China has launched construction of what is set to become the world’s largest hydropower dam, a $170 billion mega-project located on the eastern edge of the Tibetan Plateau, state-run Xinhua News Agency reported Saturday.

Premier Li Qiang described the initiative as a “project of the century,” marking the country’s most ambitious hydroelectric venture since the Three Gorges Dam.

Operations are projected to begin in the 2030s.

The new dam will span the lower reaches of the Yarlung Zangbo River known as the Brahmaputra once it enters India where the river plunges dramatically by 2,000 meters across just 50 kilometers.

The steep drop offers immense hydroelectric potential, which China plans to harness through a cascading system of five power stations.

Designed to generate up to 300 billion kilowatt-hours of electricity annually, the project is expected to boost energy supply in Tibet and across China. Officials have downplayed potential harm to downstream countries and the environment, though concerns are mounting.

India and Bangladesh have already voiced alarm over the dam’s implications for millions who depend on the river downstream. Environmental organisations warn of long-term ecological damage to one of the planet’s most biodiverse regions.

Chinese authorities have pledged to prioritise ecological protection during construction, though they have yet to disclose how many people may be displaced or the project’s precise environmental footprint.

The Three Gorges Dam displaced an estimated one million people over two decades.

Despite the risks, the announcement sent shockwaves through Chinese markets. The CSI Construction & Engineering Index surged to a seven-month high, with key construction and infrastructure stocks hitting daily trading limits.

Power Construction Corporation of China and Arcplus Group PLC both climbed 10%, while shares in equipment makers like Hunan Wuxin Tunnel Intelligent Equipment and Geokang Technologies soared 30%. Companies producing cement and civil explosives, such as Xizang Tianlu and Tibet GaoZheng Explosive Co., also saw maximum gains.

Analysts say the dam presents long-term investment potential, with mature hydropower assets often providing steady, bond-like returns.

However, some caution that speculative buying has already inflated valuations.

“The project offers strong fundamentals, but short-term enthusiasm could distort prices,” said Wang Zhuo, a partner at Shanghai Zhuozhu Investment Management.

Meanwhile, Huatai Securities projected a sharp rise in demand for materials and equipment, from cement to tunnel-boring machines.

As China pushes forward with its energy security and green development goals, the Yarlung Zangbo dam underscores the geopolitical and environmental complexities of mega-infrastructure projects in ecologically sensitive and geopolitically contested regions.

The Yarlung Zangbo originates in Tibet, flowing through India’s Arunachal Pradesh and Assam before reaching Bangladesh, making Beijing’s latest energy undertaking a source of diplomatic tension and ecological scrutiny.