The Impact of Chinese Capital on Ethnic Minorities in the Global South
China's rise as a global power has resulted in thousands of Chinese development finance and direct investment projects. Under the flagship program of the Belt and Road (BRI), Chinese capital in the form of foreign direct investments reached US$3.8 trillion in stocks in 2018, while Chinese development finance totalled $843 billion by 2018. Existing literature has examined the political, economic, and environmental ramifications of Chinese capital. However, the impact of Chinese capital on ethnic relations in host countries has been largely overlooked. Hence, this article asks: how does Chinese capital exacerbate structural violence against ethnic minorities in host countries? Structural violence occurs when social structures generate effects that inhibit people from meeting their basic needs.[1] These societal frameworks may intensify or change when exposed to an external stimulus, such as the influx of Chinese capital through foreign direct investments (FDI) and development finance in the Global South. In focusing on the impact of Chinese capital on ethnic relations in host countries, we put forward a framework of how Chinese capital exacerbates structural violence through externalization of costs, extraction of economic value, and reaffirmation of majoritarian coalitions. Externalization occurs when leaders prioritize their political survival by shifting the negative consequences of a project onto ethnic groups lacking representation in coalitions. Extraction occurs when leaders exploit indigenous lands for economic or political benefits, despite these lands often being protected and rich in resources. Reaffirmation occurs as Chinese projects are utilized to reward influential elites within the host country's majority coalitions, enabling local leaders to advance their political interests against rivals or maintain control over the nation.
China’s economic structure, institutional practices, and host country needs result in an interaction that shape project implementation. By drawing attention to this aspect, the article contends that it is precisely this unintended nexus between China’s institutional practice and the host country’s ethnic coalition’s political hunger that leads to designing projects that results in structural violence against indigenous groups in countries with weak institutions that struggle to mediate violence. The subsequent section will examine why Chinese capital works with ethnic coalitions. Then, it examines the three mechanisms of structural violence as played out in the cases of the Philippines, Myanmar, Pakistan, and the Xinjiang Uyghur Autonomous Region (XUAR). The final section concludes.
Why Chinese Capital Works with Ethnic Coalitions
Chinese capital tends to work with ethnic coalitions due to several factors. First, Chinese actors typically befriend the ruling regime in host countries, aiming to align themselves with those in power. This approach predisposes them to work closely with the network of actors surrounding the regime, including ethnic coalitions that may hold sway within it.
Second, Chinese capital comprises networks of state-owned and private firms closely tied to the Chinese party-state. The Chinese economy relies on financial repression, state-facilitated loans, and the artificial devaluation of the renminbi to subsidize major state-owned enterprises (SOEs) and private firms, increasing the availability of readily accessible capital for host countries. In the 1980s and 1990s, these economic strategies result in surplus capital that enabled the rapid build-up of China’s large-scale physical infrastructures, leading to high-speed railways, roads, and dams. These policies also gave Chinese construction firms the capital needed to build economic infrastructure, such as factories, industrial parks, and real estate. Overcapacity, which is the inability of the domestic market to absorb the pent-up expanded demand from new projects, increased the incentive for Chinese firms to export projects overseas. As a result, many of these firms have begun looking for overseas markets. This interconnectedness allows Chinese actors to navigate relationships with various stakeholders, including ethnic coalitions, in ways that serve their interests and align with the goals of the host country regime.
Third, Chinese capital exhibits flexibility in meeting the demands of host country elites, including ethnic coalitions. This flexibility enables Chinese actors to adapt their projects' implementation to accommodate the preferences and agendas of these groups, thereby fostering cooperation and collaboration. China’s long-standing adherence to the principle of non-interference[2] contributes to the susceptibility of Chinese policy banks and firms to accommodating the interests of majoritarian ethnic coalitions.[3] Chinese development finance and direct investments prioritize building strong diplomatic relations with host countries, finding profitable projects, and expanding the Chinese government’s geopolitical influence. Chinese capital is agnostic towards human rights, regime type, or whoever is in power, so long as the country adheres to the one-China policy. In contrast, Western firms are far more cautious in investing, Many Western firms are publicly listed, which means relying on consumer investments and delivering “price” signals to raise capital for projects. As a result, consumer protests and human rights controversies can, at times, hamper the operations of Western firms. Furthermore, many Western countries have passed laws that punish their firms for working with corrupt or highly abusive governments.
Overall, the predisposition of Chinese actors to align with ruling regimes, coupled with the interconnected nature of Chinese capital and its flexibility in meeting demands, contributes to their engagement with ethnic coalitions within host countries. Moreover, Chinese capital tends to go to countries that have weak governance, high levels of corruption, and political risks.
