China Comment

Energy, Environment, and Economy

Citizen Influence on Mega-Projects

China added 330 gigawatts of electricity from 2005-2008. Some commentators state that China will need to add the equivalent of Britain’s electrical capacity every year for the next several years to keep up with current demands (Britain’s total capacity is 83.6 GW; the US added 105 GW from 2005-07).

China’s government sees energy security as a vital part of their country’s stability, and citizen challenges to already-planned projects that involve power plants, refineries, or hydroelectric dams meet stiff resistance from the Government. Despite this resistance, citizen-input has been present in several cases.

Chinese citizens have used public participation through the involvement of legislators and some alternative dispute resolution techniques in order to influence development of several power projects. Whether ordinary citizens can influence power projects’ development seems tied to local official involvement, face,  political power, and potentially the province’s economic wealth.

How Public Influence Works

Public involvement in processes is often expressed through informing legislators who take issues to higher levels and act as “champions” for citizens.

It is rare in China for a citizen to affect power projects’ development by sitting down with officials and a neutral third party agency to determine what will happen. Instead, government officials trade power and influence to decide how power projects will be developed and where they will be placed. Ordinary citizens, however, get involved in the process by informing legislators about issues and hope they take concerns to higher levels and act as “champions” for the citizens.

Citizens Without Power (But About To Gain Power Generation)?

Chinese citizens may protest some power projects, but outright protests tend not to gain positive results.

Citizens protested the building of dams near Pubugou in 2004. These dam projects would result in many citizens in losing their land. Pubugou is located in a poor part of Sichuan where the average per capita income was 12,930 RMB in 2007. Rural residents’ net income per capita was 4,120 RMB. (average per capita income in Beijing was 21,864 RMB in 2006).

“More than 100,000 people protested over several days. . . until riot police crushed the demonstration,” and several people were killed at Pubugou over the development of the planned hydroelectric dam. (Jim Yardley, NYT, 2).

Prior to the rioting, citizens communicated with government officials and lodged complaints when the country decided to construct dams that would flood and destroy land.  However, the national need for development preempted those people’s attempts to preserve the status quo, as is detailed in Andrew Mertha’s book China’s Water Warriors.

Citizens With Power (Moving Power Generation)

A different situation prevailed in Guangdong province, where citizens are richer.

Sinopec and Kuwait National Petroleum Company agreed in 2007 to construct the Nansha oil refinery between Hong Kong (xianggang) and Guangzhou in order to ease “the tension of Guangdong’s petroleum supply, [promote] . . . energy security and . . . social stability.”(Yang).

The refinery was estimated to cost around $5 billion to complete, making the project China’s largest joint venture.1 The project would process 15 million tonnes of crude oil a year2 and produce 800,000 tons of ethylene.3 The Nansha Refinery would produce refined crude oil and ethylene.4

Following the project’s approval by the NDRC in 2007, residents inside eight square km of land were removed to make room for the project. However, the project still needed to complete an Environmental Impact Assessment (EIA) and then a half-month public comment period.

An EIA was made, but there was concern that the EIA would not be made public. Groups from Hong Kong lawmakers, to bloggers, to Greenpeace called for the EIA to be made public. The Government pushed back, telling media not to run “comprehensive coverage” of the EIA, but that they would in due time make the report public. (Chloe Lai & Shi Jiangtao, Nansha Refinery ‘Likely to Move’: Delta Petrochemical Plant Could Shift to Western Guangdong After Opposition From HK, Macau, S. China Morn. Post, Mar. 21, 2009.)

Although some citizens hoped the EIA would come out in March; as late as May the EIA was not released. (Wang).

Ultimately, disputes surrounding the Nansha Refinery situation were resolved through general administrative processes and the interference of several political movers-and-shakers in Guangdong Province.

The public push-back against the Nansha refinery found champions in government agencies to support their ideas. There was institutionalized lobbying on the part of 14 Guangdong provincial People’s Congress deputies, but there were no publicized mass protests or marches.

Guangzhou’s Special Champions

The government eventually decided to move the refinery. Government champions were noted for succeeding but little attention was paid to the citizens who initially suggested changes. Lobbying by powerful representatives in Pearl River Delta cities was likely vital to reconsideration of the refinery’s location. (See Chloe Lai & Shi Jiangtao, Nansha Refinery ‘Likely to Move’ Delta Petrochemical Plant Could Shift to Western Guangdong After Opposition From HK, Macau, S. China Morn. Post, Mar. 21, 2009).

