Is China a Bad Investor?
Image Credit: Marc Veraart

Is China a Bad Investor?


Last month, thousands of Burmese residents took to the streets to complain about the daily blackouts that have plagued the country’s big urban centers. But aside from criticizing the ineptitude of their officials, the protesters also linked the power supply shortage to China’s massive purchase of the country’s energy resources. A spontaneous protest took place in front of the Chinese embassy, where residents expressed outrage over the government’s decision to sell energy reserves to China’s manufacturing hubs while many Burmese are living in the dark.

The protest is quite similar to the rise of a citizen movement that opposed the construction of a China-backed mega dam along the Irrawaddy River last year. Thousands of villagers resisted the project because their homes will be demolished. Because of the popular appeal of the movement, the government was forced to suspend the project. It was perhaps the first time that the junta-anointed government responded positively to a civil society petition. China, of course, frowned upon the decision

The protests in Burma reflect the rising economic ties between China and its neighbors in Southeast Asia on the one hand, and the uneven consequences of China’s investments on the other. After years of spectacular economic growth, China has more than enough resources at its disposal to massively invest in many countries. Chinese capital is behind many of the region’s several large scale investments in hydropower, mining, timber, agriculture, and infrastructure.

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China has been Southeast Asia’s key trading partner for several centuries. This isn’t surprising as China shares land borders with Indochina. In recent years, it has become a leading investor in the region. It is, in some senses, the new Japan.

These investments are generally welcomed because of the jobs they create and their positive impact on local economies. But opposition to China’s aggressive economic expansion in the region has also emerged. The negative reaction is partly fueled by nationalist motives as local tycoons reject foreign competition. But it’s also an issue of survival and human rights for the thousands of ordinary residents who have been displaced by Chinese-funded development projects.

For example, Cambodian farmers have been complaining over a de facto Chinese “invasion” of their lands. According to the Cambodian Center for Human Rights, the Cambodian government granted 4,615,745 hectares in concessions to 107 Chinese-owned firms since 1994. Of that total, 3,374,328 hectares were forest concessions, 973,101 hectares were economic land concessions and 268,316 hectares were mining concessions.

Chinese firms are also accused of violating local laws, in particular the bribing of top officials in many countries. In the Philippines, Chinese investments on IT and railways have been cancelled by the government after it was revealed that bribes were paid by Chinese firms to secure political approval.

The emergence of China as a global economic powerhouse brings tremendous benefits to its cash-strapped neighbors in Southeast Asia. But as China expands its economic clout, it must be ready to account for the varying consequences of its actions. Many Southeast Asians feel that their countries are being treated as just another market to dominate and exploit by China, even though the region has been a reliable trading partner and neighbor for many centuries.

Indeed, while China’s economic resources can transform poor villages into prosperous communities, it can also be used to destroy the environment, violate rights, and worsen corruption in the region. China shouldn’t only wisely choose its investments – it must also respect the different customs, traditions, and political systems of its neighbors. Otherwise, Southeast Asians might decide to close their doors to their rich neighbor and seek other, more responsible, investors.

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