Workshop on China’s role in Southeast Asia

The research programme “Variegated Dragon: Territorialization and Civilising Mission in Southeast Asia,” funded by the Thailand Research Fund, held its first workshop, entitled “China’s Rise: Perspectives from the Mekong Region,” in Kunming on 8-9 January, hosted by the Nationalities Research Institute of  Yunnan University. The programme, led by Yos Santasombat, looks at the impact of Chinese investment and migration in Thailand, Burma, Laos, and Cambodia.

For me, the most informative talk was by Nguyen Van Chinh, entitled “The Social and Political Dimensions of China’s Economic Role in Vietnam.” He said that Chinese FDI inVietnam was up 74% in 2010, but with less than $2 billion it was only the number 14 investor (Korea was no. 1). Most of this is small-scale investment in manufacturing, typically under $100,000 per item. This investment has been shifting from the south to the border zones, which have poorer infrastructure (and are thus less suitable for large investments) but are close to China.

However, EPC (engineering procurement contracts) do not figure among FDI but in trade figures. The volume of EPC contracts is much higher, easily around $2 bn each, and are funded as usual by a mixture of soft and commercial loans from policy and commercial banks.

This highlights the problems with data: are EPC part of trade, investment, or aid? In the beginning of the China-in-Africa buzz, Chinese aid was criticized by the West as being thinly disguised investment; but what we now see is that it is often the other way around. Of course, the Chinese government has always made it clear that what it does is for mutual benefit, which is why such criticism has always been perplexing. But it is also obvious from recent moves by SASAC, the state assets adminstration, that it wants to make state enterprises more accountable for the economic consequences of their investments overseas, whereas parent ministries that have spawned the companies (like the ministry of transport or water conservation or mining) and the Central Organisation Department of the Party, which promotes leaders of state enterprises, are more concerned with the size of deals. (See the discussion on the recent fiasco of the Mecca light railway in the News section.)

Finally, Chinh said that Vietnamese officials — presumably, again, only some of them — see the increase of Chinese FDI and EPCs as potentially more of a problem than a solution, because of the harm they can do to domestic industries and the dependence they create. He noted that Vietnamese online forums that discuss these problems are blocked in China.

In Laos, China is the number 2 investor, with $3.68 bn approved. But the confusion in data was clear here as well: while Chinh’s data said that Cambodia received the most Chinese investment, above Vietnam and then Laos, Touch Siphat, from Cambodia’s Ministry of Rural Development, cited CDC data that say China invested around $686 million in Cambodia in the first ten months of 2010, and that this was significantly higher than during the same period in 2009. In other words, there is a difference in an order of magnitude, which should give anyone pause. Touch also said, though, that Korea was the number one investor in Cambodia.

Chinh further noted that EPC contractors tend to renegotiate tender conditions so that they are held to Chinese rather than international standards, which causes a deterioration in safety: recently there was a deadly explosion at a Haiphong thermal power station project.

The lack of dialogue between Chinese and foreign scholars that one sees so often at such events was in evidence here too, although some students did ask questions. Academics from Yunnan University played the role of hosts, but their contribution to the discussion was largely defensive.

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