Infrastructure and State-Building: China’s Ambitions for the Lower Yarlung Tsangpo Project

19 July 2025, Nyingchi, Tibet. Against a bold red backdrop with snow-capped mountains looming in the distance, China’s Premier Li Qiang—flanked on both sides by four senior officials and leaders of major state-owned enterprises—formally announced the ground breaking on the Lower Yarlung Tsangpo Hydropower Project (LYT project). Below the stage, rows of officials and engineers stood in disciplined formation, as though receiving orders for a pre-battle mobilisation.

With an estimated cost of RMB1.2 trillion (approximately US$167 billion), the LYT project is poised to be the world’s most expensive single infrastructure development. If the planned five cascade hydropower stations with a combined installed capacity of up to 60 gigawatts are realised, it will be the largest hydropower project globally.

While no official details have been released, the LYT project is widely expected to be located near the Great Bend on the lower Yarlung Tsangpo River—a dramatic U-turn where the river cuts through the Himalayas before flowing south into India as the Brahmaputra. Within a 50-kilometre straight-line distance, the river descends nearly 2,000 metres in elevation. Coupled with the substantial flow volume of one of China’s major stem rivers, this section is believed to possess one of the world’s greatest untapped hydropower potentials.

The site lies within 50 kilometres of the McMahon Line, the boundary claimed by India but disputed by China. Medog County, the expected location of the project, borders a region that China refers to as Zangnan (literally ‘South Tibet’), while India administers it as the state of Arunachal Pradesh. India has voiced concerns over the project since China’s plan to develop it became public. There are worries that China could use the dam to either withhold or release water in a way that hurts those downstream (Wong 2025).

While global media coverage is likely to focus on rising tensions between the world’s two most populous nations, the significance of the LYT project goes far beyond cross-border water politics. It should be understood as a critical instrument in China’s broader state-building agenda—designed to consolidate control over a politically sensitive, ethnically distinct frontier while mobilising natural resources to power the next phase of national development. As this essay will show, the LYT project embodies a striking confluence of territorial strategy, economic ambition, and infrastructural statecraft.

From Three Gorges to Lower Yarlung Tsangpo

The last time a Chinese national leader inaugurated a major hydropower project was on 14 December 1994, when then premier Li Peng presided over the ground-breaking ceremony for the Three Gorges Dam on the Yangtze River in Hubei Province, central China. The historical significance of the moment could not be overstated. Harnessing the power of the Yangtze River had been a longstanding ambition of China’s nation-builders since Sun Yat-sen. Mao Zedong championed the idea in the 1950s, but serious planning was derailed by the upheavals of the Great Leap Forward and the Cultural Revolution during the latter part of his rule. It was not until the 1980s, under Deng Xiaoping’s leadership, that discussions were revived and moved towards implementation.

Throughout the 1980s, the Three Gorges Project was the subject of intense debate over its design, feasibility, and potential environmental and social impacts. These were genuine public debates in which opposing voices were heard. Among the most prominent critics were Li Rui, a former vice-minister of the Ministry of Water Resources and Mao Zedong’s one-time personal secretary, who later became an outspoken critic of the Communist Party, and influential journalist Dai Qing, who wrote extensively against the project and was imprisoned in the aftermath of the 1989 Tiananmen protests. Opposition to the project came from a wide spectrum of actors, including officials and government-affiliated researchers, public intellectuals, and grassroots communities whose lives stood to be profoundly affected. These debates have been well documented, including by the participants’ published diaries and oral histories (Li 2017), academic monographs (Su 2007), edited volumes (Dai 1994), media reports (Tang 2009), and documentary films (Wang 2013).

The Three Gorges Project’s final approval in 1992 was shaped by the political aftermath of the 1989 Tiananmen Square crackdown. Premier Li Peng, who played an instrumental role in authorising the military suppression of the protests, emerged politically empowered and used his position to champion the dam (Li 2003). The post-crackdown purge of liberal reformers within the Chinese Communist Party (CCP) cleared the way for Li to push the project through (RFI 2020). Despite that, when the Seventh National People’s Congress voted on the resolution to develop the project on 3 April 1992, 177 of the 2,633 deputies voted against it and 664 abstained (Xinhua 2009). This significant level of dissent and abstention—unusual in China’s typically rubber-stamp legislature—reflected the depth of concern and controversy surrounding the project, even within the political establishment. The rest is history: more than one million people were eventually relocated to make way for the dam’s construction. Numerous ancient cities and cultural heritage sites were submerged, and the long-term environmental impacts remain uncertain.

