With little in the way of force projection, China’s dependence on natural resources in unstable parts of the world could undercut its economic ambitions. There are limits to freeriding.
The seizure of 29 Chinese workers by Sudanese rebels in the southern part of Sudan last week exposed one of the most vulnerable links in China’s ambitious plan for extending its economic influence abroad. To be sure, this isn’t the first time workers sent by China to dangerous regions were kidnapped or harmed. Five years ago, three Chinese engineers were murdered by a militant group in Pakistan. When civil war broke out in Libya nearly a year ago, Beijing had to dispatch a fleet of ships and airplanes to evacuate more than 30,000 Chinese workers from the country.
Despite the release of the workers this week, such incidents – and there will be many similar ones in the future – raise several important questions about China’s strategy of “going out” in general, and its quest for natural resources in particular.
The motivations for Beijing to expand its economic reach across the globe are easy to understand. The Chinese economy is resource-intensive and depends on secure access to energy, minerals, and other commodities to sustain its growth. Unfortunately, the geopolitics and economics of natural resources are tricky. Most of them are located in unstable or war-torn countries, with poor infrastructure, corrupt governments, and intractable ethnic conflict. The global markets for natural resources are notoriously volatile and frequently go through boom-bust cycles. Worse still, as a late-comer to the scene, the low-hanging fruits have already been picked by entrenched and powerful Western multinationals, such as Exxon, Shell, BP, Rio Tinto, BHP, and the likes, which have established seemingly unchallengeable advantages in technology, capital, and risk management.
Faced with such a strategic landscape in the competition for natural resources, China has long concluded that it will risk letting its economic security held hostage by the vagaries of the market and the entrenched Western giants if it doesn’t make a concerted all-out effort to gain direct access to strategic natural resources. The policy and actions flowing from this strategic assessment in the past decade are easy to see: China has become the world’s most aggressive player in competing for access to natural resources. It has tied its foreign aid program to gaining concessions on exploiting natural resources. Its state-owned companies, supported by access to cheap (if not free) credit from Chinese banks, often outbid foreign competitors in securing contracts and exploration rights. It is willing to take excessive financial and security risks and encourages its companies to venture into areas, such as Sudan, Zimbabwe, and Congo, where their Western rivals don’t dare to tread.
But in executing this strategy, the Chinese have found themselves facing a fundamental dilemma: it’s a rising power with global economic interests, but no global power projection capabilities to protect these interests.
On most occasions, to be sure, China can free-ride on the security provided by the West, especially the United States. For example, with the U.S. Navy patrolling the sea lanes and keeping a close watch on conflict-prone areas, China gains free protection. One of the most illustrative cases is China’s $3 billion investment in an Afghan copper mine, which is protected by the U.S. Army.
Photo Credit: Chinese Foreign Ministry