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Broken Promises in Qinghai's Earthquake Zone

June 11, 2011

20 May 2011

By staff reporter Wang Xiaoqing

Caixin Online
Copyright 2011. Caixin Media Co., Ltd. All rights reserved.
Stalled projects are frustrating survivors of a 2010 earthquake and migrant laborers ready to help rebuild  (Yushu) – More than a year after a devastating earthquake ravaged this remote corner of southern Qinghai Province, Yushu Prefecture's long-distance bus station is buzzing.
More buses than ever are plying the dusty route between the mountainous prefecture and the provincial capital Xining, and yet demand for passenger tickets still exceeds supply.
The travel buzz, however, is somewhat deceiving. About half the bus riders are construction workers streaming into Yushu from across the country. The other half are leavingYushu in frustration after failing to find work.
"Fools are coming, fools are going," said a longtime Yushu construction boss who's been watching the parade.
Those "fools" include laborers and work crew bosses from around China who, in ignorance, pinned hopes on grabbing a piece of a 31.6 billion yuan pie – the amount earmarked by the central government for residential rebuilding and infrastructure redevelopment in the wake of the quake.
A master plan approved by the State Council last year called for rebuilding 29,289 housing units in Yushu's urban area and 31,008 homes for peasants and herding families in rural areas over a three-year period. Word spread across China that Yushu was hiring.
The master plan called for maximizing government resources and closely scrutinizing expenditures through a model administered by the central government. State-owned enterprises were handed contracts and given responsibility for hiring sub-contractors. Local governments were to handle most of the final spending.
New housing complexes would account for the bulk of the contracts in the affected region, which includes seven counties and 27 towns with a combined population of nearly 247,000. The government agreed to fully subsidize 80 square-meter homes for each household, as well as public works facilities.
But as many of the bus-riding laborers and bosses can attest, the project has so far failed to live up to expectations. Conflicting interests emerged, local government officials balked at central government plans, and inefficiencies marred the administrative process.
April 14 marked the anniversary of the temblor, which killed more than 2,000 people, and the beginning of the reconstruction project's biggest year. The 2011 outlay is expected to be larger than next and last year's combined, exceeding 25.5 billion yuan. But the target may be missed by a long shot.
In the prefecture town of Jiegu, only a handful of residential projects had gotten under way as of late April, and local infrastructure construction had screeched to a halt.
Jiegu's streets were filled with wandering construction workers and idle equipment. Meanwhile, townspeople who lost homes in the disaster were still living in tents with neither electricity nor running water.
Bottlenecks It hasn't helped that, given the harsh local environment, the construction season is only about five months long in Yushu. The prefecture is located on the northern Tibetan Plateau, and elevations can exceed 4,000 meters. It's a place with long winters, day-night temperature extremes, early frosts and thin air.
"Some of our projects have had to be suspended" because of the tough conditions, said Feng Xiaoli, Communist Party secretary at the headquarters for earthquake reconstruction.
But people and institutions, not the weather, shoulder most of the blame for project delays.
The central government's plan put the Beijing Municipality and Liaoning Province governments in charge of the Yushu reconstruction push, with the actual building work spearheaded by four, state-owned enterprises.
Meanwhile, local governments were to commission the China Academy of Urban Planning and Design to draw up design and construction schedules. Based on these schedules, construction companies were to draft blueprints for each project.
Then, according to the plan, Yushu-area local government construction committees and affected residents were supposed to discuss the plans and decide which to approve. After they agreed on a housing blueprint, they could sign a building agreement with a construction company, which is then in charge of hiring laborers to get the ball rolling.
The bottleneck has been at local government levels, where many officials have decided to bargain for more than new water pipes and housing. A chief demand is for permission to expand government-controlled land reserves. Bigger reserves would give them a base for raising future fiscal revenues by leasing land to property developers.
But in the process of expanding land stocks, the scope of each reconstruction project has grown. In the process, tasks related to winning local approvals for construction plans have not only grown but also slowed to a crawl.
"While meeting the demands of the resettlement" of earthquake victims "we also want to leave land reserves for future use," explained Wang Lianbang, section chief of the YushuConstruction Bureau.
