1.  China’s global role in hydropower development Overview and Reflections London, 8 – 9 November 2012 Grace Mang, China Program Director, International Rivers

2.  International Rivers About us Our work on China’s global role in dam building

3.  China’s Global Role in Hydropower Development Why? Scale & Size, and Key Actors

4. Chinese dam-building companies now have as much as 50-60% of the world’s dam-building market. Based on our records, over 306 projects in 70 countries. South-East Asia, South Asia (primarily Pakistan and Nepal), Africa, Latin America and Eastern Europe Some trends: - Regional concentration - What types of dams, what size - New markets - What stage? Chinese companies and banks are global dam builders

5. Source: International Rivers, New Great Walls (2012) Regional Concentration

7. Chinese government: Central Government Departments - Ministry of Commerce, National Development and Reform Commission; Ministry of Foreign Affairs Chinese financiers: China Export-Import Bank, China Development Bank, commercial banks Chinese dam-builders: Dominated by State-owned enterprises Sinohydro Corporation, Gezhouba, China Three Gorges Project Corporation (subsidary China International Water and Electric Corporation). Datang, China Power Investment, Guodian, Huaneng Key Actors

11. How can we explain the Chinese dam-building industries success? -Pull: Benefited significantly from “Going out policy,” export led growth -Push: Saturation in the domestic dam-building market and low profit margins, Part of broader efforts by the Chinese government to improve diplomatic relations. What is motivating Chinese dam-builders? -Aspire to be the biggest and best dam-builders in the world -Profits and unlocking new markets -Desire to “help” countries develop How? -Bilateral agreements e.g. large infrastructure loans -Tendering and bidding: Chinese dam-builders are becoming more and more competitive, access to cheap credit lines. -Going out and securing deals themselves -Free surveying and feasibility studies offered countries e.g. Argentina, Colombia, Ethiopia, Laos Reflections on China’s Global Role in Overseas Hydropower Development

12.  Impacts of Chinese Overseas Dams

13. Impacts Environmental Human EconomicTemporal Growth- inducing Transnational Reservoir – flooding and indirect impacts from creation Downstream: sediment, flow, reduced water availability, ecological impacts Transmission lines Upstream Downstream Transmission construction Socioeconomic impacts Direct costs Indirect costs – crowding out of alternatives, balance of payments, structure changes to economy Long term costs, long term benefits may not last Hydropower development as a pathway to grow other resource intensive industries Increase dependency on other countries - borrowing & finance, buy power May cause/exacerbate tensions with other countries

14. Environmental and social risks particular to the Chinese overseas dam-building industry Mitigating social and environmental risks is challenging for Chinese overseas dam builders. Need to be conscious that different project roles will lead to different responsibilities In China, very rarely have responsibility for addressing resettlement and environmental impacts. No implementation capacity. Lack of specialists within companies often results in outside consultants do environmental and community relations work. Negotiating standards: low host country standards, higher Chinese standards, international standards. Exacerbating factors: - Chinese dam builders are late to the game - Most active in countries where rule of law, environmental law enforcement is weak or non-existent. - Initially, minimal standards on environment and community relations.

15. Dismiss widespread opposition to certain dam projects e.g. Myitsone Dam – lacked the social license Get involved in projects that are destructive, previously deemed by others as “too hard” or fraught with difficulties e.g. Transboundary rivers : Mekong mainstream dams Widely opposed and decades delayed projects : West Seti, Nepal Countries with security issues and poor human-rights : Patuca dams, Honduras Corrupt governments and non-sensical projects : Bakun Dam, Malaysia Adopt standards but don’t have the means of know-how as to how to implement them. E.g. UN Global Compact, Chinese legal standards, IFC Performance Standards

16. Ongoing Environmental Reform China Exim Bank Environmental Policy and Implementation Sinohydro’s environmental policy Adoption of international standards Implementation? Draft guidelines on environmental impacts of Chinese overseas investment (MOFCOM and MEP) Positive examples: Belinga Dam, Gabon; Chemoga Yeda, Ethiopia, Myitsone Dam, Burma

17. Differentiated responsibility – host country authorities are still by and large the developers, but this is changing … Khamchay first BOT project. Sinohydro will operate for 25 years. Nam Ou cascade will the first time Sinohydro will have been responsible for resettlement The first wave of dams are only just coming online – Bakun, Khamchay, Bui dams have only just started generating power Problems are dispersed, treated in isolation and many of the worst are still to be realized. Security and workers’ safety concerns in Africa Indigenous peoples’ protest in Latin America e.g. Colombia, Honduras Devastating environmental impacts – Gibe 3 on Lake Turkana, Mekong mainstream dams on the Mekong Delta and fisheries, Virgin protected rainforest from the Nam Ou projects – only on paper. Why are Chinese dam-builders so dominant despite their relatively poor social and environmental records?

18.  Methodology Considerations Working on China’s global role is hard!

19. Contacts are critical and are time intensive to collect. They also move on… The topic of overseas investments are still sensitive but not as much as before A good organization name opens doors. Beijing-based bureaucrats are reluctant to say anything on the record but may be more open when overseas – joint field research can be a helpful and have been successful in the past. Project and company managers of overseas projects in the host countries can be quite frank and upfront, particularly when talking to Chinese researchers.

20. Thank you Any questions or clarifications? Contact details: grace@internationalrivers.org