Financing China's mega-dam

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Financing China's mega-dam

When it comes to infrastructure projects, this is the big one - an engineering feat on a par with the Great Wall of China. But as well as flooding 600 kilometres of the Yangzi valley, the Three Gorges dam could cause a deluge of arguments among the foreign banks and contractors lining up to get involved. Jack Lowenstein reports on some early signs of trouble and picks out the project's likely backers.

A great new issuer leaps forward


Nobody knows how much it will cost China to block the Yangzi and build the world's biggest ever dam. By even the lowest estimates, it will cost more than $30 billion to fulfil Mao Zedong's dream of taming the force of the world's most powerful river. Yet some believe it could cost a staggering $70 billion. By comparison, Malaysia's recently-cancelled Bakun dam would have cost less than $6 billion.

Everything about the scheme is on a vast scale, including the controversy it has generated. The Chinese government has faced an unprecedented barrage of criticism at home and abroad over the plan which will displace a million people and create a reservoir stretching over 600 kilometres.

Many observers have long doubted the government's ability to get the dam built, and plenty still believe the project is ill conceived. One US banker in Shanghai describes it as "the last gasp of China's Stalinists". In 1996 the US National Security Council recommended against official support for the Three Gorges project because of uncertainty over its economic viability and doubts about China's ability to finance the project. Later that year the US Export-Import Bank president Martin Kamarck cited environmental concerns when he refused to support letters of interest from US exporters planning to submit for the project's first $1 billion of foreign turbines and generators.


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