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DAM-L China/water resources development/ yellow River etc.
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Date: Tue, 29 May 2001 10:03:18 -0700 (PDT)
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Subject; "Jasper Becker: Go east is true siren call"
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South China Morning Post, May 26, 2001.
Go east is true siren call
JASPER BECKER
The fervour in the mainland press over China's "develop the west
campaign"; is rapidly dwindling.
Instead attention is being lavished on the constant foreign travels of
China's top leaders, who are more often seen photographed in obscure tropical
islands such as the Maldives or in Latin America than in the gritty provinces
of inland China.
There is a seductive glamour about the international life and the global
conference circuit that is distinctly lacking for those trying to deal with
the intractable problems of some parts of China.
All too many Chinese leaders such as Zhu Rongji spent some of their best
years labouring on Mao Zedong's projects to develop China's interior to fight
an anticipated global Armageddon.
Half the country's gross domestic product was lavished on building up
massive defence industries in the interior, known as the Third Line, to allow
the Party to fight on indefinitely if the Soviet revisionists or the United
States imperialists staged a combined assault.
When these fears faded, the reforms allowed an exodus of those
transplanted from the east. Tens of millions went home - if they still could.
The movement is still in the same direction. The more the markets take the
place of Mao's command economy, the more capital and labour flows east, where
the profits are.
Even the subsidies Beijing hands out in various guises, such as its
poverty-reduction campaigns, have ended up back east in a sort of inescapable
form of internal capital flight.
The die-hard state planning ministries, such as the Water Resources
Ministry, have long relied on the central government to dig deep into its
coffers to pay for giant projects such as the construction of numerous dams on
the country's main rivers. The economic returns on these investments have been
low and much of the benefits have ended up elsewhere.
Much as with Western aid projects in Africa, the money spent on opening
mines, creating rubber or cotton plantations and constructing giant hydropower
schemes have not helped the locals as much as outside contractors and a few
bureaucrats.
The environmental destruction has been stupendous, and is best exemplified
by the Yellow River which now barely exists as a river.
If China was still an old-fashioned Socialist economy with heavy taxation,
Beijing could easily redistribute funds from the rich to the poor. Now, the
central Government has as little as six billion yuan (about HK$5.62 billion) a
year to redistribute because its tax base is so low.
If China was not a unified state, provinces such as Gansu, or Sichuan,
could have their own currencies and opt to devalue until they became
competitive. This worked in the European Union which faces many similar
problems in helping poorer member states catch up.
The EU has also disbursed vast sums in the form of agricultural subsidies
and infrastructure loans to help countries such as Greece. Workers from poorer
countries could also find factory jobs in Germany and other strong states.
Even so the disparities remain.
China has far fewer options. It still has very tough restrictions on the
movement of people. Only about six million migrant workers have been able to
leave their native provinces to find work.
So just what exactly Beijing intends to do to help the western regions
remains far from clear, despite months of propaganda. The state is issuing
treasury bonds to build a gas pipeline, a railway to Tibet, but these and
other projects are fraught with risks, political and financial.
Foreign investors must be wary of being targeted for supporting what some
condemn as Chinese colonialist policies. The World Bank ran into huge problems
over a small project in Qinghai, a focus for the Tibetan lobby.
Multinationals could easily find themselves the next victims if they start
building pipelines in Qinghai, Gansu, Tibet or Xinjiang, all with resentful
and often violent minorities. The state can also no longer guarantee investors
good returns for many of these projects. Profits will be subject to
international price fluctuations.
Xinjiang's gas fields, or its cotton plantations, have to compete with
imports arriving conveniently in ports along the eastern seaboard.
Provinces such as Ningxia, which built aluminium plants when prices were
high, now cannot find customers unless they sell at a loss. Many of the
factories built in the 1960s or 1970s as part of the Third Line have not been
turned around. The big aviation industry plants of Sichuan or Shaanxi cannot
be rescued because there are no orders.
In a country with excess capacity in most areas, many such factories are
piling up huge debts trying - and failing - to diversify. As China opens up,
the more difficult the transition for latecomers.
Once-protected state monopolies - gold mining or tobacco for example - are
being opened both to outside investors and competition.
Perhaps the greatest problem of all is poor government. Many officials
have reputations for being ignorant, corrupt and inward looking and have
served foreign investors poorly. The main target of the Party's campaign is
therefore to summon up the political will to start replacing the worst
offenders with determined and energetic newcomers.
In some cases, such as Chongqing, the arrival of fresh blood has brought a
major improvement. Attracting and keeping qualified officials to places where,
traditionally, postings are treated as punishment, or at best a temporary
sacrifice, still remains a challenge.
Everyone still prefers to go east.
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