This paper uses a political ecology approach to unpack the experience of local governments and displaced communities in Sarawak, Malaysia, with Chinese dam construction at the Bakun Hydroelectric Dam. Data for the study was collected over 32 months from 2014 to 2016. The field site offered a unique insight into how recipient countries of aid are also often at the receiving end of domestic politics of donor countries. The paper finds that Chinese and Australian enterprises involved in the dam construction and resettlement of indigenous communities displayed different understandings with regards to social and environmental safeguards, resulting in a dysfunctional handover of the project from Australian to Chinese leadership. Consequently, indigenous communities were dispossessed from their land, affecting their ability to successfully reconstruct their livelihoods, with their attempts to do so causing further damage to the environment around the reservoir of the dam.