Perhaps as a result of public cries for the Environmental Impact Assessment (EIA) report’s release, the report was issued in the same year it was made. This is quite a feat considering that historically, EIA reports have been significantly delayed or not released.

The political power of Guangzhou’s local representatives, when coupled with Hong Kong residents’ affluence and the important central policy of lowering pollution in the Pearl River Delta (PRD) region helped encourage higher officials to sit down with representatives and ultimately decide to to relocate the refinery further west along the coast, to Zhanjiang.

In the wake of the EIA statement, Zhanjiang, a place that only has a yearly GDP per capita of “17,973 yuan (HK$20,400), nearly 20,000 yuan lower than Guangdong’s average”, became the new planned home for the refinery. (Ivan Zhai, Guangdong to Help its Backward West Prosper: Region is Earmarked for Heavy Industries. S. China Morn. Post, Sept. 30, 2009.)

Citizen Involvement and Power Projects in Conclusion

The Nansha refinery case demonstrates that power project permitting can be influenced and local concerns can be addressed when local officials express distaste for nationally approved policies. Local officials’ may have considerable power even when state-owned corporations such as Sinopec are involved in the siting process for large projects.

However, the Nansha Refinery situation could be an isolated case where politics and or money influenced the State’s willingness to conduct, and then release an EIA assessment and relocation, as well as the State’s openness to dialogue.

Footnotes

1 Chloe Lai & Shi Jiangtao, Nansha Refinery ‘Likely to Move’: Delta Petrochemical Plant Could Shift to
Western Guangdong After Opposition From HK, Macau
, S. China Morn. Post, Mar. 21, 2009.

2 Zeng, supra note 212.

3 Chloe Lai, Key Report on Nansha Refinery Under Wraps, S. China Morn. Post, Mar. 20, 2009.

4Winnie Zhu, China Approves $5 Billion Sinopec-Kuwait Oil Project, Bloomberg, Dec. 4, 2007, available at http://www.bloomberg.com/apps/news?sid=aP3B6lsQZ3QA&pid=20601080 (last visited Nov. 1, 2009).

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1 April, 2010 Posted by | China Democratization, China Energy | , , , , , , , | Leave a comment

Isn’t That Odd? : Segways & Flamethrowers

Here’s an amusing article describing Chinese preparing for anti-terrorism drills.

Proximately from Engadget-but originally from Xinhua

Xinhua’s photo gallery is here: Although the Segway use can be justified (sort of- though they would seem to be pretty difficult to balance under stress conditions), a question arises looking at Xinhua’s photos, why is a flamethrower necessary for anti-terrorism drills at the Olympics?

 From Xinhua

In recent years, China installed fire extinguishers in Tiananmen to prevent people being lit on fire, after certain high-profile self-immolation protests in 2001.

One wonders how much danger the Beijing security details are expecting to handle– and with what degree of deadly force. I spoke with an Olympic volunteer and was told they were very concerned, as all people at all Olympics are, about incidents at entrances to Olympic venues.

Another especial reason for Beijing’s security worries; As recently as May 2008 an unexplained explosion that may have been intentional, went off on a Shanghai bus. Xinhua didn’t initially attribute the explosion to terror, but TIME Magazine and people on the ground have suspicions. At minimum, following the explosion, Shanghai instituted new regulations about carrying certain materials on buses and increased anti-terror patrols, which leads one to believe that there may be some reason for these heightened concerns.

With luck, nothing untoward will happen in China during the Olympics. For China’s sake, if something does happen, hopefully the police/military response is proportional and appropriate and that the coverage of said problem is transparent.

One thing that seems quite Odd is China has long believed very strongly that ignoring a problem, even after the problem has become well known, allows the country to save face. By covering-up details, forbidding publication of negative stories, and making everything seem happy, Chinese officials seek to win accolades (As I discuss in an earlier article).  Thus, they barred reporters from T$$$bet during the recent disturbances, then denied Chinese-instigated abuses (which may or may not have happened- since the West lacked independent reporting all it really has is a “monks said/Beijing says” dichotomy).

Simon Elegant at TIME Magazine thinks the media’s coverage style is changing and the Chinese government is more willing to admit to problems rather than covering-them up; but he also points out difficulties suffered by Chinese trying to discuss incidents online.

