Magazine Articles

Saving Shangri-La

June/July 2015

The former U.S. treasury secretary, Goldman Sachs CEO and Nature Conservancy board chair writes about kick-starting conservation in China in the 1990s and helping protect Yunnan’s Himalayan foothills.

I found myself increasingly drawn into efforts to preserve one of the most singularly beautiful areas in the world: Yunnan Province in the southwest part of the country. China, frankly, was the last place I had expected to find a wilderness of such spectacular biodiversity. Everywhere I went in the late 1990s, I could see—and smell and taste, for that matter—the horrific cost of China’s economic miracle. Not only was rapid industrial development fouling the air and water and threatening the health of citizens, but the country’s natural wonders were ill cared for and poorly protected, overrun by rapacious developers and hordes of littering tourists. It pained me to see this ecological disaster unfolding.

As it happened, The Nature Conservancy wanted to become more active in the Far East and China. But when I was asked to help jump-start the work of its Asia-Pacific Council, I was initially reluctant. Given the breakneck pace of development, I half joked that I doubted much would be left to preserve in the region before long. But I also questioned how effective the Conservancy could be, considering the weak regulatory environment and the indifference that I had observed firsthand.

My skepticism faded as I listened to a remarkable woman named Carol Fox, the Hawaii-based director of program development for the Conservancy’s Asia-Pacific programs, whose ambitious initiatives included protecting the forests and reefs of Indonesia and Palau. Carol had learned Mandarin while living some years before in Taiwan and in Hong Kong and was keen to bring the Conservancy’s expertise to the mainland. Carol described a project the Conservancy had been working on in northwestern Yunnan, in a remote area in the Himalayan foothills that many thought had inspired the mystical paradise of Shangri-La in James Hilton’s 1933 novel Lost Horizon. Carol was determined to involve the Conservancy in protecting the area’s extraordinary cultural and ecological diversity.

One of the most spectacular and biologically rich ecosystems in the world, the mountainous area of northwest Yunnan is home to the highest-elevation watersheds of four of Asia’s largest rivers—the Irrawaddy, the Salween, the Mekong and the Yangtze. The last three of these run parallel from north to south, through spectacular gorges, some plunging nearly 2 miles from peak to valley. At their closest point, the rivers are separated by fewer than 55 miles. Deep, fertile valleys help the region to shelter more than 20 percent of the country’s plant species and about one-third of its mammal and bird species, nearly a hundred of which, like the black-tufted, 2-foot-tall Yunnan snub-nosed monkey, are endangered.

The area’s diversity extends to its inhabitants. Some 90 percent of Chinese people belong to the Han ethnic group. They speak Mandarin or some variant of it and live in densely populated coastal or central regions. But the country claims 55 other ethnic groups, who live mainly in its vast and inhospitable border regions. Yunnan, with its mountainous terrain and porous borders, contains many minority groups that make up more than a third of its population. In the northwestern part of the province where the Conservancy was working, nearly 20 of these groups live in close proximity. Among them, Buddhist Tibetans herd yaks and build monasteries high on exposed mountainsides; animist Naxi, centered in Lijiang, boast a rich musical tradition and communicate with one of the world’s last picto-graphic written languages; the Lisu, who live in the upper reaches of the Salween River valley, are more closely related to people across the border in Myan-mar than they are to the Han.

Laojun Mountain Nature Reserve The Conservancy is helping to protect lands throughout China, including Thousand Turtle Mountain. © Scott Warren

Some of these areas had been set aside as nature reserves in the 1980s but suffered from weak pro-tection and poor enforcement. The Conservancy’s long-term goal was to identify the highest-priority sites for conservation. These would be turned into national parks that would adhere to international standards, generate revenue for local governments, and help to alleviate poverty by putting some tour-ism profits into the hands of the region’s ethnic minorities so they could make a living from pre-serving nature, not exploiting it.

I agreed to co-chair The Nature Conservancy’s Asia-Pacific Council, and in November 1997 [my wife] Wendy [who was then on the organization’s board of directors] and I represented the Conservancy at one of the country’s first environmental conferences, in Beijing. Yunnan Vice Governor Niu Shaoyao introduced what we called the Yunnan Great Rivers Project to the many Chinese government and business leaders present. I described how the Conservancy worked closely with the government and the private sector to solve problems through compromise and cooperation. The Conservancy’s nonconfrontational, science-based approach was ideal for China, which bridled reflexively at the reproaches of outsiders. The last thing the Chinese wanted to hear was a lecture from foreign industrial powers that, it could be argued, had polluted their way to power and were now proffering advice that might put obstacles in the path of China’s own progress.

I acknowledged that China’s headlong growth demanded that rough choices be made, but that a healthy economy did not have to be at odds with a healthy environment. Protecting the environment was good business. It was cheaper to prevent dam-age than to clean it up afterward. The Yunnan project leadership team began to take shape. Carol recruited Rose Niu, a Lijiang-born Naxi, to lead efforts on the ground. In early 1999 Edward Norton, a cofounder of the Grand Canyon Trust (and father of the actor), joined the team.

All conservation, like politics, is local. If local people don’t buy into a project, it won’t be successful. In the field, Conservancy staff used a comprehensive approach called Conservation by Design that brought together all stakeholders— state agency administrators, provincial and municipal officials, community members, and conservation interest groups like the Conservancy—to hash out the issues and develop a plan. The approach fit with the Chinese tradition of consensus decision making. Conservation by Design was used to identify sites for preservation and to develop strategies to reduce the threats to their biodiversity. Working with Chinese scientists and officials and gathering input from skilled American biologists and conservation experts, Conservancy staffers spent a year and a half collecting data on the region’s animals, plants and geographic features, as well as on social and economic conditions, in order to target specific areas for action.

