Increasing demand from China has been one of the most important drivers of the global palm oil industry’s rapid growth in recent years. In 2021, China became the second largest importer of crude palm oil, only slightly below India, and above the European Union. A rise in domestic demand for palm oil has sent China in search of crude palm oil overseas, prompting investments in plantations and mills in producing countries, including Indonesia and Malaysia (Shigetomi et al. 2020). While Chinese overseas investment is not a new topic for scholarly or policy discussion, the controversial nature of the palm oil industry and the development of global standards for its sustainable production warrant our attention to better understand the relationship between Chinese investment, global norms, and local interests.

As a rising global power, China has been increasingly active in expanding its economic presence through foreign aid and overseas investment. While many developing countries have welcomed this as an opportunity for their own economic development, there is a persistent suspicion—especially, but not exclusively, in the West—that the global expansion of Chinese capital will inevitably result in a broad range of actors in host countries becoming susceptible to Chinese influence. Likewise, observers have long warned of China’s use of economic instruments to create economic dependency, discussing China pulling nations into its ‘economic orbit’ and ‘carving out an empire’ (Harchaoui et al. 2021), and in the 2000s, there was talk of a ‘new scramble for Africa’, with China a key protagonist (Lee 2006; Chan-Fishel and Lawson 2007).

This essay contends that such perceptions overlook the diversity of Chinese economic actors and their relative positions in different sectors. At the same time, observers often underappreciate the agency of actors in the host country in relation to Chinese actors, in part due to the often asymmetric economic and geopolitical power between the two. This essay departs from the simplistic argument and reveals the complexity of power relations among Chinese companies and local actors, particularly in an industry in which China is a relatively new player. To support this argument, we look at Chinese investment in the palm oil sector in Indonesia. We found that multiple actors in the country that is the world’s largest producer of palm oil leverage their interests by developing ‘local regulatory projects’, which constitute a set of redefined sustainability standards and policy innovations that pull Chinese companies closer to local interests, rather than vice versa. Amid mounting pressures on companies to comply with global sustainability standards, these projects have evidently enabled Chinese companies to claim they are complying with local regulations, adding a layer of complex interactions between global norms, Chinese capital, and competing local interests. One salient political dynamic is the increasing dependency of Chinese companies on Indonesian local political elites to protect their interests against opposition from the national government and local communities.

China and Palm Oil: Reframing the Discussion

The explosive expansion of the oil palm plantation sector has led to mounting pressure from a range of major stakeholders such as European downstream buyers and nongovernmental organisations (NGOs) for global sustainability regulatory frameworks to hold companies in the upstream sector accountable. This has led to the establishment of multiple such frameworks, especially in Europe, like the EU Renewable Energy Directives (RED) I and II (Nesadurai 2018) and transnational private governance, such as the Roundtable on Sustainable Palm Oil (RSPO) and the No Deforestation, No Peat, and No Exploitation (NDPE) commitments. These regulatory frameworks provide a market-driven mechanism to address social and environmental issues and promote sustainable practices. Governments in the Global South often view these frameworks as part of a ‘trade war’ waged against their economies by rival vegetable oil producers in the Global North to facilitate the internationalisation of the multinational corporations tied to them (Choiruzzad 2019).

Despite the differences between these governance frameworks, several governments in the Global South see the RED, RSPO, and NDPE as means to make their palm oil products less competitive than other vegetable oils, harming their production (Wijaya and Glasbergen 2016). Critics also claim that these frameworks do not sufficiently represent smallholders and offer only a procedural solution without developing proper goals and metrics to assess ‘sustainable practices’ (McCarthy 2012). This has led to the emergence of some experiments in South-led governance. For instance, after the Indonesian Palm Oil Association cancelled its membership of the RSPO in 2011, the Indonesian Government introduced alternative sustainability standards, such as Indonesia Sustainable Palm Oil (ISPO). Similarly, the Malaysian Government introduced the Malaysia Sustainable Palm Oil (MSPO). While on paper many elements of the ISPO and the MSPO are similar to the RSPO’s principles and criteria (Suharto et al. 2015), these alternative standards have been developed by the governments of the producing countries and tend to be more flexible and lenient towards the producers (Choiruzzad et al. 2021).

While the academic literature has been paying increasing attention to the trajectory of Chinese businesses in oil palm plantations, the perspectives of the West and of global palm oil production networks remain dominant (see Schleifer and Sun 2018; Coenen et al. 2020). Likewise, the discussion often leads to a set of binary questions like: Will the internationalisation of Chinese capital in the palm oil sector push China to act more responsibly and uphold Eurocentric global sustainability norms, such as the RSPO and NDPE policies? Or will China challenge or even undermine these norms (Nikoloyuk et al. 2010: 62)? In this sense, the internationalisation of Chinese capital is seen to create either the ‘Shanghai effect’ (Adolph et al. 2017), in which Chinese capital undermines the social and environmental conditions in the producing country, or the ‘California effect’ (Vogel 1997), when higher regulatory standards are enacted by companies and the government to ensure producers can continue selling to more highly regulated markets. Such criticisms have been increasingly apparent in the many reports of NGOs and the international media naming and shaming companies that have been actively involved in deforestation, loss of biodiversity, and other environmental crimes, raising concerns that Chinese expansion in the upstream sector has nullified the impact of initiatives driven by transnational private governance and prevented the production of sustainable palm oil (see, for instance, Coca 2021; Kuepper et al. 2021; Segi Enam 2020).

We suggest that the trajectory of Chinese investments in the upstream sector must be recontextualised by considering the complex relationships with multiple actors in the host country and how they leverage their interests. Rather than focusing on the impact of Chinese investment on global sustainability standards, we delve into institutional regulatory contexts within which Chinese companies are embedded. As Polanyi posited, all economies are embedded and enmeshed in institutions (Polanyi et al. 1957). Expanding Polanyi’s concept of embeddedness and focusing on Chinese investment in Indonesia, we argue that these investments in oil palm plantations are entangled with competing local interests from which varying standards of sustainable palm oil production ensue. Simultaneously, as shown in the following case studies, local authorities establish compromises with Chinese companies in what we term ‘local regulatory projects’, which constitute renewed sustainability standards that might deviate from the national standards that strengthen the instrumental power of local authorities. In this context, Chinese companies become increasingly dependent on local authorities, especially in reaching negotiated compromises with any opposition and reducing the cost of compliance with global sustainability standards.

Internationalisation of Chinese Capital in the Upstream Sector

The internationalisation of Chinese enterprises in the palm oil industry did not occur in a regulatory vacuum but is embedded in various state strategic plans as well as voluntary guidelines that have emerged during both China’s ‘Going Out’ policy of the late 1990s and the more recent Belt and Road Initiative (BRI). After the inception of the agricultural Going Out policy in 2006, China’s Chamber of Commerce for Foodstuffs and Native Produce (CFNA) and the World Wide Fund for Nature (WWF) jointly established the China Sustainable Palm Oil Network, in 2009, to promote production of sustainable palm oil by Chinese enterprises (CFNA 2015). In 2013, CFNA partnered with a program called China–UK Collaboration on International Forest Investment and Trade to produce the Guide for Overseas Investment and Production of Sustainable Palm Oil by Chinese Enterprises (中国可持续棕榈油指南). The guide specifies the legal requirements and procedures for overseas investment by Chinese enterprises that are linked to both global standards like the RSPO and national standards applied in the host country—for example, it stipulates that ‘Chinese enterprises shall not sacrifice the host countries’ interests when they are engaged in overseas palm oil investment and production. They shall search for the win-win strategy to achieve sustainable development’ (CNFA 2015: 9). A draft of the guide was opened for comment in 2015, but it is unclear whether it was adopted. However, this was not the CNFA’s final foray into the regulatory realm, and it is reportedly in the process of developing another guide for the sustainable procurement of palm oil by Chinese enterprises (Jiang 2021).

As the BRI has developed, policy documents from a range of state entities and industry bodies have paid closer attention to environmental considerations in overseas investment and finance. For instance, in 2015, the People’s Bank of China (PBC) and the National Development and Reform Commission (NDRC) set up the ‘Green Bond Endorsed Project Catalogue’, the first green bond standard in China that encourages the issuers of corporate bonds to invest in 12 key green projects without explicitly excluding palm oil industries (Chen 2020). In 2021, the China Securities Regulatory Commission, the NDRC, and the PBC jointly issued a new ‘2021 Green Bond Endorsed Project Catalogue’ to clarify the definition of ‘green bonds’ (绿色债券) as well as harmonising Chinese with international standards (Nedopil et al. 2021). The 2021 catalogue recognises trade activities related to ‘green organic agriculture’, including palm oil products that have received international sustainability certification such as the RSPO (PBC 2021).

The development of this multi-scalar regulatory framework gives the impression that Chinese companies in the upstream sector encourage internationally accepted sustainability standards like the RSPO and seek to harmonise them with Chinese standards. However, what has been largely neglected thus far is that the harmonisation of sustainability standards occurs at varying scales and paves the way for operational flexibility within a system of localised governance in the host country. In this setting, such harmonisation efforts are deeply embedded in power relations whereby local authorities leverage their power to reproduce sustainability standards, resulting in local regulatory projects. It is through these local regulatory projects that Chinese companies navigate competing interests, dissent, and the increasing demand for compliance with global standards.

The two largest Chinese companies active in the palm oil industry in Indonesia are powerful cases in point. The first, Julong Group, is a private company strongly backed by the Tianjin Municipal Government and headquartered in the Tianjin Binhai New Area. When the Chinese Government launched the agricultural Going Out policy in 2006 to encourage Chinese companies to strengthen their foothold in overseas markets, the palm oil industry was one of the sectors that companies, including Julong, targeted (Schleifer and Sun 2018). In that year, Julong started to develop its oil palm plantations in Indonesia and, in 2013, it built the China–Indonesia Julong Agricultural Industry Cooperation Zone to promote a more sustainable supply chain (see Julong Indonesia 2015). By 2019, Julong had nearly 200,000 hectares of oil palm plantations in Indonesia, with eight subsidiaries in Kalimantan and Sumatra (Sawit Watch 2020). The second-largest Chinese oil palm plantation in Indonesia, after Julong, is that of ZTE (Zonergy) Agribusiness. In 2021, ZTE had 30,321 hectares of oil palm concessions in Central Kalimantan (Segi Enam 2019).

Neither Julong nor ZTE is a member of the RSPO or the ISPO (Kuepper et al. 2021). Their investments in palm oil have involved different policy innovations across various regulatory contexts. As we will elaborate below, Chinese investments in areas rich in oil palm in Indonesia can involve Chinese enterprises that do not comply with established policymaking and the local regulatory institutions that have their roots in an earlier phase of liberalisation in the upstream sector. Thanks to this liberalisation, local states, with support from key political-economic elites, established new localised regulatory projects. As Paul (2002: 472) has noted, ‘sub-national states are also sites of regulation for political-economic processes identified at diverse scales. They are sites of regulation for processes which are simultaneously global and local.’ This has led to a constant tension between different enterprises, including Chinese companies, and local elites who underpin the regulatory projects.

Case Studies: Chinese Oil Palm Plantations and Local Regulatory Projects in Indonesia

One of Julong’s largest subsidiaries in Central Kalimantan, PT Rezeki Kencana (RK), tapped into the upstream sector via the internationalisation of subnational governments. RK owns 7,620 hectares of plantations in Kampung Baru Village, Kubu Raya District, and is included in the memorandum of understanding on 21 cooperation projects between companies and regional governments in Indonesia and China that was signed by the central authorities of both countries in 2013 (Hadrian 2017). Although its presence in Indonesia long pre-dates the BRI, the Julong Group now views its expansion as an embodiment of the initiative. As the group’s supply chain director pointed out in a media interview: ‘The initiative has provided various opportunities for our local investment and expansion. We are confident of making greater achievement and serve the two countries’ (cited in Hanifah 2018). However, in its expansion, the company has faced ongoing tensions with social groups. According to the records of a local NGO, RK failed to provide fair compensation for 2,600 hectares of land that a local community group, Serikat Tani Darat Jaya (Darat Jaya Farmers’ Union), used to produce food (ELSAM 2017).

As well as this indigenous community, Javanese from the early 1980s phase of Suharto-led transmigration to Central Kalimantan were greatly affected. Given that transmigration is a government policy, they have greater legal protection for their landownership than the indigenous Dayak community. This is especially so because these migrants received individual land certificates from the central government. Like many locals, they grew a mixture of corn, timber, and bananas on their land; however, their cultivation rights have been transferred to RK to make way for oil palm plantations (Interview with local representative, May 2021). The initial arrangement made by the government should have required the participation of communities under the scheme of kemitraan plasma (‘plasma partnership’)—a concept developed in Indonesia since the late 1980s according to which the plantation company (which is metaphorically conceptualised as the ‘nucleus’ or core) must allocate parts of its concession to be owned and managed by local smallholders (the ‘plasma’ that surrounds the ‘nucleus’). Smallholders receive regular payments as well as loans for cultivation from the plantation company for supplying their produce (see Potter 2016). Unfortunately, RK reneged on its promise of a shareholding arrangement with local farmers under the kemitraan scheme.

As argued in the previous section, accelerated liberalisation since the late 1990s has led to the rise of the local regulatory state in Indonesia, with provincial and local governments given more licensing powers and enacting regulations that define how businesses operate. After the fall of President Suharto in 1998, there were massive structural reforms characterised by economic liberalisation and democratisation (that is, general and regional elections, and decentralisation of political authority). This had significant repercussions on the palm oil regulatory regime, leading subnational actors, such as district and provincial governments, to play a more crucial role in the governance and sustainability policymaking for the sector. These subnational actors have since been trying to develop regulatory projects that allow them to capture the benefit of economic activities, both for local development purposes and for their own interests. This is evident in the enforcement of Hak Guna Usaha (HGU; ‘Land Use Rights’). To operate in Indonesia, plantation companies must obtain HGU in accordance with the Basic Agrarian Law No. 5/1960. To encourage the production of sustainable palm oil, the national government restricts palm oil expansion in peatlands and food-production areas under the Food Area Preservation Law No. 41/2009 (Pramudya et al. 2018). Nevertheless, subnational governments have been granted more power to coordinate plantation-related issues, including licensing, forestry management, and spatial planning. The reorganisation of power has not been accompanied by incentives for regional governments to promote sustainable palm oil practices, so states produce their own regulations to determine local production networks, development decisions, and forest destruction patterns (McCarthy et al. 2012).

In the case of Kubu Raya Regency, where RK is located, the district government produced the Local Government Regulation (Peraturan Daerah or ‘Perda’) No. 4 of 2016 on Corporate Social and Environmental Responsibility (CSER), which incorporates into its regional development planning the United Nations’ Sustainable Development Goals (SDGs) rather than the RSPO and other relevant global standards (Jari Borneo 2020). This has created new benchmarks for identifying performance gaps between Chinese and other market participants, such as those who are official members of the RSPO. The CSER program adopted by RK has so far failed to protect food-producing land from conversion or to provide fair compensation for affected farmers. This is relatively unsurprising, as regulatory governance at the local level refers to SDGs that only comprise 17 interlinked global goals that do not identify legal and institutional mechanisms for the sustainable production of palm oil. This largely mirrors a form of governmentality in which the CSER is ‘imbued with aspirations for the shaping of conduct in the hope of producing certain desired effects and averting certain undesired ones’ (Rose 1999: 52). Ultimately, in RK’s view, it has done nothing wrong; it has complied with local regulations and implemented CSER programs that are seen to promote social inclusion and community engagement. In a media interview, a Julong representative claimed the company’s plantations have recruited nearly 10,000 locals (as cited in Hanifah 2018), however, many of these people work as wage labourers and do not benefit from the plasma mechanism (Interview with a local activist, May 2021). Under the plasma mechanism, smallholders supply farm produce to the company but still own the land; as wage labourers, they do not own the land.

Meanwhile, Julong’s South Kalimantan subsidiary, PT Palmina Utama (Palmina), in Barito Kuala (Batola) district, has faced similar issues. Conflict on the Palmina plantation emerged as Batola authorities were committing to a massive expansion of palm oil production through partnership agreements between private companies and smallholders (see also Tan and Yeremia 2022). Since the expansion decision was made in 2013, Palmina has failed to address land-sharing issues. This led to a long stand-off during which roads into the estate were often closed as local farmers demonstrated against the company (Interview with a local activist, May 2021). In 2019, the Batola Regent, Noormiliyani AS, implemented a regulatory project for the governance of the oil palm plantation based on Perda No. 5 of 2016. The rules redefined how plantation boundaries are determined and how plasma is allocated. More importantly, they have also reshaped the nature of regional agencies, such as the Regional Investment Monitoring Board. Under this regulation, Palmina is required to set aside 20 per cent of its concession for smallholders, while the board is now in charge of overseeing the company’s performance, with only limited monitoring and control from the national government. Palmina has been obliged to report in detail its operations and meet routinely with the district government and the board (see Arianto 2019). However, this has narrowed the scope for sustainability in the plantation sector, as here, Palmina’s performance is measured not in accordance with how it adopts sustainability practices, but rather by the extent to which its established plantations have allocated 20 per cent of their land to the plasma mechanism. The gap between local regulations and the RSPO indicates a new form of regulatory arbitrage that enables the company to reduce its compliance costs in Batola while expanding its plantation area, including the allocated plasma land.

Local Authorities and Power over Chinese Capital

These local regulatory interventions have burdened commercial plantations with additional operating costs (Tanjung 2020; Wiangga 2011). It is important to note, however, that such projects have secured an ‘enabling’ environment for plantations to counterbalance national regulations that might harm their long-term interests. As local governments gain enormous discretionary power to review regional spatial plans and make changes to land use, officials have rushed to reallocate land to investors. With districts competing to attract oil palm investments, local governments often do not consider allegations of irregularities in the licensing process or the environmental and social impacts the plantations will have (Setiawan et al. 2016). This negligence is in part due to the Indonesian fiscal system, which provides few incentives for companies in the upstream sector to adopt sustainable practices. Although palm oil production generates large revenues for the central government, especially from income and export taxes, local governments do not receive a direct share of such taxes (McCarthy 2012). Nor is national revenue from the production of palm oil used to support major producing districts to enforce sustainable practices.

The significant implication of this situation is that some local governments issue additional oil palm levies (retribusi kelapa sawit) to companies for their activities. This contradicts the national Law No. 28 of 2009 on Local Tax and Local Levies, which does not allow such levies, and thus forces the central government to cancel the local regulations. In attempts to seek an alternative to local levies (retribusi daerah), local governments mandate companies to pay various other fees, such as ‘disturbance permits’ (izin gangguan) and for the use of public roads, among others. Although the national government revoked more than 3,143 such local regulations in 2016 (Cabinet Secretariat of the Government of the Republic of Indonesia 2016), this did not deter local governments from issuing more similar regulations or alternative mechanisms to extract funds from oil palm plantations, such as through the Third Party Support (TPS, Sumbangan Pihak Ketiga) mechanism that provides a versatile nonbinding framework to receive funds or goods from nongovernmental entities. Apart from taxes (managed by central and local governments) and levies (managed by local governments), local governments are allowed to accept financial support for their budgets from other entities, usually in the private sector, falling under the TPS mechanism. Unlike the mandatory and fixed taxes and levies, the TPS is voluntary, nonbinding, and flexible; it is, however, frequently used to pressure plantations or companies to provide funds or other forms of support for local government programs. These mechanisms have provided the resources for local governments to implement development programs, but have also made them dependent on oil palm plantations. Their limited budget capacity requires them to find regular and reliable sources of funds, which companies will provide if the local government allows them to operate smoothly. Thus, it is difficult for local governments to revoke plantation permits or punish companies conducting illegal activities or failing to adhere to sustainable cultivation policies (Setiawan et al. 2016: 475).

This dynamic is highlighted by the case of PT Sebaung Sawit Plantations (a subsidiary of Shanghai Xinjiu Chemical Company) and PT Palem Segar Lestari (a subsidiary of Henan Jiujiu Chemical Company) in Sembakung, Nunukan Regency, North Kalimantan. As with other foreign and domestic companies operating in the district, these two have been accommodated by the district governments and surrounding communities through localised regulatory projects. According to audits conducted in 2021 by think tank Chain Reaction Research, from 2019 to the first half of 2020, Sebaung Sawit Plantations developed 2,077 hectares of plantations on peatland identified as conservation areas—a category that legally cannot be used for oil palm development (Kuepper et al. 2021). Meanwhile, the local community accused Palem Segar Lestari’s director, Tjia Ke Seng, a Chinese citizen who also serves as the president of PT Sebaung Sawit Plantations, of misuse of the HGU in 2016. As well as failing to fulfill its commitments to reallocate plasma land to farmers in Sembakung, the company sought to use the HGU for other purposes, including illegal logging (Radar Kaltara 2016).

In 2018, Indonesian President Joko Widodo issued a moratorium on oil palm plantation permits that remained in force for three years, regulated under Presidential Instruction No. 8 of 2018 concerning the Postponing and Evaluation of Oil Palm Plantation Licensing and the Increasing of the Productivity of Oil Palm Plantation (Jong 2018). In 2021, the government ended the temporary freeze but claimed it was committed to not approving any new permits until a new omnibus law came into force. The moratorium mandated local governments to review existing licences as many were known to have been issued in violation of procedures. The Nunukan District Government, however, went back on its commitment to the moratorium and produced its own regulations to negotiate the terms of ‘smallholder inclusion’ and sustainable practices with companies operating in the district, including those from China. Rather than reassessing concessions with overlapping permits and in violation of sustainable practices, the district government produced regulations that subsumed sustainable practices under the TPS mechanism mentioned above. Nunukan Regency enforces the Perda No. 33 of 2001, which requires commercial plantations to donate 5,000–10,000 IDR for every tonne of palm oil produced, claiming the TPS will contribute to local development (see Ruru 2016). Likewise, as one of the authors observed during fieldwork, local authorities leverage their interests over Chinese companies through the TPS and CSER programs, which are supposed to be voluntary. While this has added to the operating expenses of Chinese companies, the renewed sustainability standards potentially reduce their compliance costs. Likewise, commitment towards the TPS and CSER programs, like building roads, establishing vocational schools, and distributing plasma land, are seen by local governments as sustainable practices adhering to the standards set by the ISPO (Reza 2019). While Sebaung might not comply with nationally imposed sustainability standards, the normative judgement of local government about the performance of Sebaung Sawit Plantations and Palem Segar Lestari is in fact more critical and decisive for their business sustainability. As Murdiyarso et al. (2011) have argued, the presidential instruction including the moratorium on oil palm plantation permits is non-binding, which means there are no legal consequences if its instructions are not implemented.

Conclusion

Cheung et al. (2012: 202) observed that ‘China’s overseas investment activity has reached a level that could challenge international investment norms and affect international relations’. Likewise, the prevailing analysis of Chinese investment in the upstream palm oil industry has been reduced to the binary question of whether China-led South–South governance will challenge European Union–driven sustainability policies or transform markets to make sustainable palm oil the norm. Drawing from our research in Indonesia, our analysis has shown how this dichotomy erases the complexities and contingencies of resource and power distribution in the producing countries. Situating the internationalisation of Chinese capital in the context of power relations, this essay has set out to assess how Chinese companies have been navigating Indonesia’s complex terrain of local institutions while being embedded within established global and national regulatory projects. Put simply, the trajectory of Chinese capital—be it in the form of smallholding or large plantations—is embedded within competing regulatory projects, and the performance of companies is indeed contingent on territorial politics.

