A March 1999 report from U.S. Embassy Beijing
Summary: In the February 24 People’s Daily two articles examining highlighting concerns raised by the Three Gorges project followed the publication of State Council infrastructure project quality guidelines. The two articles depart sharply in tone from the 134 other Three Gorges articles which have appeared in People’s Daily since August 1998. These latest two articles, the guidelines, and Premier Zhu’s December exhortation to Three Gorges management to boost project quality may mean that the Three Gorges project has quality problems. Many recent articles in the Chinese press discuss infrastructure project quality problems and the official corruption behind them. An examination of People’s Daily articles published since August 1998 (appendix) highlights some Three Gorges problems mentioned by the “Tongue of the Party”. These include illegal surcharges that cause high rural electric power rates, increased silting on the Yangzi, and misappropriation of funds for resettling people from the Three Gorges area to be flooded.
On February 24, an article focusing on Three Gorges Project shortcomings entitled “Three Gorges, We’re Still Paying Attention to You” appeared in the People’s Daily. The article focused on problems of the Three Gorges project. Below are translations and summaries of some of the comments:
"Just how good is the construction quality of the Three Gorges Dam? Naturally that is a question that every one is concerned about. ... The Vice General Manager of the Three Gorges Project, Wang Jiazhu said ‘Quality is good, it meets design criteria. But we can't see that it is first rate by world standards. The real test is still to come in the second phase of the project when the concrete is poured for large dam structures.’ Last year on December 29 Premier Zhu Rongji visited the Three Gorges dams and set even higher goals for the dam."
The article concluded with the words of Yuan Guolin [STC: 5913 0948 2651], a Vice General Manager of the Three Gorges Development Company and a member of the National People's Political Consultative Congress. Yuan said that he “wants the people to watch the Three Gorges closely and strengthen supervision of the Three Gorges Project by public opinion since every day 30 million RMB are spent on the Three Gorges project. ... He says the Three Gorges Project faces deep problems such as the construction of the electric power network, and irrationally high markups during electric power distribution that might make it hard to sell Three Gorges power. For instance electric power leaving the station (before entering the network) at one dam electric power costs RMB 0.08 per kilowatt-hour but in a village 15 kilometers away people have to pay 1 RMB per kilowatt-hour. This shows the kind of problem that needs to be solved. Once the Three Gorges starts generating electricity, can power sales proceed smoothly? We had better start preparing for the future.”
[This article and the other articles referred to in this report can be found in Chinese on the People’s Daily website at http://www.peopledaily.com.cn See also the People’s Daily articles for August 17 and November 16 summarized at the conclusion of this report. Many English language articles on the project can be found using the search engine on the website of the official English-language paper China Daily at http://www.chinadaily.net]
Also on February 24, the People’s Daily reprinted an article from Gongmin Bao of Chongqing Municipality “Save the Historical Relics of the Three Gorges Region.” According to the article, only one percent of the 1.9 billion RMB allocated to preserve these historical relics has become available thus far. If this situation is not change only 20 percent of the historical relics in the Three Gorges area can be saved when the area is flooded. According to the article, the Historical Relics Preservation Planning Section for the Three Gorges Region of the State Resettlement Management Bureau has repeatedly since August 1996 delayed approving the historical relics preservation plan. At the time the Three Gorges project was planned, it was determined that there were over 100 historic sites and 290 million RMB were allocated to preserve these historic relics. A 1996 survey found 1282 sites with historic relics or eleven times as many as previously estimated and so the preservation budget was estimated at 1.9 billion RMB. Theft and smuggling of historical relics is common. According to the article, a rare Han dynasty bronze lamp stolen from a tomb of the Warring States Period from Woshan County, Chongqing Municipality in 1997 was sold in the United States in March 1998 for USD 2.5 million.
The articles appeared two months after Premier Zhu Rongji’s caution to Three Gorges management that greater attention to quality is needed. As reported in People’s Daily on December 31, Premier Zhu called for stricter supervision and improved quality control procedures. Well-publicized infrastructure failures including dams that burst during the Summer Yangzi floods and a bridge collapse on January 4, 1999 in Chongqing Municipality that killed 40 people have highlighted construction quality shortcomings.