Laohegou nature preserve 640x400
Laohegou Nature Reserve About the same size as the United States, China has four times the population. Still, its western provinces are home to many natural areas, such as Laohegou Nature Preserve in Sichuan. © Nick Hall

Though the Yunnan provincial and local government leaders had backed our project from the beginning, the Conservancy had to contend with rivalries and weak coordination among cen-tral government agencies. In the 1980s, China had created two kinds of protected spaces with national significance. “Scenic areas,” ranging from sections of the Great Wall to Tibetan villages in Sichuan, were developed for tourism and run, oddly enough, by the Ministry of Construction, whose idea of a park was, all too often, a patch of open land on which impressive buildings could be built. “Nature reserves,” by contrast, were administered by the State Forestry Administration, which kept a tighter rein on commercial activity. These restrictions, however, were often brushed aside.

In the spring of 1999, after a workshop in Lijiang, to discuss the future of northwest Yunnan, Conservancy and provincial officials drew up a blueprint that, among other things, called for setting aside a large swath of land for new nature reserves and national parks. The provincial government adopted the proposals. In the end the government would set aside nearly 26,000 square miles—an area just larger than West Virginia, or twice the size of Taiwan—for the Yunnan Great Rivers Project.

This success still left the Conservancy operating in a gray area—since we had yet to get official approval from Beijing. As always in China, that could be good or bad. On the one hand, the Conservancy had freedom to experiment. On the other hand, the project could be shut down at any point. Beijing distrusted nongovernmental organizations. Few were sanctioned in China at the time.

It made sense to get sign-off from the highest levels of the state. That meant arranging a meeting with President Jiang Zemin. The question was how to do that. Meetings with senior officials had to be sponsored by a state host. We decided to go through the State Environmental Protection Ad-ministration (SEPA). The wrinkle was that the environmental agency was not very powerful and lacked easy access to Jiang Zemin.

It’s a measure of just how cautiously Chinese officials operated that it would take three months and multiple trips by Conservancy staffers to Beijing before SEPA finally felt confident enough to ask to see the president. We met with Jiang Zemin at Zhongnahai in the first week of February 2002. All around us the capital was busily preparing for Chinese New Year festivities, with its noisy fireworks and train stations jammed with travelers heading home. But inside that leadership compound’s thick walls all was as serene and orderly as ever. At 4:00 p.m. we were ushered into an ornate meeting room and seated in a horseshoe of plush armchairs beneath an enormous ink landscape painting. I had brought along Carol Fox, Ed Norton and Rose Niu, as well as Goldman Sachs chief of staff John Rogers and Goldman’s head of China, Ziwang Xu. Among the Chinese attendees were State Environmental Protection Chief Xie Zhenhua and Yunnan Governor Xu Rongkai.

President Jiang looked as relaxed and friendly as ever, sporting a well-cut dark suit and his trademark square black-rimmed glasses. He got right to the point. “China needs to learn more about stock markets and global economic policies,” he told us. “I’d like to start off talking about those issues.”

Jiang quizzed me about financial topics, particularly the importance of equity markets to economic development. In his typically wry way, he quoted Sir Isaac Newton’s famous remark that he could grasp the movements of objects and celestial bodies but not those of stocks.

I explained that stock markets provided a means to invest China’s rapidly growing capital in the nation’s economic activity rather than leaving it in banks. During our colloquy I tried to shift the topic toward Yunnan and conservation, pointing out how a healthy economy and a healthy environment depended on each other, but Jiang kept his attention focused on capital markets for longer than I expected.

When I was done, the president gestured to the Chinese side of the horseshoe and told me we had better start talking about the environment, or SEPA administrator Xie and Governor Xu would become angry with him. So I spoke very briefly about The Nature Conservancy, which I called “the best conservation organization in the world,” and then I introduced Rose Niu, suggesting that she explain the Yunnan Great Rivers Project.

“I’m a simple Naxi girl from Lijiang,” Rose began, addressing Jiang directly, “and I was very nervous about my assignment of reporting our work in Yunnan to you. Then I heard you speak. Your hometown is right across the river from my husband’s, and I thought, gosh, you talk just like my father-in-law.”

It was a masterful opening, completely disarming, and from that moment, the diminutive Naxi woman, sitting on the edge of a big red chair, her feet barely touching the ground, was in absolute command of the room. Speaking without notes for perhaps 20 minutes, she gave an incisive, nuanced presentation, explaining what the Conservancy was doing in Yunnan and the importance of the Great Rivers Project, not just for the province but for China as a whole.

The president was riveted, listening intently, and leaning in close. He interrupted her at one point to ask how to pronounce a particular term of art in English, and then repeated aloud after her: “Conservation by Design, a very systematic and science-based approach.”

Jiang, being an engineer, likes systematic things.

When Rose was done, Jiang praised her effusively, commending the clarity and precision of her report. He asked her where she had learned her English and said he knew the Asian Institute of Technology, where she had studied. Then he turned again to his side of the room and declared: “All Chinese government officials concerned should work together with the Conservancy to make this project a success and take this model to all China.”

It was exactly what we were hoping to hear.

About the Author
Henry Paulson Jr. was CEO of Goldman Sachs from 1999 to 2006. An avid birder and conservationist, he chaired The Nature Conservancy’s board of directors from 2004 to 2006 and now leads the Latin America Conservation Council. He was the U.S. Treasury secretary from 2006 to 2009. He has since founded the Paulson Instititue, which, in part, aims to strengthen environmental policies in China and the United States.


About the Book
This article is adapted from Dealing with China: An Insider Unmasks the New Economic Superpower, published in April 2015 by Twelve Books. Reprinted with permission.