From the outbreak of the Covid-19 pandemic to the Russian invasion of Ukraine in February 2022, the global economy is currently facing a multifaceted crisis and countries in the Global South are experiencing economic contractions and the inability to pay foreign debts. Unlike in previous debt crises, after years of providing loans at levels on par with traditional financial institutions and governments from the Global North, China is now a major global lender. In this role, China has privileged bilateral negotiations, rather than favouring multilateral negotiations, to solve repayment crises (Carmody et al. 2022: 204, 209). While the Chinese authorities have often followed the practices initiated by major lenders of the Paris Club, they have also emphasised resolving debt crises on a case-by-case basis (Acker et al. 2020). Moreover, they have adhered to the principle of non-interventionism in their dealings with sovereign partners (Bräutigam 2020)—that is, they have never imposed political conditions, especially those that involve changes to the governing principles or policymaking of loan recipients.

In economic terms, China has chosen to write off interest-free loans for highly indebted countries, mostly in sub-Saharan Africa. In many cases, the Chinese Government has preferred to lengthen repayment time frames through maturity and grace period extensions or reduced interest rates than through reducing principal amounts (Acker et al. 2020; Bon and Cheng 2021). The literature on China’s lending suggests that if Chinese banks and state officials believe in the repayment capacity of the debtor, they are more likely to allow payment delays than write-offs and interest rate changes. But in cases like Venezuela, where trust in the economy has been eroded due to almost a decade of political and social strife, Chinese state officials are likely to withdraw from partnerships and signal caution to private investors and banks.

China–Venezuela financial relations are paradigmatic of how China deals with countries in crisis. Venezuela is China’s largest debtor globally (Gallagher and Myers 2022). However, after years of strategic relations marked by loans, dynamic investments, and increasing trade, a deep economic and political crisis in Venezuela starting in 2014 severely limited the country’s repayment capacity (Bull and Rosales 2020; Puente and Rodríguez 2020). At the core of the China–Venezuela relationship are commodity-backed loans, which linked Venezuela’s oil exports to China’s development finance and infrastructure investment. This arrangement initially allowed Venezuela to diversify its oil exports away from an overreliance on the United States, while obtaining crucial development finance that was increasingly hard to find as the Venezuelan Government became critical of traditional lending institutions and antagonistic to US-led initiatives (Rosales 2018a). For China, Venezuela was an entry point to South American markets and a way to secure oil from the country with the largest crude deposits in the world.

Amid Venezuela’s economic turmoil, China’s practices were initially typical of its approach to countries in crisis. In response to the Covid-19 pandemic, Chinese authorities first extended the grace periods of loans. Moreover, China continued to allow reduced oil shipments as international sanctions significantly affected the capacity of Venezuela’s oil industry to keep its production afloat. However, as the United States threatened to impose sanctions on third parties purchasing Venezuelan oil (and did sanction Russian state-owned enterprises for investing in Venezuelan oilfields), China became wary of US secondary sanctions. In 2015, China stopped new lending to Venezuela, withdrawing its commitment to a socialist country in crisis. At the time of writing in December 2022, the Chinese Government still actively discourages outward investment in Venezuela (Ferchen 2020; Kaplan and Penfold 2019; Rosales 2018a).

Due to the significance of Venezuela in China’s overall lending portfolio, it is important to understand the unique conditions of this bilateral relationship and how they can shape, limit, and enhance China’s future lending in the developing world. In part because of the amount of China’s lending to Venezuela—which totalled more than 60 billion USD and was 43 per cent higher than that of the second-largest borrower, Angola, between 2000 and 2020 (Boston University Global Development Policy Center 2022)—some in the Venezuelan Government and media expected China to do more to help solve the country’s crisis. However, China did not play the expected role as a lender of last resort for Venezuela, and withdrew its lending commitment. In addition, while Chinese authorities did not impose any political conditions, in keeping with their principle of non-interventionism, they continued to expect repayment of outstanding loans.

We contend that China’s non-interventionist principles and practices have important limitations and that the governance of the commodity-backed loans will require substantive reform if China wants to secure repayment. For Venezuela, long-term practices of rentierism and an authoritarian leadership that eroded oversight and accountability meant that the development goals that inspired its deals with China could not be achieved. Meanwhile, China’s non-interventionism limits its ability to successfully implement the projects it finances. In this case, rather than a ‘debt trap’, the China–Venezuela Development Fund proved to be a lender’s trap for China and a rent trap for Venezuela, in which neither party achieved what it wanted.

A Clash between Authoritarian Developmentalism and Socialist Rentierism

Venezuela is a long-time oil exporter and is often labelled a petro-state (Karl 1997). In essence, the country is heavily reliant on rents derived from the sale of oil on the international market. Petro-states dependent on resource rents generally have the capacity to ‘decouple’ from social constituencies, building linkages of patronage and clientelism with powerful cronies, which lead to poor democratic performance and low levels of development. Venezuela historically developed mechanisms to maximise rent appropriation by imposing royalties and taxes on international oil companies and its own national oil company, Petróleos de Venezuela (PDVSA). With the Bolivarian Revolution since President Hugo Chávez’s rise to power in 1999, new mechanisms of rent appropriation have been established, mainly through the dramatic overvaluation of the currency (Dachevsky and Kornblihtt 2017; Purcell 2017). Between 2003 and 2012—a period of high oil prices—the Venezuelan State used the higher revenues from oil rents to import goods, which allowed it to contain social unrest in an otherwise conflict-prone political environment (Rosales 2016). However, from 2013, this model faced important challenges as the distortions provoked by price and exchange controls triggered inflation, scarcity, and large differentials between the legal exchange rate and the market rate (Rosales 2019). The Venezuelan Government increasingly resorted to monetisation of its fiscal deficit, while maintaining price and profit controls in most productive sectors, triggering hyperinflation that lasted until 2021. According to the Observatorio Venezolano de Finanzas (OVF), in 2018, Venezuelan inflation peaked at nearly 1.7 million per cent. By the end of 2021, inflation remained high (660 per cent), but price growth was en route to stabilisation and for 12 consecutive months price growth was below 50 per cent (OVF 2022).

China’s commodity-backed loans were instrumental to Venezuela’s radical rentier model of development. They allowed the Venezuelan Government to discretionarily spend resources outside traditional institutions of oversight and, more importantly, to use rents before oil extraction even occurred, as these were prepaid oil sales. Ideally, the government expected to use China’s loans for development purposes and carry out large infrastructure projects that would support its industrial policies; however, due to the way this cooperation mechanism was managed, as we will explain below, these goals were not met. Some infrastructure projects were built, especially those related to the housing program Misión Vivienda, which was a key promise of Chávez’s re-election bid in 2012. Also, many Chinese imports were purchased to equip homes with new appliances. This was, however, a watered-down version of the more ambitious original plan to set up subsidiaries of the Chinese appliance company Haier in Venezuela to help satisfy the country’s demand for these products. After years of investment, mostly by the Venezuelan Government, only one subsidiary was built, and it has produced a meagre output (Herrera 2021). Oil investment flowed into oil camps, especially joint ventures, but mismanagement and corruption led to widespread misuse of funds.

Among the most well-known infrastructure projects that have not been implemented is the 468-kilometre railway between Tinaco and Anaco in Venezuela’s central plains, which had a total projected investment of more than 7 billion USD. Construction started in 2009 and was expected to last three years, but only one-third was completed (El Cooperante 2018; Segovia 2021b). According to several interviewees and as corroborated by media reports, agricultural projects commonly fell prey to bribery and corruption networks. For example, in 2010, the Venezuelan Government signed an agreement with Chinese state-owned CAMC Engineering Limited to develop rice-fields in Delta Amacuro, one of the poorest Venezuelan states (Berwirck 2019). CAMC agreed to develop several agricultural projects for about 3 billion USD, but none was completed. The company charged at least 100 million USD for one project, much of which ended up in the hands of contractors and intermediaries (who purportedly helped CAMC secure the contract) (Berwirck 2019). Importantly for the discussion that follows, these problems affected projects to be developed not only in Venezuela but also in China. The China–Venezuela Guangdong Petrochemical complex is a significant example. A plan to develop a 10-billion-USD refinery and petrochemical complex in southern China capable of refining 400,000 barrels a day of Venezuelan crude was agreed on in 2012 (CNPC would have a 60 per cent stake and PDVSA 40 per cent). It was to be inaugurated in 2014 but this was later rescheduled. PDVSA proved incapable of paying the 40 per cent equity investment in the operation and the partnership was dropped in 2018 (Chen 2019).

The Venezuelan example is also often brought up in discussions of China’s lending practices as an example of Beijing’s supposed ‘debt-trap diplomacy’. However, while the popular discourse often accuses China of engaging in this activity—especially because of coverage in the media from the Global North—there is no evidence that China purposefully lent to Venezuela or other high-risk countries in the Global South with the intention of seizing their assets or managing their economies from Beijing. Several scholars have argued that, if anything, the Venezuelan case illustrates a ‘lender’s trap’ that China has created for itself, in so far as lending to a poorly managed and increasingly corrupt economy means that the prospects of its loans being repaid are increasingly slim (Bräutigam 2020; Ferchen 2020).

The China–Venezuela relationship highlights important limitations on the principle of non-intervention, some of which are intrinsic. Power should not be understood as purely material forms of control, or the power of one actor to make another actor do something it would otherwise not do (Barnett and Duvall 2005). There are structural conditions in the relationships between actors in international politics that shape their interactions and behaviour. In this case, the constitution of a relationship based on the crucial exchange of commodities for finance—between a rentier socialist state (Rosales 2016) and a developmentalist authoritarian one (Gonzalez-Vicente 2022)—largely determined relations beyond the declared intention and principles espoused by state officials. As we shall see, in fact, Venezuelan officials created governance conditions that effectively turned Chinese loans from development financing to oil rent for discretionary use. In turn, China’s trust in Venezuela’s authoritarian leadership, and commitment to non-interventionism more broadly, influenced the outcome of these loans.

Senior Venezuelan officials involved in the crafting and management of Chinese loans highlighted in interviews with the authors the importance for both parties of negotiating a price formula for the oil used to repay the loans. This means conditions were already built into the loans through the terms of repayment. Similarly, all were explicit in the negotiations about China’s non-interventionism in political terms: there were no conditions beyond prepaid oil deals. Rodrigo Cabezas, former Minister of Finance (in office 2007–08), recalled that there were some conditions regarding the use of loans to purchase goods from China. In an interview we conducted with him in June 2022, he said: ‘China wrote conditions whereby it became the main supplier of certain goods—for example, vehicle parts, electronic devices, and other technology associated with the satellites that the government launched with Chinese support.’ This arrangement was formalised in a 2010 agreement that led to the creation of the ‘Grand Volume’ fund, worth the equivalent of 20 billion USD. Half of this fund was denominated in US dollars and the other half in renminbi, which would be used to import massive amounts of Chinese goods, including home appliances for Venezuelan households, as explained above. Other financial conditions were related to the institutions in charge of disbursing the funds, including the use of Chinese banks. Both parties wanted to avoid using third countries and financial institutions to channel the deals and hence encourage the building of a financial infrastructure between the two partners. Another senior official, from the Venezuelan Economic and Social Development Bank (Banco de Desarrollo Económico y Social de Venezuela, BANDES), stated that China built in its financial conditions through other means, such as the promise of increased investments (or threat of their withdrawal), interest rates, and other associated commercial conditions that could improve the standing of Chinese companies in the long term.

More importantly, Venezuelan officials devised mechanisms to overcome institutional oversight of the use of Chinese funds. As former BANDES president Temir Porras Ponceleón said in an interview with the authors in 2020: ‘The cooperation fund established a relationship that allowed the resources from oil sales to be used for development projects without ever being recorded in PDVSA’s budget.’ With the China–Venezuela Development Fund, Venezuelan state officials managed to bypass the traditional budget and use Chinese loans as discretionary funds outside the purview of institutional accountability (Mora Contreras 2009, 2017). Moreover, these resources were directly linked to oil sales and treated as oil rents, which were obtained and spent before oil extraction occurred, thus undermining the rentier state’s ability to reinvest in its own industry (Rosales 2016, 2019).

Recent interviews we conducted with former top state officials reveal that government ministers and policymakers in Venezuela saw the China–Venezuela Development Fund as a slush fund and leveraged the urgency of purported developmental projects to obtain approvals from institutions such as BANDES and the Venezuelan presidency with little regard for technical and economic feasibility. In many cases, the fund was used as a pool for private embezzlement (Guerrero 2021; Segovia 2021a).

These practices—derived from long-standing rentier tropes and new political dynamics of increasing authoritarianism—collided with Chinese authoritarian developmentalism. This collision brings about another, more practical limitation to non-interventionism. As Gonzalez-Vicente (2022: 5) has argued: ‘[T]he idea of modernization in the PRC [People’s Republic of China] has become closely associated to measurable or legible outcomes at a national scale, [which also] favours specific forms of development intervention overseas.’ This idea of modernisation was impossible to achieve, as it clashed with the political views of Venezuelan socialist leaders who saw national development as a feature more of rentier redistribution than of national modernisation. This conflict led to what Kaplan and Penfold (2019) have explained as China walking a tightrope between adhering to its foreign policy framework of non-intervention and attempting to collaborate in policymaking with the goal of suggesting reforms that would secure repayment and generate greater success in development projects. Several senior policymakers explained in interviews with the authors that, when consulted, Chinese officials offered extensive policy advice. They blamed intragovernmental disagreements and lack of trust between officials in Venezuela for not following up meaningfully on policy suggestions.

Faced with this dilemma, China progressively withdrew its support to Venezuela. Former senior Venezuelan officials and workers in the oil industry argue that Chinese partners were disappointed with the lack of consistency and continuity in Venezuela’s bureaucracy, which are crucial for the state to carry out modernisation projects (Clark and Rosales 2022). Under Chávez’s personalised political system, turnover in technical teams was high. A former senior official of BANDES explained how Chinese officials would attempt to follow up on projects for years only to witness the countless personnel changes among their Venezuelan counterparts. Chinese technical teams were disappointed with the ‘day-to-day management disaster’ in Venezuela’s bureaucracy. This emphasis on management and state capacity in China’s authoritarian developmentalism clashed with Venezuela’s socialist rentierism.

The concern about management problems perceived by Venezuelan officials is reflected in Chinese government documents such as the country guide for investments in Venezuela of the Ministry of Commerce (MOFCOM 2021: 55), which underscores the ‘frequent changes in Venezuelan decision-making levels’. MOFCOM’s guide recognises that ‘Chinese-funded enterprises carrying out economic and trade cooperation in Venezuela are facing the situation that the debts of the Venezuelan side cannot be repaid’. The guide also highlights the malaise of the country’s economic mismanagement:

The local inflation rate is very high, and as the currency depreciates rapidly, contractors’ expenditure increases significantly, but it is difficult to obtain compensation from the price adjustment; supply of steel, cement, sand and gravel is insufficient while prices keep rising; projects often are forced to be suspended while waiting for supplies of materials. (MOFCOM 2021: 55)

Development Implications

China’s non-interventionism is focused on political principles of state sovereignty and is narrowly concerned with a logic of economic results. It is much less concerned with institutional processes of democratic governance, even when these are part of the partner’s constitutional mandate. These principles are squarely based on measurable outcomes rooted in a legacy of national modernisation. In Venezuela, non-interventionism translated into inaction that led to non-results for both countries’ goals. At the outset of the expanding relationship, Venezuela was meant to become a platform for launching China’s investments in South America and securing an abundant supply of energy—mostly crude oil—and other natural resources. For Venezuela, the relationship with China was expected to leverage its immense oil reserves for the benefit of its infrastructure and developmental projects, while diversifying the markets for its oil (Briceño-Ruiz and Molina Medina 2020; Rosales 2016). Yet, the design of the China–Venezuela Development Fund undermined oversight, accountability, and democracy. Even if neither country shows any affinity with liberal democracy, the lack of oversight and accountability undermined the prospect of achieving the goals of the strategic relationship. Furthermore, China’s non-interventionism prevented it from taking the actions necessary to ensure the success of the projects it funded.

While oil remains an important link between the two countries, the inability to build refineries in China to process Venezuela’s heavy crude and the collapse of Venezuela’s oil industry have challenged the original ambitions of both. As mentioned above, PDVSA was unable to commit sufficient resources and expertise to the joint petrochemical and refinery complex in Guangdong Province. Other planned refineries also never materialised. With the imposition of US sanctions on Venezuelan oil starting in 2019, the country sells its crude at a discount to Chinese companies, which in turn use Malaysian and other intermediaries to resell the oil on international markets (Bloomberg News 2022; Bradstock 2022). Inadvertently, Venezuelan government officials deepened some of the ills they wanted to solve by turning to China for support. Venezuelan resource nationalists long complained about the dynamics of an enclave economy, in which oil was used merely to satisfy global markets, providing little development for the country. In fact, back in the 1980s, the policy of internationalisation led by PDVSA had the goal of creating a network of refineries in the buyers’ markets. The aim was to create a vertically integrated industry with upstream and downstream productive linkages (Rosales 2018b). A similar logic sought to build refineries in China and acquire large transport vessels to avoid oil companies suppressing prices and the resale of Venezuela’s oil to other markets in the absence of refining capacity within China. The failure to realise the infrastructure and oil projects agreed on by the two countries entrenched Venezuela’s disadvantaged position in relation to its partners. Venezuela sells oil at greater discounts and uses intermediaries with hefty fees for transport not only because of US-imposed sanctions, but also because of the lack of refining capacity in China for Venezuela’s heavy crude. By selling its oil at a lower price, PDVSA is required to ship more crude oil to China because the total price has already been paid.

The Future of China’s Lending in the Global South

Recent scholarship on China’s presence in the Global South has highlighted a gradual shift in its engagement, with declining numbers of bilateral loans but increasing partnerships with traditional lenders (Carmody et al. 2022). A move to ‘donorship’ is also evident in the context of the Covid-19 pandemic and its aftermath, with China increasingly pledging grants as a donor to developing countries to help solve problems, instead of issuing intergovernmental loans. Similarly, China could be encouraging more loans from commercial banks, such as the Industrial and Commercial Bank of China and private outward investment (Gallagher and Myers 2022), rather than massive public loans from state-owned banks to national governments. These changes could help diversify the exposure of state institutions and contribute to sharing the responsibility for foreign lending with other actors and states. Yet, these changes are framed within continued support for development financing and encouragement of a different form of leadership on the world stage.

As Banik and Bull (2022) underscore, China’s support for multilateralism strengthened during the Covid-19 pandemic, as well as a discursive rejection of unilateral action, sanctions, and bullying by traditional powers. Banik and Bull (2022) argue that this defence of multilateralism seeks to highlight the existing crisis of legitimacy encouraged in part by the actions of the United States and other traditional powers, while elevating China’s respect for state sovereignty and handling of strategic interests directly with state leaders. This is ‘a form of multilateralism that places China in the lead while seeking to deepen bilateral alliances’ (Banik and Bull 2022: 226). In a nutshell, while Chinese practices seem to fall into line with those of other lending institutions, China continues to favour dealing with debt restructuring on a case-by-case basis.

The dynamic engagement with Venezuela in the past two decades offers some key lessons for China’s development financing. It is incumbent on the Chinese leadership and scholars of development to recognise that engagement in development financing is already a form of structural power that helps define and constrain global politics even without imposing explicit conditions. Crucially, acknowledging the structural power of large development lenders embedded in deeply rooted productive dynamics is fundamental for a more responsible lending outlook. While non-interventionism may be an important principle in China’s foreign policy, it has limitations in the face of structural economic conditions, such as resource-dependent economies, and the very nature of ‘win-win’ cooperation agreements that are based on continuing and deepening such dependence. Non-interventionism does not necessarily lead to neutrality or cooperation; it can also be damning if it strengthens existing rentier practices that undermine accountability and oversight.

In fact, non-interventionism in the Venezuelan case allowed a predatory elite to use Chinese commodity-backed loans with little to no oversight, which undermined the rentier state by diverting funds that could have been reinvested in oilfields and infrastructure. For this reason, linking infrastructure and development projects to financing schemes dependent on volatile commodity markets should be done with caution, especially in countries with poor institutions and governance. The structural power of the lender in this case can lead to deepening of unsustainable rentier practices, even if unintentionally, by conditioning the relationship on commodity-backed loans.

This essay is the result of research carried out under the project ‘Chinese Multilateralism and Its Impact on Environmental and Democratic Governance in Africa and Latin America’, which has been generously funded by the Norwegian Research Council. We thank Wei Guo and Louis-Charles Vaillancourt for their excellent research assistance.

Critical geographers have been exploring how social actors organise space to sustain unequal social relations and how, in turn, these relations shape the space and politics around them. In examining how ‘place becomes race’, Razack (2018: 114) elaborates on how settler-colonial projects remake the conquered land into white settler society by producing segregated spaces and racial hierarchies. Based on Henri Lefebvre’s theorisation of spatial politics, this approach shows that racial hierarchies operate with gender and class domination while simultaneously constituting and reinforcing each other.

In analysing spatial politics, Lefebvre identifies three elements in the production of social space—that is, conceived, perceived, and experienced (or lived) space. First, conceived space, or representations of space, refers to how planners and corporate entities conceive of and plan spatial organisation. Second, perceived space emerges from the everyday routines and spatial practices that organise social life and inform people about their relative identities within a space. Finally, experienced (or lived) space is ‘directly lived through its associated images and symbols’, and ‘is the dominated—and hence passively experienced—space which the imagination seeks to change and appropriate’ (Lefebvre 1991: 39).

Building on this critical analysis of space and spatial politics, I use ethnographic evidence from my research on the transnational Coca Codo Sinclair (CCS) Hydroelectric Project in Ecuador. The CCS is a hydroelectric dam construction project contracted to Sinohydro Corporation, a Chinese state-owned construction firm, and funded by a 1.7-billion-USD Chinese Government loan that Ecuador agreed to repay with oil exports (Escribano 2013; for more details about the project, see Castro 2022). I conducted fieldwork for four months during 2013 and 2014 to explore how Sinohydro organises boundaries between spaces, bodies, and symbolic differences to relationally produce and maintain the daily organisation of work and life at the construction site. Because I am a Chinese person fluent in Spanish and the project had a severe shortage of interpreters, during my research, both Chinese and Ecuadorian employees often asked for my help with interpretation. In an environment in which mutual understanding was at best a challenge, my linguistic ability and efforts to facilitate communication between the Chinese and Ecuadorian employees also allowed me to closely observe their daily work and personal interactions.

Using Lefebvre’s theory of social space, which brings together the materiality and symbolic meanings of space structured by relationships of production and reproduction (see Razack 2018: 119), my analysis traces how spatial design encodes messages about where one should be and to whom one should relate. This design reveals the labour and social controls the Chinese company and its capital impose on all workers. I zoom in on how the small number of Chinese female workers living at the base camp organise their rhythms of work and life within that space, and how such practices confirm and subtly contest racialised and gendered relationships and boundaries that were reinforced by the spatial arrangements at the site.

