The Geoeconomics and Geopolitics of Chinese Development and Investment in Asia

Emily T. Yeh

• Publisher: Taylor & Francis
• Year: 2018
• Print ISBN: 9781138505612
• eBook ISBN: 9781351378963
• Edition: 1
• Topic: Social Sciences
• Subtopic: Ethnic Studies
• Index: Social Sciences

The recent launching of China's high profile Belt and Road Initiative and its founding of the Asian Infrastructure Investment Bank have underscored China's rapidly growing importance as a global player in development, diplomacy, and economic governance. To date, scholarship on "China abroad" has focused primarily on Africa and Latin America. In comparison, China's investment and development assistance among its neighbors in Asia have been understudied, despite the fact that China's aid and overseas investment remain concentrated in Asia, the countries of which have had complex and often fraught cultural and political relationships with China for more than a millennia.

Through case studies from Southeast Asia, South Asia, and Central Asia, this volume provides a targeted examination of the intertwined geoeconomics and geopolitics of China's investment and development in Asia. It provides in-depth and grounded analyses of nationalisms and state-making projects, as well as the material effects of China's "going out" strategy on livelihoods, economies, and politics. The volume contributes to understandings of what characterizes Chinese development, and pays attention to questions of elite agency, capitalist dynamics, state sovereignty, the politics of identity, and the reconfiguration of the Chinese state. The chapters in this article originally appeared in a special issue of Eurasian Geography and Economics.

Going West and Going Out: discourses, migrants, and models in Chinese development

Emily T. Yeh and Elizabeth Wharton

ABSTRACT

In 1999 China announced the launching of the Open up the West campaign, sometimes called “Going West,” to help western China finally catch up to the much wealthier eastern, coastal areas after several decades of lagging behind. The same year, China also announced a “Going Out” strategy to encourage Chinese investment abroad. The 15 years since then have witnessed dramatic Chinese government investment in various development activities in western regions of China, as well as around the world. Though rarely considered together, we argue that there are significant parallels in development discourse, the centrality of physical infrastructure, the characteristics of Chinese labor migration and the nature of migrant-local relations, and the application of “models from elsewhere” in Going West and Going Out. Considering these parallels can help shed light on Chinese development discourse and practice, as China becomes increasingly important in the field of development once dominated by Western countries. Finally, we also consider direct connections and convergences between the two strategies in China’s neighboring countries of Asia and in the One Belt One Road initiative.

Introduction

First suggested by Party Secretary Jiang Zemin in the early 1990s, China’s “Going Out” strategy (

) (zouchuqu zhanlüe) to expand the geographical reach of Chinese capital beyond its borders was officially adopted in 1999. It has been conceived of broadly as the second stage of China’s reforms, the first having been implemented throughout the 1980s to “invite the world in” through foreign investment and expertise, a strategy that made China a top destination for foreign direct investment (FDI). Since the announcement of “Going Out,” the government has explicitly encouraged firms to open up new markets, invest overseas, and develop global brand recognition through a range of bilateral and multilateral diplomatic and economic platforms to promote Chinese companies, facilitate access to credit, and simplify requirements to invest overseas. State-Owned Enterprises (SOEs) were explicitly encouraged to draw on both domestic and international resources to enhance competitiveness and establish overseas branches that would exploit comparative advantages and make headway into international markets (Murphy 2008). The strategy of boosting China’s emergence as a global economic player and producing globally competitive enterprises contributes to national pride and assuages a long history of perceived humiliation (Agnew 2012; Callahan 2009). At the same time, it was also launched as a means to cool off China’s overheating, investment-driven economy, diminish excess liquidity, and enable Chinese firms to face global competition. Indeed, the strategy was accelerated after the 2008 global financial crisis, as Chinese companies, particularly SOEs, rapidly expanded overseas (Liao and Zhang 2014).

Like the strategy of Going Out, “Open up the West” (

) (xibu dakaifa), sometimes translated as “Going West” or “Great Western Development,” was also first announced in 1999 and also conceived of as a second stage in the reform process, aimed at addressing uneven development and regional inequality. Since “Reform and Opening Up” in 1978, the “ladder step” strategy had conceptualized China’s eastern seaboard as its engine of growth, the region that would industrialize, modernize, and become wealthy first. By pivoting to the outside world, the coast would be positioned to import technologies that would then slowly diffuse westward. The 7th Five Year Plan (1986–1990) formally adopted different development paths for the eastern, central, and western parts of the country, assigning the center and the west the role of producing energy and raw materials for the advanced production of the coast (Fan 1995; Yang 1997). The strategy was successful in growing China’s economy and turning the coast into the “factory of the world” through export manufacturing, but it also revived severe regional inequality, with the regional distribution of industrial activity in the mid-1990s reverting back to what it had been before the founding of the People’s Republic of China (PRC) in 1949.

