How will China react to lost investments?
A couple of posts have appeared in a thread on the war in Afghanistan, but raise questions and issues that IMHO need their own thread.
There is to my knowledge little history of China losing overseas investments, partly as it has exported people, not capital. Other nations have considerable history of losing investments, notably post-1945 either in giving up colonies or nationalisation of assets and quite a few small wars have ensued.
Last edited by davidbfpo; 10-02-2011 at 09:53 AM. Reason: Text copied to start of the thread
davidbfpo
What interests me is less how China will respond to a "lost" investment than how they will respond to a threatened one. Suppose a government that the Chinese have purchased is threatened by social discontent and/or insurgency, with a significant anti-Chinese sentiment, possibly demands for nationalization of industries or land. Suppose the opposition or insurgents start looking likely to win. Do the Chinese go in with FID/COIN? If that doesn't work, do they commit forces? We all know that these things have a way of starting small and growing out of control.
There's no way to know what will happen, and the Chinese response will of course depend on the country involved and how critical the threatened investments are perceived as being... but I could very easily see the Chinese getting involved in something like that eventually.
I do not think they've discovered some magic method of exploiting the developing world without resistance. I suspect that their model has held up because it's relatively new and hasn't had time to generate a backlash... yet.
“The whole aim of practical politics is to keep the populace alarmed (and hence clamorous to be led to safety) by menacing it with an endless series of hobgoblins, all of them imaginary”
H.L. Mencken
A smart Chinese reaction would be if the central government cracks down on companies / managers who don't behave well.
The first crisis with an African investment should be (in their interest) the long-awaited opportunity to show that you're a good partner in times of crisis.
It's in China's best interest to resolve the issue in a win-win fashion or at least make sure there's not much the African government in question can complain about in regard to PRC government behaviour in the crisis.
Playing dumb and take the big stick from the drawer means to lose further investment opportunities, and that's not compatible with their intents.
Given how China has behaved in Tibet what are the chances they will choose the smart way (as you describe) in countries like Zambia?Originally Posted by Fuchs
Rather good.
Tibet is in their opinion theirs, not a foreign power with whom to have relations.
This is the same with Russia, which can crack down brutally on Chechnya and at the same time negotiate with the West on treaties.
The Chinese Central government of the last 20 years has exhibited a pattern; they give actors a lot of freedom (corporations, for example), but they punish hardly those who hurt its power or national interest (such as mass executions of corrupt officials).
Besides, they cannot reasonably expect to gain anything with a heavy handed approach. The more heavy-handed, the more opposition they'll get from the West (Europe still has influence on the black continent) and the more will other developing country governments resist Chinese influence.
I doubt that the possible loss of an investment in one country will provoke China to do something irrational, since they are adapt at calculating risk versus gain. Over time I suspect they'll simply adjust their policies to the point (and not beyond) that their activity will be tolerated by the foreign partner, just as many Western countries have done.
A couple of issues of interest that I didn't see in this discussion yet is that Africa as a whole has become a "Great Game" arena for both India and China, and both are aggressive in their efforts to gain access to needed raw materials, and both have a long history of engagement in Africa, so the competition is shaped by that history and emerging dynamics. In some ways this could play out like the Cold War for African nations if they tend to align with one country or the other.
Another issue is China's apparently unique approach of sending hundreds to thousands of Chinese to build and run their development projects in other countries, such as dams, power plants, and other large infrastructure programs. Not unlike the thousands of Chinese who mitigrated to the U.S. to help build our railroads, but this time they're state sponsored. I'm curious on your thoughts about why they do this? Is it to relieve pressure on the homefront (jobs, population pressure, etc.), or do you think they have a longer term goal of spreading Chinese culture and influence globally? If so, to what end? If this back fires, and multiple nations tell these Chinese expats to return home, could China effectively reintegrate them into their society, or would this lead to instability?
China has plenty of challenges, and while someday in the future they may be an enemy, they are are far from being 10 feet tall. Now they are a strong economic competitor, but even in that regard their methods for competing seem pretty vulnerable to me. If you only look at China from the military perspective you can create an inaccurate picture of their strengths and vulnerabilities, and as Robert Kaplan noted in this book "Monsoon" we tend to view the world based on our map biases. You can't understand China or India without understanding their activities in Africa and the rest of the globe, and you can't understand Africa by just looking at Africa. You'll miss too many big trends that are shaping these areas if you look at them in isolation which the military often does.
