Tibet Development Watch: China’s 100 billion spending spree in Tibet

Gabriel Laffitte

China has announced its spending plans for “Tibet Autonomous Region” to the end of the 11th Five-Year Plan period, 2010. Total spending is to be 100bn yuan, an extraordinary amount by any standard. China says this amount is to be spent on 180 projects but only a few projects have been named. Those few would not need anything like 100bn yuan, which, at current exchange rates is around US$16bn.

The named projects will appeal to two audiences, one in China, the other internationally. Inside China, the corporations who now have great power, as in any capitalist society, have been unable to gain profit from Tibet because basic infrastructure is still lacking, even sufficient electricity to operate a modern economy. Neither mineral extraction nor the tourism industry potential can be realised unless this infrastructure is put in place, paid for by the state, also the usual practice in capitalist countries. Infrastructure means railways to bring tourists in and minerals out, airports, highways, hydropower stations, and a lot of urban facilities.

These are exactly what China announced in March 2007 to complement the railway to Lhasa: an airport in Ngari, following the recent opening of an airport in Kongpo/Nyingtri, extension of the rail line to Shigatse, many hydropower plants, none of which add up to anything like 100bn, even if construction is fast, as seems to be the plan, fulfilling China’s promise of “leap-over” super fast development.

The other projects, contained in a package costed at 10bn yuan, is intended to appeal internationally. It focuses on extending the urban construction boom out into the Tibetan countryside, providing farmers and nomads with electricity, phone coverage and education. This would show China is not restricting the benefits of development to the urban centres and their largely immigrant populations.

This still leaves a lot left over from 100bn yuan. Extending the railway from Gormo to Lhasa officially cost 26bn yuan, for example, and the Three Gorges Dam, almost complete, has cost 131bn yuan till date. Where is the unannounced rest of the 100bn going? We can make some educated guesses.

Before guessing, we should consider the possibility that much of the 100bn is simply normal recurrent expenditure, most of it routine subsidies to the “TAR” Government, which relies on Beijing for 90 per cent of the money it spends, a far deeper dependence than in any other province, even though Qinghai (Amdo) and other poor provinces do get subsidies from Beijing too. In Western countries, politicians often seek to win public support by announcing large amounts of money or popular projects and issues; but when astute reporters look closely at the details in the fine print, a lot of the money was promised and allocated long ago, and is simply being repackaged and re-announced for dramatic effect. Although China has not learned from the West to practice democracy, it has learned many of the techniques democratic governments use to manage pubic opinion.

And it may be that some of the 100bn announced in March includes the huge amounts needed always, to pay the high salaries of immigrant administrators and their urban comforts. The recurring expense borne by Beijing of financing the “TAR” government is great, since there is so little taxable industry in “TAR”, the revenues raised within “TAR” amount to only 1.2bn yuan a year (2004 official statistics) while the expenditure of the “TAR” was 13.6bn the same year. The gap, of more than 12bn a year, comes from Beijing subsidies. Not surprisingly, Beijing calls the tune, and the “TAR” Government shows little inclination to use its powers of autonomy.

Even if this is so, there is still a gap. China says it has 180 projects in “TAR” (while other parts of Tibet remain neglected and under-invested, especially in pastoral areas) and only a few of the 180 have been named.

What else might be on the project list? These days, resource extraction is usually done by mining companies which are no longer directly state-owned, though they have close links to both the Party and the state. The actual operation of a mine is a corporate investment, but the expense of infrastructure–electricity, rail or road access, water supply and urban facilities–all remain expenses for the state, essential to profitable mining.

