Watering China's drying capital

Posted on Monday, June 28, 2010 by Evelyn Kusnawirianto

In satisfying the thirst for a basic commodity – water – China is making trade-offs between its short term and long term supplies. Already, its capital is suffering from drying aquifers and low groundwater level – both indicators that water supply is shrinking fast. The gargantuan South-North Water Transfer Project, costing over $62 billion, is underway to supply the parched northern region with water from the Yangtze River in Southern China. The Middle Route of the project is designed to divert water from Hubei, Henan, and Hebei toward Beijing.

Slated to provide water during the 2008 Olympics, project completion is now delayed to 2014, mainly due to financing issues related to higher than anticipated costs of construction materials and supporting projects, as well as mass relocation of people.

The South-North Water Transfer Project is by no means a panacea to Beijing’s water woes, but not receiving the planned 0.95 to 1.4 billion m3/year of water is detrimental for the drying capital. Water per capita of 1000 m3 is considered dry according to international standards, and Beijing only has 200-300 m3of water per capita. The city has a low annual precipitation of about 300-500mm, less than half of Shanghai’s 1000-1200 mm. Its reservoirs and rivers are now either polluted or drying up. Furthermore, Beijing’s ground water, which accounts for 70% of its water supply, is decreasing annually by 0.5 to 1 m due to decades of over-extraction. As a result groundwater level below Beijing has plummeted from 5-10 meters to over 50 meters.

In response, Beijing has looked to water conservation and seawater desalination. However, these are difficult to achieve due to the high government subsidies that have kept water prices artificially low. In 2008, the average water price is $0.54/ m3, whereas the cost of desalination is significantly higher, sitting at approximately $1.24/ m3. Bridging the price differential will require gradual pricing reform fill the gap between costs of desalinated water and actual water prices. Increasing water price will also more accurately reflect its market price and incentivize people to conserve.

However, increasing water price, just like increasing such basic commodities as food prices, sweats the Chinese government that social unrest may ensue. Facing the delay of the water transfer project, the Chinese government has instead constructed a 309 km canal from Hebei, itself a very dry province, as an interim measure to channel 200 million m3 of water to Beijing. In the longer term, water prices will still have to be substantially increased and investment in water technologies will need to be made to encourage sustainable water consumption. Otherwise, Beijing may have to resort to relocating part of its population or shifting water-intensive industries to other parts of China.

Image: Polluted river near Beijing
Source: http://www.watercrisischina.com/2008/10/diverting-water-to-beijing/

Under the Radar News 6.25.10

Posted on Friday, June 25, 2010 by Steve Gummo

A weekly compilation of underreported developments in Asia

  • The Political Bureau of the Communist Party of China Central Committee approved a ten-year educational reform plan aimed at increasing the effectiveness and availability of Chinese educational institutions. As part of the reform, the PRC will increase education-related funding, with the ratio of education expenditure in terms of GDP to be 4% by 2012.

  • In response to repeated youth slayings and acts of terrorism, Indian authorities announced a total shutdown of the Muslim-majority region of Kashmir. The shutdown mandates the close of all businesses, government offices and public roads in addition to the enforcement of martial law.

  • According to Japanese Prime Minister Naoto Kan, Japan will not raise its domestic sales tax for at least two years. This announcement follows a strong dip in governmental approval ratings and seeks to garner popular support before the upcoming Japanese parliamentary elections.

  • In an attempt to entice Taiwanese voters before Taipei’s upcoming mayoral elections, the Kuomintang (KMT) has undertaken a project to renovate Taipei’s Songshan Airport; converting it into a major international airport that links Taipei to Shanghai, Seoul and Tokyo.

  • Indonesian governmental authorities are considering the implementation of a blanket internet filter that would prevent access to certain internet-based materials deemed “negative and immoral”. The conservative Muslim-majority country plans to enact further internet restrictions in response to a perceived immorality problem amongst the country’s estimated 40 million citizens with internet access.

  • The first of two water diversion tunnels was completed on Tuesday as part of the South-North Water Diversion project in the People’s Republic of China. The project, drafted by the Chinese government as a way to solve water scarcity in the northern regions of the country, is expected to take up to 40 years to become fully operational.

  • Vietnam announced plans for the construction of eight nuclear power plants over the next twenty years. A Russian firm was granted the contract for the construction and operation of the country’s first nuclear facility which will commence operations in 2020.

  • In spite of repeated warnings and threats of sanctions from the US government, Pakistan announced its intention to continue with negotiations on an Iranian-Pakistani natural gas deal which, if signed, would result in the daily exportation over 21 million cubic meters from Iran to Pakistan.
  • Aerospace Trends in the Asia-Pacific Region

    Posted on Tuesday, June 22, 2010 by Matthew Hallex

    The latest report from the Project 2049 Institute, Aerospace Trends in the Asia-Pacific Region is now available on our website.

