Water And Development in China: The Political Economy of Shanghai Water Policy

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WATER AND DEVELOPMENT IN CHINA The Political Economy of Shanghai Water Policy

Series on Contemporary China (ISSN: 1793-0847) Series Editors Joseph Fewsmith (Boston University) Yongnian Zheng (East Asian Institute, National University of Singapore) Advisory Board Members Tun-jen Cheng (College of William and Mary) Jane Duckett (University of Glasgow) James Tang (University of Hong Kong) Gungwu Wang (East Asian Institute, National University of Singapore) Lynn White (Princeton University) Dali Yang (University of Chicago) Ji You (University of New South Wales)

Published Vol.1 Legitimacy Ambiguities of Political Success or Failure in East and Southeast Asia edited by Lynn White Vol.2 China Under Hu Jintao Opportunities, Dangers, and Dilemmas edited by Tun-jen Cheng, Jacques deLisle & Deborah Brown Vol.3 China's Compliance in Global Affairs Trade, Arms Control, Environmental Protection, Human Rights by Gerald Chan Vol.4 Political Civilization and Modernization in China: The Political Context of China's Transformation edited by Yang Zhong and Shiping Hua Vol.5 China into the Hu-Wen Era: Policy Initiatives and Challenges edited by John Wong and Lai Hongyi Vol.6 Water and Development in China: The Political Economy of Shanghai Water Policy by Seungho Lee

Series on Contemporary China -Vol. 6

WATER AND DEVELOPMENT IN CHINA The Political Economy of Shanghai Water Policy

Seungho Lee University of Nottingham, UK

\jjp World Scientific NEW JERSEY • LONDON

• SINGAPORE • BEIJING • SHANGHAI • HONG KONG • TAIPEI • CHENNAI

Published by World Scientific Publishing Co. Pte. Ltd. 5 Toh Tuck Link, Singapore 596224 USA office: 27 Warren Street, Suite 401-402, Hackensack, NJ 07601 UK office: 57 Shelton Street, Covent Garden, London WC2H 9HE

Library of Congress Cataloging-in-Publication Data Lee, Seungho. Water & development in China : the political economy of Shanghai water policy / Seungho Lee. p. cm. — (Series on contemporary China ; vol. 6) Includes bibliographical references. ISBN 981-256-819-0 1. Water resources development—Government policy—China. 2. Water resources development—Government policy-China-Shanghai. I. Title. II. Title: Water and development in China. III. Title: Political economy of Shanghai water policy. IV. Series. HD1698.C5L44 2006 363.6'10951132-dc22 2006046469

British Library Cataloguing-in-Publication Data A catalogue record for this book is available from the British Library.

Copyright © 2006 by World Scientific Publishing Co. Pte. Ltd. All rights reserved. This book, or parts thereof, may not be reproduced in any form or by any means, electronic or mechanical, including photocopying, recording or any information storage and retrieval system now known or to be invented, without written permission from the Publisher.

For photocopying of material in this volume, please pay a copying fee through the Copyright Clearance Center, Inc., 222 Rosewood Drive, Danvers, MA 01923, USA. In this case permission to photocopy is not required from the publisher.

Typeset by Stallion Press Email: [email protected]

Printed in Singapore by World Scientific Printers (S) Pte Ltd

Contents

Preface

xiu

Acknowledgements

xvii

List of Figures

xxi

List of Tables

xxiii

Notes on Abbreviations

xxvii

Notes on Units

xxix

Notes on Currency

xxxi

Notes on Translation

xxxiii

v

vi

Contents

Chapter 1

Introduction

1

Chapter 2

Political Economy and Water in Shanghai

9

Introduction Political Economy and Water in Shanghai Development of Political Economy in Shanghai Shanghai from 1949 to 1978 Reform Period since 1978 Pudong New Development in 1990 Socio-Economic Conditions Population and Administrative Structure Economic Structure The Environment Location and Topography Climate and Rainfall Water Resources Surface Water Ground Water Water Supply and Water Quality Water Supply and Water Use Water Quality and Pollution Overview of Current Water Pollution in Shanghai Polluting Factors Sewage Control — Sewage Treatment Plants Sewage Control— Sewage Drainage Systems Conclusion

9 12 12 13 14 15 17 17 18 20 20 22 23 25 27 29 29 29 29 32 35 38 40

Chapter 3

43

Theoretical Framework

Introduction Grid/Group Theory Definition Conceptualization Application The Hierarchists The Egalitarians

43 46 46 47 50 51 54

Contents vii

The Entrepreneurs The Fatalists Political Ecology Definition Conceptualization Application Water Quality Control: Main Discourse Water Pollution Accidents: Story Lines Institutional Change: Discourse Coalition Complexity Theory: Co-Evolutionary Approach Definition Conceptualization Application Private Sector Participation in the Water Sector Impacts of International Development Agencies on Water Policy Conclusion Chapter 4

Institutional Reform in Shanghai Water Policy

Introduction Institutional Framework Organizational Structure National Level Shanghai Institutions: Laws, Regulations, Rules, Measures and Standards National Level Shanghai Environmental Regulatory Programmes Environmental Lmpact Assessment The Three Synchronization Pollution Discharge Fees Challenges for Institutional Change Enforcement and Compliance

55 56 56 57 58 60 60 60 61 64 65 65 67 67 69 69

73 73 77 78 79 81 83 84 87 91 92 92 94 96 97

viii Contents

Trade Off between Economic Development and Environmental Protection Conflicts of Interest: Administrative and Organizational Disharmony Public Consultation Limited Achievements in Institutional Change Changes in Organizations and Institutions EIA Enforcement in Shanghai Shanghai Water Authority (SWA) Public Support Conclusion

104 105 109 109 112 113 116 118

Chapter 5

123

Development of Civil Movements

Introduction Identification of Environmental Groups Evolution of Environmental Groups Typology of Environmental Groups Environmental Groups in Shanghai Government Organized NGOs (GONGOs) Green Industry and Technology Promotion Center (GITPC) NGOs China Green Student Forum Shanghai Green Union Grassroots Community Other Small NGOs Quasi-Governmental Organizations Local Communities (.Shequ) The Media International NGOs Public Awareness Shanghai Environmental Protection Promotion and Education Center Shanghai Environment Specialty School (Green School)

101

123 128 128 131 138 138 138 140 141 143 145 146 148 148 149 149 152 153 155

Contents ix

Public Environmental Awareness Surveys Viability of Environmental Movement in Shanghai GONGOs NGOs Quasi-Governmental Organizations Local Communities (.Shequ) The Media International NGOs Public Awareness and Participation Continuous Development of Environmental Movement Evolution of GONGOs Alliances among Environmental Groups Funding for Environmental Education and Awareness Programmes Government's Need to Promote Public Participation and Awareness Conclusion

156 161 162 164 165 165 166 168 170 171 171 173

Chapter 6

181

Private Sector Participation

Introduction Understanding of Private Sector Participation The Private Sector in the Chinese Context Institutional Settings Types of Private Sector Participation Overview of Private Sector Participation Projects Water Market Analysis at the National Level Major Water TNCs Chinese Companies Water Market at the Local Level — Shanghai Mott MacDonald Thames Water Suez Veolia Chinese Companies: Youlian Consortium and Sound Group

176 177 178

181 186 186 189 192 193 193 194 197 199 200 201 202 203 205

x Contents

Institutional Change and Challenges in Private Sector Participation Institutional Change Challenges Socio-political Challenges Legal and Regulatory Uncertainty Revenue Risk Interactions between the Government, Private Companies and NGOs Conclusion Chapter 7

Impacts of International Development Agencies

Introduction Introduction of International Development Agencies Historical Perspectives Entry of International Development Agencies World Bank Shanghai Sewerage Project (SSP) Phase I (SSP-I) (1988-1993) PhaseII(SSP-II) (1995-1999) Shanghai Environment Project Shanghai Environment Project (1995-2002) Asian Development Bank and Other Development Agencies in Shanghai Asian Development Bank: Suzhou Creek Rehabilitation Project (SCRP) Other Development Agencies United Kingdom Norway Australia Other Countries Ramifications of Involvement from International Development Agencies Challenges

209 209 212 213 216 219 220 225

231 231 235 235 237 240 241 241 245 249 250 255 256 258 258 260 261 262 265 265

Contents xi

Reluctance to Institutional Reforms Technical Limitations The Chinese Customary Practice Achievements Institutional Dimensions Technical Improvement Participatory Approach Conclusion

265 267 268 269 269 270 272 273

Chapter 8

277

Index

Conclusion

285

Preface

This book focuses on China water policy issues with particular reference to Shanghai in the reform era. Whereas North China has suffered from water scarcity due to its low level of rainfall and high population growth, South China has been relatively water-rich and enjoyed its abundant water resources thanks to sufficient rainfall and surface water resources such as the Yangtze River. However, I realized that many of the mega-cities like Shanghai have faced the challenge of 'pollution-driven' water scarcity. Little research has been done on Shanghai's water policy although numerous research works have dealt with Shanghai's achievement of unprecedented economic growth since 1990. Water has played a pivotal role in Shanghai's development, but has been ignored. These factors motivated me to initiate research on Shanghai water issues in 2000. The formulation of theoretical framework was an outcome of a number of discussions with Professor Tony Allan and the then School of Oriental and African Studies (SOAS) Water Research Group (now King's College London Water Research Group) members, reflected on various case studies from the countries in the Middle East, Africa, and Asia. My first attempt to apply a set of social theories such as Mary Douglas' Grid/Group Theory and Hajer's discourse analysis xiii

xiv Preface

into the Chinese context "was encouraged by the water research group. The untested assumption without fieldwork in China did not make me confident. The fieldwork in Shanghai and Beijing in 2002 proved that the theory can work in the Chinese context. The co-evolutionary approach from the complexity theory was also introduced by the water group. This approach made my chapter on private sector participation useful in explaining how numerous social actors have co-evolved to achieve their common goal — Shanghai's water privatization. There have been various occasions where I received comments and opinions on my Shanghai's water policy research. I -was given an opportunity to present my early version of theoretical chapter at the Professional Association for Chinese Environment Conference in Nanjing, China in May 2002. I received invaluable comments and feedback on my early version of the impacts of international development agencies during the conference in Moscow in August 2002, which I attended, organized by the European Association of Chinese Studies (EACS). Some of the most exciting findings from my fieldwork in China in 2002 were the identification of emergence of non-governmental associations including environmental NGOs in Shanghai and the fast advance of foreign and local companies to the Shanghai water sector. These extraordinary findings have gained wide public interest. More academic attention has been paid to my thorough observation and analysis on the emergence of local environmental NGOs in Shanghai. I was invited to present a paper on Shanghai's environmental NGOs at the NGO conference jointly organized by Wageningen University and Qinghua University in April 2004, which will be published in a special issue of the China Information journal soon. My analysis on water privatization in Shanghai has drawn the attention of UK and French -water firms such as Thames Water and Veolia Environment China, which were willing to gain an in-depth evaluation of the business environment in the Chinese water market in 2003. A short but exclusive market information and analysis on water privatization in Shanghai was published in Global Water Intelligence in October 2003, titled, 'Shanghai growth overshadows

Preface xv

risks.' The chapter on Shanghai water privatization has also been received well in academia, and the Water Policy journal will publish a short and updated version of the chapter soon. I have been a lecturer at the Institute of Contemporary Chinese Studies, University of Nottingham since November 2004. The colleagues in the institute are primarily focusing on China with various disciplines, which has provided me with a good environment to complete this book. I have begun to teach a new course called 'Environment and Development in China' for undergraduate students since autumn 2005, which includes much about China and Shanghai water policy issues. I feel encouraged by students' active response to water issues in China. In this book, I have primarily focused on water challenges in Shanghai. However, I will launch a new research on water issues in China soon. This will be able to accommodate not only problems in mega-cities like Shanghai, but also the challenges China faces in the water sector and on how to achieve its sustainability together with its rapidly growing economy.

Acknowledgements

I would like to thank Professor Tony Allan at the Geography Department of SOAS/KCL, London and Dr Richard Edmonds in Chicago, USA, who have over the years greatly influenced my thinking and ideas. Tony has guided me to access a number of innovative and useful theoretical ideas. Rick's in-depth understanding of environmental as well as socio-political issues in China has provided me with critical viewpoints on how theories can be applied in the rapidly transforming society in China. Special thanks are due to all those who have contributed to my thinking for this research. In particular, the SOAS/KCL Water Research Group that I have belonged to since 2000 has led me to understand a number of water issues and to further develop my thinking through discussions and presentations. I would like to extend my thanks to Jeremy Berkoff, who has been very approachable whenever I need his year-long expertise as economist on China water issues, and Dr Stephen Merrett, who has been always kind to give me advice on research. I would like to thank Dr David L. Owen for being extremely helpful for my research on private sector participation in the Shanghai water sector.

