Asia Communique
China Announces Construction of Yarlung Zangbo Dam | What Does Rare Earth Export Data Tells Us? | U.S. Gov't. Employee Detained in China | PLA Purges Cadre Ranks in Cleanup
Good morning — while much of the world sweltered in a heatwave and braced for a typhoon, China quietly broke ground on a game-changing megaproject in Tibet.
Beijing’s “project of the century” begins — and India will be watching.
On Saturday, Premier Li Qiang personally broke ground on what could become the world’s largest hydropower project — a colossal dam on the Yarlung Zangbo River (Or Yarlung Tsangpo), known downstream in India as the Brahmaputra. It’s being pitched as a clean energy game-changer, but the geopolitics are hard to miss.
China has announced the formation of Yajiang Group, approved by the State Council, that will look over the construction of the Yarlung Zangbo Dam.
“With the approval of the State Council, the establishment of China Yajiang Group Co., Ltd., by the State-owned Assets Supervision and Administration Commission of the State Council on behalf of the State Council to perform the duties of investors, included in the State-owned Assets Supervision and Administration Commission of the State Council to perform the duties of investors.” announcement from the State Council said on Saturday.
What’s happening?
The dam will span the lower reaches of the river in Tibet’s Metog region. Li Qiang, who spent Friday and Saturday touring major projects in Tibet, called it the “project of the century” and urged officials to “build it into a signature project of the new era.”
The numbers (from official sources):
Cost: RMB 1.2 trillion (USD 167 billion)
Annual power output: 300 billion kWh (3x Three Gorges Dam)
Structure: 5 cascaded hydropower stations
Lead developer: China Yajiang Group (新设央企)
Construction began: July 19, 2025
What Li Qiang said:
Li used the occasion to highlight three major priorities:
Ecological protection — no shortcuts, no environmental shortcuts.
Tech-driven quality — he called for the use of cutting-edge techniques, materials, and safety standards.
Ethnic and social cohesion — major infrastructure, he said, must boost livelihoods and “enhance the well-being of people of different ethnic groups.”
He also linked the project to broader regional goals: promoting border development, modern agriculture, and completing the Sichuan–Tibet railway — another major state-led initiative.
Why this matters geopolitically:
China’s moves on the Yarlung Zangbo have long triggered concern in New Delhi. Though Beijing insists this is a hydropower-only project (no water diversion — yet), India is deeply sensitive about upstream activity, especially in the eastern sector of the Himalayas. There’s no binding water-sharing agreement between the two countries.
So far, no official Indian reaction — but Delhi is almost certainly monitoring this one closely.
MEA’s most recent comment on the dam:
“India has taken note of China’s announcement … Government carefully monitors all developments … and takes necessary measures to protect our interests, including preventive and corrective measures to safeguard life and livelihood of Indian citizens residing in downstream areas. Various issues relating to trans‑border rivers are discussed … under the Expert Level Mechanism … Government has consistently conveyed its views and concerns … and has urged them to ensure that the interests of downstream states are not harmed … The issue was also raised during the visit of the Foreign Secretary to Beijing … agreed to hold an early meeting of the Expert Level Mechanism to discuss resumption of provision of hydrological data and other cooperation.”
Hu Xijin, the former editor-in-chief of Global Times, was quick to comment on the dam’s construction:
“China is a responsible major power and will certainly not use the Yarlung Zangbo River dam to threaten India or exert political pressure. Moreover, it is important to note that it is entirely in accordance with international law for an upstream country to build a dam. There is no basis for external interference, and China will not be influenced by outside voices.”
“Even India itself is not clean on this matter. After a terrorist attack in April this year in Indian-controlled Kashmir that caused casualties, India abruptly blocked a dam on the upper reaches of the Indus River and publicly declared that not a single drop of water would be allowed to flow downstream to Pakistan. Later, when the monsoon season arrived and the upstream areas were overwhelmed, India suddenly opened the floodgates, releasing water that inundated downstream regions in Pakistan. India has behaved with no restraint when it comes to dam and water control, yet it judges China by its own standards.”
Link to Hu Xijin’s comments.
Chinese public has reacted positively following the news of a 1.2 trillion RMB investment into Yarlung Zangbo project. Chinese investors on social media were speculating about the stocks linked to the Yajiang Group that could go up in value. The markets across the Greater China region will certain see a bump in stock activity due to the announcement.
On July 21, People’s Finance News reported that according to a research note by CITIC Securities, the Yarlung Zangbo hydropower project officially broke ground on July 19 in Nyingchi, Tibet. Around the same time, China Yajiang Group Co., Ltd. — the state-owned firm overseeing the dam — held its inaugural meeting in Beijing.
With total investment estimated at RMB 1.2 trillion, the project is designed to primarily export electricity to other regions while also meeting local needs in Tibet.
CITIC Securities notes the project’s construction will be a long-term boost for top-tier suppliers in sectors like hydropower equipment and long-distance grid infrastructure.
Here I translate some of the comments on Chinese social media after the dam’s announcement:
Original:
“印度天天嚷嚷我们建水坝威胁他们,下游还不是一直靠我们给的水。你们自己在恒河上游建的水坝怎么不说?”
Translation:
“India keeps shouting that our dam threatens them — but they’ve always relied on water we release. Why don’t they talk about all the dams they’ve built on the upper Ganges?”
Original:
“真要断水对我们也没好处,水电项目不可能为了报复印度就随便关水闸,别把我们想得那么低级。”
Translation:
“Cutting off the water doesn’t help us either. Hydropower projects aren’t built just to mess with India. Don’t assume we’d act that recklessly.”