On February 23, the State Council released a notice on improving the quality of infrastructure projects. According to the State Council notice, poor quality infrastructure projects not only waste money, but endanger lives and property and the rapid, sustainable and healthy development of the Chinese economy. According to the State Council notice, poor quality construction often causes accidents. The root cause is that some local governments and work units don’t care about quality, violate construction procedures, do not perform their regulatory responsibilities, and are sometimes very corrupt. The State Council notice set forth twenty-four requirements including personal responsibility of construction group leaders for project quality, improving project management, open bidding on projects, contract management, inspection upon completion of a project, strengthening law enforcement, strengthening audits, and strengthening the supervision of projects by society.
The notice requires every locality to conduct a full inspection of all infrastructure projects financed by bonds and report the results to the State Development Planning Commission by March 31, 1999.
ESTOFF compared the two February 24 articles with 134 other articles mentioned the Three Gorges which appeared in the People’s Daily between August 1, 1998 and February 25, 1999. A keyword search using the term “Sanxia” in the People’s Daily full-text database (at http://www.peopledaily.com.cn) pulled up 134 articles on the Three Gorges region or project. Most of the articles were either laudatory or brief factual reports about the progress of the project and resettlement. The February 24 articles were the first to criticize the project itself. [Comment: The discussion of project shortcomings by the project vice general managers in the February 24 article may well be a kind of pre-emptive self-criticism by someone coming under attack. End comment]
The December 30 report on Premier Zhu Rongji’s December 27 visit raised quality concerns and Premier Zhu Rongji called on management to set up a quality control system for the Three Gorges project. A few articles did raise questions such as the unnecessary construction of fossil-fuel plants in the Three Gorges area and an electric power surplus as well as the accelerating silting owing to soil loss upstream of the Three Gorges Dam. The 134 articles from People’s Daily are interesting for their tone as well as the information they provide on the Three Gorges project and region.
The appearance of the two People’s Daily articles one day after the release of the State Council infrastructure quality guidelines and two months after Premier Zhu Rongji’s discussion of project quality with Three Gorges management may mean that the Three Gorges project has quality problems.
No People’s Daily article during the eight months previous to the February 24 article raised these points to question the Three Gorges Project itself. Newspaper articles on quality problems and concerns in construction projects have been featured prominently in the Chinese press recently. Newshoo, a PRC website that collects several thousand articles from today's Chinese newspapers from websites all over China, moved its "projects and construction" category to the top position on its webpage (in Chinese) at http://www.newshoo.com.cn
This method using searches of full-text databases of PRC newspapers to analyze trends in the Chinese press is explained in the U.S. Embassy Beijing report "PRC Infobenefit: Full-Text Newspaper Searches” at http://www.usembassy-china.gov/english/sandt/netnews.html
This method might be dismissed as mere sino-kremlinology in cyberspace. However until China, although twenty years along in its reform and opening process, becomes a more open society it will remain useful. The method is actually a cyber-adaption of a method astute Chinese newspaper readers still use to understand developments in their own country.
Many Chinese scientists doubt the wisdom of the Three Gorges projects. Some believe that Three Gorges project problems can be overcome and that the project should be built; other oppose the construction project altogether. Some scientists who oppose the Three Gorges Dam are troubled that some of the more prominent non-scientist opponents do not use scientific data about the project in an even-handed manner and so muddy the waters. During the term in office of Premier Li Peng, a strong supporter of the Three Gorges project, active opposition to the Three Gorges Project was actively discouraged by the government although scholarly publications on problems associated with the project such as river silting and strategies for overcoming them continued to be published. In “Status and Development Strategy of China’s Resources” [Zhongguo Ziyuan Taishi yu Kaifang Fangluue] published in December 1996 by the Hubei Science Publishing House as part of the Chinese Academy of Sciences Man and Nature series under the general editorship of former CAS President Zhou Guangzhao, the dam is attacked as an ecological disaster. This criticism is buried on page 555-556 of the Chinese Academy of Sciences volume, however.
Such strong criticisms of the Three Gorges project rarely appear in Chinese newspapers and magazines. A Chinese scientist from Beijing told ESTOFF that a collection of scientific articles about the Three Gorges was suppressed because the author of the introduction and conclusion argued against the Three Gorges project. Several academic works relating to the Three Gorges Project published in the PRC are listed in the appendix below. Chinese scientists owing to their training and experience with China's turbulent politics tend not to build on their expertise to make broad conclusions or to do interdisciplinary work. The social science aspect of big problems such as resettlement and management tends to be overlooked in part because of the low status of the social sciences as a stinking product of bourgeois society during the early decades of the PRC.
