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

By Guest Writer

Apr 5, 2010

In , Sinohydro’s management invited me to meet with them. In what was likely the first dialogue between a Chinese state-owned enterprise and an international advocacy group, the management expressed a commitment to protecting the environment, and said that they would consider preparing an environmental policy.

Late last year, Sinohydro announced that it plans to get listed at the Shanghai stock exchange. Through an initial public offering (IPO), a company defines its profile for international investors: Does it plan to take on contracts at any cost to the environment? Or does it try to minimize social and environmental risks as a good corporate citizen? We strongly suggested that if Sinohydro wanted to become a world class brand, it needed to adopt and implement a world class environmental policy.

China’s Ministry of Environmental Protection needs to clear IPOs of companies in polluting sectors. In early March, the ministry invited the public to comment on the which Sinohydro had prepared for its public offering. At the same time, Sinohydro informed us that it was now indeed preparing an environmental policy and invited our recommendations.

Working together with partner groups from China and other countries, we again recommended that the company needed to adopt highest international standards if it wanted to become a leading global brand. We will also convey this message to Sinohydro’s potential investors.

Policy Put Into Practice

Policy changes at the leading Chinese dam builder and financier are important first steps. Yet as we know from other institutions, there is often a big gap between an environmental policy and actual practice on the ground. The proof of the pudding is in the eating. What is happening there?

In December 2009, we learned that Turkey had China to build the on the Tigris. The Turkish government was looking for support after the German, Austrian and Swiss export credit agencies had pulled out of Ilisu because of social and environmental policy violations.

Turkish NGOs and International Rivers immediately to the Chinese authorities to warn against such involvement. Chinese support for the dam would enable a social and environmental disaster in Turkey, and undermine the international efforts to strengthen the social and environmental standards in big infrastructure projects.

Ilisu is a test case for the future role of Chinese dam builders and financiers. We expected China’s involvement to be confirmed by January, but so far, there has been no such news. The Chinese ambassador in Ankara has repeatedly stressed that China was not getting involved in Ilisu.

Have Chinese dam builders and financiers indeed opted against this project even if it meant offending an important government and passing up a lucrative deal?

Signs of Progress

While the jury is still out on Ilisu, we have witnessed progress on the ground in Gabon.

With support from China Exim Bank, Chinese investors plan to develop a huge iron ore deposit in this West African country, complete with a , railway line and port. , Gabon’s inspiring environmental NGO, sent a letter to the Exim Bank pointing out that the dam was proposed to be built in a national park and would violate its environmental guidelines. In due course, Brainforest learned from the Gabonese government that China Exim Bank had suspended the project over environmental concerns.

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