In contrast, the LYT project—with an investment cost five times greater and planned installation capacity three times greater than the Three Gorges Project, in a far more environmentally fragile and politically sensitive area—is moving ahead without a vote in the national legislature. It was simply decided and moved along China’s bureaucratic process. In October 2020, the CCP’s Nineteenth Congress passed its ‘recommendations’ for the Fourteenth Five-Year Plan covering the 2021–25 period, which included the ‘implementation’ of hydropower development on the lower Yarlung Tsangpo River (Xinhua 2020b). This was duly reflected in the Five-Year Plan released by the State Council the next year (NDRC 2021). In 2022, the project appeared in the Fourteenth Five-Year Plan for Renewable Energy Development, framed as part of a plan to develop Southeast Tibet as a comprehensive base for hydro, wind, and solar energy (NDRC 2022a). In December 2024, the state news agency Xinhua announced that the project has been approved by the Chinese Government (Xinhua 2024). In March 2025, the project was included on the list of national priority projects to be launched within the year (NDRC 2025).

Also unlike the Three Gorges Project, which sparked fierce public debate and posed serious challenges to the policymaking process, there has been little public awareness or discussion about the LYT project beyond hydropower industry circles. A search of the China National Knowledge Infrastructure (CNKI) database reveals that most published literature on hydropower development on the Yarlung Tsangpo River has been authored by industry professionals, typically emphasising its immense hydropower potential and supportive of the project. The only public figure who has openly raised concerns about the potential environmental consequences is Yang Yong, an independent scientist renowned for his long-term exploration of the Tibetan Plateau. Having written on both Chinese and international platforms about the ecological and geological risks such development could pose (Yang 2014, 2015), his anti-dam stance has made him a target of attacks by some prominent advocates within the hydropower industry, who have questioned his scientific credentials (Shuibo 2011).

The contrast between the Three Gorges and the LYT projects is revealing. It underscores the diminished space for civil society engagement as the state consolidates its capacity for top-down policymaking. At the same time, a powerful hydropower interest group—which emerged from the development of the Three Gorges and numerous other hydropower projects since the 1990s—has gained influence that now far surpasses any opposing voices.

The financialisation of the Chinese economy has further amplified the influence of this interest group. Following the announcement of the LYT project, the stock prices of major infrastructure firms surged, reflecting investor expectations of lucrative state-backed contracts (Luo 2025). On Chinese social media, financial analysts raced to identify which companies stood to benefit most. The growing entwinement of state-led infrastructure development with capital markets—and, by extension, with the financial interests of the broader public—further reinforces the political and economic clout of this interest group in shaping national development priorities.

Final Frontier

China is the most heavily dammed country in the world, with an installed hydropower capacity greater than that of the next four countries combined. Accounting for more than one-quarter of the country’s total assessed hydropower potential (Chen 2019), Tibet is the final frontier for China’s hydropower expansion.

While most regions of China have seen intense hydropower development over the past decades, Tibet’s vast water resources have remained relatively untapped, primarily due to the formidable challenges of large-scale construction in its harsh and remote terrain. Among these resources, the Yarlung Tsangpo River stands out as the crown jewel, accounting for nearly 70 per cent of Tibet’s total hydropower potential (Li et al. 2010). The river is considered the culmination of China’s hydropower ambitions. As one hydropower expert put it: ‘The day the development of the Yarlung Tsangpo is completed will be the day China’s exploitable hydropower resources are fully developed’ (Chen 2019).

The ambition to develop hydropower on the Yarlung Tsangpo has been long in the making. Surveys have been under way since the 1990s to study the hydropower potential of Tibet’s major rivers, with the Yarlung Tsangpo as the focus (Yang 2014). From the early 2000s, China’s leading state-owned power generation companies gradually expanded their presence into Tibet. Over the years, several small dams have been built on various rivers, mainly to meet local power demand. In 2009, construction began on Tibet’s first large-scale hydropower project—the 510-megawatt Zangmu Hydropower Station, located on the middle reach of the Yarlung Tsangpo River—which was commissioned in 2015 (NEA 2025). Since then, multiple hydropower projects have been planned or developed along the river’s middle reaches (Table 1).