XVII

xviii Acknowledgements

I would like to express my gratitude towards Professor Cindy Fan at the University of California in Los Angeles, who has introduced a number of eminent Chinese academics in Geography, Environmental Science, and Sociology. Many thanks are due to those who helped me to conduct my fieldwork successfully in 2001 and 2002. For financial support, I am indebted to the School of Oriental and African Studies for an Additional Fieldwork Award and the Senate House of the University of London for a Central Research Fund. In addition, I would like to mention the generous financial support from the Universities China Committee in London. Professor Ning Yuemin in East China Normal University in Shanghai has introduced to me a number of academics and governmental officials. He has also helped me to understand general issues on water policymaking in Shanghai together with the provision of innovative ideas and productive criticism. Professor Xu Shiyuan and Professor Liu Min in East China Normal University have guided me to comprehend technical aspects of Shanghai water policy. I appreciate the invaluable comments and advice of Mr Wu Jingsong in the Shanghai Environmental Protection Bureau. A discussion with Dr Wang Hua at the World Bank in Nanjing, China was a great privilege to me, and his comments on the early stage of this book were invaluable. Officials at the Overseas Department of the Shanghai Academy of Social Sciences provided me with great support to conduct my research in Shanghai, and I would like to extend my particular thanks to Ms Li Li at the Academy, who has taken care of many tedious jobs for me from arranging accommodation to introducing academics. One of the most exciting achievements in fieldwork in Shanghai, the identification of local environmental NGOs, was possible because of the continuous and extensive support from German consultants, Katja Hellkoetter at the Delegation of German Industry and Commerce Shanghai, Beatrix Etzkorn from the Centre for International Migration and Development, a German Development Agency, and Dr Eva Sternfeld and Tanya Plotz at the Center for Environmental Education and Communications in Beijing. I would like to thank the many people who agreed to be interviewed in China although time was often extremely precious for them.

Acknowledgements xix

Particularly, I would like to express my great thanks to anonymous environmental NGO activists in Shanghai, mainly university students, who enthusiastically responded to my enquiries and presented their great interest in my research. I am also indebted to Wen Bo in Beijing, China Coordinator of the Pacific Environment, who provided me with a thorough understanding and in-depth analysis of civil movements in environmental protection in China, and to Sha Shangzhi and Dr Peter R Bitschene at the Green Industry and Technology Promotion Centre (GITPC) in Shanghai. The discussion with Mr Olivier Garet, SNF Shanghai Office, was extremely useful in understanding environmental science-related issues as well as how foreign private companies have impacts on the Shanghai water sector. Professor Gu Youzhi at the Shanghai Academy of Environmental Sciences generously spent a hot summer afternoon with me to discuss large-scale water engineering projects along the Huangpu River and the Suzhou Creek. It was my privilege to become acquainted with officials in the British Embassy in Beijing, Peng Yan, then working at the Department for International Development (DFID) Beijing, and Jane Wang, Commercial Representative at the embassy, who helped grasp the roles of international development agencies in China and the activities of British water companies in China. Professor Li Jianxin, Institute of Geographic Sciences and Natural Resources Research at the Chinese Academy of Science made critical comments on my theoretical framework and helped make it more applicable to the Chinese case. With regard to data collection, I would like to thank John Smithson at Mott MacDonald, who kindly discussed with me the China water issues based on his rich experience in numerous water projects in China and let me have access to valuable project documents in Cambridge on the Shanghai Environment Project and the Shanghai Sewerage Project. Mr Bruce Murray at the Resident Representative China of the Asian Development Bank kindly sent me with a number of important project documents, such as on the Suzhou Creek Rehabilitation Project and the Chengdu BOT water supply project. Mr Graham Hutt in the Oriental and Indian Office of

xx

Acknowledgements

the British Library let me have access to articles in Chinese in the UK, and I am grateful to the librarians of the Oxford Bodleian Library for their kind support. Finally, I would like to thank all my extended family members, particularly to Hyegyoon, my wife, Sooyoun, my babygirl, and my parents, Duk-Joon Lee and Kyung-Ja Rhee, who have always inspired and encouraged me to take this exciting intellectual journey.

List of Figures

Figure 2.1

Pudong New Development Zone in June 2002

Figure 2.2

One of the Biggest Commercial Areas: Nanjing

16

East Road in Shanghai in June 2002

19

Figure 2.3

China and Shanghai

21

Figure 2.4

Yangtze River Basin

23

Figure 2.5

Shanghai Monthly Temperature and Precipitation in 2004 Shanghai Surface Water Resources

24

in Tai Lake Basin

28

Figure 2.7

Ship Building along the Huangpu River

35

Figure 2.8

Coal Shipping along the Huangpu River

36

Figure 3-1

Four Ways of Life

48

Figure 3-2

Transformation of Society in Shanghai

52

Figure 3-3

Interactions between Local and International Actors in Shanghai Water Policy

53

Figure 2.6

xxii

List of Figures

Figure 3-4

Discourse Analysis in Shanghai Water Policy

63

Figure 3-5

Co-Evolution in a Rugged Landscape: Private Sector Participation in the Shanghai Water Sector

68

Organizational Structure for Environmental Protection in China

80

Organizational Structure in the Shanghai Environmental Protection Bureau

83

Figure 4.1 Figure 4.2 Figure 5.1 Figure 5.2

Dinner Meeting of the China Green Student Forum in Shanghai in July 2002

142

Qingnian Chahui {Tea Meeting for Students) by the Grassroots Community in Shanghai in late June 2002

145

Figure 5.3 World Water Day — Environmental Awareness Campaign in Bund, 2001

154

Figure 6.1 Water Projects by Private Companies in Shanghai from the 1990s to 2003

208

Figure 7.1

Shanghai Sewerage Project (SSP) (Phase I and II)

242

Figure 7.2

Water Intake Move Project, Shanghai Environment Project, and Yangtze River Diversion to Huangpu River Project

252

Suzhou Creek Rehabilitation Project

259

Figure 7.3

List of Tables

2.1.

Average Annual Water Resources in Shanghai (billion m3)

25

2.2.

Shanghai Water Use in Selected Years (billion m3)

30

2.3-

Annual Sewage Discharge and Treatment Rate in Shanghai from 1990 to 2002

32

2.4.

Shanghai Sewage Treatment Plants in 2001

37

2.5.

Sewage Treatment and Drainage Capacity in Shanghai in 2001

39

Selected Laws, Regulations, Rules, and Measures in China Water Pollution Control Policy

86

Environmental Quality Standards for Surface Waters — 1 (GB 3838-88)

87

Environmental Quality Standards for Surface Waters — 2 (GB 3838-88) (concentration in mg/liter, except ph)

88

Selected Regulations, Rules, and Measures in Shanghai Water Pollution Control Policy

90

4.1. 4.2. 4.3-

4.4.

XXIII

xxiv

4.5. 4.6. 4.7.

5.1. 5.2.

5.3. 5.4.

6.1. 6.2. 6.3.

7.1.

7.2.

List of Tables

EIA and the Three Synchronization Implementation from 1993 to 2004 (Unit: Cases)

93

Pollution Discharge Fee Collection in Shanghai from 1991 to 2002 (RMB Million)

95

Ratio of Environmental Investment to GDP in Shanghai from 1991 to 2004 (RMB 100 Million)

103

Public Environmental Awareness Surveys in China from 1990 to 1998

157

Regarding Environmental Issues, the Extent to which Beijing and Shanghai Citizens Trust the Information Provided by Different Institutes/ Persons Shown Below (%)

159

The Extent to Which Beijing and Shanghai Citizens Feel About Environmental Pollution (%)

160

Listed Newspapers with Worse Record in 1997 Compared with in 1996

168

Laws and Regulations Related to Private Sector Participation in the Chinese Water Sector

189

Options for Private Sector Participation and Responsibility

193

Water Projects by Private Companies in Shanghai from the 1990s to 2003

207

Comparison of Water Quality Assessment Results in the Suzhou Creek between 1992 (pre-SSP-I) and 1994 (post-SSP-I)

243

Environmental Quality Standards for Surface Water (GB 3838-88) (concentration in mg/liter)

244

List of Tables xxv

7.3. 7.4.

Tap Water Tariff Comparison in the Selected Years in Shanghai US$/m3 (US$1 = RMB 8)

253

Effects of the Shanghai Sewerage Project Phase I and Phase II Compared "with the Southern Interceptor (mg/liter)

271


ADB AWG CEEC CEN CCTV CIM CSES CSSD DFID EIA EPBs FOE FON GDP GITPC GONGO

Asian Development Bank Anglian Water Group Centre for Environmental Education and Communication (Beijing) China Environmental News China Central Television Centre for International Migration and Development (Germany) China Society of Environmental Science China Society for Sustainable Development Department For International Development (UK) Environmental Impact Assessment Environmental Protection Bureaux Friends of the Earth Friends of Nature (Chinese NGO) Gross Domestic Product Green Industry and Technology Promotion Centre (Shanghai) Government Organized Non-Governmental Organizations XXVII

xxviii


GVB NGO NIVA NOK NPC ODA

PRC RMB SAES SCRP SEP SEPA SEPB SEZs SMSC SOEs SPURS SSC SSP SWA TDA TNCs TVEs WCS WWF

Global Village Beijing (Chinese NGO) Non-Governmental Organizations Norwegian Institute for Water Research Norway Kroner National People's Congress Overseas Development Administration (UK — now Department for International Development — DFID) People's Republic of China Ren Min Bi (Chinese currency) Shanghai Academy of Environmental Sciences Suzhou Creek Rehabilitation Project Shanghai Environment Project State Environmental Protection Administration Shanghai Environmental Protection Bureau Special Economic Zones Shanghai Municipal Sewerage Company State Owned Enterprises Support Programme for the Urban Rehabilitation of Shanghai Shanghai Sewerage Company Shanghai Sewerage Project Shanghai Water Authority US Trade and Development Agency Trans-National Corporations Township and Village Enterprises Wildlife Conservation Society World Wildlife Fund

Notes on Units

m3 m 3 /s m 3 /d m 3 /y

Cubic Cubic Cubic Cubic

meters meters per second meters per day meters per year

XXIX

Notes on Currency

In the book, most of the fiscal calculations are based on the US dollar using the conversion ratio of US$ 1 vs. RMB 8. This method is used to simplify figures.

XXXI

Notes on Translation

This book refers to a number of articles, newsletters, books, and manuscripts written in Chinese. The way of presenting reference materials in Chinese is a title in Chinese ipinyiri) first, and then the translated title in English. For instance, Shanghai Huanjing Zhuangkuang Gongbao 1990 (Shanghai Environmental Bulletin 1990).

XXXIII

•laaBaisiiiii!

Chapter

The book aims to explore the extent to which Shanghai has coped with freshwater demand with a focus on water quality control in the reform era since 1990. This study pays particular attention to major actors in Shanghai water policy who have contributed to the transformation of the political economy landscape in the water sector in the reform era. Water policy-making in Shanghai since the late 1990s has become complicated by the interaction of the Shanghai government with other newly emergent social actors, such as private companies, environmental NGOs, and the activities of Shanghai citizens. This complexity has been compounded by the presence of international development agencies. The emergence of these new social actors in water policy has played a key role in bringing about some of the unprecedented changes in water policy, such as private sector participation and the activities of environmental NGOs. The trajectory of policy shifts and changes in Shanghai water policy over the past decade reveals that the interactions between different actors have driven the Shanghai government to realize the need of mutual collaboration in ensuring the provision of high-quality water for Shanghai. China has experienced a rapid modernization since the establishment of People's Republic of China in 1949, and this new mode 1

2

Water and Development in China

of political economy has brought in new socio-economic, political and environmental challenges in Chinese society. Although environmental challenges have not been perceived as primary concerns in the central politics, the Chinese leaders have increasingly been alarmed by massive forces of natural disasters like floods and droughts, water shortage, deteriorating water quality, and out-of-dated water service facilities. The current major challenges in China's water are summarized in the three sectors: water supply; flood control; and water quality control. In terms of the total volume of water resources, China is water-rich, however, an availability of water resources per capita in China reaches only a quarter of the world average, about 2,600 m3. In addition, a myriad of causes prevent China from enjoying its substantive water resources, including over 1.3 billion population, the high seasonal variability of rainfall, and the uneven geographical distribution of water resources. Natural disasters such as floods have never left China untouched annually, and as of the early summer of 2005, more than 500 flood death tolls have been reported in the southern part of China. The rapid urbanization and industrialization in the reform era has triggered severe pollution in water bodies and has been adding another elusive task to the central government. This phenomenon has also generated a new pattern of water scarcity, namely 'pollution-driven water scarcity'. Shanghai is one of the many urban areas in China to suffer from this kind of water scarcity. This research pays more attention to water quality control rather than 'water supply issues in Shanghai. Contrary to the experience in Beijing and Tianjin, -which suffer water scarcity due to the semi-arid climate, overexploitation of the limited resources in North China, acute water pollution in Shanghai has overshadowed the natural advantage of the abundant surface water resources in the reform period since the 1980s. A number of large-scale water engineering projects have so far concentrated on water pollution amelioration rather than water supply. Numerous sewage treatment facilities have been constructed and new ones are planned or at the early stage of construction. These activities have facilitated the pace of private sector involvement in the water sector. In addition, poor living standards

