Monthly Archives: June 2011

Map Of Flooding In Central and Southern China

The International Red Cross has published a map of the provinces most affected by the flooding caused by the torrential summer rains this month that broke the drought in central and southern China. Just about every one along the middle and lower reaches of the Yangtze river has been hit by what are being said to be the worst floods since the 1950s. The thumbnail above clicks through to a .pdf version of the full sized map.

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China To Beef Up Maritime Patrol Force

China is to beef up ifs ability to patrol the waters off its shores, according to state media. The People’s Daily, quoting an unnamed senior official, says the China Maritime Surveillance (CMS) force will increase its personnel numbers to 15,000 from the current 9,000 by 2020. The number of ships in its fleet is to increase to more than 520, up from the 350 in the build-up plan under the current five-year plan. The number of aircraft will be increased to 16 from nine by the end of the decade.

China says there is a growing need to protect what it calls its “maritime security” as there has been a sharp rise in intrusions by foreign vessels and planes into what it claims are its waters and airspace. In 2010, the CMS monitored intrusions by 1,303 foreign ships and 214 foreign planes compared with a combined 110 cases in 2007, the CMS official said.

The comments come against a background of continuing tensions within the 200 miles of territorial waters China claims, particularly in the resource-rich and much disputed waters of the South China Sea. Earlier this week, the CMS dispatched one of its largest and most modern patrol vessels, the Haixun-31, after Vietnam has conducted live fire exercises there.

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KFC China Goes Its Own Way

The Harvard Business School has taken a look at the U.S. fast-food chain KFC’s success in China where it has become the largest such chain in the country by not being much like its U.S. counterpart. Authors Professor David Bell and his colleague Mary Shelman, identify four key reasons for KFC’s success:

  • In China, KFC’s strategy was to be part of the local community, not be seen as a foreign presence.
  • China division chairman and CEO Sam Su combined the best ideas from the US fast-food model and adapted them to serve the needs of the Chinese consumer.
  • Only a small number of menu items would be familiar to Western visitors—the Chinese KFC offerings include fried dough sticks, egg tarts, and foods tailored to the tastes of specific regions within the country.
  • To counter concerns about fast food and obesity, Su offered a healthier menu and supports exercise and youth events.

Think local, act local.

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Death Toll Rises In China’s Worst Floods Since 1950s


The flooding in southern and central China–the affected provinces are marked in blue, above–is now being described as the worst since the 1950s with more than 170 people reported dead since Jun 3 as a result of this summer’s rains and at least 63 missing. Thousand of homes have been destroyed. Two embankments along the Puyang River in  Zhejiang were breached following the latest torrential rains, requiring 120,000 people to be evacuated.

In all, rains have caused 555,000 people to be evacuated across 13 provinces. Some 400,000 hectares of farmland have beeb flooded. Disaster relief teams in Zhejiang, Anhui and Jiangxi are treating the situation as a Level 4 disaster, the highest, The torrential rains that have fallen all week show little sign of letting up. State media say economic losses from this week’s rains are 2.85 billion yuan ($2 billion), which is more than the combined direct economic losses that resulted from the two previous rounds of heavy rains.

Meanwhile, more than 200,000 acres of farmland in Anhui, Jiangsu, Hunan and Hubei along the middle and lower reaches of the Yangtze are still drought stricken, with more than 1 million people short of  drinking water. There is also prolonged drought in Ningxi in the northwest.

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Muscle Flexing In The South China Sea

The dispatch of the Haixun-31 patrol vessel into the South China Sea is blatant muscle flexing, despite its overt purpose of making a routine trip to Singapore for a six-day visit. The vessel, seen above sailing from Zhuhai on Wednesday,  is one of the largest and most modern in the Maritime Safety Administration’s fleet. Its voyage comes two days after Vietnam staged a live-fire exercise in the much disputed waters, criticized by Beijing for being a show of force.

