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1. How Indonesia Used Chinese Industrial Investments to Turn Nickel into the New Gold

Author:
Angela Tritto
Publication Date:
04-2023
Content Type:
Working Paper
Institution:
Carnegie Endowment for International Peace
Abstract:
China has become a global power, but there is too little debate about how this has happened and what it means. Many argue that China exports its developmental model and imposes it on other countries. But Chinese players also extend their influence by working through local actors and institutions while adapting and assimilating local and traditional forms, norms, and practices. With a generous multiyear grant from the Ford Foundation, Carnegie has launched an innovative body of research on Chinese engagement strategies in seven regions of the world—Africa, Central Asia, Latin America, the Middle East and North Africa, the Pacific, South Asia, and Southeast Asia. Through a mix of research and strategic convening, this project explores these complex dynamics, including the ways Chinese firms are adapting to local labor laws in Latin America, Chinese banks and funds are exploring traditional Islamic financial and credit products in Southeast Asia and the Middle East, and Chinese actors are helping local workers upgrade their skills in Central Asia. These adaptive Chinese strategies that accommodate and work within local realities are mostly ignored by Western policymakers in particular. Ultimately, the project aims to significantly broaden understanding and debate about China’s role in the world and to generate innovative policy ideas. These could enable local players to better channel Chinese energies to support their societies and economies; provide lessons for Western engagement around the world, especially in developing countries; help China’s own policy community learn from the diversity of Chinese experience; and potentially reduce frictions.
Topic:
Development, Industrial Policy, Belt and Road Initiative (BRI), Investment, and Innovation
Political Geography:
China, Indonesia, and Asia

2. Negotiating Local Business Practices With China in Benin

Author:
Folashade Soule
Publication Date:
04-2022
Content Type:
Working Paper
Institution:
Carnegie Endowment for International Peace
Abstract:
Commercial negotiations between Benin and China demonstrate how both sides navigate the dynamics of Africa-China business-to-business relationships. In Benin, Chinese and local Beninese officials engaged in drawn-out negotiations on a deal to construct a business center aimed at deepening business links between Chinese and Beninese merchants. Strategically located in Cotonou, Benin’s principal economic city, the center aims to promote investment and wholesale businesses by serving as a hub for China’s business-to-business relations not just in Benin but regionally in West Africa, especially in the large and growing neighboring market of Nigeria. This paper relies on original research and fieldwork conducted in Benin from 2015 to 2021 and the author’s access to draft and final contracts from the negotiations, which allow for a side-by-side comparative textual analysis, as well as initial field interviews and follow-up interviews with key negotiators, Beninese businessmen, and former Beninese students in China. The paper shows how Chinese and Beninese authorities negotiated the establishment of the center and, above all, how Beninese authorities made Chinese negotiators adapt to local Beninese labor, construction, and legal norms and put pressure on their Chinese counterparts. This strategy meant that negotiations took longer than usual to complete. China-Africa cooperation is often characterized by speedy negotiations, an approach that in some cases turns out to be harmful—since this can allow vague and unfair clauses to be featured in final contracts. The negotiations over the Chinese business center in Benin is a good example of how well-coordinated negotiators that take their time and work in coordination with various counterparts throughout the government can help facilitate better outcomes in terms of high-quality infrastructure and compliance with prevailing construction, labor, environmental, and business norms, while also preserving a good bilateral relationship with China.
Topic:
Foreign Policy, Development, Bilateral Relations, and Business
Political Geography:
Africa, China, Asia, and Benin