Table 1 Planned and operational hydropower dams on the middle reaches of Yarlung Tsangpo (main stem)

Despite the experience building dams along the middle reaches of the Yarlung Tsangpo, the prospect of building a mega-dam on the river’s lower reaches, particularly near the Great Bend, presents far greater challenges. Unlike the relatively stable terrain and moderate elevation of the middle reaches, the lower Yarlung Tsangpo plunges into one of the world’s deepest and most geologically unstable gorges. The region is prone to landslides, earthquakes, and extreme weather (Yang 2014; Li et al. 2015), all of which dramatically increase construction risks and costs. Seismic activity presents the deadliest threat. Medog County, the anticipated site of the LYT project, experienced an 8.7-magnitute earthquake in 1950, also known as the Assam–Tibet Earthquake. The 8.1-magnitude earthquake that struck Nepal in 2015 was the latest reminder of the extreme seismic risk to which the Himalayan region is subject (Duan 2015).

In addition, the site of the LYT project will likely fall in the Yarlung Tsangpo Grand Canyon National Nature Reserve, an area protected for its dramatic topography and exceptional biodiversity (State Council General Office 2000). According to national zoning regulations, this area is designated a ‘strictly protected’ zone, where ‘water resource development activities that are detrimental to the aquatic ecological environment are strictly prohibited, and stringent water resource conservation policies are enforced’ (State Council 2010). It remains unclear how the LYT project will address this contradiction with existing zoning regulation. Moreover, there is no publicly available information on the project’s environmental impact assessment, which is legally required as a prerequisite for initiating major construction activities.

In any case, building the dam will not be easy. Despite China’s strong capabilities in hydropower development after building thousands of dams in past decades, the LYT project presents several technical challenges without proven capabilities, including dam-building on unstable ground, constructing long tunnels through mountainous terrain, and operating in a cold and low-oxygen environment (Tan 2019). Medog County—with a population of just 15,000—was the last county in China to gain access to the national road network, with its first automobile road completed only in 2013. A 2016 report by the People’s Daily revealed that a smaller hydropower station constructed in Medog in 2013–15 cost four times more than comparable projects elsewhere in China due to the logistical challenges posed by the area’s more than 200 days of heavy rainfall annually, and frequent landslides and mudslides (Xie et al. 2016). Although paved road mileage in Medog has more than doubled following nearly RMB120 million in government investment over the past decade (Yuan and Xu 2023), the logistical challenges of transporting the large equipment required for a project like the LYT development remain substantial.

Energy-Hungry Development Vision

Why, then, have Chinese policymakers chosen to pursue the LYT project despite its significant environmental and geological risks and formidable logistical challenges? While a self-interested push from the hydropower industry may help explain the decision, the deeper motivation likely lies in the state’s broader developmental agenda: preparing the country for a new phase of growth that will require an immense and reliable supply of electricity.

China previously experienced overcapacity in its hydropower. Over the past decade, the pace of hydropower development has slowed markedly, as many existing stations have faced underutilisation—a problem known as ‘wasted discharge’ (弃水), where large volumes of water pass through dams without generating electricity. This stems from several factors: weak industrial demand, limited transmission capacity to export electricity to other regions, and local protectionism that hampers cross-regional power trade. According to China Energy News (中国能源报), the state-run energy sector newspaper, the volume of wasted discharge nationwide in 2020 was equivalent to two-thirds of the annual electricity output of the Three Gorges Dam, resulting in losses of nearly RMB10 billion (China Energy News 2021).

In response to the central government’s call to address the ‘wasted discharge’ issue (NEA 2018), Sichuan and Yunnan—two southwestern provinces where ‘wasted discharge’ has been most prominent—have introduced energy-intensive industries such as electrolytic aluminium and silicon smelters to boost industrial demand (Xinhua 2020a; Yunnan SASAC 2024). These industries are closely linked to the electric vehicle, photovoltaic, and energy storage sectors—pillars of China’s strategic push for industrial transformation and global ‘green development’ leadership. In recent years, the global race to develop artificial intelligence (AI) has further underscored the energy-intensive nature of AI infrastructure—a concern that is gaining significant traction in China’s policy discourse (Cui 2024; Li 2025).

In short, China is gearing up for a new phase of high-tech industrial development that will be highly energy intensive. With measures taken to absorb overcapacity such as selling surplus electricity at discounted rates (NDRC 2022b), the supply–demand balance has gradually begun to shift towards shortage. These developments may have prompted Chinese policymakers to initiate a new wave of power generation expansion. Hydropower is seen not only as a source of ‘renewable’ energy essential to China’s decarbonisation goals, but also as a foundational pillar for supporting the integration of other ‘green’ energy sources, such as solar and wind. Given their intermittent and variable nature, solar and wind alone cannot sustain large-scale grid stability without the baseload and regulatory support provided by hydropower. Against this backdrop, Tibet’s immense hydropower potential is increasingly seen as a resource that cannot be bypassed.

