MK8 Final Project Report
PKU Team
Submitted January 14, 2014
Key Research findings
Please summarise your key research findings, and explain why they are significant. Please highlight the achievements you consider the most important and why.
The PKU team focused its investigation on the political ecology of hydropower development within China and driving forces behind continuing Chinese involvement in hydropower development in the Lower Mekong region (LMR).
In mainstream thinkings in and outside China, there exists a gap in overall assessment of hydropower as a source of energy. Chinese industry and government perspectives emphasize hydropower as a necessity and the negative impacts from dam construction as challenges to be resolved through improvement in engineering, in contrast to calls for caution against further development of large hydropower outside the country. There also exists a tendency for Chinese government agencies responsible for approving foreign direct investment by Chinese hydropower companies to imagine what worked in China ought to work in the wider Mekong Region as well.
A review of the contemporary history of hydropower development in China tells us that since the early 1980s, the Chinese hydropower industry has made extensive use of input from the international hydropower industry. That input comes in the form professional – as apposed to the traditionally Chinese administrative – management of the entire engineering, procurement, construction, and management process. Concepts and templates like environmental impact assesement and social impact assessment were introduced by the World Bank and other international development agencies. Chinese voices in support of further hydropower growth also finds utility in global concerns about climate change, although the opinion is heavily one dimensional: hydropower is presented as a clean form of energy while disregarding alternative voices that argue otherwise.
Interests within China that sustain hydropower development also includes the equipment manufacturing industry, which prides in making it possible to trasmit electricity in the hydro-rich southwestern parts of the country to the energy-deficient eastern coast. Last but not least, small hydropower is seen as an effective means for enlarging energy access for China’s rural communities.
A holistic understanding of Chinese interests in investing in hydropower development in the Lower Mekong region must take into account the following factors.
First, historically speaking, were it not for the Greater Mekong Subregion scheme launced by the Asian Development Bank in the early 1990s, China would not have had the diplomatic cover to begin negotiating corporate access into the hydropower sector in the LMR.
Second, flowing from the first, participating in hydropower in the LMR is seen as transplanting China’s own success in poverty reduction.
Third, Chinese hydropower corporations place a great deal of faith in government-to-government negotiations, assuming the host government would fully play its expected role of ensuring the success of an investor.
Fourth, investment in hydropwower in the LMR is one venue for other sectors of the Chinese economy to reduce pressure on excess capapcity in production.
Fifth, Chinese banks that support hydropower investors over the years adapted to international norms by making commitment to environmental protection as key component in loan approval. A ‚green credit’ policy has been in place since 2007.
Sixth, Chinese hydropower companies still have a long way to go in navigating through the numerous formal and informal politics risks associated with operating in countries and societies in the LMR.
The most important findings can be summarized as two points. First, efforts to understand hydropower development must take into perview a holistic set of factors: hydropower as a source of energy, hydro-related industries, continuing search for improvement in governance, as well as interactions (though selective) with international interests. Second, Chinese justification for invovlement in hydropower development in the LMR are multiple as well. Chinese investors, however, err by insisting that the primary responsibility for taking care of the affected populations is that of the host government. Hence the pervasive negativity in societal reactions to Chinese presence in hydropower development in the LMR.
These findings are important because they correct a standard interpretation in mainstream studies about hydropower in China and Chinese involvement in hydropower development in the LMR by assuming all forces Chinese act in a unitory fashion. That interpretation also erroneously assumes that the Chinese hydropower industry has evolved outside of international norms. Therefore, international interests can hope to become more effectual only by navigating through the Chinese complexities and hence locate specific entry points for influence. Furthmore, international observers can contribute to improving Chinese corporate practices in the LMR by working from the ground up, rather than repeating ‚best practice models’, as was true of the past.
4. Key Messages
Your key messages should relate what your project learned that contributed to the Mekong BDC’s goals. How did your project contribute to fulfilling that goal? What remains to be done? What are the best ideas to emerge from your project for meeting the CPWF Mekong Basin Challenge? Highlight important achievements: technologies and products developed, and/or new or improved research methodologies.
