Defiant villagers flock back to ruins doomed by Three Gorges Dam

In the final countdown before the reservoir begins filling for the world's biggest hydropower project, the Three Gorges Dam, officials are hurrying to blow up the last houses and factories and evict the remaining residents.

In the final countdown before the reservoir begins filling for the world's biggest hydropower project, the Three Gorges Dam, officials are hurrying to blow up the last houses and factories and evict the remaining residents.

"We have to get everyone out by the end of the year," Liu Fuyen, head of the Chongqing resettlement bureau, says. In his province-sized territory, carved out of Sichuan province to govern the huge reservoir area, 550,000 people are supposed to have been resettled in new homes by today. By June 2003, the first turbines are to begin generating electricity.

But all along the 375-mile stretch of the Yangtze up to Chongqing city, thousands, perhaps tens of thousands have been refusing to leave. They are called "nail households" because they are holding tight to the houses or land they have claimed for generations.

In the small rural township of Ganqing in Zhongxian county which is to disappear, a crowd quickly gathers and starts shouting in anger and frustration when a foreigner arrives. "They will have to take us away in handcuffs," one old man says. "We haven't been given any compensation so how can we move?"

The local government has resettled some inhabitants in faraway Qingdao on the coast and built a new township 10 miles away on level ground, but no one is moving there. The villagers who suspect officials of having pocketed their money dare not stage group protests. A large police presence patrols the area, and those who tried to block roads or organise marches and sit-ins have quickly been surrounded by riot police.

In a dangerous game of chicken, many residents are hanging on, trying to force the government officials, under pressure to complete the resettlement plan early, to make them a last-minute offer.

"Everyone thinks they've been cheated," Hong Lijun, the owner of a restaurant in the river town of Fengjie, says. "The new housing costs two or three times as much as the old one." Mr Hong, his family and 300 fellow villagers were moved to Fujian province a year ago. There the authorities built a special Three Gorges migrants' village for them but he says there was no work because he could not speak the local dialect.

Instead he decided to return and reopen his roadside restaurant, which the water is due to inundate. All over the region, many of the 1,250,000 resettled out of the area have returned and are camping out, hoping to stay.

As Mr Hong's customers tuck into a plate of the daily special – stewed red pepper and pig's stomach lining – a sledgehammer swings into his neighbour's building and another slab crashes to the ground. No one pays any attention. The towns in the reservoir area look as if they have been carpet-bombed.

As in scenes from the Second World War, bands of scavengers wander like the homeless refugees amid the piles of grey bricks, stooping to pick up bits of wiring or wood.

Some scrap merchants specialise in iron and copper but others have collected doors or window frames, so the weary traveller climbs up from the ferry boats through a strange market of bric-a-brac, past half-ruined houses where the "nail households" linger on like crazed outcasts in some post-apocalypse movie.

High above, blocks of the new housing can be glimpsed, painted in breezy pastel colours. Although the new housing is a vast improvement on the old, most residents get 200 yuan (£15) per square metre but need to pay 600 yuan or 900 yuan per square metre in the much larger houses on offer. "We can't afford it because we have no jobs," another man says. More than 100,000 industrial jobs have disappeared in the past few years with 1,000 factories closed. Most inhabitants exist on the meagre monthly allowance of 200 yuan.

So far, there is little new investment despite the massive building programme of bridges, a railway, a motorway, airports and industrial zones. To create jobs, the central government is planning to turn the region into the world's biggest citrus-growing centre and build orange-juice bottling plants. The more immediate problem is grappling with a plague of rats. An avalanche of rodents is moving out too, sometimes following people to their new homes.

The land due to be submerged is being levelled but it is littered with decaying rubbish, the most visible part of the legacy of 178 waste dumps, 40,000 grave sites and three million tons of refuse.

The factories and cities in the reservoir area have been spewing so much filth into the Yangtze that the river water, a deep café latte colour, has long been undrinkable. All the river towns have had to pipe clean water from their own reservoirs far from the Yangtze.

Chinese environment officials say the millions of tons of garbage and industrial waste threaten to turn the Three Gorges reservoir into a cesspit. Although the government has set aside an extra £3bn to clean up the river, little seems to be happening.The riverbed is a toxic sludge of dangerous heavy metal, including mercury, cadmium and arsenic.

Officials say 1.2 million people will have been moved by the end of the 20-year project. Other experts claim the figure will be nearer 2 million.