I begin with a spatial analysis of the built environment of the CCS Project’s base camp, where the Chinese and Ecuadorian construction engineers and workers are housed. I further problematise the fence around the female dormitory as a symbol of spatial demarcation and differentiated bodies moving through space. I argue that the fence implicitly signifies the international division between Chinese capital and an underdeveloped Ecuador, and the class and social divisions between superior Chinese managers and engineers and unskilled local workers. As Chinese global capital relies on spatial and social organisation to routinely condition workers to a prescribed workplace rhythm and discipline, I show how the employees interpret the company’s representation of space and learn its rules and boundaries. The female Chinese employees, for example, adapted their own spatial practices, leveraging their relative social positions to push against the porosity of those boundaries. I argue that the social organisation of space not only reveals the cultural and labour politics that China’s state-owned capital was shaping on the ground in Ecuador. The conceived space also structures emergent social interactions and forms new and intersecting power hierarchies along lines of nationality (Chinese versus Ecuadorian), class, and gender.

The Organisation of Space

The CCS Project is about 170 kilometres east of the Ecuadorian capital, Quito, at the boundary of the Andean highlands and the Amazon rainforest where several rivers converge to form the San Rafael Falls. In 2013, during my first research trip, a colleague introduced me to a Chinese manager in charge of Sinohydro’s construction projects in Ecuador. Being a Chinese person and graduate of a renowned university helped me gain permission to conduct research on the CCS Project. In December 2013, the manager sent me to ride with workers in a project vehicle to the main base camp, next to the construction site for the project’s water diversion tunnel. After a four-hour drive, we arrived at the base camp entrance. The driver carefully turned on to a paved road leading to a gate guarded by black-uniformed Ecuadorian security guards (hired from a local company) sitting in a booth. Off to the right was a muddy, faded sign identifying this as the CCS Hydroelectric Project camp. To the left of the gate, a stone pedestal with Chinese characters spelled out the name Sinohydro Corporation (中国水电). Because the gate was off the road with hardly any signage, it was difficult to locate the entrance.

When one of the security guards walked towards the car with a writing pad in hand, the driver pulled over, rolled down his window, and handed the guard his ID card. The guard then dutifully logged the driver’s identification number on the sign-in sheet. The guard then looked inside the car, making eye contact as he noted each passenger. As he drew back, he finally waved his hand to let the car enter.

As we proceeded, we encountered another gate guarded by more local security guards, who performed the same procedure with the driver and passengers. We then arrived at the central office complex—a single-storey building with beige walls and a light-blue metal roof (see Figure 1) adjoining neatly laid out housing and dining facilities. I joined a group of new personnel checking in as we watched construction materials being delivered at the front of the office. An Ecuadorian security guard in an orange reflective vest also sat there, scanning people as they passed. The isolation of the base camp was in sharp relief with the buzz of activity and people at the office complex. I drew a map to show the layout of the base camp (Figure 2).

Named after the adjacent village of San Luis, the base camp served as the headquarters for four construction sites. It housed the engineers, business and administrative staff, and Chinese and Ecuadorian workers building the water diversion tunnel across the Coca River. Before the project began, Sinohydro had carefully planned the spatial organisation of the base camp, and the design team completed several rounds of modifications to adapt this to local housing standards. They marked off spaces for different types of housing with clear boundaries such as the fence around the female dormitories. Although the building quality was improved from that on the plan, Sinohydro insisted on maintaining rigid patriarchal boundaries based on professional, national, and gender status for the Chinese and Ecuadorian employees who would be working at the site.

The office complex was the most prominent structure and the central hub for work and life. Inside the building, each of the project’s departments occupied a spacious room (close to 100 square metres), well equipped with office furniture and supplies, conference rooms, and a wireless internet network. As the Chinese engineer in charge of designing the spatial layout of the camp explained to me:

The Chinese employees on the project greatly appreciated having access to this spacious office because it was built according to the standards of a permanent building compared to the temporary buildings they were used to on construction sites in China.

The Chinese employees also enjoyed being in the office complex because its spatial organisation highlighted the superior managerial positions they occupied compared with the Ecuadorians. The department directors divided the large office for engineers and business staff into clusters of desks grouped according to professional rank. Within each department, higher-ranking employees such as directors and lead engineers, all of whom were Chinese, occupied one or two desks in a corner away from the rest of the staff. Lower-ranking employees worked face-to-face at a larger workstation with four desks pushed together, meaning they were highly aware of one another’s schedules and tasks. The Chinese employees usually sat near the windows with views of the neat garden, while the Ecuadorian employees sat by the hallway. The lowest-ranking Ecuadorian secretaries (all of whom were women) occupied the transitional spot next to the door.

The location of the desks of the female Ecuadorian secretaries and Chinese interpreters was flexible—their spatial assignments subject to the director’s often arbitrary discretion. I observed that two Ecuadorian secretaries shared a desk, but they did not always stay there because the desk could be turned into a temporary place to pile project files or host visitors from other departments or camps.

In an environment in which people interpreted spatial assignments as corresponding to and displaying one’s status in the hierarchy and their attendant privileges, the fact that the Chinese engineers and managers occupied the prime areas in the office while the Ecuadorians and women were assigned peripheral areas conveyed the practical boundaries that divided the workers—marked by professional rank, nationality, and gender.

The employees’ dormitories at the base camp also had clearly demarcated hierarchical boundaries. The apartments and barracks sprawled to the east of the office complex across a 5-metre-wide path. Each of the nine two-storey buildings, dubbed ‘apartments’ by employees, had eight rooms equipped with internet connections, satellite televisions, and private bathrooms. Each room housed usually only one person, or occasionally two. Managers and senior staff could take advantage of the larger space and spend more time alone. Across a paved path were single-storey barracks housing male Chinese and Ecuadorian construction workers and junior staff that were assigned according to nationality. Typically, six to eight people of the same nationality shared one small room. Each unit was equipped with a communal bathroom but did not have internet access. Once, when I accompanied a Chinese manager to examine a typical male dormitory room, he described the situation: ‘The bunks take up most of the space in a room. Aisles between the bunks are constantly crammed with dirty clothes and shoes.’

At the beginning of my research, I expected that Chinese construction workers in a foreign country sharing a room and similar cultural backgrounds would develop a high level of personal friendship or solidarity. This was not the case. Male workers and engineers told me that the rooms were so small and messy that they were almost intolerable for day-to-day living, so most people chose to stay up late in the office and only came to the dormitories to sleep. In addition to the tight space, the deliberate placement of the younger engineers with middle-aged construction workers tended to make personal connections harder to develop. A recently graduated Chinese engineer from Beijing told me: ‘I had little in common with the middle-aged workers because we were of different generations and socio-cultural backgrounds. Even though I stayed with them for a year, we hardly talked and never developed personal connections.’

Though several younger engineers asked to share a room with their peers and have better furnishings, the company turned down their requests, arguing that dorm capacity was severely limited.

This organisation significantly shaped the social dynamics of the workplace. One major finding of my study was that although Chinese employees came from a more developed country and held higher-status jobs, they were compensated at a lower rate and had fewer labour rights than their Ecuadorian counterparts. Yet, unlike the Ecuadorian workers, the Chinese did not engage in collective organising or bargaining. I argue that because the Chinese employees were temporary migrant workers recruited and compensated under Chinese labour market standards and governed by Chinese labour laws and workplace culture, instead of making collective demands, they found it more effective to embody the ‘tough worker’ identity to increase their bargaining power and resolve their grievances on an individual basis (for more details on different labour rights and employees’ responses, see Peng 2021). On top of that, Sinohydro relied on spatial organisation that separated Chinese employees by class and nationality, to add another layer of control over worker relationships.

Like class and nationality, gendered space was prominently delimited with a green fence around the two dormitories housing about 30 mostly Chinese female employees (see Figure 3), the only opening in which was a small door on to a well-lit path leading directly to the canteens and office building.

The Gendered Space Division

The CCS, like other hydroelectric construction projects, is a male-dominated workplace. Chinese women occupied specialised and technical jobs as interpreters, accountants, heavy machinery operators, and cement technicians. Known for working meticulously and skilfully, Chinese women specialising in technical areas, such as heavy machinery operators, outcompeted men, while female interpreters and business staff were bilingual and more culturally aware, with a sophisticated ability to smoothly navigate cultural and social boundaries. Ecuadorian women occupied low-status jobs as secretaries, cleaners, and kitchen helpers.

Due to the small number of women working at the base camp, the dormitory housing Chinese women was much less crowded than the men’s. Typically, two women roomed together, and each had her own bunk, storing their clothing and belongings on its upper level; some even managed to bring a wardrobe or desk into the room. Yet, even though the rooms were more comfortable and spacious than those in the male dormitories, as I will show, the fence enclosing the dormitory strongly symbolised both the spatial and the social control of women’s work and everyday lives.

More than a few times, I had heated discussions with administrators and staff about their attitudes towards and opinions about women. The engineers and managers, almost all of whom were men, called themselves ‘hydro-workers’ (水电工人)—a label often invoked together with descriptions of harsh working conditions on construction sites in the wilderness to express implicitly masculine connotations (see Peng 2021). They were not reticent about saying women were out of place on the project. A geological surveyor named Jiayi summarised the sentiment: ‘Let me tell you: hydroelectric construction sites are very harsh working environments; we often work in the wilderness. Women are not made to do this type of job. Besides, they face male aggression and need to be protected.’

In daily interactions, similarly biased remarks abounded: most men believed men and women had different aptitudes for construction work. The dormitory fence symbolised the exclusion of women. Since women were out of place, their bodies had to be controlled. That shared perception among the men strengthened the commonly held view that only men were suited to do this kind of work and affirmed their sense of solidarity. But because the smooth operation of the construction project was reliant on these women performing technical and specialised jobs as machinery operators, interpreters, and business staff, male ‘hydro-workers’ felt a need to defend their central place in the professional hierarchy. The spatial and symbolic framing of women as subjects in need of protection reinforced the gendered beliefs that women were unfit for and, at best, auxiliaries in the hydroelectric construction industry.

The fences around the women’s dormitory visually and materially marked off an area distinct from the rest of the base camp. The Chinese camp designers regarded it as a ‘protected’ zone designed to ward off threats. The Chinese directors and managers often mentioned that local Ecuadorian men usually had multiple wives and were casual in their relationships, and Chinese female employees were constantly trying to fend off unwanted attention from Ecuadorian male workers. It was obvious that the ‘threats’ referred to possible aggression from the Ecuadorian male workers living in the camp. The fence, as a visual and boundary marker, gave the ‘illusion of transparency’ (Lefebvre 1991: 28)—the impression that the subordinate group’s daily activities and work performances could be read and thus controlled. In this way, the fence created readable and reproducible spaces that confirmed and accentuated the assumed hierarchy among Chinese and Ecuadorian employees, men and women, and more skilled and less skilled workers.

Divisions that specifically concerned Chinese female employees were the discourses and collective practices portraying them as sexually conservative and thus disciplined by patriarchal norms of female conduct. This was achieved by discursively constructing Ecuadorian women as the sexually loose ‘others’ and less skilled than Chinese women. Chinese women—including myself—were often told not to go outside the camp alone. After I persistently asked why, one senior engineer explained:

Places like this [outside the camp] are not safe and appropriate for Chinese women. Locals are too open: the men have multiple wives, and women are casual and loose. But Chinese women are professional and prudish, better protected inside the camp.

The discourse portraying Chinese women as ‘professional and prudish’ and ‘protected’ by boundaries such as the fence reflected the broader Chinese managerial ethos that state-owned companies like Sinohydro sought to transplant to the overseas workplace. This management style and labour control strategies rely on a culturally specific, predominantly male vision of foreign spaces as potentially dangerous (thus, meant only for men to explore) but full of development and profit potential. This conception and representation of space normalised the Chinese male workers’ taken-for-granted masculine notions about work, including enduring harsh working conditions, occupying high status in the professional hierarchy, and conquering the harsh environment through projects in the Global South.

Strategies for Transgressing Spatial and Symbolic Boundaries

Despite all this, the women responded to, animated, or contested the fence’s symbolic meanings. At times, the women’s everyday practices within their confined spaces generated for them a sense of freedom. Though this freedom might have been limited, the women tried to chip away at the divisive rules regulating their work and relationships on the project.

Sinohydro attempted to contain and control the behaviour of its female employees in their professional and everyday lives. In response, Qingli, the first and most experienced interpreter dispatched to work on the CCS Project, vocally contested her place in the company’s hierarchy. She was the go-to interpreter for negotiating with Ecuadorian business partners. In 2014, when the time came for annual self-evaluations and nominations for the best staff, Qingli put ‘excellent’ in her evaluation. She told me:

I’ve performed the largest volume of translation and interpreting work, but the director in my department suggested that I tune down my evaluation and put [the neutral category] ‘qualified’ instead. He had already decided to give the award to a newer [female] interpreter who had just taken a month-long vacation and had not worked as hard as I had.

Qingli confronted the director about the decision. The director responded by saying management needed to balance the rewards to protect the new interpreter’s motivation.

Operating under the gendered premise that men dominated this field and women needed guidance and protection, management tried to protect the motivation of the Chinese women employees lest they were unable to endure the conditions on an overseas hydroelectric project. But highly qualified employees like Qingli viewed the company’s practices as containing their professional achievements—as a reaction to the dreaded possibility that their linguistic and professional capabilities might motivate them to leave to work for other companies in Ecuador. Hand in hand with the control over women in their professional lives, management also regulated their personal lives so their presence would better serve the goals of the company.

This was evident when a male engineer from the company pursued Qingli publicly. After she started dating him, her colleagues, especially management, quickly came to regard the relationship as an officially ordained one. On learning more about the man, Qingli determined that he was not suitable and ended the relationship, but her rejection prompted management to intervene. As Qingli recalled: ‘Both my director and manager talked with me, asking whether I was sure about my decision. They were afraid that I might be more attracted to my Ecuadorian co-workers.’

The company’s intervention was not a stand-alone incident. As confirmed by other young Chinese employees, the company and older employees viewed romantic relationships between two Chinese colleagues as a sign of loyalty to the company and its values. The expectation was that the couple would feel more bound not only to each other but also to Sinohydro. Despite the company’s intervention, Qingli did not change her mind. She later started dating an Ecuadorian interpreter of Chinese descent. The last time I talked with her, she had left Sinohydro and was working for a private Chinese company in Central America.

The green metal fence around their dormitory can be read as the material assurance and marker for the company’s control over the women’s work and relationships. By claiming that the fence could protect women from male aggression, the company constructed and reinforced an implicitly stereotypical image of aggressive Ecuadorian men to police the behaviour of the Chinese women employees and to encourage them to engage only in ‘proper’ relationships with appropriate Chinese men. On a deeper level, the regulation of female employees’ personal relationships was ultimately aimed at ensuring their sustained work and commitment to the project.

Yet, I observed that the female workers living inside the fence felt more restricted than protected by it. For example, they paid close attention to whether other women returned to the dormitory at night according to the company rule. I was hanging out with Chinese female employees on several occasions when they commented on other Chinese women who failed to observe the dormitory rule. The conversations often escaped beyond the fence and became gossip that singled out or shamed the subjects. Consequently, Chinese women became more discreet and compliant with company rules. Still, there were many ways these women tried to evade the restrictions the fence symbolised.

Jing was a junior interpreter who had been developing a close relationship with a Chinese engineer. Though the company encouraged relationships between Chinese men and women, rumours spread about Jing’s ‘loose’ behaviour because her colleagues believed her relationship had evolved ‘too quickly’. Before long, Jing’s boyfriend went on his scheduled leave to China. Jing immediately moved out of the dormitory and stayed in her boyfriend’s single-room apartment to escape her colleagues’ and management’s watchful eyes. Jing complained to me:

Personal life here, compared to work, is much less important. We stayed in the office all the time and had no private life … Unlike men who often went outside to have fun, as a woman, I’m concerned about my safety. I’ve encountered much harassment from local men who catcalled at us all the time. I ignored them, and they eventually stopped. But the managers are less harsh toward women and our requests [to have more personal space or better living conditions] compared to male colleagues.

By dating the appropriate man, on the surface, Jing satisfied the company’s intention to contain women. She also exploited the managerial concern for women’s safety to access what she desired, although she did not challenge the premise for such control. Like Jing, many of the women believed the fence did little to protect them from real or imagined dangers in and outside the camp but was a reminder of being under the company’s control. They tried to evade symbolic control by engaging in approved behaviours in their relationships while carving out alternative spaces to seek more freedom.

Spatial Politics and Labour Control

As I have shown, professional rank, class, and gender divisions at the CCS Project site intersected to inform the organisation of space and labour relations. These divisions were symbolised in material contrasts between the apartments and barracks, the fenced-off female dormitory and the rest, constantly reminding people of their place as they carried out their daily activities and moved through the space. Labour control thrived by also regulating employees’ social relations and daily practices in space according to management’s definition of the appropriate place to be and relationships to have.

Focusing on the spatial design, the fence, and the Chinese employees’ responses, I argue that the Chinese transnational company relied on the logic of spatial differentiation and patriarchal social norms to discipline and control their employees’ labour processes and produce efficient workers. I have highlighted how the Chinese women perceived and negotiated the built space and responded to the discourses about their skills, romantic relationships, and loyalty. I use these observations to reveal the cultural and labour politics that Chinese transnational projects can engender in their operations in Ecuador. At the base camp, as in other spaces, the spatial organisation of China’s transnational projects reverberated and had a collateral impact on social relationships. These interactions, in turn, shaped the gendered organisation of work while reinforcing labour hierarchies and inequalities. By accounting for the experiences of women living in the space, I show how marginalised actors strategised to transgress those boundaries and contest their assigned places in the hierarchy as they pushed against Chinese transnational capital’s labour control practices in the workplace.

This essay examines the creation of international development studies in China over the past decade as an intellectual project. It traces the genealogy of the nascent state disciplinary apparatus, making visible the evolving landscape of individuals, institutions, and ideologies at a complicated moment of geopolitical flux, in close relation to the Belt and Road Initiative and the intensifying US–China rivalry. Examining the rise of a division of social-scientific labour in this light reveals something profound about how Chinese political and intellectual elites attempt to organise the world and find China’s place in it.

Over the past decade, a growing, albeit still small, number of university departments and government think tanks focusing on international development teaching and research have been established in China. A particularly important cohort of Chinese academics and policy researchers (hereinafter, ‘expert-scholars’) has come to be publicly identified as advisors, advocates, theorists, and critics who contribute in more or less direct and influential ways to China’s international development thinking and praxis. Located in different disciplines and institutions, these expert-scholars increasingly represent a loose but rapidly consolidating ‘epistemic community’ with a common policy enterprise—that is, to supply ideas to China’s accelerating development cooperation that are increasingly focused on legitimising a celebratory account of the ‘China Model’. Their intellectual efforts include describing China’s developmental path and promoting it as a model of development in Global South–South relations—efforts that are often accompanied by the de-politicisation of development and China’s domestic trajectory, with the potential result of partner countries glossing over the ‘dark side’ of the Chinese story.

Historically, Chinese policymakers and expert-scholars have been unfamiliar and/or uncomfortable with the notion of international development as an independent policy field of the kind that emerged in the West in the 1950s. The official discourse does not distinguish ‘aid’ from Third World solidarity or economic cooperation (Tan-Mullins et al. 2010). While this narrative remains crucial, under his ‘great power diplomacy’ doctrine, Chinese President Xi Jinping (2017b) has called for the enhancement of ‘China’s international influence, ability to inspire, and power to shape’ the external world. Following the inception of the Belt and Road Initiative (BRI) in 2013 and in the context of intensifying US–China rivalry, a discursive field has emerged in which the meaning of international development is being rearticulated by Chinese policymakers and expert-scholars, engendering an expanding state-disciplinary apparatus. This new discursive field is not independent of geopolitical and geo-economic discourses, producing divisions of knowledge that constitute objects such as ‘development’ and spaces like ‘BRI countries’ as targets for ‘partnership’.

More than an academic practice, Chinese international development studies should be considered a state-sponsored attempt to build Global China’s knowledge infrastructure—that is, regimes of knowledge that produce, transmit, and stabilise ‘truths’ about other peoples and places. This is not unique to China. The making of development studies (and area studies) in the West, mostly in the 1950s and 1960s, was underpinned by the colonial era and the beginnings of the Cold War (Bernstein 2006; Cooper and Packard 1997; Kothari 2019). Pletsch (1981: 584) persuasively argues that ‘it was the sudden appearance of the Soviet bloc in Western strategic calculations that gave rise to the three worlds scheme, modernization theory, and the systematic division of social scientific labor’. Often supported by contracts from governments and aid agencies for vocational training, applied research, and consultancy, Western development studies was integral to the postwar explosion of institutions, professions, organisations, and disciplines whose raison d’être was development (Watts 1993).

The rise of Chinese international development studies locates the intertwined geographies of Global China as not only ‘out there’, but also ‘in here’. This relational perspective is timely because, while much has been said about the influence of China’s internal dynamics on its overseas engagements, less discussed is the transformation experienced at home during such outward-facing processes (Gonzalez-Vicente 2011). Approaching the rise of Chinese international development studies in this vein brings to the fore China’s domestic reorganisation of power and discourse and the attendant institutional change given its global ‘rise’. It also advances the understanding of Global China as a work-in-progress of Chinese–global entanglements and as a ‘method’ insofar as it ‘helps us overcome the longstanding “methodological nationalism” that has plagued China studies, area studies, and the social sciences in general’ (Lee 2022: 29; see also Byler 2021; Franceschini and Loubere 2022).

Studying Foreign Aid and Development Cooperation

The People’s Republic of China (PRC) has a history of providing aid to foreign countries that stretches as far back as 1950 (Bräutigam 2009). Diverging from Western norms, Chinese development finance takes several forms, ranging from grant aid, aid in kind, and zero-interest loans, to subsidised loans, commercial loans, and investments. However, the study of aid as a distinct research subject did not take off as early in China. While Chinese expert-scholars had begun watching US and Soviet aid in the 1950s, it was not until the early 1970s that the Chinese Ministry of Commerce (MOFCOM) set up an in-house research unit within the Chinese Academy of International Trade and Economic Cooperation, where a small team of policy staff monitored Chinese aid flows. The unit, later formalised as the Institute of Foreign Aid (商务部对外援助研究所) and renamed in 2014 the Institute of International Development Cooperation (商务部国际发展合作研究所), was China’s first and, for a long time, only research institution dedicated to the subject.

While the institute’s establishment and growth could be said to owe much to endogenous policy needs, the gradual emergence of Chinese international development studies since the 2000s has more to do with exogenous context, conditions, and impetuses, or the combined ‘push and pull’ of domestic and global forces strongly shaped by key geopolitical events. Specifically, the Forum on China–Africa Cooperation 2006 Beijing Summit, with its significant aid commitments, led many in the ‘traditional’ development regime (including official agencies, the media and public, academia, and think tanks) to recognise and question China’s aid policies and development impact in Africa and beyond (Manning 2006). International accusations of neocolonialism and ‘rogue aid’ (for example, Naim 2009) and domestic concerns about punching above one’s weight when there was vast poverty at home propelled several Chinese Africanists as well as international relations and world economics scholars who had studied Western aid to write about the ‘time-tested’ China–Africa friendship and South–South solidarity.