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Fighting In Myanmar Underlines Risks To China’s Support

China has pulled out engineers and technicians working on the Tapain hydropower plant in Myanmar intended to supply China after fighting broke out last week between Myanmar government forces and Kachin rebels. Hundreds of local villages have reportedly fled across the border into China after government forces fired on a position near the power plant held by the Kachin Independence Army (KIA). Reports say 16 government soldiers have been killed and 80 wounded in the latest fighting, with the KIA suffering four casualties. Bridges on the roads to Yunnan from the remote mountainous area, and along which Myanmar’s exports of minerals, jade, timber and foods move, with cheap Chinese consumer goods coming in the other direction, are also said to have been destroyed.

A similar government offensive against ethnic rebels, in that case, the Kokang, who are ethnically Chinese, led to tens of thousand people fleeing into Yunnan in 2009. A truce between the government and the KIA, which has fought the country’s ruling juntas for decades, broke down last year, ending its semiautonomous rule. Beijing, one of Naypyidaw’s few friends, will not be happy that its energy projects in the country are at jeopardy. An oil and gas pipeline now being built that will connect southern China to the Indian Ocean also passes through the area, and there are plans for a rail link from Kunming to Yangon and onto the coast at Kyauk Phyu, the port being built by the Chinese which is also the terminus for the oil and gas pipeline.

China’s energy and infrastructure projects are far more important to it than its investments in mining and rubber plantations. Kyauk Phyu gives Beijing not only access to Burmese offshore gas but also Middle Eastern oil that won’t need to be shipped through the Straits of Malacca. The fighting is a reminder that there are risks to its continuing and expanding economic involvement with the government of an internationally isolated regime whose control over its country remains incomplete.

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The Lessons Of China’s Disappearing Lakes

Fifty years ago China had half as many natural lakes again as it does today. This Bystander is indebted to Xinhua for the statistic that the total has been reduced from 3,000 to 2,000, and to Caixin for this related one:

Drought stricken Hunan, Hubei, Jiangxi, Anhui and Jiangsu had a total lake area of 29,000 square kilometers around the founding of the People’s Republic. By the end of the 1980s, only 19,000 square kilometers remained.

We surmise that the lake surface has shrunk substantially since. China’s water use by farmers, growing cities and industry has increased substantially. Poyang Lake, the country’s largest freshwater lake, is a tenth of the size it once was. Hongze Lake has all but disappeared.

They have, at least so far, survived the fate of hundreds of smaller lakes along the Yangtze basin that have dried out completely or been drained and are now farmland or housing. Why this is all of more than mere curiosity is that such lakes form a natural buffer against drought and flood. Their absence is now being fatally felt.

It throws into sharp relief China’s water use policies, already complicated by the fragmentation of water management among various ministries and levels of government. But they are now at a critical juncture. China has 20% of the world’s population but only 6% of its fresh water. Urbanization and economic growth over the past three decades has stretched the country’s water supplies to their natural limits, not to mention beyond the edge of their ability to act as self-cleaning waste sewers for industry. There is a barely a river in China clean enough to drink from because of industrial pollution and spills. Even official statistics says 60% of the country’s rivers are unfit to be a drinking water supply.

Water conservation, now a policy priority, tackles the demand side of the problem. Beijing has managed some success in reducing the amount of water that agriculture, which takes 60% of the country’s water, and industry require to produce economic growth. The recently concluded five-year plan called for a 20% reduction in water consumption per unit of output. That target was met. The current five-year plan calls for it to be met again. The long-term goal is to reduce water consumption per unit of output by 60% from 2005 levels. It all helps but China remains a water hog even by BRICS’ standards and the economy is growing so fast it is a perpetual race to keep up.

Urbanization and industrialization changed the priorities of China’s water management. The growing demands for electricity in the cities led to the damming of rivers for hydroelectric power generation, with the Three Gorges Dam on the Yangtze the poster-child. A large amount of high-energy-use, high-pollution industries are concentrated in fast expanding cities of the the middle and lower reaches of the Yangtze, China’s most densely populated region. The Three Gorges project was intended to meet that growing demand and end the seasonal power cuts that had become commonplace.