Introduction 3

due to water pollution near rivers in Shanghai have led citizens to be very concerned about water quality issues and to participate in environmental protection activities in the last few years. There has been a new trend in the Shanghai water sector since 1990. Water policy-making in Shanghai has changed direction since the late 1990s. The political economy as a whole has been transforming. The water sector has been affected by the same forces that have impacted the political economy. A key feature under the new conditions is the interactions of the Shanghai government with other newly emergent social actors, such as private companies, environmental NGOs, international development agencies, and the activities of Shanghai citizens. The Shanghai government has transformed itself from a single service provider into a regulatory entity overseeing the institutional evolution of a diverse water sector. International development agencies have contributed to the complexity through development projects in Shanghai. Environmental NGOs have begun to influence environmental protection coupled with a growing increase in public awareness. A rapid expansion of the private sector in the Shanghai water sector has also taken place since the late 1990s, primarily led by water trans-national corporations. The research shows that the Shanghai water sector has transformed itself from the state-society duality to a multi-faceted institutional system in which diverse social actors interact in adapting to dynamic new environments. This study focuses on the reform period from the late 1970s to the present, particularly the past decade since 1990. The reason this research focuses on the recent decade is that since the launch of the Pudong New Development Policy in 1990, Shanghai has begun to implement its own social infrastructure projects to improve the environment, including its water resources, on the basis of economic achievement and political independence from the central government. Some of the distinctive policy and political economy changes in the water sector have occurred since the late 1990s, such as the growing expansion of private sector involvement, the activities of environmental NGOs, and the implementation of institutional change including the establishment of the Shanghai Water Authority.

4


The geographical scope of the research is Shanghai, the economic capital of China. In the course of the modernization of contemporary China, Shanghai has provided an important case of socio-political and economic development since the early part of the last century. The Mao period from 1949 to the late 1970s had negative impacts on the environment because of his stance against the nature. Shanghai was one of the worst affected regions through ecological degradation due to the concentration of heavy and manufacturing industries as economic center. The situation became even worse in the reform era due to the acceleration of economic development in China. Shanghai has been the epicentre of ecological degradation, particularly of freshwater resources. The Chinese leadership came to realize the need to reverse environmental degradation and began to implement a number of institutional and engineering methods to remedy environmental pollution issues. They believe that Shanghai, as a model city in China, should take a leading role in environmental protection. Shanghai has become a testing ground for implementation of innovative ideas and institutional reforms. A range of social theory will be used to analyze developments in Shanghai's water policy in the 1990s, such as the grid/group theory of Mary Douglas, the political ecology theory of Hajer, and the co-evolutionary approach of complex adaptive theory. Grid/group theory is useful in identifying different social actors to influence Shanghai water policy including newly emergent actors, such as environmental NGOs, private companies, and international development agencies together with the Shanghai government and citizens. The political ecology theory of Hajer provides an analytical framework to understand how water quality control has become a main discourse in the Shanghai government since the 1980s whereas most of the governmental bureaux were busy promoting economic development over the past two decades. The co-evolutionary approach of complex adaptive theory helps explain the way private sector participation in the Shanghai water sector has developed and transformed the political economy landscape of Shanghai. The approach is also useful in addressing the influence of international development agencies on the Shanghai water policy.

Introduction

5

Fieldwork, mainly in Shanghai, with a short period in Beijing, has provided an in-depth understanding and analysis of the past and current issues relevant to Shanghai water policy. The first fieldwork was conducted in Shanghai from March to April 2001 and the second major fieldwork was undertaken from February to July 2002 including a trip to Beijing. The fieldwork aimed to conceptualize current issues and problems in Shanghai water policy through interviews, site visits, and data search in various libraries and research institutes. Interviewees consisted of a variety of groups: professors, environmental NGO leaders, government officials, senior engineers, and business leaders. Interviewees were contacted through snowball sampling. All the interviewees were asked to introduce new relevant experts. German environmental consultants based in Shanghai and Beijing introduced a number of environmental NGO leaders, and Chinese professors helped contact government officials. Sixteen interviews "were conducted in Shanghai (three in 2001 and eight in 2002) and in Beijing (five in 2002). For instance, interviews with environmental NGO activists in Shanghai redressed the assumption that there would be almost no environmental NGOs in Shanghai. Interviews in Beijing provided me with opportunities to understand national environmental issues and a hierarchical but contentious relationship between the central government and the Shanghai government in policy-making and implementation. The interviews in Shanghai enabled me to comprehend how policies for water have an impact on society in Shanghai based on the perceptions of the citizens' own experience. The interviews illustrated the stark contrast in views between environmental NGOs and foreign environmental experts, and professors and governmental officials in their understanding of social change and the value of environmental resources. This book consists of eight chapters including introduction and conclusion. Chapter 2 explores the environment, politics, economy, and society in Shanghai for the provision of useful information in analyzing the challenges of water supply and water quality control in Shanghai. A range of information and data on the environment, politics, economy, and society in Shanghai will be reviewed.

6


The purpose of the chapter is to explain the linkage between water policy and socio-political and economic development over the past two decades. It will be shown that the dual development goals of economic gain and environmental protection in Shanghai have not been successfully addressed. Economic development has unambiguously been prioritized. Water bodies in Shanghai have seriously degenerated due to the anarchic discharge of industrial and domestic sewage caused by pro-growth policies and plans for decades. Chapter 3 provides a theoretical framework to examine the social and political relations based on social theory. The selected theory is first, the grid/group theory of Mary Douglas, second, the political ecology theory of Hajer, and third, the co-evolutionary approach of complexity theory. The grid/group theory is useful for the identification of social actors, such as the Shanghai government, environmental NGOs, private companies, Shanghai citizens, and international development agencies. An analysis of political ecology by Hajer examines the way the Shanghai government has reformed its institutions and organizations faced with water pollution through discourse analysis. The co-evolutionary approach of complexity theory helps explain the development of private sector and the nature of the participation in the Shanghai 'water sector by new social actors. Chapter 4 aims to evaluate the extent to which institutional reorganization in the Shanghai government has been effective in ameliorating water pollution from the 1990s to the present. The primary focus of the chapter is that the Shanghai government has been reforming its institutions and has reinforced regulatory regimes over the past two decades. Alongside grid/group theory, the political ecology theory of Hajer is deployed. Discourse analysis of Hajer provides a framework to understand the way water pollution has been emphasized and prioritized in Shanghai water politics. The Shanghai government has realized the need for intergovernmental cooperation and the balance of achieving both economic development and environmental protection for effective water quality control in Shanghai. Also the policy reform will be implemented insofar as the Shanghai government embraces the involvement of other social actors in civil society, environmental NGOs and Shanghai citizens.

Introduction 7

Chapter 5 analyzes the development of the civil realm of environmental politics in Shanghai. The study reveals how the civil realm in Shanghai has developed with a self-capacity to redress environmentally unfriendly policies over the last decade based on the grid/group theory. A number of environmental NGOs and other social groups have been identified through fieldwork in Shanghai in 2002. These environmental groups now commit themselves to various environmental issues although there is no particular NGO dedicated to freshwater issues in Shanghai. A collaboration of various environmental social groups in Shanghai has led to the formation of a civil force that influences Shanghai's environmental policy-making. Chapter 6 explores the extent to which private sector participation has had an impact on Shanghai's water policy. The emergence of private companies in the Shanghai water sector will be identified through grid/group theory. In addition, the co-evolutionary approach of complexity theory is used to identify and highlight the conflicts between a company's approach and the socio-political landscape in Shanghai in the expansion of the private sector since the late 1990s. This study pays attention to the way private companies in the Shanghai water sector have adapted to new changes resulting from political economic circumstances. The current picture provides evidence only of the interaction of government and private water companies, such as Veolia, Suez, Thames Water, and some Chinese companies. However, such a simple picture can change and turn into a more complicated one when environmental NGOs and Shanghai citizens participate actively in water projects in which private companies and the Shanghai government have already been involved. Chapter 7 discusses the impact of international development agencies on Shanghai water policy over the past two decades. An adaptation of the grid/group concept is used to highlight the relationship between the local and the international hierarchists, namely the Shanghai government and the international development agencies. The co-evolutionary approach of complexity theory is also useful explaining the extent to which Shanghai's water policy has

8


evolved by the interactions between the two hierarchists in the Shanghai's political economy and the way international development agencies have pressured the government to introduce institutional reforms. The experience of the Shanghai government's involvement with international development agencies has been marked by some significant achievements, for instance, in securing finance and the import of advanced technology and management expertise. However, socio-political tensions have been generated between the two actors because of the different visions and perspectives on water policymaking. The way the new political economy landscape has been developed results from the complex relations between the Shanghai government and the international development agencies. In Chapter 8, the book concludes that the state-society duality in Shanghai water policy has been transformed into a multi-faceted institutional system since the 1990s through the contributions of new social actors. The activities of newly emergent social actors, such as environmental NGOs, private companies, Shanghai citizens, and international development agencies, have proven to infuse new energy in the Shanghai water sector. The mutual cooperation between different actors has just begun and has provided an adequate path to the provision of high-quality water for Shanghai.

Chapter

Political Economy and Water in Shanghai INTRODUCTION This chapter reviews the political economy in Shanghai and addresses the challenges of water supply and water quality control over the past two decades. Diverse sources of information and data in Shanghai will be evaluated. The following assessment aims to delineate the linkage between Shanghai's water policy and its sociopolitical and economic development. It will be shown that the two development goals of economic gain and environmental protection in Shanghai have been unsuccessful, and economic development has been unambiguously prioritized. Among other environmental elements, water bodies in Shanghai have been the major victims of the discharges of industrial and domestic sewage caused by pro-growth policies for decades. Since the establishment of the communist regime in 1949, Shanghai has functioned as China's most important industrial and commercial base. Shanghai served as one of the main cash providers for the central government to implement the crucial goals of industrialization and modernization in Communist China over the past decades. During this period, it was not possible for the Shanghai 9

10


government to retain sufficient revenues to undertake its own urban infrastructure projects, including water supply and sewage treatment facilities. Also, owing to political and social upheavals until the late 1970s, there had been no room for the consideration of externalities such as impacts on the environment. The opening of China to foreign interests from 1978 was another type of political impetus to push hard economic development, which was unfavorable to the protection of water resources in Shanghai. Even though various economic indicators show that Shanghai has achieved remarkable goals, such as an economic growth rate of more than ten percent per annum since the early 1980s, the "opening" has not provided significant incentives to promote an accommodation between economic development and environmental protection. Water bodies in Shanghai have been one of the main victims of economic development. Water bodies in Shanghai became even more seriously degraded in the early 1980s than in previous decades. Their status remains serious, and more than 80% of the water bodies in Shanghai have been classified in the lowest classes — as Class IV and V.1 Shanghai is located in the Yangtze River Delta and enjoys a mild climate coupled with a large number of rivers and substantial annual rainfall. Despite its adequate water resources, Shanghai has a long history of water pollution since the early part of last century. The low priority accorded to the environment in the communist regime from 1949 to 1978 seriously influenced the water quality of rivers in Shanghai. This situation has deteriorated further since the open door policy was launched in 1978. Now Shanghai is known as one of the cities in China suffering from pollution-caused water scarcity. The data and figures will demonstrate that water bodies in Shanghai have been seriously polluted by point sources such as industrial sewage as well as non-point sources such as agricultural run-off, 1

The Environmental Quality Standards for Surface Water (GB 3838-88) in China has five different categories used to classify water bodies. Class I water is regarded as the best and Class V water the worst. The detailed discussion will be in Chapter 4. The water quality for drinking should comply with at least Class III and above.


