A consortium of U.S. companies is working with the American and Chinese governments to develop financing for what would be the largest hydroelectric project in the world and possibly the biggest construction project in China since the building of the Great Wall.
The size and technological complexity of the multibillion-dollar project will require substantial foreign involvement and -- American businesses hope -- lucrative contracts for U.S. design, engineering and consulting companies.
Potenially, it could mean "humdreds of millions, of not billions, of dollars for U.S. companies," according to Martin Weil of the National Council for U.S.-China Trade. But companies from other industrial nations will be competing against U.S. firms for work on the massive project, if it goes forward.
Construction tentatively is scheduled to begin next year, but final approval by the Chinese government depends on the resolution of major financial, political and technical problems. Critics, who include American environmentalists and Chinese scientists, charge that the project is being pushed forward with insufficient planning and inadequate environmental safeguards, which could turn it into an expensive disaster.
The controversial plan is intended to provide flood protection, generate electricity and improve navigation on a treacherous stretch of the Changjiang (formerly) the Yangtze River). The dam site is in the Three Gorges, a stretch of the Changjiang described as the Grand Canyon of China because of its beauty and cultural and historical associations. The proposal calls for a concrete dam 600 feet high and 1.2 miles across, producing 13,000 megawatts of electricity, which would equal 20 percent of China's 1980 generating capacity.
The 300-mile-long reservoir would displace more than 3 million people and flood up to 10 entire cities and parts of eight others, including Chongqing, the most important industrial city in Southwest China. It also would flood 100,000 acres of fertile farm land, now meticulously terraced and tended. Not only people, but homes, farms, harbors, railroads, factories, highways and communications lines will have to be moved at an estimated relocation cost of at least #3.5 billion out of the project's total $9 billion.
U.S. involvement with the dam began in 1944 when engineers from the U.S. Bureau of Reclamation recommended a dam at the Three Gorges site. Enthusiasm for the dam has waxed and waned since that time, but several years ago the project received preliminary approval from China's State Council, the key to inclusion in China's Five Year Plan. In August 1984, William Clark, secretary of the Department of Interior, which includes the Bureau of Reclamation, signed an agreement with the Chinese government with the Chinese government guaranteeing the bureau's "technical and consulting services" on the project for five years.
One problem faced by U.S. companies hoping to get a piece of the Three Gorges project is the reluctance of the Chinese to deal with the private sector. The Reagan adminstration ha gone to some lengths to blur the line between public and private-sector involvement in this project.
Last May, after his retirements as Interoir secretary, Clark undertook a semi-official mission to China. Upon his return, Clark helped set up the U.S. Working Group on the Three Gorges, composed of representatives of government agencies and the American Consulting Engineers Council; Guy F. Atkinson Co., an engineering company with headquarters in San Francisco; Bechtel Civil and minerals Inc., the accounting firm of Coopers and Lybrand, Merrill Lynch Capital Markets, Morgan Bank, Morrison-Knudsen Inc., an engineering firm headquartered in Boise, and Stone and Webster Engineering corp.
The group is headed by Robert Polvi, vice president and general manager of the hydro and community facilities division Bechtel Group Inc., one of the nation's largest construction and engineering companies -- and a company that helped build the Hoover Dam -- is already heavily involved in China.
In July, the group sent a proposal for technical and financial assistance to the Chinese, hoping for a commitment that hte project would be approved for the next five-year plan, which runs from 1986 to 1990. If the group's proposals are accepted, the development of the Three Gorges Dam will be directed jointly by the Chinese government and a consortium of U.S. companies. The Chinese, however, are holding out for a commtment on concessionary financing -- on other projects they have asked for rates of les than 7.5 percent a year -- from various sources, including the U.S. Export-Import Bank, the World Bank, and other export credit agencies.
The working group hopes the project will get final approval form the State council in time to be ratified at next May's meeting of the National People's Congress. Construction then could begin later in the year, with site work under way before the design is complete and the first electricity generated in 1994.
To meet this schedule, construction of access roads and other preparatory site work already has begun. But despite the leadership's enthusiasm for the dam, financial and sensitive political and technical issues first must be resolved. The initial feasibility study left key technical questions unresolved, according to critics and those involved with the working group. It is unclear how large an area the dam would protect from floods, nor are the benefits and costs of the estimated flood control quantified, although proponents assert that the cost of building the dam would be dwarfed by the losses from a single serious flood. The $9 billion cost estimate (at 1980 prices) for building the dam did not include interest rates or operating costs.
What China's leaders have voiced the most doubts about is the relcation effort, which would be the largest in history.
Other aspects of the project have attracted criticism from inside and outside China. One is the concentration of so much of the nation's electrical capacity at one site, vulnerable to attack in time of war or national unrest. Another concern, raised by the United States, is that the project site is very prone to landslides "large enough to pose a significant threat."
It appears likely that the Chinese will decide that technical and environmental questions need more studly before the project goes forward. But many observers in the United States are convinced that, whatever the delays and whatever the controversy, the prospect of building the world's biggest dam in one of the world's deepest gorges will be irresistible to China's leaders. In the words of David Denny of the National Council for U.S.-China Trade, "It's not a question of whether it will go ahead, but when."