Identifier
Created
Classification
Origin
09CHENGDU90
2009-05-26 09:41:00
UNCLASSIFIED//FOR OFFICIAL USE ONLY
Consulate Chengdu
Cable title:  

SICHUAN QUAKE RECOVERY UPDATE: RAPID RECONSTRUCTION

Tags:  SOCI ECON PGOV CH 
pdf how-to read a cable
VZCZCXRO2517
RR RUEHGH RUEHVC
DE RUEHCN #0090/01 1460941
ZNR UUUUU ZZH
R 260941Z MAY 09
FM AMCONSUL CHENGDU
TO RUEHC/SECSTATE WASHDC 3235
INFO RUEHOO/CHINA POSTS COLLECTIVE
RUCPDOC/DEPT OF COMMERCE WASHINGTON DC
RUEHCN/AMCONSUL CHENGDU 3908
UNCLAS SECTION 01 OF 04 CHENGDU 000090 

SENSITIVE
SIPDIS

DEPT FOR EAP/CM
BANGKOK ALSO FOR USAID

E.O. 12958: N/A
TAGS: SOCI ECON PGOV CH
SUBJECT: SICHUAN QUAKE RECOVERY UPDATE: RAPID RECONSTRUCTION
COMPROMISING QUALITY AND TRANSPARENCY?

REF: CHENGDU 011

CHENGDU 00000090 001.2 OF 004


UNCLAS SECTION 01 OF 04 CHENGDU 000090

SENSITIVE
SIPDIS

DEPT FOR EAP/CM
BANGKOK ALSO FOR USAID

E.O. 12958: N/A
TAGS: SOCI ECON PGOV CH
SUBJECT: SICHUAN QUAKE RECOVERY UPDATE: RAPID RECONSTRUCTION
COMPROMISING QUALITY AND TRANSPARENCY?

REF: CHENGDU 011

CHENGDU 00000090 001.2 OF 004



1. (U) This cable contains sensitive but unclassified
information - not for distribution on the Internet.




2. (SBU) Summary: Spurred by the central government's goal of
moving displaced quake victims into permanent housing by the end
of 2009, reconstruction in the earthquake zone has significantly
picked up pace since the beginning of the year. According to
official statistics, close to 99 percent of home rebuilding in
the rural areas is now underway. However, rural families are
struggling to pay the costs of reconstruction in the face of low
government subsidies and limited credit access; many are
delaying completion of their new homes or compromising on
building material quality. With official energies apparently
focused on housing and infrastructure reconstruction, there is
little evidence of strategic planning to address long-term
livelihood recovery. Non-governmental organizations (NGOs) and
volunteer groups continue to operate widely, and are filling
some gaps, but face an increasingly "managed" operating
environment. Obtaining good information on reconstruction
projects, particularly the bidding and procurement processes,
remains difficult, raising questions regarding transparency.
End summary.



A recent boom in home reconstruction as deadlines loom

-------------- --------------




3. (SBU) Reconstruction in the earthquake zone has
significantly picked up pace since the beginning of the year.
During recent travel in the Dujiangyan, Pengzhou, Mianzhu and
Beichuan areas, Congenoff observed extensive infrastructure and
housing reconstruction underway along all routes. The shift is
notably dramatic in Zundao, a town of around 20,000 under
Mianzhu, where reconstruction efforts had barely begun just a
few months ago (reftel). During a recent visit, Congenoff found
the town transformed into a giant construction zone, with the
majority of residents engaged in home rebuilding, whether
building themselves or supervising construction. Piles of
bricks and reinforcement bar (rebar) lined the roads, and every
visible housing plot was in one or another state of

construction. A small number of residents were putting
finishing touches on houses they said they began just three
months ago. Most were somewhere between laying the foundation
and building the walls. Similar scenes are to be found
throughout the quake zone.




4. (U) During a press conference in early May, Sichuan
officials emphasized that all rural residents must move into
permanent housing by the end of September, three months ahead of
the central government deadline. For urban residents the
deadline is May 2010. In Zundao, the town government broadcasts
announcements four times a day, reminding residents of the
September deadline and urging them to build their houses and
move out of the temporary shelters as quickly as possible.
Rural residents also face a June deadline to at least have their
new foundation in place to qualify for government housing
reconstruction subsidies.



