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Wednesday, Feb. 8, 2012

China faces rising risks as it looks overseas for resources


SINGAPORE — China's meteoric rise to become the world's second biggest economy and a global manufacturing center is sustained by ever-growing imports of raw materials and increasing investment abroad, often in under-developed countries shunned by the West for alleged human rights abuses or because they are considered too dangerous.

The investment has been accompanied by a wave of Chinese managers, technicians and workers, many employed by state-owned firms spearheading China's commercial expansion into Africa, Asia and Latin America. They seek promising foreign markets and access to resources that include oil, minerals and timber. These companies often bring their own laborers to do work that Western firms would usually hire local employees to perform.

With a population of over 1.3 billion, many of them still poor, China needs to provide as many jobs as possible for its citizens, at home and abroad. Beijing argues that to complete foreign projects efficiently, it must have a workforce that understands the Chinese language and is familiar with Chinese business practices.

Chinese companies had 812,000 employees overseas at the end of 2011, double the number in 2002. Most were laborers involved in construction, mining and other ventures, often in remote areas. Outbound Chinese investment, excluding the financial sector, amounted to $60 billion in 2011, about treble the figure three years earlier.

But the expansion has come at an increasingly heavy human cost. This was underscored by the recent capture of 54 Chinese citizens in Sudan and Egypt. It showed how Chinese are becoming sought-after targets by insurgents, criminal gangs and, potentially, terrorists — and how China has only limited power to protect its nationals and ensure their safe release.

The 25 Chinese seized last month on their way to work at a cement plant in Egypt's sparsely populated Sinai Peninsula were quickly freed. But the 29 Chinese hostages grabbed by rebels after attacking the camp of a Chinese road-building company in Sudan's oil-rich South Kordofan region proved more difficult to handle. The rebels evidently wanted to use the Chinese as leverage in their separatist struggle.

It prompted Beijing to put pressure on Sudan, which supplies about 5 percent of China's crude oil imports. Deputy Foreign Minister Xie Hangsheng said on Jan. 31 that China "attaches great importance to protecting nationals overseas" and was "deeply shocked" by the abduction. At the same time, China sent an interagency group to Sudan to help the Chinese embassy there try to secure the release of the Chinese. And in Sudan itself, a small group of Chinese private security contractors joined more than 1,000 Sudanese troops in the rescue effort.

China has made noninterference in the internal affairs of other countries a key part of its foreign policy. But China is being drawn deeper into turbulent Sudanese politics. Its entanglement that has intensified since South Sudan seceded from Sudan in July.

Nearly all the oil reserves of the former Sudan are in the South. But the export pipelines, built by China, run northward through Sudan. South Sudan recently stopped oil production after Sudan imposed a hefty transit fee. Oil from fields in newly independent South Sudan was being pumped mainly by three Asian state-controlled energy firms from China, Malaysia and India.

The hostage-taking in Sudan and Egypt were not isolated incidents. The Chinese business magazine Caixin listed 13 similar attacks against more than 100 Chinese citizens in 10 countries over the past five years, including Afghanistan, Cameroon, Columbia, Ethiopia, Myanmar, Pakistan, Nigeria, Thailand and Yemen, as well as Egypt and Sudan. Fourteen of the victims died.

As China's international presence and influence grows, calls are mounting at home for better protection of Chinese nationals abroad. Global Times, which is published by the ruling Communist Party's People's Daily and often voices nationalistic views, lamented last week that "China is not powerful enough at this time to protect every Chinese citizen scattered around the vast (African) continent."

China launched a rescue mission with ships and planes to evacuate nearly 36,000 of its citizens from Libya after civil war erupted there early last year. The Chinese military was closely involved in the rescue, which was widely praised at home.

In December, the Chinese border patrol force launched joint river patrols on the Mekong with its counterparts from Laos, Myanmar and Thailand following the killing of 13 Chinese crew members from two cargo vessels plying the Thai section of Southeast Asia's longest river.

China's military budget — officially put at $95 billion this year, second only to the United States — is modernizing the armed forces and increasing their ability to project power overseas. There have been calls in China for Chinese commandos to be sent to Sudan to emulate the recent rescue in Somalia of an American aid worker and a Danish colleague by U.S. special forces.

China's response to hostage-taking of its nationals will be closely watched by neighboring states in Asia. It would cause alarm if it involved establishing foreign bases and deploying the Chinese military. Protection of Chinese citizens overseas may become a pretext for faster and more extensive military expansion. From there, it may only be a short jump to a more assertive policy of protecting the millions of ethnic Chinese who are residents or citizens of countries in Southeast Asia and many other parts of the world.

However, there is no sign so far that China is moving in such a controversial direction. A more likely immediate outcome is tighter security arrangements by Chinese firms overseas and increasing use of ex-military personnel to guard vulnerable groups of Chinese.

Michael Richardson is a visiting senior research fellow at the Institute of Southeast Asian Studies in Singapore.


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