Mekong BDC’s goals can be found here: http://mekong.waterandfood.org/archives/644
1. Fostering career opportunities for the population affected by dam construction is the key to sustainable dam managment.
This is a key lesson Chinese governments at different levels learned in their handling of the impacts in constructing and operating a hydro-dam within the country. Examples of career opportunties include 1) prioritize hiring from the affected population for operation of the dam, 2) prioritize job creation for the affected population in the post-construction phase of a dam, for example, in reservoir fisheries, reservoir transportation, and tourism around the reservoir, 3) give priority to financing the education of the school-age children and 4) tie free education for those children to encouraging them to return to their home communities and became teachers at the primary and secondary levels. The 4th approach is especially important because usually at the site of the dam and in many instances the relation, the level of public education is low. Through upgrading of basic education, the younger generation does not have to repeat the cycle of poverty their grandparents and parents had to suffer.
It seems, in our investigation, that in the LMR context, there is a greater level of emphasis on what foreign hydropower investors should do. That is rightfully so. Nevertheless, the nature of any cross-border investment is to make profits. Corporations and governments have a division of responsibility. When governments design the compensation packages in a way that promotes career development, especially for the young, they are really being forward-looking.
2. Engaging Chinese hydropower companies can be more effective though detailed intervention at the entry stage of a project.
As a rule of the thumb, Chinese hydropower company executives tend to assume that the host government they operate in functions in the same manner as their home governmets in China. That is hardly the case. More to the point is that within China, the government promotes integration of ethnic minorities into the mainstream society and economy. Hence, many Chinese executives we interviewed express surprise over complexities the local societies they operate in the LMR. As can be easily understood, personnel mobility in the management teams means that often institutional memories about lessons in a specific locality can be lost as well.
Thus far, international efforts aimed at upgrading the level of performance in corporate social responsibility for Chinese hydropower investors often highlight the ulitity in ‚best practice’ models. There is certainly good value in doing that. Meanwhile, each model grows out of a unique context, with the corporate culture of the dam construction and/or hydro-power plant operator being centrific in making it possible. Chinese dam construction and hydropower plant operators do engage international peers and concerns on the home front. But they are just not as easily adaptable in a foreign context. So, future efforts at engaging Chinese companies should be preventative in nature, i.e., working to get them to set the standards right at the entry phase of a project.
Project outcomes
This section attempts to address what has changed as a result of the research (a) Did your target groups change the way they did things? (b) What roles did your project play in these changes? (c) What did not change and why not? What can we learn from this experience? (d) Did you employ promising strategies to generate changes that we can learn from in the future?
The target groups the PKU team succeeded in reaching include government regulators of foreign direct investment and two Chinese hydropower companies.
The government regulators include those from China’s Ministry of Commerce, the Export-Import Bank of China, the National Development and Reform Commission, Ministry of Environmental Protection, and the Development Research Centre under the State Council. A word about the Development Research Centre is in order. Though called a ‘research centre’, its main function is to be directly answerable to the State Council (China’s cabinet) in everyday policy deliberations.
The two Chinese hydropower companies are Huaneng Lancang River Hydropower Co. Ltd (www.hnlcj.cn) and the China International Water and Electric Corporation (http://english.cwe.cn/). Huaneng Lancang Hydropower Co. is so well known in documentation and discussion about China and hydropower in the LMR that it hardly needs any more mention. For the China International Water and Electric Corporation, or CWE for short, its website introduces itself as “a leading pioneer in Chinese hydropower industry to participate in international economic cooperation.“ Furthermore, „the present company name was adopted in 1983; nevertheless, the history of CWE traces back to more than half a century ago when it was an international engineering company affiliated to the Ministry of Water Conservancy and Electric Power of P. R. China.“ This description gives a lively hint about how the company sees itself. Beginning with being part of the Chinese government’s foreign aid program, now it prides itself to have grown into a company that is capable of conducting commercial bidding in hydropower projects overseas.