11

domestic sewage, and fertilizers, especially, since the mid-1990s. Confronted with the acute water pollution, dozens of sewage treatment plants have been constructed over the last few decades, and the redevelopment of sewage collection and interception systems has been undertaken. The first section of this chapter focuses on politics, the economy, and the society of Shanghai over the past few decades. As the most important economic powerhouse in China, the overall development of Shanghai was delayed in the pre-reform period. Shanghai remitted a large portion of its revenues to the central government for the construction of the socialist planned economy for the first decades of the Communist government. The opening to the outside world from the late 1970s and the launch of the Pudong New Development Zone in the early 1990s accelerated the pace of economic development in Shanghai. Over the past two decades, the revitalization of Shanghai as trading and financial hub has brought about the remarkable transformation of its economy. However, these achievements have been possible at the expense of the environment, particularly water resources. The overview of the environment in Shanghai will be the second focal point. The strategic location of Shanghai in the Yangtze River Delta Plain and the Tai Lake Basin explains the reason why Shanghai has emerged as a major economic centre in China in such a short period. Shanghai's numerous waterways have been a resource and a sink for pollution. The water resources of Shanghai consist of largely surface water such as the Yangtze River, Tai Lake, the Huangpu River, the Suzhou Creek, and ground water. The third part of this chapter provides in-depth information on water supply and water quality control in Shanghai. Attention will be paid more to water quality control rather than to 'water supply. Contrary to the experience in Beijing and Tianjin, in the northern part of China, which lack water resources, the challenge for water in Shanghai is pollution. This analysis will demonstrate that non-point source pollution is increasingly posing a greater threat to water resources in Shanghai than point-source pollution. Point-source pollution such as industrial sewage has been more targeted by

12


environmental regulatory agencies rather than non-point-source pollution. The chapter will conclude that the severe water pollution in Shanghai is still a chronic and elusive challenge. Awareness of the need for integrating economic development and environmental protection has just begun.

POLITICAL ECONOMY AND WATER IN SHANGHAI Development of Political Economy in Shanghai In the early part of the last century, imperial, commercial, and military interests and inland local trade along the Yangtze River made Shanghai transform from a quiet and small local town to a flourishing megalopolis. The Treaty Port System included Shanghai and facilitated an unprecedented pace of development in its commerce and industry until 1949-2 In the mid-1950s, Shanghai "was regarded as the seventh largest city in the world with a total population of almost four million. Shanghai essentially owed its great expansion of internal and external trade and commercial activities to the many waterways that connected inland lakes and rivers as well as Shanghai harbor. For instance, the Suzhou Creek, the Huangpu River, and the Yangtze River functioned as crucial waterways to trade goods such as tea, silk, eggs, wool, and peanuts between the harbor and inland markets in Zhejiang Province, Jiangsu Province and further hinterlands. Shanghai's conspicuous industrialization and commercialization earlier in the last century made Shanghai "the other China".3 2

Murphey, Rhoads, Shanghai: Key to Modern China (Cambridge (MA): Harvard University Press, 1953), p. 57. The treaty port system was launched on since the end of the Opium War in 1842. There were five coastal ports: Canton (Guangzhou), Amoy (Xiamen), Fuzhou, Ningbo, and Shanghai, which were opened to foreigners according to the Treaty of Nanking. A basic attitude of the Qing government about the result of the Opium War could be understood from the fact that concession of trade privileges only limited to these cities was able to restrict the scope of the Westerners and to prevent turmoil which would break out by them. 3 Li, Linda Chelan, Centre and Provinces: China, 1978-1993, Power as Non-Zero-Sum (Oxford: Clarendon Press, 1998), p. 114.

Political Economy and Water in Shanghai 13

Shanghai from 1949 to 1978 The flourishing economic and commercial activities of Shanghai in contact with the outside world ended when the Chinese Communist Party took power in 1949- The "golden age of the Chinese bourgeoisie" faded away, and the trajectory of development in Shanghai from 1949 to 1978 showed a completely different pattern compared with that of the pre-1949.4 Although the Communist leaders viewed Shanghai as "a leftover from a humiliating semi-colonial past", the economic achievement of Shanghai in the period from the 1950s to the late 1970s confirms that Shanghai continued to serve as a main industrial and commercial center for China.5 The annual economic growth of about nine percent in the period from the 1950s to the 1970s outperformed the national average of economic growth in China.6 However, Shanghai did not receive any political and financial support from the center to improve its own social infrastructure and public services. Rather, the city began to lose its prominent stance in trade and manufacturing and served to devote its skilled workers, machinery, and technology to inland industrial bases in China. In addition, Shanghai had to remit more than 60% of its GDP to the central government, which retarded Shanghai's economic and social development until 1978.7 The Communist regime continued a policy of restricting Shanghai's social and urban growth and demanded a massive remittance of funds and human capital from Shanghai to the

4

Bergere, Marrie-Claire, The Golden Age of the Chinese Bourgeoisie 1911-1937 (New York: Cambridge University Press), 1989. 5 Yeung, Y.M., 'Introduction' in Y.M. Yeung and Yun-Wing Sung (Eds.), Shanghai, Transformation and Modernization under China's Open Door Policy (Hong Kong: The Chinese University Press, 1996), p. 2. 6 Ibid, p. 8. 7 Naughton, Barry, 'Cities in the Chinese Economic System: Changing Roles and Conditions for Autonomy,' in Deborah S. Davis, Richard Kraus, Barry Naughton, and Elizabeth J. Perry (Eds.), Urban Spaces in Contemporary China (Cambridge, New York and Melbourne: Cambridge University Press, 1995), p. 74.

1A

Wafer and Development in China

inland provinces to narrow the gap between the coastal and interior regions. 8

Reform Period since 1978 The open door policy since 1978 slowed the even development policy by encouraging each provincial and municipal government to pursue its own development goals. The post-1978 Chinese policy embodies the promotion of "uneven development income distribution in the spatial aspect, through the forced growth of particular regions". 9 Despite this policy shift, Shanghai's economy did not achieve a fast growth rate in the 1980s compared with cities and areas that are located in Special Economic Zones (SEZs). These zones enjoyed preferential policies from the early 1980s. This was because political leaders in the central government did not want to make any mistake under the experimental economic reforms in such a politically and economically crucial city. The leadership would rather have preferred to test economic reforms in less politically and economically important areas, including Guangdong and Shenzhen. It was in 1984 that Shanghai began to enjoy more attention and favorable policies by being designated as one of the 14 open coastal cities. 10 This opportunity, however, did not give a stimulus to Shanghai's development, since various preference policies dedicated to other coastal cities and areas did not equally apply to Shanghai in the 1980s. It is interesting that the annual economic growth of 8

Tian, Gang, Shanghai's Role in the Economic Development of China, Westport, Connecticut & London: Praeger, p. 1 and 4-5. Tian argues that prior to 1949, the Chinese government emphasized the importance of narrowing the gap between urban (developed) and rural (less developed) areas. He added that large cities and the nation would benefit if the growth of population and economic activity would be diverted to medium-sized development poles, of which accelerated growth could be induced by government policies regarding infrastructure, taxation, capital subsidies and similar incentives. 9 Tian, Shanghai's Role in the Economic Development of China, p. 5. 10 Yeh, Anthony C O . , 'Pudong: Remaking Shanghai as a World City', in Y.M. Yeung, and Yun-Wing Sung (Eds.), Shanghai, Transformation and Modernization under China's Open Door Policy (Hong Kong: The Chinese University Press, 1996), p. 274.


Shanghai in the 1980s did not reach eight percent, which was lower than that of the national average. The quality of Shanghai products and goods was not as good as that of other SEZs in the domestic market, and the high entrepreneurial spirit, one of the greatest assets in Shanghai, was observed to diminish.11

Pudong New Development

in 1990

The genuine breakthrough for the overall development in Shanghai took place only after 1990, when the Pudong New Development Policy was announced by the central government. 12 It is noteworthy that the Pudong New Development Policy was possible thanks to the strong support from the central government in which a number of Shanghai-based political leaders began to promote Shanghai's development from the mid-1980s. Shanghai-based political leaders had been working for the national government in the pre-reform period; however, with the advent of the reform era, they began to have an impact on the promotion of Shanghai's development through political support from the center, such as the 1987 land reform13 and the 1994 revenue sharing reform.14 11

Yeung, 'Introduction', p. 8. The official announcement was undertaken by Premier Li Peng on 18 April 1990. 13 Yeh, 'Pudong: Remaking Shanghai as a World City', p. 276. The land reform allowed the paid transfer of land-use rights or land leasing in Shanghai, which stimulated the creation of a land market and made the city achieve revenue from land. The revenue resulted in being used to improve and rehabilitate social infrastructure. 14 Cheung, Peter T.Y., 'The Political Context of Shanghai's Economic Development', in Y.M. Yeung and Yun-Wing Sung (Eds.), Shanghai, Transformation and Modernization under China's Open Door Policy (Hong Kong: The Chinese University Press, 1996), p. 55. This reform was related to the system of taxes and tax collection. The central government and local governments should set up parallel tax collection systems throughout the country. But in 1997, the Shanghai government refused to allow the separate central tax collector to operate, so taxes are paid against one return that is filled with the local bureau, which paved the way for the Shanghai government to possess the money, determine how to share revenues, and to define what are central and local revenues. See also Yabuki, Susumu, and Harner, Stephen M, China's New Political Economy (Boulder and Oxford: Westview Press, 1999), pp. 163-164. 12

16


The main goals of the Pudong New Development were to establish a new district equipped with a cutting-edge communication network and to lay the foundation of infrastructure and well-connected communication and information systems in order to make Shanghai become a pivotal trading and economic megalopolis in the new millennium.15 The development area covers 350 km2 and is divided into five independent sub-areas: Waigaoqiao-Gaoqiao, QingningsiJinqiao, Lujiazui-Huamu, Zhoujiadu-Liuli, and Beicai Zhangjiang Sub-area. In particular, the Lujiazui Financial and Trade Zone was the most spotlighted development district. The Zone was planned to be developed as "the Manhattan of Shanghai" and included the central business district of Pudong 16 (See Figure 2.1).

Figure 2.1 Pudong New Development Zone in June 2002 Source: Author. 15 16

Yeh, 'Pudong: Remaking Shanghai as a World City', pp. 278-279. Ibid.


Shanghai's outstanding economic performance with a GDP growth rate of more than ten percent per annum since 1990 was achieved at the expense of the environment.17 In 1980, Shanghai was reported to hold notorious records in several categories compared with other large cities in China, including: an overcrowded population; too many factories in the city; the lack of green space; inadequate housing conditions, and high cancer levels due to environmental pollution.18 It is also reported that the levels of particulates and sulfur dioxide in air were unacceptable in accordance with the environmental standards, and the noise generated from roadways and factories had a far-reaching negative impact on large parts of the city. In addition, severe water pollution, in particular, in the Huangpu River, the main potable water source, put the city in danger of lacking available water for domestic as well as for industrial use. 19 The seriousness of pollution in the Huangpu River generated an offensive odor and turned the water black in the urban section of the river throughout the 1980s and the 1990s.20

Socio-Economic Conditions Population

and Administrative

Structure

Around 17 million inhabitants populated the Shanghai municipality in 2004. The total area of the Shanghai municipality is approximately 6,340 km2, with 140 km2 classified as urban, composed of 18 central 17

Shanghai Tongji Nianjian 2002 {Shanghai Statistical Yearbook 2002). Cheung, 'The Political Context of Shanghai's Economic Development', p. 55. It was reported in Jiefang Daily on 3 October 1980. 19 Lam, Kin-che and Tao Shu, 'Environmental Quality and Pollution Control', Y.M. Yeung and Yun-Wing Sung (Eds.), Shanghai, Transformation and Modernization under China's Open Door Policy (Hong Kong: The Chinese University Press, 1996), p. 470. 20 Zhang Chonghua, 'Case Study II, Shanghai Huangpu River China', in Richard Helmer and Ivanildo Hespanhol (Eds.), Water Pollution Control: A guide to the use of water quality management principles (London & New York: E & FN Spon, 1997), p. 317. 18

18


districts, one county, and 220 towns. 21 Owing to the continuous decentralization process since the 1980s, district governments are autonomous in implementing tax collection, budget allocation, and infrastructure provision and planning in Shanghai.22

Economic

Structure

The Pudong New Development Project in 1990 began to rejuvenate the high entrepreneurship of Shanghai and to rekindle the spirit of achieving economic wealth among Shanghainese (See Figure 2.2). Alongside the strong political support from the center, Shanghai achieved more than ten percent economic growth per annum throughout the 1990s. Shanghai achieved 13-0% of its GDP growth in the period of the Eighth Five Year Plan (1991-1995) and 11.4% of its GDP growth in the period of the Ninth Five Year Plan (1996-2000).23 In 2004, the GDP of Shanghai reached around US$ 93 billion (RMB 145 billion) and a per capita urban income was US$ 2,085 (RMB 16,682), and rural income reached US$ 883 (RMB 7,066).24 One of the major contributing factors to the rapid economic growth of Shanghai in the 1990s was the continuous and successful economic restructuring and diversification. Until the early 1990s, a number of energy-inefficient, out-of-date small-sized and traditional manufacturing factories were congested in the central Shanghai.25 The traditional manufacturing industries in Shanghai were steel, petrochemicals, energy, shipbuilding, and automobiles until 1978. 21

Zhongguo Tongji Nianjian 2005 {China Statistical Yearbook 2005). Yusuf, Shahid, and Wu Weiping, 'Shanghai Rising in a Globalizing World', Policy Research Working Paper (The World Bank: Development Research Group, 2001), p. 6. 23 Shanghai Tongji Nianjian 2002 {Shanghai Statistical Yearbook 2002). 24 Zhongguo Tongji Nianjian 2005 {China Statistical Yearbook 2005). The amount of per capita income in urban and rural areas of Shanghai would be different if this was calculated based on purchasing power parity (PPP). The level of PPP-based per capita income already reached over US$ 4,600 in 2000, and the current level would be estimated over US$ 6,000. 25 Yeung, 'Introduction', p. 9. 22


Figure 2.2 One of the Biggest Commercial Areas: Nanjing East Road in Shanghai in June 2002 Source: Author.

