Trickle down economics - the problem with China's water
The CCP is fighting against China’s ecosystem. Whether or not it can win will determine the future of the nation and the fate of its people.
The impending collapse of China’s economy has gripped the headlines recently. And by the headlines, I mean the thumbnails of Youtube channels that typically focus on flashy business news commentary and half-baked financial advice. Not only do many of these videos claim an impressive amount of insider knowledge (some of them even manage to pinpoint the exact moment China will come crashing down), but they often seem amazed by the information they impart (There’s a mortgage crisis! China is in competition with the US! China suppresses protests!)
While I don’t want to dismiss the urgency of these claims, we’ve covered China’s economic issues relatively recently, and I don’t think much has really changed since that newsletter. Besides, I get the feeling that claims China’s entire economy will collapse by the end of August might be clickbait. There’s no doubt that the real estate sector is in trouble, but it’s nothing the world hasn’t seen before. Granted, it’s on a larger scale than 2008, but China’s whole economy is on a larger scale (it may surprise some of these guys to know that real estate does not make up the ‘entire’ of China’s economy). A collapse in one sector does not mean the whole thing will come down like a house of cards.
Something helpful that this uptake in China’s economy has sparked, though, is the interest in the bigger picture. A lot of commentary gives overviews of the interconnectedness of China’s economy with the rest of the world, such as in production and supply chains, which was demonstrated very clearly during the pandemic. However, part of this bigger picture that I think some people are not talking about is China’s impending water crisis.
Water scarcity is a global issue. Experts have flagged water shortages as a key source of conflict that is only increasing over time: "Population growth and economic development are driving increasing water demand worldwide. Meanwhile, climate change is decreasing water supply and/or making rainfall increasingly erratic in many places." This is also true of China, where water control - floods, droughts, damming, irrigation, cleanliness - has been a problem for centuries. Discussion around water in China has recently picked up again. It’s not just Western academia and media that’s taken an interest; even local and national Chinese media, as well as Chinese scientists, have highlighted ongoing problems with severe and sustained droughts.
So what is going on with China’s water supply? What are the risks for China’s economy and environment? And what are the potential risks for the countries that rely on China for access to water now and in the future?
The news
For me, the biggest sign that there’s an issue worth talking about is the fact that problems with China’s water supply are being discussed openly in the Chinese news media. Southern China has been experiencing a heatwave for around 2 months, and the lowest recorded rainfall for 60 years has caused a drought that threatens the autumn harvest. The drought has affected 4 million in Hubei province, 1.3 million in Jiangxi province, and has reduced the country's largest freshwater lake, Poyang, by 75%.
The government has had to release 5.3 billion cubic metres of water from the Three Gorges Dam and other reservoirs into the middle and lower reaches of the Yangtze. In Chongqing, authorities have had to set up distribution stations for residents in parched villages to collect water. Chinese officials are attempting cloud seeding to induce rain.
Of course, the usual spin is applied, making it difficult to make heads or tails of the news. “There has been no major change to the amount of water stored in the basin's main reservoirs,” despite the fact that “water in the main body of the Yangtze and in two major lakes in its basin, Dongting and Poyang, has fallen to its lowest recorded level.” Sichuan Province has had to ration its power, which is largely reliant on hydroelectricity. But the power cuts have not had any lasting impact on production, and the hopes are that things will improve later this month, as power companies in the North reallocate electricity from the nationwide grid to help regions in need.
Despite the positive spin however, signs of struggle are apparent. Farmers are losing millions and scrambling to save their plants. The government has to drive water to villagers. The Sichuanese have rolling blackouts. Certain industries that rely on hydropower have been ordered to turn off power for 6 days. And that’s to say nothing of the ecological damage the drought has caused.
The academic literature
Scientists have been cataloguing problems with China’s water supply for decades. A report in Nature in 2010 highlights the impact of the drought in Yunnan, and how causes are not just linked to climate change, but general water management, monocultural practices, and other environmental factors such as deforestation. Droughts are not uncommon in Southwest China, A 2015 study argues that the droughts have been getting worse over the past 50 years. Another adds that the average drought-related economic loss is approximately 35% of the total losses related to natural disasters in China, and China is particularly vulnerable to these losses, as it has to feed 22% of the world’s population with only 7% of its arable land.
As extreme weather events increase, lack of water is exacerbated by the choice to grow plants that demand more water such as rubber trees, or to build quarries and mines that have cleared huge swathes of forest. These choices have a noticeable effect on the local ecology. Scientists in Yunnan, for example, noticed that as certain plant species died off due to lack of water, other, hardier plants took over, but were worse at absorbing carbon dioxide. China’s inability to properly control the distribution of water across the land is also contributing to desertification, which means the amount of habitable and arable land will only decrease with time.
A lack of geological surveys, investment in large-scale projects as opposed to smaller, local projects, and a reactive attitude towards drought means that recurrent disasters remain likely. This is backed up by news reports - the worst affected areas are those on the margins that “depend on small reservoirs, mountain springs and creeks.” It is clear that more needs to be done to mitigate the effects of weather disasters in the future, otherwise current events may be a portent of much worse things to come.
The long-term implications
One of China’s great goals for this century is to reach peak CO2 emissions by 2030, and be carbon neutral by 2060. One of the ways in which it hopes to do this is through hydroelectricity, an important source of renewable energy, as well as national pride. The CCP considers the Three Gorges Dam to be one of its major achievements, not only supplying the region with energy, but also preventing the flooding of major settlements and farmlands in central China.
