February 2014 - Chinafolio

Hydro-Power and Hydro-Hegemony: China’s Prolific Dam-Building

February 16, 2014/in Economics /by ChinaFolio

The History of Hydro-Power in China

Before 1949, only 22 large dams existed in China. A dam study by Oregon State University concluded that since that time, the People’s Republic of China has undergone four waves of dam construction. Socialist agricultural policy between 1949 and 1960 encouraged the construction of many small and medium-sized irrigation dams. In particular, the 1958-1960 Great Leap Forward policy advocated that each of China’s 1,465 counties build at least one water conservation dam. As a result, tens of thousands of dams were built in China, mainly by peasant-led teams with limited equipment, materials, and training. During the period from 1968 to 1980, the pace of dam construction increased. Water projects grew in size and complexity and were progressively constructed for hydropower and flood control. While fewer dams were built between 1980 and 2000, those that were constructed were larger in scale and more technically difficult. The 1978 market reforms allowed China to import foreign technology, know-how and funding, enabling the building of dams that previously had been too difficult and expensive to undertake.

Government measures since 2003 have led to a decentralization of hydropower production. The State Power Corporation was disbanded, its assets were distributed and development rights on China’s main rivers were shared out. While the central government has a majority of stock in each of the companies into which the State Power Corporation was split, in general, the enterprises act quite independently. The “corporatization” of China’s hydropower sector has created a significant increase in domestic and overseas dam building as companies compete to secure existing assets and to develop new hydro-projects.

Today, China runs about half the world’s approximately 45,000 dams that are larger than 15 m in height. In total, the number of dams in China is estimated to exceed 85,000. In 2009, China’s installed hydropower was calculated to be approximately 200,000 MW, representing about 17% of China’s total electricity power. According to recent reports, of the 37 GW hydro-power capacity added worldwide in 2014, a full 22 GW, nearly 60%, was added in China alone, dwarfing developments in other nations (the five largest contributors behind China added a combined 8.7 GW). This has brought China’s hydropower capacity up to 27% of the world total. China continues to set high goals for itself, with China’s National Energy Agency planning to increase China’s hydropower capacity to approximately 380,000 MW by 2020. Huge hydropower cascades have been proposed and are being constructed on some of China’s remaining pristine river basin systems including the Lancang, (upper Mekong), the Nu (Salween) and upstream of the Three Gorges Dam on the Yangtze. It is estimated that China has relocated a total of almost 23 million citizens since 1949 to make way for its water projects.

The Three Gorges Dam

Large dams are enormous interventions into highly complex ecosystems. Their impact can be felt thousands of kilometers away and often occur many years after construction has been completed. It is impossible to anticipate and mitigate all the social and environmental impacts that such projects can cause. The Three Gorges Dam provides a good indication of the challenges that such large dams pose.

Originally conceived by Chairman Mao and supported by Zhou Enlai, the Three Gorges Dam, and its related infrastructure, is the largest water project in the world. It stretches approximately 2km across the Yangtze River, which flows 6,418 km eastward from the Tibetan glaciers through China’s southwest, central, and eastern regions before eventually emptying in the East China Sea at Shanghai. The Three Gorges Dam reaches nearly 200m in height and has created a reservoir 600km long with a storage capacity approaching 40 billion m³. Three Gorges generates approximately 22,000 MW of electricity, equivalent to the burning of 50 million tons of coal annually, compared with Hoover Dam, for instance, that has an installed capacity of only 2080 MW. It was built at an estimated cost of $27 billion, although if hidden costs are taken into account, some appraise the dam’s actual cost to be in excess of $60 billion. Hidden costs include losses incurred as a result of the reduction in commercial fishery production, the cost of landslides caused by frequent fluctuations in water levels and the further population resettlement that these landslides are likely to require, the costs of water pollution as raw sewage and fertilizer run-off collect in the Three Gorges Reservoir instead of being flushed downstream, the shrinking of the Yangtze river estuary, and the weakening of downstream dikes caused by the dam’s faster than anticipated water discharge. Besides generating emission-free energy, the Three Gorges Dam was built to control flooding, to improve water resource utilization and river navigation. Access to the major port of Chongqing, for instance, which receives 90% of its goods by water, has improved markedly even though it is located more than 600 km upstream of the dam. The Three Gorges’ lock system is one of the world’s largest and has also helped to increase the amount of cargo able to move into the river’s upper reaches.

Despite these real benefits, the Three Gorges Dam has also generated significant problems. Most important of these has been the disruption of the Yangtze’s ecosystem. When the river flowed naturally, it helped to cleanse industrial pollution. It also traditionally transported large sediment loads from the river’s upper reaches to the East China Sea. The Three Gorges Dam has significantly decreased downstream sediment transport, changing the river’s chemical balance, temperature, and flow. This in turn is impacting fish habitats. In addition to changing the river’s ecological characteristics, the dam is also blocking fish migration, impacting access to spawning grounds; it also may have contributed to the extinction of the Yangtze river dolphin. Between 2003 and 2005, annual fish harvests from below the dam were 50% to 70% below previous baselines; larva and eggs levels have dropped off even more sharply. Although pollution and other factors were already causing a reduction in fish stocks before the dam was constructed, the Three Gorges accelerated the trend.

The river’s reduced silt load has also deprived downstream agricultural land and fisheries of nutrients. Additionally, because less silt is reaching the river’s mouth, approximately 980 acres of coastal wetlands are disappearing each year. This has allowed sea water to intrude further upriver, affecting coastal agricultural and drinking water. Silt buildup within the reservoir is also impacting its overall storage capacity, causing higher volumes of water to be released from the dam, stressing downstream levees.

Landslides around the Three Gorges Reservoir have also been a greater problem than was first expected. The fluctuating water levels of reservoir have weakened hundreds of miles of its slopes, triggering massive mudslides. Controlling this erosion is projected to require a further investment of $10 billion or more. In some cases, landslides have produced massive waves as high as 50 meters, causing even more damage to the reservoir’s edges.

Every large dam built in China has led to the resettlement of local people because of China’s high population density along its major rivers. Over 1.2 million people have already been resettled as a result of the Three Gorge’s construction. Originally, residents were to be shifted to higher ground nearby, given new homes and new jobs. Yet, greater than anticipated erosion and landslides made large uphill areas unsuitable for building, so the displaced were eventually resettled to 11 different provinces. In late 2007, it was announced that another 4 million people – a number equivalent to the entire population of Scotland are likely to be relocated from the Three Gorges Reservoir area in the next 10 to 15 years. Officials dispute that these are related to the reservoir’s landslides and ecological degradation, arguing instead that they are part of the national experiment to ease regional overpopulation and to provide greater opportunities for industrial development.

Many scholars are now finding that people displaced due to construction projects face the long-term risk of continued food insecurity, lack of access to good arable land, joblessness, and social marginalization. Displaced women are often more severely affected than men. Taking farmland from the host population to give to the resettled groups has also often caused tensions and conflict between the two groups. Studies indicate that early resettlement efforts at the Three Gorges have indeed led to diminished living standards for many of the displaced. Local government corruption has aggravated resettlement challenges as 12% of the resettlement funds were estimated to be embezzled; hundreds of local officials have now been imprisoned.

In addition to the social costs, many now believe that large dam reservoirs can also cause seismic events as their weight can place unsustainable pressure on local faults. The Three Gorges Dam sits on two major fault lines, and scientists have acknowledged that seismic activity has increased slightly since the reservoir first started impounding water. Earthquakes can also damage a dam’s structure. Many of the new hydro-projects outlined in 12th Five-Year Plan are to be constructed in China’s mountainous southwestern region, which is crossed by numerous active fault lines. The tectonic movement in the three parallel Rivers area of the Nu, Upper Mekong and Upper Yangtze is one of the strongest in the world, for instance, yet China is planning to erect a cascade of dams in these areas. Research in the Chinese Journal of Geology and Seismology has recommended that further study be undertaken to determine the role that dam reservoirs play in triggering quake activity.

Environmental Movement Impacts Hydro-Power in China

The Chinese government has tried to address some of the problems associated with dams by improving the legislation which regulates the industry. While not always enforced, recent legislation has required more stringent procedures for environmental and social impacts assessment. A September 2003 law, for example, obliges companies planning projects with significant environmental impacts to conduct environmental impact assessments, and to have the assessments approved by the appropriate Environmental Bureau or the Ministry of Environmental Protection. Additionally, public participation in environmental impact assessment is increasingly encouraged. 2008 legislation has laid-out basic instructions on methods for public disclosure of environmental impact assessments, when to involve the public in the environmental impact assessment process, and who should be included in public participation. Indeed, in 2004 for instance, criticism from environmentalists, the public and the international media at least temporarily halted the development of a 13-dam cascade planned for the Nu River in Yunnan province, one of China’s last free flowing rivers. Laws passed in 2006 made efforts to better protect those displaced by dam construction by setting out appropriate land compensation, requiring that displaced people be provided with a level of livelihood similar to or greater than that which they had prior to the dam being built, and that resettlement plans must include economic development strategies as opposed to simply providing one-off monetary compensation.

Damming of Trans-boundary Rivers – Hydro-Hegemony

Many of China’s new planned hydro-engineering projects are on trans-boundary rivers, including the Mekong, Salween or Nu, Brahmaputra, and Amur. On the Brahmaputra River, for instance, a series of five dams is planned to be built close to disputed territory between China and India which will impact India and Bangladesh downstream, causing concern that China may divert the Brahmaputra’s water for its own needs. Many of the planned dams on trans-boundary rivers are being designed as cascades – one dam after another – or as mega-dams – with walls of 100 meters or higher-both of which have a greater impact on a river’s ecology. One of the new dams approved for the Brahmaputra, for instance, is to be twice the size of the Three Gorges Dam and situated almost on the contested border with India. Overall, about a third of China’s geography is within an international river basin, and China shares 18 rivers with its neighbors, many of which originate in China. Indeed, the Autonomous Province of Tibet provides China with access to some of the best untapped hydropower in the world as does its Yunnan province, often termed China’s hydro-power storehouse. China is acting as “hydro-hegemon” regarding its shared rivers as it is damming without the support and partnership of its neighbors, and at times in outright opposition to their wishes. But it is not just the unilateralism of its damming on international headwaters that upsets downstream countries; it is also the opacity around which it builds and runs its dams. China does not readily share environmental or technical information with its neighbors when building the dams nor, many feel, does it give real weight in its decision making as to how its dams will impact river ecology downstream. Indeed, many of China’s international river dams will provide it with the physical ability to change the hydrogeology of the rivers it is damming, thus creating new hydro-strategic and hydro-political realities, and thus allowing it to dictate the status quo of water allocation. By controlling large parts of Asia’s water tap, in an area where per capita freshwater availability is less than half the global average, China is acquiring tremendous leverage over its neighbors.

Yet, China considers developing large-scale hydropower to be critical to meeting its future energy needs and thus its national security. The Chinese government has thus worked to keep these resources under its control, and has been unwilling to sign any comprehensive water sharing agreement with downstream riparian nations or to join any river basin associations such as the Mekong River Commission, which was established in 1995 “to promote and coordinate sustainable management and development of water and related resources for the countries’ mutual benefit and the people’s well-being.” It is also one of only three countries that voted against the 1997 UN Convention on the Law of Non-Navigational Watercourses which lays down rules on the shared resources of international watercourses. Additionally, China has been reticent to share information on water levels and flows with its downstream neighbors once its dams are operational. China is now impounding water for the large reservoir behind the Xiaowan dam on the upper Mekong, for instance, which some believe exacerbated 2010 drought conditions downstream. Only after the drought became severe, and China came under significant pressure from the Mekong River Commission, did it start to provide information on daily water flows from its dam cascade.

China has tried to offset complaints and the potential creation of anti-Chinese alliances by its downstream neighbors by using trade and development incentives – developing the Southeast Asian electricity grid and building sewage and road infrastructure in Cambodia as examples – to weaken their ability to challenge China’s dam-building activities, it also engages in a public discourse that not only advocates the importance of hydropower to its national security but emphasizes exclusively the benefits of the dams without considering how they will disrupt downstream ecosystems and water access. Specifically, it talks about flood control, reduction of Chinese CO2 emissions, and the benefits of improved navigation and water flow during the dry season. In many cases, it is also helping to fund and construct dams downriver in places such as Vietnam, Laos, Myanmar, and Cambodia. Their own independent construction of dams with Chinese financing has weakened downstream riparian neighbors’ ability to protest the ecological destruction that China’s upstream dams are causing.

The Lancang Cascade

The Lancang Cascade is an example of China’s dam building on trans-boundary water. In total, China has built eleven dams on Upper Mekong (called Lancang in China). The Mekong River flows 4,800 km from the Tibetan plateau, across China’s Yunnan province, through Myanmar, Thailand, Laos, Cambodia and Vietnam, before pouring into the South China Sea. The Lancang comprises only 16% of the Mekong’s total discharge as measured in the delta, yet it accounts for 100% of the flow at the Laos border, 45% of Cambodia’s average flow in the dry season, and originates 50% of the river’s total sediment. The upper basin is characterized by deep gorges, with more than 80% of the drop in elevation occurring in Yunnan province. Indeed, Yunnan and Laos have the greatest hydropower potential in the basin. The lower basin is characterized by plains and deltas which support large-scale irrigation, fishing, and transportation. The Mekong is vital to the food, water supplies and transportation of over 70 million inhabitants in the region. An estimated 8 out of 10 people within the basin depend on the Mekong River for subsistence, either in terms of fish catch or agriculture, with at least 50% of Cambodia’s animal protein consumption coming from Mekong fish and the Mekong Delta supplying waters for more than 50% of the agricultural component of Vietnam’s GDP.

