China: Not the Rogue Dam Builder We Feared It would Be?

By Peter Bosshard
International Rivers

A few years ago, Chinese dam builders and financiers appeared on the global hydropower market with a bang. China Exim Bank and companies such as Sinohydro started to take on large, destructive projects in countries like Burma and Sudan, which had before been shunned by the international community.

Their emergence threatened to roll back progress regarding human rights and the environment which civil society had achieved over many years. However, new evidence suggests that Chinese dam builders and financiers are trying to become good corporate citizens rather than rogue players on the global market.

Here is a progress report.

In December 2003, China Exim Bank approved $519 million in loans for the Merowe Dam in Sudan. It thus helped kick off a project which would displace more than 50,000 people from the fertile Nile Valley into desert locations, and for which the Sudanese government had failed to attract funders for many years. China Exim Bank also provided support to projects in Burma which no other funder was prepared to touch.

“The Bank specializes in financing projects that no other financial institutions would fund,” International Rivers and Friends of the Earth warned in July 2004.

Chinese dam builders wasted no time rolling up the international market. Low costs, access to cheap loans and a big portfolio of domestic projects make them attractive partners for clients around the world.

We are currently aware of at least 216 dam projects in 49 countries which have some form of Chinese involvement — and counting. The president of Sinohydro recently estimated that his company controls half the global hydropower market.

Greater Attention to Environment?

When it comes to the environment, we have seen significant changes in a short period of time.

In response to our alert of July 2004, a manager of China Exim Bank wrote back saying:

“To my knowledge, [the Bank] actually cares about the environmental issues of its projects. Maybe its standard cannot reach yours or international common practice. Since it is one of export credit agencies in the world it really needs to meet the international practice.”

When I had the chance to meet China Exim’s president two years later (photo at right), he agreed that his institution shared a responsibility for the projects it funds. The Bank adopted an environmental policy in 2004, and published it after a request from NGOs in 2007. More detailed guidelines followed in 2008.

In late 2008, the China Exim president told Deborah Brautigam, an expert on Chinese aid practices, that his institution only worked with Western agencies for the assessment of environmental impacts. They were “more credible,” the president said, and:

“We do not want the environment to be an issue.”

China's Hydropower Giant: Sinohydro

Seeing some progress with China’s main financier of overseas dams, we decided to approach the biggest hydropower company next.

In February 2009 a coalition of NGOs called on Sinohydro to “establish a world-class environmental policy and strengthen its relations with the host communities of its international projects.”