By Minxin Pei
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
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Liang1a
I have posted many replies to posts addressed to me. But they seem to have all disappeared. Come on, Diplomat, why all these censorships? They contain no foul language only facts and figures about the amount of iron ore imported by China, the population increases in Tibet, number of people killed in American Civil War, etc. Why does Diplomat find these truths intolerable?
Jason
I believe the diplomat is about the discussion of theories, not the discussion of proofs.
a_canadian_observer
I think guys like John Chan, ari, applesauce, liang1a etc. work for the Westpac to smear china. Ever since they appeared on this blog, decent people have been drawn together and away from them and china.
79
Date Time stamp a_canadian_observer
February 10, 2012 at 3:22 am
Hmmmm? I wonder where in the world it could be 2/10 and 3:22am when it is 2/9 and 2:33pm EST…..boy that’s a mystery….
ari
Michael’s comments are fair but looking at the history of the Anglo-American West and their government’s penchant for self-interests, greed, aggression, invasion and conquest, it behoves all non Western countries to build up a strong military to defend their homeland.
Beijing had always declared its intention as peaceful but it seems the West, led by Washington prefers to lent a deaf ear to that and continue its malicious attacks on China via its medias, words and actions of its politicians, economic protectionist moves, attempted financial subvertion and control, endeavours to create emnity between China and neighbouring countries, sales of huge amounts of arms to China’s neighbours, live military drills, undermining China’s sovereignty over historical territories .. and so forth.
Peace is only won, it seems by a strong military that can be both defensive and offensive at the same time. Beijing must have learnt by now that had it been more offensive in its defence, it could had prevented itself from being invaded and conquered. The history of the world would had been different had the Chinese been military taken a higher posture in the past.
Today, Washington is the “barbarian” at Beijing’s gates.
John Chan
Western culture is an extension of Roman Empire, the way Romans obliterated and demolished Carthage is the standard way for the Western culture to deal competitors and opponents. Carthage will be China’s sample if it cannot defend itself.
Lung Sha Shou
Chinese “culture” and behaviour is an extension of Mongol Empire, who conqured China and became absorbed into it. The way the Mongol’s used terror and threat to obliterate and demolished numerous cities and nation states is the standard way that China wished to behave against perceived competitors and opponents. Thje rest of the world will again be treated in this way if they don’t see China for what it REALLY is with some moral clarity and be ceratin that they can guarantee the complete obliteration of China many many times over, destroying all that they leaders cherish and care about.
In this way, the CCP may not start a war – remember the party considers its survival far more important than China’s. They would rather see China in ashes than it evolve per the people’s wishes into a system where anyone else had the power and the wealth.
The John Chan’s of this world are prepared to enslave or impoverish any number of Chinese or others to keep power in the hands of people who benefit his interests and those of the morally bankrupt party members. People who have no business affecting the lives of others
a_canadian_observer
@Lung Sha Shou: Very well said! You understand the CCP at the core.
aaron
“Beijing had always declared its intention as peaceful” – Yes, and I’m sure the 2,000+ ballistic missiles that China has pointed at Taiwan have a peaceful role as well; perhaps they really contain fireworks rather than warheads…
ari
This is a misleading counter-point by aaron. The situation between PRC and Taiwan is an unfinished civil war. It has nothing to do with China’s declaration of peaceful intention to the rest of the world. Next time please think before replying. Irrelevance and scoring cheap argument points does not go down well with the thinking readers.
a_canadian_observer
@ari: Claiming the illegal 9-dotted line, cutting cables, hasrash and fill VN + PH fishermen in their EEZ, having generals calling for nuclear war with the US and assimilation of VN are all actions of “peaceful rise”?
srp
The U.S. government provides almost no protection to its citizens and their investments abroad against the actions of foreign governments, foreign political movements, or foreign civil disorder (the sea lanes are a separate issue). We are long past the time of gunboat diplomacy, where the U.S. Navy might be called in enforce debt payments and the Marines deployed to protect endangered corporate personnel and property. American policy and practice is that private investors should assess and bear these risks on their own, without the implicit subsidy of taxpayer-supported military rescues. The logic of this policy, besides avoiding excessive military confrontations, is that investors internalize the security costs of their projects, thus preventing investments that would return less than their total cost (including security costs).
Since so much Chinese investment is carried out by State-controlled entities who aren’t incentivized to focus on risks and returns, the U.S. policy may be hard to implement. But given functioning world markets for most natural resources, there really isn’t anymore reason for China to desire direct ownership and physical control of overseas natural resources than there is,say, for Germany (to pick another export-oriented manufacturing nation).
