July 16, 2013
China is grappling with the social and environmental risks of building 300 dams in 66 countries, with a large number in south-east Asia.
Today, Chinese companies dominate the international hydropower market. Over the past few years, China has successfully exported its large dam-building expertise to the world. International Rivers is currently aware of some 300 dam projects in 66 countries in which Chinese companies and financiers are involved.
More than two-thirds of these dams are large hydropower projects with a generating capacity of over 50 megawatts. Approximately 40% of these projects are located in south-east Asia and 15% in Africa. The geographical spread mimics the regional distribution of Chinese overseas investment.
With the Chinese overseas dam industry’s ever-increasing global presence, International Rivers and its partners around the world have been working since 2007 to better understand China’s global role in hydropower development. Through our report “New Great Walls – An Activist Guide to Chinese Overseas Dam-Building Industry“, revised and republished in November, we have sought to share information with communities impacted by Chinese dam building.
While China has not turned out to be the rogue dam builder that many feared it might be, Chinese dam builders are coming late to the game and face heightened environmental and social risks when operating overseas.
First, Chinese companies often operate in countries that have weak environmental protection and social safeguards. For example, in Burma, the government did not require any environmental approvals for the 6,000 megawatt Myitsone Dam. In such cases, Chinese companies cannot rely on local legislation to ensure compliance with international laws and standards.
Second, until very recently, Chinese dam builders have lacked any clear environmental and social policy standards consistent with international best practice for their overseas operations.
Third, many Chinese companies lack experience and are ill-prepared to adequately deal with community grievances in the host countries and the scrutiny of an independent media. When confronted with local opposition or negative reporting, Chinese companies have tended to be defensive or dismissive, confirming perceptions that they operate in a non-transparent manner.
And, finally, in some cases strengthening bilateral relations between China and the host country has meant that social and environmental considerations of dam projects are an afterthought.
However, Chinese dam builders have made it clear that their aim is to be a responsible global actor and, in recent years, civil society has been fundamental in helping to shape the pathway for Chinese dam builders to get there.
Sinohydro forging new environmental path
Sinohydro, the world’s largest hydroelectric company, is engaged in a dialogue with Chinese and international NGOs, and has prepared an environmental policy that puts it at the forefront of the international hydropower industry. Sinohydro has adopted all the World Bank safeguard policies, including those relating to indigenous people, resettlement and the environment, as its minimum standard.
It has also identified a number of “no-go” zones for hydropower development, including World Heritage areas and the habitats of internationally protected species. And it has committed to establishing grievance and complaints mechanisms for its overseas projects. Of course, the challenge will be in policy implementation, which will require a fundamental change in the way Sinohydro does business.
Chinese government agencies have also issued guidelines for foreign investors to protect the environment and respect local communities in their host countries. Efforts are also under way that would see the Chinese government go beyond what any western country has done to address the social and environmental impacts of its companies operating overseas.
The Ministries of Commerce and Environmental Protection are currently drafting guidelines for the environmental impacts of Chinese companies operating abroad, which will go some way to establishing a minimum standard regardless of how weak host-country laws may be.
Civil society groups have also been directly engaged in pressuring Chinese dam builders to pull out of destructive dam projects. After protests by local communities and NGOs, Chinese companies and financiers had to suspend projects in Burma and Gabon, and even withdraw from their operations in Cambodia.