The Lancang cascade is part of China’s “Develop the West” program. Initial plans for the Lancang cascade were developed in the 1980s, before Yunnan opened to foreign trade, and when China’s political relations with its lower Mekong neighbors were not as robust as they are today. China espouses that the Lancang cascade will benefit its lower riparian neighbors by providing flood control in the wet season, increasing water supply in the dry season, improving irrigation and navigation, and reducing overall carbon emissions.

Yet, as seen with the Three Gorges Dam, large hydro-power projects change the hydrology of a river. Of key concern for the Mekong is whether the dams will negatively impact the hydrological dynamics of the Mekong’s “flood pulse” resulting from the river’s seasonal flooding triggered by the annual monsoons. Diminishing the flood pulse could result in declines in biodiversity and volumes of fisheries by altering spawning and migration cues could affect its transfer of nutrients and could limit the drift of eggs larvae and juveniles to the floodplain habitats. It could also impact rice harvests as 80% of rice production in the lower basin depends on water, silt, and nutrients from Mekong flooding. It might also cause increased salinization as seasonal flooding flushes delta areas, constraining sea water intrusion. The countries downstream are also concerned that the effective powering of their own dams will be dependent on China to discharge enough water. Impacts to water levels and fisheries have already been recorded in the lower Mekong basin which is one of the world’s biggest sources of fish. Indeed, as water levels reached 50-year lows in 2010 in the Mekong River Basin, China’s dam building along the upper Mekong was blamed as a significant contributor to the drought.

More recently, a 2020 study conducted by Eyes on Earth Inc. with funding by the US State Department’s Lower Mekong Initiative reported that the 11 Chinese dams on the upper portion of the Mekong River captured almost all the river’s flow in 2019, blocking it from reaching communities and ecoystems downstream in Vietnam, Cambodia, Thailand and Laos. The study gathered its data both through physical river gauges, and by analyzing 28 years of satellite data. This analysis illustrated that China’s portion of the Mekong saw above average snow melt and rainfall in 2019. Over the same timeframe, water levels downstream on the Mekong near the Thai-Lao border where often approximately 3 m below normal. It is estimated that 11 dams hold as much water as the Chesapeake Bay in the United States, and over the last 30 years, China’s Mekong dams have held back more water than they have released. The study argued that this water compounding has contributed to a record-breaking drought that still plagues the region and puts in jeopardy the food supplies and livelihoods of the 70 million people who rely in the river. It is hoped that this study will provide Cambodia, Laos, Vietnam and Thailand with data with which it can more effectively negotiate with the Chinese regarding their dam and water management.

By compounding water at such levels, and concurrently causing drought in downstream countries, China is demonstrating that it views the water originating on Chinese soil as a sovereign resource rather than a shared resource. Some Chinese stakeholders have expressed the opinion that water originating in China should be for Chinese use first before any is released downstream. There is also fear that China’s compounded water may be transferred for domestic uses instead of eventually being released downstream. Although they have not been executed, China does have long standing plans to redirect approximately 200,000,000,000 m³ of water annually from the upstream sections of six rivers in southwestern China including the Lancang/Mekong, the Yarlung Zangbo/Brahmaputra, the Salween/Nu to the Yangtze and Yellow Rivers. These plans may become more enticing as Himalayan glaciers rapidly melt. It may be China’s point of view that it wants to capture this water runoff for future domestic use before it leaves Chinese territory.

Building Dams Abroad

In addition to damming trans-boundary rivers, China has also stepped up its dam building internationally. As China has absorbed and copied complex hydro-engineering technology initially supplied by the West during the 1980s and 1990s, it is now able to export its own domestically produced turbines, generators and other hydro-equipment to countries abroad, along with its dam building expertise. These exports are supported by a set of schemes known as the “Going Out” strategy introduced in 2001. This strategy encourages investments, exports and subcontracting in overseas engineering projects. Specifically, the government has aided China’s hydro-engineering companies with country-specific research, financial subsidies, and cheap credit. These advantages have helped Chinese companies to position themselves as low-cost competitors. This cost advantage has also been aided by the fact that Chinese construction companies often import cheap, highly productive labor from home to staff all or at least part of their workforce. Their extensive hydro-engineering experience has also allowed them to gain real efficiencies not shared by their competitors. As a result, in 2012, it was estimated that China was involved in more than 300 dam projects in 66 different countries, including the construction of 19 of the world’s 24 largest hydropower stations.

It is not uncommon for these international hydro-engineering projects to help support Chinese strategic interests. Because of its relative isolation from international markets until the early 1980s, China has been late to develop international sources of raw materials, particularly oil, timber and mineral resources. Yet, its position as “the world’s factory” has meant that its demand for natural resources has significantly increased over recent decades. As a result, China has implemented a strategy of retrieving resource deposits which had not heretofore been developed because they have been deemed insignificant in size, geographically remote or politically risky. In many cases, accessing these raw materials has obliged China to invest in secondary infrastructure such as pipelines, roads, railways, dams, power plants and transmission lines. For instance, the Belinga Dam in Gabon is being constructed by China to power a Chinese-built and financed iron ore mine whose output is destined almost exclusively for China’s construction industry. The dam is located in the Invindo National Park and was planned by China with no public environmental impact statement. Myanmar recently decided to halt the massive China-backed the Myitsone Dam project, which has been opposed by green groups and opposition parties because of its significant environmental and social impacts. The dam was to generate some 6000 MW of power, most of which was to be exported to China, while creating a reservoir the size of Singapore with the depth of nearly a 70-story building, displacing tens of thousands of people.

China’s flurry of rapid international dam building has been driven in large part by its ability to self-finance its projects. This has allowed it to fast-track projects that the World Bank and the European Investment Bank, for instance, have been less quick to consider because of their environmental and social risks. China’s Exim Bank, the official export credit agency of the Chinese government, has delivered vital funding for many controversial large dams, including the Merowe Dam in Sudan, which resulted in a ruinous deterioration of living conditions among displaced people. The state-owned China Export and Credit Insurance Corporation, the China Development Bank, and the China-Africa Development Fund are all also increasingly involved in financing energy projects overseas. In some cases, hydro-engineering companies provide their own financing to their international customers. Sino Hydro, for example, a large state-owned company involved in at least 42 major dam projects, often invests in many of the projects it builds as does China’s International Water and Electric Corporation, China’s National Heavy Machinery Corporation and China Southern Power Grid. For the period 2010 to 2012, Sino Hydro directed over $1 billion towards dam-building and related projects in Zambia. In 2014, the total value of contracted projects in Africa was estimated at $70.8 billion. This self-financing has put increased pressure on Western financial institutions and construction companies to also circumvent internationally recognized – but unenforced – social and environmental standards when designing and building infrastructure abroad, so that they can compete with Chinese banks and construction companies.

China remains wary of Western-dominated environmental norms circumscribing its investment and construction activities abroad. China does not accept any country imposing on it their values, social systems or ideology, nor, as stated in its ‘principle of non-interference in the internal affairs of another country’, does it feel that it should impose its value systems on other countries. China has also defended its approach to overseas investments by insisting that developing countries should not operate at the same standards as developed nations; developed countries also polluted first and then cleaned up after as its economy and technology developed. China has argued that it is unwilling to impose environmental policies on foreign countries which might slow their growth.

Yet, recently there is some evidence that China’s leaders have started to reassess the long-term costs that can come with a no-strings-attached approached to construction overseas; reckless practices, in some cases, have prevented Chinese companies from growing business internationally. The ecological destruction that some of China’s dams have wrought have aggravated anti-Chinese sentiment at several sites in Asia, Africa and Latin America. For instance, in 2006 violent protests broke out at the $2 billion dollar Merowe Dam in Sudan resulting in three dead and dozens injured. Ultimately 15,000 people were displaced, often forcibly, by the reservoir. Protests renewed in 2011 when 1000 people staged a sit-in to protests the government’s failure to compensate them as promised.

China’s frequent policy of employing a Chinese workforce to build dams and other projects abroad reinforces the perception that it is engaged in exploitative practices. To counter this criticism, in 2006, the China’s State Council issued nine principles which should guide the work of firms working abroad. These principles included safeguarding environmental protection, protecting the livelihoods of local communities and peoples, obeying host laws and regulations, and employing local workers in a friendly and fair manner. The principles, while lacking specificity as to who should regulate overseas construction companies, and as to what domestic regulatory tools should be applied to Chinese companies operating overseas, do indicate the Chinese leadership’s desire to avoid future high-profile disasters such as those occurring around the Merowe dam in Sudan. However, without specific regulatory control or penalties for breach of standards, these principles remain mostly theoretical. Some Chinese companies have begun to establish their own environmental policies; China’s Exim Bank and China’s Development Bank, for example, both have environmental policies which are to guide their lending practices, but again these policies lack detail, and do not appear to be well enforced.

Trends

At present, 3,700 dams with greater than 1 MW capacity are currently planned (83%) or under construction (17%). These projects are spread across several continents, but focused mainly in Brazil, Argentina, Central Africa, and China. Even if all these dams were constructed and realized their anticipated electric output, China would remain the world’s hydropower hegemon with an annual potential of nearly 1.8 million GWh (gigawatt-hours). While China’s position in the hydroelectric field may not be challenged in the coming years, its share within that sector is expected to diminish from 31% of world hydropower produced to around 25%.

China prioritizes the continued development of China’s hydro-power capacity to maintain its lead in production. Indeed, China’s National Energy Agency plans to increase China’s installed hydropower from approximately 200,000 MW to 380,000 MW by 2020. While greater efforts will certainly be made to better resettle those displaced by dams in the coming decades, environmental concerns regarding the impacts of China’s large hydro-engineering projects are unlikely to stop their future construction, particularly given the corporatization and increasing power of China’s hydro-power industry.

China’s construction on trans-boundary rivers is also likely to continue even in the face of growing international concern. China will continue to follow a “carrot” strategy to blunt the criticism of these dams, providing downstream countries with infrastructure and other needs where possible in order to get them on-side with China’s actions. China has the construction ability and the finance to proceed with the construction of many of these dams quickly. There is some argument that China plans to get the dams in place before the international community can rally effective support to pressure China to reconsider its actions.

The speed of China’s dam-building has helped many of its projects, both domestic and national, bypass international environmental standards and impact studies. Though hydropower is not an exceptionally high-emission source of energy in the long run, it has been shown to be rather carbon-intensive during initial phases. In 2014, the Intergovernmental Panel on Climate Change stated that short-term emissions from damming and dam-related activity might be ten times the emissions that could have been saved if governments reduced fossil fuel usage via other means. The short run emissions are largely a result of the large reservoirs that form behind newly constructed dams. As these young bodies of water undergo various hydrological changes, they often emit larger quantities of greenhouse gases.

Over many years, however, total hydropower-associated emissions are nearly 30 times lower than coal, which is currently China’s most dominant energy source. In 2013, coal accounted for 73.8% of China’s total 5,396 TWh generated, while hydropower ranked second with a 16.9% energy share. Despite the prevalence of coal as an energy source, coal usage decreased 1.2% through October 2014, and this trend is likely to continue as northern China feels the strain of dwindling local water sources. Coal mining and processing requires an extraordinary amount of water that China can no longer afford to divert, given the drinking water demand of its citizens in northern urban centers like Beijing and Tianjin. If anything, the decline of coal will lead to an increase in the dominance of hydropower, which is already well-established in China. Dams may well supplant coal entirely and become the primary source of Chinese energy.

In July 2014, China reaffirmed its commitment to pursue further hydroelectric projects on the Jinsha River (the upper Yangtze), Yalong River, Dadu River, and the Lancang Cascade. It will also continue to aggressively pursue the international dam market, both to meet its own energy needs abroad and to create renewable, clean energy infrastructure for other countries. China’s commitment to Africa remains steadfast, with water conservancy and electric power as two of four key focus areas (the other two being communications and construction of ports, bridges, and railways). With these developments and even more plans in place, China is quickly becoming the largest, most experienced and most competitive dam builder in the world.

References

China’s Challenging Environment

February 16, 2014/in Economics, Society /by ChinaFolio

Introduction

The state of Chinese environment today must be placed in the context of the extraordinary development that it has accomplished and of the continuing challenges it will face in the upcoming decades. Since 1981, China has lifted approximately 500 million people out of absolute poverty, an unprecedented achievement. Yet, in 2008, 172 million Chinese citizens still lived on less than $1.25 a day and about 400 million earned less than $2 a day. China’s population continues to grow, and is expected to peak at 1.4-1.5 billion people by 2030. Inequality in China has increased significantly both within the population, between rural and urban residents, and between different regions within the country. Those Chinese moving into the middle classes are demanding a better diet, modern housing, and the consumer goods which have long been common in the West.

