“We should look behind the curtain”

State-owned companies are pushing for a “Great Leap Forward” in dam building. But Chinese NGOs can hold them to account, environmentalist Yu Xiaogang tells Isabel Hilton.

State-owned companies are pushing for a “Great Leap Forward” in dam building. But Chinese NGOs can hold them to account, environmentalist Yu Xiaogang tells Isabel Hilton.

Yu Xiaogang is director of the NGO Green Watershed, based in the city of Kunming, in south-west China. A veteran environmentalist and past winner of the Goldman Prize, an award for grassroots green campaigners, he has been at the forefront of China’s debate on dam building. At a recent meeting in Delhi, Yu Xiaogang sat down with Isabel Hilton to explain his concerns about powerful special interest groups in China who, he claims, exercise undue influence on government policy.

Isabel Hilton: Who are these special interest groups and why are you concerned?

Yu Xiaogang: One characteristic is their monopoly. The second is the combination of their power and capital. China is in a transition period: in the state-planned economy, every big company or industry was under government control. Then we changed to the market economy, but big state-owned enterprises (SOEs) still have power and they now get the advantages of the market economy. So they use their influence with the government to ensure they are allocated the assets; then they can get resources from the stock or the bond markets.

The state benefits from this in several ways: through taxation, or because such companies listen to the government most of the time. The government can dominate the market economy because its share in some industries is much bigger than in others. In energy for instance, it is as much as 70%.

IH: What impact does this have on dam building in China?

YX: The government can dominate some very critical industries, like railways, air transport, power industries and telecommunications. They like to control them, but this also creates contradictions with their ideology or the targets that the Chinese government is pursuing – targets such as a just and harmonious society. These monopoly companies go in the opposite direction.

The Chinese government wants to improve policy and reach “political civilisation”, but we think that the SOE monopolies have a triple role: they are company owners; they are decision makers (or at least they can capture the decision makers); and they also manage the market.  So they control everything and that’s not good for the free market or “political civilisation”. Also it creates conflict with the people, because this combination of power and capital often works against the people’s interests, against democracy and against public participation.

IH: Civil society managed to bring a halt to dam building under the 11thFive-Year Plan. In the 12th Five-Year Plan, there seems to be a “Great Leap Forward” in dam building in preparation. Will civil society be able to mobilise again?

YX:  We have realised that the 12th Five-Year Plan was influenced by these interest groups. Before this plan was finalised, we observed a lot of academics, official insiders, like the National Energy Administration, decision-makers and think-tanks combined saying that NGOs and civil society have misled the leaders under the 11th Five-Year Plan and that hydropower’s environmental and social impact was not negative. They portrayed it as a conspiracy between the international community and civil society to attack hydropower development. Also they said that because of the frozen period during the 11th Five-Year Plan, we now need a “Great Leap Forward” in dam building.

We can see very clearly that this advocacy influenced the decision-makers and we also think that NGOs can do something. I think it’s very important to deconstruct this discourse, because Chinese government decision-making is often influenced by this kind of discourse. NGOs should debate it. The special interest groups often operate behind the curtain – people don’t know about it. People think that SOEs are better than private companies because at least they operate in the interests of the taxpayer. People don’t know that they are destroying the economy and the political system and hurting the taxpayers’ interests. So we need to tell people about this.

Why do these interest groups not pay attention to the environmental and social impacts? Because they want the maximum profit. They don’t care about the impacts. That’s why I think that civil society should look at what interests there are behind the curtain; so we can understand why they don’t listen to us and how they capture the government to make decisions that favour special interest groups. NGOs can investigate this and tell people the truth. Then people can perhaps find a solution individually, or campaign on projects.

IH: What would your solution be?

YX: There are many possible solutions. Some are more political. For example, some people say that these SOEs should make a profit. Many don’t. They may pay their taxes but they don’t share their profits. The taxpayer is the owner and should be recognised as such. The government should represent the people’s view.

[First], the SOEs should make their profits transparent and share them with social security funds or foundations for poverty alleviation or some other public purpose. Second, the government should not be too dependent on them. For example, in energy saving and emissions reductions, we have hundreds of solutions and methods. We need to pay attention and invest, to develop small and medium enterprises (SMEs) that can solve this. We have many demand-side management opportunities with small technologies. There are two general approaches: restraint and counterbalancing with an increase in SMEs. The third element is checking and monitoring. We should train the SOEs to follow market rules and reduce their monopoly.

IH: Would you like to see a halt to the kind of dam building that is proposed in the 12th Five Year Plan?

YX: Of course. We think that in the last 60 years, China has built so many dams already. Very big dams were constructed, especially in the last decade. Now the remaining rivers are in seismic-risk areas, so building in these areas will be very risky to people downstream and we must assess the environmental impact. We think we must assess the full cost first.

They may say that we need energy, but we should also rationalise energy consumption. This needs investment and education and the government to change its orientation. In this way, the people can save energy and reduce consumption. Only this way can we stop the dam construction. First, tell the people the risks and then have the government pay attention to the many small approaches that can solve the problem.

Isabel Hilton is editor of chinadialogue 

Photo courtesy of Tom Dusenbery