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Foreign Public Opinion Dogs Chinese Plans

China is famously resistant to lectures and harangues from foreign governments, but it is learning the hard way that making large investments abroad makes a country more vulnerable to foreign opinion.

Once you’ve made large fixed investments in another country — mines, dams, factories — you become hostage to the politics of those countries.  You don’t care what Zambia thinks about your foreign policy until you’ve bought a large mine there.  But once you’ve invested, Zambia has a thousand new tools with which to torture you: it can raise taxes on ore exports, put new tolls on the highways, raise tariffs on mining equipment, allow unions to organize — the possibilities are as limitless as the greed of a developing world kleptocracy seeking to cash in on the ‘resource curse’. (The name Zambia was chosen at random with no intention of disparaging the government of that happy land.)

China is learning the hard way how to deal with environmental regulations and political turmoil in countries where it makes big investments. China’s current (twelfth) five-year plan allocates trillions of dollars for development projects in foreign countries, but these projects have strings attached. As the FT reports:

Burma’s authoritarian government has suspended the construction of a $3.6bn Chinese-backed hydroelectric dam…

The government has come under increasing pressure in recent months over the potential environmental and social impact of the 6,000mw Myitsone dam in Kachin state, northern Burma, which was to be built by the state-owned China Power Investment Corporation.

There have been rare demonstrations in the country’s biggest city, Rangoon, against the dam, which would have flooded an area about the size of Singapore, and in an unprecedented move the government said on Friday that public opposition had swayed its decision on Friday.

Domestic public opinion in Burma or Pakistan or Sri Lanka matter to Chinese companies building dams or highways or ports. Officials in Beijing may not lose much sleep over the fate of rural Burmese displaced by dam construction, but Chinese development companies are certainly discovering that they can have a huge impact on business interests. As one analyst told the FT: “They have to deal with unfamiliar labor, environmental, tax, and other laws, local subcontractors and suppliers, and less friendly courts and regulators. It’s quite a different set of risk analyses.”

This will continue to happen to other Chinese foreign development projects, especially high-impact projects like the Myitsone dam. Political turmoil in places like Burma and Libya can drastically change the outlook for Chinese business interests, and those business interests can and will translate the foreign pressure on their operations into pressure on the Chinese foreign policy system.

As time goes on, China will become increasingly vulnerable to foreign pressure.  Becoming the workshop of the world isn’t as easy or as fun as it looks.  One of my undergraduate students comes from a country near China; I asked her how people in that country feel about China.  Her answer was, “We like China except when it is exploiting our resources.”

Did the Chinese steal those resources, I asked.  No, she said, but the politicians in her country stole the money the Chinese paid for the resources.  To her, and to many of her compatriots, China gets the blame for the corruption of local officials — just as protestors in Latin America hated the US companies who bought their resources more than the corrupt officials who sold them, just as people in Nigerian delta villages I’ve met blame the foreign oil companies more than the corrupt Nigerian officials.

Welcome to the big leagues, China.  The game is harder than it looks.

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  • Jim.

    How do you balance this point of view with the article on Wilsonian international politics that you wrote earlier?

    Is it naive to think that you can get away with ignoring world opinion (such as with the UN security council, or “the harangues from foreign governments”)? What distinctions would you draw between when times and places when it is, and times and places when it is not?

    How can we shape that balance point to the advantage of the United States and its citizens?

  • Kris

    “Did the Chinese steal those resources, I asked. No, she said, but the politicians in her country stole the money the Chinese paid for the resources.”

    Down with Chinese Imperialism and its running dogs!

  • Corlyss

    I want to know what we’re doing to get our share of those resources the Chinese are trying to monopolize. What the heck is a global power for if it doesn’t secure the interests of it’s people in access to needed resources, wherever they exist? To blazes with all this nonsense about imperialism. The powerful do what they will; the weak endure what they must!

  • Jennifer Doherty

    Interesting article about development induced displacement and resettlement in China.

    The World Bank estimates that forcible “development-induced displacement and resettlement” now affects 10 million people per year. According to the World Bank an estimated 33 million people have been displaced by development projects such as dams, urban development and irrigation canals in India alone.

    India is well ahead in this respect. A country with as many as over 3600 large dams within its belt can never be the exceptional case regarding displacement. The number of development induced displacement is higher than the conflict induced displacement in India. According to Bogumil Terminski an estimated more than 10 million people have been displaced by development each year.

    Athough the exact number of development-induced displaced people (DIDPs) is difficult to know, estimates are that in the last decade 90–100 million people have been displaced by urban, irrigation and power projects alone, with the number of people displaced by urban development becoming greater than those displaced by large infrastructure projects (such as dams). DIDPs outnumber refugees, with the added problem that their plight is often more concealed.

    This is what experts have termed “development-induced displacement.” According to Michael Cernea, a World Bank analyst, the causes of development-induced displacement include water supply (dams, reservoirs, irrigation); urban infrastructure; transportation (roads, highways, canals); energy (mining, power plants, oil exploration and extraction, pipelines); agricultural expansion; parks and forest reserves; and population redistribution schemes.

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