Nearly 99% of rural rebuilding underway; one trillion RMB
reconstruction funding gap

-------------- --------------




5. (U) During the above reference press conference, Sichuan
officials announced that building was underway for 1,248,000
rural houses, representing 98.8 percent of the total, and that
repair and reinforcement of an additional 2,213,000 was already
completed. Among rural residents, over 45,000 rural households
with total population of about 160,000 cannot rebuild in situ as
their land was destroyed; most of this group will move to new
housing developments. For urban residents, according to
official statistics, about half of the repair and reinforcement
is complete. (719,000 homes) and rebuilding has started on
about 44 percent (138,000). (Note: the total number of damaged

CHENGDU 00000090 002.2 OF 004


or destroyed rural homes, at an estimated 3,476,000 stands at
twice the urban number; the total number of rural homes needing
to be completely rebuilt, at about 1,263,000, is four times
greater than in urban areas.)




6. (U) The provincial government estimates it needs 1.7
trillion RMB (US$274 billion) for quake reconstruction. Vice
Governor Huang Xiaoxiang in mid-May told local media that
combining provincial government revenues, central government
support, donations and other sources Sichuan to date has 330
billion RMB (US$53 billion). He said the province hopes to
close the funding gap with a combination of support from other
provinces, international aid, and credit. The National
Development and Reform Commission in a report issued May 21
noted that spending for quake rebuilding comprises a quarter of
the 4 billion RMB (US$586 billion) national stimulus plan. The
Sichuan Statistics Bureau recently reported that disaster
reconstruction has boosted the province's fixed asset investment
by 78.9 percent year-on-year for the period of January-April,
while transportation-related investment increased by 131 percent
for the same period.



Time pressure and poverty may be compromising homebuilding
quality

-------------- --------------




7. (SBU) Rural families are struggling to pay the costs of
rebuilding under current time pressures. Quake zone residents
we spoke to in several locations consistently estimated their
total rebuild costs at about 100,000 RMB (US$14,706). The
government subsidies are set at 16,000 to 21,000 RMB (US$2,353
to 3,088) per household depending on family size. Local
governments are supposed to assist with ensuring that bank loans
are easily available for rebuilding costs, but actual access
varies across the quake zone. In recent conversations residents
report that loan ceilings remain low, in the range of
20,000-30,000 RMB (US$2,941-US$4,412) or that they have
difficulty obtaining any line of credit as they are unable to
meet bank requirements for collateral and proof of repayment
ability. Those that do have the option to borrow still
expressed reluctance to take on the debt, noting their limited
ability to repay it.




8. (SBU) Many rural residents told us they will delay
completion of their homes or compromise on the quality of
building materials. A group of locals in Sangzao town in
Mianzhu expounded on the various rebar specifications,
emphasizing that most people could not afford the 25 millimeter
bars necessary to withstand a strong quake, and so were
proceeding to build with cheaper materials and hoping that the
next quake of similar magnitude would not occur in the coming
decades. On the way out of Sangzao, Congenoff observed an
apparently completed home that seemed to reflect these cost
impediments, with a brick first floor, but the second level
built using materials from the temporary pre-fabricated
shelters. (Note: While last year's 8.0 quake stands out in its
severity, quakes in the range from 6.0 to 7.9 have occurred
regularly over the past century; the barely noted August 2008
Panzhihua quake, clocking in at a mere 6.1, reportedly cause the
collapse of 10,000 homes.)




9. (SBU) Local officials in Beichuan, whose county town was
completely destroyed and will be rebuilt about 20 kilometers
away from its original location, also were equivocal in their
enthusiasm for increasingly constricted official deadlines for
reconstruction. When asked whether the State Council's
declaration that "the goal for a three-year reconstruction
should be realized within two years" was realistic for the
building of New Beichuan one official noted that the government
"must have a scientific reason" for shortening the timeframe,
even if the local officials did not understand it. Other
officials acknowledged that while they expect New Beichuan's
"basic infrastructure" to be done in two years, true completion
of the new town will require another decade.



CHENGDU 00000090 003.2 OF 004



Long-term livelihoods: an outstanding question

-------------- -




10. (SBU) With official focus on rebuilding, there is little
evidence of strategic planning for long-term recovery of
livelihoods. For now, the business of reconstruction appears to
be occupying much of the population, as well as providing
construction jobs to skilled workers from around the country.
However, our observations within the quake zone point to
potential future problems. In Pengzhou, the damaged local
cement factory in one town will be rebuilt too far away to
employ the local workers who were previously employed there.
Near old Beichuan, the county seat that was completely destroyed
and will be left as a memorial, Consulate staff recently
encountered residents demonstrating against the plans for the
New Beichuan. Their complaint was that their new homes would
not include any land, thus depriving them of main source of
previous livelihoods. This will likely be an issue for many of
the 160,000 rural residents whose land is too damaged for
rebuilding and will instead be moved to new housing
developments. A number of recovery-funded projects, such as
state owned enterprise (SOE) expansions, new factories, and
several "industrial zones" promise sources of future employment,
but many rural quake area residents lack the skills to take
advantage of such opportunities.