Oh China, such an odd and amusing, but often frustrating place.

7 July, 2008 Posted by | China Stability, Isn't That Odd? | , , , , , , , , , , | 2 Comments

Criticism in China

The WSJ’s China Journal called attention to an interesting analysis of Chinese being critical in their blogs by calling attention to a paper presented at the Chinese Internet Research Conference that was a content analysis “conducted on more than 500 blogs with political content and discussion of news events from 2006.”

It underlied some of the challenges facing free speech and the “chilling effect” of control in Chinese society.

More research needs to be done in regards to whether challenging ideas are being posted and deleted by censors, posted and deleted by the bloggers, or if quite simply no one dares set their opinions down in digital ink.

Only 61% of 500 blogs with political analysis studied by Ashley Esarey of Middlebury College expressed criticism of some “important” group in society. 81% of Chinese newspapers “did the same.”

But the amount of “real criticism” is overstated by the raw numbers.

Graphical Representation linked from WSJ China Journal Blog

* A chilling 0% gave implicit or explicit criticism of the head of state.

I recall one teacher I had in China who shut the door whenever we discussed political terms, and would nearly hyperventilate whenever foreigners criticized their own political leaders. She couldn’t believe that foreigners could be so audacious.

* More upsetting, 0% gave criticism of local government leaders.

This belies a system where local government leaders have disproportionate power to harm people under their control and therefore, people fear to criticize them openly (at least in print–there is plenty of criticism happening verbally). As Chen Guidi discusses in Will the Boat Sink the Water: The Life of China’s Peasants, a book written by Chinese researchers investigating allegations of power abuse, there is a systemic problem of power concentration in the hands of a few elites, especially at lower levels of government.

* 2% gave explicit criticisms of local governments.

* 2% gave implicit criticisms of local governments.

* 8% explicitly criticized the national government.

Presumably, criticism in the aggregate should be easier to do than criticising any particular cadre. It should be noted that in the past it has been all right to criticize certain figures in government; from Chen Liangyu of Shanghai (busted in a corruption probe). Also, after Jiang Zemin stepped out of power, many made fun of his antics, especially those who were upset about his handling of the SARS epidemic.

*  12% practiced implicit criticism of the central government.

Interestingly, only 2% contained criticism of foreign countries. When contrasted to popular perceptions of rising Chinese nationalism, this low proportion merits further investigation.

* 19%, combined, criticised national and local phenomenon (which would include disasters like the snow emergencies in January/February.)

* 6% criticized public figures, private individuals or celebrities. (This would include criticisms of celebrities having more than one child, which became a big issue.)

* And 10% criticised corporations. Some of that criticism, though, might not be rooted in reality; instead it might be mercenary. As a BusinessWeek article states: “Plenty of companies are willing to pay for positive spin. PR outfits hire students to write postings that boost certain brands and criticize the competition, says a staffer at a Western PR firm in Beijing. The job description of one online help-wanted ad reads: “Publicize and popularize [products] via online forums and blogs. Send at least 50 propaganda posts per day.” Workers are offered 1.5 cents per post. ” (Imagethief does more analysis of this phenomena).

* As the study demonstrates, China’s civil internet society still has a far way to go before it can be counted on as a significant independent commentator on political issues at the crucial local and macro head-of-state levels.

14 June, 2008 Posted by | China Democratization | , , , , , , , , , , | Leave a comment

China’s Oil Price Freeze

Considering recent shortages in fuel in some places in China, as reported by today’s WSJ and an article by the Jamestown Foundation, many may wonder why China is leaving its oil prices at the same level since the last raise in November 2007?

What follows is an analysis focusing on bank loans and stability concerns. More work needs to be done looking into the elite political decisions, namely the discussions between ministers in charge of different portfolios since that can also affect these decisions, but that will have to wait for later.

China wants to present a good image to the world while it prepares to host the Olympic games. The Olympics are a coming-out ceremony for them, an opportunity for much 爱国 (aiguo) or love of country/patriotism. Red, the color of China, appears everywhere. Even PEPSI changed its traditional blue to red in the run up to the Olympics. As one Chinese said in the article: “I thought it was a good idea when I saw those promotional cans. They’re supporting Team China.”

So, what stereotypes does China have to promote to present a good image of their country?