PLA Issues New Rules to “Cleanse Poisonous Influence” and Reinforce Political Cadre Discipline
Beijing launches campaign to restore the image of political officers in the armed forces.
The Central Military Commission (CMC) has issued a sweeping new directive aimed at purging lingering “toxic influences” within the People’s Liberation Army (PLA) and restoring the credibility of its political officer corps.
Published in the PLA Daily, the new rules — titled Regulations on Promoting Fine Traditions, Fully Eliminating Residual Poison, and Rebuilding the Reputation of Political Cadres — mark a renewed push to enforce ideological discipline and revive what the CMC calls “the revolutionary character” of its political system.
The document reflects the latest phase of the PLA’s political rectification campaign, launched under Xi Jinping’s “political army” vision. It sets strict red lines around behavior, loyalty, and internal discipline — particularly for senior political officers — and urges every cadre to “place themselves inside the reform,” take responsibility, and lead by example.
Key points in the directive include:
Strengthening political loyalty and Party discipline
Clearly defined red lines for ethics, power, and personal conduct
Strict prohibitions on actions that damage image and authority
Emphasis on top-down accountability, where leaders must model behavior
The CMC describes this effort as both a moral pledge and a disciplinary contract — a continuation of the PLA’s political traditions dating back to the Red Army era. The goal: to forge a political leadership that is “absolutely loyal to the Party, focused on combat readiness, and unshakable in its image.”
Why this matters:
This is not just about internal discipline. These reforms reflect the CCP’s ongoing effort to ensure total control over the military ahead of sensitive anniversaries (like the PLA’s centenary in 2027) and potential future crises.
China’s Rare Earth Exports Are Up — Even After New Controls
The numbers don’t lie — Beijing’s export clampdown didn’t shrink shipments. It boosted them.
Surprise: Despite all the headlines about China tightening controls on rare earth exports, the data tells a different story. Between April and June 2025, China actually exported more rare earths than it did during the same period last year.
| Month | 2024 Exports (tons) | 2025 Exports (tons) | Year-on-Year Change |
|-------------|----------------------|----------------------|----------------------|
| **April** | 4,565.4 | 4,784.8 | +4.8% |
| **May** | 5,019.1 | 5,864.6 | +16.9% |
| **June** | 6,282.9 | 7,742.2 | +23.2% |
| **Q2 Total**| **15,867.4** | **18,391.6** | **+15.9%** |
Source: China Ministry of Commerce
That’s nearly 18,400 tons exported in just three months — a 16% increase year-on-year.
So what’s going on?
In April, China introduced a new export licensing system for medium and heavy rare earths (those used in missiles, EVs, and wind turbines). The assumption was that tighter controls would mean fewer exports. But what actually happened was:
Backlogged orders cleared as new licenses got approved
Traders front-loaded shipments to hedge against future restrictions
And maybe — just maybe — Beijing flexed its dominance by saying: “We’ll control the tap, not shut it off.”
The takeaway: Even under tighter rules, China still runs the rare earth show. No country can match its processing scale, at least not yet.
Keep an eye out: July figures drop mid-August, and that’s when we’ll see if this surge was a one-off or the start of a new normal.
U.S. Gov’t Employee Trapped in China
A Chinese American man working for the U.S. Patent Office is stuck in China after being hit with an exit ban — reportedly for not disclosing his government job on a visa form.
He was visiting family. Now he can’t leave.
U.S. officials are pushing for his release, calling it “hostage diplomacy.” He’s one of dozens of Americans — mostly ethnic Chinese — currently barred from leaving China.
China had recently stopped an executive from Wells Fargo from leaving the country.
Beijing hasn’t confirmed the case but says all visitors must obey Chinese laws.
What to Watch This Week
From Manila to Shanghai, here’s your quick guide to the week’s geopolitical, economic, and tech flashpoints.
MONDAY | Marcos in Washington
Philippine President Ferdinand Marcos Jr. continues his visit to the U.S. at former President Trump’s invitation. While tariffs are on the agenda, the real story is strategic: both sides are recalibrating their alliance amid China’s growing presence in the South China Sea. Watch for signals on basing access and new joint defense initiatives.
WEDNESDAY | ADB Outlook + BOJ Speech
The Asian Development Bank updates its Asian Development Outlook — a timely snapshot as the U.S.–China tariff environment shifts again. Last quarter, the ADB warned that Asia bears the highest effective tariffs globally.
Meanwhile, BOJ Deputy Governor Shinichi Uchida speaks in Kochi Prefecture, just days after Japan’s upper house election. With the next BOJ policy meeting looming, markets will parse his tone for any pivot signals.
THURSDAY | EU–China Summit + Indonesia Auto Show
EU Commission President Ursula von der Leyen lands in Beijing following talks in Tokyo. But expectations are low: the summit was cut to just one day, and it’s unclear if Xi Jinping will show up. Expect friction over trade and Ukraine.
In Jakarta, nearly 40 brands — including BYD, Hyundai, and Toyota — join the Gaikindo Indonesia Auto Show. It’s a key test of consumer demand as Indonesia’s middle class shrinks and EV competition intensifies.
SATURDAY | Taiwan Recall Vote + Shanghai AI Expo
Taiwan holds recall votes targeting 24 KMT lawmakers, the first in what could be a sweeping challenge to the opposition-led legislature. Civil society groups are pushing back against recent KMT policies that have disrupted budgets and judicial reform.
Meanwhile, over 3,000 exhibits go live at the World Artificial Intelligence Conference in Shanghai. Top players like Alibaba, Tesla, Moore Threads, and QuantumCtek will showcase China’s latest AI breakthroughs.
Reads:
How China Built a Global Port Network — WSJ