Upstream Power, Downstream Consequences: China’s Strategic Leverage on the Mekong

DI MIRIAM SEMERARO

23/04/2025

Originating in China’s Qinghai province, the Mekong River flows through Tibet, Myanmar, Thailand, Cambodia, Laos, and Vietnam, supporting nearly 70 million people. Its basin is vital for hydropower, agriculture, fisheries, and water resources, making it a strategic geopolitical hotspot in the Indo-Pacific. The region faces growing non-traditional security threats, particularly due to China’s increasing control over the river’s water flow and hydropower resources.

China, as the upstream power, has constructed extensive infrastructure—particularly dams—that allow it to regulate water flow, often at the expense of downstream states. Through this control, Beijing exercises its hydro-hegemony, influencing regional economies and ecosystems while using water as a strategic tool in diplomatic relations. These unilateral actions have significant economic, environmental, and social repercussions across the region.

At the same time, China seeks to utilize the Mekong to diversify its energy mix and strengthen trade routes under the Belt and Road Initiative (BRI). Investments in Mekong Basin infrastructure also serve to export China's surplus industrial capacity, facilitated through the Lancang-Mekong Cooperation Framework.

Water Scarcity and Climate Challenges in the Mekong Valley

The Mekong Basin is increasingly affected by hydropower development and climate change, threatening food and water security. Agriculture and fisheries, which sustain over 65 million livelihoods, face growing risks due to altered water flow, reduced sediment transport, and declining biodiversity. Fish populations—critical for regional diets—are particularly vulnerable. Reservoirs submerge wetlands and forests, while sediment retention reduces soil fertility in the Mekong Delta, harming agriculture.

Climate change further compounds these challenges. The Lower Mekong Basin (LMB)— Cambodia, Laos, Thailand, and Vietnam—is highly vulnerable to rising temperatures, erratic rainfall, and extreme weather events. Projections indicate that by 2060, temperatures could rise between 0.4°C and 3.3°C, while rainfall patterns may shift dramatically—decreasing by 16% in drier scenarios or increasing by 17% in wetter ones. These shifts threaten agriculture, hydropower generation, and regional stability. Reduced dry-season water flows could also disrupt navigation, necessitating major investments in infrastructure to mitigate floods, landslides, and rising sea levels.

Dams Proliferation and Hydropower Development

Hydropower development in the Mekong Basin is being pursued aggressively by both China and Lower Mekong nations. China operates 12 mainstream dams in the Upper Mekong (Lancang), including the massive Nuozhadu Dam, which can store a volume of water equivalent to half of the Chesapeake Bay. These dams significantly regulate water availability downstream, reinforcing China’s dominance.

However, China is not the only player. The Lower Mekong Basin is also experiencing rapid hydropower expansion. Laos, aiming to become the "Battery of Asia," leads the region with 98 projects, representing 64% of total installed capacity. Currently, 88 hydropower plants are operational, generating over 13,257 MW, with 20 more under construction and 14 in planning. If completed, the region’s total hydropower capacity could more than double, reaching 27,302 MW. Many of these projects are constructed by Chinese firms and financed with Chinese loans.

Thailand, Cambodia, and Vietnam also invest in hydropower, purchasing electricity from Laos while building their own dams on Mekong tributaries. Thai and Vietnamese companies are actively involved in Laotian hydropower projects, and Cambodia appears to be reviving plans for a major mainstream dam.

Will the Mekong Valley Become the Next South China Sea?

Strategically, the Mekong has gained importance in U.S. regional considerations, prompting comparisons to the South China Sea. However, while China’s actions in both regions reflect assertive expansion, key differences exist. In the South China Sea, China focuses on military and commercial infrastructure to secure vital navigation routes and exploit oil and gas resources. In contrast, its Mekong strategy revolves around hydropower dominance, economic leverage, and securing BRI trade routes while addressing its "Malacca Dilemma."

China finances dams and transmission lines in the Mekong Basin to export surplus industrial capacity, but regional nations fear over-reliance on Beijing. To mitigate concerns, China frames its projects as mutual cooperation. However, its influence is not absolute.

Laos, for example, has developed major dams funded by Thailand, reducing Thai dependence on Chinese electricity. Vietnam is also shifting toward solar and Laotian hydropower but remains reliant on Chinese solar panels and coal investments. Additionally, in response to environmental concerns, China has slowed new Lancang dam projects, and in 2020, Cambodia announced a halt to further mainstream Mekong dams.

Given the Mekong’s growing geopolitical significance, the U.S. has an opportunity to deepen engagement with the Mekong River Commission and counterbalance China’s hydro-hegemony. Whether Washington will seize this opening remains to be seen.