Will China Find a New Balance Between the Environment and Economic Growth?

Peter Bosshard
Thursday, September 1, 2011

Originally published in China US Focus

The pace at which China is developing its economy is nothing short of breathtaking. Yet the country pays a high price for this development. The train crash near Wenzhou, the oil spill in the Yellow Sea and other recent disasters have demonstrated that the breakneck speed of China's industrialization has put public safety, health and the environment at risk. "China should say no to a blood-stained GDP," China's party newspaper, the People's Daily, warned in a dire commentary on the high-speed train disaster.

The hydropower sector illustrates the risks of China's rapid economic development. Over the past 60 years China has built half the world's large dams. It boasts a higher hydropower capacity than any other country and with the Three Gorges Dam, has built the world's biggest hydropower project. Once Chinese dam builders started going overseas, they quickly rolled up the world market. We are currently aware of more than 250 dam projects with Chinese involvement in 68 countries. Sinohydro, a state-owned enterprise which recently announced a multi-billion dollar listing at the Shanghai stock exchange, says that it controls 50% of the global market for hydropower projects.

While Chinese dam builders have not had a big public disaster since the 1970s, technical, social and environmental problems are simmering. In international comparison Chinese dams have a bad safety record, and several projects came to the brink of collapse after the Sichuan earthquake of 2008. In many projects, thousands of local people have protested against insufficient compensation for their lands and abuses by corrupt local officials. In May 2011, China's highest government body acknowledged that the Three Gorges Dam, which like the high-speed trains had served as a symbol of the country's engineering prowess, was causing "urgent problems" in terms of environmental protection, geological hazards, and relocated communities.

As Chinese dam builders have gone overseas, many host governments have applauded the rapid pace with which they have assessed and implemented projects. But being late-comers to the global market, Chinese companies have taken on many projects in regions that are environmentally fragile and beset by social tensions. And like at home, they have often prioritized technical and economic aspects at the cost of the environment, local communities, and human rights. In recent months and years, UN bodies have expressed concerns over a Chinese dam in Sudan that has caused massive human rights violations and a Chinese funded-dam in Ethiopia that would devastate a unique World Heritage Site.

A new conflict over a Chinese dam project has recently flared up in Burma's Kachin state. The China Power Investment Corporation (CPI) plans to build the controversial Myitsone hydropower project on the confluence of the Irrawaddy River. The local Kachin population fears that the project will lead to widespread environmental destruction and only enrich the country's elite. The environmental baseline study which the company commissioned found that "there is no need for such a big dam to be built at the confluence of the Irrawaddy River." Yet CPI is forging ahead with the project. The start of construction has led to military conflicts between the Kachin rebel movement and the Burmese army, and has already displaced 30,000 people.

The Chinese government has stated clearly that it wants its companies and financiers to be socially and environmentally responsible actors. Since 2006, it has issued several guidelines urging Chinese overseas investors and contractors to respect the rights of local communities, workers, and the environment. Sinohydro, the world's biggest hydropower company, has recognized that state-owned enterprises are the face of China's soft power in foreign countries. The company has engaged in a dialogue with International Rivers since 2009, and has just drafted an environmental policy which reflects and at times goes beyond generally acknowledged international standards.

I have been personally involved in the dialogue with members of Sinohydro's management, and have been impressed by their openness and interest in civil society concerns. We believe that the company's environmental policy could set a model for Chinese and Western dam builders, and will continue to bring in international best practice examples and the concerns of local communities. But we are also aware that implementing a strong and effective policy presents a huge challenge. Hydropower can be an important source of electricity. But dams put freshwater ecosystems, which according to the World Conservation Union are the world's most endangered ecosystems, at risk. And as the Myitsone project illustrates, they often exacerbate conflicts with local communities over scarce land and water resources.

The recent railway disaster and oil spills are stark warning signs about the risks of our narrow focus on economic growth. We hope that Chinese - and Western - companies will take these warnings seriously. We all need infrastructure development, but not at the cost of public health, safety and the environment.

Peter Bosshard is the policy director of International Rivers, a non-profit organization that protects rivers and defend the rights of communities that depend on them.