Some observers had speculated that the inauguration of Zhu Rongji as China's new premier in March 1998 might bring a new look at the Three Gorges Dam project. It is still too early to say if the increasingly critical eye focused on the Three Gorges Dam and other large infrastructure projects will result in major changes in the Three Gorges Project. After the Summer 1998 Yangzi flood damage, which was considerably aggravated by poor quality dike construction, the threat to life and property from poor quality infrastructure arising at least partially from widespread corruption has been getting more attention.
Premier Zhu Rongji is widely admired among the Chinese people for his sustained attack on the widespread and pervasive corruption at all levels of Chinese government. Chinese governments have often tried to implement policies through intense campaigns that last several months but are then widely ignored. A Party official actively involved in investigating corrupt officials told ESTOFF over a year ago that while previous anti-corruption campaigns were not very serious, this latest one is different. Since the diversion of funds away from their intended purpose and supplier decisions made on a political rather than technical basis often result in inferior public infrastructure, Premier Zhu’s attacks on corruption would address one of the main causes of poor construction project quality in China.
Premier Zhu Rongji in his late December visit to the Three Gorges Dam called on management to do a thorough overhaul of their quality assurance system at all levels and to pay close attention to the successful resettlement of people displaced by the Three Gorges Dam project. Premier Zhu Rongji called on the company to bring in foreign engineers to help manage the Three Gorges project. Premier Zhu's strong words on the importance of quality control in infrastructure projects came just a week before a bridge collapse in Chongqing Municipality on January 4 that killed 40 people. Premier Zhu’s criticism on the Three Gorges is not based on the long debate about the Three Gorges Dam but rather on China's capacity to build such a complex project. China has many brilliant, well-educated engineers. Yet the problem is not the quality of engineers but the quality of management and the corruption that threatens to engulf the Three Gorges Projects as well as many other institutions in Chinese society.
In a January 21 interview with China Daily, Beijing University Professor Xiao Zhuoji said "The blind pursuit of speed at the expense of quality has caused tremendous losses to the country.” According to the report, Xiao said that corruption and poor planning in local construction projects resulted in poor quality construction. Some of these projects should be abandoned, said Xiao. "It might seem they (local governments) have missed an opportunity; but in the long run, they are saving resources for themselves and the country as a whole.”
The full interview is available on the China Daily website at http://www.chinadaily.com.cn/cndydb/1999/01/d4-1accu.a21.html [Comment: Although China Daily, written for a foreign audience, is less candid than the People’s Daily, China Daily does have a useful keyword searchable website in English at http://www.chinadaily.com.cn End comment]
Fighting corruption is one of the main themes of the Zhu Rongji government that took office in March 1998. Chinese academics and think tank scholars which advise the Chinese government make it clear in their writings (in the People's Daily as well as in very well-received books in the China's Problems Series published by Today's China Publishing House) that corruption is not just a matter of individual integrity but is also built into China's current political and economic system. The task of China's reformers is to change the system so that it fosters integrity and public service rather than corruption and self-seeking behavior.
Thus quality control critiques of the Three Gorges project and other infrastructure projects fit in well with Premier Zhu Rongji's anti-corruption campaign. The diversion by local governments of money intended for water conservancy (for example in the failure of the levee in the Jiujiang section of the Yangtze River in Jiangxi Province where bamboo was substituted for iron reinforcing rods in the levee construction) aggravated the Summer 1998 floods and for resettling people displaced by the Three Gorges Dam reported in the December 21 People's Daily article summarized below are just two examples.
Brief summaries from a few of these articles presented below clarify some of these questions about the Three Gorges Project and illustrate how the People’s Daily as the “tongue of the Party” has been reporting on the Three Gorges Dam project. The articles summarized below are not typical of the group of 134 articles examined. These illustrate some of the problems associated with the Three Gorges project yet do not take the extra step of raising doubts about the project itself. The articles on February 24 are the first People’s Daily articles to raise questions about the Three Gorges project itself.
People’s Daily 8/16/98 The start of construction of the Three Gorges dam has made many historical artifacts more accessible. If vigilance lags just a little the artifacts are stolen by smugglers. Chongqing Municipality customs reports a rapid increase in historical artifact theft in the Three Gorges area but also the recovery of some stolen national cultural treasures. In 28 cases 182 artifacts were recovered.