Tibetan Power, Outbound

Large-scale hydropower development in Tibet primarily serves the energy needs of other regions in China. Given Tibet’s small population size and limited industrial base, local electricity demand was quickly met by small power plants built in earlier phases of development, although seasonal supply–demand mismatches persist (Tan 2019). The commissioning of the Zangmu Hydropower Station in 2015 marked the beginning of outbound electricity transmission from Tibet. By 2024, the region had exported 1.791 billion kilowatt-hours of electricity—primarily hydropower, but also geothermal, wind, and solar energy—to ‘East, Central, North, Northwest, and Southwest China’ (State Grid 2024). In other words, electricity generated in Tibet is now transmitted across vast distances to power regions throughout China—a feat enabled by the ultra-high-voltage transmission technology that China is actively promoting on the global stage. Tibetan electricity has become an increasingly integral part of the country’s national infrastructure landscape.

In addition to plans for transmitting Tibetan electricity to other parts of China, hydropower industry insiders have repeatedly floated the prospect of ‘international cooperation’—suggesting that electricity generated from Tibetan rivers could one day be exported to countries in South and Southeast Asia, integrating the region into China’s broader Belt and Road Initiative (Li and Chang 2019; Zhou et al. 2021).

The LYT project is explicitly designated to serve primarily outbound transmission needs (Xinhua 2025). However, evacuating the vast amount of electricity generated by the project will require overcoming both technical and institutional obstacles. Transmission networks must be constructed across the Himalayan ridges to connect the LYT project with other regions, posing engineering and logistical challenges that might overshadow those of building the LYT dam itself.

Furthermore, given the project’s extraordinarily high construction costs, the resulting electricity is expected to be highly expensive and economically uncompetitive without substantial subsidies (Su 2018). To ensure the viability of the project, it is anticipated the government will provide significant financial support—beyond the estimated RMB1.2 trillion in capital investment—to subsidise electricity prices. Yet, how these funds will be mobilised remains unclear.

As one hydropower industry expert has warned, utilising Tibet’s hydropower potential will require careful coordination among power generation, transmission, and consumption sectors, which under China’s current power sector structure remain institutionally fragmented (Tan 2019). This fragmentation has been a contributing factor to the problem of ‘water discharge’ seen in past hydropower projects and could be repeated in the LYT project unless substantial institutional reforms are undertaken.

Perhaps in anticipation of the project’s financial and coordination challenges, the central government established a new state-owned enterprise (SOE), China Yajiang Group (CYG), to lead the development of the LYT project, rather than assigning it to one of the SOEs already active in Tibet. Notably, CYG is ranked number 22 among the 99 SOEs directly supervised by the State-Owned Assets Supervision and Administration Commission of the State Council (SASAC). This high ranking suggests that the new company will enjoy vice-ministerial authority, in contrast to the lower administrative standing of most existing power generation SOEs. Such elevated status is likely intended to facilitate the cross-regional and interagency coordination necessary for implementing a project of this scale and complexity. 

Cross-Border Water Conflict, or Competition in Infrastructural Power?

As the downstream country, India has closely monitored China’s hydropower development activities on the Yarlung Tsangpo River in the past decade (MEA 2016a, 2016b, 2018, 2021, 2025a, 2025b, 2025c). Much of the focus has centred on the two countries’ respective rights to the waters of the Yarlung Tsangpo–Brahmaputra River. The Indian public has expressed particular concern that China could weaponise its upstream position to manipulate river flows. However, the prevailing media narrative may overstate the risks of cross-border water conflict and obscure the deeper geopolitical stakes—namely, the consolidation of territorial control in a disputed border region.

While cross-border water management is undoubtedly a source of tension, both countries appear to have managed this issue relatively cooperatively. They set up an Expert Level Mechanism in 2006 to discuss issues related to trans-border rivers and signed a memorandum of understanding on ‘Strengthening Cooperation on Trans-Border Rivers’ in 2013 (MEA 2013). China has been providing India with hydrological data, albeit charging US$125,000 a year for the privilege (Mittra 2017). Cooperation under these mechanisms was reiterated during a visit by the Indian Foreign Secretary to Beijing in January 2025 (MEA 2025b). In recent months, Chinese diplomats in India have also actively engaged with the Indian press to assuage concerns about China’s potential weaponisation of hydropower projects (Chinese Embassy in India 2025).