Active expert-scholars at this stage came from Peking University (PKU), the China Institutes of Contemporary International Relations, the Chinese Academy of Social Sciences, and Xiamen University, among others. Most participated in the Organisation for Economic Co-operation and Development (OECD) Development Assistance Committee (DAC) China Study Group between 2009 and 2011—an informal arrangement initiated by the DAC to (cautiously) engage with ‘non-DAC donors’ (Manning 2006). Through various research taskforces and policy workshops, the group created the physical and discursive space in which to assemble a loose but emerging Chinese ‘epistemic community’. During this period, some small research hubs on aid and development cooperation were set up, including at Xiamen University, as well as at the University of International Business and Economics (UIBE) and the Chinese Agricultural University (CAU)—both in Beijing—although they existed in all but name only. The subject gained further momentum with interest from prominent scholars such as Xue Lan at Tsinghua University’s School of Public Policy and Management, which is China’s equivalent to Harvard University’s Kennedy School of Government.

The inception of the BRI in 2013 brought with it a visible growth in academic and policy research and commentary, positioning aid and development cooperation as key pillars of the initiative’s multifaceted international partnerships. Initially, the connection was argued in terms of the BRI’s resemblance to the Marshall Plan—a notion soon discredited by the Chinese Government for inspiring speculation about its geopolitical ambitions and ‘spheres of influence’. Nevertheless, the fact that a large number of BRI-branded projects are funded by loans from China’s policy banks, including the China Development Bank and Export–Import Bank of China, as well as China’s increasing deployment of multilateral and sovereign development finance through the Asian Infrastructure Investment Bank and the Silk Road Fund (Liu et al. 2020), provided Chinese expert-scholars and their institutions with ample reasons to claim the relevance of studying aid and development cooperation. Subsequently, several Chinese universities created BRI-focused teaching or research programs in different disciplines, including Tsinghua (global governance), Fudan (international relations), Beijing Normal University (social policy), and CAU (rural studies).

The establishment of the China International Development Cooperation Agency (中国国家国际发展合作署, CIDCA) in 2018, to consolidate aid management in support of the BRI and President Xi’s ‘great power diplomacy’ doctrine, supplied Chinese expert-scholars with a strong sense of enthusiasm, as clearly manifested in the weeks of workshops, lectures, meetings, and conferences that followed the agency’s establishment. Within three months, the Shanghai University of International Business and Economics founded the International Development Cooperation Academy, soon followed by UIBE’s School of International Development and Cooperation, which was the first university department dedicated to the subject in China. Both have now grown into fully fledged academic institutions with research faculty and degree programs, with the common themes of aid and development cooperation as foreign policy instruments for the BRI at their core. In July 2022, CIDCA established its two ‘do tanks’: the Foreign Aid Support Center (对外援助服务保障中心), to improve the monitoring and evaluation of Chinese aid projects, and the Global Development Promotion Center (全球发展促进中心), to implement Xi’s Global Development Initiative, which was announced in 2021.

Studying Development Theory and Social Change

In the early 2000s, Western development agencies including the World Bank, the United Nations, and the (former) UK Department for International Development increasingly turned to the Chinese domestic experience of poverty reduction and economic growth in the Reform Era to explore lessons of international relevance that could potentially help achieve the Millennium Development Goals. Beijing viewed its poverty reduction as a success story—ideal for promoting China’s ‘peaceful rise’ and addressing Western pressures for it to become a ‘responsible international stakeholder’ (Zoellick 2005). This convergence of interests led to Shanghai hosting the World Bank’s Global Conference on Scaling Up Poverty Reduction in 2004 and, subsequently, the establishment of the International Poverty Reduction Center in China (中国国际扶贫中心, IPRCC) in Beijing in 2006 to facilitate international research and training on China’s development experience. The IPRCC was affiliated with the then Office of the State Council Leading Group on Poverty Alleviation and Development (国务院扶贫开发领导小组办公室; now the National Administration for Rural Revitalisation, 国务院乡村振兴局) and began to bring the latter’s pool of Chinese expert-scholars specialising in national development into the realm of international development studies, including by involving them in the DAC China Study Group.

China’s relatively successful weathering of the 2008 Global Financial Crisis, and its surpassing of Japan in 2010 to become the world’s second-largest economy by nominal gross domestic product, led Beijing to raise its sights as a possible contender for world leadership. Notably, this gave rise to Beijing’s open propagation of the ‘China Model’—originally a foreign creation that came ‘to be embraced subsequently by Chinese leaders and writers anxious to establish a developmental identity of China’s own’ (Dirlik 2012: 277). Following China’s quick restoration of high growth rates, especially in contrast with continued challenges in major Western economies, there was a further surge of interest from many developing countries in learning from the Chinese experience (de Haan 2011). An important manifestation of this increasing interest was the World Bank’s appointment of prominent PKU economist Justin Yifu Lin as its chief economist and senior vice-president from 2008 to 2012. Lin was the first citizen from a developing country to hold this post.

Under Xi Jinping, China has identified itself as ‘moving closer and closer to the world’s centre-stage’ in the New Era of national rejuvenation and global re-emergence (Xi 2017b). Accompanying the growing discursive visibility of the China Model at home is the intensifying assertion of ‘Chinese wisdom and Chinese solutions’ (中国智慧和中国方案) to problems facing the ‘community with a shared future for mankind’ (人类命运共同体). While continuing to object to the idea that there is a model to export, the Chinese Government changed from carefully noting that the Chinese experience may not be applicable in other contexts to declaring the China Model as the country’s gift to the world. The new approach seems to contrast with the experimental, gradual, and contextual development of policies in China before Xi’s era. Indeed, the ‘model’ seems to have changed too much to really represent a model. What are characterised as ‘Chinese solutions’ are often based on China’s process of learning from other countries (in East Asia, for example). The emerging development discourse, however, has failed to capture these nuances.

Against this backdrop, at the UN Sustainable Development Summit in 2015, Xi announced the establishment of the Institute of South–South Cooperation and Development (南南合作与发展学院, ISSCAD), now hosted by PKU with Justin Yifu Lin as its inaugural dean, and the Center for International Knowledge on Development (中国国际发展知识中心, CIKD), based at the Development Research Center of the State Council, which is the Cabinet’s premier think tank. ISSCAD and the CIKD have been tasked with reviewing and sharing the Chinese experience with other developing countries, with the former focusing more on CIDCA-funded academic programs and the latter on policy engagement (although the distinction is blurred in practice).

The ethos of ISSCAD draws closely on Lin’s ambition since his return to Beijing in 2012 to construct a Chinese/non-Western development (economics) theory. For him, China’s ‘unprecedented economic miracle’ should be held up as a ‘goldmine’ for theoretical innovation, to move towards a theory of the ‘general principles’ behind a country’s development (Lin 2019). Lin also makes a qualitative distinction between the different locations of knowledge production. In his view, the validity of a theory/experience depends on fulfilling the preconditions of that theory or experience, and the preconditions are more similar among developing countries than between developing and developed countries (Lin 2017). Lin thus argues that sharing experiences among developing countries and learning theories generated from developing countries (in this case, China) are more useful for realising developing countries’ aspirations for industrialisation and modernisation. In this vein, ISSCAD promises to theorise from the Global South, by ‘removing the shackles’ of the Western-dominated paradigm of development studies (Lin 2017).

Similarly, the CIKD’s premise is founded on the apparently stark contrast between the vast poverty in the Global South and China’s remarkable changes in recent decades (even though there are many developing countries with higher living standards than China), which leads it to contend that many countries have not found a development theory and path that are suitable to their conditions (Xinhua 2017). In the CIKD’s view, China has a responsibility to systematically study and theoretically refine its experience for other countries’ reference and learning. The CIKD has pledged to translate the Chinese experience into concrete ‘knowledge products’ (such as research papers on Chinese approaches to industrialisation and infrastructure investment) that contribute Chinese wisdom and solutions to global development challenges. The principal aim of its inaugural flagship program, called ‘China’s Development Path’, was to establish the ‘general principles’ and ‘common values’ embedded in the Chinese experience and to ‘enrich methodological and path options for developing countries to achieve modernisation’ (CIKD n.d.), but it was short of critical reflections on the meaning of modernisation beyond economic growth or the limitations of and ‘bumps’ in the Chinese path. Unlike ISSCAD, which has a predominantly economic focus, the CIKD takes a multidisciplinary approach—including economics, political science, and sociology—to apprehending broader lessons underlying the Chinese experience that can be shared with the Global South. Its work aligns closely with President Xi’s promotion of ‘Chinese-style modernisation’ at the Twentieth National Congress of the Chinese Communist Party (CCP) in 2022, which will serve as the main driver of China’s major policy initiatives for the next five years and beyond (Xinhua 2022).

Development Knowledge as Power

Essential to the Chinese state apparatus and its demand for policy advice, technical training for developing countries, and international dialogue, Chinese international development studies is now envisaged as generating both theoretical frameworks and applied knowledge that are increasingly framed around the China Model. Studies of foreign aid and development cooperation are particularly relevant to the first two mechanisms. In the 2000s, Chinese expert-scholars insisted on distinguishing Chinese aid as a form of ‘non-interfering cooperation’, of South–South solidarity with win-win benefits, while notions of ‘donor’ and ‘aid’ were still viewed as mischaracterising China’s vision of itself and its relations with the Global South. Few at this stage expressed concerns about the ‘development’ of other peoples and places. With the BRI, however, while the South–South rhetoric continues to be evoked, there appears to be a growing ideological shift among Chinese policymakers and expert-scholars suggesting a transition from the previous hands-off attitude towards a more interventionist approach (Cheng et al. 2022).

Such change can be considered a result of China’s increasingly embedded presence in the Global South, to the extent that China must ‘manage the consequences of success’ in what Mawdsley (2019: 259) calls the era of South–South cooperation 3.0. This tension was previously observed in China–Africa relations and has been intensified in wider territories and at finer scales as the BRI unfolds (Cheng et al. 2022). In response, studies of aid and development cooperation are more and more strongly linked to optimising the use of economic means and policy tools to protect overseas interests and pursue power and influence in the Global South, especially in the context of the escalating US–China rivalry. As an anonymous MOFCOM official put it in an interview in 2020: ‘Before, however these developing countries were governed internally was none of China’s business, but now is different because their unhelpful development models directly affect our interests, forcing China to shape their paths in ways that suit our needs.’

Studies of development theory and social change may be evaluated in closer relation to strategies for achieving soft power or symbolic domination that shapes ‘habits of thought, dispositions, and the classification of reality’ (Lee 2022: 28). As President Xi (2017b) stated in his address to the Nineteenth National Congress of the CCP in 2017, China’s supposedly unique model is ‘blazing a new trail for other developing countries to achieve modernization … [and] offers a new option for other countries and nations who want to speed up their development while preserving their independence’. The claim foregrounded fundamental questions about the international order, interstate relations, Third World solidarity, and US–European hegemony. The notion of Chinese development knowledge was further projected on to the developing world when Xi (2017a) declared at the first Belt and Road Forum for International Cooperation in 2017: ‘We are ready to share our development experience with other countries.’

Arguably more than ever before, Chinese international development studies encompasses not only the technical details of how to undertake cooperation, but also the larger question of what kind of society development should strive to create and how to spur this change. For many Chinese expert-scholars, achieving development in the Global South requires multifaceted transformations like those discernible in the contemporary Chinese experience at home. The certainty that history is on ‘our’ (that is, China’s) side pervades recent Chinese elite and popular discourses, as the language of ‘miraculous’ material improvement expresses an ascending confidence that China has found a unique ‘path’, as Justin Lin has put it at various conferences and workshops. In this narrative, if provided with ‘suitable’ (read Chinese) wisdom and solutions, poorer countries can also aspire to a prosperous future, as did China just a few decades ago. While Chinese expert-scholars disagree over specific details of development knowledge, most would identify their work with the overarching cause of establishing the ‘general principles’ (such as social stability, a strong state, and infrastructure investment) that make development possible for ‘latecomers’.

On the other hand, the claim of confidence comes at a moment when many Chinese political and intellectual elites are uncertain about China’s changing place in the world, gloomy over the domestic economic outlook, and anxious about growing geopolitical and ideological conflicts with the United States. The promotion of the China Model and a more interventionist approach creates considerable pressure on China’s long-held South–South principles, demanding theoretical and moral justification. Various Chinese expert-scholars and institutions have tried to provide one by arguing that the Global South can achieve ‘leapfrog development’ by ‘riding the BRI’s fast train’ (leaving limited space for critical reflections on the contested processes of ‘development’ in China and potential ways to do development differently). The metanarrative of Chinese international development studies provides a sense of meaning for China’s increasingly assertive geopolitical and geo-economic programs. Examining the rise of a division of social-scientific labour in this light reveals something profound in the emotional tone among Chinese political and intellectual elites about their ways of organising the world and finding China’s place in it.

This essay draws on the author’s paper ‘Disciplinary Geopolitics and the Rise of International Development Studies in China’, published in Political Geography in August 2021, doi.org/10.1016/j.polgeo.2021.102452.

Throughout history, the foundation and prosperity of regional institutions in Latin America have been the result of a combination of local initiatives, political dynamics, and great-power influence. Born of a compromise between the United States’ desire for hegemony in Latin America and Latin American elites’ ideas about a prosperous and autonomous region, the Inter-American Development Bank (IDB) is no exception. Intellectuals and political leaders from Latin America originally proposed the establishment of a regional development bank in the early twentieth century, but US support was not secured until 1959, when it sought to strengthen Latin American cooperation to prevent further communist progress after the Cuban Revolution (Tussie 1995, Bull and Bøås 2003).

Given this background, it is rather predictable that the IDB would be affected by the rise of China and US–China rivalry. This essay discusses how this has been panning out through an analysis of China’s entry into the IDB and US reactions to it. It argues that the consequence of the US–China rivalry has been a weakening of the IDB’s regional character and multilateral norms. To understand how and why this happened, it is necessary to place China’s entry in historical context. Drawing from documents, press reports, and interviews (some online and some in-person) with IDB staff and members of the Board of Directors between 2021 and 2022, the essay offers a chronological perspective on the ascent of China into the IDB and US reactions to it, highlighting the long-term implications of this for regionalism in Latin America.

The IDB between Regional Aspirations and US Hegemony (1959–1990s)

From the outset, the IDB was the result of compromise. Since the beginning, the United States has controlled about one-third of the votes on the bank, and the headquarters were placed in Washington, DC. However, the bank’s institutional ideology was largely the offspring of the Latin American state-led vision of development, as pioneered by Raul Prebisch and the structuralist school of the Economic Commission for Latin America—a group that sought economic and social modernisation through state involvement and temporary decoupling from global markets. The role of the IDB was to channel finance from global markets to Latin American states (Tussie 1995). Moreover, Latin American borrowing member countries would hold just over 50 per cent of the equity or capital shares in the bank, maintaining a voting majority, and the system for electing the president guaranteed that the winning candidate would be from one of the 26 Latin American and Caribbean countries. The IDB also had a clear identity as a ‘Latin American bank’, and was characterised by ‘political savviness’ due to its proximity to regional governments (Birdsall 2014). In addition, the bank had built-in solidarity with a ‘soft window’ providing concessional (low-rent) loans and grants to poorer economies.

The 1980s brought major changes to the IDB. First, the debt crisis that devastated Latin America from 1982 threatened to break the IDB economically. Second, the US agenda shifted towards a focus on imposing market-oriented policies, which threatened to render the IDB irrelevant, making it lose both ideological momentum and financial muscle (Bull 2005). As it moved to survive the devastating impact of the debt crisis by adjusting its profile towards US interests, the IDB was increasingly criticised for failing its original mandate and being too subservient to the United States.

In the 1990s, the United States sought to make Latin America a cornerstone of the strengthening of an open global economy, framed by ideas of prosperity and free trade. In Latin America, the US vision was expressed first in the North American Free Trade Agreement (NAFTA) linking Mexico with Canada and the United States, and later in the initiative to create a Free Trade Area of the Americas (FTAA) stretching from Alaska to Tierra del Fuego. The United States saw a role for the IDB in this regional vision and agreed to strengthen the bank’s financial position. One of the means through which it did so was by allowing non-regional countries as members: 16 European countries, plus Japan, Israel, South Korea, and the People’s Republic of China. This partly rested on the fact that the United States saw few threats against its vision and interests at the time, in Latin America or elsewhere. As Nancy Birdsall (2014: 14) explains:

[T]he United States was more willing in the 1990s to dilute its capital share in a region where almost all the borrowers had become democracies, and where there was a broad consensus on the relative roles of the market and the state, with the private sector as the engine of growth and the state as enabler of growth by supporting a level playing field and the rule of law.

While lending practices became more closely aligned with the Washington Consensus, the shift of the bank’s presidency in 1988 from Mexico’s Antonio Ortíz-Mena to Uruguayan Enrique Iglesias reflected once again the compromise between Latin American influence and US ideological preferences (Vivares 2013). Iglesias had led the negotiations for the Uruguay Round that ended with the establishment of the World Trade Organization (WTO) and was seen as a proponent of both liberal globalisation and Latin American structuralism favouring state-led modernisation.

The openness to non-regional countries also encouraged China to express its interest in becoming a member. In 1993, Zhu Rongji, then Vice-Premier of the State Council and later Governor of the People’s Bank of China (PBC), sent a letter to the IDB on behalf of the Chinese Government formally applying for membership. However, its application was rejected by the United States, which argued that there were no ‘free shares’ for China to buy (Zhou 2012).

The Commodity Boom, the Global Financial Crisis, and Chinese Entry into the IDB (2004–2009)

In the first decade of the 2000s, three factors again affected the relevance of the IDB: the commodity boom, the Global Financial Crisis (GFC), and China’s rise as a major lender in Latin America. Due to the commodity boom (2003–07) and the ensuing inflow of capital to Latin America, the highest-ranked borrowers in the region—for example, Chile, Uruguay, Brazil, and Mexico—could achieve loan conditions similar to or better than those offered by the IDB on regular financial markets, which drove a wedge between these countries and the poorer economies (Fleiss 2021: 52). The first real opportunity for China to become a bank member occurred in 2004, when then president of the IDB Iglesias told the Chinese Ambassador to the United States, Yang Jiechi, that the 550 shares (with a total value of 6 million USD) owned by Bosnia and Macedonia were ready to be transferred to new members. Although some of the shares were to be sold to South Korea, Iglesias believed China could buy the other half (Zhou 2016). At that point, no Chinese development bank had yet provided loans to Latin America (Gallagher and Irwin 2016), and most regional member countries held a positive attitude towards China’s participation.

The resistance again came from Washington. The United States argued that the entry conditions for countries outside the Americas should be that they had ‘graduated’ from regional development banks—that is, they no longer received loans from global or regional development banks. South Korea had ‘graduated’ several years before its application to the IDB, while China was still receiving loans from the Asian Development Bank and the World Bank (Zhou 2016). In the Chinese media, however, this move was widely seen as part of a geopolitical struggle by the United States to keep China out of its ‘backyard’ (Jiang 2005) .

A few months later, the United States changed its position. In October 2004, the Sino-US Economic Joint Committee of the US Congress issued a communiqué stating that ‘the United States supports China’s efforts to join the IDB’ (Zhou 2016). This started a long process of negotiation mostly between the US Treasury, the Chinese Ministry of Foreign Affairs, and the IDB’s newly elected president, Colombia’s Luis Alberto Moreno, over China’s ‘entry fee’.

President Moreno’s job of negotiating the Chinese entry into the IDB was perhaps facilitated by the 2008 GFC, during which the IDB lost 1 billion USD and needed a capital increase to play the role of a countercyclical lender for Latin America. The ninth general capital increase (GCI-9) was accepted at the meeting of the IDB Board of Governors in July 2010. It was the largest in the IDB’s history, providing 70 billion USD in additional capital subscriptions to ordinary capital and 479 million USD in new contributions to the Fund for Special Operations (FSO), the IDB’s soft-loan window for its poorest member countries (IDB Undated).

The GFC also marked the turning-point in the presence of Chinese development banks in the region. While Chinese lending was absent before 2005 and reached a modest 300 million USD in 2005, in 2010, it skyrocketed to more than 35 billion USD—three times as much as IDB lending in the same year—driven by multi-billion-dollar loans issued by the China Development Bank (CDB) and the Export–Import Bank of China (China Eximbank) mainly to four countries: Venezuela, Argentina, Brazil, and Ecuador. Finally, in June 2008, an agreement was reached that China would pay 350 million USD for its miniscule 0.004 per cent of IDB votes. Of this amount, 125 million USD went to the FSO, and another 75 million USD created a multi-donor fund to strengthen the institutional capacity of Latin American and Caribbean countries. China also joined the IDB-affiliated Inter-American Investment Corporation (IIC) and the Multilateral Investment Fund (MIF)—another entity administered by the IDB—and contributed 75 million USD to each of them (IDB 2009). On 7 January 2009, China’s membership of the IDB was celebrated in a ceremony with the Chinese Ambassador to the United States Zhou Wenzhong (IDB 2009).

China as a Discrete IDB Member (2009–2019)

Inside the IDB, China had little influence due to its negligible voting share of 0.004 per cent, which was not enough even to give it a presence at board meetings.[1] To this day, only South Korea has a similarly low share. Croatia and Slovenia hold the next lowest shares, but both are about 10 times that of China (0.031 per cent and 0.050 per cent, respectively). In comparison, the United States has 30.006 per cent of the votes, the Latin American countries jointly control 50.055 per cent, with Brazil and Argentina controlling more than 11 per cent each.

Rather than direct participation in the bank’s managing bodies, China’s influence came through making available large sums of money. After the GFC, there was a desire on the part of the regional members to access more of the abundant Chinese capital. After the 2010 capital increase, the IDB had the lowest share of ‘paid-in capital’ of any multilateral development bank and its private sector funding arm was especially underfinanced.[2] After a series of meetings between Moreno and Zhou Xiaochuan, the Governor of China’s central bank, the PBC, in 2013, China established the Co-Financing Fund for Latin America and the Caribbean of 2 billion USD, 1.5 billion USD of which was channelled to private sector lending, with 500 million USD to the public sector, which would also be subject to IDB standards.

Private sector lending in the IDB was previously split between the private sector lending institution the IIC and a private sector window in the bank proper. In 2015, these were merged into the new subsidiary IDB Invest. When IDB Invest was established, the United States decided to reduce its participation, as did Spain and Japan (Runde 2021). The result was that there were more shares left for China and it could translate its support into a voting share of 5.4 per cent. Also, the 1.5 billion USD private sector share of the Chinese trust fund was transferred to IDB Invest (IDB 2013). Although trust fund money is not leveraged—that is, it does not give one more votes—the trust fund was worth twice as much as the paid-in capital of IDB Invest at the time, giving China potential informal influence. In 2012, China Eximbank had created an ‘equity investment platform’ with 153 million USD of paid-in capital and the potential of mobilising a total of 1 billion USD (IDB 2012).

