China has started work to build the world’s biggest hydroelectric dam in Tibet as part of its drive switch its power generation to renewables, but analysts say the plan won’t make a big difference.

Chinese infrastructure stocks soared on the news that the project was going ahead on what is set to become the world’s largest hydropower project, designed to generate 300TWh annually — equivalent to the UK’s entire electricity consumption. The project has captured headlines and market enthusiasm alike.

But behind the headlines lies a more sobering economic reality: the project will offer minimal stimulus to China’s broader economy, Capital Economics said in a note on July 25.

“At an estimated RMB1.2trn ($165bn), the cost of the project is equivalent to just 1% of China’s GDP,” Leah Fahy and Mark Williams of Capital Economics noted. “If it takes around ten years to build, that’s annual spending of just 0.1% of GDP.” In other words, “building the world’s largest hydropower project will hardly provide any GDP boost,” underscoring the broader challenge facing Beijing as it attempts to support domestic demand.

Infrastructure spending has long served as a cornerstone of China’s economic management toolkit, particularly in response to cyclical downturns. But “projects of sufficient scale are nowadays hard to find,” the analysts observed. Even as policymakers weigh their options, there has been a marked decline in the share of new local government bond issuance earmarked for infrastructure, reflecting both fiscal constraints and diminishing returns on capital investment.

 “China has a public capital stock that already rivals much richer economies in per capita terms,” the authors said. This muted outlook explains why Beijing is belatedly shifting its emphasis toward household consumption as a more sustainable source of growth.