Friday, August 10, 2012

Dam shows flaws in China's economic model

[Apologies for cross-posting]

Dam shows flaws in China's economic model
by Rob Schmitz
Marketplace (American Public Media)
August 9, 2012

The Yangtze River, near the town of Luohuang. This section of the river
belongs to a nature reserve created to protect hundreds of species of
fish, including the Chinese Paddlefish. When built, the Xiaonanhai Dam
will destroy the reserve, flooding it, creating an enormous reservoir.
At around five billion dollars, the dam is one of Chongqing's largest
investment projects. Critics say Bo Xilai championed the project to help
the city acheieve historic GDP growth numbers, thereby securing himself
a spot in China's top leadership.

Kai Ryssdal: China's trial of the century was over today almost as
quickly as it started. Seven hours beginning to end for the wife of
disgraced politician Bo Xilai. She's accused of murdering a British

Bo Xilai himself, once a hugely powerful party chief in the southwestern
city of Chongqing, was cashiered in April for violations of discipline,
the party said. His legacy lives on, though, through the political
machine he built. And a lot of actual things he built.

Marketplace's Rob Schmitz explains.

Rob Schmitz: Scientists say the Chinese Paddlefish has lived on Earth
for more than a hundred million years. It survived an asteroid impact
thought to have killed off the dinosaurs. It lived through the Ice Age.
Nothing, it seemed, could kill this animal.

But then along came China's Communist Party. It built enormous dams on
the Yangtze River, cutting off the paddlefish's migratory path, making
it nearly impossible for the fish to reproduce.

The last Chinese paddlefish was seen here on this nature reserve, on the
upper reaches of the Yangtze six years ago. Scientist Yang Bo studies
the river for the Nature Conservancy.

Yang Bo: If we worked harder to protect the fish, we might be able to
restore its habitat. But if this new dam is built, we won't have a chance.

She's talking about the Xiaonanhai Dam. The dam was Bo Xilai's pet
project. But now, Bo's gone. Still, the government's going ahead with
the dam.

And that angers Weng Lida. Weng is the former head of the government
bureau charged with protecting the Yangtze. He first heard about the
project when Bo Xilai sent a team to try and sell him on the idea.

Weng Lida: Economically, the project made no sense. They wanted billions
for a dam that would generate relatively little electricity. Then I
thought the dam might help with irrigation, but that didn't make sense

Weng was convinced Bo Xilai wanted to build this dam for only one reason.

Weng: This is all about GDP. This will cost five billion dollars to
build. It's one of the biggest investments in the history of Chongqing.
Bo wanted the best GDP growth numbers in China'he wanted to make sure
growth stayed over 14 percent annually.

Bo got what he wanted -- the investment secured for the Xiaonanhai dam
helped catapult Chongqing's GDP growth to a whopping 16.4 percent last year.

Patrick Chovanec: For a long time now, the main way to get ahead as a
local official in China was to produce high levels of growth and hit or
exceed GDP targets.

Patrick Chovanec is a professor at Tsinghua University's school of
economics and management. He says Bo helped fund Chongqing's investment
boom by cracking down hard what he labeled the mafia, seizing their
assets, then using them as collateral to borrow money from state banks.
According to former government official Weng Lida, Bo's underlings
bribed a colleague of his to write a favorable report on the dam's
environmental impact. And when China's Ministry of Agriculture raised
objections to the dam, Weng's friends there told him Bo went straight to
the top of the ministry, exerting enough pressure to change their minds.

But Bo's way of operating was hardly unique among China's government
officials, says Patrick Chovanec.

Chovanec: The party is on dangerous ground in any of the charges they
level against Bo, whether it be the corruption or whether it be wasteful
economic policies, because when they point the finger at Bo, they kind
of point the finger at themselves.

The farm of 54-year-old Li Long Rui won't survive when the dam is built.
Government officials have just measured her house to determine how much
she'll be compensated after its flooded. Tens of thousands of people
will have to move out of this area.

Li Long Rui: I have no idea where I'll move. And I'm sure local
officials will steal from the compensation money I'm owed. All of them
are so corrupt! They just don't care about us farmers.

As for the Chinese Paddlefish, its final resting place might be here, in
the quiet halls of the Yangtze River Museum of Aquatic Organisms,
downriver in the city of Wuhan. Scientist Wu Qingjiang says the
Xiaonanhai dam is one of many proposed dams he's worried about. One day
soon, says Wu, the upper Yangtze will cease to be a river -- it'll be a
series of cascading reservoirs leading from one dam to the next.

Wu Qingjiang: In the short term, these dams may help develop the local
economy, but if you take the long view, there are things you can never
recover, like this fish. Once it's gone, it's gone.

One of many species wiped out by one of the worst predators to come
along in millions of years: ambitious government officials with a
seemingly insatiable appetite for GDP growth.

Reporting from Chongqing and Wuhan, I'm Rob Schmitz for Marketplace.

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