As a result, China became active in the governance of IDB Invest, although, according to some of my interviewees, the views expressed by the Chinese representatives did not differ significantly from those of other significant shareholders (Interview with board member, August 2021). Moreover, there is little to suggest major Chinese political influence over decision-making in IDB Invest. As proof, Humphrey and Chen (2021) point to the 2021 approvals of Chinese co-financing funds for loans to Guatemala and Honduras, both of which still recognise Taiwan. While Chinese companies gained several contracts for IDB-funded projects, there is no evidence that they were disproportionately favoured (Humphrey and Chen 2021; Interviews with staff, June 2021).

In the IDB’s main governing bodies, China’s tiny voting share did not give its officials access to board meetings. To make up for that, the IDB added an extra advisor to board constituencies (voting groups) to ensure China had a permanent advisory presence in the bank’s headquarters (Humphrey and Chen 2021). Over time, the number of Chinese nationals among the staff increased to about twenty. Nevertheless, there is little to suggest that China has had major influence over bank operations or IDB Invest decision-making.

The IDB as a Battlefield for US–China Rivalry (2019–2022)

With the elections for Nicolás Maduro’s second term as President of Venezuela widely seen as fraudulent by renowned political scientists and the country’s opposition, on 23 January 2019, the President of the National Assembly in Venezuela, Juan Guaidó, declared himself the rightful president of the country, giving as a justification the constitutional mandate that called for the President of the National Assembly to take on that role in the absence of a president. The United States immediately recognised Guaidó as Venezuela’s rightful president and, over the following months, 56 other countries followed suit. Among the first were neighbouring Colombia, which was hosting a large diaspora of Venezuelan opposition figures as well as an increasing number of refugees. On 24 January 2019, Colombian-born president of the IDB Moreno tweeted: ‘The IDB confirmed its willingness to work with the interim-president Juan Guaidó to ensure its continued support for the development of the Venezuelan people’ (Moreno 2019). The Chinese city of Chengdu had already been chosen to host of the IDB’s annual meeting in March of that year. Moreno had until then had a good relationship with the Chinese and, indeed, had spent years seeking a closer relationship with Beijing. However, the Chinese Government—which had a close relationship with the Maduro administration and had lent it more than 60 billion USD—did not approve of Moreno’s tweet supporting Guaidó (Rosales 2016).

Guaidó named a complete ‘interim government’ and appointed Ricardo Hausmann, a former chief economist of the IDB (1994–2000), as his representative to the bank. The IDB Board—then dominated by countries recognising Guaidó—accepted the appointment of Hausmann, who had been a vocal critique of Chinese projects in Venezuela for their lack of transparency or solid economic foundations. When the Chinese side refused to invite Hausmann as a representative of Venezuela to the meeting in Chengdu, the US Trump administration threatened to withdraw from the meeting and urge regional partners to do the same, leaving the meeting without a quorum. Moreno decided to cancel the annual meeting only a few weeks before the event, when flights had already been booked and identification paperwork issued (Bermúdez 2019). China reacted sharply, with government spokesperson Geng Shuang saying the IDB meeting ‘should focus on financial cooperation rather than … discussing sensitive political issues’ (AFP 2019). He further emphasised that China had made lengthy preparations as the host country and the change of venue was the result of some parties ‘manipulating the Venezuelan issue’.

This was a major blow to the relationship between China and the IDB. China tried to keep the conflict over Venezuela at bay but nevertheless boycotted the much smaller and more low-key meeting of the IDB and IDB Invest held in Guayaquil, Ecuador, in July the same year (Ray 2019). Yet, all of this was just a mild wind compared with the storm that was to follow when the time came to elect the new IDB President after Moreno’s retirement in 2020 after 15 years of service.

In February 2020, the President of Argentina, Alberto Fernández, backed the IDB’s former secretary for strategic issues Gustavo Beliz as a candidate to succeed Moreno. He immediately won the support of Mexico, but various governments later put forward their own candidates, among whom were former Costa Rican president and IDB consultant Laura Chinchilla. Observing the split between the Latin American countries, on 16 January 2020, the US Treasury Department proposed Mauricio Claver-Carone for IDB President, breaking for the first time the unwritten rule of US support for Latin American candidates for the top position (US-Gov 2020).

Claver-Carone was born in Florida to Cuban exiles and developed a career as a lobbyist pushing for hardline policies on Cuba in Washington, DC. He had originally supported Marco Rubio rather than Donald Trump as Republican presidential candidate and was thus not appointed to a high-level position in the Trump administration. However, after Trump made regime change in Venezuela a foreign policy priority, Claver-Carone was appointed senior director of the National Security Council on the Western Hemisphere. In this position, he was a key strategist behind the ‘maximum pressure’ strategy towards Venezuela, which included the imposition of tough sanctions and denunciation of the role of Cuba in Venezuela (Waldron 2020).

Claver-Carone’s candidacy quickly gathered support from Brazil, Colombia, and Ecuador—all of which had right-wing governments at the time. Paraguay, Uruguay, and five Central American countries later added their support. Fearing deep politicisation of the IDB, as well as US dominance and potential problems with a possible change in the US Government, a civil society campaign began to try to postpone the elections for IDB President until after the US presidential elections to avoid the appointment of Claver-Carone (WOLA 2020). Although the candidates for election for bank president require only 50 per cent of the votes to win, 75 per cent of the votes are required to open an election. Thanks to this mechanism, Argentina, Mexico, and the bank’s European member countries should have been able to block the opening of the vote (Cibeira 2020).

The campaign, however, failed. Argentina and Costa Rica eventually withdrew their candidates, and Claver-Carone was elected in September 2020 with the backing of 30 of 48 bank governors (the remainder cast blank votes) amid criticism of the United States for continuing to operate according to the Monroe Doctrine and treating Latin America as its own backyard (Welsh 2020).

After taking the president’s position in October 2020, Claver-Carone immediately began to make changes. His most high-profile endeavours were to work for new capital replenishment and to introduce the idea of ‘nearshoring’ in the IDB’s new strategy paper, Vision 2025 (IDB 2021). Both efforts were designed to keep China at bay. The idea of nearshoring originated in Trump’s ‘Back to the Americas’ initiative and sought to entice US companies to move back to Latin America or the United States from China, which would contribute to development in the United States and Latin America and reduce US companies’ vulnerability to Chinese influence (Garibello 2022). The purpose was clear: to incentivise US companies to invest in Latin America instead of China and prevent Chinese companies gaining a foothold in Latin America. A leading voice of the nearshoring movement was Trump’s trade advisor and China hawk Peter Navarro, who pointed out that this strategy would counteract China’s domination of all aspects of the supply chain. The purpose was clearly spelled out in the United States Innovation and Competition Act of 2021, which linked both the capital increase to the IDB and nearshoring with accusations about how ‘the Government of the People’s Republic of China’s predatory economic practices and sovereign lending practices in Latin America and the Caribbean negatively influence United States national interests in the Western Hemisphere’ (US Congress 2021: 986, lines 21–25).

Claver-Carone brought the idea of nearshoring into the debate in the IDB ahead of the 2021 meeting of the Board of Governors as a main thrust of his proposed Vision 2025. This was not well received by the Chinese, who understood this as a clear attempt to keep them out of the region (Interviews with non-regional board representatives, April 2021).

Claver-Carone’s attempt to ensure a capital replenishment commitment failed at the meeting of the Board of Governors in 2021. After Joe Biden came to office, Claver-Carone’s relationship with the IDB’s largest single stakeholder soured and he spent much of his time lobbying in the US Congress. In February 2021, a bipartisan group of lawmakers, of whom two were well-known hardliners on issues related to Cuba and Venezuela—Florida Republican Marco Rubio and New York Democrat Bob Menendez—introduced the Inter-American Development Bank General Capital Increase Act to authorise the United States to vote for a 80 billion USD capital replenishment in the IDB (US-Gov 2021). This was incorporated into the United States Innovation and Competition Act of 2021, which was adopted by the US Senate on 8 June 2021. Authorisation for the IDB capital replenishment is given under Section 3250 of this Act, ‘Addressing China’s Sovereign Lending Practices in Latin America and the Caribbean’ (US-Gov 2021).

Claver-Carone’s struggle for a capital increase made him popular particularly with the smaller countries in the region—a position that was fortified by his appointment of vice-presidents from these countries, including Honduras, while he ignored the larger countries such as Argentina. He also introduced a new communication style, willingly giving interviews to the media in which he consistently emphasised his favourite topics: nearshoring and the capital increase to make the IDB the favoured institution for bringing Latin America out of the Covid-19 crisis.

However, the conflict in the election that had brought him to the presidency and the strong message against China in his main proposals created an unprecedentedly harsh tone at the usually cordial and consensus-oriented meeting of the Board of Governors. One country representative said it ‘was the noisiest meeting I have ever attended in the IDB’, noting that many of Claver-Carone’s opponents had been unusually vocal (Interview with member of the Board of Governors, May 2021).

In March 2022, an anonymous email was sent to IDB directors alleging that Claver-Carone had an inappropriate relationship with his chief of staff, Jessica Bedoya, and had misused funds while spending time with her. An investigation by the law firm Davis Polk confirmed the relationship and several other violations of the IDB’s statutes and ethical codes (Goodman 2022). On 26 September, the Board of Governors voted to dismiss him (IDB 2022). This prompted relief among employees, who argued that Claver-Carone’s governing style and policies had created a culture of fear among staff and board members (Jiménez 2022). On 20 November, Ilan Goldfajn was elected IDB president, the first Brazilian to hold this post. It created some controversy in Brazil, as he had been suggested by outgoing president Jair Bolsonaro and the left-wing in the coalition of president elect Luiz Inácio Lula da Silva, to take office on 1 January 2023, unsuccessfully sought to postpone the election. However, Goldfain is a highly respected economist who enjoys wide support in the region and in the Biden administration, and his election promises the return the IDB to normalcy.

Lost Regionalism?

There is little doubt that the United States’ intention to use the IDB as an instrument in its rivalry with China has had negative repercussions for the bank’s ability to strengthen regional consensus and foster regional multilateralism. However, it is also the case that the existing fragmentation among Latin American countries facilitated the United States’ divisive strategies. It is less certain how China will use its role in the IDB in the future. While not a prominent institution, the IDB is an important lender for many countries in the region, and it provides an important platform for economic multilateralism in the area. The dismissal of Claver-Carone will probably lower tensions and allow the regional member countries to unite around a joint candidate and policies. The consequences of the choice of a candidate who obviously lacked the qualifications and political experience needed for the IDB presidency have been so negative that it is unlikely that anyone will try something similar again. However, although it is likely that we will see an increased respect for regional multilateral norms in the years to come, bipartisan support for policies aimed at limiting China’s influence in Latin America remains strong in the United States, making it likely that the IDB will continue to be a site of contestation and superpower rivalry.

This article has been produced as part of the project ‘MultiChina: Chinese Multilateralism and its Impact on Environmental and Democratic Governance in Africa and Latin America’, funded by the Research Council of Norway. The author would like to thank Wei Guo for her outstanding research assistance.

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[1] The IDB is governed by a Board of Governors, comprising governmental representatives—often finance ministers, central bank presidents, or high-level diplomats—who meet once a year. The daily governance issues are handled by the Board of Executive Directors, comprising 14 executive directors representing 48 member countries and including 14 alternatives, who have full power to act when their principals are absent. Those member countries with small shares are joined in ‘voting groups’ that have a director that rotates between the members. China, however, did not gain even the right to have a rotating director.

[2] The IDB, like most multilateral development banks, has two ‘kinds’ of capital: paid-in and ‘callable’. Callable capital is essentially collateral for loans taken by the bank on regular financial markets. ‘Paid-in’ capital is deposited by the non-borrowing countries and can be lent to borrowing members directly.

Johannesburg is often portrayed as rough and unsafe, with deep-rooted inequalities visibly entrenched in the urban landscape (Murray 2011). Its partial identity as both a trading hub and an arrival city resonates with images of hustling, cut-throat competition, and the cash economy (Zack and Govender 2019). It is within this context that many Chinese migrant-entrepreneurs have sought to take advantage of existing (or new) business opportunities and explore possibilities for a better life. As a symbol of late capitalism, the advent and proliferation of Chinese-run shopping malls—largely concentrated along the southern edge of the inner city—have come to embody the high level of Chinese involvement in wholesale trade during the first decade of the twenty-first century (Lin 2014; Huang 2021).

At the same time, the Chinese presence in South Africa is complex, sparking much scholarly interest over the years. There have been several waves of Chinese migration, raising questions about identity, forms of attachment, and belonging (Huynh et al. 2010). The Chinese presence includes ‘local’ Chinese—those born in South Africa—many of whom grew up during the Apartheid years and were subjected to racial discrimination (Park 2008). Their grandparents or even great-grandparents were attracted by the goldrush towards the end of the nineteenth century but were not allowed to work in the mines due to racially exclusionary laws. Instead, they opened grocery stores, restaurants, or gambling dens (Yap and Man 1996; Accone 2004). During the 1970s, the Apartheid regime—which rendered the government isolated internationally and desperate for foreign investment—granted Taiwanese industrialists preferential treatment (tax incentives and status as ‘honorary whites’), convincing some to set up factories near the former so-called homelands (Hart 2002). After decades of controlled mobility (both domestically and internationally), the People’s Republic of China (PRC) undertook economic reforms and began opening-up from the late 1970s, while the issuing of passports was liberalised in 1986; both made it possible for mainland Chinese to migrate overseas on their own initiative (Nyíri 2020: 43). Mainland Chinese started arriving in South Africa in the late 1980s and early 1990s, when the gradual demise of Apartheid generated new possibilities, especially due to the dearth of affordable manufactured goods. Owing to China’s emergence as a global manufacturer, many of these early pioneers and adventurers made a fortune through the importation of textiles and other everyday products. The prospect of quick economic gains—achieved largely through bulk sales—acted as an attractive pull factor. While until this point the Chinese presence remained limited, with a considerable proportion of the local Chinese and Taiwanese even deciding to leave South Africa during the 1990s, the influx of new migrant-entrepreneurs in the early 2000s quickly brought numbers to somewhere between 350,000 and 500,000 people (based on rough estimations; see Park 2012).

Today, Johannesburg appears far less attractive than a decade ago. Initial stories of success and rapidly made fortunes have gradually morphed into a reality of reduced profit margins and (a somewhat self-induced) market saturation. Due to factors ranging from a prolonged economic slump, unfavourable exchange rates, and a partially hollowed-out state to persistently high crime rates and recurrent anti-foreigner sentiments, many Chinese seem to be reconsidering whether staying in South Africa is a viable option. Meanwhile, personal circumstances and living conditions vary significantly. Whereas earlier migrants (including local Chinese, Taiwanese, and early mainlanders) are generally better off and tend to live in upmarket suburbs, the bulk of the newcomers have less capital, fewer networks, and lower education levels. This is also reflected in their occupations—from those active in the corporate world, others running businesses, to the ones working in shops inside the Chinese-run malls. How their relationship to the country, city, and neighbourhood unfolds is contingent on a combination of all these criteria. Moreover, the way they navigate Johannesburg’s urban landscape is shaped by a series of shifting ‘strategies and tactics’, which manifest in varying forms of (in)visibility (Harrison et al. 2012).

In my research on Johannesburg, starting in 2009, I studied the ways in which different Chinese spaces—or at least those perceived as such—have materialised, changed, and become entangled with the underlying realities of the city (see, for instance, Dittgen 2017; Dittgen et al. 2019). Over the course of my fieldwork (both individually and in collaboration with others—for example, with photographer Mark Lewis, whose photos accompany this essay), I met several key individuals who were often gatekeepers and who, throughout the years, offered me access to the different layers of these ‘spaces’. I kept in touch with a few of them, observing how some of their initial thoughts, habits, ideals, or goals changed, were dismissed, or became more firmly entrenched. Simultaneously, these periodic conversations allowed me to gain a more nuanced sense of how these people reflected on some of their life decisions, roads not taken, as well as everyday doings, alongside hearing about their joys, concerns, hopes, and frustrations. Many of the thoughts expressed during these exchanges resonated closely with a certain idea of pragmatism in which navigating everyday life requires ‘learning to expect and manage uncertainty’ (Wills and Lake 2020: 3). To link pragmatist thinking with ways of living, this essay explores the notion of ‘pragmatic living’ from a particular perspective and as unfolding within a specific context.

First, it is necessary to provide a few preliminary remarks on what I mean by ‘pragmatic living’, which requires diving into the scholarly literature on pragmatism. For ‘first-generation’ pragmatists such as John Dewey, experience—referring both to the experiencing subject and to the object of experience—plays a crucial role in the pragmatic maxim (despite subsequent debates about its conceptual validity). It is ‘a process through which we transact with our surroundings and meet our needs’ while being also ‘shaped by our habits of expectation’ (Legg and Hookway 2021). As such, experience actively mediates between ideas and outcomes. Depending on circumstances or the ‘provocations of life’, these ideas can evolve, pushing people ‘to inquire into new ways of thinking and acting’ (Wills and Lake 2020: 11), especially in a setting in which ‘visions of urban futurity cede ground to tentative experiments in managing what cannot be confidently foreseen’ (Zeiderman et al. 2015: 283). If this dynamic interplay can, in ideal scenarios, be tied to personal preferences or desires, in most cases, pragmatic living requires compromise and experimentation. Furthermore, it also speaks to ‘a willingness to bracket prior expectations and foundational assumptions, [as much as] an openness to and tolerance of multiple perspectives’ (Wills and Lake 2020: 16). If an elaborate unpacking of the concept itself exceeds the limits of this essay, it is nevertheless worth stressing that pragmatic living is deeply entangled with both modalities of power—understood here ‘as a relational effect of social interaction’ (Allen 2003; 2008: 1614)—and a dynamic space–time dialectic (Massey 2005). Ultimately, ‘the possibility for the unexpected’ (Wills and Lake 2020: 4) becomes an integral part of pragmatic living. As such, using pragmatic living as a lens for social inquiry challenges more compartmentalised and often rigid ways of examining these lives, which transcend migrant, diasporic, transnational, as well as localised characteristics. In what follows, some of these underlying elements are explored primarily through the personal stories and experiences of two Chinese individuals who have lived in Johannesburg for a considerable time, offering some contextualised glimpses into ageing and living in motion.

Spatial Geographies of the City Reconsidered

Mei, originally from a major city in central China, and Haoyu, from China’s southern coast, have been based in Johannesburg since the mid and early 1990s, respectively, witnessing first hand the political transition at that time [Both are pseudonyms and, to the best of my knowledge, they do not know each other]. I met Mei in 2010, when conducting research on Chinese shopping malls and wholesale activities, and Haoyu in 2016, when focusing more specifically on the dynamics of change along Derrick Avenue, the main street of Johannesburg’s primary Chinatown. Now aged in their mid to late fifties, both chose distinct paths (one is a businesswoman, the other an architect/designer) and priorities, while at the same time entertaining a shifting relationship with the (so-called) Chinese spaces and the city as a whole.

In contrast to many of the more recently arrived Chinese migrants, both are financially stable and hold South African ID (while also keeping their Chinese passports). Mei thrived financially after establishing a successful logistics company focusing on imports and exports between China and South Africa. Her initial decision to come to Johannesburg, aged 27, was to join her mother and sister. Following the death of her father, a professional singer whom she often accompanied to concerts throughout China, and her first marriage ending in a divorce, Mei had no reason to stay in China. At first, Mei lived with her family in Johannesburg but soon married a white South African to legally stay in the country. As part of this marriage of convenience, as she refers to it, she moved to an upmarket neighbourhood, and substantially improved her English during that time. This marriage did not last, but soon after, she married a US citizen, her current husband. Originally from a poor background, Mei repeatedly mentioned how driven and eager she was to become rich and be part of the upper class. Johannesburg’s complicated dialectic between race and class—still manifest in the spatial make-up of the city—raises questions about where Chinese people (especially when successful) situate themselves in South African society. Back in 2010, during one of our first conversations, Mei shared some general thoughts about this:

People, they look at you because you’re a foreigner. But they’re very nice to you, at least to me. Chinese people, however, have a common problem that they don’t treat black people equally. In China, there is less difference, so when Chinese people come to South Africa, they automatically fit themselves into the white category, instead of associating themselves to people of colour. Often, they’re not friendly to black people, and it creates a lot of misunderstandings. (Interview, November 2010)

Over the years, Mei regularly invited me to her house either to share a meal or to play cards with her and some of her friends, many of whom were part of a Chinese women’s business association. Successful and mainly involved in wholesale trading, they all followed a similar upward class trajectory, which was mirrored by their lifestyles and spatial practices in the city. Comparable with many in the middle and upper classes (and irrespective of racial background), Mei’s guests all shared an aversion to or at least strong discomfort about specific neighbourhoods in Johannesburg that were considered unsafe and largely inhabited by poor black people. At the same time, quite a few of those who arrived in the city in the early 1990s started from rather humble beginnings, often hawking in the same neighbourhoods they now avoid.

While proudly Chinese, Mei’s strong attachment to ‘Chineseness’ gradually took on a more clearly discernible class dimension as, over time, her mental map of no-go areas expanded from downtown Johannesburg and surrounds to several so-called Chinese spaces, including Derrick Avenue in Cyrildene:

I don’t go there anymore. I don’t feel safe … [P]eople will follow you. And, I have everything I need in Rivonia: groceries and restaurants, and you see far more corporate Chinese going there as well. Along Derrick, the Chinese are rude and they have no manners. (Interview, March 2022)

Johannesburg has two Chinatowns: one close to downtown, in decline, and linked to an earlier wave of migration going back to the turn of the nineteenth century; the other in the eastern suburb of Cyrildene, which only began developing from the 1990s. About 10 years ago, several Chinese restaurants and shops also started to cluster along Rivonia Boulevard near Sandton, the city’s main financial district, and several upmarket northern suburbs. The partial split in terms of clientele between Derrick Avenue and Rivonia Boulevard points to a growing class differentiation between mainland Chinese migrants who live in South Africa. This echoes Goodman’s (2014: 189–90) argument about class considerations in China being increasingly tied to lifestyle concerns and housing preferences, and subsequently reinforcing forms of class identity. Initially, though, I would frequently meet Mei in Chinatown in Cyrildene, where she was a regular at dinner functions and events organised by various Chinese associations and was often asked to deliver a song. While not a professional singer, Mei gathered fame among the Chinese in Johannesburg (especially for her repertoire of traditional songs) and told me many times she had performed on stage during former president Jacob Zuma’s third wedding.