In the 1980s, the shift toward neoliberalism resulted in limited state intervention. However, the neoliberal shift has also dried up Western commercial bank financing and foreign aid geared toward large-scale physical infrastructure. As such, host countries in the global south, which badly need financing for large-scale physical infrastructure, become the most avid borrowers and receivers of Chinese capital. Many of these countries are led by political coalitions that comprise the state’s most powerful ethnic groups.
When Chinese and host governments agree on projects, these ethnic coalitions acquire the power to design these large-scale ventures. Host country elites see Chinese capital as an opportunity to advance their own domestic agendas. It is this nexus between China’s institutional practices and the host country elite composition that leads to designing projects that result in structural violence against ethnic minorities in the Global South.
The Three Mechanisms of Structural Violence
We argue that three mechanisms, particularly externalization, extraction, and reaffirmation, exacerbate structural violence against ethnic minorities:
- Externalization refers to when leaders want to maximize their political survival, redirecting the externalities of the project to those ethnicities who do not have representatives in the coalitions.
- Extraction is when leaders use indigenous lands for economic or political gains. These lands have not only been given protected status in the post-war era but also hold untapped and vast amounts of resources.
- Reaffirmation is when Chinese projects are used to reward key elites in the host country's majoritarian coalitions, allowing the local leaders to forward their political agendas against their rivals or maintain their hold over the country.
We illustrate these mechanisms using the Philippines, Pakistan, and Myanmar, three cases that vary in their regime type, regional location, economic development, and relations with both China and the US.
In the Philippines, under the Duterte administration (2016-2022), President Rodrigo Duterte acquired Chinese commitments worth US$24 billion. Two projects, the Kaliwa Dam project and the Chico River Pump Irrigation Project, vastly impacted the indigenous people in the country. First, costs were externalized onto the indigenous groups in the areas through the speed at which the environmental impact assessments and procedures that were finalized.[4] In Quezon Province and in the Mountain province, proponents of the project constructed bunk houses for Filipino and Chinese workers, with little regard for the indigenous peoples’ ancestral domains.[5] Large areas of forested land were cleared to funnel the river waters to make way for the construction of the dams in both sites, resulting in family relocations and affecting the livelihoods of the Kalingas.[6] Second, in the case of the CRPIP, Duterte’s elite’s benefited economically from the projects as Philippine landowning politicians were the direct beneficiaries of the stronger cash crop fruit economy and a stable water supply for the city. Finally, Duterte reaffirmed his political coalition by rewarding key military and landed elites, particularly the Cagayan elites, who rule over Northeastern Luzon, at the expense of the indigenous groups.[7]
In Myanmar, since 2010s, the Burmese junta externalized costs on its ethnic minorities in the construction of the Myitsone hydropower project, a Chinese-backed infrastructure project. Land grabs also impacted the Kachin’s access to food and the livelihoods of fishing communities. Extraction of economic value occurred as the suppliers and businesses linked to the junta benefitted from the construction of the infrastructure at the expense of the minorities.[8] Myanmar’s majority coalition— both under the Thein Sein administration and the National League for Democracy led by Aung San Suu Kyii—reaffirmed their interests by leveraging the project to legitimise and address national security concerns.[9]
In Pakistan, Balochistan province, which has long been a source of strife for regional, extra-regional, and internal politics has seen China’s increased economic footprint through the China-Pakistan Economic Corridor (CPEC).[10] From 2018 and 2019, Chinese FDI in Pakistan increased from US$1.7 billion to $2.2 billion. One of CPEC’s key energy and infrastructure projects involves the Gwadar Port, which China considers will serve as the end of “backdoor” transportation route leading into western China. Development of the port was seen as a way to economically develop the Balochistan region to combat social unrest and improve economic conditions in view of the ongoing insurgency. Externalization of the project costs occurred as Pakistani’s successive governments under Musharraf (2001–2008), Sharif (2013–2017), and the Khan administrations (2018–2022) advocated for the CPEC. There have been widespread occurrence of land grabs and the inequitable distribution of the CPEC’s potential benefits,[11] in addition to the Pakistani security forces’ alleged extrajudicial abductions and enforced disappearances of those suspected of having ties to terrorists, insurgents or activists, have only served to exacerbate ethnic tensions between the local Baloch people and the state.[12] Balochistan fishers were most severely impacted, as their access to fishing stocks and clean water were impacted from the construction of the Gwadar port. There has also been a massive build-up of Pakistani armed forces in the area to safeguard CPEC projects.