Open up the West in 1999 was the first major change in regional development strategy since 1978. Its stated premise was that China’s east had its turn to get rich, and it was now time for the west to receive its fair share of economic development. According to official announcements, the strategy would close the development gap and restore regional equality through investment in major infrastructure projects for communication, transportation, and power generation. In turn, this would establish the conditions necessary to attract private and foreign investment to link these places to the global economy.

The one and a half decades since the launching of Going West and Going Out have witnessed the Chinese Government becoming a significant investor in development activities both in western provinces of the PRC and around the world, including countries in Africa, Latin America, and the Asia-Pacific. However, little scholarship has considered Going West and Going Out in relation to each other. The former has been broadly understood as a project of state building and state incorporation. In contrast, China’s investment and aid beyond its territorial borders does not make sovereign claims to those territories, notwithstanding popular media discourses of “rogue aid” and neocolonialism (Naím 2009; for critique see Mawdsley 2008; Sautman and Yan 2008; Tan-Mullins, Mohan, and Power 2010). Nevertheless, the informal power relations that characterize Chinese economic engagement abroad constitute an externalization of the reach of the state, or what has been called “geogovernance” – governance projected over and acting at a distance across national borders (Carmody, Hampwaye, and Sakala 2012).

Recognizing that Going West and Going Out are two distinct projects, we argue that there is nevertheless utility in thinking about them together. Doing so can shed light on Chinese development approaches, as China becomes increasingly important in the field of development once dominated by the West. Coming two decades after Reform and Opening Up, Open up the West reflected ideas about development formed and honed through China’s experience in its eastern provinces. At the same time, China began presenting itself as having experience that might be useful to other would-be developers (while eschewing attempts to declare a “Chinese model” of development). Of course, China is only one actor in the newly emerging field of non-OECD South-South development and investment, which is rapidly transforming the entire global aid architecture. Other countries, including Brazil, India, South Africa, Turkey, and South Korea are also playing increasingly prominent roles, but the interaction between China and these other emerging development actors is beyond the scope of this paper (see Abdenur 2015; Carmody 2013; Kim and Lightfoot 2011; Woods 2008; Zimmermann and Smith 2011).

After a closer look at Going West and the relationship between Going Out and the emerging Chinese development role, we examine parallels in development discourse, the centrality of physical infrastructure, characteristics of Chinese labor migration, and the application of “models from elsewhere.” The last section turns to direct connections between the two strategies in China’s neighboring countries, particularly through the new One Belt One Road initiative, which arguably brings the two strategies together as a successor to both. In drawing out broad parallels between Going Out and Going West, we necessarily generalize and focus on patterns amidst diversity, recognizing that each country’s developmental trajectory is unique and has encountered different kinds of Chinese capital and businesses. Chinese migrants are also quite heterogeneous (González-Vicente 2013; Huynh, Park, and Chen 2010; Lee 2009; Mohan and Tan-Mullins 2009; Park and Huynh 2010; Smith 2012). Within China’s west, too, there is significant provincial-level diversity in development strategies and trajectories (Donaldson 2011; Fischer 2014b).

Our analysis of Going Out draws from multi-disciplinary research on Chinese development and investment in Africa, Latin America, Oceana, and Asia, but with an emphasis on Africa, the region of the second author’s research focus. In discussing Going West, we focus on the Tibet Autonomous Region (TAR) in order to draw on the first author’s research there and because the geopolitically fraught nature of its development, which is directly linked to the Chinese state’s efforts to further secure its territorial sovereignty, makes its analysis in relation to Going Out particularly relevant. Our goal is to provide a conceptual framework for understanding parallels and connections between Going West and Going Out as manifestations of Chinese development discourse and practice.