Haoyu, on the other hand, has continuously lived in Chinatown near the main activity strip, in the same freestanding house he bought in 1991. On a day-to-day basis, his engagement with the street is limited; he mostly stays inside (preparing food, checking on his 13-year-old son’s study progress) or spends time elsewhere. His engagement with Chinatown materialises in a more structural way. For example, on request by one of the richest Chinese businessmen in Johannesburg and as someone who is deeply involved in community matters, Haoyu agreed to design the archways now standing at each end of Derrick Avenue. He refused to charge for the work, with the gates primarily financed through community donations, and told me this was his contribution to the shaping of an attractive Chinatown. In parallel, property prices within Chinatown and its immediate surrounds had soared, triggered by the high demand from Chinese newcomers (at least until a few years ago) looking for a place of (transient) attachment and familiarity:

It’s difficult for white people to accept this kind of lifestyle. Only Chinese can accept this. It’s too noisy, crowded and things just work differently … Over the years, I received many offers to sell my house. The neighbours wanted to pay 4 million [ZAR] to tear down the house and build a block of flats. My wife didn’t want to sell, so we kept the house. Today we wouldn’t get 4 million anymore, maybe 2 million [ZAR, or roughly €125,000]. There is much less demand now. (Conversation with Haoyu, October 2021)

The gradual transformation of the built environment along Derrick Avenue generated continued objections from adjacent residents who feared that Chinatown—perceived as dirty and chaotic—would spread and disrupt the largely residential suburb. The main concern was the street and its immediate surroundings negatively impacting on the area’s property values. At the same time, the high demand among Chinese to either rent or buy property pushed prices up, even if in a spatially confined manner. With Cyrildene not high on the city administration’s list of priorities, eventually, the Planning Department agreed to develop a precinct plan, trying to find a balance between the altered urban fabric and demands to limit Chinatown’s expansion. As a long-term resident of the area, Haoyu disagreed with the city’s vision and form of engagement, stressing the need to consider a far more pragmatic approach to urban change:

[T]o develop the area, attention needs to be paid to the economic base. So far, it has developed organically without any plans in place … The main thing to note is that this area has slowly been changing and even if it looks the way it does, this should be seen as positive and can be used as a foundation to develop it to be better, in a holistic and sustainable way. Whatever plans the city has, they are not communicated effectively with the Chinese community and not much effort seems to be made to understand our needs. There is also a disconnection about the way development should proceed between CoJ [City of Johannesburg] and the Chinese community. For them, there must be a plan before the area can be developed, and since it is not a priority area, nothing happens and we have this organic form of development, which looks chaotic. If this area is not a priority for CoJ, why don’t they then support community efforts? Cyrildene has faced ups and downs; no-one can control that. (Interview, August 2019)

While staying in Cyrildene, Haoyu also designed and built a house in an upmarket gated estate halfway between Johannesburg and Pretoria. Finalising the project has taken much longer than expected as he aimed to import some of the material from China (partly to save on costs), which has been delayed due to the pandemic. While construction was stalled, he received a monthly fine from the estate’s management without being able to establish a direct channel of communication with the body corporate to explain himself. While Haoyu generally tends to resonate more in terms of class than racial dynamics, in this instance, he was adamant that being Chinese had triggered this treatment. While he envisaged this new estate as his eventual place of retirement, these challenges have dampened his eagerness to move there.

If pragmatic living, through the lens of experience, is about meeting needs and expectations, in practice, this can result in deciding what spaces to engage with. Alternatively, it can also mean that some options simply appear outside the sphere of what is deemed possible or acceptable. For the Chinese newcomers who work inside the Chinese-owned malls and whose capital and networks are scant, spatial and residential dynamics are largely informed by the goal to save money and limit risks and expenses. As a result, many resort to sharing accommodation in Chinatown or within the premises of those malls that offer residential possibilities. In Mei’s and Haoyu’s cases, because of their upward economic mobility, pragmatic living is closely entangled with shifting class dynamics and becomes, to some extent, a question of convenience and personal preference. If Mei’s evolving engagement with the city could be reduced to opportunism, within a pragmatist mindset, these different stages of her residential journey can be ‘understood as [an] active mediation between ideas and outcomes’ (Wills and Lake 2020: 11).

Work, Ageing, and (Long-Term) Possibilities

One day, Haoyu and I drove through the inner city on our way to visit some of the Chinese-run malls in the mining belt. Stuck in traffic, he pointed to the adjacent street and casually mentioned that many years ago he was mugged in that spot. I asked him whether this incident had sown doubt about his decision to stay in South Africa, to which he replied:

This was in 1991 when I arrived in South Africa. China was still very poor then and only opened up recently; it was still very difficult to get out or to come in. So, no one can really know what the world outside is like. My uncle from Hong Kong, a businessman, told us that he travelled to many places in the world and South Africa is the best option: the weather is nice, houses are big and very cheap, highways are good, electricity, everything is cheap … I didn’t know how fast China was going to change. I was still working in China, so never felt I can’t go back, but I could not go to Europe or the US. Lots of people applied for SA [South African] passports; this helped to get a visa for the US, Europe, or Australia. I didn’t need it as my work was in China. (Interview, September 2020)

His uncle, who had invested a sizeable sum in South Africa, was granted 19 immigration permits, which he offered to his extended family. Haoyu’s wife decided to accept and migrated to start her own business in Johannesburg. Haoyu, aged 28 at the time, was not particularly drawn to South Africa as he had a job in China and did not want to give it up. However, since the couple wanted to start a family, he eventually joined her. Over the years, while based in Johannesburg, he continued to primarily work on projects in China, periodically flying back to design and oversee the construction of developments (mainly towers and commercial spaces). Because his studies had coincided with the Tiananmen protests, he never received his final diploma and struggled to have his degree officially recognised in South Africa. Occasionally, Chinese businesspeople in Johannesburg and beyond do hire his services to design projects, mainly for commercial purposes, but he has not managed to work for a South African firm.

In contrast, Mei, as an entrepreneur, thought it was less complicated to set up a business in South Africa than in China. At various points, she imported high-end furniture, ran a tourist agency, a logistics company, and explored possibilities in relation to solar energy, while acknowledging that some of this ease, at least at an early stage, was linked to her husband being white. More importantly, though, singing put her in contact with a lot of Chinese businesspeople, opening doors and widening her pool of potential customers. Eventually, she acted as the secretary-general of a well-connected Chinese businesswomen’s association, with about 100 members in Johannesburg, Cape Town, Durban, and even Mozambique, and largely involved in charity work targeted at local initiatives. It was through this that she met former president Zuma’s third wife, as well as other political leaders. In business, she often combined the two networks, trying to team up with those having access to government projects (and ticking the right affirmative action conditionalities) while making use of her Chinese connections to gain information about certain industries or contacts at specific factories back in China. A few years ago, she had a car accident that continues to affect her health, putting a lot of her decisions and priorities into perspective. For some time, she had been thinking about moving to the United States, where her mother, sister and her eldest son (from her first marriage) all live and where her two sons from her current marriage recently enrolled in a private high school:

You know I always tell you that I love money. But I actually don’t need all the things I have, all these bags, clothes, the big property. It doesn’t matter really … Our plan is to sell the house and the farm, scale down and then move to Florida. There is no one left here besides the two of us [referring to her husband]. I cannot retire yet, there are a lot of expenses, so I want to buy a small place here, keep a link. Try to do some business between South Africa and the US. [Because of Covid-19, she let go of her travel agency and is now solely focusing on her logistics company.] I have spent half my life here; South Africa is all I know workwise. And, no, to answer your question, I don’t want to go back to China; there’s nothing left for me there. (Interview with Mei, March 2022)

For both Mei and Haoyu, looking ahead is still less about the specifics of retirement (even if this has increasingly come up in conversations) and more about adapting to changing circumstances, in both practical and emotional terms. For example, due to the pandemic and stringent quarantine rules in China, Haoyu has not managed to travel back to work. After decades of being focused on China for work prospects, he half-heartedly started working part-time for a locally based Chinese investment company. He said it was odd that both he and his wife now worked for others—‘something which we have never done before’ (Conversation with Haoyu, March 2022).

Some time ago, his wife had returned to China so their son could attend primary school and receive a Chinese education. As a result, Haoyu’s wife had to give up her own business. On returning to South Africa, and with their son now enrolled in a private high school in Johannesburg, she felt it was ‘easier’ to work for someone else rather than start afresh. She manages a friend’s shop in one of the Chinese-run malls, working seven days a week.

Becoming gradually more open to new options, Haoyu recently travelled to Zambia to design a project for a Chinese friend—his first visit to a country other than China or South Africa. Besides spending a few days in Lusaka, he drove to the Copperbelt in the country’s north, seeing lots of work opportunities and even pondering whether he should buy a property and stay a few years in Zambia. He will probably end up retiring in South Africa, as he often mentions that his wife feels comfortable there. Meanwhile, he is concerned about his son’s level of English proficiency, wondering whether he will manage to enrol in university or find employment in an environment dominated by English. Despite having resigned himself to remaining in South Africa, Haoyu still feels restless:

It is not always easy in South Africa. Work is easier than life; I still often compare China with South Africa. But, whatever, we live here now. I accept it, I just need to find more company and keep busy. (Conversation via WeChat with Haoyu, April 2022)

Overall, these two accounts point to a form of pragmatism that is characterised by an intricate time–space dimension, with Mei generally pleased about living in South Africa yet planning to leave, and Haoyu, although somewhat disgruntled, ready to stay put. In these two instances, aspirations of moving to an upmarket gated estate or pursuing an upper-class lifestyle point to the idea of what Lauren Berlant (2011) called ‘cruel optimism’ where desires become obstacles to personal (and social) flourishing. The pair’s evolving spatial footprint in Johannesburg mirrors a more general upward class mobility, comparable with the emerging black middle-class (Southall 2016); other spatially informed dynamics, of relocation or (reluctant) immobility, are closely tied to family matters. If ageing as well as shifting priorities can affect levels of mobility, in Mei’s and Haoyu’s cases, the latter is also shaped by more tangible factors such as travel restrictions linked to the Covid-19 pandemic and health-related issues.

Pragmatic Living as Method of Inquiry

One could argue that living in general is imbued with a fair amount of pragmatism. This includes striving for sufficient financial stability, finding the right work–life balance, as well as bringing risk factors to an acceptable level. As such, ‘pragmatic living’ materialises in different and malleable ways, not only influenced by power dynamics and contextual and temporal circumstances, but also contingent on aspects such as socioeconomic status, ethnicity, gender, citizenship, and duration of stay. The narration of Mei’s and Haoyu’s reflections and experiences is by no means meant to be representative of a wider reality of Chinese migrant lives in Johannesburg, but rather, an attempt to open a discussion about how pragmatic living, from a conceptual standpoint, can serve as a productive way to broaden the analytical lens.

Having met both Mei and Haoyu in connection with specific research interests, I at times inadvertently also ended up associating them with specific activities or locations. As obvious as it seems that people are irreducible, carry complex and layered personalities, can change their habits, ideas, and at times even their outlook on life, in scholarly work, we often tend to stubbornly stick to rigid frames and categories of analysis. Moreover, within the academic literature, exploring the interplay between migration and the life course, migrant lives tend to be studied through a causality perspective based on combined readings of trajectories, transitions, sequences, and turning points (see, for instance, Wingens et al. 2011). While useful in building a sequential and time-sensitive portrait, migrants and migrant practices continue to be viewed through a separate analytical framework and, as a result, are ‘conceived of as categorically different from the practices and dynamics of non-migrants’ (Çağlar and Glick Schiller 2018: 22).

To approach migrants as complete social actors poses the combined challenge of ‘discard[ing] the binary between migrants and non-migrants [while] keep[ing] in focus the migration experience’ (Çağlar and Glick Schiller 2018: 5). As argued by Barnett (2020: 277) when reflecting on pragmatism, it is therefore ‘not simply a matter of arriving at an agreed set of criteria against which one might judge the value (not utility, surely) of knowledge claims[, but] a matter of slowing down and thinking about how criteria work’. This comment is also relevant to scholarly interest in Chinese mobilities and migration to the African continent (or elsewhere), with research focused on temporalities and forms of attachment to a specific context often tied to analytical categories, from ‘sojourners’, ‘settlers’, or ‘drifters’ to the notion of ‘in-betweenness’ or ‘liminality’ (for example, Park 2010, 2022; Giese and Thiel 2014; Wang and Zhan 2019; Driessen 2020). Using pragmatic living as a method of social inquiry can potentially unearth and cut across different perspectives, imaginations, and forms of experimentation, ‘in which the extension of interactions across time and space enhances the collective capacity to address a wider web of issues’ (Barnett 2020: 279–80).

Observers frequently contend that China’s international influence is growing in lockstep with its economic rise. This includes the US Department of State, which recently suggested that after four decades of rapid growth, China’s ‘global reach and international influence have expanded accordingly’ (Office of the Secretary of State 2020: 40). While scholars in international relations and other fields have been more cautious, policy and popular debates have shed nuance in favour of a linear narrative that pegs China’s influence to its global investments (Goh 2016; Kastner and Pearson 2021).

Within this narrative, grandiose infrastructure projects along the Belt and Road Initiative (BRI)—introduced in 2013 to promote connectivity across an overland ‘belt’ through Eurasia and a maritime ‘road’ through the Indo-Pacific—are important sites for Chinese influence generation. In 2018, US vice-president Mike Pence declared that China is ‘offering hundreds of billions of dollars in infrastructure loans to governments from Asia to Africa to Europe and even Latin America’, of which ‘the benefits invariably flow overwhelmingly to Beijing’ (Pence 2018). The first part of Pence’s statement is accurate. As Figure 1 shows, since 2000, the Chinese Government has committed tens of billions of dollars annually to infrastructure projects in developing countries. More than two-thirds of China’s development finance—which includes aid and less-concessional, debt-based financing—has funded transportation, energy, and industrial projects.

But mounting evidence from the first decade of the BRI raises doubts about the second part of Pence’s statement, and the extent to which overseas infrastructure projects amplify China’s influence. China’s policy banks and state-owned enterprises (SOEs) are not the only actors which benefit from BRI infrastructure projects. While these projects produce economic, social, political, and environmental risks, they also deliver clear economic benefits to host countries (Dreher et al. 2022). Moreover, though certain individual projects have encountered challenges and attracted the bulk of international publicity (Bräutigam 2019), many of China’s overseas infrastructure projects have been successfully implemented on time or even ahead of schedule and have helped relieve infrastructure bottlenecks in host countries (Bluhm et al. 2020; Malik et al. 2021).

Recent evidence along the BRI also raises doubts about whether and how much influence the Chinese Government is gaining from high-profile overseas infrastructure. Influence is often defined in political science as an actor’s ability to change another actor’s behaviour in ways congruent with the interests of the influence-seeker (see, for instance, Dahl 1984). However, as discussed below, the BRI exposes the limits of narrow definitions of influence that assume straightforward intentions and results but neglect the importance of host-country environments. Mounting evidence from a diverse set of BRI countries—such as Indonesia, Kazakhstan, Malaysia, and Zambia—demonstrates significant local, national, and even international pushback against Chinese-financed infrastructure that has created real foreign policy consequences for the Chinese Government. Common grievances about Chinese-financed infrastructure include opaque lending terms and debt sustainability risks, environmental degradation, socioeconomic disruption, and unequal benefits across the communities that host projects. Researchers have repeatedly emphasised the role of host agency—the ability of state and nonstate actors in host countries to influence project selection, negotiation, implementation, and reception on completion—in modulating whether projects are successful and whether China can gain influence by financing them (see, for instance, Wong 2021; Wang 2022). In aggregate, at least so far, the BRI does not appear to have significantly boosted China’s international position or reputation.

Instead, an uncomfortable outcome for Beijing has emerged. Its high-profile infrastructure projects have complicated rather than enhanced China’s global influence and have weakened the ability of the Chinese Government to control its net influence abroad. Large infrastructure has always been economically risky given its ambition, scale, and complexity. The same features that make high-profile infrastructure attractive make its planners prone to miscalculation of economic risk. BRI projects are not immune to this general tendency. But in addition to economic risks, the BRI—as a massive, state-led global infrastructure drive—has demonstrated that overseas infrastructure can also introduce unintended volatility for states’ net international influence, even if influence-seeking is not the primary objective.

China’s global infrastructure financing over the past two decades is remarkable when viewed in this light. During the same period, China’s stability-oriented government has tightened its political control at home and has made substantial public diplomacy investments abroad to shore up its global reputation and ‘tell China’s story well’ (Caixin 2015). Like other rising powers, China’s government has sought to translate its growing material capabilities into greater influence at home and abroad. But in financing high-profile overseas infrastructure at scale, it has injected major unpredictability into this broader pursuit.

This essay draws on the author’s recently published and forthcoming work and makes three observations about China’s global infrastructure–influence nexus. First, national economic priorities have driven contemporary Chinese global infrastructure investments, but these projects are not merely products of the recent ‘Going Out’ strategy or the BRI. Chinese authorities financed hundreds of infrastructure projects abroad between 1949 and 1999, motivated in part by the overlapping political interests of the Chinese Government and host-country politicians. Second, their political and economic motivations make China and host governments vulnerable to a common infrastructure trap—that is, the tendency to oversimplify and miscalculate the economic risks posed by high-profile projects. China’s state-led approach to financing global infrastructure is not immune to this tendency and may even exacerbate it.

Third, in addition to economic uncertainty, overseas infrastructure projects create a variety of ‘influence externalities’ beyond China’s control that are not well understood by project planners. High-profile infrastructure is uniquely visible and politically salient and these features make it a valuable but risky source of national political capital. One example of an influence externality occurs when state and nonstate actors in host countries or elsewhere craft and distribute their own narratives about infrastructure projects. Another is when host-country actors accidentally or purposefully misattribute credit or blame to the Chinese Government due to the complex set of state, quasi-state, and nonstate Chinese actors involved or located near Chinese-financed infrastructure projects. Either of these related processes can affect China’s foreign policy interests at high or low levels of politics and are largely beyond the control of the Chinese authorities. In short, high-profile infrastructure possesses distinct features that initially make it economically and politically attractive to the Chinese Government and host-country leaders; but these features also inject major political volatility for China’s foreign policy interests.

China’s Tenacious Global Infrastructure Projects

National economic goals have stimulated China’s overseas infrastructure financing since the 1990s. Towards the end of the decade, the government’s Going Out strategy urged Chinese companies to internationalise to achieve several macroeconomic objectives, such as offloading excess capacity and foreign exchange reserves, creating national champion firms in strategic industries, and increasing China’s energy security. It also mandated China’s major policy banks, the Export–Import Bank of China and the China Development Bank, rapidly scale up overseas lending to developing countries. Much of this lending has funded large-scale infrastructure for which Chinese SOEs serve as contractors (Zhang 2020). The BRI, in addition to its diplomatic and political elements, is similarly designed to address these domestic economic objectives by financing large-scale infrastructure that directs Chinese state-led capital abroad (Ye 2020).

However, decades earlier and long before these economic goals were formulated, the Chinese Government had already begun financing and building high-profile infrastructure in Africa and Asia (Bräutigam 2009). My forthcoming research comprehensively analyses China’s global high-profile development projects—a broad class of high-visibility, politically salient infrastructure including transportation projects, other economic ‘megaprojects’, and ‘prestige projects’ such as government buildings, sports stadiums, conference centres, and high-tech projects—since 1949. While these projects differ substantially in their motives and features, they share two qualities that make them uniquely valuable for host-country leaders. First, they are highly visible in terms of their physical presence and degree of publicity. Second, and relatedly, they are politically salient within host countries. Host-country leaders acquire externally financed infrastructure projects and brand them as national and political achievements, allowing them to claim credit and pursue higher support among domestic audiences by appealing to individuals’ sense of national pride or desire for status, particularly during politically important periods.

During the past two years, my research team constructed a dataset of more than 4,000 global development projects committed to developing countries by the Chinese Government between 1949 and 1999 (Strange forthcoming). The dataset complements recent efforts to track China’s contemporary global development projects and reveals that the Chinese Government provided several hundred high-profile infrastructure projects worldwide before 2000 (Custer et al. 2021; Dreher et al. 2022). This includes more than 200 transportation infrastructure projects and more than 200 prestige projects such as government buildings, stadiums, conference centres, and entertainment venues. While China’s prestige projects have usually been financed using grants or other concessional foreign aid, other high-profile infrastructure—such as big-ticket transportation, energy, and construction projects—has mostly been financed by loans with varying levels of concessionality from Chinese policy or commercial banks.

My research suggests that high-profile infrastructure has served as a unique form of political capital for China’s government as well as host-country governments throughout different periods of China’s history as a donor and lender. The tenacity of these projects is explained in part by the alignment of host-country and Chinese Government political incentives. For example, developing-country leaders have consistently looked to China to finance and build conference centres, sporting facilities, and other large public venues—often to hold major regional and international events. Cambodia offers an illustration of how this phenomenon has continued to the present day. In the mid 1960s, the Chinese Government financed and built the National Sports Complex in Phnom Penh, which featured a 50,000-seat stadium, during the leadup to the second Games of the New Emerging Forces (GANEFO) to be held in 1966. Cambodian ruler Norodom Sihanouk had directly requested the project from China’s leaders. In December 2021, more than five decades later, the Chinese Government provided another stadium for Cambodia. Prime Minister Hun Sen—an important regional partner—requested the project in 2014 in anticipation of hosting the 2023 Southeast Asian Games. The Chinese authorities obliged and funded a US$169-million facility known as Morodok Techo National Stadium, which was built by the China State Construction Engineering Corporation. Both stadiums reflect China’s use of high-profile infrastructure to cement high-level ties with the Cambodian Government (Burgos and Ear 2010).

Cambodia is a non-democratic regional partner, but my research shows that China’s high-profile infrastructure does not favour any type of political regime or geographic region. Instead, host-country governments around the world have often shaped the allocation of these projects. For instance, I find that governments of smaller, less-developed states who are otherwise unable to finance high-profile infrastructure at scale are more likely to request prestige projects from China (Strange 2022).

Donor governments also benefit from these projects, at least in the short run. China has consistently used high-profile infrastructure to cultivate and strengthen ties with foreign governments. Compared with other aid, prestige projects send relatively clear signals of political support to recipient governments and generate higher expectations of reciprocity because individuals perceive these projects as supporting the interests of host-country governments (Strange 2022). China has provided hundreds of prestige projects since 2000 to reap high-level influence outcomes such as support in the United Nations General Assembly (Dreher et al. 2018). These projects are also frequently deployed as part of larger assistance packages committed to governments following their announcements of breaking diplomatic ties with Taiwan. But again, prestige and other high-profile infrastructure are not new fixtures in China’s foreign aid, and the Chinese Government has consistently recognised their potential to generate influence. Its most famous historical aid project, the Tanzania–Zambia Railway (TAZARA), was endorsed by premier Zhou Enlai, who believed the project would generate substantially greater influence than would using the money to build small and medium-sized projects in other countries (Editorial Board 2008: 322; Monson 2021). Though TAZARA—and many other high-profile, Chinese-financed projects—was also heavily motivated by other economic and political objectives, the Chinese Government perceived the project as important for China’s pursuit of international influence.

Political synergy between China and host-country governments is part of a broader discussion about the politics of infrastructure. Scholars have long demonstrated that roads, railways, dams, stadiums, and other high-visibility infrastructure create unique forms of political capital. Governments deploy infrastructure for a variety of strategic goals such as consolidating power over territory, forging national identity, and winning popular support among constituents (see, for instance, Herbst 2000: 42; van der Westhuizen 2007). For governments unable to finance high-profile infrastructure internally, capital from foreign donors and creditors offers an alternative. Earlier political science research shows how recipient politicians utilise aid, especially visible projects, to pursue higher levels of political support (Cruz and Schneider 2017; Dietrich et al. 2018). Beyond China, the Soviet Union, Israel, Japan, and the United Kingdom all financed high-profile infrastructure projects during the twentieth century and India, Saudi Arabia, and Qatar have begun to do so across the Middle East in recent years (Strange 2022).

