Chinese Investment: Boon or Bane for Southeast Asia?

This post is part of our International Relations & Security coverage.

Spontaneous protests against Myanmar’s power blackouts received news coverage in May 2012 because the government seldom permits anti-government activities. Even more significant were the protests that took place in front of the Chinese embassy in Yangon, Myanmar's capital.
Protesters came together to raise their voice against the government's decision to sell Myanmar’s limited energy reserves to China. Below is a comment from the Facebook page of Eleven Media Group [my], one of the largest private media organizations in Myanmar, which echoed the sentiment of many consumers in Myanmar:

70% of electricity supplied to Yangon is from Law Pi Ta and Ye Ywar hydro-powered stations, that from the Shwe Li station goes to China, so there is a shortage of electricity in Yangon. Why? Go and cut China's power!

Protest against electricity shortages around City Hall, Yangon. Image from Facebook page of CJMyanmar.

Protest against electricity shortages around City Hall, Yangon. Image from Facebook page of CJMyanmar.

China has been trading with Southeast Asian countries for centuries. However, several years of spectacular economic growth in China has pushed it to become a leading investor in the region. Malaysia is set to become China's third biggest trading partner after Japan and South Korea.
In the last 15 years, China has poured $8.8 billion USD of investments into Cambodia making it the largest investor in the country. China also surpassed Thailand and Vietnam as the biggest investor in Laos last year.
Chinese capital is behind several large scale investments in hydropower, mining, timber, agriculture, transportation, and infrastructure in the region. These investments are generally welcome, 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 is also an issue of survival and human rights for the thousands of ordinary residents who have been displaced by Chinese-funded development projects.

China-Backed Mega Dam

Ayeyarwaddy River, Myanmar. Photo from Flickr page of DamienHR used under CC license Attribution-ShareAlike 2.0 Generic (CC BY-SA 2.0).

Ayeyarwaddy River, Myanmar. Photo from Flickr page of DamienHR used under CC license Attribution-ShareAlike 2.0 Generic (CC BY-SA 2.0).

Last year, the Myanmar civilian government suspended a China-backed mega dam project along the Irrawaddy River, after a citizen movement opposed its construction because it would have led to the eviction of thousands of villagers. It was perhaps the first time that the junta-anointed government positively responded to a civil society petition.
This comment [my] from a Myanmar netizen on the news website was a common reaction in the country, after the announcement of the cancellation of the project:

I wholeheartedly thank Mr. President for making the courageous decision to fulfil the public's wishes, despite its impact on the long term energy needs of China, which protects Myanmar in the Security Council of the UN; and the legal repercussions of voiding contracts that have already been signed.

Cambodia land issues

Cambodian farmers have also been raising objections to a mini Chinese take-over of their lands. According to the Cambodian Center for Human Rights, the Cambodian government has 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.

Land disputes often lead to militarization in Cambodia. Photo from Licadho.

Land disputes often lead to militarization in Cambodia. Photo from Licadho.

In this article, Journalist Alex Watts explores why China is the preferred investor for the Cambodian government:

Because the way things are going, you’re soon going to need a Chinese visa to visit Cambodia with all the huge tracts of land being sold off to Asia’s ever-voracious powerhouse.

Some activists warn that the way things are going most of Cambodia’s national parks and wildlife sanctuaries could soon be sold off to Chinese investors.
They point out how China is a favourite with the Cambodian government because it’s the country’s biggest investor and source of foreign aid, and is less demanding than Western nations when it comes to trifling matters like human rights and villagers being kicked out of their homes.

Investments in Philippines

Meanwhile, notable Chinese investments in the Philippines have been tainted by accusations of corruption. The proposed National Broadband Network and Northrail projects have been cancelled by the government after it was exposed that bribes were paid by Chinese firms to get the backing of Philippine officials. Even the former president of the Philippines government has been accused of receiving kickbacks for supporting the mega deals.

Chinese firm ZTE was embroiled in a corruption scandal in the Philippines

Chinese firm ZTE was embroiled in a corruption scandal in the Philippines

Another controversial deal which was exposed by a Philippine senator, involves leasing of the country’s prime agricultural land to Chinese firms. The senator raised constitutional and sovereignty issues opposing the agreement.
Filipinos initially cheered the cancellation of the overpriced and anomalous projects, but the issue has also affected the inflow of Chinese investment to the country. Blogger Bong Mendoza is worried about the impact it could have on the relationship between the two countries:

Philippines-China relations must be at one of its lowest points ever. Even during the height of the Mischief Reef crisis (1995-1997), economic ties were growing and there was minimal effect on warm people-to-people linkages.
Now the value of economic cooperation with China has been questioned due to perceptions that it has been pursued through corrupt practices (e.g. NBN-ZTE, Northrail)

There is no doubt that 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. China should not treat Southeast Asia as another market to dominate but an old trading partner with unique customs, traditions, and political systems.
In short, China’s money can transform poor villages into prosperous communities but it can also be used to destroy the environment, violate citizen rights, and worsen corruption in the region. China’s failure to recognize the impact of its investments might compel Southeast Asians to seek other investors.

ISN logoThis post and its translations to Spanish, Arabic and French were commissioned by the International Security Network (ISN) as part of a partnership to seek out citizen voices on international relations and security issues worldwide. This post was first published on the ISN blog, see similar stories here.

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