    Authored by Mark Stokes and Ian Easton the monograph addresses trends in China's force modernization, strategy, and doctrine; development of conventional air force, air and missile defense, and long range precision strike modernization in Taiwan, Japan, India, and the United States; and options for countering the coercive utility of evolving PRC aerospace power, including cooperative threat reduction initiatives.

    The report was launched on May 25, 2010 with a discussion of aerospace trends in the region by a panel of experts as well as a keynote speech by the Deputy Defense Minister of Taiwan. Video from the event is now available on the Project 2049 Institute Youtube channel.

    Mark Stokes, The Project 2049 Institute

    Paul Giarra, Global Strategies & Transformation

    Jim Thomas, Center for Strategic and Budgetary Assessments

    Deputy Minister Andrew Yang

    Under the Radar News 6.18.2010

    Posted on Friday, June 18, 2010 by Evelyn Kusnawirianto

    A weekly compilation of underreported developments in Asia

  • 10 Jemaah Islamiah members were arrested by Malaysian Police on charges of recruiting local university students and youths to take part in jihad abroad.

  • The Asian Development Bank will provide up to US$146.6 million in equity and loans for waste water treatment at the polluted Songhua River Basin in northeast China. Widespread contamination of river water has deprived 62 million people living in the region of clean, safe drinking water.

  • South Korea announces plans to further improve its ISR capability by deploying two recon planes near North Korea by 2014, as part of its effort toward assuming wartime operational control from the United States in 2012.

  • The Nuclear and Industrial Safety Agency says that nearly half of Japan’s commercial nuclear power reactors do not pass safety inspections, with some having significant problems over discharge of radioactive materials into the sea.

  • Vietnam, listed as one of the world’s most vulnerable countries to climate change, will collaborate with the United Nations to set up a national natural disaster-mitigating forum to discuss measures to mitigate impacts of natural disasters and climate change.

  • In the aftermath of ethnic unrest in southern Kyrgyzstan, China has evacuated 1299 nationals by chartered flight to Urumqi, Xinjiang Uygur Autonomous Region.

  • Australia will provide a P5.2 million grant to the Philippines’ Commission on Human Rights to improve its investigative capability and response to human rights violations allegations.

  • Indonesia may change its elections law to allow military personnel to vote. They have not been allowed to vote over concerns that it would lead to a split in the military but President Yudhoyono said that military personnel should be allowed to exercise their political right.

  • North Korea has cut off state ration and allowed people to buy food through private markets after China stopped supplying it with cereals.

  • China is using seawater desalination technology at a nuclear power station in Liaoning Province. This is the first time the technology has been employed at a major nuclear power plant in China.
  • The Arctic “Floating Pipeline” to Asia?

    Posted on Monday, June 14, 2010 by Tiffany Ma

    The Arctic Northern Sea Route (NSR) looks set for another summer of experimental navigation as ice cover temporarily recedes in this shipping frontier. Russia’s largest government owned shipping company Sovcomflot is planning the first over oil tanker shipments from the country’s resource-rich northwestern region to Japan and China through the NSR.

    The deliveries will herald a new dimension in the region’s energy dynamics. As countries in Asia seek to diversify beyond Middle Eastern oil, Russia’s ambition of capturing a larger share of the region’s energy market could be furthered by the increasing accessibility of the NSR. The route has been hailed as a “floating pipeline” connecting Russia to a lucrative, import dependent Asian energy market, extending all the way to Southeast Asia. In addition to oil, there are similar plans for future shipments of liquefied natural gas through the NSR which could reduce transport to the Asia-Pacific market by 30%.

    Climate change induced warming of atmospheric and oceanic temperatures is likely to open the NSR to longer periods of shipping. The sea route, currently only traversable for two months during the summer with specialized vessels, is highly anticipated as a shortcut between East Asia and Europe, bypassing the traditional passage through the treacherous Strait of Malacca and the pirate-plagued Gulf of Aden. If the Russian oil tankers successfully complete the voyage this summer, it will also open up the new possibilities for the maritime trade of Arctic resources through the NSR.

    A northern shipping lane could facilitate Asia’s access to Russia’s Arctic wealth. The remote Yamalos-Nenets Autonomous area, where the upcoming shipments to Japan will originate, accounts for 90% of Russia’s natural gas and 12% of its oil outputs. Estimated reserves are staggering and include some of the largest untouched oil fields in the country. Warming global temperatures also raises possibilities for viable drilling in currently inaccessible Arctic areas.

