Three Gorges Dam, which is rising on China's Yangtze River, is the world's biggest construction project. As many as 30,000 workers have manned nine concrete plants, 40 cranes and hundreds of trucks as the wall stretches toward its 18-story summit. When completed in 2009, the dam will be wide enough to block the Golden Gate Bridge.
The project, costing an estimated US$25 billion, will generate as much electricity as 18 nuclear plants for homes and industries as far as 1,000km away in Shanghai and Guangdong, according to State Power Corp, the government utility that will distribute the power. And the government says Three Gorges Dam will tame the Yangtze's floods, which killed over 320,000 people during the 20th century.
International investors aren't convinced about the benefits of the dam, which will take a toll on people and the environment. To make room for the 660km-long reservoir the dam will create, the government is uprooting at least 1.1 million residents. When the basin fills, towns will vanish and people like Shen Yauyin, a 93-year-old former shopkeeper, will have to move.
"I have lived here all my life," says Shen, his great-granddaughter tugging at his blue Mao suit. "But moving is state policy, so we have to do it." As China steps on to the international stage -- hosting the APEC summit this past October, completing its 15-year quest to enter the WTO and preparing for the 2008 Olympic Games -- investors are struggling to decipher the rules for doing business in the world's most promising market. The Three Gorges project embodies the contradictions and difficulties they face.
On one hand, the dam reinforces the expectation that China will put national goals first, even as it agrees to adopt rules of free trade. On the other, China's 1.3 billion consumers form a market that is too large to ignore. GDP rose 7 percent in the third quarter -- almost triple the IMF's forecast for the rest of the world this year. Trade Minister Shi Guangsheng predicts that GDP will expand to US$1.51 trillion by 2005 -- a 40 percent surge from last year.
"We know China has a lot of problems, lots of hindrances and difficulties," says Michael Lung, president of Dow Chemical Co's China unit, which is awaiting Beijing's approval to build a US$3 billion petrochemical plant in the northern city of Tianjin. "But the rewards are pretty big too. Can you afford to take the risk of not being a player in the Chinese market and hope 20 years later you are still a major player?"
Many investors think not. Foreign direct investment increased 20 percent in the first eight months of this year to US$27.4 billion, according to the Ministry of Foreign Trade and Economic Cooperation.
Contracted foreign investment, a gauge of future projects, rose 32 percent to US$43.7 billion. And the number of companies registered as foreign funded -- those that derive 51 percent or more of their registered capital from non-Chinese firms -- climbed 19 percent to 16,344.
Still, many foreign investors have shunned the Three Gorges project. State Power officials acknowledge that it's difficult to reconcile the dam with investor expectations.
"We are trying to state clearly our stance on migration issues," says Deputy Director General Chen Dongping, seated in the utility's Beijing headquarters, a former Qing dynasty home with carved pillars and Chinese paintings on the walls. "Based on the situation in China, it's very difficult for us to do so in a way that will satisfy Western investors."
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