People’s Daily 8/17/98 – According to Ran Longshu [STC: 0373 7127 6615] of the Chongqing Municipality People’s Consultative Congress, many counties and smaller cities in the Chongqing Municipality portion of the Three Gorges area over the last two years have added new fossil fuel power plants with an installed capacity of 300,000 kilowatts. The central government added an extra one billion RMB to built several 100 kilovolt and 500 kilovolt high tension power lines to distribute power from the Three Gorges Dam when it begins generating hydroelectric power in 2003. What is going on? There is already overcapacity – many of the power plants are running with only a light load. The excess fossil-fuel plants also increase air pollution.
Why do local governments like expensive, inefficient, dirty power plants? One reason is that local enterprises are so inefficient that an inefficient power plant looks good in comparison so local officials ignore central government restrictions on small power plant construction. Another reason is local protectionism that wants to shut out the state power grid so that the local company can make more money. The result is much pollution. For example the twin 13,500 kW generations at Wanzhou, for each day it generates 600,000 kilowatt-hours, 45 tons of ash are dumped into the Yangzi. Moreover, since the air pollution control equipment doesn’t work well, a lot of harmful material is put into the air and the productivity of the surrounding farms goes down. Small, inefficient electric power plants mean high electric power prices and so a greater burden on the people.
People’s Daily 8/17/98 Although the State Council permits only five types of surcharges for electric power, including a surcharge to help finance the Three Gorges Project, the cost of electricity in China to users considerably exceeds the set price. According to regulations, which cover all of China except for Inner Mongolia, Hainan, and Guangdong, power costs for China's provinces averages 0.34 RMB per kilowatt-hour (USD 0.06), to which allowed fees are added to come to under 0.39. Several provinces have set electric power rates plus surcharges of RMB 0.44.
Yet in fact electric power prices in China are chaotic: each province is different and even each county along the same power line is different! Higher electric power prices trouble production. In non-ferrous metal production, for example, electric power accounts for 40 percent of production costs. Many farmers are very unhappy about this since in some rural areas the cost of electric power exceeds RMB 1.0. Some farmers are even abandoning electricity and going back to kerosene lamps or candles. A study of illegal added charges to electricity bills in China turned up RMB 21.7 billion in illegal electric fees collected on the pretext of 528 different types of electricity surcharges. Here is what the survey found in its study of electric power pricing:
Authoritative sources say that this is just the tip of the iceberg. Many local governments add much more -- especially county governments and local governments which provide power to governments. Another survey conducted January - June 1997 (excluding Shandong and Inner Mongolia) turned up RMB 6.62 billion in unauthorized surcharges on provincial power networks, RMB 1.7 billion on urban and regional for a total of RMB 10.5 billion over a six month period.
Illegal fees included electric power poverty alleviation fees, electric power family planning fees, and electric power water conservancy fees. The manager of an aluminum plant complained about local government adding many illegal fees to the electric power bill. Yet State Council documents clearly state that electric power price changes must be approved by the State Council and that adding supplementary fees is not allowed. The State Council decided that the central government will stamp out illegal electric power fees and so the State Development Planning Commission, the former Ministry of Electric Power, and the Central Disciplinary Commission and the State Council Office on Reducing Burdens [Guowuyuan Jianfu Bangongshi] issued orders to stop this illegal practice.
People’s Daily 9/25/98 excerpt from a new book. The forest cover along the Yangzi river fell from 22 percent during the 1950s to 10 percent in 1986. The area from which soil was lost to the Yangzi as runoff doubled from 363,000 square kilometers to 739,000 square kilometers. In recent years, Sichuan forests have been chopped down at 11 times the rate at which they have been renewed. In 1949, forests covered 20 percent of Sichuan Province. By the early 1980s this number had fallen to just 10 percent. In Jiangsu Province, only 4 percent of the total area of the province suffered from soil erosion and run-off to the rivers in the 1950s but this percentage rose to 23 percent 30 years later. Of the 220,00 square kilometers of lake and marsh along the middle and lower reaches of the Yangzi during the 1950s, only half (120,000 sq. km.) remained by the 1980s.
Increased silting of the river has raised a portion of the bottom of the Yangzi (the Jing Jiang section) above the surrounding land. Flood prevention along the Yangzi costs much more than along the Yellow River and many more people live along the Yangzi. A 15 billion RMB investment in a 600,000 square kilometer region on the upper reaches of the Yangzi can could make the region green and boost water storage capacity by perhaps 10 billion or 100 billion cubic meters. From "Great Chinese Disasters of the Twentieth Century" edited by edited Qian Zhong and published by Shanghai People's Publishing House.