[13] Second, externalization of project costs from CPEC on the Baloch occurred as the construction of the CPEC is also expected to use 62 percent of the land in Balochistan, including Gwadar coastline. Only 4.5 per cent of the US$62 billion budget for CPEC projects is expected to go to the province.[14] Most of the jobs will go to those outside Balochistan and will enhance Pakistan’s exports and development capacity. Pakistan’s neighbouring countries, including Iran, Afghanistan, India and Central Asia are also expected to benefit from CPEC. As the CPEC served as a source of economic patronage to the ruling elites, Chinese capital through the CPRC served to reaffirm Pakistan’s majoritarian political coalition. In the case of Pakistan, internal disagreements over distribution of patronage flows, in addition to outside pressure, impacted the elite consensus on CPEC.[15]
In the case of the Xinjiang Uyghur Autonomous Region (XUAR), Chinese project costs were externalized onto Xinjiang’s Uyghur ethnic minorities as significant investments in economic and transportation infrastructure have resulted in forced labour and environmental degradation. During the Great Leap West in 2000, Beijing invested in economic and transportation infrastructure, focusing on cotton and oil. In recent years, as part of its poverty alleviation campaign, the state engaged in state-sponsored labor transfers by targeting unemployed people in rural areas and transferring them to farms or factories in different locations where there is a need for workers.[16] Cotton-producing areas experienced lower soil quality,[17] while oil production also impacted the environmental conditions in Xinjiang, affecting the health of the population indirectly.[18] Economic extraction occurred as surveillance increased in the region. Chinese firms benefited from the central government’s focus on maintaining stability and counterterrorism in Xinjiang.[19] Economic extraction occurred through industrialization which increased Xinjiang’s need for access to energy resources. As part of Xi’s governance strategy in Xinjiang, both the externalization of Chinese capital and extraction of economic value have served to reaffirm the Chinese party-state’s legitimacy. The Supervision and Administration Commission of the State Council (SASAC) is a major shareholder of oil and gas sector firms in Xinjiang and cooperates with the central government in the governance and control of the region. Apart from the oil industry, Chinese and foreign businesses with stakes in the state-led surveillance complex in Xinjiang also participate in the extraction of economic value from the region. Finally, the externalization and extraction of economic value from the region also reaffirms the Xinjiang Production and Construction Corps (XPCC). The XPCC, which is a Han-dominated state-owned economic and paramilitary organization, controls vast swaths of the economy in Xinjiang and is the biggest cotton grower in the region.[20]
Conclusion
Chinese capital differs from Western forms due to the involvement of state-owned and private firms intricately linked to the Chinese party-state, contrasting with Western capital controlled by powerful private sector actors capable of influencing elections and policies.[21]
Chinese actors tend to ally primarily with the ruling regime in host countries, while Western actors often engage with both the regime and opposition.[22] This preference affects the network of actors surrounding the host country regime. While Western firms prioritize short-term gains, Chinese state capital aims at increasing political leverage in host countries and creating jobs for the Chinese population.[23] The effects of Chinese capital on structural violence are seen as both new and overlapping with those of Western capital. Chinese capital's flexibility in meeting the demands of host country elites allows them to shape project implementation, potentially exacerbating structural violence. Western capital, especially in industries involving critical minerals like oil, gas, and rare earth, can also face controversies. However, Western firms may employ tactics to conceal their involvement, distinguishing their approach from Chinese firms. Structural violence by Western firms typically stems from market-driven processes, such as deregulation and privatization. In contrast, Chinese firms may engage in externalization, extraction, and reaffirmation without relying on market changes in host countries, leading to more pronounced effects of structural violence.
These implications suggest that while there are similarities between the effects of Chinese and Western capital, the involvement of state actors and differing approaches to host country engagement can lead to distinct outcomes, particularly in terms of structural violence and geopolitical entanglements.
Note:
Adapted from Camba, Alvin and Stefanie Kam. "How Chinese Capital Exacerbates Structural Violence: Externalization, Extraction, and Reaffirmation against Ethnic Minorities in the Global South." Asian Perspective 47:4 (2023), 655-681. © 2023 Institute for Far Eastern Studies, Kyungnam University. Reprinted with permission of Johns Hopkins University Press.
[1] Galtung, Johan, 1969. “Violence, Peace and Peace Research.” Journal of Peace Research, vol. 6, no. 3, pp. 167-191.
[2] Zheng, Chen. 2016. “China Debates the Non-interference Principle.” Chinese Journal of International Politics, vol. 9, no. 3, pp. 349–374.