It was also intended to deal with the seasonal flooding along the river, though it doesn’t take a very close reading of official statements since to see now that the environmental impact of achieving both goals with a giant dam were little considered at the time (construction started in the 1990s) while the periodic devastating flooding of the Yangtze hurried the project forward. Even the goal of power generation has failed to be met as power shortages have come earlier than ever this year. And while there is much debate about whether such projects, and the Three Gorges in particular, cause droughts downstream, there is little argument that they worsened the the most recent one. The draining of the natural reservoirs that lined the Yangtze basin in the cause of power generation meant there was no reserve when the rains failed to come earlier this year. Those lakes had once held more than 30% of China’s fresh water.

There is now some soul-searching about the environmental effects of such mega projects, and not just because they have endanger flora and fauna like the finless porpoise in Poyang Lake. They are affecting the lives of people and the health of the economy. The political undercurrent is the threat to social stability and the possibility of environmental issues becoming a kernel of political movements that could challenge the party. As a the official Water Resources Assessment for China said a decade ago, “the water resources of lakes is closely related with the sustainable development of China’s economy and people’s life.” At least three times this year, the Three Gorges Dam has released water for drought relief, at the expense of power generation. That had dropped its water level to the point where no further releases would have been possible had the recent rains not come.

Water diversion schemes, such as the long controversial plan to divert some of the waters in the Yangtze to the Yellow and Hai rivers to supply the increasingly arid North China Plain and Beijing on its edge, are also getting a second look. The huge spending on the infrastructure for these mega projects–and thus their capacity for a little local corruption–means there is unlikely to be any agreement on a significant change of plans

There is a similar story of concern upstream on the Qinghai-Tibet Plateau, which held 46% of the country’s fresh water and is the source of most of China’s great rivers. As we have noted before, the Himalayan water shed is drying up. China already dams one river that rises in the Himalayas and flows south across international boundaries, the Mekong, and has reportedly started damming another, the Bhramaputra, which flows south into India and Bangladesh. Diverting water from both rivers to China’s arid plains is being considered, causing rows between Beijing and Delhi and Dhaka. Such conflicts can only get worse.

The challenge is the more urgent because of climate change. Over the past 30 years, floods have been getting bigger and more frequent around the world but no region has been more affected than the Asia-Pacific and no country in the region more than China. (A list of China’s worst floods is here.) Not only has there been more adverse extreme weather to prompt them, but more people and property are in their way thanks to urbanization.

Urban flooding is becoming a greater concern to policymakers than rural flooding. Floods in cities are both more costly and difficult to manage. The economic damage and disruption goes far beyond the immediate destruction caused by the floodwaters. In addition, rising sea levels threaten coastal cities and and their floodplains. More than 100 million Chinese have moved from inland areas to flood-prone coastal cities in the past quarter of a century.

Beijing is spending large sums of money on both river diversion to tackle drought and hard defenses such as embankments to curb floods. From 2011 to 2020, China’s investment in water conservancy projects, including flood defenses, is expected to reach 4 trillion yuan ($617 billion), almost four times as much as that spent during the past 10 years. Yet nature has provided lakes and floodplains to do the same job. An important part of fighting drought and flood is the protection, restoration and reconnection of both lakes and floodplains so they can do what they do best: take in water when the river is high and give it back when it is low.

It is increasingly being realized around the world that rivers and lakes cannot be infinitely sacrificed or bent to man’s will in the name of economic development. China’s policymakers, too, have to learn that it is unsustainable for them to continue just drawing power from the water supply come rain or shine.