China has raised the per capita income and standard of living of its citizens by providing an export-led, average GDP growth rate of over 8% over the last several decades. Much of that growth was fuelled by high- sulphur coal, with lax environmental regulation. The result has been a massive degradation of China’s environment. In 2006, China surpassed the United States to become the world’s largest source of carbon dioxide emissions. An estimated 70% of China’s rivers and lakes are currently contaminated, and 300 million Chinese people drink tainted water.

In part, China has achieved its unparalleled economic growth since the launch of its 1980 market reform through a policy of greater decentralization. The central government today has less of an ability to impose absolute control over provinces than it had previously. Environmental law has also been slow to develop and has not been aggressively enforced. Moreover, China’s “Century of Humiliation” has caused it to be protective of its sovereignty, and suspicious of foreigners and their environmental agenda. Indeed, China has opposed the monitoring of its greenhouse gas emissions as it views this as excessive intervention in its internal affairs. Partly as a result, China has not been transparent about environmental data. Its citizens, even its scientists, and the international community often lack the information needed to understand the full impact of China’s development on Chinese and international eco-systems. The basis of the Chinese Communist Party’s legitimacy has also shifted during the last three decades. Though it cannot ignore issues that threaten social stability, CCP power is now more dependent on its ability to continually deliver improving living standards than it was previously.

This has led China to follow a “grow now, clean-up later” approach to development. In international negotiations, China has vigorously opposed any binding, monitored agreement to reduce global emissions of greenhouse gases, although more recently it has pledged voluntarily to improve its own energy efficiency relative to economic output. Until recently, China’s calculation has been that short-term mitigation is more costly to the regime than adapting to a changing climate later, particularly given development’s immediate financial, political and social benefits. China’s 12th Five Year Plan seems to marks a shift in this attitude. Unlike previous plans, climate change and energy are featured prominently, and a strong emphasis is placed on targeting a more sustainable average annual GDP growth of 7%. The 12th Five Year Plan also adopts as binding domestic law the voluntary climate pledges China first made before the Copenhagen 2009 United Nations Framework Convention on Climate Change. More recently, in a joint announcement with President Obama in November 2014, Chinese President Xi Jinping announced a target of peaking carbon dioxide emissions around 2030 with a goal of reaching that target earlier, and an intention of increasing the share of energy coming non-fossil fuel sources to 20% by 2030.

That said, China’s 11th Five Year Plan also called for a slower average GDP growth rate of 7.5%, which China significantly exceeded. Ambitious local officials often consider Five Year Plan objectives as targets to be exceeded. GDP growth is a way for provincial officials to compete with rival regions and get promoted. Indeed, historically the performance evaluation system of government officials in China stresses the economic indexes while ignoring environmental protection indexes. This incentivizes local officials to prioritize GDP growth. As environmental protection can hamper GDP growth, environmental protection indexes have previously only constituted a small part of performance evaluation. After the 11th National People’s Congress in March 2011, Premier Wen Jiabao acknowledged this when he noted that GDP-oriented criteria for evaluating performance and government officials was an obstacle to achieving the environmental goals laid out in China’s 12th Five Year Plan. As a result, the central government would work toward adopting new performance evaluation criteria for local governments they gave more weight to the efficiency of economic growth, environmental protection and living standards improvements. Yet it will remain difficult to deter business leaders and officials who are profiting handsomely from rapid development.

Ultimately, many factors will influence China’s environmental policies in coming decades, not all of which are under central government control. Factors which encourage sustained pollution include: the continued need to provide economic growth to ensure political and social stability; the difficulty in implementing national environmental policies at the regional level; the ineffectiveness of MEP (China’s Ministry of Environmental Protection); and general corruption. Factors which are acting to protect the environment include the increasing recognition by Beijing of China’s limited bio-capacity, the increasingly vocal demands of its citizens to protect the environment, China’s significant investments in green technologies, and China’s opportunity to lead the world in green markets. It is still unclear which combination of factors will ultimately have the greatest influence on China’s short, medium and long-term environmental policies, or the state of its environment. That said, there is an undeniable trend toward recognizing the importance of environmental protection in China.

The State of China’s Environment

China’s environmental statistics are grim. In 2009, for instance, China surpassed the US to become the world’s largest energy user. While China’s average per capita emissions remain below those of the US, they have overtaken the global average, and are rising rapidly. Despite efforts by China to improve its energy efficiency, its CO2 emissions from fossil fuels rose by almost 80% during the past decade. The Chinese government recently conceded that only 3 of its 74 major cities met national air quality standards during 2013. Indeed, the Beijing-Tianjin-Hebei area had an annual average levels of PM2.5 – tiny pollutants smaller than 2.5 microns – at 106 micrograms per cubic meter, more than 10 times the World Health Organization’s safety level of 10.

This pollution is affecting countries worldwide, and not just because of the consequences of global warming. An analysis of air in places as disparate as San Francisco and Kyoto found chemical signatures of coal-fired Chinese power plants, smelters and chemical factories. Additionally, China’s water is also both in short supply and highly polluted. Growing urbanization is increasing both China’s air and water pollution and exacerbating its water scarcity since urban dwellers consume three times more water and energy than do rural residents. Moreover, an estimated 70% of China’s rivers and lakes are now polluted. In 2009, 57% of the 7 monitored river basins had pollution levels of I-III, suitable for drinking, swimming, household use, and able to support aquatic life. 24% of the water in China’s rivers had levels of IV-V, water unfit for swimming, but suitable for industrial purpose. 19% had V+, meaning that the water is considered useless, unfit for industry or agriculture. 23% of China’s key lakes and reservoirs had water grades of I-III, 42% IV-V and 35% V+. 2.3% of groundwater in 8 regions was rated I-II, 23.9% was graded III, and 73.8% ranked IV-V.

Stresses to China’s environment will continue to grow in the future. By 2030, three quarters of the 11 gigaton projected increase in energy-related global CO2 emissions is expected to be generated by China. By 2030, an estimated 390 million vehicles are projected to fill China’s roads, an almost 3 fold increase from today. Urban floor space will need to double to accommodate the approximately 350 million additional people moving into cities. At the same time, an expanding number of Chinese will rise into the middle classes, increasing demands on the environment further. Even with its aggressive development of alternative fuels, by 2030, it is still estimated that China will need to burn almost 200 million more tons of coal than in 2005 to provide sufficient heating and electricity for its new urban citizens. Indeed, overall coal-based power generation capacity is projected to triple between 2005 and 2030. Proper desulfurization of coal plants will require sizable capital investments and extensive regulatory monitoring. Urbanization and rising living standards will also increase demand for greater varieties of food. China will need to control desertification, overgrazing, the overuse of fertilizers, and over-logging in order to preserve the productivity of its arable lands. Moreover, managing the growing amount of urban waste will be a major challenge.

China’s Position on International Climate Negotiations

Yet, despite pollution levels which are increasingly having consequences for both China and the world, China aggressively defends its right to develop and thus pollute. In 2007, China’s National Development and Resources Commission reiterated China’s past position that “developed countries should take the lead in reducing greenhouse gas emissions as well as providing financial and technical support to developing countries. The first and overriding priorities of developing countries are sustainable development and poverty eradication.” In other words, as a developing country, China must give priority to economic development over environmental protection. Domestic environmental issues take precedence over global concerns. As developed countries are responsible for the large part of historical degradation, they must limit their emissions first, and pay for and transfer technology to developing states to address their environmental problems. These payments are not loans but compensation for the developed world’s historical environmental damage. Developed countries must also take a lead in the reduction of greenhouse gases, and the implementation of signed agreements. The sovereignty of the country’s national resources must be respected. There should be no linking of aid or the implementation of sanctions to any formal agreement to change environmental practices. Environmental considerations should not be used as a reason to interfere in the international affairs of a developing country, or as a reason to impose trade barriers.

China has expanded its position in recent years by noting that population control is one of the most successful strategies to curb emissions. China argues that given its effective population control since 1970, China should be given credit for this key mitigation effort. Additionally, as China has four times more people than the US, China should have a higher emissions quota. China has also advanced the argument that having a modest but dignified level of well-being – which some reason to be about $7500 annually – is a basic human right which takes priority over environmental concerns. China argues that those below this development should be exempt from any requirement to pay for climate policy which indeed includes a large part of its citizens. China contrast this argument with the fact that the richest 20% of the world use over 75% of global resources and emit 51% of global CO2 emissions to maintain their way of life. The Chinese also point out that the ownership and responsibility for emissions is a nuanced discussion; approximately 33% of China’s domestic 2005 CO2 emissions, for example, resulted from the production of exports, raising the question as to whether consumers also bear responsibility for these emissions because of their purchasing decisions.

To bolster its negotiating position, in the past China has formed an alliance with developing and very poor nations. In 1991, for instance, in advance of United Nations Conference on Environment and Development, China convened a forum attended by 41 developing countries which resulted in a unified negotiating position largely reflective of China’s views. During 1987 negotiations for the Montréal protocol to protect the ozone layer, China joined India and Brazil to insist that without significant financial support and transfers of technology from the international community, neither country would sign the Montréal Protocol on Substances that Deplete the Ozone Layer. This resulted in the establishment of the multilateral fund to offer developing countries assistance in the form of both financial compensation and technological transfers. The international community agreed to establish the fund because China and India’s emissions would cancel out the positive impact of the other signatories if they did not participate. That said, China was quick to sign the 1993 Convention on Biodiversity as it was not a threat to its economic growth. With funding in hand, China has worked to meet its commitments under the Montréal Protocol. For instance, in December 2011, China’s Ministry of Environmental Protection announced its HCFC Phase-out Management Plan (HPMP), a US$270 million project to cut consumption of Hydro chlorofluorocarbons (HCFCs) by 1 January 2015 by 17%. As China is the largest producer, consumer and exporter of HCFCs in the world – more than 70% of global HCFC production, and 50% of total consumption of developing countries – its current campaign is essential for the successful implementation of the Montreal Protocol. The plan is aimed at halting the 11% annual growth in Chinese HCFC production that has occurred in the last three years. Christophe Bahuet, United Nations Development Programme (UNDP) Country Director of China expressed optimism that China would reach its targets. Recently, China’s climate stance alongside developing and very poor countries has shifted. During the 2009 Copenhagen conference, for instance, China joined forces with the large, increasingly wealthy so-called BASIC developing states – Brazil, South Africa, India and China – to refuse binding limitations on greenhouse gas emissions, despite entreaties from extremely vulnerable poor countries, especially small island states, whose very existence is at threat by global warming. To this extent, China is no longer an unqualified defender of the developing world.

Increasingly, China has set forth voluntary, non-binding, and non-verifiable emission reduction targets as it did before Copenhagen, when it stated that it would “endeavour to lower its carbon dioxide emissions per unit of GDP by 40-45% by 2020 compared with the 2005 level; decrease its share of non-fossil fuels and primary energy consumption to about 15% by 2020; increase forest coverage by 40 million hectares, and forest stock by 1.3 billion m³ by 2020 from the 2005 levels.” Likely, China’s willingness to put forward these targets was because they were consistent with policies China was already adopting nationally. Indeed, China has many domestic policies related to climate change – to increase energy efficiency and to use more alternative energy, for example – yet these policies are often driven by objectives such as increased energy security, enhancing technological innovation and arresting desertification instead of outright greenhouse gas mitigation.

The Cost of Environmental Degradation to China

Despite its negotiating position in the international community, domestically, China recognizes that environmental protection is a pressing issue. In 2007, the World Bank assessed that China’s combined health and non-health cost of outdoor air and water pollution to be $100 billion annually conservatively estimated, or 5.8% of the country’s GDP. Four of the ten most polluted cities in the world are in China. The World Bank calculated that up to 400,000 people in China die each year from outdoor air pollution, 30,000 from indoor air pollution, and 60,000 from water pollution. An estimated 40% of all the global deaths linked to air pollution occur in China. This is reflected in greater rates of lung cancer and respiratory system problems. China’s water is also producing higher rates of various health abnormalities including liver and stomach cancer, stunted growth, miscarriages and birth defects. Polluted water is also exacerbating China’s severe water scarcity problems. It is conservatively estimated that urban water scarcity costs China about $14 billion annually in lost industrial output, and rural water scarcity generates an additional $24 billion in annual costs. In 2000, the Ministry of Agriculture related that almost 20% of agricultural and poultry products in major industrial and mining districts are irrigated with contaminated water. On China’s current trajectory, the health costs of air and water pollution could triple by as early as 2020, particularly as China’s population begins to age more rapidly.

Moreover, China’s 2011 “Second National Assessment Report on Climate Change” estimated that global warming will significantly impact China in the coming decades. In particular, the report predicted that China’s grain output could fall by between as much as 20% by 2050, putting greater pressure on food prices, and threatening China’s food security. The report also forecasted that global warming would lead to severe imbalances in China’s water resources within each year, and across the years. By 2050, eight of China’s provinces and provincial status cities could face severe water shortages (meaning less than 500 m³ per resident), and another 10 could face less dire chronic shortages. Additionally, since the 1950s, over 82% of Chinese glaciers which feed many of China’s major rivers have been in a state of retreat. With the report predicting that global temperatures will rise between 2.5 and 4.6°C above the 1961-1990 average, this rate of glacial retreat will increase. The report also estimated that sea levels will rise between 10 to 15 cm in the next 30 years, pressing up against China’s big coastal cities and export zones, making them more vulnerable to typhoons and flood tides unless China invests heavily in new coastal embankments.

