At present, China's economic development faces energy challenge, and the appropriate solution of energy bottleneck is the key to healthy, rapid and sustainable development. China's gross amount of hydraulic resource ranks first in the world; however, because of low level of development, hydraulic resource has a broad development prospect. Now, China's hydropower development is in its peak period. By the end of 2004, the gross installed hydropower capacity of China broke through 100 million kW. From there, it has remained in the top slot worldwide. The vigorous development of hydropower is necessary because of the energy shortage and environmental pollution in China in order to attain sustainable development of China's economy. Abundant hydraulic resource, huge market demands, the strategy of western development and the favorable environment of economic development provide hydropower construction with unprecedented advantages and opportunities. Chins hydropower development aims at an installed hydropower capacity of up to 194 million kW by 2010, accounting for 23.1% of the gross installed power capacity and 35% of hydropower resource. Finally, we present the general condition of Three Gorges project as well as the new mode of hydropower development of Three Gorges Project Corporation, i.e., cascade development. (C) 2009 Published by Elsevier Ltd.