Massive quake rebuild holds key for China economy

ANXIAN, China (Reuters) -- In 80 seconds of shaking, China’s devastating earthquake earlier this year cut a swathe of death and destruction through remote hilly towns.

Women push wheel barrows loaded with gravel for building their new homes in Anxian County, Sichuan province December 15, 2008. REUTERS/Simon Rabinovitch

In a recovery that will take years, the whole country’s prosperity is at stake.

Quake reconstruction is a central plank of the government’s stimulus plan for the ailing Chinese economy, set to take one-quarter of Beijing’s promised 4 trillion yuan ($580 billion) spending boost and to create millions of sorely needed jobs.

Already, the disaster zone has been transformed into a vast, manic construction site, a trail of bricks, steel and cement coursing through its heart, those made homeless hammering away to reverse their fate and entrepreneurs from far-flung corners of the country attracted by the whiff of profit in calamity.

“I’ve been doing this job for about 20 years and I’ve never seen things so busy,” said Zhao Renjun, bending steel girders into shape on a construction site in Anxian county, part of the huge area rocked by the May 12 earthquake that killed more than 80,000 people in China’s southwest.

“I haven’t had time to fix my own house. I’ve been so busy working for others,” he said.

A partial list of needs includes 4.5 million homes, 51,000 kms (31,690 miles) of roads and 5,500 kms (3,418 miles) of railways -- enough to occupy at least some of the 20 million people who could lose jobs in China’s once-humming export factories hit by the global slowdown.

The feverish activity inspires confidence about the financial muscle of the state and the vigor of the economy that it is trying to nurse back to health, but it also carries warning signs of the corruption, waste and unforeseen complications that are already dogging China’s economic plans.


“Because everyone is building, prices for materials have shot up,” said Liu Siyin, 34, taking a break from hauling buckets of cement on a shoulder pole at his quake-damaged home.

“We can’t buy everything we need now and we might have to stop building for a while,” he said. “We really wish the government could control prices.”

Liu had just started laying bricks for the second-floor wall of his house up a treacherous mountain road.

Only half joking, he said fast-inflating material costs would neutralize his 50,000 yuan interest-free loan from the government for rebuilding. Bricks and cement from local vendors have trebled in price in just a few months.

Some local authorities, such as the city government in Mianyang, have vowed to crack down on price gouging.

However, a degree of price increases is exactly what the government wants. As with the stimulus package for the wider economy, Beijing is providing a huge pot of cash to kick off quake reconstruction but expects to lure private businesses into the fold, to have the investment momentum spread more widely.

A profit-chasing zeal has already been unleashed.

Piles of bricks, bundles of steel girders, wood boards and small concrete mixers -- all for sale -- line the narrow highways in the disaster zone, many in front of makeshift shops set up by entrepreneurs from Chongqing, a huge city 350 kms (217 miles) to the east.

Some have come from much further afield.

Tang Qinghua, a young energetic man with close-cropped hair, said his last job had been selling apartments in Shenzhen, the one-time boomtown across from Hong Kong where property prices have dropped by nearly 20 percent over the past year.

He and two friends now ply rutted back roads in a small van to drum up customers for their selection of tiles -- green, white and clay, glazed and unglazed, interior and exterior.

“People have no choice here. They have to rebuild. And we’re making a contribution, helping them out,” Tang said.


Glimpses of a darker side to the reconstruction effort have come through in official reports.

Any country in the world that throws so much cash at disaster recovery, when urgency overwhelms usual budgetary checks and balances, must contend with mismanagement and outright theft.

China, which has long struggled to rein in corruption, is no exception. Small, isolated cases have been publicized so far.

A national audit found that a half-dozen villages had improperly spent subsidies meant for quake victims, or demanded illegal reconstruction fees. An investigation in Chongqing concluded that a hospital had sold donated medicine for profit.

A little more than one month after the quake, the National Bureau of Corruption Prevention said it had already received more than 1,000 complaints from the public and punished 43 officials.

Aid agencies lavished praise on China for mobilizing rescue workers just minutes after the 7.9 magnitude quake reduced homes, schools and offices to rubble. It was China’s worst earthquake in three decades.

The planning and oversight required in the next three years, during which the government has pledged to spend 1 trillion yuan on rebuilding, may prove more vexing.

“There has to be a process. We want it to be fast but not too fast, not too rushed,” said Tan Li, Communist Party secretary of Mianyang. “Things have to be well built, to proper standards.”

Getting it right in the quake zone is a critical part of China’s bigger plan for reviving its economy.

The torrent of investment flowing toward reconstruction and the country’s interior more broadly should transform inland provinces into China’s growth engine in 2009, as the coastal factories that have long propelled the country struggle, Standard Chartered Bank economists say.

But among the cranes and steamrollers, brick layers and steel workers now busily rebuilding, there is one place that is completely silent. The jagged buildings and boulder-strewn roads at the epicenter of the earthquake in Beichuan are untouched, preserved as an open-air memorial to the tens of thousands who died that May afternoon when the earth shook so violently.

Editing by Megan Goldin