Social unrest is also an increasing consequence of environmental degradation. The Chinese government received 750,000 environment-related complaints in 2008, a number that has increased approximately 30 percent annually since 2002. This environment-related social unrest risks threatening central authority. Moreover, it is estimated that by 2025 between 30 and 40 million more people may need to relocate due to environmental degradation. The environmental migrants are on top of the high numbers of Chinese citizens slated to be relocated as the result of China’s aggressive dam building.

Challenges to Implementing Environmental Policy in China

Yet while China recognizes the danger of its increasingly stressed bio-capacity, implementing effective environmental policy remains difficult. Perhaps the greatest challenge to implementing effective environmental policy in China is the sheer number of Chinese citizens still well within poverty levels, and the inequality of wealth distribution throughout the country. Until poverty and inequality eradication have been generally achieved, economic growth will be prioritized. Wu Shunze, Deputy Director General of the Chinese Academy of Environmental Planning noted this when he stated that China estimates its industrialization will be completed by 2030, that its use of resources and energy will peak between 2020 and 2030, and that between 2030 and 2050, China will then begin to see a greater shift toward a service-driven economy, and begin to repair environmental damage. China thus anticipates that until 2030, the relationship between the economy and the environment will be “in contradiction”, and will only become preliminarily “harmonious” by 2030.

Until then, China will look for win-win solutions where its environmental policies improve energy security, reduce production costs, promote job creation, and provide it with technological advantage in the world markets without impeding development at home. China’s belief in its ability to “clean-up later” is founded not just on western experience, but on its millennia old tendency to control and shape nature – uprooting forests, redirecting rivers, filling in swampland, building dams and dykes. Successive Chinese dynastic and now Communist governments have long pursued domination over ecological resources.

China’s growing focus on inequality is an increasingly key factor in its environmental discourse as inequality is potentially an existential threat to the Communist Party’s monopoly of power. As opposed to always approaching China as if it were monolithic, international engagement with China about the environment needs to be across multiple levels. What might be expected of China’s increasingly wealthy urban coasts can be an unreasonable demand for China’s poor western areas. Similarly, it is difficult for Beijing to set uniform, national environmental policy. Internal pollution mitigation will require strategies that address challenges at the global, regional, intraregional, city, small town and village levels. In 2009, President Hu articulated this by arguing that China’s wealthier eastern regions must take the first major step toward emissions mitigation, while poor western regions continue to catch up economically.

Since 1980, China has nevertheless implemented a flurry of environmental regulation. Decentralization after the 1980 market reform means that Beijing’s has increasingly imperfect control over its local governments. This exacerbates the environment’s “Tragedy of the Commons” principle. The problem of discharge into China’s rivers is illustrative. To enhance their competitiveness, each locality has an incentive for its factory to discharge its waste as cheaply (often illegally) as possible, with each factory’s waste seemingly inconsequential in relation to the river as a whole. Ultimately, the accumulation of its and other factories’ waste devastates the river. This effect is compounded by the fact that pollution fines are low and that natural resources are undervalued. Additionally, those most affected by river pollution do not always speak out against pollution when their livelihoods are dependent on the offending industry. While farmers, for instance, might suffer lower crop yields, sick animals, and deteriorating health because of polluted water, their income can nevertheless be reliant on the polluting factory which may be providing family members with jobs, investing in local infrastructure and purchasing farm produce, which in itself might be contaminated.

The ineffectiveness of local environmental protection bureaus compounds the problem. Numerous Chinese agencies are responsible for overseeing environmental protection depending on the pollution problem. These ministries often compete for international and domestic environmental funding. Their poor coordination and delineation of public duties creates conflicts of interest, especially at the local level. Nationally, responsibility for environmental protection in China rests primarily with the Ministry of Environmental Protection (MEP) formerly the State Environmental Protection Agency (SEPA). While elevation to a cabinet level ministry has enhanced its power, MEP still remains a relatively weak voice within China’s government. Historically, environmental funding has been low. China’s Environmental Protection Bureaus (EPBs) monitor environmental conditions at the local level. Despite MEP supervision and the bureaus seemingly large manpower – China’s roughly 2500 EPBs employ some 60,000 people – in general, the EPBs report to local governments for budget and resource support. This gives the local government leverage to protect local interests. A chronic lack of funding also hampers enforcement. Bureaus often have insufficient staff and cars for inspections. Factories are aware of these constraints and use this to their advantage by, for instance, discharging at night. Even when bureaus launch campaigns to close or sanction problematic companies, the companies often relapse into violation or reopen once the campaigns quieten down. Also, fines often cannot be applied to companies across administrative boundaries. Counties and cities have often shifted polluting enterprises near the border with downstream counties, so river discharge is carried quickly into the next province. Pollution fines also partly fund EPB activities. This can lead to perverse incentives where a bureau can encourage the persistence of pollution problems in order to pay its wages.

Courts are also often ineffective and enforcing environmental law. While China has an increasing level of environmental legislation, public awareness of environmental law remains poor. Given the poor availability of environmental data, when cases are brought to court, it is difficult for victims to provide conclusive evidence. Additionally, many polluting companies pay relatively significant levels of local taxes. As most courts are funded and staffed by local governments, there is an incentive to interfere with court proceedings in order to protect polluting companies and the taxes which flow from them. As a result, many environmental court cases are thrown out on the basis of flimsy reasoning.

Corruption is also a factor in China’s environmental degradation. In China, corruption can be seen as bribery and cronyism when developing environmental policy and when promoting harmful environmental practices, embezzlement of environmental funding, and bribery during environmental inspections and issuing of permits. Environmental corruption can also be connected to organized crime, particularly in mineral, timber and wildlife trafficking.

Trends

What is certain is that, even if it were to implement every environmental strategy discussed in China’s 12th Five Year Plan, China’s greenhouse gas emissions will continue to rise. What is uncertain is the level of that increase. Many factors influence the rate of environmental degradation within China, and its contribution to global warming. On the negative side, the decentralization that has occurred as China has transitioned to a market economy means that it has less absolute control over its regions than it did historically, so that enforcing national environmental regulation remains challenging. Moreover, courts and regional Environmental Protection Bureaus are often funded at the local level, reinforcing regional control over the implementation of environmental policy. Currently, most market and political incentives encourage local officials to continue to prioritize rapid economic development. While Beijing has indicated a move toward decoupling promotion from GDP growth, most local party officials will continue to be strongly incentivized by the financial benefits that accrue to their region and to themselves as a result of strong economic performance. Corruption will also continue to undermine environmental protection.

As the Chinese Communist Party’s legitimacy now rests in large part on its ability to provide a rising standard of living for its citizens, China will continue to need strong economic growth to raise its approximately 400 million citizens still living on $2 or less per day out of poverty, and provide them with a “modest dignified level of well-being”. In addition, growing inequality throughout the country is placing greater pressure on CCP leadership to provide opportunity for those regions, mainly in the west, that significantly lagged behind wealthier east coast provinces. While China increasingly speaks of the importance of sustainable development, and although it is increasingly investing in green technologies, it is unlikely that these technologies can come online rapidly enough to offset all the pollution that will be emitted as China works to provide a reasonable standard of living for the bottom third of its population. Additionally, China is racing against the problem of a rapidly aging population, trying not to grow old before it grows rich and before the competitive advantage of its huge inexpensive workforce begins to dissipate.

Given the challenges of China’s decentralization, and the pressures of poverty, inequality and a rapidly aging population, what is most likely is that China will continue to be the world’s largest contributor to greenhouse gas emissions and environmental degradation for at least the next two decades. Yet within this high greenhouse gas emission model, there will be an increasing trend toward bringing on line a rapidly growing level of alternative fuels, green technologies and pro-environmental protection policies such as environmental taxes and cap-and-trade pilot programs. Indeed, by the end of 2030, it is possible that China will be a world leader in many of the green technologies that will be most impactful on protecting our global environment going forward.

In international climate change negotiations, China will continue to refuse to be constrained by internationally imposed targets which can be monitored by outside countries. Yet, China’s growing implementation of environmental technologies at home will allow it to be a much more constructive player in international negotiations in the future. Increasingly, China is likely to hold up its environmental accomplishments at home as an example to other countries; for example, by 2015, China is expected to lead the world in installed hydro, solar, wind, and nuclear capacity. Thus, China’s future in the field of environmental protection will be, paradoxically, both world-leading but also internationally uncooperative.

Rising Income Inequality in China: A Price Worth Paying?

February 16, 2014/in Economics, Society /by ChinaFolio

Introduction

China, a country of continental scale, has experienced inequality in many shapes and forms throughout its 4000-year history. Part of this inequality is regional; attributable to China’s sheer size and the diversity of its geography. Lack of water, arable soil, and good links to transport networks significantly affect an area’s ability to prosper. Areas that suffered from such deficiencies in China 1000 years ago tend to be the same areas that struggle with limited resources today. For instance, China’s southeast, with its abundantwater resources and excellent access to international markets, continues to be one of the wealthiest parts of modern China. China’s western plateaus, sparsely inhabited, with poor arable land and water resources, limited transport and infrastructure systems, remain poorer areas of the country today.

Inequality during the Mao Era

During the Mao era, the Chinese government set income equality across China as an important goal, although it was never fully achieved. Topographical advantage remained determinative, even in the face of economic policies aimed at reducing it. The CCP enforced a hukou family register system, which eliminated the ability of China’s citizens to move about the country, limiting them to the area in which they were born and their family registered. What this meant in practice was that those born in regions that lacked resources, or those born in the countryside, had relatively less wealth than those born in more resource-rich regions or in urban areas. Thus inequality during the Mao era was principally between urban and rural areas, as opposed to between individuals in the same area. Nevertheless, high ranking party officials did enjoy more relative wealth than those who were not part of the Communist Party, yet the lack of consumer goods and isolation from the international economy meant there were not many opportunities for even high-ranking party officials to have conspicuous consumer advantages over rank-and-file citizens. In fact, until the Reform era brought more consumer goods to China, most Chinese citizens merely strived for the four “must-haves”: a bike, a watch, a radio, and a sewing machine.

Inequality in the Reform Era

In 1978, this all began to change with the implementation of the Dengist reforms. Deng explicitly declared that some should be allowed to ”get rich first”, with the implicit understanding that others can get rich later. This was a significant alteration in policy; for a communist government to accept, and even encourage, societal inequality was certainly groundbreaking. As China began to make the transition from planned- to market- economy – a journey that has, by no means, been completed – income inequality increased in measure with its transition towards capitalism. However, the early years of the reforms, at the beginning of the 1980s, were marked by a fall in overall inequality, driven by the loosening of restrictions on rural areas selling their excess produce for profit. This allowed those rural producers of food to close the income gap with their urban counterparts. Chinese official statistics struggle to provide an accurate picture of Chinese incomes today; the wealthy often under report their earnings and the very poor can be underrepresented as their geographical isolation and high illiteracy rates can make them difficult to track. Yet even those official figures that can be produced, which may try to disguise large disparities, have shown income disparity to be increasing. China’s Gini coefficient – the most commonly used measure of inequality under which an entirely equal society would have a coefficient of 0 and one that is entirely unequal would register as 1 – stands today at 0.47. This is considerably above both the World Bank’s ‘critical threshold’ of 0.4 and the US Gini of 0.41, and shows signs of reaching the extreme levels that plague Latin America. This statistic becomes even more alarming when viewed against the levels of inequality at the outset of the economic reforms: in 1980 the Gini coefficient was 0.28. In essence, inequality has risen in China by over 50% in thirty years. While this is in line with the Dengist policy of ‘letting some get rich first’, it is evident that continued increases on anything approaching this scale over the next thirty years would cause difficulties for the CCP both in terms of potential social unrest, something that is already a growing problem, and of its ability to undermine the CCP’s legitimacy base. The CCP has begun to recognize this rhetorically as well as in policy with speeches from Wen Jiabao and Hu Jintao peppered with references to the need to address income divisions.

Regional Inequality

Today, the biggest discrepancy of incomes can be seen between regions. China began its capitalist experimentation in the Pearl Delta region of Guangdong province, where its workers sewed piecework for Hong Kong textile manufacturers. As more and more of China’s GDP began to be generated by international trade, this and other industries spread northwards along its coast. Consequently, China’s east coast is now its most developed area, with income levels at purchasing power parity (PPP) approaching those of countries such as Saudi Arabia or Singapore.

In the first 12 years of economic reform, growth in China’s interior regions was driven by a re-introduction of private markets in the agricultural sector, as well as increased productivity during the ‘green revolution’. This increased productivity allowed peasants to move into rural industry, such as the manufacturing of farming equipment, further driving rural GDP and income growth. Although this did initially cause the income gap between urban and rural areas to fall in the early 1980s, geographical inequality has since been rising and shows little sign of reaching a plateau.