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Asia’s Worst Floods Since 2000

YEAR

LOCATION

DEATHS

TOTAL LOSSES ($B)

INSURED LOSSES ($M)

INSURED LOSSES/TOTAL (%)

2010

China: various parts

2,451

19.1

380

2

2003

China: Yangtze, Huai

923

10.1

<1

2010

Pakistan: Indus

1,760

9.5

100

1

2004

China: Yangtze, Yellow, Huai

1,196

8.3

<1

2007

China: Huai

900

7.9

<1

2006

India: Gujarat, Orissa

365

5.3

400

8

2002

China: various parts

900

5.2

<1

2004

India, Bangladesh, Nepal

2,200

5.0

<1

2005

India: Mumbai

1,150

5.0

770

15

2008

Myanmar: Tropical Cyclone Nargis

140,000

4.0

<1

2007

Oman: Tropical Cyclone Gonu

49

3.9

650

17

2007

Bangladesh: Tropical Cyclone Sidr

3,200

3.7

<1

2008

China: Pearl

212

2.7

<1

2005

China: Pearl

685

2.5

<1

2000

India: Osten, Norden

1,429

1.9

<1

2007

Indonesia: Jakarta

90

1.7

410

24

2000

Japan: Typhoon Saomai

9

1.5

1,050

72

2010

Oman, Pakistan: Tropical Cyclone Phet

39

1.1

150

14

2007

Tajikistan

13

1.0

<1

2007

Pakistan: Tropical Cyclone Yemyin

420

0.9

<1

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China Tightens A Tad More As Economy Maintains Momentum

More confirmation that the economy is maintaining its momentum, and policymakers a degree of nervousness. The People’s Bank of China has again raised its capital reserve requirement for the big banks, the sixth and latest of its step increases as the central bank continues to tighten monetary policy. The capital reserve ratio will be increased to a record 21.5% from June 20th.

The central bank made the announcement in the immediate aftermath of the publication of May’s consumer price inflation number, which at 5.5% is the highest in almost three years. The one following the other so quickly was unusual, but the central bank may have been attempting a little inflation expectation management combined with sopping up some of the foreign-exchange inflows that will have come with a resumption of trade surpluses in April and May. Nonetheless, the inflation number may be of more pressing political than economic concern, if the weekend’s riots in Zengcheng are any indication. Food price inflation in May was 11.7%.

The economy’s growth is moderating in a far more comfortable way for policymakers as the rate of new bank lending and money-supply growth is slowly but surely reined in. May’s greater than expected rise in industrial production and the slight rise in retail sales also suggests that the economy is maintaining enough momentum to take another step rise in interest rates, which would be the fifth since last September, in its stride.

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Migrant Worker Resentment Erupts In Zengcheng

The dissent among China’s lowest social strata that constantly bubbles beneath the surface burst forth in the weekend’s riot in Zengcheng, a textiles export town in Guangdong. Thousands of workers, many migrants from Sichuan, took to the streets after a pregnant hawker, also from Sichuan, was knocked to the ground on Friday by either police or security guards trying to make her move her stall. Government buildings were attacked and vehicles, including police cars, set on fire. Police fired teargas to disperse the crowds. Riot police now control the town. A curfew has been imposed.

Complaints about corruption and the abuse of power are commonplace, especially among migrant workers, who feel themselves being close to the bottom of the heap, much discriminated against and are finding what is already a hard-scrabble life being made worse by high inflation, now at a nearly 3-year high. Most of the time authorities keep the lid on this resentment, and particularly now when any potential signs of challenge to the Party’s rule are being snuffed out. But the Zengcheng riot is by no means unique.

Over the past decade, some 100 million migrant workers have moved from the countryside to the factories and workshops of China’s industrial cities, doubling their number to 221 million. The recent census uncovered much larger numbers of migrant workers than thought in all the provinces in the Pearl and Yangtze river deltas, where the haves and havenots live in close proximity though separated by the hukou system. Migrants’ numbers and anger remain a continuous threat to stability, one that ultimately will require a solution to the root causes.

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