Answers to breakdown of questions:
a) Change. 1) The government regulators the PKU team reached most certainly saw value in the mission of the MK8 project and the entire Challenge program. Zha Daojiong, leader of the PKU Team, is among the principal authors of a book that targets training of present and future Chinese corporate executives who embark on direct investment abroad, especially in construction projects. Reviewing Chinese construction investments in the LMR is a prominent feature of contents in the book, from the perspectives of enhancing corporate social responsibility in environmental and community relations perspectives.
1.1) Since a key member in the outreach targets, Mr. Li Fusheng of the Ex-Im Bank of China, is a voting member of the loan appraisal committee, his acknowledgement of the value in philosophies embedded in the Challenge and MK8 programmes is going to directly impact his input in a key segment of the Chinese system for foreign direct investment, especially those in the LMR.
1.2) Another key member in the outreach targets, Ms. Jiang Heng of the Ministry of Commerce, was already active in promoting the U.N. Global Compact program among Chinese corporations. She is embedding many of the philosophies and specific recommendations of the Challenge and MK8 programme.
1.3) The third key member in this government is Mr. Zhang Jianping, who specializes in researching China’s foreign direct investment policies and case studies in the National Development and Reform Commission. Though a research by profession, his input on improving Chinese hydropower company performance in the LMR has the potential of directly impacting approval by his ministry, which is as influential as the ministry of commerce in the process of approving Chinese corporate applications for making foreign direct investment.
The three individuals are just highlights in this report. In a general sense, government regulators have few qualms with what the Challenge and MK8 programmes are promoting. The challenge, though, is that they have to navigate among a larger group of colleagues and superiors who are less exposed to international calls for change and therefore need further persuasion.
2) The CWE, which is already operating multiple numbers of dams in Kazakhstan, Laos, the Sudan, Guinea, and Ecuador, is likewise open to ideas the Challenge and MK8 programmes are promoting. Mr. Qi Xuechun (deputy CEO of CWE Laos) whom Prof. Zha invited to a work-luncheon with a number of MK 8 team members based in Naga House, Vientianne April 23rd, 2013, made clear that he and his colleagues were fully aware of the efforts by the Challenge programme. He was appreciative of the invitation to the face-to-face meeting. It goes without saying that suggestions for further contacts and exchanges go a long way in relating this particularly Chinese hydropower company and the MK8 programme officers and researchers.
2.1) The Huanneng Lancang Hydropoer Corporation sent Mr. Huang Guangming, a deputy CEO, to a stakeholders’ meeting the PKU Team organized in Beijing, December 16 2012. This one day meeting was specifically devoted to knowledge sharing of perceptions about Chinese corporate performance in hydropower development in the LMR. Mr. Huang shared his candid thoughts about the social and political environments in LMR countries. He acknowledged the utility of keeping communicaton channels open between the Chinese corporate sector and the international NGO communities. It was encouraging to hear Mr. Huang praise inclusion of Chinese researchers in the Challenge Programme. To him, this greatly helps raise the level of effectiveness in two-way conversation between Chinese and international interests.
3) A third group of targets the PKU team has reached out are students. One group of them are those who are pursuing degree studies in the School of International Relations, Peking Univesity. They include both Chinese and foreign nationals. Another group are students who are pursuing degrees in other Chinese universities in Beijing and those who are pursuing degree studies in American and European universities. A partial list of the students so reached will be provided in the appropriate sections later in this report.
B) The project’s role. Throughout the entire duration of the project, both the PKU team members and colleagues from the MK8 project -- Mr. Nathanial Matthews in particular – defined their role as first and foremost that of a patient listener. We encouraged our audiences to open to us through being open to them as a first step. A companion role the project has been playing is to be a fascilitator of the virtual communication between our targets and those voices in the affected societies in the LMR. This is important because in the East Asian cultural context, unless and until levels of discomfort reach the absolutely unbearable stage, the affected people usually remain silent. Yet once they do choose to speak out, they usually do so in confrontational and even violent manners. So, by being a facilitator, we functions as preventors of future conflicts to come, at least so we hope.