3. How Huawei’s Localization in North Africa Delivered Mixed Returns

Author:
Tin Hinane El Kadi
Publication Date:
04-2022
Content Type:
Working Paper
Institution:
Carnegie Endowment for International Peace
Abstract:
Trade between China and North Africa has increased significantly since the early 2000s, but it has largely reproduced patterns of unequal exchange. Since they were unveiled, the Belt and Road Initiative (BRI) and the Chinese government’s 2016 Arab Policy Paper have signaled the promise of a qualitative shift in China’s engagement with the region. China has committed to increase investments in high-value-added sectors and to boost cooperation in science and technology with countries across North Africa. The digital space is a notable aspect of recent China–North African partnerships. Chinese tech firms are becoming ever more important actors in North Africa through the Digital Silk Road, the digital component of the BRI. North African governments see the Digital Silk Road as an opportunity to help bridge the digital divide and bolster their own national efforts to build digital economies and create high-quality jobs for the millions of unemployed university graduates across the region. In recent years, the region has become home to notable Digital Silk Road projects such as smart cities, satellite navigation centers, data centers, and network infrastructure. Huawei’s localization strategies in Algeria and Egypt show that, far from imposing a one-size-fits-all blueprint on other countries, as Beijing is often depicted as doing in U.S. and European media and policy discussions, Chinese tech players adapt their engagement depending on local development agendas. Flexibility, customization, and services tailored to local demand have been cornerstones of Huawei’s localization strategies in North Africa. Accommodating local development priorities is central to Huawei’s success in globalizing its business ventures. The Chinese firm has responded favorably to Algeria’s and Egypt’s attempts to leverage foreign companies for conducting more value-added activities within their respective economies. Among other things, Huawei opened its first African factory in Algeria, employing Algerians to assemble products for and beyond the Algerian market. It also launched an OpenLab for conducting research and development (R&D) activities in Egypt and established partnerships with several universities in the region to train local students. However, closer scrutiny of Huawei’s localization in both Algeria and Egypt indicates that the company improved its brand image without engaging in meaningful capacity building. For all its success at winning the hearts of government officials across the region, Huawei has engaged in training, manufacturing, and R&D in a way designed to maintain the firm’s technological edge. The Chinese tech giant has managed to localize seemingly developmental activities in North Africa without contributing much to technological upgrading. North African governments should take lessons from China’s playbook of how it became a technological superpower. This means adopting policies that could maximize the benefits of Chinese and non-Chinese investments by ensuring positives spillovers and protecting potential local tech champions. Increasing economic integration across North African countries and moving beyond fragmented bilateral commercial negotiations with China are two steps that may help level the playing field with the Asian giant.
Topic:
Development, Science and Technology, Telecommunications, Huawei, and Digital Space
Political Geography:
China, Asia, Algeria, North Africa, and Egypt