When it comes to inequality between coastal provinces and their poorer inland neighbors, differences in income have been rising ever since the start of the reform era, as the coastal east has benefited from China’s export driven economic growth. Apart from the obvious geographic advantages for trade, coastal provinces have benefited from government initiatives such as favorable tax and financing regimes. As a result, through much of the 1990s, coastal growth rates were three percentage points higher than those of inland regions and China’s coastal provinces remain more affluent than its interior regions. There is, however, some evidence that the phenomenon of coastal GDP growth outpacing the interior is starting to change, as rising wages in coastal areas and the consequent reduction in international competitiveness, has driven some industries inward in search of lower costs. One notable example is Foxconn, the giant consumer electronics manufacturer that produces goods for companies such as Apple and Sony, which has relocated part of its production line to the interior. That said, China’s interior western provinces still have a long way to go. In 2011 Guizhou, China’s poorest province, had a GDP per capita of 16,000 RMB (approx. $2,400), while Tianjin’s was 84,000 RMB (approx. $13,000). The three provincial-level cities in the east – Beijing, Tianjin, and Shanghai – have the largest incomes per capita by some distance, each with a per capita GDP of in excess of 80,000 RMB, while Tibet, Gansu, Yunnan and Guizhou – all in the far west of the country – are all under a quarter of this total.

Although huge differences in income between regions evidently remain, the central government has shown an increased interest in resolving this inequality. In 1999, President Jiang Zemin announced the “Develop the West Program”. As well as addressing ecological and security concerns, the “Develop the West Program” was intended to stimulate development in China’s least prosperous provinces and to soften the blow to China’s interior as China entered the World Trade Organization in 2001. This policy has had reasonable success; in particular, it has encouraged significant infrastructural investment in China’s western provinces. However, though it may have slowed down the rate of increasing inequality between east and west, the pattern has continued throughout this time, leaving those in the west relatively poorer than they ever have been.

Getting Rich First?

Within any one region, individual income inequality is also now evident. Economic development tends to lead to income inequality in every society and China has been no exception. In June 2012 it was reported that the number of dollar-millionaires in China had reached 1.4 million, while the number of billionaires has been placed at between 100 and 600, second only to the US; at the same time there are still 400 million Chinese who live on less than $2 a day, and around 172 million on less than $1.25. Many workers have seen great returns on their education and skill levels; those with higher levels of education, experience, and skills were rewarded with increased incomes. Some were well positioned during privatizations, having party and other connections which allowed them to win contracts or acquire state assets at significantly reduced prices. Studies show that CCP membership is positively correlated with income. A report in 2009 said that around 90% of China’s billionaires are so-called “princelings”, the sons or daughters of leading Communist Party cadres. China does, however, have a long history of entrepreneurship and many Chinese have embraced this tradition. Some were just plain lucky, had a good idea, or were in the right place at the right time. Zhang Yin, for example, rose from humble roots to become China’s first female billionaire. She earned her fortune by buying scrap paper from the US, importing it to China where she turned it into cardboard before selling it back to US manufacturers.

Gender Inequality

While one can point to stories of women such as Zhang Yin as examples of the relative freedoms and opportunities offered to Chinese women, nevertheless there remain real income differences between the sexes even within the same geographical area. Though Mao declared, “women hold up half the sky,” meaning that women were to be freed from the subordinated expectations of dynastic China, and to work as equals with men, this is seen by many not as demonstrative of his opinions surrounding gender equality, but rather his obsession with increasing the Chinese labor force. The male communist worker was still, on average, better compensated than his female compatriot. Yet the income-earning opportunities of women in the Mao era were unimaginably better than those of their ancestors, many of whom were confined to the house, teetering on 3 inch feet. Today, the pay gap between male and female workers shows no signs of decreasing. This is by no means confined to the elder generation; female graduates earn on average 13% less than their male contemporaries. Still, opportunities for women in China are often strong when compared with those of many other countries. For instance, 19% of Chinese companies employ female CEOs, compared with 9% and 5% in the EU and North American markets respectively.

Ethnic Inequality

Another group that has consistently been at China’s lower income levels is China’s ethnic minorities. Part of this inequality may be caused by the fact that most Chinese minorities live in the western fringes of the country which often suffer from water scarcity, short growing seasons, and difficult access to transportation systems and international markets. The minority populations living in these areas often suffer from lower wages and living standards than those who have made their way to the east and the gap between Han and ethnic minorities can, to some extent, be explained in these geographical terms. Still, it is also true that the average Chinese ethnic minority suffers at least some discrimination regardless of where location, and often does not have the same opportunities as the average Han Chinese.

Inequality at what cost?

China has tolerated its growing inequality in order to achieve the rapid rates of economic growth that is has experienced since the 1980s. The CCP’s fear is that once economic growth starts to slow, which grows more likely given the continuing financial and economic challenges of the west, then the unequal distribution of wealth at various levels will cause major social unrest. The Tiananmen Square incident of June 1989 was partly caused by high levels of income inequality and in reaction to high levels of inflation that were squeezing the living standards of the poorest in China. Beijing is wary of the possibility of the reoccurrence of such an event, especially given the recent events taking place in the Middle East in what has come to be known as the ‘Arab Spring’, itself partly driven by dissatisfaction with levels of inequality. Additionally, as the poorest provinces in China are generally those with the highest percentage of ethnic minorities, China fears that their social unrest may exacerbate feelings of resentment towards Beijing and stoke ethnic tensions within society. Violence directed towards Han Chinese has already occurred in several parts of Chin, notably among the Uyghurs of Xinjiang, the Tibetans in Lhasa, and the Hui in Henan.

Chinese intellectuals today debate whether economic growth at all costs should be tolerated. Many propose a more “socialist” or European model of social development, where the state shares some of the responsibility for ensuring that all its citizens reach a basic level of economic prosperity. This prosperity would be significantly aided by the re-creation of China’s health and pension systems, which were often commune-based and largely dismantled when China privatized many of its state-owned industries. Developing its national healthcare and pension systems would also help China shift its economy from being largely export driven to being one that relies on much greater domestic demand. Currently, the average Chinese citizen saves aggressively in anticipation of future healthcare and pension costs that will need to be self-funded. A first attempt at providing a very basic social security was launched in 1999 with China’s creation of the Minimum Living Standard Guarantee Scheme (Dibao) designed to aid those most in need in the form of a very basic welfare package. The income limit for becoming eligible to this however is incredibly low. In urban areas, the average level is just over 200 RMB ($30) per month, while for rural areas it is below 100 RMB ($15) per month.

Future Trends

The persistence of inequality in China today is a thorn in the side of the CCP. Having largely moved away from its communist ideological base, the CCP’s legitimacy is largely based on nationalism and the promise of economic prosperity. China is faced with the double challenge of not only ensuring that its economy continues to grow, but of trying to see that its wealth is shared out as equally as possible. The potential for friction in society – and the threat that might pose to the CCP – is implicitly acknowledged in Hu Jintao’s drive for a ‘harmonious society’, the principle tenet of his ideological musings. It is important to note that despite the rise in relative inequality, the absolute living standards for almost every single Chinese person have increased since the economic reforms were implemented. Since the reform era began, China has lifted around 400 million people out of absolute poverty, an achievement unmatched anywhere in the world and throughout human history. This should not be underestimated even as the problem of relative wealth disparity is, correctly, addressed as a pressing issue.

It is of course impossible for any nation to be completely equal and most developed countries have their own problems with unequal distribution of wealth. China, with its vast size, enormous population, and varied geography, will always struggle with inequality. Inequality persists throughout China. While it is true that the west is poorer than the east, there are pockets of abject poverty even in the richest provinces and rich parts in the poorest areas. From the Communist Party’s perspective, its key task is to prevent income inequality from rising to such levels that widespread social unrest threatens its control of power. As China’s wealth grows, and as it invests large parts of its enormous surplus within its own borders, more government initiatives are expected to be designed to develop the prosperity of provinces and sectors of society that lag behind the rest. Nevertheless, in the short term, income inequality will continue to increase as China’s rapid economic development lifts its population from poverty at varying rates. The mammoth task for the CCP will be to ensure that inequality doesn’t rise at a faster rate than GDP growth. While the living standards of the majority are being raised it is likely that increases in inequality will not prove perilous for the authority of the CCP, especially as much of this inequality is between areas that are thousands of miles apart. The next 30 years will prove very difficult for China to maintain the balance between consistent economic growth and raising the living standards of those at the very bottom of the income ladder, although this can be managed as long as China continues to move towards a domestic demand-led, and not export-driven, economy.

Taiwan: Strait Talking

February 16, 2014/in Politics /by ChinaFolio

Introduction

More than sixty years after the establishment of the People’s Republic of China when Chiang Kai-shek’s nationalists fled to the island, Taiwan remains at the core of domestic and foreign policy decisions for Beijing. Despite enjoying de facto independence, having never been directly ruled by the CCP, Taiwan is considered by Beijing to be an inalienable part of its territory and the goal of ‘reunification’ is one of its highest priorities. This is resisted in Taiwan where most people favor retention of the status quo; that is, neither a declaration of de jure independence – a move that would almost certainly provoke an angry reaction from the mainland – nor a move to accept CCP rule over the island. The issue is a sensitive one in China at both the political and societal levels and any suggestion of support for an independent Taiwan ordinarily sparks heated responses from China, which accuses its protagonists of trying to ‘split’ China. It is a complex, emotional, and seemingly intractable problem.

Chinese Annexation and Japanese Colonialism

Taiwan was formerly known as Formosa in the West

Known as the island of Formosa in its past, Taiwan’s history over the past two hundred years has been complex. The largest island of the Formosa island chain located off the southeastern coast of mainland China, it was originally the home of aborigines and the occasional Chinese migrant, refugee, and pirate. Neither Western nor Asian powers showed any sincere interest in acquiring the island until the late seventeenth century, when China brought Taiwan under its authority in order to quell pirates using the island as a base of operations. China largely left the island untouched until the Qing Dynasty was forced to cede the island to Japan after its loss in the First Sino-Japanese War of 1894-5. Qing subjects were given a two-year grace period to sell their property and move to mainland China if they so wished, but very few Taiwanese saw this as feasible and most remained under Japanese rule. An 1895 effort by pro-Qing Taiwanese officials to challenge impending Japanese rule was quickly put down by Japanese forces.

During Japan’s fifty-year control of Taiwan, the occupying government imposed harsh rule on the island, showing no tolerance of dissent, and limiting lucrative jobs and business contracts to Japanese living on the island. Aboriginals and Chinese were treated as second-class citizens. Despite this harsh rule, the Japanese helped to develop Taiwan’s economy and brought with them technology that was unseen on the Chinese mainland. They also helped to enlarge Taiwan’s railroad and other transportation networks, built a widespread sanitation system, and developed the public school system. Rice and sugarcane production also increased greatly under Japanese occupation. Thus, by the end of the World War II the island of Taiwan was much better off than mainland China. That it was largely saved from the ravages of the Japanese occupation that were meted out on the mainland certainly helped in this, but it is an uncomfortable truth for those on both sides of the strait that Taiwan owed its position of relative economic strength to its former occupiers.

The Republic of China

Japanese rule over Taiwan came to an end after they surrendered to the Allies at the end of World War II in 1945. At this time the approximately 300,000 Japanese living in Taiwan were repatriated back to Japan. After Japan’s surrender Taiwan once again fell formally under Chinese rule, which was by this time under by the Chinese Nationalist Party or Kuomintang (KMT), with China now formally called the Republic of China (ROC). Celebration of the island’s return to Chinese rule was short lived. Tension soon built between the locals on the island and their new government. The source of this tension was two-fold. Firstly the KMT government questioned Taiwanese loyalties after their having been subject to fifty years of Japanese rule. The KMT thus continued Japan’s policy of treating the Taiwanese as second-class citizens. Secondly, as the KMT was fighting a civil war with the Communists in China, they took every resource available on the island to support their war efforts.

These tensions culminated in the 228 Massacre of 1947, so called because it occurred on February 28th. What started off as police harassing an old woman who was peddling cigarettes turned into island-wide riots in which local residents attacked mainland immigrants and their property. KMT leader Chiang Kai-shek and Taiwan governor Chen Yi responded by bringing in military reinforcements to restore order to the island. The result was the execution of as many as 4,000 Taiwanese. The 228 Massacre was the start of the nearly four-decade White Terror in which the KMT established a dictatorship over the island and suppressed any organized dissent.

The Chiang Kai-shek Memorial Monument in modern day Taipei

In 1949, Chiang Kai-shek was forced to flee to Taiwan after Mao Zedong and the Communists took control over all of mainland China and founded the People’s Republic of China (PRC). Eventually, 2 million people, most of them soldiers, KMT party members, intellectuals and business elite where evacuated to Taiwan. These refugees brought with them many national Chinese art treasures, as well as gold in foreign currency reserves. Most people on the island believed this would be the end of the KMT as Mao amassed an invasion force in the Chinese province of Fujian, directly across the Taiwan Strait from the island. In addition, the US, the KMT’s largest provider of funds and material, announced it would take no further steps to support Chiang in his fight against the Communists. It appeared that it was simply a matter of time before the PRC would gain control of the island.