These industries consisted of many State-Owned Enterprises (SOEs) and flourished primarily relying on governmental subsidies before the reform was launched. However, the trend of marketization put SOEs in the process of reforming management and production, and rising raw material prices, inefficient management, and subsidydependent business structure pushed the Shanghai government to embark on economic restructuring in the 1980s. Since the early 2000s, Shanghai has focused on six major industries, such as finance and insurance, wholesales and retails, real estate, transport and postal services, IT industry, and hotel business. 26 After the two decades of restructuring, Shanghai's industrial structure has changed. Service industries already accounted for around 50% of GDP in 1999, when the contribution of the service 26

Official webpage of the Shanghai Government. Available Online: http://www. shanghai.gov.cn

20

Wafer and Development in China

industries outpaced that of the manufacturing industry for the first time.27 The statistics from the Shanghai government in 2005 indicate that in 2004, primary industry accounted for 1.3%, secondary industry 50.8% and tertiary industry 47.9% compared with 4.3% for primary, 63.8% for secondary and 31.9% for tertiary in 1990.28 These figures illustrate that the industrial structure of Shanghai has shifted from being mainly dependent upon heavy industries to service (financial and banking) industries. The contribution of foreign trade in imports and exports has been increasingly important to Shanghai's economic and social development since the Pudong New Development Policy was launched in 1990. The total value of imports in Shanghai in 2004 was about US$ 86.5 billion, and the total value of exports to other countries was about US$ 73-5 billion. The scale of Foreign Direct Investment to Shanghai has grown exponentially since 1990 and in the year of 2003 reached US$ 5.4 billion (China Statistical Yearbook 2005). THE ENVIRONMENT

Location a n d Topography Shanghai is located in the Yangtze River Delta Plain on the southern side of the Yangtze River within the Tai Lake Basin. The administrative responsibility of the Shanghai government extends over the island of Chongming, bordered by Jiangsu Province in the north and west and by Zhejiang Province in the south. 29 The age-long sedimentation along the rivers in Shanghai has formed the extensive deltaic plain with the average elevation of 3^4 m. Situated in the 27

Dai Xingyi, 'Cong Jingjixue Kan Shanghai Chengshi Shengtai Jianshe (Shanghai Ecological City Building from the Economic Point of View)', Shanghai Gaige {Shanghai Reform) (January 2001), p. 16. 28 Official webpage of the Shanghai government. Available Online: http://www. shanghai.gov.cn 29 Yeung, 'Introduction', pp. 3-4, and Zhang, 'Case Study II, Shanghai Huangpu River China', p. 317.


Figure 2.3 China and Shanghai Source: 2000 Encyclopedia Britannica.

middle of the deltaic plain, Shanghai has witnessed a great deal of development of canals and waterways, which link the city to neighboring provinces and cities (See Figure 2.3). Geo-politically, Shanghai is recognized as one of the most important hubs to connect to the port cities of North and South China as well as cities in Korea and Japan. Shanghai also has another invaluable asset in relation to its development, namely its "massive hinterlands". These areas are composed of flourishing urban and rural areas that produce abundant agricultural and raw products alongside a high degree of industrialization. A dense network of canals and waterways in the hinterland along the Yangtze River has provided a base for enormous trade and transshipment in Shanghai, which has benefited the city's economy (See Figure 2.4).

22

Water and Development in China JWNGSU

Figure 2.3 {Continued) Source: Official Website of the Shanghai government. Available Online: http://www.shanghai.gov.cn

Climate a n d Rainfall Shanghai's subtropical latitude (30 degrees 23' south to 31 degrees 21' north) and maritime location give the city a mild climate. The mean January minimum temperature is 3°C and the mean July maximum temperature 27°C.30 Compared with cities in North China, such as Beijing and Tianjin, Shanghai enjoyed abundant rainfall, 1,096.4 mm per annum on average in the period from 1956 to 1990.31 30

Zhongguo Tongji Nianjian 2000 (China Statistical Yearbook 2000), p. 7. Wang Songnian, 'Qianxi Shanghai Shuiziyuan Zhuangkuang (Analysis of Shanghai Water Resources Situation)', Shanghai Shuiwu Zhazhi (Shanghai Water Authority Magazine), 2001, Vol. 2, p. 1. The total rainfall in 2004 was 1,061.0 mm according to Zhongguo Tongji Nianjian 2005 (China Statistical Yearbook 2005). 31


Figure 2.4 Yangtze River Basin Source: Lu Jinyou and Zheng Wenyuan, 'Progress of Sedimentation Research for the Yangtze River', Proceedings of the Ninth International Symposium on River Sedimentation, Yichang, China (18-21 October 2004). Available Online: http://www.irtces.org/old/irtces/report/9isrs/JinyouLu.pdf

In spite of its substantial rainfall, the characteristic feature of the rainfall pattern in Shanghai restricts the effective utilization of the rainfall volume. The rainfall volume in Shanghai varies on a large scale every year. For instance, there were 1,797 mm in 1999 compared with 596.8 mm in 1978. Although rainfall is well spread throughout the year, the volume varies depending on the seasons. Most rainfall occurs in the period from May to September and is particularly heavy in June and July and rare in December. 32 (See Figure 2.5)

Water Resources The water resources in Shanghai comprise surface -water and ground water. Surface -water resources come from rivers and waterways in the city center and the outskirts of Shanghai. The major sources are 32

Wang, 'Qianxi Shanghai Shuiziyuan Zhuangkuang (Analysis of Shanghai Water Resources Situation)', p. 2.

24

Water and Development in China 35

8

9

10

11

12

1 Mean Monthly Temperature (Celcius) - Mean Monthly Precipitation (mm) Figure 2.5 Shanghai Monthly Temperature and Precipitation in 2004 Source: Zhongguo Tongji Nianjian {China Statistical Yearbook 2005).

the Yangtze River and Tai Lake. The total annual volume of 'water resources in Shanghai is approximately 59.5 billion m 3 . Surface water comprises most of the water resources, accounting for 59-39 billion m 3 (99-76%). The annual volume of rivers and waterways in Shanghai is 1.96 billion m 3 (3-3%). The flow from Tai Lake is 10.2 billion m 3 (16.9%), and from the Yangtze River, it is 47.4 billion m 3 (79-8%). The volume of groundwater in Shanghai is negligible, about 145 million m 3 (0.24%)33 (See Table 2.1). The annual water resource per capita is estimated at around 5,240 m 3 per person, which is more than the national average of 33

Huang Changyin and Yang Kai, 'Shanghai Shuixi Wuran Fenxi ji Qibaohu Duice (Analysis and Protection Countermeasure of Shanghai River System Pollution)', Shanghai Huanjing Kexue {Shanghai Environmental Sciences), Vol. 21, No. 1, 2002, p. 58.

Political Economy and Water in Shanghai 25 Table 2.1 Average Annual Water Resources in Shanghai (billion m3) Water Resources

Surface Water

Ground Water

Rivers and Waterways in the City Flow from Tai Lake Flow from the Yangtze River

1.96 (3.3%) 10.2 (16.9%) 47.4 (79.8%)

0.145 (0.25%)

Total

59.39 (99.76%)

0.145 (0.25%)

Source: Huang Changyin and Yang Kai, 'Shanghai Shuizi Wuran Fenxi ji Qibaohu Duice (Analysis and Protection Countermeasure of Shanghai River System Pollution)', Shanghai Huanjing Kexue (Shanghai Environmental Sciences), Vol. 21, No. 1, 2002, p. 58.

2,670 m 3 per person. However, if the volume from the Yangtze River is excluded from the total volume of water resources in Shanghai, the annual water resource per capita is only 1,049 m 3 per person. In addition, each person in Shanghai can have only 162 m3 per person if the volume from Tai Lake is also excluded from the total volume of water resources in Shanghai.34 Despite the substantial surface water volume, Shanghai's water resources are substantially affected by the natural conditions of the Yangtze River and Tai Lake in neighboring provinces. There is high risk that Shanghai would be in danger of running out of water supply unless careful water resources management is adopted.

Surface

Water

Thousands of rivers in the city serve as major water supply sources for the urban population of Shanghai. The Huangpu River and the Suzhou Creek are the most significant among numerous rivers in terms of water supply, sewage discharge, and navigation. The Huangpu River originally stems from Tai Lake, but the mainstream of the river begins from Dianshan Lake. The length of the river is around 113-4 km from Dianshan Lake to Wusong Kou where the 34

Ibid., p. 58.

16


river joins the Yangtze River. The water flowing from the Tai Lake area during the summer has a significant impact on the flow rate, the volume, and the water quality of the Huangpu River and on its water quality. The average volume of water per annum of the Huangpu River is 10 billion m3, which ranges from 5 billion m 3 in a dry year to 24 billion m 3 in a wet year.35 A characteristic of the Huangpu River is that the river is influenced by a tidal flow from Tai Lake and the Yangtze River. Sometimes the tidal flow from Tai Lake and the Yangtze River traps sewage and solid waste flowing along the Huangpu River and reverses the flow of the Huangpu River upstream. This phenomenon poses a threat to the water quality of the upper reaches in the Huangpu River "where a water intake point for the urban center of Shanghai is located. Another major river flowing through the city center is the Suzhou Creek. The Suzhou Creek links the Huangpu River to Tai Lake, and the total length of the Suzhou Creek is about 125 km (53-1 km in Shanghai).36 The annual average flow of the Suzhou Creek, measured at Huangdu, 37 is about 10 m 3 /s. The creek contributes to Shanghai in various fields. The Suzhou Creek works as the most crucial navigation channel for facilitating commerce for towns and villages between Tai Lake and Shanghai conveying construction materials, grain, solid waste, and night soil. 38 Land and urban drainage facilities are situated along the creek, and the creek provides water for industrial and agricultural use. In addition, the close proximity of the creek to residential areas results in it receiving a massive amount of sewage from households as well as industrial 35

Gu Youzhi, 'Cut Down of Pollution Loading is Priority in Rehabilitation of the Huangpu River', paper presented at Sino-Germany Seminar on Water Protection and Treatment in Yangtze Delta Area, Shanghai (8 October 1998), p. 1. 36 Lu, Hongde, 'Shanghai Chengshi Shuihuanjing de Huigu he Zhanwang (Retrospect and prediction for the Shanghai municipality's water environment)', Shanghai Chengshi Fazhan {Shanghai City Development), No. 1, February 2001, p. 38. 37 Mott MacDonald and INTERCONSULT, Second Shanghai Sewerage Project Design Review and Advisory Services Appraisal Report, unpublished project report, 1995. 38 Zhang, 'Case Study II, Shanghai Huangpu River China', p. 320.


users, which has caused severe water pollution in the Suzhou Creek for a few decades. Dianshan Lake's surface occupies 64 km2, and the volume of the lake is around 110 million m3. The lake provides an abundant freshwater, fishery resource and spectacular views, -which stimulates tourism. However, the development of Township and Village Enterprises (TVEs) and animal husbandry farms since the 1980s have contributed to massive amounts of sewage into Dianshan Lake, which has triggered a fast pace of eutrophication.39 The surface size of Tai Lake is 3,160 km2, and the volume of the lake is 5-77 billion m3. Tai Lake is part of the Yangtze River Basin and is connected to the Yangtze River in its north side (See Figure 2.6). As one of the two major tidal water resources of Shanghai, the tidal volume of Tai Lake into Shanghai is around 10 billion m 3 per annum. 40 The Yangtze River also influences the flow of the Huangpu River by its tidal water and provides the largest continental navigation channel in Asia. The total length of the Yangtze River is estimated at about 6,300 km, 41 and the annual average flow is estimated at around 933-5 billion m 3 per annum measured at Datong (lower reach) and 736 billion m 3 per annum measured at Hankou (upper reach). 42

Ground

Water

The other water resource for Shanghai is groundwater. The volume of groundwater is about 145 million m 3 . The groundwater in Shanghai has been exploited for years without any systematic plan 39

Yuan Renliang (Ed.), Shanghaishi Shuihuanjing Yanjiu {Shanghai Municipal Water Environment Research) (Shanghai: Kexue Press, 2000), p. 15. 40 Huang Xuanwei (Ed.), Taihu Liuyu Guihua yu Zonghe Zhili {Overall Management and Planning of the Tai Lake Basin) (Beijing: China Water Conservancy and Hydropower Press, 2000), pp. 13-14. 41 Zhongguo Tongji Nianjian 2000 (China Statistical Yearbook), p. 7. 42 Wang, 'Qianxi Shanghai Shuiziyuan Zhuangkuang (Analysis of Shanghai Water Resources Situation)' p. 1. See also UNESCO Water Resources Website. Available Online: http://www.webworld.nesco.org/water/ihp/db/shiklomanov.

