China has started building the largest hydropower dam in the world on the eastern edge of the Tibetan Plateau, said the Xinhua news agency. The mega-project, which is estimated to cost at least 170 billion dollars, is the most ambitious energy project in China since the Three Gorges Dam. The investors interpreted it as a fresh stimulus to the economy and Chinese construction and infrastructure stocks rose.
The dam will be on the lower Yarlung Zangbo river and will comprise five cascading hydropower plants that will have the capacity to generate 300 billion kilowatt-hours of electricity a year, which is equivalent to the amount consumed in Britain in a year. The project has however raised regional concerns with India and Bangladesh cautioning of significant downstream effects. Beijing claims the dam has passed rigorous scientific scrutiny and will not harm ecosystems or neighboring countries’ water rights. Nevertheless, India is speeding up its own hydropower schemes on the Brahmaputra River in Arunachal Pradesh as a counter.
The news brightened up the Chinese capital markets. CSI Construction and Engineering Index reached a seven-month high. Power Construction Corporation of China and Arcplus Group shares rose 10 percent and tunnel and cement companies also rose by more than 10 percent. Chinese Premier Li Qiang called it the project of the century, and demanded stringent environmental safeguards. The project will increase GDP due to the public investment, and Citi predicts that it will increase GDP by 16.7 billion dollars annually.
The dam will be operated by a new state-owned company China Yajiang Group. Although the number of jobs created is not clear, the Three Gorges project once created close to a million jobs- albeit displacement of many. Equivalent displacement numbers of the Yarlung Zangbo project are not disclosed.
NGOs and environmentalists are concerned that the Tibetan Plateau will suffer irreversible damage, and that the region will experience seismic hazards. Nevertheless, markets are currently celebrating the Chinese aggressive hydropower initiative.