LAND COMPENSATION REGULATIONS FOR WATER PROJECTS

C O N F I D E N T I A L BEIJING 019662 SIPDIS SIPDIS USDOC FOR 4420 TREASURY FOR OASIA/ISA - DOHNER/CUSHMAN STATE PASS USTR FOR STRATFORD, WINTER, ALTBACH STATE PASS CEA FOR BLOCK STATE PASS FEDERAL RESERVE BOARD FOR JOHNSON/SCHINDLER; SAN FRANCISCO FRB FOR CURRAN/LUNG; NEW YORK FRB FOR DAGES/CLARK E.O. 12958: DECL: 09/15/2016 TAGS: ECON EAGR EINV ENRG PGOV CH SUBJECT: LAND COMPENSATION REGULATIONS FOR WATER PROJECTS MIRED IN CENTER-PROVINCE RIFT CLASSIFIED BY: ACTING MINISTER COUNSELOR FOR ECONOMIC AFFAIRS CHRISTOPH ER BEEDE; REASON 1.4(B) AND (D) SUMMARY -------------- ¶1. (C) EMBASSY CONTACTS QUESTION WHETHER REVISED REGULATIONS ON COMPENSATION STANDARDS FOR LAND THAT IS EXPROPRIATED FOR DAM CONSTRUCTION WILL BE IMPLEMENTED IN SUCH A WAY AS TO MEET THE CENTRAL GOVERNMENT'S OBJECTIVE OF CREATING A NATIONAL STANDARD. INSTEAD, OUR CONTACTS BELIEVE THAT PROVINCIAL AND LOCAL GOVERNMENTS WILL CONTINUE TO ABUSE THEIR AUTHORITY, AND THAT, AS IN OTHER CASES, FARMERS IN THE PROVINCES WILL NOT BENEFIT FROM NEW BEIJING INITIATIVES BUT WILL CONTINUE TO BE OFFERED UNFAIR COMPENSATION FOR THEIR LAND. END SUMMARY. DRAWING ATTENTION TO A BIG PROBLEM -------------- ¶2. (U) REVISED REGULATIONS COVERING BOTH COMPENSATION STANDARDS FOR LAND REQUISITION AND PAYMENTS TO FARMERS FORCED TO RESETTLE DUE TO WATER AND HYDROPOWER PROJECT CONSTRUCTION WERE ANNOUNCED BY THE STATE COUNCIL IN AUGUST AND TOOK EFFECT ON SEPTEMBER 1. ACCORDING TO REPORTS, FARMERS WILL RECEIVE HIGHER COMPENSATION IF THE STATE CONFISCATES THEIR LAND TO CONSTRUCT WATER CONSERVANCY OR HYDROPOWER PROJECTS. THE REVISED REGULATIONS WILL PROVIDE RESETTLEMENT SUBSIDIES TO FARMERS EQUAL TO SIXTEEN TIMES THEIR AVERAGE ANNUAL OUTPUT VALUE OF THE PRECEDING THREE YEARS. STATE-CONTROLLED MEDIA CLAIMED THE NEW REGULATIONS WOULD MORE THAN DOUBLE THE AVERAGE SUBSIDY TO FARMERS WHO LOSE THEIR LAND FROM WATER PROJECTS. ¶3. (U) ACCORDING TO THE XINHUA NEW CHINA NEWS AGENCY, THE NEW REGULATIONS SEEK TO ADDRESS THE PROBLEM OF UNEVEN COMPENSATION WHILE ALSO RAISING THE STANDARD. THE CENTRAL GOVERNMENT WILL INCREASE THE ELECTRICITY TARIFF, IN PART TO FUND RESETTLEMENTS DUE TO DISLOCATIONS FROM HYDROPOWER PROJECTS. REPORTS ESTIMATE THAT AS MANY AS 22 MILLION AFFECTED PEOPLE WOULD RECEIVE THE HIGHER COMPENSATION, THEREBY ALLEVIATING A SIGNIFICANT SOCIAL STABILITY CONCERN, ACCORDING TO XINHUA. COMPENSATION STREAM COULD BE A POSITIVE FLOW... -------------- -- ¶4. (C) LI PING, STAFF ATTORNEY AT THE RURAL DEVELOPMENT INSTITUTE IN BEIJING, OFFERED CAUTIOUS OPTIMISM ON THE CENTRAL GOVERNMENTS EFFORT TO STANDARDIZE COMPENSATION FOR RESETTLEMENT. HE SAID THAT GIVEN THE LARGE NUMBER OF FARMER RESETTLEMENTS DUE TO WATER CONSERVANCY OR HYDROPOWER