Is China the new World Bank?

Friday, 01 April 2011
Teresita Cruz-del Rosario & Phillie Wang Runfei
BusinessDay

The Chinese are everywhere. Or, more accurately, Chinese money is everywhere, thanks particularly to the China Development Bank (CDB) and the China Export-Import Bank. As the two institutions responsible for all Chinese overseas financing, they are making waves around the world.

According to The Financial Times, Chinese lending in 2008-2010 surpassed World Bank assistance by approximately $10 billion. By the end of 2010, the CDB's reach extended to more than 90 countries, whose total indebtedness reached $141.3 billion.

So, is China reshaping the landscape of development assistance? In a nutshell, yes.

Consider the following: Chinese investment in Zambia's rich copper and coal reserves accounts for 7.7% of the country's GDP. In Saudi Arabia, the state-owned China Railway Construction Corporation built the Al-Mashaaer Al-Mugadassah light-rail project to ease traffic pressure during the annual Hajj pilgrimage to Mecca. There are even said to be plans for an Arctic highway to facilitate trade throughout the polar region.

Pristine environment may be taken over by Chinese hydroelectric dams under Hun Sen's watch

Children stand on a bridge across a river in the Teuk Chu valley resort in Kamport province, 146 km (91 miles) west of Phnom Penh, March 24, 2008. In the last two years, Cambodia's Prime Minister Hun Sen has agreed to at least four Chinese-funded hydropower projects as part of a $3 billion scheme to boost output from a measly 300 MW today to 1,000 MW in a decade, enough to power a small city. To match feature CAMBODIA-DAM/ REUTERS/Chor Sokunthea
Girls walk across stones in the river in the Teuk Chu valley resort in Kamport province, 146 km (91 miles) west of Phnom Penh, March 24, 2008. In the last two years, Cambodia's Prime Minister Hun Sen has agreed to at least four Chinese-funded hydropower projects as part of a $3 billion scheme to boost output from a measly 300 MW today to 1,000 MW in a decade, enough to power a small city. To match feature CAMBODIA-DAM/ REUTERS/Chor Sokunthea
People play in the river in the Teuk Chu valley resort in Kamport province, 146 km (91 miles) west of Phnom Penh, March 24, 2008. In the last two years, Cambodia's Prime Minister Hun Sen has agreed to at least four Chinese-funded hydropower projects as part of a $3 billion scheme to boost output from a measly 300 MW today to 1,000 MW in a decade, enough to power a small city. The sign reads, "Please keep the valley clean". To match feature CAMBODIA-DAM/ REUTERS/Chor Sokunthea
People play in the river in the Teuk Chu valley resort in Kamport province, 146 km (91 miles) west of Phnom Penh, March 24, 2008. In the last two years, Cambodia's Prime Minister Hun Sen has agreed to at least four Chinese-funded hydropower projects as part of a $3 billion scheme to boost output from a measly 300 MW today to 1,000 MW in a decade, enough to power a small city. To match feature CAMBODIA-DAM/ REUTERS/Chor Sokunthea

Chinese dams threaten Cambodia's forests, farmers

Tue Mar 25, 2008
By Ek Madra

CHAY ARENG RIVER, Cambodia (Reuters) - Along the Chay Areng valley in Cambodia's remote Cardamom mountains, children still scamper barefoot through one of mainland southeast Asia's last remaining tracts of virgin jungle.

If they take the same paths in a few years, they will probably have to be swimming.

Faced with a rapidly growing but power-starved economy, Prime Minister Hun Sen has decided the rivers flowing from one of the few elevated spots in a relentlessly flat country should become its battery pack.

With this in mind, in the last two years he has agreed to at least four Chinese-funded hydropower projects as part of a $3 billion scheme to boost output from a measly 300 MW today to 1,000 MW in a decade, enough to power a small city.

The indigenous communities who have lived off the forests in the Cardamoms since the dawn of time appear to be the ones who will be paying the biggest price.

"We have been living here without a dam for many generations. We don't want to see our ancestral lands stolen," said 78-year-old Sok Nuon, lighting a fire inside her wooden hut nestled in among the trees near the Chay Areng river.

"I do not want to move as it takes years for fruit trees to produce crops. By then, I'll be dead," she said.

WAR ON BLACKOUTS

Few people argue that Cambodia's 14 million people need more power.

After decades of war and upheaval, including the Khmer Rouge "Killing Fields" of the 1970s, the economy has finally taken off, growing at nearly 10 percent a year.