Will the 100bn be used to set up major mines and processing plants? This seems quite likely. There has been much mining in Tibet, in many places, often highly destructive, but usually on a small scale by world standards. Future mines will be on a world scale, since the Chinese metals industries operate now on a world scale, importing vast quantities of minerals, even those found in Tibet, because it was cheaper and easier. Building a world scale mine means investing very large amounts in a specific location because the cost of extraction there is less than the cost of extraction somewhere else. Chinese steel mills and copper smelters, in deciding whether to locate a mine and perhaps a smelter as well, in Tibet, will make heir choice by comparing costs of extraction from Tibet with the costs of a similar plant in Brazil or Canada or Australia or Orissa. Until recently such overseas destinations have been cheaper, faster and easier than investing in Tibet

That has now changed. The prices of almost all metals, coal and oil has risen dramatically; doubling, trebling, even quadrupling worldwide, because of China’s endless demand. Expert commodity price forecasters employed by major exporting countries say the present high prices will slowly go down, but not to the prices of only three years ago. High quality iron ore, which was until 2003 available for little more than US25 a ton is now $80 a ton and may, by 2010 drop back to $50 or even $40 a ton.

This professional guess of future prices could be of great importance for Tibet. Tibetan mineral deposits that until now seemed too distant, expensive and complicated for China’s largely coastal metal manufacturers, may now be profitable, due to the worldwide price rises and shortages of
energy and minerals.

One mineral deposit almost certain to profit from the 100bn Beijing package is the Shetongmon gold and copper deposit, near Shigatse, which will be able to send concentrated or even fully refined copper to distant Chinese markets on the rail line to be extended to Shigatse by 2010. The
copper mine at Yulong, north of Chamdo, has been in preparation a long time, and publicly announced many times, but has not yet begun operation. It may now go ahead soon. The chromite mine near Tsethang, and other chromite deposits north of Lhasa which the new railway crosses, may increase production.

There may even be intensive preparations to determine the feasibility of a huge iron ore mine in remote upper Tibet in Tsochen dzong, near Tari Namtso. The quality of the iron ore there is as high as the iron ore China currently imports hugely from Orissa, but a mine at Tsochen would have to be competitive with imports, so a railway would be essential. A railway that far west, far beyond Shigatse, would also be very expensive. Much surveying work may be seen soon.

Another major extraction project that is already well advanced in planning, and would cost many billions in implementation, is the capture of the Tibetan headwaters of the Dri Chu, to be channelled, through tunnelling into Tibetan mountain ranges, all the way to the Ma Chu, China’s Yellow River, or Huang He. This is officially known as the western route of the south-to-north water diversion, and planning has been under way for a long time. Other south-to-north water diversions, downstream in China, are well under way. The many rivers of Kham that feed into the Dri Chu (Chang Jiang in Chinese, Yangtze in English) are next in line, but also controversial in China, not because it is Tibetan water but because there are many doubts about the great costs environmental consequences and effectiveness of the idea. It is the lower Yellow River, in Shandong, close to Beijing, that runs dry, and Tibetan water pumped into the Yellow River at the junction of Sichuan Amdo Ngawa, Qinghai Amdo Golok and Gansu Amdo Kanlho is so far from Beijing it may never reach.

The place where Dri Chu headwaters would be pumped into the Ma Chu is the great Dzoge wetland, a haven for many rare migrating bird species as they fly south from Siberia at the end of summer. In order to ensure the Dri Chu water flows down towards the far distant sea, and does not just spread out into the wetlands, it is almost certain the wetlands would be drained and ruined, sealed off from the river.

These are huge projects, and would cost many billions. Perhaps this is where the unannounced projects will be.

The announced projects include an airport in arid far western Tibet, in Ngari, where the main attraction is the holiest of all Tibetan pilgrimage places, the mountain known to the world as Kailash, to Tibetans as Gang Rinpoche or Gang Tise. Devout pilgrims make the long and arduous journey from the populous districts of Tibet, to purify their minds, by walking round the holy mountain, and its matching lake, Manasarovar. If this becomes a major tourist destination, easily accessible by air from Lhasa or even by direct flight from Beijing, pilgrims will find it hard to maintain the clarity of mind essential to achieving the purpose of pilgrimage, to transform the mind.