The Influence Risks of Overseas Infrastructure

While high-profile infrastructure offers unique sources of short-term political capital, it introduces substantial political risk over time. Some of China’s most visible global infrastructure projects have encountered stiff local, national, and international criticism in recent years. On the one hand, ‘BRI backlash’ is likely related to features of China’s development finance approach such as opaque lending terms, inadequate pre-project evaluations and safeguards, and direct negotiations with national-level host politicians that can sideline critical voices and foster corruption or other negative externalities. Political science research suggests that politicians in developing countries often have incentives to manipulate foreign aid and other ‘unearned income’ to their political advantage (Smith 2008). China’s longstanding non-interference principle prescribes a generally hands-off approach that enables host-country leaders to request, allocate, and brand projects to their own political advantage, implicitly compromising the ability of other local actors to scrutinise projects and hold leaders accountable (Dreher et al. 2022).

On the other hand, all large-scale infrastructure—Chinese or otherwise—possesses distinct features that make it appealing initially but introduce major economic, social, and political risks over time. Indeed, for scholars of infrastructure, critical reactions to China’s global infrastructure projects could hardly have been surprising. In their study of ‘megaprojects’—defined as multibillion-dollar infrastructure projects—Flyvbjerg et al. (2003: 5) note that ‘project promoters often avoid and violate established practices of good governance, transparency and participation in political and administrative decision making’. Zealous project promoters denounce the ‘cost–benefit analyses, financial analyses, and environmental and social impact statements’ usually carried out before bankrolling projects and exclude outside voices that would make implementers more accountable. As a result, large-scale infrastructure projects around the world have repeatedly encountered long delays, over-budget expenses, widespread corruption, and highly uncertain popular reactions. Viewed in this broader context, BRI infrastructure projects are hardly exceptional. Neither the commercial nor the political motives behind China’s global infrastructure projects suggest their planners should be better at avoiding these classic traps. If anything, the opaqueness that often characterises Chinese project negotiations and implementation may intensify the above tendencies.

But while its economic risks may not be distinctive, the sheer scale of China’s state-led global infrastructure drive has uniquely demonstrated that beyond economic uncertainty, high-profile infrastructure also injects political risks, particularly regarding China’s pursuit of international influence. Earlier analyses of China’s influence along the BRI often fail to appreciate the unique visibility and political salience of high-profile infrastructure that make these projects attractive but risky ventures. In an insightful article, Ho (2020) argues that Chinese overseas infrastructure generates both structural power—positional power over other states because of asymmetric advantages—and discursive power, or power generated using discourse to constitute identities and interests. In general, however, scholars have conceptualised China’s infrastructure influence in direct, simplistic terms in which China, the influence-seeker, exercises different forms of influence over host countries.

My research instead moves beyond deliberate influence and argues that high-profile infrastructure creates outsized ‘influence externalities’ for China, which I define as changes to a state’s international influence that occur unintentionally and independently of the state’s objectives due to changes in behaviour or perceptions by foreign state or nonstate actors (Strange forthcoming). Political scientists have long suggested that certain kinds of power and influence are unintentional rather than deliberate (see, for instance, Lukes 2005; Barnett and Duvall 2005). In examining China’s global infrastructure projects, I illustrate two channels through which high-profile infrastructure can generate unintended influence consequences for the Chinese Government.

First, high visibility and political salience make China’s overseas infrastructure projects unique sites for narrative building at scale and beyond the control of the Chinese Government. Narratives shape actors’ choices and affect outcomes. They ‘limit what political actors inside and outside the halls of power can publicly justify’ (Krebs 2015: 3). When deployed effectively, narratives can create consequences for China’s foreign policy interests. For example, in Zambia, both workers and civil society organisations have found success in shaping their country’s foreign relations with China from the bottom up by carefully framing their objections to high-visibility Chinese projects as national grievances (Leslie 2016).

Alternatively, while host-country leaders can initially craft and propagate high-profile infrastructure narratives, opposition politicians or other elites can later capitalise on negative public sentiment towards Chinese infrastructure. In some cases, this can jeopardise China’s influence, particularly if it enables other governments to achieve bargaining advantages that diminish China’s position. For instance, in Indonesia, debates over Chinese-financed infrastructure projects, including the Jakarta–Bandung High-Speed Rail (Wijaya 2021), have permeated popular and elite political discourse. Indonesian politicians have successfully wielded general anti-China sentiment in recent years—stemming in part from social media coverage of labour issues related to Chinese-involved projects such as the Indonesia Morowali Industrial Park (Ginting and Moore 2021)—to increase their bargaining leverage in negotiations for future Chinese-financed projects (Tritto 2020; Camba 2020). In Malaysia, negative public sentiment has also destabilised China’s foreign economic policy interests. In 2018, Malaysian prime minister Mahathir Mohamad cancelled projects worth more than US$20 billion signed by his predecessor, Najib Razak. This occurred as the projects became entangled in highly public corruption allegations and as Malaysia’s public debt owed to China was increasing. High-profile infrastructure—such as the East Coast Rail Link and Bandar Malaysia, a mixed-development housing project in Kuala Lumpur—featured prominently in both public and elite discussions about engagement with the BRI (Liu and Lim 2019).

The ability of political actors in host countries to create, contest, modify, and disseminate narratives around high-profile projects through both bottom-up and top-down channels is a challenge for China. Once narratives gain a foothold, they are difficult for Beijing to control. Sometimes infrastructure narratives are contained locally or regionally. Sometimes they instead spread far and wide, amplifying the influence consequences for China regarding a specific issue or even spilling into other policy domains that affect China’s international interests. During the first decade of the BRI, the Chinese Government found neither it nor host-country governments could exercise a monopoly over popular narratives about high-profile infrastructure (Bräutigam 2020). China’s state-centric approach to financing and building infrastructure is clearly not immune to popular or elite contestation beyond its borders.

High-profile infrastructure can also generate unintended influence consequences through a second, related process. Most infrastructure projects are financially and operationally complex, and observers in host countries often possess highly imperfect information about the identities and interests of different project stakeholders, the details of project financing and contractual arrangements, and the facts of project implementation on the ground. Host-country actors—from ordinary citizens to high-level officials—can accidentally or purposefully misunderstand the nature of China’s behaviour or misattribute credit or blame to the Chinese Government when learning of project successes or failures (Baldwin and Winters 2020; Bräutigam et al. 2022). These informational problems are not unique but may be particularly acute for China’s state-led global infrastructure projects given the integration of China’s domestic and international development strategies and the increasingly complex set of Chinese state, quasi-state, and nonstate commercial actors operating in developing countries around the world. In financing infrastructure and other development projects, the Chinese Government delegates responsibility to quasi-state or nonstate agents that behave in part in their own interests (see, for instance, Norris 2016). In many cases, local observers may be unable to distinguish which actors, preferences, and behaviours belong to the Chinese Government. For example, one recent survey-based study finds that Peruvians often perceive both private and state-owned Chinese mining companies operating in Peru as being linked to China’s Government regardless of the company’s actual identity (Ratigan 2021). Beijing’s lack of transparency and disclosure regarding its overseas development finance projects may further exacerbate this issue. As with infrastructure project narratives, the Chinese Government appears to have limited capacity for demystifying the complexity of its global infrastructure financing to diverse audiences in other countries. Misattribution or other informational deficiencies that arise from this dynamic can feed into the local or national narratives about China’s global infrastructure projects discussed above.

Infrastructure and Influence in Global Development

High-profile infrastructure breeds economic and political risks that its ambitious planners often fail to appreciate. China’s state-driven approach to financing overseas infrastructure, which follows an ‘encompassing accumulation’ logic aimed at commercial and political objectives, could amplify these uncertainties (Lee 2017: 31–32). This does not mean China’s overseas infrastructure projects will categorically reduce its aggregate global influence; more time is needed to assess their economic and political results. But financing high-profile infrastructure at scale creates ‘influence externalities’ that significantly limit the Chinese Government’s ability to control its net influence outcomes abroad.

While such dynamics are not unique to Chinese-financed projects, the sheer scale of China’s global infrastructure push makes it distinct within the contemporary global development landscape. Western development agencies have drastically curtailed infrastructure investments in recent decades in hopes that the private sector will fill the infrastructure financing gap and because of concerns about corruption (Dollar 2008). While recent multilateral responses to the BRI such as Build Back Better World (B3W) suggest ‘traditional’ donors and creditors may re-join the infrastructure game, such initiatives face serious questions about scale and coordination (Lu and Myxter-lino 2021).

The tenacity of China’s overseas infrastructure provision is also noteworthy. Strong political synergy between China and host-country governments has made high-profile infrastructure resilient to changes in China’s approach and to outside criticism. Earlier high-profile infrastructure financed by China faced both elite and popular contestation in developing countries (for example, Monson 2009: 148). In 2018, following international criticism that China was building ‘white elephant’ infrastructure projects in developing countries, President Xi Jinping stated that China’s development cooperation with African countries needed to avoid ‘vanity projects’ (Reuters Staff 2018)—presumably, referring to many prestige projects discussed above with questionable benefits for host-country populations. More recently, the Chinese Government has advocated for ‘high-quality development’ (高质量发展) projects along the BRI (Xinhua 2021). Yet, their underlying political and economic incentives suggest China’s high-profile infrastructure projects are here to stay for the foreseeable future, even as China recalibrates the focus of the BRI.

More generally, volatile reactions to China’s high-profile infrastructure along the BRI warrant a more inclusive approach to studying influence conceptually and empirically (Fung et al. forthcoming). In international relations, it is well established that bilateral donors and lenders use development finance to purchase elite influence such as policy concessions. They also deploy development projects to enhance their public image overseas. The Chinese Government similarly aims to generate elite and popular influence by financing infrastructure in other countries (Wellner et al. 2022). But these projects’ distinct features create unintended consequences beyond China’s control, which existing theories do not adequately explain but which nonetheless affect China’s overall level of international influence.

The author thanks the Global China Pulse editorial team for helpful suggestions. The University of Hong Kong, the Hong Kong Research Grants Council, and the Wilson Center provided generous support.

Three years before the official christening of China’s Belt and Road Initiative (BRI) in 2013, a Chinese-financed copper mine in Myanmar provided a cautionary tale of the risks Chinese companies face in their overseas investments and the role civil society can play in pushing back (Yu 2021a).¹ The Chinese company in question was Myanmar Wanbao Mining Copper Limited (Wanbao), a subsidiary of China North Industries Corporation (Norinco), a large state-owned conglomerate mainly engaged in the defence industry. In 2010, Wanbao signed a contract to invest US$997 million in the Letpadaung Copper Mine, receiving the rights to operate the mine for 60 years and becoming a 49 per cent shareholder in the mine with Myanmar Economic Holdings (MEHL), a conglomerate owned by the Myanmar military, as the majority shareholder (Chan and Pun 2021).²

In what is often standard procedure for Chinese investors, Wanbao relied on government authorities to smooth the way for its takeover of the project. At the time, Myanmar was under military rule and civil society had limited influence, while China was Myanmar’s leading international investor. In this political environment, Wanbao had little incentive to consult with villagers. This situation changed when village heads began confiscating land for the mine, providing little compensation to villagers in the process. In response, villagers began to complain and protest. They became more emboldened with the dissolution of the military regime and the transition to a quasi-civilian government in March 2011 and the election of Aung San Suu Kyi and other National League for Democracy members to the still military-dominated parliament. By late 2012, thousands of villagers were participating in protests and, together with activists, community leaders, students, and even Buddhist monks, they occupied the project site. The response by Wanbao and the Chinese Embassy was clumsy and defensive. Wanbao blamed the protests on outside activists and the Chinese Embassy told journalists the mine was intended to benefit Myanmar’s development (Chan and Pun 2021: 11).

In December 2012, the new military-backed civilian government decided to halt the project and, with the military’s approval, set up a parliamentary commission headed by Aung Sang Suu Kyi to lead a review. The commission’s findings and recommendations led Wanbao to implement some corrective measures starting in 2013. In addition to a revised profit-sharing agreement, these included agreeing to provide villagers with job opportunities, supporting vocational and small business training, pledging 2 per cent of the mine’s profits to corporate social responsibility (CSR) activities, setting up a community social development team to consult with villagers, and commissioning a consulting company to carry out another environmental and social impact assessment (ESIA) (Cai et al. 2017; Chan and Pun 2021). According to Chinese researchers who conducted interviews with the villagers several years later, a significant gap still remained between Wanbao’s promises and the demands of the villagers, many of whom were not receptive to other solutions and simply wanted the project to stop (Personal communication with author, March 2021).

Recurring Themes from the Letpadaung Case

The Letpadaung Copper Mine is not an isolated case and is illustrative of the problems Chinese companies have faced elsewhere by failing to consult with local communities and civil society over land resettlement and compensation, ESIAs, and other related issues. Cai and Zhou (2018), who conducted interviews with 12 Chinese companies with large-scale investment projects in Myanmar, found only three were operating according to plan. Three other projects—the Myanmar–China Oil and Gas Pipelines (Yu 2021b), the Tagaung Taung nickel mine project, and the Letpadaung Copper Mine—had come under pressure from local stakeholders, while the Myitsone hydropower project was suspended due to domestic opposition (Yu 2021c). The Letpadaung case, however, is particularly valuable in providing a high-profile and well-documented example that foreshadows several themes related to Chinese overseas investment that reappear in other cases (Cai et al. 2017; Cai and Zhou 2018).

One such theme is Chinese companies partnering with local companies with ties to corrupt or autocratic governments with little transparency or accountability. In the Letpadaung case, Wanbao partnered with a very powerful company owned by the Myanmar military. Chinese companies may see these partnerships as providing investment security and political protection from legal and social risks, but in engaging in such collaborations, they tend to rely on host country partners to smooth the way and as a result take little responsibility for their own actions. They also reinforce public perceptions of collusion and rent-seeking between host-country elites and Chinese companies—a theme that aligns with findings from a study of Chinese investment in three conflict-affected BRI partner countries: Kyrgyzstan, Myanmar, and Uganda (Swaine et al. 2021: iii).

A second, and related, theme is that Chinese companies often find themselves operating in countries where the political situation is unstable, and they are frequently unable to adapt to rapid change. Wanbao entered Myanmar when the military government was in power and the voice of civil society was much more restricted. The company was content to operate within this status quo, making few gestures to communities and allowing local elites to deal with complicated land compensation and relocation issues. When the situation changed in the following year, Wanbao was slow to respond to escalating protests and took corrective actions only after recommendations made by the parliamentary commission.

A third theme is the way the Chinese Government and company representatives took a top-down, defensive, and even hostile approach to dealing with civil society organisations (CSOs) and communities. When protests gathered steam in the autumn of 2012, Wanbao and other Chinese companies in Myanmar sought to brand the protests as illegitimate, accusing outside activists of manipulating villagers. The Chinese Embassy also made a tone-deaf effort to defend the Chinese investment in the mine as socially responsible by saying it was intended to help the country’s industrialisation, adding that China would not back a project that did not support local people (Chan and Pun 2021: 12).

A final motif is the preference of Chinese companies to promote the economic benefits of their projects, emphasising how they support skills-building and job creation and expand market opportunities for village entrepreneurs, while often failing to deal with more difficult issues such as relocation and compensation demands, and creating long-term community consultation and grievance mechanisms.

The Diversity of Civil Society Responses

In a recent report, the Business & Human Rights Resource Centre (BHRRC) provided an account of the wide range of human rights violations linked to Chinese overseas investments it has documented. Of the 679 allegations BRHHC documented between 2013 and 2020, 31 per cent involved inadequate disclosure of environmental impact assessments (EIAs), 29 per cent involved land rights violations, 28 per cent loss of livelihoods, 19 per cent labour issues, and 18 per cent pollution and health (BHRRC 2021: 17–19; 2022). Community protests, like those in the Wanbao case, may be the most common image many people have when they think about civil society pushback against such violations. The reality is that responses have taken a wide range of pathways and strategies. One way to categorise these diverse responses is to group them into actions at the local, national, and international levels.

At the international level, some CSOs and communities have used international treaties and norms such as the United Nations Guiding Principles on Business and Human Rights and grievance mechanisms associated with international financial institutions such as the World Bank and International Finance Corporation (IFC) to hold Chinese companies accountable. Communities in Cambodia sought to use international human rights mechanisms to hold the Chinese sugar company Hengfu and its subsidiaries accountable for lost land and livelihood opportunities (Mackenzie et al. 2022). UN officials have written to the Chinese Government on the communities’ behalf and are awaiting a response (BHRRC 2021: 27). Similarly, in the past few years, international and local CSOs in Indonesia have worked together on an international media campaign and to file a complaint through the IFC’s accountability mechanism, the Compliance Advisory Ombudsman, about the dangers posed to nearby villages of a mine whose majority owner is a Chinese SOE and whose parent company received loans from a Chinese bank that was a client of the IFC (Inclusive Development International 2021a; Learning Spaces 2021a). In another instance, in April 2020, 260 civil society groups from across the world issued a joint letter calling on the Chinese Government to ensure that Covid-19–related financial relief for struggling BRI projects was not used to bail out projects mired in social, environmental, and financial risks (Inclusive Development International 2020).

At the local and national levels, CSOs, lawyers, and trade unions across the Global South have used environmental and labour laws to file complaints and lawsuits against Chinese investment projects, pushing Chinese companies to improve wages and working conditions, as well as environmental compliance. In the field of labour rights, for instance, mine worker unions in Zambia’s Copperbelt Province have fought to have Chinese-owned mines recognise and collectively bargain with them as required by Zambian labour laws (Learning Spaces 2021a). In 2020, the Chinese-invested Lamu coal plant project in Kenya had its environmental licence revoked following petitions by local communities and a complaint to the National Environment Tribunal over the project’s defective ESIA and insufficient public participation (BHRRC 2021: 15). The Industrial and Commercial Bank of China (ICBC) pulled its financing from the project soon after the tribunal revoked the project’s environmental licence (Kinney 2022). In 2021, soon after reports of a drastic decline in worker safety at Chinese-operated cobalt mines in Democratic Republic of Congo, a local worker injured at one of the mines was awarded damages by that country’s High Court (RAID 2021; Searcey et al. 2021).

These efforts often rest on the difficult, often unrecognised work done at the grassroots level by affected communities, workers, and CSOs in documenting project impacts, communicating with local regulators and policymakers, and carrying out protests, strikes, and campaigns seeking to raise concerns with Chinese companies and decision-makers. The Lamu case was the result of a coordinated campaign involving local communities and local and international CSOs (UNEP 2019). A strong local network of community, environmental, and social groups developed and linked up with global legal experts, environmental specialists, and campaigners, to build a persuasive message. In the US territory of Saipan, Chinese construction workers building casinos and hotels on the island took to the streets in 2017 to draw attention to poor working conditions and unpaid wages. Their efforts eventually led the Chinese companies for which they worked to negotiate settlements with the US Department of Labor in 2018–19 to pay nearly US$14 million in owed wages to 2,400 Chinese workers. In 2021, a US federal court awarded another US$5.4 million in compensation to the workers (Halegua 2020a, 2020b; Learning Spaces 2021c). In Ecuador, indigenous communities, with the help of anti-mining and environmental activists, organised protests in 2018–19 against the Rio Blanco mine jointly owned and operated by Chinese and Hong Kong companies for not engaging in consultation with the communities as required by the country’s constitution and the UN Declaration on the Rights of Indigenous Peoples (Latinoamérica Sustentable 2020). The judge, citing a past precedent, ruled in favour of the communities and ordered a temporary halt to mining activities (Hui 2019). In some cases, unaddressed community concerns have led to violence, such as in Kyrgyzstan, where locals attacked and burned down a Chinese-financed gold-processing factory in 2018 due to concerns about environmental impacts such as water contamination, mercury pollution, and findings that the company did not have the necessary construction permits and ESIA. According to the Oxus Society’s protest tracker, covering protests between January 2018 and December 2020, there were 42 rallies and protests in Kyrgyzstan that were in some way related to Chinese policy or investments (Swaine et al. 2021: 9).

The above examples have the following in common: they involve local and/or international civil society working outside China to call for redress for the human rights and environmental impacts of projects connected to Chinese companies operating overseas. There is another subset of civil society responses, however, that involves global civil society working in collaboration with Chinese stakeholders.

Insider versus Outsider Advocacy

Another way to think about civil society responses to Chinese overseas investment is to group them into ‘insider’ versus ‘outsider’ advocacy approaches (Learning Spaces 2021b). The insider–outsider framework borrows from the literature on lobbying (Kernell et al. 2017: Ch.13). Insider lobbying involves seeking direct, personal access to policymakers to influence policy outcomes, whereas outsider lobbying seeks to influence policy through grassroots campaigns that change public attitudes and mobilise the public. Similarly, insider advocacy in the context of Chinese overseas investment involves gaining access to Chinese decision-makers to raise their awareness about international environmental, social, and governance (ESG) standards, and build their capacity to incorporate those standards into policies and guidelines to improve outcomes. Outsider advocacy involves mobilising local and international groups to raise public awareness, raise concerns to Chinese decision-makers, and in the process apply pressure to encourage them to address ESG impacts. Viewed from this perspective, examples of insider advocacy with Chinese stakeholders are often overlooked. While the civil society responses cited earlier largely fall in the ‘outsider’ advocacy category, there are several CSOs that have chosen to explore opportunities to collaborate with Chinese stakeholders on these issues. Some of these are international CSOs, while others are Chinese CSOs and consulting companies.

These CSOs see the problem as stemming not simply from a lack of willingness on the part of Chinese stakeholders, but also from a lack of capacity. As a researcher formerly with Syntao, a Chinese CSR consulting company, told the author in November 2020, Chinese companies often face challenges dealing with affected communities and CSOs but lack the experience, knowhow, or resources to effectively communicate with those communities and address their concerns. In 2018, Syntao partnered with the Asia Foundation and the China International Contractors Association, a large industry group whose members include most of the major SOEs, to develop a community engagement handbook and used it to carry out three training sessions in China for more than 100 high-level SOE managers and frontline personnel (Syntao 2021). Syntao intended to carry out more training in overseas project sites in Southeast Asia but had to cancel those plans due to the Covid-19 pandemic (Personal communication with Syntao and Asia Foundation staff overseeing the development of the handbook, November 2020). Similarly, the international NGO Global Witness has partnered with another Chinese industry group, the China Chamber of Commerce of Metals, Minerals, and Chemicals Importers & Exporters, to develop guidelines on socially responsible mining and human rights due-diligence guidelines for its members (Learning Spaces 2021b).

Insider advocacy is an important channel for providing awareness-raising and skill-building for Chinese stakeholders who generally have very little experience dealing with communities and carrying out social and environmental due diligence and are wary of collaborating with civil society. The cases of Global Witness and Syntao indicate there is willingness among some Chinese stakeholders to work with CSOs they trust, particularly Chinese ones and those with a formal presence in China. Insider advocacy in China, however, has become more difficult in recent years given the rapidly shrinking civil society space there. Working to change the mindset and behaviour of stakeholders in China’s top-down, highly bureaucratic system is also a slow process. Chinese stakeholders may issue improved ESG policies and guidelines, but so far have been unlikely to invest more staff and resources to carry out better community consultation or address immediate grievances in projects on the ground.

