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A rise that's not so 'win-win'

Author: Elizabeth C. Economy, C.V. Starr Senior Fellow and Director for Asia Studies
November 15, 2005
International Herald Tribune

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If the past is any guide, Chinese President Hu Jintao is poised to score another diplomatic tour de force. This week, he is joining Asia’s leaders at the Asia Pacific Economic Cooperation forum in Pusan, South Korea, and playing host to George W. Bush in Beijing. Early next month, he will travel to Kuala Lumpur for the inaugural meeting of the East Asia Community.

All the while, Hu and his team will advance their “win-win” diplomacy and earn praise for being the good superpower. But if you look more carefully, here is what you see: a rising power exploiting other countries’ natural resources, spoiling the global environment, making economic deals but looking away from serious government mistreatment of its citizens and not delivering on promises.

In Peru, workers at China’s Shougang-owned Hierro Peru mine have protested unsafe labor and environmental standards and watched their incomes decline, even as the mine has posted record profits. In Myanmar, where Chinese military assistance props up a brutal dictatorship, Chinese logging companies are ravaging old-growth forests and exploiting mineral resources with little benefit to the Burmese people.

Brazil’s ambassador to the United States, Manuel Rocha, has also noted that while Brazil granted China much-desired recognition as a market economy, China has yet to deliver the huge infrastructure investment or seat among the UN powers that Brazil anticipated in return.

China gets away with this because it has matched its growing economic prowess with an attractive political tag line. Its leaders skate through Africa, Southeast Asia and Latin America striking trade and aid deals, outlining grand bargains on infrastructure development, promoting military exchange and cooperation and building hospitals, palaces and sports stadiums. In the process, they pitch their “peaceful rise” diplomacy—China is the rising tide that lifts all economic boats—and portray China as a “kinder, softer, gentler” rising power that doesn’t exploit others’ resources in pursuit of economic gain and doesn’t mix business with politics.

Not surprisingly, such investment and financial largess, with no apparent strings attached, has been well received in the developing world. Sudan’s mining minister, Awad Ahmad Jaz, has praised the Chinese for “looking for business, not politics,” while Malaysian Prime Minister Abdullah Ahmad Badawi has complimented China as a “creator of prosperity of the highest order.”

But the downside is beginning to show. Discussions among African elites at a conference in Johannesburg last month skipped quickly through the benefits of Chinese investment to focus on the challenges presented by China’s growing engagement with the continent. Topping the list of concerns were China’s financial and military contribution to conflicts in Sudan and Zimbabwe; support for the corrupt Dos Santos regime in Angola; and lack of transparency in business dealings with a number of African governments. The promise not to mix business with politics is clearly at odds with the situation on the ground.

The international community should press China to bridge this gap between word and deed. A few measures could jump-start this process. First, when China does business abroad, ensure that it applies the same standards for its multinationals that it demands from multinationals that do business in China.

The price of doing business in China increasingly means observing best labor and environmental practices, as well as significant technology transfer and providing extensive training for Chinese workers. The developing countries, in turn, should use their leverage—the natural resources that China seeks to exploit—to require that China and Chinese multinationals observe these same best practices.

Second, shine a harsh light on Chinese behavior. No country should free-ride its way to global leadership.

Eventually, the downside will catch up to Beijing. Countries that provide assistance to sustain unpopular regimes for short-term economic or strategic interests often pay a steep long-term political price once these regimes fall out of favor. China should look carefully at its engagement in countries like Sudan, Zimbabwe and Myanmar, among others. Chinese multinationals, too, should consider the longer-term health, safety and environmental welfare of the communities in which they operate, or risk growing local protest.

Better for China’s leaders to make a course correction now, before their “peaceful rise” diplomacy loses its luster.

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