Dam shows flaws in China’s economic model

Rob Schmitz Aug 9, 2012

Dam shows flaws in China’s economic model

Rob Schmitz Aug 9, 2012

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

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

Marketplace’s Rob Schmitz explains.

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

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

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

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

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

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

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

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

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

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

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

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

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

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

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

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

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

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

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

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

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