According to Xinhua News Agency’s report on February 1, 2005, China General Environment Protection Bureau on January 18 announced that 30 projects in 13 provinces were illegal, with a total investment of 117.94 billion yuan (US$14.21 billion). This action evoked a huge number of responses statewide.

Xie Zhenhua, director of China General Environment Protection Bureau (CGEPB), stated on January 25, “In the past, we only investigated and punished the small, illegal projects, which were criticized by both the masses and our supervisors. However, this time we [exposed] 30 large-scale projects and we consequently enhanced our reputation within the public.” Chinese Premier Wen Jiabao fully supported this action. During the discussion about the Government Working Report, Wen pointed out that it was great that the CGEPB was targeting big projects and making real breakthroughs this time.

Three projects marked illegal during this action belong to China Three-Gorges Development General Company, which is commonly believed to be closely related to former Chinese premier Li Peng’s family. These three projects are the Jinsha River XiLuoDu Hydropower Station, the Three Gorges Underground Power Station and the Three Gorges Engineering Mains Power Station.

However, according to Oriental Morning Post, on February 2, the construction in the field was still taking place and all machines were under full-load operation until January 29, the 4th day after the CGEPB issued the administrative penalty notice. The report quoted from Li Yongan, general manager of China Three-Gorges Development General Company, Cao Guangjing and Yang Qing, vice general managers of China Three-Gorges Development General Company, indicating that the three projects are legal and should not be stopped.

However, Chen Shanrong, vice director of the Inspection Department for CGEPB, pointed out that the three projects of China Three-Gorges Development General Company were no doubt illegal in operation and violated the environmental protection law. The confrontation has gradually intensified.

Another two projects under China National Electric Power Group were also listed as illegal projects. They are the Ningxia Shizuishan Power Station double 330 Kilowatt Technology Upgrade Project and the Yunnan Xuanwei Power Station 7th-Stage double 330 Kilowatt Enlargement Project.

However, according to an insider who recently returned from the fields of the two projects, both projects are still under construction and there are no signs indicating that they will be shut down. One high-level official from China National Electric Power Group indicated that the company just did a slow down for show, and the whole project was moving forward as usual. This happened 12 days after the CGEPB began criticizing China’s power industry and is believed to be a subsequent action following The Three Gorge Projects’ public rebuttal.

Our source also stated that the 6th-stage project of the above-mentioned power station in Yunnan province had already started to generate electricity and the 7th-stage project would start operation soon. Other projects, including the Jiangsu Taicang Environmental Protection 4th-stage Project, the Xutang Power Station and the Ningxia Shizuishan Power Station, were recently listed illegal but still under construction. Some of them have already started to generate electricity.

Another high-ranking official from China National Electric Power Group affirmed that these projects are not illegal operations and therefore should not be stopped.

Observers question the executive decisions and efficiency of CGEPB’s action against the power industry in China. An official from the Jiangsu Development and Reform Committee pointed out that shutting down the undergoing projects would have an enormous negative effect on the power enterprises and at the same time would increase the loan risks for banks, which could potentially lead to a financial crisis. In addition, the power shortage in certain regions would also become worse.