A couple of articles on China's foreign aid if you're interested:
http://news.xinhuanet.com/english201...31102329_4.htm
Sounds like the first couple of sentences could have been written by George Washington.The Chinese people adhere to the social system and path of development chosen by themselves and will never allow any external forces to interfere in China's internal affairs. China promotes friendly and cooperative relations with all the other countries on the basis of the Five Principles of Peaceful Coexistence. It does not form alliance with any other country or group of countries, nor does it use social system or ideology as a yardstick to determine what kind of relations it should have with other countries. China respects the right of the people of other countries to independently choose their own social system and path of development, and does not interfere in other countries' internal affairs. It is opposed to the practices of the big bullying the small and the strong oppressing the weak, and to hegemonism and power politics. China calls for settling disputes and conflicts through talks and consultation and by seeking common ground while putting aside differences. It does not impose its own will upon others and acts in the fundamental interests of the Chinese people and the common interests of all peoples throughout the world. China bases its decision on a particular issue according to its merits. Upholding justice, China plays an active and constructive role in international affairs.
http://www.guardian.co.uk/global-dev...-policy-report
A lot more at the link, to include a link to their white paper on foreign aid.While Chinese involvement in large-scale industrial and infrastructure projects abroad has attracted considerable attention, the report says that industrial aid in particular has decreased in importance since the 1980s, when many developing countries turned to the private sector to finance industrial projects and Beijing began to shift its priorities.
More recently, "China has been increasing its aid for agriculture and grain production in particular", says the report. The white paper also emphasises Beijing's interest in technical training programmes, highlighting that Chinese aid in 2009 paid for 1,324 medical professionals to work at 130 institutions in 57 developing countries, and for 11,185 scholarships to foreign students studying in China.
That may well be correct but that does not make it true.
and like China in Tibet they are allowed to get away with it because of some trade off. They know and exploit the fact that certainly with the US everything... and I mean everything is negotiable.This is the same with Russia, which can crack down brutally on Chechnya and at the same time negotiate with the West on treaties.
They have an agenda and they are sticking to it (see the quote in post #5 above). In addition to massive bribery as the leading edge of their so called 'investment' in Africa they are dumping peasants (being workers from completed projects) by the tens of thousands.The Chinese Central government of the last 20 years has exhibited a pattern; they give actors a lot of freedom (corporations, for example), but they punish hardly those who hurt its power or national interest (such as mass executions of corrupt officials).
Besides, they cannot reasonably expect to gain anything with a heavy handed approach. The more heavy-handed, the more opposition they'll get from the West (Europe still has influence on the black continent) and the more will other developing country governments resist Chinese influence.
I am not sure one needs to water down the threat to underdeveloped countries from the Chinese but it would be more intelligent to monitor what they are doing on the basis of the old Chinese strategy being "death by a thousand cuts".
Do not for a moment think that they believe that African labour is anywhere near capable of allowing agriculture, mining and associated industries to reach maximum potential. There is nothing they would like more than for the locals to refuse to work on the mines and agricultural projects that they now effectively own. A briefcase or two of US$ shared out to the local ministry of immigration officials and very soon there will (like in Zambia) be no accurate records of Chinese nationals resident in the country.
So really there is no competition because how do you compete when the market has been bought and effectively closed to outsiders.
Would that include something like, say, this incident?
http://www.nytimes.com/2011/04/05/wo...mbia.html?_r=1
“The whole aim of practical politics is to keep the populace alarmed (and hence clamorous to be led to safety) by menacing it with an endless series of hobgoblins, all of them imaginary”
H.L. Mencken
Well from that incident the Gemstone and Allied Workers Union of Zambia will not be organising any protest marches at the Collum Coal Mine anytime soon now that they know the Chinese bosses are armed and prepared to use them.
Maybe they'll get some guns and shoot back, which is what you or I would likely do under the same circumstances.
It seems they've taken another step first: electing a government that's promised to be less inclined to roll over and do what the Chinese want. If that doesn't work, picking up guns and shooting back seems a reasonable next step. Shooting the workers has rarely produced long-term labor peace.
Overall, I see little evidence to suggest that the enlightened scenario proposed by Fuchs is emerging on the ground, or is likely to emerge.
“The whole aim of practical politics is to keep the populace alarmed (and hence clamorous to be led to safety) by menacing it with an endless series of hobgoblins, all of them imaginary”
H.L. Mencken
That would be an interesting issue.
And it would be real callous of the Zambian Govt to not act if their citizens are killed.
I saw a BBC programme which shows that Zambians are not too comfortable with the Chinese.
But then, I may have missed something.
Last edited by Ray; 10-10-2011 at 06:03 PM.
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