China is setting up a company to raise money from foreign as well as domestic investors for its controversial Three Gorges dam, the country's state-owned media has reported.

The China Yangtze Electric Corporation was formed on 29 September, according to the China Daily, with the aim of selling shares on the Shanghai market next year.

With listings in Hong Kong and elsewhere to follow, the paper said, there will be a continuous flow of public offerings till 2009 to pay for the 26 huge electric generators the dam will require.

To attract the needed investment, the paper said, half of net profits will go to dividends for investors.

The dam is costing a total of about $27bn (�17.4), and is expected to end up creating an artificial lake 600km long and about 200 metres deep.

A matter of pride

The project - intended not only to supply huge quantities of electricity but to alleviate China's huge flooding problems - has already attracted controversy for the scale of the disruption it is causing, and the potential for environmental damage.

After years as the favoured public works project of international donors, dam-building has fallen out of favour in recent years which could hit the chances of landing the much-needed investment.

But even the legacy of massive, internationally-funded projects such as India's Narmada Dam and Lesotho's Highlands Water Project are nowhere near the scale of the Three Gorges initiative.

Creating a dam across the Yangtze has become a matter of public pride for China's government, and so far more than a million people have been uprooted to make way for it.