But its antiquated, mainly diesel-fuelled power plants can meet only 75 percent of demand, meaning frequent blackouts and unit prices around twice those of neighboring Thailand and Vietnam -- both factors inhibiting faster expansion.

With the closer ties Hun Sen has cultivated with Beijing in the last five years, Chinese cash and dam-building expertise has become a logical solution to what is one of the inevitable pains of breakneck growth.

"Chinese investment in hydropower is so important for Cambodia's development," Foreign Minister Hor Namhong said in January after meeting with his Chinese counterpart Yang Jiechi.

But critics maintain that much of the planning is taking place with scant regard for the long-term impact on the environment in a country where (80) percent of people still rely on agriculture for their livelihoods.

"Poorly conceived and developed hydro-power projects could needlessly and irreparably damage Cambodia's river system with serious consequences," said Carl Middleton of the U.S.-based International Rivers Network.

MUDDY WATERS

The Chinese embassy in Phnom Penh denied Beijing was taking any short-cuts in dam construction in Cambodia -- part of a massive aid package designed to ensure a compliant friend in the region.

"They comply with environmental standards and are approved by the Cambodian government," said a Chinese diplomat who did not wish to be named. "We just want to help Cambodia as much as we can."

But the Chay Areng project hardly appears to be a model of transparency.

The deal was signed in late 2006 with China Southern Power Grid Co (CSG), one of China's two grid operators, to build a 260 MW plant at an estimated cost of $200 million and with a completion date of 2015.

With no prior consultation, the first villagers knew of the project was when Chinese engineers turned up this year to start working on feasibility studies -- details of which CSG and the government are reluctant to discuss.

Environmentalists who have conducted their own studies say the dam's lake will cover 110 sq km (42 sq miles) and displace thousands of indigenous people in nine villages.

More than 200 animal species, including elephants, sun bears, leopards and the endangered Siamese crocodile, would be affected upstream, said Sam Chanthy, head of the NGO Forum, a foreign-funded non-governmental organization in Phnom Penh.

Downstream, the delicate ecosystem of the flooded forest, home to some of the world's rarest turtle species as well as hundreds of types of migratory fish, would also be hit by disruptions to water flow, he said.

"It won't take long for these invaluable assets to disappear when the dam is built," said Eng Polo, of wildlife group Conservation International.

(Editing by Ed Cropley)

Cambodian dam plans suffer information drought

Mar 26, 2008
By Andrew Nette
Asia Times (Hong Kong)

PHNOM PENH - Cambodia has rejuvenated old plans to develop the country’s huge hydropower potential, big-ticket schemes to be led by Chinese investors which will simultaneously fill government coffers and have severe social and environmental impacts on local communities.

Like neighboring Laos in the 1990s, foreign donors, electricity-hungry neighboring nations such as Thailand and Vietnam and big business interests in China are all keen to transform Cambodia into a major hydropower generator. Previous plans for developing Cambodia's hydropower potential were put on hold due to political instability and the economic chaos that followed the 1997-98 Asian financial crisis.

But with recent rapid economic growth rates in the region - including Cambodia, which notched gross domestic product growth of around 10% in 2006 and 2007 - hydropower schemes are apparently back on the national agenda. Cambodian Foreign Minister Hor Namhong told a donor’s meeting last year that his government plans to make Cambodia into the "battery of Southeast Asia".

A 2003 plan developed by the Ministry of Mines, Minerals and Energy, with the support of the Mekong River Commission, estimated that Cambodia has the potential to generate 10,000 megawatts of energy for internal use and export. Almost 50% of that power would be generated from projects along the mainstream Mekong River, which runs through Cambodia.

Foreign donors continue to play an important supporting role, particularly the Manila-based Asian Development Bank (ADB) through its so-called Mekong Power Grid Plan, a plan it has been pushing since the early 1990s which envisages an interconnected power grid across the entire region.

The ADB predicts that Cambodia will initially be a net electricity importer but will become a net exporter once the country's full hydropower potential is realized. However, local and international environmental and other groups are warning that large-scale hydropower development could create serious problems, impacting on some of the country's most pristine ecosystems and reducing water flow and fisheries with major consequences for the livelihoods of thousands of people.

"We are not against development or hydropower," said Ngy San, deputy executive director of the NGO Forum, an umbrella body of nongovernmental organizations. "What we want to do is to ensure poverty reduction and sustainable development, which is also the government's plan.