1.) China is not backward

Thus they have retranslated many formerly amusing signs that made little sense in English, such as “Deformed Man” signs outside toilets for the handicapped.

2.) China is ruled by law and order and every Chinese loves China.

Thus, they will increase security and recently presented new regulations aimed at discouraging protestors, both from outside and inside the country. Additionally, the recent clampdown on foreigners overstaying and sometimes working on tourist visas is somewhat based on this. China wants to catalogue all the people inside the country. Laxity in law enforcement is dissipating as the government becomes concerned that foreign elements might seek to upset the festivities.

This also explains the move to ban liquids on Beijing subways starting on May 9th, which appears to be based on International Flight legislation banning liquids on airplanes, and the ban on liquids in other major cities’ subways around the world.

Additionally, the ban of reporters from travelling freely in T*b*t is another example of China trying to present a good “face” to the world– if no one is seen protesting, then it doesn’t happen.

And of course China’s press has cracked down against “negative stories”, and the Hong Kong-based South China Morning Post and other media outlets routinely provide evidence of the country’s greater crackdowns on the free speech of the press. (“Free media for Games = media free of bad news, one city says.” South China Morning Post. March 20, 2007.); also see an April 30, 2007 report on: “The Olympics countdown – repression of activists overshadows death penalty and media reforms”

3.) China wants its economy to keep growing.

China has not reevaluated its currency extremely fast in order to control inflation since it fears (since 2007 in fact, when it had only appreciated 5% against the dollar since the July 2005 depegging, compared to the over 20% it has appreciated by April 2008) that exporters will not be able to survive if there is a rapid reevaluation. Chinese exports to the world have risen exponentially since the early 2000s as the multifiber agreement and trade protectionist agreements expired.

If exporters start suffering, then bad loans could accumulate back to levels not seen since 2005/6 when worries about China’s 10-45% nonperforming loans in state banks led some people to predict an imminent banking collapse– that did not happen, however (China claimed state banks NPLs were only 9.5%) . China seems to have cleaned up it banking act (surprisingly quickly), making its banks at least as solvent as those in America and Europe wracked by subprime.

Some argue that China’s state banks’ cleaned up their balance sheets. However, it appears that some exposure might be hidden. According to the 2006 NYT article: “China Construction had turned in the best numbers at that point, reducing its share to 3.92 percent of loan assets late in 2004, down from 17 percent in 2002… But the risk adviser began cautioning that bad loans were being hidden at the bank’s branches, erroneously labeled as good loans, even though company records showed that they were impaired. He told bank officials that in Beijing and Tianjin alone, he had uncovered $750 million in bad loans that had been deemed good.”

According to an article in Britain’s Telegraph from December 2006; “Less understood is that a sharp rise in the yuan could be the last straw for China’s banks, sitting on a network of loss-making factories living off marginal exports. Standard & Poor’s said a 25pc rise in the yuan combined with a 2pc rise in interest rates would slash corporate profits by a third.”

All these reasons may explain why China raised the reserve requirement to 17.5%. China’s leaders don’t want to risk a hit to their economy’s growth and want to insulate themselves from runs on banks that might happen if loans start to go bad.

As one professor said in regards to a 2006 report on China’s banks, quoted in the NYT: “If there is a slowdown, there will be a day of reckoning. It might be in a long, long time or it might be the day after the Olympics.”

BUT WHY WOULD RAISING GAS PRICES HURT THIS?

Considering all the unrest and trouble that China has recently suffered in T*b*t, and with increasingly loud voices calling for accountability in the construction of school buildings, China wants to avoid more unrest.

With inflation at around 8 percent on the year already, and likely to climb higher, increasing prices for gasoline and ending subsidies can send that rocketing even faster. China’s low per person GDP means that non-subsidized gas will negatively effect farmers, and small businesspeople disproportionately. This could cut into entrepreneurialship and send some to protest, like people have already done in India and Malaysia where “the pump price of gasoline rose Thursday by a whopping 41 percent to 87 cents a liter, or $3.30 a gallon.”

The question is, will gas shortages, caused by undersupply (due to price controls) result in more unrest than raising prices. It appears that as far as the Chinese leadership is concerned, they believe it is better to keep prices low, considering all the other hits to the world economy.

Therefore, I predict that if gas prices in China rise before the Olympics, they will rise much less than they have elsewhere in the world. More likely, the prices will be raised after the Olympic ceremonies are complete.

