In the April-June period, the Chinese economy’s real growth rate was just 6.2 percent — the slowest in 27 years. Meanwhile, a University of Chicago research team revealed that tax revenue increases between 2010 and 2016 were 1.8 percentage points lower than the official real-term growth rate. This suggests that China’s economic growth may have in fact slowed to around 4 percent.
U.S. President Donald Trump immediately responded to China’s announcement of the slowing growth rate, tweeting: “United States Tariffs are having a major effect on companies wanting to leave China for non-tariffed countries.” Trump has identified China’s macroeconomic fundamentals as a weak point, and has attacked accordingly.
Various countries have surreptitiously begun exploring China’s potential weaknesses — its Achilles heel. Just this April, a team representing the intelligence agencies of a U.S. ally visited my think tank, Asia Pacific Initiative, to cite a list of China’s vulnerabilities and fired off a number of related questions before departing. During a visit to Washington later in the same month, I spoke with a U.S. Defense Department official researching the same topic.
A number of potential issues came up in the course of these conversations: burgeoning private-sector debt, the “zombification” of state-owned enterprises, bad debt associated with the Belt and Road initiative, China’s “Malacca Dilemma,” choke points in the global supply chain for semiconductors and other products, growing disparities in wealth and opportunity, the corruption of apparatchiks, environmental destruction, and ethnic minority uprisings and associated acts of terrorism.
As we talked, however, it became increasingly apparent that the most long-term and fundamental of China’s vulnerabilities could be summed up in a single word: water. China has failed to secure a sufficient amount and quality of water for its citizens, leading to an “absolute scarcity” of the resource in the country.
The United Nations defines three levels of “water stress,” which begins when the annual supply of water available in a country drops to 1,700 cubic meters per person. The situation becomes graver when this annual level drops to 1,000 cubic meters — a condition defined as “water scarcity.” Countries with an annual amount of less than 500 cubic meters of water per person experience “absolute water scarcity.” Eight of China’s northern provinces are currently experiencing absolute water scarcity, while another 11 are at the water scarcity level.
The water resources provided by the Yellow River are a tenth of what they were in the 1940s; Across the Yellow River Basin region, they have been halved in the past 50 years. In 1997, the Yellow River dried up for 226 days, severing the river’s connection to the Bohai Sea.
Recent studies show that pollution has made a tenth of the river’s water unfit for agricultural use. Climate change has only accelerated the pace at which the river is drying up. In 2000, Premier Zhu Rongji warned that the current pace would eventually force the government to relocate its capital from Beijing.
To secure Beijing’s water supply, the Chinese government launched the South-North Water Transfer Project to channel water from the Yangtze River northward. The Eastern Route (1,156 km) was completed in 2013, and the Central Route (1,432 km) in 2014. The Eastern Route flows between the cities of Hangzhou and Beijing, and makes use of the Grand Canal, which was constructed during the Sui Dynasty and was later restored and expanded in the Ming Dynasty.
The Grand Canal was an important transport route that carried grains from the Jiangnan region to Beijing as a form of tax payment. Today, water is delivered to Beijing via pipelines along the route. While the South-North Water Transfer Project may temporarily alleviate the severity of its water shortage, Beijing remains in a condition of “absolute water scarcity,” and neighboring provinces will continue to face similarly harsh levels of water scarcity.
The source of this water, the Yangtze River, is also feeling the negative consequences of this enormous project. At the origin of the Central Route in Hubei Province, approximately 380,000 people were resettled from the area around the Danjiangkou reservoir. To prevent water contamination, factories, farms, and fisheries in the area were also shut down. Some local governments are defending their water supplies by building dams along tributaries of the river to prevent their water from being siphoned off.
China’s water crisis stems primarily from its inability to halt water pollution and waste. To begin with, water has been too cheap: in fact, water was free for the first 30 years of communist government in China. Only with the economic reforms of the 1980s did the government begin charging for water.
Since ancient times, “river management” has been fundamental to governance in China. During the Qing Dynasty, repairs to the Grand Canal were halted following the 1855 flooding of the Yellow River, and the governmental organ responsible for managing the river was abolished. At this point, a shift to the sea transport of grains from Jiangnan to Beijing was already underway.
However, the government’s measures deprived the many people who worked in the Grand Canal-based transport and forwarding industry, as well as related industries, of their livelihood. The resulting social unrest was one backdrop to the Taiping Rebellion. Fittingly, the surname of the rebellion’s leader, Hong Xiuquan, is represented by the written character for “flood.”
River management and irrigation in China have always been characterized by massive geo-engineering projects accompanied by political pageantry. This is nothing other than “PoliTec:” the transformation of the environment in service to society.
In the 21st century, this age-old drive will turn toward the Hindu Kush and the Himalayas. Known as the “Roof of the World,” this region is the source of Asia’s great rivers: not only the Yangtze and Yellow, but also the Indus, Ganges, and Mekong. Its ice fields are the third largest in the world, after the two poles.
In the future, fierce struggles over water resources and the race to construct dams will envelop not only the Himalayan region countries of China, India, Pakistan, Nepal and Bhutan, but also such downstream countries as Bangladesh, Myanmar, Thailand and Vietnam.
Yoichi Funabashi is chairman of the Asia Pacific Initiative and a former editor-in-chief of the Asahi Shimbun. This is a translation of his column in the monthly Bungei Shunju.