The situation changed quickly in 1950, however, when communist North Korean soldiers crossed the attacked the US ally South Korea. US President Harry Truman, fearing communist attempts to take over all of Asia, reversed his policy on Taiwan and sent the US Naval Seventh Fleet into the Taiwan Strait to protect the island from Chinese invasion. This led to a political and military stalemate that is still basically in effect today. Because of the Cold War, most Western nations and the United Nations regarded Taiwan’s Republic of China as the sole legitimate government of China until the 1970s, when the most nations began switching their recognition to the PRC, a response to a thaw in relations with the US that saw it achieve mutual diplomatic recognition by 1978. Initially, Taiwan held the seat on the United Nations Security Council under its formal name of the Republic of China, recognized as the sole legitimate government of all of China. In November 1971, the seat was transferred to the PRC, since which time Taiwan has had no formal representation at the UN despite some sporadic attempts to achieve this.

Taiwan’s accelerated economic growth since World War II has transformed it from a largely agrarian island into an industrialized, developed society. The IMF categorizes it as an ‘advanced’ economy, and the World Bank considers it to be a ‘high income’ economy. One of the strengths of its economy is its advanced technology industry, which plays a significant role in the global economy. Although most of this manufacturing is now outsourced to mainland China, Taiwanese companies still control the production of a large portion of the world’s consumer electronics.

Political Reform

The Sun Yat-sen Memorial in Taipei

Chiang Kai-shek died in April 1975, just over a year before the death of his old foe, Mao Zedong. Chiang’s son, Chiang Ching-kuo, took over. The younger Chiang slowly instituted political reform, allowing more native Taiwanese to enter into the bureaucracy and tolerating limited dissent. One example of the latter was the Tangwai. While the KMT did not allow any opposition parties to develop before 1987, it did allow for candidates to run for office independently. Thus some independent activists and politicians founded the Tangwai. The Tangwai, whose name literally translates as “outside the party”, was a loose coalition of people whose main commonality was opposition to the KMT’s dictatorship. The KMT did occasionally persecute its members, namely in response to a 1979 protest held in the southern port city of Kaohsiung. Nevertheless, KMT leaders largely tolerated the organization.

The Democratic Progressive Party (DPP), the island’s first enduring opposition party, was founded in 1986, a year before such parties officially became legal. The DPP’s makeup was similar to that of the Tangwai in that members were united predominantly in their opposition to the KMT. In fact, the DPP was made up largely of former KMT members. However, within a few years of its founding, the party had established itself as a pro-Taiwanese independence party that promoted a Taiwanese cultural and national identity.

Chiang Ching-kuo died in 1988 and was replaced by his hand-picked successor Lee Teng-hui, the first native Taiwanese to become ROC president and KMT chairman. Lee continued with Chiang Ching-kuo’s reforms, working within the KMT and with activists to open up more government positions to competitive election. For example, the National Assembly and Legislative Yuan, the government’s two legislative bodies, had their first general elections in the early 1990s, and Taipei, the island’s capital, had its first competitive mayoral elections in 1994, which was won by the DPP candidate Chen Shui-bian.

Taiwan’s current president is the KMT’s Ma Ying-jeou

Taiwan’s democratic reforms continued through the early 1990s and culminated with the island’s first ever direct presidential election, held in 1996. Interestingly, in a world where dictatorial parties tend to get punished in free elections, the KMT’s Lee Teng-hui won what was widely considered to be a fair election. China reacted angrily to the possibility of elections in Taiwan and engaged in military exercises in the Taiwan Strait in a naked attempt to intimidate politicians and voters on the island. The move backfired as it led to the US intervening by sending its aircraft carrier into the area as a warning to the Chinese. The move also appeared to harden both the determination to democratize as well as the opposition to any suggestion of ‘reunification’ with the mainland. Four years later, taking advantage of a split KMT ticket, DPP candidate Chen Shui-bian was elected and succeeded Lee, becoming the first non-KMT president of Taiwan and marking the first change in government brought about by democratic elections anywhere in the Chinese speaking world.

Despite grand hopes that the new ruling party brought with them into office, Chen’s eight years as president were largely disappointing. There were many causes of this disappointment. For example, Chen came to power during a global economic downturn. As Taiwan has an export-based economy, the slump in demand significantly harmed many Taiwanese livelihoods. Additionally, China refused to deal with Chen, declaring him to be a Taiwanese separatist with whom they could not deal. While economic ties between the two sides continued to strengthen, political ties significantly worsened. Another problem lay in people’s expectations of Chen himself. Chen, as president, actually had relatively little power to keep his campaign promises. The power his predecessors enjoyed were largely due to martial law and other temporary revisions the government put in place during the KMT’s dictatorship. As the country instituted democratic reform, many of these presidential powers were taken away and given back to the legislature, where the writers of the constitution originally allocated them. This left Chen mostly powerless to enact some of the reforms he promised. Lastly, many in Chen’s administration, and ultimately Chen himself, were accused of corruption. After Chen’s terms as president ended, he was indicted on charges of bribery and is now in prison serving a 19 year sentence, though he maintains that the trial was politically motivated.

The teahouses of Jiufen

The KMT took back the presidency in 2008 with the election of Ma Ying-jeou, showing the resilience of this once dictatorial party. Ma has moved to improve relations with the mainland, recognizing the futility of antagonizing Beijing and the enormous potential of cross-straits trade, though he has always stopped short of advocating imminent reunification. The KMT remains rhetorically committed to the goal of reunifying with the mainland, though insists that this cannot be under the rule of the CCP. Though this had previously been an unacceptable stance to Beijing it has become the lesser of two evils in contrast to the pro-independence stance taken by many in the DPP. Ma was re-elected in January 2012 with more than 51% of the vote on an impressive turnout of over 74%.

Relations with China

Taiwan’s army is focused almost entirely on one possible aggressor

Despite having a mature and stable government, a thriving economy, and an active civil society, Taiwan’s status in the international community remains in limbo. The reason for this is the position of China. Beijing insistence that Taiwan is a part of China that must eventually come under Beijing’s rule, whether peacefully or by force, remains a stumbling block for Taiwan in many of its dealings with the international community. Though Taiwan has never made a formal declaration of independence, partly because of the KMT’s stance that Taiwan is part of one China but also because of the fear of serious reprisals from Beijing if it did so, Taiwan maintains its de facto independence. In other words, Taiwan is independent for all practical means and purposes. It maintains set geographical boundaries, a government to rule over lands within those boundaries and this government and its state are recognized by its population. The international realm is not so clear. Other states do recognize Taiwan’s passport but most do no conduct formal bilateral relations with the island, although many maintain links in an unofficial capacity. There are 23 states that maintain diplomatic relations with Taipei instead of Beijing, a reduction from 71 in 1969, the most significant among them being Guatemala, the Dominican Republic and the Vatican. A practice of the PRC and Taiwan competing for diplomatic recognition among states seems to have come to an end; according to a document released by Wikileaks, Panama made moves to switch its recognition to the Beijing but was asked to remain with Taipei in order not to cause diplomatic embarrassment at a time when cross-straits relations were improving. Taiwan is therefore not able to enjoy de jure independence, which means it is not independent according to law. This means that Taiwan cannot join many international organizations that require statehood for membership. These organizations include the UN and the Organization for Economic Co-operation and Development (OECD). Additionally, when joining in other international events and organizations, Taiwan must join under some alternate name, such as its official Olympic title of Chinese Taipei.

The US continues to supply F16s to Taiwan, despite objections from China

The status of Taiwan cannot be ignored in any aspect of China’s international relations; it is impossible for any state in the international system to have diplomatic relations with Beijing without recognizing the PRC’s sovereignty over the island. This is especially pronounced in the relationship with the US, and in almost every high level political meeting it is incumbent on the representatives of the US to reiterate their support for the “one-China policy”. However, there is a nuance to this acceptance by the US in that it explicitly opposes any actions or statements that would “unilaterally alter Taiwan’s status”. This applies to both Taiwan and the PRC, meaning that Taiwan has an insurance policy in its relationship with the US that ought to deter China from making the first move in any conflict. The special relationship that exists between the US and Taiwan is at the root of this sensitivity, but it is more serious than a linguistic exercise in diplomacy. The US has, on several occasions, demonstrated its willingness to defend Taiwan should it be subject to an unprovoked attack from the PRC. This was evidenced in the 1996 deployment of warships to the Taiwan Strait in response to PRC missile testing in the region. Additionally, the US has continued to meet its legal obligation to provide Taiwan with defensive arms which provokes strongly worded protests from Beijing on each occasion. Since 1990, according to a US Congressional report, Taiwan has requested major purchases in every calendar year except for 2006 and 2009. One of the most recent purchases, agreed in January 2010, included 114 PAC-3 defense missiles and 60 Black Hawk helicopters in a deal worth almost $6.4 billion; one of the largest ever agreed. In September 2011, the US reached a decision to refurbish Taiwan’s fleet of F-16s, fitting them with AESA radars (a form of stealth technology) but stopping short of approving the sale of new planes, but going far enough to anger China. While there are now some calls among American academics to rethink this alliance, it is unlikely to alter in the near future. The involvement of the US seems to assure that the future will be one of an easy maintenance of the status quo. While far from a perfect a solution, this is probably the best option for all concerned.

China Airlines, Taiwan’s national carrier, now flies direct to the mainland

The period of Chen Shui-bian’s presidency was certainly a low point in cross-straits relations, but the recovery since Ma’s election in 2008 has been impressive and encouraging. Political gestures have been important in this process, most notably the historic visit to the mainland by then-chairman of the KMT, Lien Chan, in 2008. Following Lien’s trip Beijing relaxed rules on Taiwan residents visiting the mainland and on mainlanders visiting Taiwan. The result was a dramatic increase in grassroots exchanges across the strait, with up to 3000 mainland tourists visiting the island every day. Direct flights were permanently established in the same year as Lien’s visit and have expanded consistently ever since, with a total of 558 weekly direct flights between the island and one of 41 cities on the mainland. Taiwanese investment in the mainland is thought to be greater than from any other territory, though the exact figures are obscured by a tendency for the investment to be channeled through tax havens such as the British Virgin Islands. More than one million Taiwan residents – around 5% of the population – now live on the mainland.

Future Trends

Taipei 101 was the tallest building in the world for a time

While maintaining such an unconventional status within the international arena does present some symbolic challenges for the Taiwanese, the situation across the Strait right now remains stable and even mutually-beneficial for both sides. By some measurements, Taiwan is the number one source of FDI into China, providing valuable capital and knowledge from Taiwan’s world-class IT industries. In turn, these economic ties have allowed Taiwanese companies to remain cost-effective even as the island has shifted away from a labor-intensive to a knowledge-intensive economy. These economic ties have also gone some way in tempering Beijing’s saber rattling towards the island. One example of this was seen in 1996 when local officials in Fujian province, an important destination for Taiwanese capital, encouraged Beijing to show restraint during missile tests in the Strait, lest they scare off investors from the island. While CCP leaders say that economic factors would not deter an attack on the island if warranted, the prospect of the flight of Taiwanese capital from China certainly raises the potential cost for any Chinese action.

Although most states in the world continue to pay lip service to China’s ‘one China’ policy, they also maintain informal relations with Taiwan in their day-to-day affairs, particularly in the economic sphere. The US, in particular the US Congress, is Taiwan’s most ardent and powerful supporter. The involvement of the US and the potential for a conflict between to the world’s two greatest powers means that the cost of China acting unilaterally with regard to Taiwan is high, though the complexities of the forces competing for influence in China over this issue mean that it cannot entirely be ruled out. Oddly, one of the most potent sources of political tension in the region – the dispute between China and Japan over the Diaoyu/Senkaku islands – has provided an opportunity for improved relations between China and Taiwan, since both share a rhetorical position on the matter. Nevertheless, the most likely future path for Taiwan and its relationship with the mainland is one of an uneasy maintenance of the status quo; it is in neither side’s interests to act unilaterally and the scope for common ground is too narrow to allow an agreement to be reached in the foreseeable future. Taiwan will not gain the independence that some of its people seek, but it is unlikely to be swallowed whole by China any time soon.

Water in China: A Thirsty Country

February 1, 2014/in Economics, Society /by ChinaFolio

Introduction

China faces severe water shortages. Its current water per capita is one quarter of the world average, yet its overall per capita usage is still low by international standards, but this will increase over the coming decades. The water that China does have is often badly polluted and is inefficiently used. Moreover, China’s water is unequally distributed with the Yangtze River basin and areas to the south enjoying 84% of China’s naturally available water compared with just 16% in China’s north.

China’s water scarcity will challenge its future economic expansion. Already, agriculture, industry and China’s growing cities all compete for scarce water resources, as do China’s different regions. Decades-old economic priorities such as food self-sufficiency will be increasingly difficult to maintain because water used in industrial output creates more economic value than it does in agriculture. Water scarcity also creates domestic unrest. Increasing illness caused by polluted water is driving up healthcare costs and generating more internal dissent. In 2009, the Chinese government acknowledged that 90,000 “mass incidents” (a euphemism for protests) occurred, many of which were sparked by environmental and water degradation.