12 June, 2008 Posted by | China Economy, China Energy, China Future | , , , , , , , , , , | Leave a comment

Unequal Wealth, Inflation, and Harmonization

President Hu’s policy of a harmonious society, which encourages a move toward slower, more manageable economic growth informed by environmental awareness and greater concern for the poor could be seen as a great leap forward for the Chinese toward a sustainable development model. However, the policy has increasingly resulted in greater degrees of “harmonization” (read about it and see a bizarre chinese video HERE) and suppression of free speech as the society grows increasingly challenged to appeal to ever-diverse interests.

In order to ensure harmoniousness in the face of unique challenges to China’s future, its leadership (and HERE for a more indepth look at the leaders’ CV’s) might be forced to take drastic measures to contain stresses originating from China’s rapid, but inequitable economic growth.

China’s economic progress continues at a rate of greater than 10% for the past several years, and despite cyclical shocks and a worldwide economic downturn, the Chinese economy appears strong enough to expand. This growth rate and the growth rate of other developing countries brought exuberance to the Shanghai stock market, with stock prices up to an average of 42 percent of valuation over earnings as of July 2007, according to Bill Powell of TIME Magazine. Although the Shanghai stock exchange was down 21% in 2008 by February, and was down nearly 50% in April from its high of 6,124 points reached in October 2007, the Chinese economy is still on pace to grow a bit over 9 percent, according to the World Bank.

With such high and constant growth rates over the past decade (where nearly all years recorded over-ten percent economic growth), inflation is becoming a problem. Even worse, food prices are rising higher than China’s overall rate of inflation. As China’s inflation grows, wealth disparity and purchasing power parity becomes a greater source of social instability as people lose access to amenities they once could easily purchase.

China’s Gini coefficient, used to measure income disparity, is now above .45, according to the 2003 UN Human Development Report, a number above which demonstrates a potentially dangerously unequal society on par with many economically imperiled Latin American states. In comparison, China in 1980 boasted a .33 Gini coefficient (higher numbers indicate greater disparity), according to AsiaTimes. The United States boasts a .47 Gini coefficient, up only eight points from 1970, according to Arthur Brooks in the Wall Street Journal.

Seeking a balanced economic growth rate was a major goal of President Hu Jintao’s first term. However, Hu’s “Go West” campaign to develop poorer interior regions failed to spread wealth as rapidly as was hoped– much more work needs to be done. This lack of development, and increase in rising foodstuff and transportation prices risks increasing the amount and vehemence of public protests.

Interestingly, (and ignoring for the moment the mass T1b1tan unrest) the reported numbers of protests has actually declined, but China is notorious for ordering newspapers not to report embarrassing stories. Jonathan Watts of Britain’s The Guardian discusses China’s press crackdown against “negative stories” in detail, and the Hong Kong-based South China Morning Post and other media outlets routinely provide evidence of some Chinese officials’restrictions on individuals, and of the country’s greater crackdowns on the free speech of the press. (Staff Reporter. “Free media for Games = media free of bad news, one city says.” South China Morning Post. March 20, 2007.); also see an April 30, 2007 report on: “The Olympics countdown – repression of activists overshadows death penalty and media reforms” and of course the newest info on curtailing press freedoms in coverage of the Sichuan earthquake.

As worries about rising inflation and unbalanced economic growth increase, China becomes increasingly secretive, restricting press freedoms. Today makes me recall something that happened at the end of the decade of the 1980s; a time of widening press freedoms, rising inflation, exhuberance of the future and many people gaining wealth while others were left out. This led to protests and marches that were eventually suppressed to international disdain– a suppression that was partially modelled on how President Hu, then Provincial Secretary of T*b*t cracked down on social unrest there.

If economic inequalities lead to greater citizen unrest, it is likely President Hu will look to his past experience and party ‘successes” and enact increasingly draconian restrictions, rolling back much of the late-20th Century’s increased journalistic openness- with a goal of preserving stability and maintaining a harmonious society.

The question is, though, when will these economic inequalities come to a boiling point? It isn’t going to happen before or during the Olympics, but depending on what happens with China fuel subsidies, food prices, and inflation, the protest-barometer could be interesting to watch sometime after February or June 2009.

-An earlier version of this article was written in October 2007

5 June, 2008 Posted by | China Economy, China Future | , , , , , , , , , | 1 Comment