People’s Daily 11/16/98 The State Development Planning Commision, The State Economic and Trade Commission, the Ministry of Finance, the Procurate, the Auditing Bureau [Shenji Shu] and the State Council Working Style Rectification Office [Jifeng Ban] issued an order on "Restoring Order to Electric Power Pricing and Stopping Illegal Imposition and Collection of Electric Power Surcharges"] and reaffirmed an earlier State Council notice forbidding unauthorized charges. A list of five hundred and sixty kinds of illegal surcharges specifically forbidden as examples of illegal charges was also published at the same time as the order.
Only the following kinds of electric power surcharges are legal: The Electric Power Construction Fund established by the State Council; the Three Gorges Project; fees approved by the Ministry of Finance for urban construction projects; and fees approved by the State Council for specific electric power network construction projects. Illegal fees are abolished. Power companies may only collect electric power fees according to the price schedule established by the State; a power company may not establish its own price schedule exceeding this level. Managers of enterprises which violate this order will be prosecuted.
People’s Daily 12/21/98 An auditing working conference turned in an examination of the financial records of 2130 cities and counties as well as water conservancy authorities in 31 provinces, and found over RMB 20 billion (USD 3 billion) in funds that should have gone to the central government. Nineteen provinces held back 3.5 billion RMB in water conservancy funds or 69 percent of the total that should have been transferred to the central government. Water conservancy money for twelve other provinces are yet to be checked. An investigation of where the water conservancy money went disclosed that 1.39 billion RMB went to building houses, miscellaneous office expenses, buying cars and setting up companies. A misappropriation of 237 million RMB (USD 30 million) was found among funds used for resettling people displaced by the Three Gorges project.
An examination of illegal electric power surcharges in 22 provinces turned up 12 billion RMB in illegal charges, 3.3 billion which had already been spent. A check of fines and administrative fees imposed by 1360 public security bureaus and grassroots units turned up 833 million in collections for illegal fees and 1 billion RMB in administrative fees that should have been sent to the central government, 330 million which had already been misdirected to other purposes.
A check of Guotai, Huaxia, and Nanfang among 88 securities companies and 1218 local branches found that 8 percent of the institutions made falsifications in their capitalization calculation, 7 percent on their debts and 45 percent on their profits. The Zhongbao and Rentai insurance groups had a total of 4.5 billion RMB in violation of economic laws and regulations. An examination of grain company accounts found that in 202.5 billion in new accounting entries, 27 percent of the total, RMB 55.9 billion were false loss accounts. The grain companies used 64.2 billion RMB of this and other funds for sideline businesses such as hotels and office buildings.
People’s Daily 12/23/98
The forest cover in the Chongqing Municipality portion of the Three Gorges project area fell from 40 percent during the 1940s to just 30 percent today. The increased soil runoff caused difficulties for the construction of the Three Gorges project.
People’s Daily 12/31/98 Premier Zhu Rongji on December 28 - 30 inspected resettlement and construction work in the Three Gorges Dam area. Premier Zhu said that he was very concerned about the quality of the construction of the Three Gorges Dam. Everyone working on the dam has a responsibility to history and to their grandchildren to assure that every detail of the construction is correct. Premier Zhu asked for thorough quality control in the design, materials, and construction of the dam. Premier Zhu asked that the management of the dam be strengthened and suggested that foreign engineers might be brought in to participate in the management of the construction. Premier Zhu said that the successful resettlement of the people displaced by the Three Gorges project is essential. The first phase of resettlement has been completed; the next phase will continue until 2003. In building housing, the wishes of the farmers and the ability to pay should determine the kind of housing that is built; farmers should not be forced to accept a house of a standard design.
People’s Daily 1/15/99 Three Gorges bonds issued by the China Yangzi Three Gorges Development Company will go on sale for investors on January 18. The bonds have an AAA rating. This is the first batch of Three Gorges bonds issued this year.
People’s Daily 2/17/98 Eighty percent of the 940,000 victims of the Summer 1998 Yangzi floods in Hubei, Hunan, Jiangxi and Anhui provinces will be in new housing by the Chinese New Year. This number equals the number of people who live in the Three Gorges area. Many people have been moved in order to return farm lands to lakes and rivers from which it was taken. This is a flood control measure. Total resettlement costs will come to RMB 3.5 billion.
2/15/98 At the close of 1998, 168,000 people from the Three Gorges area had already been resettled. They had been allocated about 10,000 hectares of land and 4.2 million square meters of housing floor space built for them.