China has commenced building what is set to become the world’s largest hydropower facility on the Yarlung Zangbo River in Tibet, near the Himalayan foothills. Premier Li Qiang confirmed this week that work on the colossal $170 billion project is officially underway.
Planned for the lower reaches of the Yarlung Zangbo—where waterfalls drop an astonishing 2,000 metres across a 50 km stretch—the dam will feature five cascade power stations and generate around 300 billion kilowatt-hours of electricity each year. Analysts suggest this output matches the UK’s entire annual electricity consumption.
The project, one of China’s most daring since the Three Gorges Dam, is expected to begin operations around 2030. Premier Li referred to it as a “project of the century” and emphasised the importance of preserving the surrounding ecosystem to avoid significant environmental harm, according to Xinhua.
Like the Yangtze’s Three Gorges Dam, this ambitious venture is likely to reshape regional topography. The new dam will dwarf existing infrastructure and become the centrepiece of China’s low-carbon energy transition.
Environmental and Geopolitical Concerns
However, concerns have been raised by neighbouring countries. The river—known as the Brahmaputra in India and the Jamuna in Bangladesh—plays a crucial role in downstream water systems. Both India and Bangladesh have voiced unease over the potential impact on millions living along the river’s lower basin.
India’s Ministry of External Affairs stated it had formally expressed its concerns to China and pledged to closely monitor developments to safeguard its national interests. Environmental groups have also warned that the dam could threaten one of the planet’s most biodiverse regions.
Despite these objections, Chinese authorities insist the project will not significantly disrupt water supplies or ecosystems downstream. Electricity generated will serve both local needs in Tibet and be transmitted to other regions to meet broader national demand.
Economic Impact and Market Reaction
The announcement of the dam has sparked major activity in China’s financial markets. With ¥170 billion earmarked for the project, investor enthusiasm has surged across relevant sectors.
Shares in Hunan Wuxin Tunnel Intelligent Equipment Co, which manufactures tunnelling equipment, soared by 30%, while those of Geokang Technologies Co Ltd, a provider of intelligent monitoring systems, also rose sharply.
The CSI Construction & Engineering Index climbed by 4%, hitting a seven-month high, as reported by Zhuozhu Investment Management. Other companies, including Power Construction Corporation of China and Arcplus Group PLC, reached their daily limit of 10% gains.
Hydropower projects are increasingly seen by investors as stable, long-term assets, akin to bonds. However, Zhuozhu’s partner Wang Zhuo warned against excessive speculation, cautioning that overvaluation of related stocks could follow.
Huatai Securities anticipates that the mega project will drive significant demand for construction inputs such as cement and civil explosives. Reflecting this, shares of Xizang Tianlu Co Ltd and Tibet GaoZheng Explosive Co, both involved in these sectors, also jumped 10%, marking record highs.
Government bond yields also rose in response, with 30-year treasury futures among the most traded, reflecting market sentiment that the dam is part of a broader economic stimulus initiative.
Written by:
*Dr Iqbal Survé
Past chairman of the BRICS Business Council and co-chairman of the BRICS Media Forum and the BRNN
*Cole Jackson
Lead Associate at BRICS+ Consulting Group
Chinese & South American Specialist
**The Views expressed do not necessarily reflect the views of Independent Media or IOL.
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