Michael
In all its glorious history, China has never successfully extended its power very far beyond its own borders. In large part, this is because for a son or daughter of the Middle Kingdom, all that is truly worth having is right there. But it is also because China is a continental power without any history of power projection through seafaring. The West, whose history is so much more bloody and even barbarous, has been for centuries now outward-looking, for better and for worse. Western armies have fought on every continent. Indeed, as the author of this article points out, American power is devoted to keeping shipping lanes and international markets open for all, including the Chinese, and, whether they like that or not, the Chinese economy owes its vibrancy in large measure to the openness of world markets to their exports. The world is much different than it was during the Cultural Revolution when for a number of years the only Chinese embassy left open was, of all places, in Cairo. Now, if the Greeks default or there is a bad wheat harvest in Canada, there is a negative effect in China which is in this globalist predicament along with all the rest of us.
It is always dangerous to generalize from individuals to an entire society, but the Chinese friends I have made have impressed me as among the most practical and clear-sighted people I have known. In the long run, I believe that wisdom will prevail, and China will be able to understand that they are not a nation or a people apart, that theirs is a land that is neither the “sick man of Asia” nor some sort of superior country deserving of special consideration.
If, on the other hand, China’s leaders allow themselves to be drawn into some sort of semi-imperialist adventures beyond its borders, disaster awaits, for them and for all.
peterlam
To Michael
Very insight comment.
The Chinese people throughout history have a distate for wars and violent struggles. The whole Confucian culture is adverse to human adversities. The only time there were wars were either domestic conflct to overthrow a despotic Emperor or defense against nomadic invaders.
Yes, the Chinese social unit is primarily composed of the family in which the parents work and sacrifice to ensure that the next generation is better off. Having no descendants to take of forebears, past(ancestors) and present is the primal sins anyone can commit.
That was true through history. In the present day and age, with the one-child per family policy, imagine if body bags start coming home from military adventures dictated by government foreign policy. There would be social upheavals in magnitues beyond imagination. THIS IS CHINA’S ACHILLES HEEL!
No, China is anathema to foreign military adventures.
zzzzzz
Clearly, you know very little about Chinese history. There was probably more people killed by war in ancient China than the rest of the world combined at the time. There were many huge armies, and war was constant. Read a book.
ACT
well spoken.
Nam Nguyen
Well said.
It’s always puzzling me that the many Chinese friends I know are rather very practical and mind their own business and have no interest whatsoever in dominating others. They show great respect to others from different backgrounds. How THAT turns out the Chinese government of today (or 50 years ago) is beyond me.
That’s said, the people I have met are mostly in border towns and abroad, so I could be wrong. I have heard horrendous accounts of foreign expats who couldn’t manage Beijing for half a year or even people who come to adopt that couldn’t take just a few days.
ThatGuy
You ask how the Chinese government is what it is today based on what you just described. I think a few things explain it. First, in every society, the minority always end up affecting change for the majority. Even in the West, most people are generally apathetic and don’t care, choosing to stay out of the way. The American Revolution, the French Revolution- all these events were carried out by the minority. In other parts of the world, the Iranian revolution was also carried out by the minority, a minority of people roam around and terrorize the poor people of Burma, or did all the killing in Rwanda. The Chinese are no different. A minority of idealistic communists (useful idiots) rallied around Mao, and the end result was something like ten million killed before the revolution was over, and anywhere between an additional 40-90 million died because communism is such a miserable failure of an economic policy.
In ADDITION to all that, Chinese society, perhaps all or most Asian society, is more apt to accepting what happens and, for lack a better term, “going with the flow.” In the West, we complain, we riot, we rebel, we demand things we want. In Asian society, sure you have an occasional protest, but it’s not as mainstream to do so as it is here. And it appears that it’s usually inspired by people “thinking like Westerners.” At least that’s my understanding of the culture, admittedly not living in it. To sum up: Chinese culture is more primed for a tyrannical government because they are more willing to take orders. In the West, don’t tend to tolerate authority so much.
As for the foreign expats who couldn’t handle Beijing, I can tell you that Japanese culture, (and from what I understand of Chinese culture, they are similar minded in this,) considers itself superior to the rest of the world. They look down on other, dissimilar people far more than the politically correct West would ever allow someone to do openly without derisive criticism, marginalization and, ironically, intolerance.