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Using recovery

Using recovery to enhance resilience: Exceeding expectations in Sichuan Province 

When the magnitude 8.0 earthquake struck southwestern China on 12 May 2008 the impact – particularly in Wenchuan County where the quake was centered – was devastating. The disaster directly affected more than 47 million people and left more than 85,000 people either missing or dead.

The toll on physical assets was equally severe. Approximately 34,000 kilometers of highway, more than 1,200 reservoirs, almost 7,500 schools and more than 11,000 hospitals and clinics were significantly damaged or destroyed1, as were more than 5.5 million rural and 860,000 urban homes.


Following the disaster, China’s government jumped into action with a pledge to spend more than RMB1 trillion (around USD150 billion) within three years to completely rebuild ravaged quake areas. This funding included investments in waterways, highways, schools and hospitals. The World Bank also assisted in the post-disaster reconstruction by providing funding and advisory support as part of the Wenchuan Earthquake Recovery Project (2009 to 2014).2

Focusing on resilience in recovery

Under the Wenchuan Earthquake Reconstruction Master Plan outlined by China's State Council, the central and local government decided to not just rebuild Sichuan, but to focus on creating stronger and more robust infrastructure within the province, while also enforcing higher safety standards on every project.


Activity immediately began at the epicenter of the crisis – Wenchuan – which is a medium sized county of around 100,000 people. The county lost almost everything to the earthquake: waterways, phones and internet lines, homes, schools, hospitals, bridges and highways. In the immediate aftermath, just trying to leave the area proved almost impossible.


As efforts to rebuild a stronger, more resilient community continued locally within Wenchuan, activity started to pick up pace within the larger cities and provinces impacted by the event. Other – more wealthy – regions pitched in, with Guangdong and Shanghai donating significant funds towards the reconstruction effort and providing professional workers and builders who lent their skills to developing stronger and more effective infrastructure.


The impact of the program on the affected region has been amazing. In just three years, travel time from Wenchuan to Chengdu (the provincial capital) fell from half a day to just one hour as a result of newly connected and rebuilt highways. Right across the region, scenic riverside roads, new schools and modern hospitals have been meticulously rebuilt.

Maintaining a focus on foreign direct investment

While the Wenchuan Earthquake (as it is commonly referred to in China), inflicted heavy losses to Sichuan, the province's productive capabilities, cultural heritage and economic potential avoided any permanent damage.


Many areas within Sichuan have not only been able to construct more efficient infrastructure, but have also become significant tourist attractions that preserve the area's unique ethnic culture famous around the world for embroideries, buildings, unique religions and places of worship, customs, languages and festive celebrations.3


Many of the cities within Sichuan province have also continued to keenly promote the advantages of southwest China to the rest of the world. In particular, Chengdu led the way by continuing the development of technology parks and reinforcing the strong business advantages of the region including relatively low rent, personnel and utilities costs, as well as a friendly enterprise culture for foreign businesses.


According to Jacky Muk, KPMG China's Senior Partner in Chengdu, "The past five years have seen enormous efforts from all government levels, people, and businesses in Sichuan to not only rebuild the physical infrastructure and the province's image as an attractive investment destination, but also to help those in the quake zone who survived the disaster and assist the general population to recover to a level that I did not imagine was possible at the time.

Hosting the world in Sichuan

Clearly, the combination of more resilient infrastructure and a keen focus on attracting foreign investment is paying off. In the immediate aftermath of the quake, many foreign businesses – such as Dell, Unilever, Intel, Amazon and Carrefour – responded by making donations and hefty capital investments into infrastructure and other plant property and equipment facilities in the province; a particularly notable achievement for the province given the earthquake came at a time when most global business operations were either flat or contracting on a global level.


Significant private sector investment has gone into making the province more productive. In 2009, for example, Intel invested an additional USD75 million in Chengdu and officially announced that the company’s west China distribution center would be located in the Chengdu Hi-Tech Industrial Development Zone. The company also declared its intention to integrate its assembly and testing facilities in the city.


Unilever is another fantastic example of a company that invested in the province. Immediately following the quake, Unilever donated USD2 million, which went directly to the rebuilding of elementary and middle schools in the hardest hit areas around Chengdu. By the end of this year, the company also expects to complete construction of its new USD45 million laundry detergent plant in Chengdu.

Wenchuan wins accolades

At the sixth annual Global Forum on Human Settlements held in New York in 2011, Wenchuan County was recognized for their great achievements and honored with the award for the ‘World’s Best Implementation of Post-Disaster Reconstruction’.4 The award recognizes not only how disaster relief was planned and executed, but also what resources were utilized and how the town’s culture was preserved.


From its blueprint and plan through to the design and implementation, the post-earthquake recovery and reconstruction effort is now widely viewed as a ‘leading practice’5 and offers the world a valuable example of post-disaster reconstruction. In particular, the plan’s focus on ecologically-friendly and low-carbon concepts within the reconstruction projects is often noted for the way it integrated with people’s lives.


In June 2013 Chengdu hosted the Fortune Global Forum, further reinforcing the importance of the province to the global business community. As Jacky Muk noted following the event, "The inland western regions of China and, in particular the populous regions of Sichuan and neighboring Chongqing, are critical to China's overall growth plans. I look forward with optimism to seeing how the investment that is flowing strongly today will enhance the development of China's western region over the next five to ten years."


*Special thanks to Robert Ritacca (Research Manager, KPMG Global China Practice) for contributions to this article


1 http://www.shihang.org/zh/news/feature/2012/12/04/supporting-post-earthquake-recovery-in-china
2 http://www.shihang.org/zh/news/feature/2012/12/04/supporting-post-earthquake-recovery-in-china
3 http://www.chinadaily.com.cn/cndy/2013-05/11/content_16491875.htm
4 http://english.people.com.cn/90001/90776/90882/7361749.html
5 http://7ibb.com/viewthread.php?tid=875&extra=&page=7

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