    To boost future Arctic energy trade, from the modest 3 million ton deal between Lukoil and Sinopec to a commercially significant level, intermediate investments are necessary for enhancing NSR’s shipping potential. A larger fleet of ice-class tankers and escort vessels can increase the volume of trade as production rises. Search-and-rescue facilities as well as other supporting infrastructure along the passage can improve the NSR’s safety and utility, potentially reducing shipping insurance costs and negative environmental impacts.

    For Asian countries with keen interests in the Arctic, but without territorial claims to the resources, the NSR opens up the shipping potential to tap into the energy-rich region. In addition to shortening the maritime transit between East Asia and Europe, the NSR offers a strategic trade lane to Asia for Arctic commodities.

    Image: The Northersn Sea Route compared to current shipping route from Europe to Asia.
    Source: UNEP.

    Under the Radar

    Posted on Friday, June 11, 2010 by Tiffany Chen

    A weekly compilation of underreported developments in Asia

  • Malaysia is expected to become the only net exporter of oil in Asia Pacific by 2014 despite decline in its proven oil reserves.

  • China plans to invest 700 billion yuan on 4,600km of high-speed railways this year. China also plans to build another 10,000km railways across the country, especially in western China.

  • Seoul is considering deploying Patriot PAC-3 anti-missile batteries on land but not on warships. If approved, This move may create tensions with China and North Korea.

  • Pakistan has signed amemorandum of understanding (MOU) for bilateral cooperation with Australia. The MOU calls for interaction between the armed forces of both countries and doubles the Australian training commitments for the Pakistani military.

  • Japan meets fierce competition in the rare metal market as it pursues “resource diplomacy” in purchasing large amount of lithium from Bolivia.

  • Japan’s new Prime Minister Naoto Kan will be celebrating Japan Day during his first overseas trip to China, symbolically underscoring the importance of bilateral relations.

  • Planned cooperation between Indonesia and South Korea to start a joint project on jet fighter production is underway. The project is an opportunity for Indonesia to revitalize and develop its defense industry.

  • Google has raised concerns over Vietnam’s new internet regulations that allows the government to block access to websites and track user activity.

  • China plans to step up efforts to tap offshore wind energy to meet demand from the country’s eastern coast, and wants at least 15 percent of its energy to come from renewable sources by 2020 as it seeks to reduce reliance on coal and oil.
  • A Sino-Pakistan Nuclear Deal?

    Posted on Tuesday, June 8, 2010 by Prashanth Parameswaran

    In late April, China confirmed that it would supply Pakistan with two new civilian nuclear reactors.

    The deal violates China’s obligations under international law. As a member of the 46-nation Nuclear Suppliers Group (NSG), Beijing is prohibited from exporting nuclear equipment to countries like Pakistan that have not signed on to the nuclear Non-Proliferation Treaty (NPT) or do not have international safeguards on reactors.

    China argues that the two reactors were already “grandfathered in” under a previous agreement with Pakistan before it entered the NSG. The deal included providing Islamabad with more civilian nuclear research reactors and the fuel necessary to run them.

    Furthermore, Beijing views the deal as mere compensation for Pakistan’s insecurity in the wake of the 2008 U.S.-India nuclear deal, where Washington did similar business with Islamabad’s archrival (which has also refused to sign the NPT). This is despite the fact that India’s non-proliferation track record is much cleaner than Pakistan’s, particularly given the latter’s involvement in the AQ Khan scandal where nuclear secrets were disclosed to known proliferators like Iran and North Korea.

    If China goes ahead with the deal, it will have to officially inform the NSG of its planned transaction, and the group will then consider the item in one of its next meetings. This will present a dilemma for the NSG, as it risks allegations of hypocrisy if it chooses not to endorse the deal, particularly having approved a similar U.S.-backed exclusion for India just two years ago (despite the aforementioned differences between the two cases).

    Even if the NSG rejects the deal, however, China could also brush aside the group’s disapproval without incurring direct penalties as the NSG’s decisions and guidelines are not legally binding.

    But if the group does not register its opposition, the accord could be a major blow not just for the NSG but for the global nonproliferation framework as a whole. This is particularly concerning amid speculation that the U.S. may be willing to tolerate the deal to mitigate Islamabad’s security concerns after the U.S-India nuclear deal and as a concession for China to agree to United Nations Security Council sanctions against Iran. The official response from Washington has been muted thus far, with U.S. Deputy Secretary of State James Steinberg only saying that the U.S. has yet to “reach a final conclusion on” the deal.

    In turn, silence by the United States may be interpreted as tacitly condoning nuclear trade between members of the NSG and known proliferators. At a time when the nonproliferation regime is already under assault by unlawful proliferation in Iran and North Korea, and in a world where new countries are mulling nuclear programs of their own, setting such a precedent could trigger grave consequences down the road.