28


Figure 2.6 Shanghai Surface Water Resources in Tai Lake Basin Source: Tai Lake Water Authority Website. Available Online: http://www.tba.;

or regulation.43 The monitoring of groundwater has also been poor. Extraction from private wells has caused grave concern about land subsidence in certain areas in Shanghai.44 This anarchic approach to 3

Zhang, 'Case Study II, Shanghai Huangpu River China', p. 321. In the early 1960s, the maximum extraction amount reached more than 200 million m3 per annum, which alarmed the authority to limit a random private extraction of ground water in Shanghai. Shanghai Water Supply Management Office, 'Shanghaishi Dixiashui Quanmian Dongtai Jiance Gouxiang (Proposal for monitoring the overall situation of groundwater in Shanghai)', Shanghai Shuiwu Zhazhi (Shanghai Water Authority Magazine), 2002, Vol. 1. Available Online: http://www.shanghaiwater.gov.cn/information. 44 Zhang, 'Case Study II, Shanghai Huangpu River China', p. 321.


groundwater extraction began to come to an end in recent years, and as a new freshwater source for clean bottled water, the groundwater began to draw attention of the public according to a recent newspaper report. 45 The amount of extraction of groundwater in Shanghai in 2000 was 95 million m3, which matched the maximum limit of extraction amount (100 million m3) in Shanghai.46 WATER SUPPLY AND WATER QUALITY Water Supply a n d Water Use The total volume of the maximum water supply in Shanghai in 2004 was estimated at 11.8 billion m 3 per annum. In terms of actual water provision, Shanghai managed to supply 2.7 billion m 3 of water to domestic, industrial, and agricultural users in the year of 2004.47 In association with the actual volume of water supply in Shanghai, it is necessary to discuss the amount of water use in Shanghai in order to understand the general situation of water supply in Shanghai. The trend of the amount of water use in Shanghai for two decades is shown in Table 2.2. Table 2.2 demonstrates that there was a sharp increase from 1980 to 1990, and the period from 1990 to 2004 shows a modest decrease. Water Quality a n d Pollution Overview

of Current

Water Pollution

in

Shanghai

The abundant annual mean rainfall and rich surface water resources in Shanghai cannot guarantee sufficient water supply for Shanghai's 45

Zou Huilin, 'Water, water underground but not used', Shanghai Star (3 October 2000). 46 Shanghai Water Supply Management Office, 'Shanghaishi Dixiashui Quanmian Dongtai Jiance Gouxiang (Proposal for monitoring the overall situation of groundwater in Shanghai)', Shanghai Shuiwu Zhazhi (Shanghai Water Authority Magazine), 2002, Vol. 1. 47 Shanghai Shuiziyuan Gongbao 2004 (Shanghai Water Resources Bulletin 2004). The water supply amount from surface water was 11.7 billion m3, and that from groundwater 0.1 billion m3.

30

Water and Development in China Table 2.2 Shanghai Water Use in Selected Years (billion m3)

Year

Total Water Use

Industrial Use

Agricultural Use

Domestic Use

1980 1990 2004

8.053 10.719 11.141

4.672 6.292 7.605

2.876 3.576 1.923

0.505 0.851 1.613*

"This includes the volume of household and public domestic water use. Source: Yuan, Renliang (Ed.), Shanghaishi Shuihuanjing Yanjiu {Shanghai Municipal Water Environment Research) (Shanghai: Kexue Press, 2000) and Shanghai Shuiziyuan Gongbao 2004 {Shanghai Water Resources Bulletin 2004). Available Online: http://www.shanghaiwater.gov.cn/sw/2004_3_2.asp.

population. Although freshwater resource per capita in Shanghai is twice the national average (5,240 m 3 /y vs. 2,476 m 3 /y), most of the main water bodies in Shanghai are heavily polluted.48 An uneven distribution of rainfall, in particular relatively lower level in winter, worsens the pollution in water bodies in Shanghai through reduced water flow. According to a pollution source survey in 1985, around 60% of industrial sewage was discharged directly into rivers in Shanghai. Such a high portion of untreated industrial sewage became a major water pollution factor in Shanghai in the 1980s.49 This low level of sewage treatment in the mid-1980s was not much enhanced in the 1990s. It is recognized that in the early 1990s, approximately 25% of the industrial wastewater received primary and secondary treatment,50 48

Shanghai Water Conservancy Annals Publication Council (Ed.), Shanghai Shuili zhi {Shanghai Water Conservancy Annals) (Shanghai: Shanghai Academy of Social Sciences Press, 1998), p. 102. 49 Zhang, 'Case Study II, Shanghai Huangpu River China', p. 322. 50 Primary treatment removes phosphorous using the physical and chemical setting. In China, it is not common to adopt the chemical setting in sewage treatment facilities, and therefore, there remains a high percentage of phosphorous in Shanghai rivers. Biological processes in secondary treatment utilize biochemical reactions to remove soluble or colloidal impurities, usually organics. Tebbutt, T.H.Y, Principles of Water Quality Control, (Oxford: Butterworth-Heinemann, 1998), p. 120.


and only 14% of the domestic wastewater was subjected to secondary treatment. 51 Because of the low level of sewage treatment for domestic as well as industrial use, the water quality of the Huangpu River has continued to deteriorate. Most parts of the Huangpu River still remain heavily polluted in the level of Class IV or V although a number of large-scale sewage treatment plants were constructed along the river in the 1990s. The 2004 Shanghai Environmental Bulletin, however, shows that in 2003, 95% of industrial sewage and 53% of domestic sewage were treated (See Table 2.3).52 Compared with the period from the 1980s and the mid-1990s, Shanghai increased remarkably its sewage treatment capacity in the late 1990s. But there remains a fundamental question on why the Huangpu River, the Suzhou Creek, and other branch rivers still remain severely polluted. The explanation stems from various factors. First, since 1997, the portion of domestic sewage has outpaced that of industrial sewage. This trend demonstrates that an increase of domestic sewage and the low level treatment of domestic sewage have offset the improvement of overall sewage treatment capacity in the Huangpu River. One of the main concerns in water quality control in the Huangpu River is how to regulate and control an increasing amount of domestic sewage. Second, there are a number of pollutants discharged into rivers, such as domestic and industrial sewage, excretion and waste from animal husbandry farms, polluted silt on the river bed, and wastes from small ports along rivers.53 The third factor is that the government has only targeted main rivers, such as the Huangpu River and the Suzhou Creek. Attention has not been paid to numerous small rivers, and the water quality of the small rivers without adequate treatment has continued to deteriorate. 51

Zhang, 'Case Study II, Shanghai Huangpu River China', p. 322. Shanghai Environmental Protection Bureau, Shanghaishi Huanjing Zhuangkuang Gongbao 1999 {Shanghai Environmental Bulletin 1999), p. 5. 53 Murray, G and Cook, I.G., Green China (London and New York: Routledge-Curzon, 2002), p. 67. 52

32

Water and Development in China Table 2.3 Annual Sewage Discharge and Treatment Rate in Shanghai from 1990 to 2002 Industrial Sewage

Domestic Sewage

Year

%

ton/y (million)

1990

80.0 74.8 77.0

1,332

12.7

1991 1992

13.9 14.2

1993 1994

82.3 82.2

1995 1996

86.4 93.7 93.8

1,325 1,370 1,280 1,181 1,161 1,141

1997 1998 1999 2000 2001 2002 2003

95.3 95.7

N/A 95.4 94.8 94.9

999 900 850 725 680 649 611

%

12.9 33.2 41.1

N/A 39.9 53.1 50.4 48.8 53.3

N/A N/A

ton/y (millio

667 633 658 750 855 1,840 1,140 1,110 1,180 1,176 1,212 1,270 1,272 1,211

Source: Shanghai Environmental Protection Bureau, Shanghaishi Huanjing Zhuangkuang Gongbao 1991-2004 (Shanghai Environmental Bulletin 1991-2004).

Polluting

Factors

There is a suite of polluting factors that contribute to the pollution of water bodies in Shanghai. First, massive amounts of organic substances are contained in the sewage flow from agriculture and domestic sources into the rivers in Shanghai. The organic substances containing nitrogen require large amounts of dissolved oxygen in water, and this problem has been regarded as one of the China's Seven Priority Environmental Problems in "the Environmental Action Plan of China 1991-2000".54 Second, over 80% of the small waterways in Shanghai 54

National Environmental Protection Agency and State Planning Commission, Environmental Action Plan of China 1991-2000, 1994. See also Ma Xiaoying and Ortolano, Lenoard, Environmental Regulation in China — Institutions, Enforcement, and Compliance (Lanham, Boulder, New York and Oxford: Rowman & Littlefield Publisher, 2000), p. 1.


are seriously polluted, and these polluted waterways exacerbate the water quality of the Huangpu River and the Suzhou Creek. The heavy pollution in the urban areas in Shanghai is the third attribute influencing the pollution in the Huangpu River. This also poses a threat to the water quality of the Da Qiao water intake point in the Huangpu River. The urban water pollution results from a rapidly increasing pace of domestic sewage caused by material wealth and economic development. As seen from Table 2.3, the amount of sewage discharge from households in Shanghai has outpaced that from industrial users since 1997. Fourth, pesticides (agrochemicals) and chemical fertilizers are heavily used and discharged into rivers in Shanghai without adequate treatment. Every year, more than 100 tons of pesticides are reported to remain in the soil and flow into the rivers. The amount of chemical fertilizer consumption in 2002 was estimated at around 10,000 tons per annum, which increases nitrogen pollution in rivers and eutrophication in lakes.55 In addition to those fertilizers, animal husbandry has become another main source of pollution discharge. Seven million tons of animal excretion and other organic sewage were generated in 2002, and among them, over two million tons were discharged into water bodies without proper treatment. 56

55

Yang Yi, Liu Min, Xu Shiyuan, Hou Lijun, and Qian Changping, 'Shanghai Chengshi Zhoubian Diqu Zhuyao Huanjing Wenti ji Qiduice (Dominant Environmental Problems in the Ambient Area of Shanghai city and Their Relevant Countermeasures)', Changjiang Liuyuyu Huanjing {Resources and Environment in the Yangtze Basin), Vol. 11, No. 2 (March 2002), p. 156. 56 Gao Chao, Zhu Jian-guo, and Dou Yijian, 'Nongye Feidianwuran dui Taihu Shuizhide Yinxiang (Contribution of Agricultural Non-Point Source Pollution to Water Quality Deterioration in Tai Lake Basin)' Changjiang Liuyu Ziyuan yu Huanjing {Resources and Environment in the Yangtze Basin), Vol. 11, No. 3 (May 2002), p. 261.

34


The fast increase in the scale of non-point source water pollution57 in the animal husbandry industry has drawn more attention in recent years, especially since 1997.58 The fifth attribute of the system is unique, namely the tidal flow in the Huangpu River. The Huangpu River receives a large volume of tidal water from the Yangtze River and Tai Lake, and in particular, around 80% of the total water resources in Shanghai come from the Yangtze River. The total tidal influx from the Yangtze River to the Huangpu River is estimated at up to 48 billion m 3 per annum. 59 This tidal flow into the Huangpu River influences the pattern of the river flow and prevents organic pollutants from being released to lower stretches.60 All kinds of contaminants and wastes in the upstream of the Huangpu River cannot flow downstream, where most of the wastewater treatment plants are installed. The tidal process also contributes to the pollution of water intake points in the Huangpu River. The sixth factor for polluting the Huangpu River is linked to the slow flow rate of the Suzhou Creek. Part of the Suzhou Creek flow in upper reaches takes about a month to arrive in the estuary of the creek where the Huangpu River and the creek meet together. This brings about the result that sewage in the Suzhou Creek cannot flow

57

Non-point source water pollution occurs due to fertilizer run-off, pesticide run-off and discharges from intensive animal production enterprises. World Bank, China: Air, Land & Water (Washington D.C.: World Bank, 2001), p. 58. Shanghai has a number of non-point source pollutants to have a hazardous impact on rivers. These are: (1) domestic sewage; (2) sewage containing phosphorous; (3) sewage from small factories; (4) excrement and sewage from animal husbandry farms; (5) pesticides and other agricultural industry-driven sewage; and (6) domestic solid waters and wastes from riversides and wharfs. Dai Xingyi, 'Cong Jingjixue Kan Shanghai Chengshi Shengtai Jianshe (Shanghai Ecological City Building from Economic Point of View)', Shanghai Gaige (Shanghai Reform) (January 2001), p. 19. 58

This was confirmed by an interview with an official from the Shanghai Environmental Protection Bureau in April 2001. Interview-020401. 59 Zhang, 'Case Study II, Shanghai Huangpu River China', p. 321. 60 Ibid, p. 322.