There are technical grounds to support the argument that China’s ability to disrupt downstream waterflows through the LYT project will be limited. Unlike the Three Gorges Dam—a large storage dam that creates a vast reservoir by holding back substantial volumes of water and submerging wide areas of the riverbank—the dams planned for the Yarlung Tsangpo are designed as ‘run-of-the-river’ type. While the Three Gorges Dam serves multiple purposes, including hydropower generation, flood control, navigation, and irrigation—supporting densely populated and economically vital regions along the Yangtze—the Yarlung Tsangpo dams are intended solely for power generation, given Tibet’s sparse population and lack of significant agricultural or industrial demand that would justify multipurpose water regulation. According to the announced design, the LYT project involves diverting water through tunnels across the Great Bend, enabling it to flow in a more direct path and harness the river’s steep drop in elevation. Unlike the Three Gorges model, these dams will not rely on high barriers to hold back water, meaning their capacity to significantly regulate or interrupt downstream flows is inherently limited.

As the Chinese scientist Yang Yong—himself a vocal critic of the LYT project—has pointed out, ‘downstream countries’ concerns about the impact on river flow are not scientifically based’ (Walker 2011). This is because China’s contribution to the Brahmaputra’s flow is estimated to be lower than 30 per cent, with substantial contributions to the river’s flow coming from tributaries in India and Bhutan and from rainfall—all beyond China’s control (Giordano and Wahal 2022).

There has long been speculation about a separate initiative to divert Tibetan rivers to arid regions of China, such as Xinjiang. If realised, such a project would pose a significantly greater threat to the water security of downstream countries. However, not only has this speculation been officially denied (Xinjiang Cyber Administration 2025), but also the recent confirmation of the LYT project has further reduced the likelihood of diversion; it would be difficult to pursue both projects simultaneously, since hydropower generation and long-distance water transfer compete for the same water resources.

However, this does not diminish the geopolitical implications of the LYT project. Rather than centring on direct competition with India over water use, the project may be more strategically aimed at consolidating territorial control in the border region. Its construction and operation will require the mobilisation of large numbers of engineers, workers, and managerial personnel into an area that has long been isolated and sparsely populated. The newly established CYG, which enjoys a higher administrative rank, may offer stronger incentives for personnel to relocate to this remote region. High-grade roads and railways will be built to transport large equipment, further enhancing infrastructure connectivity and military defensibility. Taken together, these developments are likely to transform the region physically and demographically, potentially turning it into a new economic hub whose influence could extend into surrounding areas, including those currently under Indian administration.

Therefore, the development of the LYT project in this border region illustrates the extension of the state’s ‘infrastructural power’ (Mann 1993)—not only through the building of physical infrastructure, but also through an expanded bureaucratic presence and deepening of economic integration.

This logic of state power is mirrored on the Indian side. The Brahmaputra Basin holds the greatest share of India’s total hydropower potential, more than the Indus and Ganges basins combined (Goyal 2022). Within Arunachal Pradesh (or what China refers to as ‘Zangnan’), up to 150 dams have been planned on the Brahmaputra (Giordano and Wahal 2022). Additionally, the National River-Linking Project envisions diverting water from the Brahmaputra to other parts of India. Few of these projects have materialised so far, as India’s federal system and more dynamic civil society make it less likely for the government to launch large-scale infrastructure projects in the manner that is done in China. Nonetheless, the strategic rationale of integrating this remote northeastern frontier into India’s national economy and reinforcing territorial control remains a key impetus of Indian policymaking.

Transformed Horizons

Unlike the balloon-decorated, celebratory atmosphere that accompanied the launch of the Three Gorges Project in 1994, the stern looks on the faces of Chinese officials and SOE leaders at the LYT project’s ground-breaking ceremony hint at an uneasiness about the extraordinary challenges that lie ahead. Whereas the Three Gorges Project underwent more than four decades of public debate and scrutiny, the LYT project is being pursued with little rigorous examination of its environmental risks or the social impacts on local communities. Instead, it is being framed as a strategic response to the country’s future industrial needs and, ironically, as part of its ‘green development’ agenda. The imperative to compete with a rival neighbour has likely also contributed to the decision.

With the launch of the LYT project, the anticipated surge in infrastructure development on the Tibetan Plateau will usher in a new wave of state-building projects in a region long regarded as a remote frontier. One thing is certain: the plateau will be profoundly transformed.

Featured Image: Lower reaches of the Yarlung Tsangpo in Mêdog County. Source: JL Cogburn, Wikimedia Commons (CC).

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