PROJECTS, THE REVISED REGULATIONS ARE GOOD NEWS FOR FARMERS. THE NEW COMPENSATION STANDARD AT SIXTEEN TIMES ANNUAL INCOME IS SIGNIFICANTLY HIGHER THAN THE TWO TO THREE TIMES ANNUAL INCOME THAT LOCAL GOVERNMENTS OFTEN GIVE IN PRACTICE. LI NOTED, HOWEVER, THAT THE NEW STANDARD FALLS SHORT OF THE MAXIMUM 30 TIMES AVERAGE ANNUAL INCOME ALLOWED UNDER THE LAND MANAGEMENT LAW, AND HE QUESTIONED HOW THE NEW REGULATIONS WOULD BE ENFORCED AT LOCAL LEVELS. ...BUT IN THE PROVINCES, THAT SINKING FEELING -------------- ¶5. (C) YU MEISUN, A BEIJING-BASED ATTORNEY WHO OFTEN REPRESENTS FARMERS IN LAND EXPROPRIATION CASES, STATED THAT HE DOES NOT BELIEVE THE REVISED REGULATIONS WILL BE EFFECTIVE. YU, WHO PREVIOUSLY PROVIDED LEGAL COUNSEL TO FARMERS INVOLVED IN HIGH-PROFILE LAND CASES IN DINGZHOU, HEBEI PROVINCE AND SHANWEI, GUANGDONG PROVINCE IN 2005, SAID THAT LOCAL OFFICIALS WILL IGNORE THE CENTRAL GOVERNMENT DIRECTIVE AND CONTINUE TO PROVIDE SUB-STANDARD COMPENSATION. CENTRAL GOVERNMENT REGULATIONS ARE NOTHING MORE THAN "PIECES OF TRASH" TO LOCAL OFFICIALS, HE STATED, AND LIKE OTHER BEIJING INITIATIVES, THE REVISED COMPENSATION STANDARD WILL FAIL TO GAIN TRACTION IN THE PROVINCES. LOOKING DOWNSTREAM: NATIONAL STANDARD TOUGH TO MEET -------------- -------------- ¶6. (C) JIA HUAQIANG, A PROFESSOR AT THE CENTRAL PARTY SCHOOL, AGREED WITH BOTH LI AND YU. AN EXPERT ON SUSTAINABLE DEVELOPMENT, JIA NOTED THAT AN IMPROVED COMPENSATION STANDARD FOR LAND THAT IS CONFISCATED FOR WATER AND HYDROPOWER PROJECTS IS NECESSARY FOR THE FUTURE OF CHINA'S ECONOMIC DEVELOPMENT. A LOW STANDARD WOULD ENCOURAGE LOCAL GOVERNMENTS TO LAUNCH MORE RECKLESS LARGE-SCALE DEVELOPMENT PROJECTS AND FURTHER THREATEN SOCIAL STABILITY BY INCREASING THE NUMBER OF DISENFRANCHISED FARMERS IN THE COUNTRYSIDE. ¶7. (C) JIA STATED, HOWEVER, THAT DIFFERING VIEWS EXIST BETWEEN LOCALITIES ON THE REVISED REGULATION. IT IS NOT CLEAR, HE SAID, WHETHER OR NOT LOCAL GOVERNMENTS WILL ABIDE BY THE REGULATIONS. IN GENERAL, JIA SAID, MANY LOCAL GOVERNMENTS AIM TO RESIST WHAT THEY VIEW TO BE CENTRAL GOVERNMENT INTERFERENCE IN LOCAL AFFAIRS, MAKING IT LESS LIKELY THAT LOCAL OFFICIALS WILL ENFORCE THE NEW COMPENSATION STANDARD. ¶8. (C) ZHANG JUN AT THE CHINA ACADEMY OF SOCIAL SCIENCES (CASS) AGREED THAT A NATIONAL COMPENSATION STANDARD WOULD BE DIFFICULT TO ACHIEVE DUE TO REGIONAL ECONOMIC DIFFERENCES AND LOCAL GOVERNMENT ATTITUDES TOWARDS CENTRAL GOVERNMENT INITIATIVES. HE ALSO NOTED THAT PROVIDING COMPENSATION NEAR URBAN AREAS OFTEN IS EASIER BECAUSE THE COMPENSATION CAN INCLUDE AN URBAN HUKOU REGISTRATION OR EMPLOYMENT OPPORTUNITIES IN THE CITY, BUT WATER PROJECTS ARE THE MOST PROBLEMATIC FOR COMPENSATION BECAUSE LAND FOR THE PROJECTS OFTEN IS CONFISCATED IN REMOTE RURAL AREAS. RANDT