Figure 2.7 Ship Building along the Huangpu River Source: Author.

away into the Huangpu River, which worsens the pollution level in the creek as well as the Huangpu River.61 The last polluting factor is related to the city's economic development history dating from the early 20th century. The long history of industrialization has ironically driven Shanghai to retain out of date sewage treatment systems and an inefficient energy utilization infrastructure.62 The main traditional industries in Shanghai, such as the petrochemical, textile, metallurgical and ship-building industries, have been the major liquid effluent producers (See Figures 2.7 and 2.8).

Sewage Control — Sewage Treatment

Plants

Compared with spectacular economic growth in Shanghai, there has been no equivalent improvement of the water quality despite the 61

A senior Chinese engineer confirmed this, who has been involved in the Shanghai Sewerage Project and the Shanghai Environment Project. Interview-060602. 62 Lam and Tao, 'Environmental Quality and Pollution Control', p. 470.

36


Figure 2.8 Coal Shipping along the Huangpu River Source: Author.

enhanced capacity of sewage treatment until the late 1990s. In the urban and suburban areas of Shanghai, 20 wastewater treatment plants and facilities in total had been constructed and installed mainly along the Huang River and other small canals and rivers in the period between 1926 and 2001 63 (See Table 2.4). The number of sewage treatment facilities increased up to 38 in 2004 including 15 located in the city center and 23 in suburban or industrial development areas.64 63

Ouyang, Christine, Environmental Protection in Shanghai 1999, Shanghai: Consulate General of Sweden in Shanghai, 1999, p. 19. The report also shov/s that the municipal government was planning to construct another ten sewage treatmentplants in next three to five years and the designed capacity of treatment for the largest one in Shidong Kou will be 0.4 million m 3 /d. See also Shao, Fang, Huang, Shenfa, and Sun, Jian, 'Shanghaishi Wushui Chuli Sheshi Wenti Tanxi (Approach on the Problems of Sewage Treatment Installation in Shanghai)', Shanghai Huanjing Kexue {Shanghai Environmental Sciences), Vol. 20, No. 12, 2001, p. 570. 64 Shanghai Shuiziyuan Gongbao 2004 (Shanghai Water Resources Bulletin 2004).


37

Table 2.4 Shanghai Sewage Treatment Plants in 2001 Design Service Actual Capacity Capacity Percentage of Construction Area Year (km2) 1,000 (m 3 /d) 1,000 (m 3 /d) Operation (%)

Location Name Dongqu Quyang Beijiao Caoyang Minhang Tianshan Central Longhua Changqiao Sitang Wusong Chengqiao Taopu

1926 1984 1968 1954 1961 1985 1986 1992 1992 1992 1989 1998

13.00 4.27 2.82 1.60 15.50 9.67 12.00 4.94 1.84 7.70 0.40 3.10

Nanqiao Jinshan Jiading Anting Suburbs Songjiang Nanhui Minhangqu Qingpu

1990 1998 1979 1987 1981 1988 1979 1986

4.00 8.00 15.00 12.00 12.00 14.00 30 7.5 141.84

Total

34 75 20 30 50 75 105 22 20 40 5 60

32.5 54.3 18.9 22.3 54.7 43.6 47.2 13.2 21.9 23.8 2.7 20

95 72 95 74 109 58 45 60 110 60 54 33

10 17 30 25 68 12.5 13.7 7.4

11.7 9.1 20 9 20 7.8 46 97

117 54 67 36 30 62

736.0

453.8

62 (Average)

Source: Reproduced based on Shao, Fang, Huang, Shenfa, and Sun, Jian, 'Shanghaishi Wushui Chuli Sheshi Wenti Tanxi (Approach on the Problems of Sewage Treatment Installation in Shanghai)', Shanghai Huanjing Kexue {Shanghai Environmental Sciences), Vol. 20, No. 12, 2001, p. 570.

The constant degradation of the water quality of the Huangpu River shows that the current facilities are insufficient in terms of treatment capacity. The effectiveness of operating the current facilities is also in question, with only about 60% of the facilities being in operation. There has been an absence of adequate drainage network systems linked to sewage treatment facilities in

38


the municipality. 65 In addition, most of the large-scale sewage treatment facilities are aimed at servicing urban areas. The current sewage treatment facilities are unable to cope with water pollution caused by the heavy use of fertilizers and pesticides as well as the random discharge of animal excretion from animal husbandry farms in the outskirts of Shanghai.

Sewage Control — Sewage Drainage

Systems

As discussed above, the low rate of sewage treatment in Shanghai results from an inadequate sewage network that covers only about 50% of discharged sewage in the city area. The designed capacity of the total sewage drainage systems in Shanghai is more than five million m 3 per day; however, the actual capacity is less than three million m 3 per day (See Table 2.5). To make the situation worse, only 30% of sewage covered by the total sewage drainage systems receive secondary treatment, which leaves organic wastes untreated, and such discharges pollute water bodies. 66 There have been four new sewage drainage systems constructed in Shanghai in the period up to the early 2000s. First, the Shidongkou sewage drainage system (Xigan Xian — also called the Western Interceptor) was constructed in order to improve the water quality of the Suzhou Creek in the early 1970s. This system covers the riversides of the Suzhou Creek in the northern part of Shanghai and has a daily capacity of 800,000 m3, and the discharge point is Shidongkou, located in the Yangtze River Estuary. This system is connected to the Shanghai Sewerage Project Phase I, and the Shidongkou sewage treatment plant with the capacity of 400,000 m 3 per day, which was built in January 2003- The second sewage drainage system is the Zhuyuan sewage drainage system, Nangan-Xian, the Southern Interceptor, and was established through the Shanghai Sewage Project Phase I in 199365

Shao, Huang, and Sun, 'Shanghaishi Wushui Chuli Sheshi Wenti Tanxi (Approach on the Problems of Sewage Treatment Installation in Shanghai)', p. 571. 66 Interview with China Representative of SNF (China) Flocculant Co., Ltd on 25 June 2002. Interview-250602.


39

Table 2.5 Sewage Treatment and Drainage Capacity in Shanghai in 2001

Name Shidongkou Discharge System Zhuyuan Discharge System Bailonggang Discharge System Hangzhou Discharge System (Jinshan & Fengxian) Municipal Sewage Treatment Plants Total

Sewage Design Quantity Long Term Actual Scale Capacity Capacity After Primary 3 3 Treatment (1,000 m 3 /d) (1,000 m /d) (1,000 m /d)

Remarks

170

N/A

800

1,450

N/A

Primary

1,700

700

N/A

3,300 (Phase I & II) 1,700

339

155

135

539

Primary

736

454

' 454

350

Secondary Bio

800

1,700 (Phase I)

5,275

2,929 (55%)

589 (10%)

Secondary Bio

Primary

6,689

Source: Shao., Huang, and Sun, 'Shanghaishi Wushui Chuli Sheshi Wenti Tanxi (Approach on the Problems of Sewage Treatment Installation in Shanghai)', p. 569.

The coverage area is the northern part of Shanghai excluding the areas covered by the Shidongkou sewage drainage system. The daily capacity of the system is 1.7 million m3. To avoid further coastal pollution, the construction of the Zhuyuan No. 1 Sewage Treatment Plant was commenced in 2002. Third, the Bailonggang sewage drainage system covers the southern part of old Shanghai (Xuhui and Luwan) and part of the Pudong New Area with the daily capacity of 1.7 million m3. It was established through the Shanghai Sewerage Project Phase II in 1999 to supplement the function of the Zhuyuan sewage drainage system. The fourth sewage drainage system in

40


Shanghai is the Hangzhou Bay sewage drainage system, which delivers and discharges sewage from the city center to the Hangzhou Bay. The daily capacity of this system is around 150,000 m3.67

CONCLUSION This chapter has discussed water, politics, economy, and society in Shanghai and provided data and information necessary for understanding the past and current water supply and pollution situation in Shanghai. The analysis based on the data on Shanghai has revealed that owing to its geo-political and natural advantages, Shanghai has prospered economically since the early 20th century. In the process of the development of Shanghai, water has been one of the crucial elements supporting its socio-political and economic development. This fundamental resource, however, has deteriorated primarily through the accelerated pace of economic development since the beginning of the reform policy in the late 1970s. As a result, despite its abundant annual rainfall and surface water resources, water pollution has triggered water scarcity in Shanghai since the 1980s. Shanghai has tried to address water pollution through the construction of a number of sewage treatment plants and several sewage drainage systems, however, these facilities have not proved to be very effective. The mild climate, substantial rainfall, and rich surface water resources in Shanghai have served as a powerful engine for Shanghai to become an economic hub for commerce and trading activities. The Huangpu River has provided freshwater to Shanghai supplemented with the Yangtze River and Tai Lake. Water use in Shanghai has increased, particularly since the 1980s, because of the fast pace of economic development. The natural advantages of Shanghai, however, have been gradually damaged as a result of the neglect of the protection of the environment

67

Shao, Huang, and Sun, 'Shanghaishi Wushui Chuli Sheshi Wenti Tanxi (Approach on the Problems of Sewage Treatment Installation in Shanghai)', p. 571.


in the Communist period from 1949 to 1978. Water quality constantly deteriorated in rivers of the Shanghai region in this period. The open door policy since the late 1970s made the situation worse, and the Pudong New Development Project in 1990 posed a new threat to water bodies in Shanghai. Even more sewage was discharged from domestic, industrial, and agricultural users. It has been shown that water bodies in Shanghai have been seriously polluted by point sources like industrial sewage as well as non-point sources such as agricultural run-off, domestic sewage, and fertilizers, especially, since the mid-1990s. Confronted with the acute water pollution, many sewage treatment plants have supplemented the plants built in the last century. Despite decades of efforts to abate water pollution in Shanghai, most of the major water bodies in Shanghai, such as the Huangpu River and the Suzhou Creek, are still heavily polluted. This gloomy outcome illustrates that there have been many loopholes in sewage treatment management, regulation, and a lack of facilities to treat the massive amounts of sewage from urban as well as rural areas in the Shanghai area. It is important to learn a lesson from previous mistakes so that the end-of-pipe management can be converted to preventive solutions and measures for freshwater management in Shanghai. In addition, the establishment of an integrated policy embracing environmental protection and economic development will be essential to guarantee the better quality of water for Shanghainese. This challenging task can only be addressed through the political will of the Shanghai leadership. In order to explore how Shanghai has coped with amelioration of water pollution for the provision of high-quality water, Chapter 3 will provide a theoretical framework to evaluate the social and political relations on the basis of social theory.

Chapter

Theoretical Framework INTRODUCTION The chapter aims to provide a theoretical framework which consists of a range of social theory. The theories found useful include the grid/group theory of Mary Douglas, the political ecology theory of Hajer, and the co-evolutionary approach of complexity theory. Fieldwork in 2002 in Shanghai showed that these theories not only helped shape the research strategy, but also enabled useful insights into the Shanghai water policy domain and why water politics have been developed and changed through the involvement of diverse actors in the reform era transition. The grid/group theory of Mary Douglas has been used to identify social actors and analyze their activities and interactions in the Shanghai "water policy domain. Mary Douglas conceptualized four different ways of life in society, which are the Hierarchists, the Egalitarians, the Entrepreneurs, and the Fatalists. The theory will be used to analyze the socio-political mechanisms with which actors in the Shanghai water domain have prioritized policies. Shanghai has experienced dramatic shifts in approach to the organization of society and politics over the past decade. Grid/group theory provides an analytical framework to demonstrate the way the state-society duality has been transformed into a multi-dimensional and complicated 43

44


society of contemporary China. The state was assumed to be capable of governing, planning, and managing an effective and secure political economy. The reforms of the last two decades of the 20th century have reflected a questioning of that assumption evident in the diversification and privatization of the economy and the growth of social movements. These developments question the entitlement of the communist state to be the only source of governance. In the Shanghai water sector, the theory has identified five major actors, the Shanghai government (the Hierarchists), environmental NGOs (the Egalitarians), private companies (the Entrepreneurs), Shanghai citizens (the Fatalists), and the international development agencies (the international Hierarchists). Theoretical approaches from political ecology developed by Hajer will also be discussed. Political ecology serves as an analytical tool to delineate the way the environment has been managed in a certain manner. Analysts in the field of political ecology, such as Hajer, have attempted to provide answers as to how environmental emblematic processes and events, such as acid rain, drought, and famine, have pushed governments to conduct the shifts and changes in their environmental policies. Discourse analysis will serve to shape discussion and provide a framework on how to track the development of water quality related polices in Shanghai. There are three main components in discourse analysis: main discourse; story lines; and discourse coalitions. The main discourse, focused on water quality control, has been emphasized through story lines based on a number of cases and experiences. These story lines were able to provide reformative ideas and contexts relevant to governmental agencies in new institutional contexts. Discourse coalitions develop based on an ensemble of story lines, diverse actors, and practices and rules that the actors follow in the main discourse. The Shanghai government has tried to commit an integrated approach to water pollution problems via discourse coalitions such as the establishment of the Shanghai Water Authority. It will also be shown that emblematic events, such as water pollution in rivers in Shanghai, could also drive the Shanghai government to introduce institutional change in the water policy domain.