    Under the Radar News 6.07.10

    Posted on Monday, June 7, 2010 by Steve Gummo

    A weekly compilation of underreported developments in Asia

  • The People’s Republic of China announced the establishment of the country’s first maritime NBC (Nuclear, Biological, and Chemical) response team. The emergency rescue team is based in the Shandong province in northeastern China and will provide nautical rescue assistance during crises involving weapons of mass destruction.

  • Pending the completion of two plutonium based nuclear reactors in Khusab, Pakistan’s domestic production capacity for weapons-grade plutonium will increase by 700%.

  • France released a statement of intent to withdraw their military liaison unit from Taiwan after an international court ruled that France was in violation of a 1991 arms sales contract. The court ordered France to pay damages of approximately USD$830 million for the breach-of-contract.

  • According to a statement released by the Vietnam Securities Depository Agency, 20 new foreign investing licenses will be granted, permitting the trade of domestic stocks within the country.

  • Maoists in Nepal have called for the resignation of Nepali Prime Minister Madhav Kumar Nepal, citing his occupation of the office as the only factor preventing the formation of a government of national consensus.

  • According to the China National Petroleum Corporation, China’s largest oil and natural gas supplier, construction has begun on a transnational oil pipeline between China and Myanmar. The pipeline, once finished, will permit the international transport of over 22 million tons of oil annually.

  • The first long-term strategic dialogue between China and the Gulf Corporation Council took place in Beijing on Friday. The conference both reflected the growing partnership between the Gulf countries and China and resulted in a denunciation of Israel’s May 31st attack against an aid flotilla in Gaza.

  • China and Japan released a joint-memorandum concerning possible measures to increase food safety in East Asia. The memorandum is a response to incidents in 2007-2008 during which tainted gyoza polluted with pesticide sickened 10 people.

  • The Tibetan Military Command conducted a comprehensive war-game exercise in an attempt to increase general troop preparedness and improve fighting capability. As part of a total military refit, this exercise is one of many conducted by the Tibetans since the beginning of 2010.
  • Will electric vehicles drive the future of resource diplomacy of East Asia?

    Posted on Wednesday, June 2, 2010 by Evelyn Kusnawirianto

    As thousands of Japanese lined up to buy Japan’s first mass-market electric vehicle, Mitsubishi’s iMev, the electric vehicles market is looking up. Japan has set a goal for electric and hybrid cars to account for 50% of new car sales by 2020. This target will help Japan reduce its reliance on foreign oil from 40% to 30% of its overall energy use and to reduce greenhouse gas emission by 25% from its 1990 level.

    While this reduces Japan’s dependency on oil and encourages energy efficiency, it amplifies reliance on another strategic resource: lithium. Critical for producing the lithium-ion batteries for electric vehicles, the burgeoning demand could create new geopolitical tensions.

    The known global reserve of lithium is estimated to be nearly 30 million tons and more than half are in Bolivia. With lithium demand forecasted to outstrip supply in 2015, major consumers Japan and China have been stepping up their efforts to woo Bolivia. To date, they have enhanced diplomatic engagement as well as provided aid and military equipment. Thus far, Japan appears to be leading the race, securing guaranteed access to Bolivia’s lithium in exchange for power plants and solar power technology.

    Japan’s electric vehicles ambition can potentially alter the dynamics of global demand for rare earth elements, as neodymium and dysprosium are also used to make the magnets for electric motors used in these vehicles. This could also create friction with China, currently the world’s largest supplier. Although China produces about 95% of the rare earth metals, it is also boosting its imports to bolster domestic stockpiles, in part for their own goal of producing 500,000 electric cars by 2011.

    Banking on the strategic nature of the automotive industry, the Japanese government has made securing rare metals supply a priority to maintain the competitive edge of Japanese car and electronics companies. Recently, this has included exploring the seabed in their Exclusive Economic Zone (EEZ) in the East China Sea, an ongoing trouble spot for Japan and China due to unresolved disputes over territorial claims and resource deposits in the area. Although a bilateral agreement on joint exploration was reached in 2008, disagreements remain over operationalizing the cooperative project and dividing the profits. The thirst for rare earths may thus add another dimension to the already complicated and unresolved disputes.

    Japan’s rare earth metals procurement is also viewed through a global lens; to date, it has explored mining projects in South Africa and Kazakhstan. China has welcomed these efforts as new commercially viable sources may allow them to broaden their own supply base, particularly if demand outstrips domestic production in the future. Furthermore, greater diversification in the international market can help avoid dangerous price spikes that could potentially trigger resource competitions.

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