[3] Chalmers, Adam William, and Susanna Theresia Mocker. 2017. “The End of Exceptionalism? Explaining Chinese National Oil Companies’ Overseas Investments.” Review of International Political Economy, vol. 24, no. 1, pp. 119–143; Camba, Alvin, Terence Gomez, Richard Khaw, and Kee-Cheok Cheong. 2021. “Strongmen Politics and Investment Flows: China’s Investments in Malaysia and the Philippines.” Journal of the Asia Pacific Economy, vol. 28, no. 3, pp. 1–22.
[4] Cruz, Jerik, and Hansley Juliano. 2021. “Assessing Duterte’s China Projects.” Asia Pacific Pathways to Progress Foundation, Inc., March.
[5] Camba, Alvin. 2021. “How Duterte Strong-Armed Chinese Dam-Builders But Weakened Philippine Institutions.” China Local/Global. Carnegie Endowment for International Peace.
[6] Ibid.
[7] Interview, Philippine provincial elite, Davao City, March 8, 2023.
[8] Gong, Xue. 2022. “Chinese Mining Companies and Local Mobilization in Myanmar.” China Local/Global. Carnegie Endowment for International Peace, January 25. https://carnegieendowment.org/2022/01/25/chinese-mining-companies-and-local-mobilization-in-myanmar-pub-86262.
[9] Han, Enze. 2023. “Overconfidence, Missteps, and Tragedy: Dynamics of Myanmar’s International Relations and the Genocide of the Rohingya.” Pacific Review, vol. 36, no. 3, pp. 581–602.
[10] Ahmed, Zahid Shahab. 2019. “Impact of the China–Pakistan Economic Corridor on Nation-building in Pakistan.” Journal of Contemporary China, vol. 28, no. 117, pp. 400–414.
[11] Ullah, Shakir, Usman Khan, Khalil Ur Rahman, and Aman Ullah. 2021. “Problems and Benefits of the China-Pakistan Economic Corridor (CPEC) for Local People in Pakistan: A Critical Review.” Asian Perspective, vol. 45, no. 4, pp. 861–876.
[12] Ellis-Petersen, Hannah, and reporter in Quetta. 2020. “Kidnap, Torture, Murder: The Plight of Pakistan’s Thousands of Disappeared.” Guardian, December 14. www.theguardian.com/global-development/2020/dec/14/kidnap-torture-theplight-of-pakistans-thousands-of-disappeared.
[13] Hassan, S. R. 2016. “To Protect Chinese Investment, Pakistan Military Leaves Little to Chance.” Reuters, February 8. www.reuters.com/article/pakistan-china-security-gwadar-idUSKCN0VH06F.
[14] Shahid, Saleem. 2018. “Balochistan MPAs Demand ‘Due Share’ in CPEC Projects.” Dawn, December 22. www.dawn.com/news/1452914.
[15] Boon, Hoo Tiang, and Glenn K.H. Ong. 2021. “Military Dominance in Pakistan and China–Pakistan Relations.” Australian Journal of International Affairs, vol. 75, no. 1, pp. 80–102.
[16] Bureau of International Labor Affairs (BILA). n.d. “Against Their Will; The Situation in Xinjiang.” US Department of Labor. www.dol.gov/agencies/ilab/against-their-will-the-situation-in-xinjiang.
[17] Zheng, Q., H. J. Wang, X. Lyu, T. Y. Dong, X. Y. Shi, and Y. Liu. 2018. “Comprehensive Method for Evaluating Soil Quality in Cotton Fields in Xinjiang, China.” Ying Yong Sheng tai xue bao [The Journal of Applied Ecology], vol. 29, no. 4, pp. 1291–1301.
[18] Scull, Erika. 2008. “Environmental Health Challenges in Xinjiang.” Research Brief Produced as Part of the China Environment Forums Partnership with Western Kentucky University on the USAID-supported China Environmental Health Project, Western Kentucky. www.wilsoncenter.org/sites/default/files/media/documents/publication/xinjiang_dec08.pdf.
[19] Millward, James, and Dahlia Peterson. 2020. “China’s System of Oppression in Xinjiang: How It Developed and How to Curb It.” Brookings Institution, September. www.brookings.edu/articles/chinas-system-of-oppression-in-xinjianghow-it-developed-and-how-to-curb-it/.
[20] Byler, Darren. 2021. In the Camps: China’s High-Tech Penal Colony. Columbia Global Reports.
[21] Hung, Ho-fung. 2015. The China Boom: Why China Will Not Rule the World. New York: Columbia University Press.
[22] Camba, Alvin. 2022. “How Chinese Firms Approach Investment Risk: Strong Leaders, Cancellation, and Pushback.” Review of International Political Economy, vol. 29, no. 6, pp. 2010–2035.
[23] Lee, Ching Kwan. 2018. The Specter of Global China. Chicago: University of Chicago Press.