Theoretical Framework 45

A co-evolutionary approach of complexity theory is used to analyze the extent to which private sector participation in the Shanghai water sector has developed, particularly since the late 1990s. Complexity theory explores complex systems where many actors such as organizations or institutions maintain dynamic interaction in nonlinear modes. In the course of the numerous interactions between actors, constant and energetic evolutionary processes develop in correspondence with internal and external environments. Different actors start to co-evolve in interaction with a myriad of actors that have impacts on internal and external environments. Simultaneously, these actors adapt to the new environments. The co-evolutionary approach shows that the interactions between the Shanghai government and private companies have brought about a new political economy landscape in Shanghai through co-evolutionary processes. The coevolutionary approach also contributes to the examination of the way the Shanghai government and international development agencies have co-evolved through development projects. The first theoretical discussion relates to grid/group theory identifying diverse actors in the Shanghai water sector. The analytical framework of grid/group theory will be discussed first, and the conceptualization of the theory will be explored and the hyper-cycle to explain the relationship between different actors. Fieldwork in 2002 in Shanghai revealed that there were newly emergent social actors, such as environmental NGOs, private companies, and international development agencies alongside the Shanghai government and Shanghai citizens. The political ecology theory of Hajer will be the next element of the chapter. Discourse analysis will be introduced as an analytic tool to examine the way some critical environmental issues, such as water pollution, have been prioritized and have become main features of the discourse in environmental politics. Discourse, story lines, and discourse coalitions will be discussed as three components of discourse analysis. Next, political ecology theory will be used to explain the way the Shanghai government has reformed its institutions and organizations faced with the evidence of very serious water pollution. The third part of this chapter is to discuss a co-evolutionary approach of complexity theory.

46


A definition of co-evolution will be introduced, and the properties of co-evolutionary processes will be explored. The co-evolutionary approach helps analyze the development of private sector participation in the Shanghai water sector and the way the Shanghai government and international development agencies have achieved institutional reform in the way development projects have been implemented. It is concluded that social theory has proved to be useful relevant to the Shanghai water sector, especially during fieldwork. GRID/GROUP THEORY Grid/group theory focuses on socio-cultural viability that indicates how ways of life sustain and maintain themselves. It illustrates 'the variability of an individual's involvement in social life.'1 The theory was developed by Mary Douglas, reflecting what has been discussed as a valuable typology that contains the lessons of the ageold tradition of sociology, anthropology and psychology.2 She has not paid much attention to abstractions such as values and worldviews, but has an insight into the more observable facets of culture in daily life. She also has kept three unchanged pre-suppositions: (1) human beings are social creatures; (2) the most significant actor in their lives is other people; and (3) diverse forms of society support, and different systems of belief and morality.3

Definition It is observed that all activities occur in a social context, and therefore, there is no freedom from the social context. Mary Douglas has tried to differentiate one from the other type of social context to present the extent to which beliefs and social environment appear to relate 1

Thompson, Michael, Ellies, Richard, and Wildavsky, Aaron, Cultural Theory (Boulder, San Francisco, Oxford: Westview Press, 1990), p. 5. 2 Fardon, Richard, Mary Douglas (London: Routledge, 1999), p. 210. 3 Ibid., p. 211.


to each other. From this context, the concept of group is defined as 'the experience of a bounded social unit' for measuring membership of enduring social groups. 4 The other axis of the theory is grid, defined as 'the rules that relate people to one another through ego-centerd networks', which also means 'controlling the flow of behavior defining proper relations based on sex, age, seniority, etc'. 5 Actually the definition of grid and group has been evolved by Douglas as well as by her collegues, such as Michael Thompson, in the course of dynamic societal changes throughout a number of decades. In the book, Cultural Theory, Michael Thompson provides the different definitions of grid and group, but the main concepts embedded are the same: 'group, the extent to which an individual is incorporated into a bounded unit', and grid, the degree to which an individual's life is circumscribed by externally imposed prescriptions'.6

Conceptualization Grid/group theory has been summarized in a diagram that helps understand how the theory can delineate different ways of life demonstrating the interactions of different individuals and social entities in society. Figure 3-1 illustrates the identification of four different ways of life in a quadrant, which has been developed by a number of cultural theorists. These four ways of life have been conceptualized in the following terminology. The Hierarchists exist within strong group boundaries and observe a number of compulsory rules and regulations. In other words, individuals in the Hierarchists are controlled by other members in the group and to binding prescriptions. For the Egalitarians, every individual is strongly grouped and supposed to be free from being controlled by any form of authority or hierarchy aimed at achieving ethical and 4

Ibid., p. 219. This definition initially came out from the book, Mary Douglas, Natural Symbols: Explorations in Cosmology (London: Barrie and Rockliff, 1970). 5 Fardon, Mary Douglas, p. 219. 6 Thompson, Michael etal, Cultural Theory, p. 5.

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Water and Development in China Private Sphere

The Fatalists

Public Sphere

The Hierarchists

Grid The Entrepreneurs

The Egalitarians

Group

Figure 3-1 Four Ways of Life Source: Reproduced by author based on Thompson, 'Socially Viable Ideas of Nature: A Cultural Hypothesis,' p. 62.

moral goals. The Entrepreneurs suppose that all boundaries are provisional, tentative and subject to negotiation at any time. Members belonging to the Fatalists are excluded from social groups and peripheral to the personal networks of others.7 Figure 3.1 also illustrates the structural analysis based on the public and the private sphere. The focus on the dynamic interaction between the public and the private sphere is useful to comprehend the activities in Shanghai's society. In this study, it is suggested that the private sphere includes the Entrepreneurs and the Fatalists, and the public sphere does the Hierarchists and the Egalitarians. The idea is particularly useful in explaining the changing relationship between the Hierarchists (the Shanghai government) and the Egalitarians (environmental NGOs and other social groups) in contemporary China. Also the approach helps identify the interactions between actors in the public and private spheres, such as the development of privatization in the Shanghai water sector between the Shanghai government and private companies. 7

Thompson, Michael et al, Cultural Theory, pp. 6-7, and Thompson, Michael, 'Socially Viable Ideas of Nature: A Cultural Hypothesis,' in Braak, E. and Svedin U., Man, Nature and Technology (Basingstoke: Macmillan, 1988), p. 62.


The second discussion in grid/group theory relates to the hyper-cycle.8 The hyper-cycle explains that even though these four distinctive actors have different ways of life, each social actor cannot live without the other differently inspired actors. These mutualities keep a sort of equilibrium between the four different social actors, and also make the social actors manage their ways of life with stability through unceasing mutual challenges and changes, which achieves a form of stability.9 For instance, if there were no hierarchists or entrepreneurs, egalitarians would lose their target and undermine their justification for their strong group boundary. It is normal to observe alliances between groups and against groups. According to the mechanism of grid/group theory, the establishment of alliances between the Hierarchists and the Entrepreneurs takes place more commonly than any other alliance form. The phenomenon draws much attention not only because of the nature of the mechanisms of alliance between the two different approaches, but also because of its potential strength of the synergy of the alliance. The Entrepreneurs can keep business as usual based on the stability, such as property relationships and defence against outsiders, guaranteed by the Hierarchists. The Hierarchists can strengthen their capacity to control the masses and society and confront any exogenos or endogenos challenge through economic development supported by the Entrepreneurs. 10 It is noted that these ways of life is evident in the neo-liberal European and American cases. Particular Chinese cases differentiate from the neoliberal European and American cases. The communist system in China from 1949 to 1978 de-emphasized the existence of diverse 8

Thompson, Michael et al, Cultural Theory, p. 51. This concept was presented from E. Eigen and P. Schuster, 'Emergence of the Hypercycle', Naturwissenschaften 64 (1977); 541-65; Karl Sigmund and J. Hofbauer, Evolution of Hypercycles, Cambridge: Cambridge University Press, 1984. 9 Thompson, Michael, 'Policy-Making in the Face of Uncertainty: the Himalayas as Unknowns' in Chapman, G.P. and Thompson Michael (eds.), Water and the Quest for Sustainable Development in the Ganges Valley (London: Mansell Publishing, 1995), p. 35. 10 Thompson, Michael, et al, Cultural Theory, pp. 88-89-

50


social groups, and China achieved its government and industrial synergy from 1949 to 1978, mainly through a communist system. The Entrepreneurs were discouraged from participating in the establishment of the communist state, and the communist-controlled centrally planned economy that dominated all economic activities. Since the beginning of the reform era in 1978 China has introduced new socialist market principles creating a more complex socioeconomic environment in which the neo-liberal principles and the communist system co-exist and operate. Application There have been attempts to apply grid/group theory to the Chinese context by some China scholars. Lucian Pye identified the two dominant ways of life, hierarchy and egalitarianism in Chinese history in the book, The Mandarin and the Cadre.11 Pye asserts that the egalitarian culture emphasizes the need of the potential and innate goodness of human beings whereas the hierarchical Chinese tradition puts a stress on the value of institutions. But it is important to note that egalitarianism has been melted into the sphere of the governing philosophy and ideology in Chinese history. Hjellum argues that fatalism can also be included in one of the Chinese ways of life, and fatalism, egalitarianism, and hierarchy are all embedded in order to confine individual autonomy. Hierarchy and egalitarianism in China have prioritized the group over the individuals insofar as fatalism dominates the individuals. It would be plausible to contend that there have been three dominant ways of life in traditional China, fatalism, hierarchy, and egalitarianism, which worked based on hierarchy.12 These arguments provide the evidence of the Chinese mode of the 11

Pye, Lucian W., The Mandarin and the Cadre-. China's Political Cultures (Ann Arbor: University of Michigan Press, 1988), pp. 37-50. Referred to by Thompson, Michael et al, Cultural Theory, pp. 227-228. 12 Hjellum, Torstein, "Is a Participant Culture Emerging in China?", in Kjeld Erik Brodsgaard and David Strand (eds.), Reconstructing Twentieth-Century China: State Control, Civil Society and National Identity (Oxford: Clarendon Press, 1998), p. 224.


public/private spheres prior to the communist regime from 1949, which were represented by the hierarchy-society duality. Regarding the analysis of the public and private spheres, the public sphere represents the spatial and institutional space where the party-state in China has been predominant although there is a spurt of environmental NGOs and other social associations since the 1990s. The reform policy since the late 1970s has induced private sector's active involvement in various business fields and the resurrection of market functions in the private sphere. In the Shanghai water sector, privatization began to come into being in the late 1990s. The masses, who were strictly controlled by the state in the pre-reform era, have started to be individualized in the reform era because of the withdrawal of the state in society and have become active participants in the private sphere. They now take an active part in divergent economic activities in the private sphere and become participants in forming social discourses including environmental protection and sustainable development. This transformation of society in contemporary Shanghai is shown well in Figures 3-2 and 3-3However, unlike the clear demarcation shown in the diagram, it is problematic to draw lines between public and private in contemporary Shanghai. Although the governmental capacity of control over society has withdrawn, the processes of devolution and marketization have provided new opportunities for the government and its subsidiaries to engage in economic activities as well as social "works. This implies continuous but indirect influence of the state on the private and the public sphere in new forms.13

The

Hierarchists

In the pre-reform period (1949-1978), the structure of Chinese society was dominated by the monolithic political system by the Chinese Communist Party. The state-society duality continued until the late 1970s to embrace all types of organizations, labor units and even 13

Mo, Ka-ho, Social and Political Development in Post-Reform China (Basingstoke: MacMillan, 2000), p. 189.

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Water and Development Private Sphere The Fatalists

in China

Public Sphere

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The Hierarchists

The Masses Rural Population

Nationalist Government

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Water And Development in China: The Political Economy of Shanghai Water Policy

Water And Development in China: The Political Economy of Shanghai Water Policy (Series on Contemporary China, Vol. 6)

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Water And Development in China: The Political Economy of Shanghai Water Policy