NGOs can help, but reach limited and operational environment
complex

-------------- --------------




11. (SBU) A large number of international and domestic NGOs
continue to operate throughout the quake zone, playing an
important role in filling some of the gaps in the official
response such as livelihood recovery. Both Sichuan Academy of
Social Sciences and local NGO contacts note the extent to which
NGOs encountered a more open operating environment in the months
following the quake, when around 200 organizations quickly
arrived in the area. However, a May 6 article in
Guangzhou-based periodical, Nanfengchuang, highlights the
complexity of the operational landscape for NGOs, with relations
with local officials usually the key determinant of whether they
can continue their work or not. Over time, increased focus on
maintaining social stability has meant a gradual increase of
government efforts to manage NGOs and volunteer groups. In a
notice issued last month the Mianzhu City Communist Youth League
called for strengthened "management" of volunteer groups, noting
the risk of volunteers "doing things that affect social
stability." (Some local volunteers have reportedly, for
example, provided lists of student victims of school collapses
to Beijing artist and blogger Ai Weiwei.) In mid-May local
media reported on a new provincial government program to provide
financial support to NGO projects in the quake zone, emphasizing
the need for applicants to have legally registered and
identifying the project categories eligible for support.




12. (SBU) While larger organizations with savvy government
relations and a willingness to stay away from sensitive issues
have been able to expand their post-quake work, smaller NGOs
that want to maintain more autonomy may find themselves
increasingly squeezed out. A domestic NGO that provided social
services in a small township for most of the last year, with
local government support, quickly found its fortunes reversed in
the weeks leading up to the May 12 anniversary. After resisting
a new registration requirement, the organization's head told us,
they found their phone and internet lines cut off and an
increasingly unwelcoming reception among local officials. They
ultimately decided to close down their operations.



Quake procurement raises transparency questions

-------------- --




CHENGDU 00000090 004.2 OF 004



13. (SBU) Obtaining detailed and comprehensive information on
reconstruction projects remains difficult. Although publicly
available information includes some project lists and overall
statistics on the numbers, types and value of projects, little
specific detail is provided. The Sichuan Development and Reform
Commission's website has a list of the provinces 500 "key
projects" for 2009, 82 of which are designated as quake
reconstruction projects. However, the project descriptions are
fairly skeletal, with no information on bidding and procurement
processes. When asked how procurement for projects under their
purview is being handled, Beichuan officials recently told us
only that all bidding is being managed "according to the law".
They added that bid invitations are basically going to domestic
companies, noting that the process is too "complicated" and
timeline too tight to open to international bidders.




14. (SBU) Most of the assistance being provided by other
provinces, under the recovery partnering program mandated by the
State Council in June 2008, is coming in the form of large
projects carried out by the assisting provinces. Discussing
their partnership with Shandong, Beichuan officials readily
acknowledged the immediate post-quake relief support from
Shandong, and cited the large reconstruction projects to which
Shandong has committed. Seventeen municipalities in Shandong
are each supporting one or two towns in Beichuan, for a total of
twenty; all are supporting the building of New Beichuan.
However, a Beichuan Development and Reform Commission official
told us that they do not have clear or detailed information on
project specifications or planning from Shandong. Although each
of the Shandong municipalities committed to Beichuan have set up
offices in the Beichuan areas they are supporting, the project
bidding process is run out of the working office in Shandong set
up to coordinate the Beichuan assistance. Not surprisingly,
Shandong companies apparently expect to get the vast majority of
the new business. Similar arrangements appear to hold true for
the other provincial partnerships. A researcher at the Sichuan
Economic Development Research Institution recently told us he
expects the assisting provincial governments to recoup a
significant portion of their reconstruction contributions via
increased tax revenue from home province companies'
quake-related projects.




15. (SBU) Comment: Government at all levels appear to be given
credit on the ground for the initial rapid reaction to the
earthquake and subsequent quick deployment of resources for
reconstruction. However, as reconstruction moves forward, in
the hurry to meet mandated deadlines, the current approach could
very well lead to further shoddy construction and increased
corruption. Moreover, despite the scale of current efforts,
they will likely continue to fall short of the vast needs of the
quake area population.
BOUGHNER