The United States, China and Yumiko Kojima, Kyoko Murai, Howard Pang, and Elena Vitale The Three Gorges Dam project on China’s Yangzi River is the world’s largest hydroelectric undertaking. While Chinese leaders say the dam will improve river navigation, prevent periodic flooding, and provide the needed electricity for China’s growing economy, many doubt that the dam will be able to meet the proponents’ claims and instead point to evidence of environmental catastrophe if it is built. Under pressure from NGOs, the Clinton Administration has opposed the provision of competitive export financing for the dam. This decision sparked criticism from U.S. executives who argue that by not participating the United States is losing jobs and the opportunity to mitigate the negative aspects of the dam. This paper argues that the U.S. position was justified. As part of a consistent and credible environmental policy to promote sustainable development, the United States should integrate environmental guidelines into its commercial diplomacy. U.S. policy towards China should provide support for prudent environmental policies as well as environmental technology transfers, both to foster environmentalism and advance U.S. commercial interests. Introduction Construction of the Three Gorges Dam on China’s Yangzi River began in earnest in late November 1997, perhaps marking the end of almost 15 years of debate on the project among American policymakers. However, the case highlights a key dilemma in U.S. foreign policy-making that is likely to remain for years to come: how to balance U.S. commercial interests with environmental concerns. Though lauded by environmentalists, the Export-Import (Ex-Im) Bank’s decision not to provide financing for U.S. equipment suppliers vying for dam-related contracts has been criticized roundly by American corporations. They claim the policy hampers their efforts to break in...
