Tuesday, August 10, 2004

Water, Water Everywhere

and not a drop to export?

China struggles to satisfy thirst for water

By John Hill

China is facing increasing shortfalls in the water resources it needs to sustain economic growth. Despite infrastructure projects to address the problem, the consequences of the shortages are already being felt internationally.

The growing scarcity of water resources is becoming so critical to China's economic well-being that minister of water resources Wang Shucheng admitted in March that the issue is now "challenging national security".

China's phenomenal economic growth is largely responsible for the emerging crisis and questions are already being asked about whether the current pace of development can be sustained. Wu Xiaoling, the Vice-Governor of China's central bank, the People's Bank of China, said in April 2004 that "if measured by the sustainability against the availability of resources", then China's economy is already overheated. He noted that none of the nation's energy, water and land resources can support the current rate of growth. For Chinese leaders, the fear is that an economic downturn could lead to social unrest.

In December 2003 the Ministry of Water Resources noted that water shortages were already causing 230bn yuan (US$28bn) of losses in industrial output. While the issue has significant domestic consequences, it is not purely an internal problem for China. The resource demands made by one sixth of the world's population will always have the potential to affect the rest of the world, particularly its immediate neighbours. "China's anxiety to secure reliable supplies of electricity and water has pitted it against neighbours including Thailand, Burma, Vietnam and Cambodia," according to China analyst Willie Lam, referring to the pressures working against the implementation of President Hu Jintao's flagship policy to promote China's 'peaceful rise' (heping jueqi).

A case in point is Beijing's plan to build hydroelectric dams at the upper reaches of the Mekong and Nu rivers - and to funnel more water from them for irrigation purposes. This has resulted in less - and poorer quality - water for countries reliant on the downstream portions of these rivers.

And I thought LNG would be Canada's next export to Asia! Little did I know that a freshwater export business might be the ticket. Seriously though, this could be a long term strategic issue. China does not have a good track record of playing nice with its neighbours when it wants something.

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