China’s west

The West that is the target of Going West occupies roughly 71% of the PRC’s land area but is home to only about 29% of its population (Figure 1). This is not the same Western region delineated by the 7th Five Year Plan (1986). By 2000, “the West” had been redefined as consisting of Xinjiang, Tibet, Ningxia, Inner Mongolia, and Guangxi Autonomous Regions; Chongqing municipality; and Qinghai, Gansu, Shaanxi, Sichuan, Yunnan, and Guizhou provinces. Among these, the Inner Mongolia Autonomous Region was previously included in the central region, and Guangxi in the eastern region. Also included are three autonomous prefectures of Hubei, Hunan, and Jilin provinces; Jilin’s Yanbian Korean Autonomous Region, which borders North Korea, is far to the east of Beijing. Thus, “the West” has been redefined less as a geographical space than as “a frontier region of poverty, ethnic minorities, and poor economic infrastructure” (Jeong 2015; Oakes 2007, 245). Indeed, it encompasses every inland border province of China, pointing to its importance to politics beyond PRC borders, particularly vis-a-vis populations of Tibetans, Mongolians, and Uyghurs abroad.

Figure 1. Xibu Dakaifa (Open up the West) Regions. Tibet and Xinjiang Autonomous Regions highlighted in gray. Source: Digital Cartography by Mark Henderson.

No single policy document summarizes Going West. Instead, it has been characterized as a “fragmented cluster of diverse agendas, sometimes competing but not necessarily contradictory” (Holbig 2004, 41). Going West has often been invoked in reference to projects and agendas that were already ongoing. Its most recognizable agenda is the building of large-scale infrastructure. Among the gargantuan projects built under its banner are the West-East natural gas transfer pipeline, the West-East electricity transfer project, the South-North Water Transfer Project, and the Qinghai-Tibet railway, which together are estimated to have cost over 90 billion USD. Despite its focus on “catching up” with the East, scholars have argued that the strategy was oriented more toward rent allocation than promoting the growth of competitive local enterprises (Jeong 2015; Shih 2004) and that the types of infrastructure projects emphasized did far more to extract resources from China’s west and send them cheaply to the industrial and wealthy east than to effectively develop the economy of western provinces (Oakes 2004).

Economic analyses of Going West more than a decade after its launch show that the program has not generally enabled the reduction of China’s widening regional disparities and that the west continued to fall behind the national average in most economic indicators (Grewal and Ahmed 2011). Infrastructure created new transportation and communication routes, but also many non-productive capital construction projects. Going West has been largely unsuccessful in attracting foreign investment, despite the encouragement of border provinces to garner foreign investment from neighboring countries in South-East Asia, Central Asia, Russia, and South Korea (Chung, Lai, and Joo 2009; Jeong 2015; Shih 2004). Domestic investment and the construction of domestic east-west linkages have been much more important and in some areas, such as Chengdu and Chongqing, there has been significant private capital investment. However, western development as a whole has been characterized by heavy subsidies and center-to-province fiscal transfers (Becquelin 2004; Fischer 2015; Grewal and Ahmed 2011).

Along with resource extraction and rent distribution, Open up the West has also been strongly associated with the reconsolidation and recentralization of state power and control (Goodman 2004; Oakes 2007; Yeh 2013). The inclusion of non(geographically) western regions populated by ethnic minorities indicates the importance of nation-building. In minority areas, the program has been implemented with goals of consolidating state integration, social “stability,” national security, and unity, marked in particular in Xinjiang and the TAR by increased Han Chinese in-migration (Becquelin 2004; Jeong 2015; Lai 2005). In the TAR, exceptional levels of subsidization compared even to other western provinces, the disassociation of these subsidies from the local productive economy, and externalized patterns of ownership have intensified dependency on the central state, thus deepening state incorporation (Fischer 2015).

Going West is not referenced in policy discourse as prominently today as it was in the first decade after 2000, though institutes dedicated to the study of developing the West remain active, for example, in Sichuan University and Zhejiang University, in the State Council Leading Small Group for Western Development, now led by Premier Li Keqiang, and the Department of Western Development under the National Development and Reform Commission.¹ In July 2010, central authorities announced a “new round” of Open up the West at a ...

Table of contents

• Cover
• Half Title
• Title
• Copyright
• Contents
• Citation Information
• Notes on Contributors
• Introduction: The geoeconomics and geopolitics of Chinese development and investment in Asia
• 1. Going West and Going Out: discourses, migrants, and models in Chinese development
• 2. Chinese engagement in Southeast Asian energy and mineral resources: motivations and outlook
• 3. Resource extraction and national anxieties: China’s economic presence in Mongolia
• 4. Nationalism and anti-ethno-politics: why ‘Chinese Development’ failed at Myanmar’s Myitsone Dam
• 5. “A handshake across the Himalayas:” Chinese investment, hydropower development, and state formation in Nepal
• 6. Flowing goods, hardening borders? China’s commercial expansion into Kyrgyzstan re-examined
• 7. Politics or profits along the “Silk Road”: what drives Chinese farms in Tajikistan and helps them thrive?
• Index