Source: IPS

By Antoaneta Bezlova

BEIJING, 4 January 2010 - As China moves up in the world and the need for investment in its own infrastructure declines, Chinese investors and financiers are eyeing lucrative contracts in less developed countries, winning bids to build dams, power plants and highways from Burma to Uzbekistan and Angola.

However welcome by local governments this influx of fresh Chinese financing may be, the wave of cheap Chinese labour and investors’ lack of concern for local communities are creating ripples of resentment in recipient countries, and gradually becoming a PR problem for image-conscious Beijing.

When economic historian Qin Hui recently gave a talk on China’s involvement in infrastructure projects in South-east Asia, he described Chinese investors as the new "Westerners" in Laos and Cambodia.

Speaking in Kunming – the centre of much Chinese investment flowing into the Mekong region – Qin said Chinese companies have a tendency to apply the lowest standards they possibly can. "Some companies look to see whether local standards are lower than Chinese standards – if so, they apply local standards," Qin said.

This has created a lot of complaints about Chinese companies’ wrongdoings, agrees Zhang Xizhen of the School for International Studies at Beijing University. "There are multiple reasons for this: some Chinese companies only focus on profits and have little concern about local peoples’ benefits. On the other hand, the Chinese government has not taken strict measures to check companies’ behaviour but has only encouraged them to 'go out.’"

While some of the companies that operate in Asia are small and obscure private enterprises, the most important players come from the state-owned sector – they are big, powerful and enjoy strong support from the government and the state banks.

In the first ten months of 2009, Chinese companies completed overseas projects worth 58 billion U.S. dollars, an increase of 33 percent over the same period in 2008, according to data from the commerce ministry.

Flush with cash and backed by an economic "going-out" government strategy, Chinese companies are more daring than ever when contemplating projects in risk places like Burma or Sudan. But the backlash against Chinese investors in some countries like Zambia and even ideological allies such as Vietnam are now sounding alarm bells in Beijing and making policymakers question the behaviour of its state champions abroad.

In Zambia, where China is mining cobalt, the deaths of several local workers in an accident in a Chinese factory in 2006 led to riots and more fatalities. After Chinese investment became an issue in Zambia’s presidential elections, Chinese president Hu Jintao was advised against visiting the country’s copper mines during his state visit to the country in 2007.

In Vietnam, where the communist party rules unrivalled in much the same way as in China, the state leaders have come under fire for undermining the country’s sovereignty by giving Chinese companies too many contracts to mine valuable natural resources.

In a stunning outcome for Hanoi, the environmental lobby and dissidents were joined by the venerated statesman and general Vo Nguyen Giap. The general, who once took his lessons in Marxism and guerilla warfare from Chinese communist leaders, has written several open letters calling on party leaders to scale down Chinese companies’ infiltration of Vietnam.

All these developments have been a matter of concern for Beijing for some time, and observers say Chinese leaders have responded to mend the country’s image and prevent another rise of "China threat" propaganda – particularly in South-east Asia, which Beijing regards as its backyard.

The development of the Mekong water resources in the region has emerged as one of the most sensitive issues between China and its downstream neighbours. China has built three hydroelectric dams on the Mekong (known as the Lancang in China) and is halfway through a fourth at Xiaowan, in the southern Yunnan province. What is more, Chinese investors are involved in scores of hydropower projects in Laos, Cambodia and Burma.

According to Qin Hui, of the 34 planned hydropower projects in Laos, roughly 40 percent are being developed with Chinese investment, while all of the 20 plants planned to be constructed in Burma are being built by Chinese companies.

For the complete article, please see IPS.