Population and its Impact on the Hydrological Cycle

Right from China’s earliest dynasties great attention was paid to agricultural productivity. The Chinese bureaucracy mobilized the Chinese masses to construct irrigation systems and to clear land. This created an agriculture-population feedback loop. Increased agricultural productivity led to a rise in population, requiring further hydro-engineering and agricultural innovation to maintain China’s swelling numbers. In an agrarian society, large families of many sons offered rural parents security both in terms of providing labor for farming and care in old age. In this way, China has remained the world’s most populous country for thousands of years. China is still the world’s most populous country today. In 2019, China’s population was approximately 1.434 billion people. By 2035, China’s population is expected to peak at 1.461 billion people. By 2050 and 2100, China’s population will reduce to 1.402 billion and 1.064 billion, respectively.

China’s large population today has risen in part because of a significant population surge between 1950 and 1980. During the period, China’s population grew from 554 million to just over 1 billion people. In order to feed its enormous and rapidly growing population, Mao mobilized its masses to create new agricultural and grazing land through the clearing of forests, the filling of lakes, the draining of swamps and wetlands, and the creation of large irrigation projects. While placing more agricultural land under plow and significantly expanding its irrigation networks, this significant transformation of China’s natural environment into an agricultural environment has impacted China’s hydrological cycle. When land is cleared of plant life through unsustainable farming and grazing methods, the local hydrological cycle is disrupted, and desiccation – the drying out of the environment – occurs. Instead of catching precipitation in the region and allowing rain to repeatedly return to the area hrough the process of evapotranspiration, deforestation, over-grazing and over-farming causes surface water to run immediately into streams instead of permeating the soil. In the north and northwest of China, it has been estimated that the average annual precipitation has decreased by one third between the 1950s and the 1980s; overall China has 350 billion m³ less water than it had at the start of the century equivalent to the amount of water that flows through the mouth of the Mississippi River in nine months.

China’s Significant Desertification

Approximately 28%, around 2.5 million km², of China’s land is desert or suffering desertification. China’s deserts have expanded significantly over the last six decades. China’s Environmental Protection Agency reported, for instance, that the Gobi Desert grew by 52,400 square kilometers (20,240 square miles) from 1994 to 1999. Overall, China’s semi-arid regions have increased 33% during 1994–2008 compared to 1948–62, and its deserts continue to expand at an estimated rate of 1,300 square miles a year. In addition to topographical and geographical conditions, factors driving China’s desertification include over-cultivation, overgrazing, pollution, wind erosion, water erosion, salinization of soils through over-irrigation, over-cutting firewood, water misuse, and industry and mining-related land destruction.

The cost of desertification is real. It is estimated that China loses approximately $6.8 billion annually from its growing deserts and arid lands. Desertification leads to depreciated land values, food insecurity resulting from reduced crop yields, heightened healthcare issues, and increased costs resulting from land protection efforts. Desertification and deforestation have also caused sediment levels to significantly increase in all of China’s river systems due to severe soil erosion. Greater soil levels in river water can impact the functioning of China’s many hydropower systems.

To fight China’s desertification, China unveiled the Great Green Wall program. Launched in 1978 and targeted to continue until 2050, the program’s objective is to plant a shelterbelt of trees across the northwest rim of China skirting the Gobi Desert. The Great Green Wall is expected to be 4,480 km long and 560-1460 km wide. To date, an estimated 66 billion trees have been planted.

However, this massive reforestation program has been controversial. Much of the shelterbelt area, except for areas to the east, is not highly suitable to forest growth. Trying to plant trees in ecosystems not suited to forest can diminish biodiversity, reduce water recharge, and cause a loss of soil quality and moisture. Additionally, China has tended toward the planting of a single species of trees over large areas. In Ningxia, for example, 70% of the trees planted were poplar and willow. Monocultures tend to be more vulnerable to disease. In 2000, for instance, one billion poplar trees were lost to disease, wiping out 20 years of planting effort. Additionally, monocultures do not increase biodiversity as they are not appropriate either for plants and animals normally found in the native, dry-land ecosystems or for the animals and plants that might want to migrate to newly forested ecosystems.

Another disadvantage of planting trees on grasslands is that they tend to absorb large amounts of groundwater. In Minqin, an area in north-western China, studies have shown that groundwater levels dropped by 12–19 metres since the advent of the project. As these trees absorb water levels, shallower-rooting native shrubs and grasses can die off. When this occurs, the soil on the forest floor is susceptible to wind erosion, the very challenge that the trees were planted to thwart. As evidence of this risk, sand storms from wind erosion have become more frequent despite China’s herculean tree-planting efforts. Fifty years ago, dust storms plagued China about once every seven or eight years; now they occur annually.

Given the challenges of the Great Green Wall, there is growing realization shrubs and grasses native to the region may be much more effective in restoring degraded dry lands and holding sand in place. As a result, there has been some movement toward replacing the planting of trees with the sowing of native flora.

Water Scarcity

Overall, China is an extremely arid country. As China’s population has swelled over the millennia, its per capita water has decreased. China now has an estimated 2,029 m3 of water per capita per annum, one quarter the world’s average. This per capita water figure is projected to decrease to 1,875 m³ by 2033. This water scarcity is exacerbated by China’s uneven water distribution. China’s precipitation patterns are heavily affected by the East Asian monsoonal climate. Its mountainous geography impedes and drains the monsoonal rains as they move from the southeast into the northwest of the continent. On average, southern China – including the Yangtze River basin and areas to its south – has approximately 80% of China’s water, yet the area supports 54% of its population, 35% of its arable land, and 55% of its GDP Conversely, northern China collected only 20% of China’s water to maintain 46% of the population, 65% of the arable land and 45% of its GDP. In some northern areas, strains on water resources are even worse. Beijing’s and Tianjin’s Hai River basin, for instance, receives approximately 1.5% of China’s water to support 10% of its population and 11% of its arable land. Moreover, 47% of total industrial output is fabricated in China driest 11 provinces including: Beijing, Gansu, Hebei, Henan, Jiangsu, Liaoning, Ningxia and Shandong. These 11 water-parched provinces account for just 7% of China’s total water resources but produce 36% of China’s agricultural production and 43% of total GDP while supporting 38% of the population.

Approximately 400 of China’s cities currently face water shortages, and over 300 million people drink water contaminated with pollutants including arsenic, excessive fluoride, toxins from untreated factory wastewater, agricultural chemicals, leaching landfill waste and human sewage. Moreover, China’s per capita water footprint is growing. China will not only have more people competing for its finite water resources in the coming decades, but each person will individually demand more water. Today, China’s overall water footprint per capita is still about half that of the US but is expected to grow by between 40% and 50% by 2030. Factors such as higher living standards, increasing urbanization and further industrialization are driving water demand. China’s rising wealth has meant, for instance, that its citizens are eating substantially more meat. The production of one kilogram of beef requires 600 liters of water compared with the 100 liters required for a kilogram of wheat. This shift in diet can be seen in China’s food footprint numbers. In 1961, China used 260 m³ of water per capita to grow food; by 2003 this figure had more than trebled to 860 m³.

Agricultural, Urbanization, Industrialization, Water Wastage

Currently, 62% of China’s water is used for agriculture, a sector which is responsible for approximately 13% of the country’s GDP. About 50% of China’s farmland requires irrigation, more than double the world average. Nearly 75% of total grain production and over 90% of China’s cash crops are sown on irrigated farms. According to China Water Risk, irrigation water usage was approximately 340 billion m³ in 2013, equal to the average annual flow from China’s Pearl River, China’s third longest river. Yet agriculture water usage remains extremely inefficient, with an estimated 45% of agricultural water lost before it even reaches crops. By contrast, water used for industrial output is 70 times more productive in terms of financial value than that used in wheat production.

That said, the water productivity of Chinese industry is also low by international standards. The industrial added value per 10,000 yuan of water consumption is about 50 m³ compared to 7-9 m³ in developed countries. Additionally, the industrial water recycling rate is less than 50% compared to 85% in developed countries. Overall, China’s overall water productivity – calculated by dividing GDP by annual total water withdrawal – remains low: $15 in 2015 compared with $318 for the UK, $115 for Singapore, $103 for Germany, $67 for Japan, and $36 for the United States.

China’s growing urbanization is also requiring more water per capita. 70% of Chinese citizens are projected to be living in cities by 2030, up from 59% today. This is significant because urban dwellers consume three times as much water and energy as rural residents. Between 2000 and 2020, for instance, the World Bank estimated that China’s urban water consumption increased by 60% as its urbanization rate rose from 36% in 2000 to 57% in 2020. Moreover, more urban dwellers will require more electricity. Currently, it is estimated that 59% of China’s primary energy consumed was powered by coal. Coal requires more water to produce them all other energy sources. Moreover, over half of China’s coal deposits are found in its north, the Chinese region which suffers from the most water scarcity. Coal mining, processing, combustion, and coal-to-chemical industries are the country’s second largest water consumer after agriculture. Therefore, consuming more coal to produce more electricity will put additional stress China’s limited water resources. Finally, China’s urban water distribution networks are particularly leaky. In 2002, an investigation of 408 cities conducted by the Ministry of Construction found that urban water supplies lost an average of 22% of their total water flow.

Water Pollution

Despite China’s efforts over the last three decades, water pollution has spread from the coastal to inland areas and from the surface to underground water resources. An estimated 70% of China’s rivers and lakes are now polluted. In 2009, 57% of the 7 monitored river basins had pollution levels of I-III, suitable for drinking, swimming, household use, and able to support aquatic life. 24% of China’s rivers had levels of IV-V, water unfit for swimming, but suitable for industrial purpose. 19% had V+, meaning that the water is considered useless, unfit for industry or agriculture and unsafe for human contact even after treatment. 23% of China’s key lakes and reservoirs had water grades of I-III, 42% IV-V and 35% V+. 2.3% of groundwater in 8 regions was rated I-II, 23.9% was graded III, and 73.8% ranked IV-V.

Causes of water pollution include the disposal of industrial chemicals and waste, agricultural waste, and residential wastewater. Of these pollution sources, approximately 70% of the water pollution nationwide comes from agriculture, particularly runoff from fertilizers, pesticides, and animal waste. For millennia, China’s farmers produced agriculture through “organic” farming methods. Farmers collected every bit of organic waste to ferment for fertilizer. Nothing was wasted, and even human waste, or “night soil”, went into “honey buckets” to transport to the fields. Every winter and spring farmers dredged nearby rivers and canals to add sediment to the fertilizer. Particularly in the south, dense grass at the water’s edge was added to pig fodder, which, after being digested by the pigs, produced manure, and helped keep the rivers and lakes clear from vegetation. The entire process of recycling was labor-intensive but efficient. The rivers and lakes remained relatively clean despite thousands of years of intensive farming.

Yet, since 1978, fertilizer applications in China have increased fivefold. In general, animal and human feces are no longer collected for fertilizer, and instead are discharged untreated into rivers.

In addition to causing pollution, fertilizer runoff is also raising the instances of eutrophication. Although blooms of aquatic biomass are spurred by a variety of factors including nutrients, light, temperature, water flow, turbidity, zooplankton grazing and toxic substances, the main factor contributing to the growth of algae is the supply of nutrients. Chemical fertilizer runoff has significantly accelerated eutrophication of many of China’s lakes such as Dian Chi in Yunnan Province, Chao Hu in Anhui Province and Tai Hu in Hubei Province where algae blooms absorb a significant portion of the lake’s oxygen, choking off fish and other aquatic life. Large algae blooms also broke out right before the 2008 Olympics, forcing Beijing to launch a massive emergency clean-up to ensure the sailing events could go ahead as scheduled in Qingdao, in Shandong.

In addition to pollution caused from fertilizer and pesticide runoff, rural areas also contribute to contamination by poor wastewater management. According to the 2017 China Statistical Yearbook, for instance, while nearly 95% of municipal wastewater generated by urban residents was treated, this number dropped to 25% for rural residents. Additionally, small-scale rural enterprises have less rigorous environmental monitoring, but frequently engage in all manner of heavily polluting production, such as the operation of paper mills, tanneries, and breweries. Pollution from the small-scale rural enterprises is aggravated by the fact that they are more likely to use outdated equipment and have less resources to spend on pollution abatement.

About 80% of China’s 7500 most polluting factories are located on rivers, lakes, or in heavily populated areas. While occurring less frequently than in the past, these factories have been known to release untreated waste and chemicals into China’s waters either intentionally or by accident. Example of this is the 2012 cadmium spill in Guangxi which polluted an approximately 100 km stretch of the Longjiang River at a level of more than five times the official limit, contaminating water supplies for Liuzhou, a city of 3.2 million people. Cadmium is poisonous and can cause cancer. Another example is the 2020 Heilongjiang province spillage of 2.53 million cubic meters of water containing molybdenum ore waste into the local river system. The spill contaminated water for 110 km southwest of the mining site, where the chemical oxygen demand reading (DOC) – a measure of water quality – was 5.7 times higher than standard levels.

China’s factories also release dangerous airborne pollutants that are absorbed into groundwater or contaminate rivers by way of urban runoff. Some of the most harmful are categorized as polycyclic aromatic hydrocarbons (PAHs), and an estimated 90% of water located in sources near Chinese cities is now dangerously polluted because of their presence.

