ECONOMIC DOWNTURN POTENTIALLY SPURRING SOUTHWEST CHINA'S

C O N F I D E N T I A L SECTION 01 OF 02 CHENGDU 000035

SIPDIS

DEPT FOR EAP/CM AND G

E.O. 12958: DECL: 2/19/2019
TAGS: ECON PGOV SENV CH
SUBJECT: ECONOMIC DOWNTURN POTENTIALLY SPURRING SOUTHWEST CHINA'S
HYDROPOWER PROJECTS

CHENGDU 00000035 001.2 OF 002


CLASSIFIED BY: James A. Boughner, Consul General, U.S. Consulate
General, Chengdu.
REASON: 1.4 (b),(d)




1. (C) SUMMARY: Post recently learned from local NGO and
academic contacts that the economic downturn appears to be
pushing Yunnan's provincial government to move forward with
hydropower projects on the Nu River, previously put on hold by
the central government, as a means to funnel government
investment into major infrastructure projects. Despite previous
objections, the central government may also now be supporting
construction of these dams, considers information on them to be
classified, and reportedly has blocked requests to make
information about the projects public. Some environmental NGOs
based in Yunnan are steering clear of this sensitive project,
focusing instead on areas where they can easily cooperate with
local governments. End Summary.

Renewed Plans to Dam the Nu River
--------------


2. (C) Yunnan's provincial government is seeking to move forward
with the controversial Nu River dam project, according to Yu
Xiaogang from Green Watershed, a Kunming-based NGO contact who
previously worked for the Yunnan Academy of Social Sciences. Yu
said that current plans call for China Huadian Corporation to
build four dams along the Nu River. These four larger dams will
retain roughly the same volume of water behind as a plan for 13
smaller dams originally proposed in 2004 would have. The
originally-proposed series of dams would have generated more
power than the Three Gorges Dam and would have displaced 50,000
farmers, according to a 2005 article published in China Daily.
Yu said the revised dam project would likely displace a similar
number of people.


3. (C) Yu claimed that the Yunnan provincial government sees dam
construction on the Nu River as a way to maintain a high rate of
GDP growth. Yunnan's newspapers echo national-level calls to
ensure GDP growth at or above 8 percent in 2009. Recent print
media and at least five television reports have also publicized
the benefits of the Nu River dams, a move Yu sees as trying to
garner popular support for the project. The effort to generate
support comes despite the claim that local communities in the
dam area may gain little direct economic benefit from the
project. A Consulate contact at the Sichuan Academy of Social
Sciences told us that local areas often reap direct economic
benefits from small and medium sized dams that can be built and
managed at the local level, but not larger dams like those
planned on the Nu River.


4. (SBU) If the Nu River dams receive approval from the central
government, Yunnan would probably be able to use this project to
lobby for an increased share of the four trillion RMB (USD 536
billion) stimulus funding available from the central government.
An academic from neighboring Guizhou Province told Congenoff
that a greater proportion of the stimulus funding would go to
provinces that have centrally-approved, large-scale projects.

NGOs Have Limited Influence~
--------------


5. (C) Local NGOs appear to have limited ability to influence
government decision making about the proposed hydropower
project. The central government turned down a request from NGOs
to make environmental information about the river and the dam
project public. Beijing told the NGOs that information about
the Nu River must be "kept secret" (bao mi). Beijing has also
refused to publish a report it received from NGOs that discusses
the environmental impact of dams on the Nu River, according to
Yu. The government-although it was unclear if Yu meant the
central or provincial government-claims that ordinary citizens
would not be able to understand the information about the river,
even if it were published. (NOTE: Yu's reference to "bao mi"
could also mean that the Chinese government has officially
classified information about the river at or above the
"confidential" level. END NOTE).


6. (SBU) The government did, however, tell local NGOs it would
share some information with small villages in the area affected
by the dam project. Yu said it would be difficult for NGOs or
the public to verify if this actually happens. He went on to
say that NGOs will find it hard to stop the project because of
the current focus on maintaining economic growth. He said that
earlier proposals to dam the Nu River stalled not because of
environmental considerations, but because Beijing at that time
wanted greater control over infrastructure investment, according
to Yu.

CHENGDU 00000035 002.2 OF 002



~and Choose to Work on Less Sensitive Projects
-------------- --------------


7. (SBU) NGOs like The Nature Conservancy (TNC) and Conservation
International (CI)-two NGOs with a prominent presence in
Southwest China-have chosen to focus on less sensitive
environmental issues that do not involve hydropower projects.
The Yunnan Program Deputy Director for the TNC in Kunming, Chen
Jie, said during a January meeting with Congenoff that TNC's
programs in Southwest China focus on building national parks,
promoting eco-tourism, and golden monkey preservation. The
organization relies on its established relationships with
Lijiang and Deqin--two local governments in Yunnan--to continue
its environmental work.


8. (SBU) Li Shengzhi, the head of CI's office in Sichuan, told
Congenoff in September 2008 his organization does not work on
hydropower projects, or environmental issues related to
hydropower projects, because of a "lack of data." CI's Sichuan
office works on eco-tourism and national park legislation and
enjoys a good working relationship with the government. Li said
that his organization recently helped the Sichuan government
publish reports on panda habitat. He also plans to accompany
the Yunnan Party Secretary to Latin America in February to learn
about eco-tourism programs. CI has only one staff member
working in Yunnan, and she does not work on water-related
issues.


9. (C) COMMENT: The Nu River dams are still of course a
sensitive subject in China. In 2006, local authorities briefly
detained a German reporter for conducting interviews about the
dam and confiscated his notes. Yu appears to have few
reservations about sharing his views about the Nu River project
with consulate officials, although he stopped short of
describing or speculating about specific details of the
information the government considers secret. In 2005, Yu
reportedly had his passport confiscated and the government
almost certainly still monitors his activities.
BOUGHNER