China's $167 Billion Mega-Dam: A Game Changer for Clean Energy and the Economy

China has begun constructing the world's largest hydroelectric dam, a $167 billion project expected to take at least a decade to complete. The dam's impact on China's economy, clean energy output, and surrounding controversies are being closely watched by Bloomberg experts.

China has initiated the construction of what will be the world's largest hydroelectric dam, a $167 billion project slated to take at least a decade to complete. The dam, located on the Yarlung Zangbo River in Tibet, is expected to generate 300 billion kilowatt-hours of electricity annually, equivalent to Britain's entire power consumption in 2024. This ambitious project, described by Chinese Premier Li Qiang as a "project of the century," is aimed at meeting China's growing power demand while advancing its clean energy goals.

The announcement of the dam's construction sent positive signals through Chinese markets, with stock prices and bond yields rising. The Power Construction Corporation of China and Arcplus Group PLC saw significant gains, with the former surging by its 10% daily limit. The project is expected to drive demand for construction and building materials such as cement and civil explosives, potentially boosting related sectors.

However, the dam's construction has raised concerns, both environmental and geopolitical. NGOs have warned of potential ecological damage and displacement of local communities. India and Bangladesh have expressed worries about the dam's impact on downstream water supplies, given the Yarlung Zangbo's flow through these regions. The dam's construction in a seismically active zone also poses additional risks.

Economically, the project is seen as a significant stimulus for China's slumping economy. Citigroup analysts project that it could add 0.1% to the country's annual GDP growth for the next 10 years, primarily benefiting the construction, cement, and steel sectors. The dam aligns with China's clean energy objectives, aiming to reduce emissions by providing a substantial source of renewable energy.

The project's impact on China's relations with India is a key concern. The Yarlung Zangbo flows through Arunachal Pradesh, a state in northeast India, and into Bangladesh. Officials from India fear the dam could cause flooding or restrict water flow to downstream regions. The mega-dam project comes at a time of tense relations between the two nations, with India positioning itself as a manufacturing hub to counter China's growing influence.

The construction of the dam is overseen by the newly formed state-owned China Yajiang Group, which aims to complete the project by 2033. The environmental risks, including potential biodiversity loss and seismic activity, are being closely monitored by environmental groups and experts.

References:

[1] https://www.investing.com/news/stock-market-news/china-starts-building-worlds-largest-hydropower-dam-in-tibet-4142879
[2] https://www.morningbrew.com/stories/2025/07/21/china-is-building-the-biggest-dam-in-the-world
[3] https://www.marketscreener.com/news/china-s-167-billion-mega-dam-could-be-a-coal-killer-ce7c5cdcd188f724
[4] https://san.com/cc/chinas-167-billion-hydroelectric-dam-raises-alarm-with-india/