Moreover, local government officials are finding it difficult to wade through the enormous expenditures slated for the rebuilding effort. Prior to the earthquake, the Yushugovernment's annual income was only about 50 million yuan.
Central government funds are being allocated to the Qinghai provincial government, which in turn passes on the money to prefecture and county finance agencies. Delays for project approvals, which typically take about six months, have pushed back the entire construction process. Even projects that started last year have been handicapped. Another problem is that local governments and construction companies under the SOEs sometimes do not trust one another. For example, the two sides have disagreed over project costs.
Since cost estimates are critical to project feasibility reports, cost disputes have delayed construction start-ups.
Caixin learned that the Qinghai government estimated the average cost of new housing in the province's quake-hit cities and towns at 1,850 yuan per square meter. In rural areas, the standard is 1,670 yuan per square meter. Wang said the Qinghai government based its standards on of professional estimates.
But builders argue their costs are far higher. One SOE, Beijing Construction Engineering, pegged the average price tag at more than 4,000 yuan per square meter.
One Yushu builder, however, told Caixin that the 1,850 yuan per square meter is enough, and that SOE estimates are based on the costs of extra layers of subcontractors and crew bosses.
Feng told Caixin that local governments have asked for permission to accelerate the construction work. But on the other hand, he said, they've failed to allocate necessary funds because planning procedures are incomplete.
A project affecting several towns that would add several hundred housing units began in 2010 but is now at a standstill. Officials won't let work resume until planning procedures are complete.
Wang says the approval process, although slow, is reasonable and must be followed. "Approval procedures still need to be done according to national regulations and cannot be done illegally," he said. "Even if I agreed" to sidestep the rules "the National Audit Office would not agree." Mirroring the frustration is the experience of a worker surnamed Luo from Sichuan Province's Meishan County who asked his boss, contractor Lui Dewang, to tell him when he could expected their work in Yushu to start. It was the morning of April 28, and Luo had been in Yushu, idle, for 20 days.
Liu could not give a clear answer. So, in response, several angry workers Luo beat him.
Liu's employer is the labor services firm Qinghai Hongxing Co., which won contracts to provide about 3,000 workers for projects on agendas at railroad builder China Railway Erju and the utility China Water.
A spokesman for Hongxing explained the bottleneck: "Final plans for reconstruction units still haven't been made," he said. "They can't get the blueprints." Meanwhile, Liu's work crew is costing the firm money. During the 20-day wait, the cost of daily living, travel and tents for the 100 workers he brought to Yushu exceeded 100,000 yuan.
New Model    The Yushu effort stands in sharp contrast to the government's rebuilding initiative launched after the 2008 Wenchuan earthquake in Sichuan Province. At that time, the central government ordered provincial and municipal governments around the nation to contribute funds and directly hire construction companies.   "In Sichuan we could still made money in reconstruction," said Feng. "Here, we can't even achieve the 'break even, small profit' situation promised by the State Council. We're losing money." To overcome cost obstacles, local government may start asking for more funds so they can meet contractor demands.
"Right now, no one really knows out how much construction Yushu really needs," said Wang.    A source close to the Yushu government told Caixin that local governments have often set higher-than-necessary requirements for construction projects as a ruse to obtain more funds through the central government's master plan. Some of the money winds up in local government coffers.
But several sources among building companies said contractors hope government financial agencies or the State-owned Assets Supervision and Administration Commission will make adjustments that boost available funds for reconstruction.
Without more money, builders may cut corners. "Some contractors are unwilling" to complete a project at the low prices offered by local governments," said a sub-contractor. "Some clear out, others stay. But cost-cutting is inevitable." Left out of the equation, it seems, are disheartened Yushu residents. They survived the earthquake but continue to wait for the homes they were promised. Meanwhile, government officials and builders butt heads, labor crews wait for work, and contractors cut corners.
In Jiegu, local residents were shocked to discover that one of the only housing projects under way in April had to be stopped due to quality problems. A foundation that was supposed to be at least 1.2 meters deep had been dug to around 60 centimeters. Moreover, steel rebar for the homes was too thin for safety in a quake zone.
"I don't know how to build a home that can resist a level-eight earthquake," said one resident, "but we could build a better home than this ourselves."2
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