4. Chinese Mining and Indigenous Resistance in Ecuador

Author:
Cintia Quiliconi and Pablo Rodriguez Vasco
Publication Date:
09-2021
Content Type:
Working Paper
Institution:
Carnegie Endowment for International Peace
Abstract:
Chinese mining companies were drawn to Ecuador by a strong interest in diversifying their sources of copper in Latin America. But Chinese mining operations in Ecuador, which could have contributed to Ecuadorian development, soon gained a negative reputation after these activities prompted a great deal of local pushback, especially from affected Indigenous communities. As a result, the major Chinese mining consortium that now controls Ecuador’s two main copper mines has taken adaptive steps to stabilize its mining investment and increase the security of its supply networks, steps that often have not produced the intended results. Working through two subsidiaries, the Chinese mining consortium has responded to this localized criticism with a blend of tactics that includes co-opting select local figures, colluding with national officials to sidestep environmental and sociocultural safeguards, and coercing inhabitants into relocating under the threat of force from accommodating Ecuadorian authorities. By turning Ecuadorian national elites against locals and using divide-and-conquer tactics among Indigenous communities, the Chinese-led mining projects have entrenched existing political cleavages, have undermined community cohesion, and ultimately have harmed Ecuador’s democratic fabric, especially the standing of civil society and Indigenous rights organizations. While Ecuador has welcomed Chinese capital and other sources of international investment, this infusion of financing has increased the risk of political abuses at the national and local levels. This paper explains the adaptive strategies employed by the Chinese consortium and its subsidiaries in charge of the Mirador and San Carlos Panantza mining sites, contrasting the differing results these tactics have produced in each case. Both projects are located in Ecuador’s so-called Copper Belt provinces of Morona Santiago and Zamora Chinchipe, which are part of a mountain range known as the Cordillera del Cóndor. They are embedded in an ecologically and culturally sensitive zone that includes territory of the Indigenous Shuar community in the Ecuadorian Amazon. In the case of Mirador, the Chinese mining consortium’s adaptive response helped its subsidiary overcome local resistance but only by crushing it. In the case of San Carlos Panantza, local resistance so far has not been overcome, so the Chinese consortium has remained unable to proceed with its project. Neither case, even the Mirador site where mining has moved forward, is a sign of success for future relationships between Chinese mining conglomerates and Ecuadorian communities. To understand why the Chinese consortium’s adaptive tactics were somewhat more successful in Mirador, it is important to focus on the differing composition of the inhabitants of the land where the two mines are located. Mirador sits on territory shared by Shuar and non-Shuar settler communities who have different bonds with the land. The non-Shuar settlers emphasize the productive and commercial value of the land over the spiritual and symbolic value that is key for many in the Shuar community. The Canadian-held and later Chinese-controlled companies active in Ecuador’s mining industry understood this difference between Mirador’s inhabitants and adapted accordingly: they managed to displace resistant residents despite widespread opposition through questionable and sometimes arguably illegal purchases of land. In San Carlos Panantza, a second subsidiary of the Chinese consortium chose to respond to local criticism with the same alleged practices of violence, occupation, and displacement used in Mirador. However, although the two projects are geographically near each other, the situation played out differently at the second would-be mine: ongoing opposition has prevented mining operations from beginning at all yet. Again, paying attention to the inhabitants of the land is instructive. San Carlos Panantza is in the heart of Shuar territory in Arutam, a region with few non-Indigenous settlers. The mining incursion by the Chinese-run subsidiary and the Ecuadorian security forces tasked with supporting it were seen as a threat to the area’s Shuar people, who have been strongly protesting and opposing the mining venture since late 2016. This state of affairs is likely to have far-reaching effects for Ecuador too. The apparent collusion between Ecuador’s national government and the Chinese consortium (and its subsidiaries) has crushed those who oppose mining, has upended the country’s policies on resource extraction, and has yielded documented violations of local communities’ human rights. These events have transpired because both the Chinese firms and the Ecuadorian state have tended to see local communities as an obstacle to the development of the country’s extractive industries. As a result, local social and environmental safeguards have been weakened, tenuous consultation processes have eroded, environmental licenses have been granted under dubious circumstances, and local communities have been forcibly displaced. This paper explores the implications of the adaptive tactics chosen by the Chinese mining subsidiaries that run the Mirador and San Carlos Panantza mines. It also addresses how Chinese companies have, in some cases, negotiated with local communities to begin mining exploitation, while also analyzing the ways the Chinese mining consortium has interacted with the Ecuadorian government and other players, such as the Canadian mining company it acquired and other peer companies that set up successful coalitions for mining development in Ecuador. Finally, the paper explores the effects the agreements between the Ecuadorian government and the Chinese consortium have had on local actors.
Topic:
Development, Government, Mining, Indigenous, and Resistance
Political Geography:
China, Asia, South America, and Ecuador

5. Balancing Without Containment: An American Strategy for Managing China

Author:
Ashley J. Tellis
Publication Date:
01-2014
Content Type:
Policy Brief
Institution:
Carnegie Endowment for International Peace
Abstract:
China is poised to become a major strategic rival to the United States. Whether or not Beijing intends to challenge Washington's primacy, its economic boom and growing national ambitions make competition inevitable. And as China rises, American power will diminish in relative terms, threatening the foundations of the U.S.-backed global order that has engendered unprecedented prosperity worldwide. To avoid this costly outcome, Washington needs a novel strategy to balance China without containing it.
Topic:
Foreign Policy, Defense Policy, Development, and Emerging Markets
Political Geography:
United States, China, America, Washington, Beijing, and Asia