"We are also working to ensure that Cambodian decision-makers will learn the lesson of other countries in relation to hydropower, and not repeat those mistakes," said San. What is potentially different for Cambodia is the role China is expected to play in developing the resources.

China’s and Cambodia’s political and economic ties have grown enormously over the past decade. China is the nation's single largest investor, and Chinese state companies, often financed by state-owned financial institutions such as the Chinese Export-Import Bank, are the main players in hydropower dam development.

Phnom Penh has identified about 14 priority projects, of which six are under development - all by Chinese companies. For instance, China's Sinohydro is building a 145-meter dam on the Kamchay River in Kampot province, representing Beijing’s biggest investment in the country.

There is no disagreement among officials and activists that Cambodia needs to generate more power. Currently, only 20% of the population has access to cheap, reliable sources of electricity, mainly in urban areas. Meanwhile domestic demand for electricity is estimated to be growing at around 20% per year.

"It is simple - development needs electricity," said Touch Seang Tana, an advisor to Cambodia's Council of Ministers and a fisheries expert. "Power is currently very expensive in Cambodia, particularly in regional areas that are the most disadvantaged."

The government wants to provide services to the rural communities, but this is difficult to do without electricity," he said. "The actual number of people impacted negatively [by dams] is small and overall the entire benefit to the nation is significant. The government has to balance all these factors."

Activists strike a more cautionary note. "The rush to develop our hydropower potential needs very careful study," said NGO Forum’s San. "However, it must include consultation with impacted communities, and comply with all relevant national and international laws. There are some in the government that share our concerns, but they find it difficult to act because they are not the real decision makers."

NGOs complain that the decision-making process in relation to hydropower development lacks transparency. While a plethora of departments and regulatory bodies participate in the process, observers say the agenda appears largely to be set by the Ministry of Industry, Mines and Energy, with the direct intervention of Cambodian Prime Minister Hun Sen.

The lack of transparency is accentuated by China’s involvement, critics say. "There is almost no information in the public domain on the financing arrangements for Cambodia's hydropower projects," stated a report released jointly in January by the US-based International Rivers Network (IRN) and the NGO Forum.

"The lack of information from the Chinese dam builders is very disturbing - they do not consult or share information," said Seng Bunra, country director for Conservation International in Cambodia (CIC). His organization works in the Cardamom Mountains Protected Forest Area, one of the largest continuous swathes of rainforest left in Southeast Asia and home to a number of globally endangered species.

According to the CIC, there are plans to build a number of dams in the protected area, all by Chinese companies. According to the plan’s critics, the number of hydropower projects scheduled for construction in protected forest areas illustrates the fact that existing laws are insufficient to protect the environment and affected communities.

The situation is particularly serious, notes the report by the NGO Forum and IRN, given that "compared against the already less than admirable environmental and social standards of Western bilateral donors and export credit agencies ... Chinese institutions are noticeably weaker".

One of the projects under scrutiny is the proposed Sambor dam on the mainstream Mekong in central Kratie province. A number of construction options are being studied, including one that would only block between one-quarter to one-fifth of the river and have, according to Council of Ministers adviser Tana, only "minimal" impact.

NGO Forum’s San concedes that there are mixed views about dam-building and the economic impact involved for the potential affected communities. "Is there a real need for electricity in Thailand? Yes. But have the economics been thought through, have any preliminary contracts for power export from Cambodia to Thailand actually been signed? No. We want to see a good economic analysis, including a full cost-benefit analysis before projects go ahead," San said.

(Inter Press Service with editing by Asia Times Online)

ADB, China to help Greater Mekong Subregion assess poverty-reduction projects

11.13.07

MUMBAI (Thomson Financial) - The Asian Development Bank (ADB) said it will manage a 500,000 usd technical assistance grant (TA) funded by China to help countries in the Greater Mekong Subregion (GMS) develop results-based monitoring and evaluation systems used in assessing efforts to reduce poverty.

The grant will be used to assist Cambodia, Lao People's Democratic Republic and Vietnam enhance skills, resources and systems for results-based monitoring and evaluation, the ADB said, adding funding is expected to be completed in October 2009.

The technical assistance grant will be used to raise proficiency in monitoring and evaluation, conduct research on evaluation capacity development and increase knowledge sharing, the agency added.

Olivier Serrat, senior evaluation specialist (knowledge management) said: 'GMS countries have recognized the shortcomings of their monitoring systems. The 14th GMS ministerial meeting held in Manila in June 2007 resolved to address this. The TA will provide related knowledge products and services.'