From The River at the Centre of the World (Simon Winchester, 1996) pp248-52
… They were there quite simply because they wanted a piece of the action.
They turned out to be fairly small players – an Ontario-based firm that had put in for a $35 million contract to design project-management system software, something that would enable the Chinese to organize their work more efficiently. When they met me they were at first dismayed at having been found out, and then became exceptionally discreet. They were well aware that back home the majority of the Canadian public had been appalled by what it knew of the dam, and would not look kindly upon firms from Canada who came to China Iooking for dam-building business. But they were far from being alone: it turned out that dozens of other firms from America and Europe and Japan had been scurrying to Yichang in the weeks before, specifically to court business. Still others were expected.
I was shown a list marked ‘confidential’: among the names of those arriving in China and touring for work, or celebrating their having been given some, were General Electric, Hitachi, Mitsubishi, Krupp, Mannesmann, Siemens (who had opened an office in Wuhan), Caterpillar, Nomura, Alcatel, Framatome (the French atomic-power experts, already endeared to the Chinese because of the help they had given to build an equally controversial can-the-Chinese-really-be-trusted-to-run-it nuclear generating station at Daya Bay, thirty miles to the windward of Hong Kong), Atlas Copco, Terex Trucks, Brown Boveri and the Finnish Foreign Trade Association. With assistance from companies like these, the Chinese builders will probably not want – at least in the early stages of building – for earthmovers, dump trucks, compressors, drilling rigs, communications gear, heavy steel construction equipment, turbines, electrical transmission towers, ship lock gates or high-powered diesel engines. The only item in short supply in the early stages of building was likely, it seemed, to be money. Given what is known of the state of the Chinese treasury, the want of $36 billion seemed to put the country at least two sandwiches short of a picnic.
The world’s financial community had been extremely leery of the project ever since – and indeed because off the rebellion in the National People’s Congress in April 1992 and since the World Bank had pulled out. But the Chinese met this resistance squarely: they decided to go ahead with construction on their own and by doing so demonstrate that the project would eventually become attractive as an investment, even if it wasn’t at the outset. It was an adroit bit of gamesmanship; and when combined with adroitly applied doses of blackmail – suggestions to foreign banks, that if you don’t help as finance the dam, you won’t get any more business in China at all – it began to work.
The risks of lending money to China are manifold. The country has a total foreign debt of some $90 billion, and a dismal record of welshing that has not endeared her to more prudent minds in the investment community. This particular project, which will take at least seventeen years to complete and will not begin to generate electricity (and thus revenue) until 2003 at the very earliest – and which is plagued by technical opposition, by environmental implications and by massive sociological upheavals – is even less attractive than most. And yet, big American investment firms like Merrill Lynch and banks like Morgan Stanley were early in expressing an interest; while maintaining a discreet distance and the silence of the conclave, they have stuck with the project, offering advice, strategy and, it is assumed, at least promises of eventual funds. Others in America and Japan – Goldman Sachs, Salomon Brothers, Daiwa Securities and Nomura – have taken an interest, too, committing nothing, but keeping their options open and their powder dry. For their part the Chinese offer huge rewards: vast stretches of the Yangtze valley are being opened up to foreign investment, with those who agree to help with the dam being given preference over those who don’t.
Politically correct investment strategists have taken a toll on the bankers’ enthusiasms, however. A number of investment funds in America now take the view that banks should not invest in environmentally or sociologically unacceptable projects – the Three Gorges Dam being, in their view, a classic of unacceptability. And so they – organizations like New York City Comptroller’s Investment Responsibility Office and the Boston-based Franklin Research and Development Corporation – target banks in which they have shares and who are thinking of doing the kind of business of which the shareholders disapprove.
New York’s pension funds currently hold $18 million worth of Morgan Stanley shares and $47 million worth of Merrill Lynch: they have clout, in other words. If, following advice from the Investment Responsibility office, the city says it will not touch the Three Gorges project with a bargepole, as it has intimated, then it can bring considerable pressure to bear on the bankers who wish to. Thus is the world becoming more global; in other contexts and from other points of view, thus is it becoming less democratic, thus do international corporations affect the lives of millions, and thus can men in one corner of the world make decisions that have unimagined repercussions on the far side of the planet.
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