China has launched the $167 billion Tibet mega-dam on the Yarlung Tsangpo River despite potential downstream risks in India and Bangladesh. The country has dismissed concerns that the project could affect water availability, geopolitical stability, and downstream ecosystems.

The transboundary nature of the Yarlung Tsangpo River, which flows from the Tibetan Plateau and joins the Brahmaputra River as it flows to Bangladesh through India’s Arunachal Pradesh and Assam states, raises concerns about the dam’s effect in those regions. There are also concerns that the project’s location near the Line of Actual Control (LAC) with India could pose geopolitical risks. 

China refutes concerns over Tibet mega-dam

The river drops nearly 2,000 meters over a 50-kilometer stretch, which Chinese officials believe minimizes the need for large reservoirs and reduces some environmental risks. The dam will include five cascade dams located around the city of Ngingchi, Tibet’s southeast region. 

China has promised to put in place measures to prevent environmental disruptions to downstream areas. Beijing affirmed that the project has been scientifically reviewed to ensure that it would not negatively impact agriculture, water rights of neighboring countries, or downstream biodiversity. The country’s foreign ministry also acknowledged that the project will contribute to disaster prevention, regional energy cooperation, and adaptation to climate change.

China’s foreign ministry also pointed out that the dam will not be used for political leverage. Analysts have raised concerns about the potential of China to disrupt water flow to India and Bangladesh in case of political tensions, which could pose a risk of floods or drought downstream.

The project will feed generated power into China’s national grid and is projected to be a major source of clean power in the country. There are concerns about the high costs of stringing power lines to get electricity to major parts of China. There are also concerns over the means of getting materials and workers to such a remote site. 

Environmentalists have also raised concerns about the irreversible environmental impact of dam construction in the Yarlung Tsangpo gorge. They revealed that the Grand Canyon is a national nature reserve and a biodiversity hotspot for rare species like the snow leopard and ancient cypress trees. 

There are also seismic risks that Chinese officials claim the dam could withstand. The project lies near the boundary of two tectonic plates, in a site that recorded a magnitude 8.6 earthquake 300 miles away in 1950.

India launches its hydro-power project 

India has also initiated its own Siang Upper Multipurpose Project (SUMP) in Arunachal Pradesh to offset perceived risks from the Chinese dam. The country revealed that the downstream project of the 10-12 gigawatt dam aims to mitigate flood risks and enhance its water security.

China’s push for a new source of clean power that could help it reach its goal of net-zero emissions by 2060 will likely drive demand for hydropower infrastructure. After the news, China’s Power Construction firm and Energy Engineering shares both surged by 10%, while China Energy Engineering’s Hong Kong rose by slightly over 50%. 

The project was revealed as part of China’s 14th Five-Year Plan in 2020 and was later approved in late 2024. Chinese Premier Li Quang launched the project on July 19 in the southeastern Tibetan city of Nyingchi near the Indian border. He also announced that the China Yajiang Group would be the new company to manage the project. 

The dam is also estimated to be three times the size of China’s Three Gorges Dam, with a projected annual electricity output of 60,000 megawatts of power. The project’s $167 billion budget is more than four times larger than the $37 billion it took to complete the Three Gorges Dam.

The launch of the project came at a time when both nations had stabilized their bilateral ties after the June 2020 border incident that killed around 20 Indians and four Chinese. After the four-year stalemate, China appointed a new ambassador to India in 2024, and both countries also agreed to facilitate visa processes and resume direct flights.

Cryptopolitan Academy: Tired of market swings? Learn how DeFi can help you build steady passive income. Register Now