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Title: The developmental impact of China's investment in South America's extractive industries
Other Titles: Zhongguo yu nan Mei Zhou cai kuang chan ye de tou zi dui dang di fa zhan de ying xiang
Authors: Gonzalez Vicente, Ruben
Department: Department of Asian and International Studies
Degree: Master of Philosophy
Issue Date: 2009
Publisher: City University of Hong Kong
Subjects: Mineral industries -- Social aspects -- South America.
Investments, Chinese -- South America.
Notes: CityU Call Number: HD9506.A2 G66 2009
228 leaves : col. ill. 30 cm.
Thesis (M.Phil.)--City University of Hong Kong, 2009.
Includes bibliographical references (leaves 201-228)
Type: thesis
Abstract: This thesis examines the developmental impact of Chinese state-owned enterprises’ (SOEs) increasing engagement in the South American extractive sector since the 1990s. To do so, it addresses two questions: i) how much room for independent developmental planning do China’s foreign policy aims and Chinese SOEs’ on-the-ground behaviors leave at the national levels? ii) how do Chinese mining and oil SOEs impact development at the places where resources are extracted? The thesis contains two case studies of Chinese extractive firms in South America based on fieldwork carried out in Peru and Ecuador at the end of 2008. At the national level, as China’s engagement in South America increases overtime, its foreign policy approach of non-intervention in sovereign affairs may bring about changes to a region whose fate has been traditionally determined by its dependent relations with North America and Europe. I argue that China’s approach is not positive or negative per se, rather it empowers states to create indigenously tailored policies whose outcome is largely dependent on national governments’ capacities, leadership, as well as their ability and willingness to draw up long term developmental plans. Therefore, in terms of its political influence, China acts as a accommodating force that reinforces positive and negative internal trends rather than as a transformative force. Furthermore, Chinese state-owned companies’ behaviors respond to national and corporate interests, as their operations are both part of Beijing-funded “Going Out” strategy and of each company’s individual search for global competitiveness. As a result, Chinese SOEs firmly controlled (and substantially financed) by Beijing will tend to be more cooperative with host governments. Where SOEs lack economic incentives to comply with China’s foreign policy, relations with host government may be strained. Consequently, as long as China’s policy for South America remains non-interventionist, and Beijing continues to fund SOEs, cooperative attitudes are expected to persist. At the local level, Chinese SOEs’ behaviors are essentially similar to any other transnational extractive company, showing no genuine concern for the socio-economic organization or the environmental reality of the places where their operations take place. Hence, the local level conflicts in which Chinese companies have sometimes been involved can be adequately studied with mainstream theoretical approaches that address the social dynamics of resource extraction in developing countries. Two case studies are elaborated to illustrate these theoretical findings. Andes Petroleum Company Limited (a consortium formed by Sinopec and China’s National Petroleum Corporation) is an example of collaborative attitude with central government, as well as of typical conflicts between companies and indigenous populations at local level in Ecuador. Shougang Hierro Peru S.A.A. is an example of how companies with a high degree of independence from Beijing may not cooperate with governments when their business interests are at stake. At the local level, Shougang has had a significantly negative impact on development. Nonetheless, as China’s regional policy has been progressively drawn, and as Peru has increasingly democratized, Shougang’s developmental impact has began to show signs of improvement.
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