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
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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
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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...
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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
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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