Water conservancy facilities in China have been constructed as public welfare undertakings since the founding of New China in 1949. They include facilities and undertaking for hydropower-generating, water-supplying, reservoir fish raising and multi-purpose businesses to raise efficiency in flood control, prevention of water logging, irrigation and water and soil preservation.
The construction of water conservancy facilities is a huge undertaking that has been carried out systematically in China. In different periods, China has stipulated various principles for the construction of such facilities. In the period from the founding of New China in 1949 to 1957, the principles underlying the construction of the Haihe River water conservancy facilities were to repair and rebuild the water conservancy works left over from old China, prevent flooding and water logging of land, develop farmland water conservancy works and harness the river in its middle and lower reaches and increase the efficiency in controlling small floods. The period from 1958 to 1975 was a period of overall harness of the river. After the big flood of Haihe River in 1963, Chairman Mao Zedong said that Haihe River must be harnessed. The state put forward the principle of storing floodwater in the upper reaches, dredging the middle reaches and discharging floodwater into the lower reaches. After 1976, the policy of readjustments, consolidation, reform and improvements was implemented. In 1983 a principle of strengthening management and paying attention to economic results was advocated. The construction of water conservancy facilities was put at the top of the agenda of basic and capital construction work in 1995. At the National Water Conservancy Work Conference held in 1996 Premier Li Peng pointed out that the construction of water conservancy facilities had become an important issue in the country's economic and social development as well as in people's daily life. It is also an important strategic measure in terms of future development.
The general principle is that the central government will harness bigger rivers and the local governments will be responsible for the management of small rivers and lakes in their localities. The responsibility for the control of floods in cities lies with local governments, and local people should take care of small local floods. In April 1997, with the approval of the State Council, funds for the construction of water conservancy facilities were allocated and put into use. The funds come from two sources: the central government and local governments. Those from the central government are used for the construction and maintenance of the key projects which are of vital importance to national, economic and social development, while the local funds are used for the control of city floods as well as for harnessing medium and small rivers and lakes and for the construction and maintenance of small water conservancy projects. Funds for major water conservancy projects across provinces and for the protection projects on the rivers across country borders will come from both central and local governments.
The development of an economy based on China's water resources began with the comprehensive management of the water conservancy. As early as in 1978, the former Ministry of Water Resources and Hydropower had proposed that all administrative units of water conservancy should develop an all-round business operation on the basis that safety and efficiency are ensured. This was a milestone in the management of water resources in China. In the 1980s the ministry reaffirmed that an all-round business operation of water resources was important for the development of water conservancy industry. The scope of the business operation was expanded in the 1990s, and a water resource economy was proposed.
The water resource industry began to introduce an enterprising management in 1995 with the aim of establishing a "pyramid structure" with less administrative and institutional departments and more enterprises. The new water resource industry is composed of enterprises at three levels. First, to establish or reform the state-owned enterprising groups belonging to the central government of provincial governments, as well as the holding companies of professional water conservancy, to make investments in the projects that the government wants to have a share or have the majority of the share to ensure or increase their value. Second, to establish some economic entities based on key projects on river deltas in order to develop a comprehensive water resource industry covering hydropower generating, water-supplying and aquatic production. Third, to give decision-making power to small water conservancy projects for a better use of water resources. In 1995, the Ministry of Water Resources selected 100 water conservancy projects as experimental units for establishing a modern enterprise system. In December 1997, the State Commission of Planning promulgated the Policies on the Water Resources Industry, China's first statute in which industrial policies have been applied to the infrastructure.
In June 1995, China had 130,000 enterprises or economic entities in its water resource industry, of which 4,200 were registered enterprises.
By June 1996, China had 84,000 large, medium-size and small reservoirs with a combined storage capacity of 470 billion cubic meters. They were able to supply 540 billion cubic meters of water to towns and countryside and irrigate 4.7 billion hectares of farmland. Water resource departments had built and were operating 46,000 large, medium-size and small hydropower stations with a total installed generating capacity of 20.23 million KW and an annual electricity generation of 67 billion KWH. Fish production in reservoirs had also been developed and the annual output reached 815,000 tons. The total income from the comprehensive management of water resources topped 51.36 billion yuan.
In 1997 the area under effective irrigation was increased by 1.21 million hectares, the area under water saving irrigation systems was increased by 1.23 million hectares, and a total of 10 billion cubic meters of water was saved.
In 1998, a total of 450,000 projects destroyed by floods were repaired, 30,000 km of dikes were strengthened, and 47,000 km of river courses were dredged. The year also witnessed an increase of 50,000 km in the treatment of soil erosion and an increase of 1.1 million hectares of effectively irrigated area.
Opening to the Outside World
The cooperation in the water resource industry between China and other countries and regions began with the Lubuge Project in the 1980s. The Xiaolangdi Project on the Yellow River used 1.1 billion US dollars in loans from the World Bank, the largest foreign loan in China. By 1998 China had formed cooperation with 40 countries in the water resource industry, joined more than 40 international organizations concerned with water resources and absorbed a total of 4 billion US dollars of foreign investment in water resource projects.