China Weekly Brief
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February 5, 2011 - February 11, 2011

Political and Internal Development

The on-going drought in the main wheat growing areas of China has spurred a nation-wide debate on food grain production. An estimated total of 6.4 million hectares of winter wheat crop covering approximately 35.1% of farmlands dedicated for wheat production in eight provinces has been affected by this four months long drought. The eight provinces, namely, Hebei, Shanxi, Jiangsu, Anhui, Shandong, Henan, Shaanxi and Gansu contribute over 80% of nation’s total wheat output. According to a report published by Food and Agriculture Organization (FAO) on February 8, more than 56% of wheat produced in China in 2009 was yielded in Shandong, Hebei and Henan, which are the worst affected areas by this year’s drought.

Substantially low precipitation and thin snow cover in the winter months has drastically reduced the soil moisture capacity which is most needed for wheat production during the post-dormant growing period. The severity of the drought has lessened to a certain extent after rain and snow fall on February 9 and 10 in areas along Yangtze, Yellow River and Huai River as well as in North China. In order to increase precipitation, China’s air force and artificial weather intervention office performed cloud seeding operations in the region. According to the National Meteorological Centre, current precipitation will not do much to relieve the drought. Moreover, since the temperature has dipped below three degree from normal because of snow fall in North China and regions north of Yellow and Huai River, it has become difficult to irrigate drought hit crops. Analysts are afraid that situation would be worse for China if winter drought lingers on well into the months of spring.

Meanwhile, in January the national average retail price of wheat flour rose more than 8% compared to previous two months. This will put further pressure on China’s inflationary food market especially after the Lunar New Year holiday. Snow fall in the south made food distribution to the drought stricken areas from southern provinces more difficult. According to a FAO database, in 2009 China’s wheat production was nearly double than the grain produced by the US or Russia. Some analysts pointed out that the international wheat market has already suffered due to heat wave in Russia and floods in Australia. In this situation if China is forced to procure wheat from outside due to poor harvest, wheat price would increase both in the domestic market as well as in the international market.

Addressing to the crisis, Standing Committee of the State Council of China has introduced some measures to further increase efforts to support food production. Premier Wen Jiabao also called for more efforts to boost food production in a teleconference on February 10. The decisions that were taken in the Standing Committee meeting are as follows: expansion of winter drought water subsidies; implementation of fertilizer subsidies for weak sapling; allocation 1.2 billion yuan for agricultural and irrigational machinery mainly for winter wheat producing areas; provisions for more specialized assistance for destroying insects and pests; implementation of greenhouse benefits for protecting rice seedlings in the three provinces of Northeast China; distribution of 10 yuan per mu mulching planting corn subsidies for production in a total 5000 mu farmland in Northeast and Southwest China; expansion of county level drought service grant in the arid regions in 800 counties and each county will be provided with a grant of 2 million yuan; increasing the intensity of emergency anti-drought infrastructure; increasing minimum purchase prices of three varieties of rice by 9, 10 and 23 yuan per 50 kilogram respectively; and organizing nationwide action for promoting food production.

Yu Fugong, the director of Economics Department at Guangdong Provincial Party School comments that the government has to assure the public that there are enough food stocks in the country and it should strengthen supervision on the food market, because stable food prices are keys to steady commodity prices. The Chinese leadership is also aware of the destabilizing effects of food price inflation. Some analysts believe that rising food prices was one of the complementary factors of China’s biggest pro-democracy movement in the Tiananmen Square in 1989. Some even cited example of Tunisia where a nationwide anti-regime movement has recently triggered off mainly because of food crisis. It is too early to talk about such incidents in China, but it is definitely a testing time for the Chinese communist leadership.

Chinese Development Model and Beyond

As China has been facing frequent droughts in the recent years, China’s dam builders and pro-big dam lobbies have again become active in getting central government’s approval for the construction of big dams. After construction of Three Gorges Dam, there was a period of dam boom in China. Just one month after UNESCO listed Nujiang River as a World Heritage site in 2003, a proposal of building 13 dams on the river was submitted to the National Development and Reform Commission (NDRC). Premier Wen Jiabao called off the project in April 2004. Since then hydropower companies have been waiting for an opportune moment to tap the potential of rivers of Southwest China, which are the main water resources of China, South Asia and Southeast Asia. Now they are trying to downplay environmentalists’ objection in name of green energy.

Interestingly, for the construction of smaller dams approval of the State Council is not required and therefore construction works for taming rivers in the region have never been halted despite repeated efforts by Chinese environmentalists. Between 2008 and 2009, not a single major hydropower projects was given consent by the central authority, and due to which only one third of the hydropower projects were completed in the 11th FYP. Since last June, the NDRC has given permission for the construction of Jin’an Bridge, Ludila and Long Kaikou Dams on the Jinsha River (Golden Sand River) and Zangmu hydropower station on the Yarlung Zanbo River (i.e. Brahmaputra River), which is considered by many as an indication that ban on the construction of medium and large size dams would be lifted during the 12th FYP.

The builders have at least a dozen of hydropower construction projects on Jinsha River up their sleeves. Many of these projects have been already started without any environment impact assessment by the Ministry of Environment Protection. There are several hydropower projects at various stages of development on the upper stream of other international rivers situated in Tibet, Qinghai, Sichuan and Yunnan. After visiting Southwest China’s dam construction sites, Wang Jian, a river specialist from Beijing commented that these were as dense as the stars on the sky.

Yu Xiaogang, a renowned river management specialist and founder of the non-governmental group called Green Watershed in Yunnan, recently told that if the government gives clearance to all the proposals there would be one Three Gorges Dam every year for the next five years. The Chinese environmentalists contend that the lifting of ban on gigantic hydropower projects for the sake of reducing carbon emission is too big a sacrifice to make. Dai Qing, the renowned journalist and most eloquent opponent of the Three Gorges Dam, commented that China is still busy building huge dams even when no one actually favours this kind of construction projects in the West. In her opinion, preference for such massive projects shows that China is always one step behind rest of the world.

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