Economic and Health Cost of Water Pollution

The World Bank estimated that China’s water crisis is reducing China’s GDP by approximately 2.3% annually, with 1.3% attributable to water scarcity, and the other 1% caused by the cost of water pollution estimates do not include the costs of ecological deterioration caused from the eutrophication of lakes and rivers. Nor do they reflect the economic cost of disease caused by water pollution, conservatively estimated at an additional 0.5% of GDP. In China’s most polluted areas, water has also been blamed for the recent high rates of various health abnormalities including liver and stomach cancer, stunted growth, miscarriages, and birth defects. This pollution can also be absorbed through China’s food supply. In 2011, it was estimated that up to 10% of China’s rice crop might contain unsafe or nearly unsafe levels of cadmium because of widespread irrigation with cadmium-poisoned water. A more targeted 2014 Greenpeace study testing rice harvested in Hunan province near a smelting site found that the rice contained dangerously high levels of cadmium, lead and arsenic.

China has also seen a rise in cancer rates. Contemporaneously with the rise in pollution levels in China’s lakes and rivers, digestive tract cancers including stomach, liver and esophagus have also risen and are now responsible for approximately 36.4% of cancer-related deaths in China compared to less than 5% of total cancer deaths in either the US or the UK. Additionally, there have also been incidents of contaminated river water from industrial activities leading to outbreaks of cancer concentrated in some villages. These villages have become colloquially known as Aizheng Cun, which literally translates as “Cancer Village.”

Flooding – Yellow River and Yangtze River

Not only are desertification and deforestation exacerbating China’s water scarcity, they are also aggravating China’s flooding challenges. The Chinese Minister of Water Resources, Chen Lei estimated in 2007 that China has lost 2% of national GDP annually to flooding since 1990 and a recent study placed the total costs of floods from 2000 to 2012 at 105 billion RMB annually (US $17 billion). Flooding has challenged Chinese rulers for millennia. From 602 BCE to 1938 AD it is estimated that major collapses of Yellow River dikes occurred once every two or three years. Then, every hundred years or so, the river would change its course. Many of the resulting floods were some of the deadliest natural disasters ever recorded. For millennia, the Chinese constructed dikes along the lower reaches of the Yellow River trying to contain its torrents, yet constant ecological destruction along the upper reaches increased erosion which intensified river silting. The silting raised the riverbed above the countryside. This “suspended” river greatly increased flood damage when the river inevitably breached its dikes. After 1949, the CCP built almost 3000 dams on the Yellow River, and heavily reinforced its levees and embankments. These hydro-engineering projects involved the equivalent of 500 million workdays and 1.4 billion m³ of reinforced concrete – enough to build 13 Great Walls. Yet many of the Yellow River’s dams have fallen short of physical and economic targets, and have resulted in huge losses of forest lands, wildlife habitat and aquatic biodiversity. Global warming has also increased evaporation at many of the dam sites.

Similarly, parts of the Yangtze River have flooded continually for millennia. Yet, as deforestation and reclamation of land has increased, floods have become more frequent and more destructive. The CCP attempted to solve the flooding by increasing the height of 3,600 km of embankments and more than 30,000 km of levies. The work required more than 4 billion m³ of dirt and stone, or enough material to put a wall around the globe three times. Yet these raised structures could not offset the loss of water absorption capacity caused by the rapid deforestation and agricultural land reclamation that occurred during the same period. As a result, the Yangtze experienced a series of significant floods in 1980, 1981, 1983, 1991 and 1996. Then in June 1998, China suffered one of its worst floods in 40 years, leaving 3,700 people dead, 15 million homeless and causing $26 billion of economic damages. The reinforced embankments and levees proved largely ineffective, with approximately 9,000 of them collapsing. As well as providing hydropower and improved navigation, the controversial Three Gorges Dam was built in large part to control the Yangtze’s flooding, although many scientists believe that the Yangtze is still vulnerable. Additionally, after the 1998 flood, China began to place greater importance on the role of ecology in flood prevention and has begun an extensive campaign of reforestation and forest preservation.

Drought

Because of the variability of the monsoonal rains and other factors, like flooding, drought has plagued the country for millennia. Yet desiccation, reduced precipitation and rising temperatures in many areas have made China’s droughts more frequent with longer durations extending over greater areas than at any previous time. For instance, research has shown that since 1980, severe droughts in China’s northeast have increased in frequency, severity, and duration. Between 1960 and 1980, acute droughts struck approximately once a decade. From 1980 onwards, droughts have occurred with greater frequency: in 1981, 1986, 1992, 1994, 1997, 2000, 2001, 2005-2007, 2010, 2017-2018, 2019, 2020. China’s southwest to northeast belt was the area most affected by drought. Regions most impacted include Inner Mongolia, Hunan, Yunnan, Hubei, Jilin, Anhui, Sichuan, Liaoning, Guizhou, and Shandong.

Although difficult to pinpoint specifically, it is estimated that China lost $7 billion annually due to the economic cost of drought between 1984 in 2017. If global warming continues apace, these economic losses could increase to between $47 billion annually if temperatures rise an additional 1.5°C to $84 billion if global warming drives temperatures above 2°C. China has been essentially self-sufficient in grain for decades. This self-sufficiency camouflages the fact that China produces one-sixth of the world’s wheat output and one-fifth of global corn. China is thus enormously important to the world’s food supply. If drought significantly disrupted China’s food production on a large-scale, it could significantly impact world food prices. The risk is real. In every year since 2005, drought has challenged China’s grain crops, and the government has been forced to spend billions of dollars digging wells and cloud seeding to encourage rain. In 2010-201, northern China suffered its worst drought in 60 years, impacting most of China’s wheat producing regions. At its peak, it is estimated that 36% of China’s northern wheat fields were affected, and that 2.57 million people and 2.79 million livestock suffered from a lack of water. The water shortages also affected around 161 million people, with an economic cost estimated at $2.8 billion. In 2017, China’s Inner Mongolia region experienced a severe drought which affected 120,000 people and 500,000 livestock and 16 million acres of pastureland. It is estimated that the drought caused economic losses of approximately $780 million. In 2019, China’s Hebei province experienced a serious drought which impacted almost 800,000 ha of cropland and left 15,700 people and ,3000 domestic animals with diminished access to drinking water.

Drought has not been restricted to China’s drier north. In western Sichuan, for example, rapid deforestation caused Sichuan’s forest cover to fall from 3.6 million hectares in in 1985 to 2.34 million hectares in 1995 which has led to decreased precipitation. In the 1950s, serious droughts hit Sichuan about once every three years. In the 1960s, this became once every two years and by the 1980s, drought troubled Sichuan counties annually. In 2010, more than 20 million people in Yunnan, Guangxi, Guizhou, Sichuan, and Chongqing were left without adequate drinking water and a 2011 Sichuan drought affected almost 8 million people. Looking at drought conditions in Guangxi province specifically, records show that from 1618 to 1943, major droughts hit the region once every 33 years. From 1946 to 1972, the interval fell to every six years, and in the 1980s, it fell to every two years. There were four major droughts in the three-year period from 1989 to 1991. Since 2000, drought has plagued Guangxi annually. In 2004, for instance, 1100 Guangxi reservoirs went dry, and hydropower generation was cut dramatically. In 2007, one million residents in Guangxi and 250,000 in neighboring Guangdong faced water shortages during the worst regional drought in more than 50 years. In 2009, Guangxi, which produces 60% of China’s sugar cane, had a 10% drop in its production due to drought conditions. In 2010, 12 of the 14 cities in Guangxi were affected by water shortages. As another example, in 2019, Anhui Province, was plagued by the worst drought it had experienced in 50 years. Rainfall was at only 40% of normal levels. The neighboring provinces of Hubei, Jiangsu, Jiangxi and Zhejian were also significantly impacted.

Climate Change

How climate change will impact China’s water scarcity is still being studied. A study published by the Proceedings of the National Academy of Sciences estimated that drought related losses caused China approximately $7 billion annually between 1984 in 2017. If temperatures were to rise 1.5°C, these losses could grow to $47 billion annually. Above 2°C, drought losses could rise as high as $84 billion annually. Overall, however, a clear understanding of the impact of climate change on China’s water resources and agriculture is not definitive. Most scientists agree that more work is needed on regional climate simulations-especially simulations of precipitation-to better understand how a warming environment will impact everything from crops to diseases to future per capita water resources. (Piao, 2010)

What is definitive is that global warming is having an undeniable effect on the Tibetan Plateau. Like the Arctic and Antarctic, the Tibetan plateau is warming three times faster than the global average at .3°C per decade. In Tibet’s case, this accelerated warming is driven significantly by its Tibet’s high elevation which averages 4,500 meters. The plateau holds the largest amount of snow and ice after the Arctic and Antarctic, an estimated 14.5% of the global total including 46,000 glaciers. The plateau is also the source of 10 of the world’s largest rivers including the Yangtze, Yellow, Ganges, Brahmaputra, Mekong, and Indus Rivers which in turn provide water to over 1.6 billion people. An estimated 80% of Tibet’s glaciers are now melting more quickly than originally thought. Many Chinese scientists believe that one-third of the glacial area in Tibet will disappear by 2050, and half will disappear by 2100.

Greater melting rates will have several effects. Melting glaciers often create glacial lakes dammed by unstable moraines. These moraine dams can unexpectedly burst, causing catastrophic flooding. Greater glacial melt water in the short term will increase river runoff. In the long term, as glaciers diminish or disappear, the resulting depletion of meltwater runoff is likely to deplete the year-round viability of Tibetan originating rivers, threatening the lives and livelihoods of billions of people downstream.

Power Outages

China’s water scarcity has also resulted in lower water levels of many of China’s major river systems. For instance, Chinese researchers have discovered that the volume of water entering the Yangtze River at its source on the Tibetan plateau has dropped by 15% over the last four decades. Similarly, a study regarding Yellow River water found that runoff has runoff decreased significantly between 1956 and 2009. Moreover, a 2013 study conducted by China’s Ministry of Water not only corroborated that the Yellow and Yangtze Rivers are experiencing declining water levels, but also found that approximately 28,000 of China’s original 50,000 rivers have now disappeared. Part of the reason for the disappearing rivers has been attributed to improved mapping techniques; however, the fact that rivers are disappearing has been validated by other studies. Other rivers, especially in the north, have become seasonal rivers flowing most strongly during the spring melts.

Diminishing flow levels in China’s rivers mean that the country will be challenged by power outages due to inadequate flow through its hydropower dams. Hydropower accounts for approximately 22% of China’s total installed capacity. It is estimated that the lack of water to run hydropower dams has cut hydroelectric power production by 20% and China may be forced to burn 1 million more metric tons of coal a week to cover the shortfall.

Trends

Serious water scarcity looms in China’s future. This scarcity is likely to increase competition between Chinese regions, between sectors of the economy and between urban and rural residents. It will also raise tensions between the government and parts of society that lack access to adequate, clean water sources. Moreover, the Tibetan Plateau is a source of rivers that reach 16 downstream countries including Pakistan, India, Bangladesh, Burma, Bhutan, Nepal, Cambodia, Laos, Thailand, and Vietnam. China’s damming, polluting, and use of international rivers is likely to increase tensions with these countries as populations in downstream riparian countries grow, and as these economies continue to develop and urbanize. Many of these countries, especially India, are already facing their own severe water crisis, which will only be exacerbated if China diverts river water that needs to be shared internationally.

Additionally, China’s water contamination risks exporting China’s pollution and water-borne disease to its neighbors downstream. This water pollution is exacerbated by rapid glacial melting. Glaciers capture atmospheric pollution; dangerous pesticides such as DDT and pollutants such as perfluoroalkyl acids are increasingly coursing downstream in meltwater and collecting in sediments and in the food chain.

Political relations could be further stressed if water shortages cause mass migrations of people. In fact, some analysts suggest that the so-called “oil wars” of the 20th century could be replaced by “water wars” in the 21st. Over the last 30 years, China’s Mekong dams, alone, have held back more water than they have released. There is some argument that, in anticipation of the fact that Tibet’s glaciers will likely be rapidly depleted in the next 80 years, China is compounding glacier melt for its future needs.

China’s immediate water solution is to use water more conservatively, and to improve pollution control. Historically, China has solved growing water demands through the construction of massive hydro-engineering projects such as the Three Gorges Dam and the South-North Water Diversion Project. In the future, China will increasingly need to solve its water deficit through ecological conservation, pollution management, more efficient water usage, and a redistribution of economic output by raising the price of water to reflect its scarcity and true economic value.

References

The History of Hydro-Power in China

The Three Gorges Dam

Environmental Movement Impacts Hydro-Power in China

Damming of Trans-boundary Rivers – Hydro-Hegemony

The Lancang Cascade

Building Dams Abroad

Trends

Introduction

The State of China’s Environment

China’s Position on International Climate Negotiations

The Cost of Environmental Degradation to China

Challenges to Implementing Environmental Policy in China

Trends

Introduction

Inequality during the Mao Era

Inequality in the Reform Era

Regional Inequality

Getting Rich First?

Gender Inequality

Ethnic Inequality

Inequality at what cost?

Future Trends

Introduction

Chinese Annexation and Japanese Colonialism

The Republic of China

Political Reform

Relations with China

Future Trends

Introduction

China’s Significant Desertification

Water Scarcity

Agricultural, Urbanization, Industrialization, Water Wastage

Water Pollution

Economic and Health Cost of Water Pollution

Drought

Power Outages

Trends

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