But lack of water has exposed a weakness. A region that was previously prone to flooding now faces the opposite problem. The dam is being run dry, revealing ecological effects it had on the landscape such as soil erosion and deforestation. This situation has also revealed that China’s damming projects also have the potential to cause ecological damage elsewhere. One study shows that another dam along the Mekong river is causing droughts for China’s Southeast Asian neighbours, even during the rainy season, as China seeks to hoard as much water as necessary. While this has apparently not been deliberately to date, it could be used as a means of influence, or even as a weapon in the future.
This points to China’s plans for self-sufficiency in the long term, which are also threatened by the current droughts. If the government can’t guarantee agricultural production or water availability, then they can’t be counted on to reliably feed their population. Add to this a looming demographic crisis, and it’s clear that China will need to solve this problem as fast as possible before a shortage of workers becomes a huge issue. If China can’t automate the entire production system as well as its water supply, millions of people will be left without access to power, food, and water, perhaps on a rolling basis, and perhaps indefinitely.
Control and Survival
It’s clear that the problem isn’t just drought, but extreme weather generally. Just two years ago, China was battling major floods in the same region, which affected more than 20 million people and caused major damage. If China can’t control the quality, quantity, and flow of water, then the people will grow restless, as they have done in previous times.
An op-ed in China Daily titled “West must stop demonizing BRI” (Chinese media doesn’t like unnecessary articles) brought to mind the roles of control, power, and water in governance. “Whether the West likes it or not, the Belt and Road Initiative has been driving infrastructure development globally, with many road, railway, port and bridge projects either completed or under construction.” Indeed, China has invested a lot in the development of other countries, for rather opaque reasons. I still don’t think that money is all that’s in it for the Chinese government. As I’ve argued before, the scattered projects of the Belt and Road seem to cluster around resource-rich developing nations, or somehow be in support of a network of roads, railways and waterways that lead conspicuously back to the Middle Kingdom. These projects not only provide jobs, but goods and possibly even resources like energy or, if necessary, water that can be used to pay back debts. It may seem like a long shot, but with everything that’s going on, it may well be on the cards in the future.
China’s eagerness to export dams to other countries as part of the BRI has been “generally interpreted as being about China's domestic overcapacity problems and the need for resource security.” These projects include but are not limited to the “Bui dam in Ghana…Merowe (Sudan), Imboulou (Republic of the Congo), Gibe III (Ethiopia), and Memve'ele (Cameroon).” If these projects dry up as a result of climate change, demographic change, or political turmoil, it poses a direct threat to China’s stability. However, there’s an equal - if not greater - risk for global firms and other governments who support such projects, as “contrary to the Chinese imaginary that stresses government financial support, at least in Ghana the host government and non-Chinese lenders are the key financiers that sustain Chinese business overseas. Outside China, the Chinese government’s financial connections with these corporations may be more rhetoric than reality.” However, though the BRI is not a top-down, centrally controlled project, how the Chinese state benefits from international projects should always be borne in mind.
Not to make China seem obsessed with dams, but also dams play a huge role in China’s economy, helping to hold back flood waters and to generate power for industry and people. The news about power rationing backs up claims that future reliance on BRI power projects could be on the cards, as well as the fact that China’s transformation to fully renewable energy will be a slow process.
I do take issue with some evaluations of the BRI that portray the CCP and Chinese businesses as engaging in some sort of neo-colonial invasion of developing nations. Long-term loans are used in every area of life at every scale every day. What is a mortgage if not a long-term loan from a bank? Individuals, businesses, and governments take out loans all the time. China lending money for infrastructure projects is nothing new. In my view, the problem here is not with the money, but what China plans to do with the resources it extracts from these projects. A return on investment doesn’t just mean getting cash-back and creating jobs for Chinese workers. It means getting food, energy, precious metals, and other key resources to ensure that China can thrive regardless of poor weather.
What we should be aware of is not that China wants to be a rich country in a prospering world. But rather that, come the fall of civilisation, China will not hesitate to prioritise its own survival at the expense of everyone else’s.
Yes, there is authoritarianism in China. It can push the building of great dams and bridges. It can fuel stunning new technology-at a price that almost any human can afford it. What good are the cameras on an iphone without the ability to use or afford the beautiful screen?
I looked at the recent photos of Chunking. The Yangtze is drying up. The forests are burning, the relentless rows of skyscraper apartments may or may not now have power.
But still, in America, with fewer people than China had a century ago, and with our our own centrifugal forces hurtling near to destroying our great experiment, China's ability to maneuver something like stability when people are nearly stumbling over each other...well, it is a thing of wonderment.
And something we Americans need to be cognizant of.
Segue: Of all Chinese leaders of the 20th Century I would like to meet Zhou En-lai most. think he best personifies the spirit that makes China great today.
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Another interesting and thought provoking article. Your final statement is pretty grim. Since they have never really tried to interact with the world much outside their own borders until recently it seems like they realize (maybe in a globalist way) that their own existence relies on having functional cooperative relationships with the other nations on the earth. From the individual up to the national level there seems to be a spectrum of outlook, either you think we have succeeded as a species because we cooperate or at the heart of all human endeavor is just self preservation even if it means harming the other. If there should ever be a legitimate collapse of human civilization I would be curious to see which end of the spectrum humanity finally decides to be the driving force. But historically China has been pretty standoffish and not like a nation that would destroy another country to get the resources it needs to survive. But it never had 1.4 billion people before in a world that is also crowded and struggling for shares of resources.