China’s Influence on World’s Rivers Grows

Grace Mang
Friday, December 10, 2010

Since World Rivers Review last took stock of Chinese dam builders in 2007, China has emerged as the world leader in the international hydropower industry. The number of overseas Chinese dam projects that we are aware of has increased from 46 to 266. Chinese overseas dam builders are now active in 65 countries. Developing countries have welcomed Chinese dam builders and the loans offered by Chinese banks.

While all these new dams don't bode well for the world's rivers, some potentially positive trends are emerging. Just a few years ago, Chinese companies appeared to be willing to take on highly destructive projects that had been shunned by western dam builders. In 2007, Chinese dam builders were involved in the Merowe Dam human rights disaster in Sudan. Following the completion of the Three Gorges Dam project in 2006, there was a concern that China's newfound expertise would lead to a proliferation of mega-dams around the world.

But in the past three years, the Chinese government has begun to realize that social and environmental sustainability is in its long-term interest. It has urged Chinese firms to follow stricter environmental and safety standards abroad. The Chinese ministries of Commerce and Environmental Protection are currently finalizing environmental policy guidelines for overseas Chinese investment.

Some Chinese companies have also recognized the need to meet their international responsibilities. Sinohydro, a Chinese state-owned enterprise and the world's biggest dam builder, is currently developing an environmental policy for its overseas operations. Through a policy dialogue with Sinohydro, International Rivers has made it clear that if Sinohydro wants to become a global leader in this industry, it must have an environmental policy that reflects the highest international standards. That message appears to be heard. Sinohydro has looked at international standards, such as those adopted by the World Bank, for guidance.

Other Chinese dam builders have also emerged as potentially big players in the international hydropower market. Dam builders such as China Gezhouba, China Southern Power Grid Corporation and Datang International are some of the new actors that are eager to obtain a larger share of the international construction market but currently lack demonstrable environmental or social safe-guards. While we are hopeful that the positive steps being taken by the Chinese government and Sinohydro will influence these dam builders, International Rivers will push for stronger environmental and social safeguards as we expand our policy dialogue to include other Chinese dam builders.

Growing awareness

One critical development has been the growing awareness, both inside and outside of China, of the huge role China is now playing in building big dams abroad. In 2007, the political space for monitoring Chinese overseas dam builders, let alone engaging in a dialogue with them, was non-existent. Today, International Rivers works in partnership with a growing group of Chinese NGOs to monitor and engage with Chinese dam builders. Beyond China, environmental and human rights groups in host countries are more aware of the different strategies and advocacy avenues available to them when Chinese actors are involved in projects in their countries.

There have been some successes. In Gabon, Brainforest – a local environmental NGO – succeeded in getting China Exim Bank to suspend a loan because it violated Exim Bank's own environmental guidelines. The dam was to be built in a national park. And in another case, Sinohydro has agreed to work with the Global Environmental Institute, a Chinese NGO, in an effort to address the social and environmental impacts of the Nam Ngum 5 Dam in Laos.
There have also been failures. Despite committing to green finance principles, the Industrial and Commercial Bank of China recently granted an export credit for hydropower turbines for the hugely destructive Gibe 3 Dam in Ethiopia, a project that will have significant impacts on the ecosystems and people of the Lower Omo Valley and Lake Turkana region in Kenya.

The story of Chinese dam builders still has no clear ending. Policy changes at China's leading dam builder and financier are important first steps. Yet as we know from other institutions, there is often a big gap between an environmental policy and actual practice on the ground. However, three years on, the evidence suggests that Chinese dam builders and financiers are not becoming the rogue players we had all feared. Indeed, they might emerge as good corporate citizens with leading social and environmental standards.