Given the limitations of insider advocacy, outsider advocacy plays an important role in holding Chinese (and host-country) stakeholders accountable and pressuring them to act more quickly to address grievances, and it is often the only channel available to groups that lack access to Chinese decision-makers. Ideally, insider and outsider advocacy approaches would be complementary, each working through different channels to hold government and corporate stakeholders accountable. However, this would require the insider and outsider groups to share information with one another and collaborate closely on strategy—something that has not happened much to date, even though it is worth noting that some international CSOs such as Global Witness do engage in both types of advocacy.

Chinese Stakeholders Are Responding … Slowly

Since 2013, when President Xi Jinping first announced the BRI, there has been increased focus on Chinese overseas investment and finance. In many developing countries, Chinese capital has the potential to make a significant contribution to their infrastructure needs. The critical question is whether it will contribute to sustainable, inclusive development that will benefit not only government and corporate elites but also communities and more vulnerable groups that often have little voice or influence in these investment decisions. For that to happen, host-country governments and Chinese state and corporate actors need to make a much greater commitment to social and environmental standards in principle and hold themselves accountable to those standards in practice.

The demonstrated growing commitment of Chinese stakeholders to social and environmental responsibility over the past few years suggests that pushback by communities and civil society has had an impact. Government guidelines, policies, and regulations, as well as public statements from Chinese stakeholders, have increasingly mentioned the need for companies to ensure environmental protection, respect the laws and cultures of host countries, and follow international best practices for sustainability. Signalling this shift, a few years after the crackdown on the Letpadaung Copper Mine protests in 2012—and perhaps cognisant of the negative reaction received on that occasion—Chinese officials changed tone. When clashes occurred again in 2014, after Myanmar police fired on protesters, killing one and injuring at least 20 others, China’s foreign affairs spokesperson stated: ‘We express concern and regret at the reports of casualties. We call for the relevant parties to appropriately deal with those victims’ cases’ (Reuters 2014).

The most high-profile commitment came from President Xi in a speech at the Second Belt and Road Forum for International Cooperation in April 2019, when he spoke of the need for a clean and green, high-quality BRI:

We have agreed to act on the principles of high-standard, people-centred and sustainable development, align our cooperation with universally accepted international rules and standards, follow the philosophy of people-centred development, and pursue coordinated progress in economic, social and environmental dimensions. (Belt and Road Forum 2019)

The language of ‘high-standard’ overseas infrastructure development is now present in all major official speeches.

Soon after Xi’s speech, on 26 June 2019, Kenya’s National Environment Tribunal announced it was cancelling the licence issued for the construction of the Lamu Coal Power Plant, and the Chinese state-owned ICBC announced it was withdrawing from the project (Kinney 2022). Two days later, the Chinese Embassy opened its doors to the Save Lamu civil society coalition and China’s Ambassador to Kenya, Wu Peng, reassured the CSOs that ‘whether a coal power plant is built or not should always be and will in the future be the decision only people in Kenya can make’ (BHRRC 2021: 15).

In January 2021, the Chinese Government released a White Paper on international development cooperation that announced China’s intention to significantly step up its development cooperation with the Global South and listed the BRI as a major platform for doing so (SCIO 2021). The White Paper calls for the establishment of ‘a new model of international relations based on mutual respect, equity, justice and win-win cooperation, and build[ing] an open, inclusive, clean and beautiful world’. It devotes several sections to supporting the Sustainable Development Goals (SDGs), such as poverty reduction, protection of vulnerable groups, food security, health care, education, gender equality, and environmental protection.

More recently, in July 2021 and January 2022, China’s Ministry of Commerce and Ministry of Environment and Ecology released a set of voluntary ‘Working Guidelines for Green Development in Overseas Investment and Cooperation’ and ‘Guidelines for Ecological Environmental Protection of Foreign Investment Cooperation and Construction Projects’, respectively. Unlike past regulations and guidelines that largely focused on the importance of respecting host-country laws and culture, CSR, and communicating with affected communities, these go further in emphasising the importance of companies following international rules and best practice for environmental protection, improving their internal environmental management systems and personnel, and integrating environmental considerations into the entire lifecycle of a project (Nedopil et al. 2021; Wang 2022). In host countries where environmental governance is weak or insufficient, these guidelines recommend Chinese companies adopt the standards prevailing in international organisations or multilateral institutions, or China’s stricter domestic standards for investment and cooperation activities. Around the same time, following up on his earlier call for a green, clean BRI, President Xi announced at the seventy-sixth session of the UN General Assembly in September 2021 that China would no longer build new coal-fired power projects overseas and would focus on supporting the development of green and low-carbon energy in developing countries (UN Affairs 2021).

Looking Forward: Opportunities and Risks

These developments reflect progress in Chinese commitments in principle to adhering to social and environmental standards at the national and international levels. While they may seem incremental, they represent a welcome change from the originally clumsy, defensive, and even hostile responses of Chinese company and government representatives in the Letpadaung Copper Mine case nearly a decade ago. They also show that Chinese leaders and stakeholders are aware of, and sensitive to, the pushback they have encountered from civil society in the Global South. More importantly, given the Chinese responses have mostly been in the form of verbal and written commitments rather than actions, they provide an important opportunity for civil society groups to hold Chinese stakeholders accountable in practice by reminding them of their commitments and exerting pressure on their own governments and judicial institutions to enforce domestic human rights, labour, and environmental laws.

At the same time, civil society efforts to hold powerful government and corporate actors accountable are by no means risk-free. Reports of environmental and human rights activists in the Global South being harassed, detained, and even killed by host-country actors are all too common (Coalition for Human Rights in Development 2019). While the Save Lamu campaign was ultimately successful, a UN Environment Programme (UNEP 2019) blogpost noted that campaigners ‘encountered misinformation (sometimes deliberate), arrests, branding as terrorists, raided offices and further forms of harassment and intimidation’. In 2021, media reports emerged about the arrest of staff of an Ugandan CSO who had been working with communities affected by the proposed East African Crude Oil Pipeline being developed by the French company Total and the Chinese company CNOOC (Gyuse 2021; Inclusive Development International 2021b).

Civil society also faces risks from dealing with Chinese stakeholders who often hold unfriendly attitudes towards nongovernmental actors. One study’s interviews with Chinese companies in Myanmar found they had little understanding of and even suspicion about the motives of local and international CSOs (Cai and Zhou 2018). In the Letpadaung case, Chinese companies such as Wanbao viewed CSOs as outside instigators coming in to stir up community protests. Local and international CSOs are at times also wary of working with Chinese civil society groups on these issues given the Chinese Government’s increasingly draconian cooptation of, and restrictions on, those groups inside China (Tower 2020).

In this complex environment, civil society groups working to address the human rights impacts of Chinese overseas investment should be aware of the risks they face and put in place mitigation measures to protect themselves. They can do so, however, with the knowledge they will play a critical role in ensuring the realisation of the ‘open, inclusive, clean, and beautiful world’ promised in Chinese Government speeches and white papers.

1. I use civil society and civil society organisations (CSOs) throughout this article to refer to a wide range of groups, including communities, informal associations, indigenous groups, social movements, as well as formally registered nongovernmental organisations (NGOs).
2. The current production-sharing contract, modified after protests in 2012, gives 51 per cent of the profits to the Government of Myanmar—represented by the state-owned company Mining Enterprise 1. Wanbao Mining’s share of profits was cut to 30 per cent and MEHL’s to 19 per cent (Win Ko Ko Latt and Soe Than Lynn 2013). The mine was previously owned by Canadian company Ivanhoe, and has a controversial history punctuated by conflict with local people (Yu 2021a).

China’s special economic zones (SEZs) facilitated the country’s transition from an agricultural to an industrial economy from the 1980s, attracting foreign direct investment (FDI) and contributing significantly to Chinese economic development. The success of this model attracted many imitators across the developing world. Though China has recently been involved in ‘exporting’ its SEZ model through directly funding SEZs abroad, in many other cases, host countries have attempted to imitate China’s success without any direct involvement from the Chinese state. These include India, which from 2005 attempted to establish new Chinese-style SEZs and reinvigorate older export zones based on its interpretation of China’s model. Sharing similarities with China in population size, economic growth rate, and agricultural sector size, India offers an interesting case study of how China’s ‘model’ can be translated elsewhere. Yet, the South Asian country’s different political, social, cultural, and temporal contexts highlight the difficulty of attempting to copy China’s experience—itself based on a complex genealogy and distinctive set of global, national, and local factors.

This essay examines the attempted replication of China’s SEZ experience in India through a focus on one (anonymised) Indian zone, which is marketed as a new ‘industrial city’ and was directly modelled on a Chinese zone its founders had visited. It employed the same international consultants who had designed well-known Chinese zones, and attracted investment from several Chinese firms, which, alongside multinational firms with manufacturing experience in China, began to import labour practices from China. This case study suggests China’s SEZ experience may be translated into India by a variety of actors, with a variety of motives, going well beyond intentional ‘policy transfer’ by state policymakers. The Chinese model is diffuse, contingent, and dynamic, rather than a static template, and it produces results in the Indian context that are similar to yet different from those in China. Our research shows how different elements of the model are mobilised by different actors; how they mutate in response to local political, economic, social, and cultural contexts; and how they produce new forms of urban experience rather than replicating China’s path.

Policy Mobilities and China’s SEZ ‘Model’

The field of policy mobilities has been developed by political and urban geographers over the past decade as an alternative to political science’s policy-transfer approach (Benson and Jordan 2011). Policy transfer conceptualises policy movement in terms of careful selection and application of best practices by rational decision-makers, but the policy mobilities approach provides a more geographically sensitive approach, emphasising sociospatial contexts and the mutation of policies as they travel (Peck and Theodore 2012). One strand of the policy mobilities literature is concerned with urban models, in which groups of principles have become associated with particular cities and are increasingly used to inform urban development policy (McFarlane 2011). Such models were originally overwhelmingly European and North American, but Asian cities have provided more recent alternatives, especially for other Asian countries (Robinson 2002; Roy 2016). The literature suggests the export of these models is facilitated through the interaction of state actors, as well as cross-border networks and consultants, who contribute funding and expertise (Shin et al. 2020).

When a model is adopted, it is also adapted. Actors adopting the model prioritise aspects they find attractive (McCann and Ward 2012), transplant the model into different conditions (Ong 2011), and often work from an abstract ideal and not a realisable plan (Shin 2019). We suggest there may also be different actors at different levels involved in translating the model, some of whom are unintentional agents of policy mobility or who reproduce unwanted and/or unobserved aspects of the original. Moreover, the model itself may have antecedents that complicate a straightforward understanding of its development. China’s SEZs—with their complex genealogy, ranging from the colonial entrepôts of Singapore and Hong Kong, newly industrialising Taiwan and South Korea, to the classic European example of Shannon, Ireland—provide an excellent example of such a policy model.

SEZs were established in China from the 1980s to overcome economic and technological weaknesses following three decades of relative isolation under Mao Zedong. Their core features have been enumerated by many and usually include: a large, geographically delimited, physically secured area of former rural land; governance by comprehensive national legislation, with local-level autonomy to develop laws and administer zones; benefits for foreign investors, including financial incentives, exemptions, and more relaxed labour regulation; and labour-intensive manufacturing, employing primarily young, female rural migrants (World Bank 2015). From the start, they were designed as experimental zones—sites of transformation as well as production. China’s first four SEZs—Shenzhen, Zhuhai, Shantou, and Xiamen—were established along the coastal periphery, not only to attract investment from Hong Kong and Taiwan, but also so they could be easily erased if they failed (Bach 2017). The new term ‘special economic zone’ aimed to avoid association with capitalist export processing zones, instead connoting model cities with residential and leisure areas and diverse industries (Wong 1987).

Their flagship was Shenzhen: a new centrally planned industrial city with a range of urban functions, as well as an export processing hub. Its preferential treatment for investors, possibilities for joint ventures, and experimental contract labour system ensured rapid investment from overseas. Many multinational corporations set up manufacturing bases, employing workers recruited from rural China. By 1989, there were more than one million temporary workers in the zone, 80 per cent of whom were women (Sklair 1991). The Shenzhen experiment was a great economic success: it is now a 500-square-kilometre megacity of about 20 million people, one of China’s principal import–export hubs, and a globally leading manufacturing centre attracting millions of internal migrants (Goodburn 2020a). China now has a wide range of other economic ‘zones’ of different shapes, sizes, locations, and nomenclatures, which are estimated to have contributed 22 per cent of China’s gross domestic product, 45 per cent of FDI, and 60 per cent of exports, as well as accelerating nationwide industrialisation, agricultural modernisation, and urbanisation (World Bank 2015).

Indian Emulation and the 2005 SEZ Act

China’s success in expanding manufactured exports and employment inspired many developing countries, including India, whose own export processing zones (EPZs) pre-dated China’s SEZs but were not successful in attracting significant investment or promoting growth (Knoerich et al. 2021). In 1994, the Indian Council for Research on International Economic Relations sent a mission to China to identify ‘useful features of Chinese zones that could be adapted to Indian conditions’ (Cross 2014: 37) and, in 2000, commerce minister Murasoli Maran visited and was impressed by Shenzhen (Palit and Bhattacharjee 2008). Borrowing the Chinese term ‘SEZ’, Maran initiated new rules for the establishment of private zones in India and began converting EPZs into SEZs, which were intended to encompass the full array of facilities that make up a city, with housing, hospitals, schools, and leisure and retail developments, rather than the existing more modest industrial enclaves (Ministry of Commerce and Industry 2005). In 2005, these developments were formalised in the new Special Economic Zones Act (SEZ Act), which was aimed explicitly to ‘help India replicate the Chinese success story of rapid industrialization’ (Parliament of India 2007).

The new Act encompassed not only trade and investment, but also radical deregulation, infrastructure creation, and tax regime changes, to overcome barriers raised by monetary, trade, tariff, and labour regulations. As in China, SEZ policy was strategic and experimental: in 2005, commerce minister Kamal Nath commented approvingly that the SEZ Act would allow massive ‘rurbanisation’ (that is, conversion of rural land for urban development) free of the ‘shackles of the government inspector’ (Kothari et al. 2010). However, in marked contrast to China, India’s SEZ Act also encouraged private investors, rather than the state, to develop the zones (Aggarwal 2010; Sampat 2010). In setting up city-style zones, the developer would be responsible for providing civic amenities, roads, sewerage, housing, utilities, green spaces, and education—in essence, taking over the role of the municipal government (Menon and Mitra 2009). The state’s role would be limited to that of broker in assisting private entities to acquire the land (Sood and Kennedy 2020).

Impacts of Emulation in the ‘Industrial City’ Case Study Zone

The anonymous ‘industrial city’ discussed here is a key example of this new type of Indian SEZ: it is large, at nearly 100 square kilometres; it is in an underdeveloped rural location; and it was established by private investors shortly after the 2005 SEZ Act. For inspiration, the founders looked directly to China, visiting several SEZs and other industrial zones before identifying one that could act as an immediate model. They were so impressed by the architecture and spatial layout of the Chinese zone—spread over a vast area in anticipation of industrial, commercial, and residential expansion—they hired the same third-country consultants who had designed it to work on the plans for their ‘city’.

The model Chinese zone, founded in the 1990s, emphasised ‘scientific planning’, providing extensive infrastructure before the construction of factories, and strictly dividing the zone by sector and function. It was well connected to existing transport and services from the start and rapidly developed its own amenities, including commercial centres, education areas, leisure and recreation districts, as well as industrial and high-end residential areas. The Indian city followed a similar pattern in terms of the layout, but when we visited in 2018, its vast terrain was mostly still unoccupied and its wide, multilane highways almost empty. Leisure and commercial areas were unfinished—a source of much complaint from the Chinese firm managers we interviewed, who compared the lack of facilities negatively with China’s zones. They highlighted the role of the state in Chinese infrastructural development; as one factory manager put it:

In China all the basic facilities, like shopping malls and mobile [phone] signal, would be here first; it would be mandatory. The government would send a command to establish them. But here, it’s democratic … the government can’t just tell Airtel to set up a tower.

Different ownership structures played a crucial role in the provision of amenities: the private nature of the Indian zone meant there was no state-directed infrastructure development. Although the 2005 SEZ Act dictates that infrastructural services be provided, the state’s responsibility ends at the gates of the zone (Ministry of Commerce and Industry 2005). The outcome is that, with no state investment inside the SEZ, as well as the generally more limited state ability to mobilise large development projects in India than in China, the pace of SEZ expansion is much slower. The Indian zone developers had to expand cautiously in line with demand from investors, rather than rapidly based on broad policy ambitions for local development.

Another source of complaint for Chinese managers was the rural location, with the nearest big city nearly 80 kilometres away along poorly maintained roads. Though the zone’s founders promoted the location as equidistant between ports and airports, it made urban integration more difficult than in the case of the Chinese model zone, while it also lacked the huge state investment to create new urban infrastructure that had ensured the rapid development of China’s 1980s SEZs like Shenzhen. Therefore, despite its founders’ attempts to emulate a specific Chinese model of internal spatial configuration, differences in ownership, location, and infrastructural investment meant the Indian industrial city developed in a manner fundamentally different both from its immediate model and from the original Chinese SEZs.

While firm managers bemoaned unfinished infrastructure, local villagers were also dissatisfied with spatial changes, complaining that much of the land they had sold to developers lay for years undeveloped, yet they were deprived of access through it by the internal customs boundary that divided the city’s domestic production zone from the formal SEZ area. Just as in Chinese SEZs of the 1980s, this boundary could only be crossed by those employed within the formal SEZ, and then only with an official pass at the start and end of their shifts. The boundary thus meant locals’ access to space was radically reshaped and the urban fabric of the city disrupted. Villagers who continued to farm after the establishment of the SEZ lost access to grazing routes and watering spots, and some were obliged to graze their remaining cattle within villages—sometimes causing damage.

Despite the roles of collective ownership and the hukou (户口; ‘household registration’) system in producing China’s ‘urban villages’ (城中村) (see O’Donnell 2021), a surprisingly similar phenomenon was visible in the Indian case study, where, as in early Chinese SEZs, agricultural land was purchased for SEZ development while housing land was left intact, thus removing the need for resettlement. This mode of incorporating villages into the city enabled the founders to avoid the extensive protests that had characterised other cases of Indian land acquisition (Bedi 2013; Srinivasulu 2014), and it was lauded as a model for future development of large SEZs in India. Some villages benefited quickly: paved roads were dug past those near the new factories and residential areas, and electric streetlights erected. Some former farmers used the cash payment for their land to upgrade their homes and, in wealthier and better located (typically higher-caste) villages, rooms were let to white-collar in-migrants, providing a useful source of income.

This letting of rooms parallels the widespread construction of accommodation for migrant workers in Chinese ‘urban villages’, some of which has been so lucrative the original inhabitants have purchased property in the ‘city proper’, while continuing to let out apartments in the village (Liu et al. 2010). However, in the Indian city, incoming white-collar employees were few and many preferred to commute from elsewhere, given the city’s lack of amenities. The more numerous blue-collar migrant workers were accommodated in hostels outside the city, so opportunities for rental income were limited. Moreover, the option of expanding homes for rental was not feasible financially or practically for most villagers, particularly in less well-connected (often lower-caste) villages, where their greater distance from new factories meant they remained without paved roads and public transport.

As in China’s early SEZs, then, several ‘off-grid’ urban villages emerged, where roads and other facilities remained the responsibility of the lowest level of rural government, which lacked resources. Though a new private school was built, with subsidised fees for those formally employed in the zone, a public primary school was demolished to make way for new roads. Children from nearby villages now must travel several kilometres over unpaved tracks to attend school. Nor were the factory jobs, which villagers had been promised when they agreed to sell their land, available to all, since most villagers’ low level of education meant they were not chosen for assembly-line work. As in the Chinese model zone, those villagers who were recruited were typically on informal contracts with local labour agencies, working in maintenance, gardening, or cleaning. While some found work outside the city gates, many were unemployed or dependent on the income of a single family member.

Factory employment in the industrial city primarily targeted young women educated to at least age 16—akin to the dagongmei (打工妹) of China’s SEZs. While young women’s factory labour is not original to China, the gendered Chinese regime of precarious employment in export-oriented multinational manufacturing has been elevated to the status of a ‘model’ (Smith and Pun 2006). The reproduction of these gendered patterns in the Indian industrial city, by both Chinese and multinational firms moving from China, suggests how corporate actors may contribute to the importing of a development model, albeit unintentionally, by continuing practices in the new setting. Yet, in conjunction with India’s differing labour regulations and sociocultural setting, the impacts on neither labour management nor the women themselves were straightforwardly reproduced.

Young women were preferred as factory workers in the Indian city for reasons like those in China. They were seen as more docile than men and unlikely to object to low wages. Young men complained it was difficult for them to find work, since they were viewed as potential troublemakers by factory managers. Moreover, the labour was seen as particularly suitable for women: gender stereotypes about ‘nimble fingers’ and the idea that women more willingly accept tedious work—long used to justify hiring women on Chinese assembly lines—were frequently mentioned by Chinese and other managers in the Indian city. An additional factor was that some work was in traditionally female roles such as sewing, which was highlighted as work to which husbands and fathers would not object. The much lower rates of female workforce participation in India than in China (Klasen and Pieters 2015) made it more likely that male family members would reject women’s engagement in paid labour without extensive assurances about the nature of the work as well as the working environment and accommodation.

These requirements meant Indian workers were subject to a far more repressive workplace and accommodation regime than their Chinese counterparts. Since firms demanded more female factory labour than was available locally, thousands of migrant women aged 18–23 were recruited from poor rural areas of the state to work for one to three years, before returning home for marriage. Unlike Chinese migrant workers, who were accommodated in factory dormitories, they were housed in privately run hostels subcontracted by the firms and located outside the city gates. Buses collected the women from the hostels before each shift and returned them as soon as the shift was over. All food was provided in the hostel and—apart from one weekly group excursion under the supervision of a warden to buy essential items such as toiletries—women were not allowed to leave without permission. These extreme restrictions were required by firms, since families would not allow their daughters to migrate for work if their ‘safety’ (physical, moral, and sexual) was not guaranteed. Controlling women’s movements thus allowed firms to ensure an adequate supply of young, female labour.

These repressive conditions meant few Indian migrant women experienced the kinds of emancipatory effects—a greater say in spouse selection and family decision-making or, in the longer term, potentially settling down and marrying in the city—that some Chinese migrants experienced (Fan 2007; Goodburn 2015, 2020b). Although the zone’s founders spoke positively of the social changes they believed would arise from women’s employment (enhanced autonomy, later marriage, increased emphasis on female education), these gains applied predominantly to local women, who could avoid the hostel regime. For the zone’s migrant women, any such effects were offset by their repressive living conditions, which prevented urban integration.

The Limits of Translation

Overall, our research shows how the Chinese SEZ model is translated into India by a range of actors (policymakers, consultants, firms, migrants, local people, and others) and interacts with specific local contexts—including differing roles for state and private capital, local and national institutional frameworks, and sociocultural norms and expectations—to create varied impacts. Although the Indian zone has achieved some level of industrialisation and urbanisation, it falls short of the rapid urban expansion of most Chinese zones and its impacts have been uneven. The extension of infrastructural development to only some villages has resulted in prosperity and poverty existing side-by-side; villagers who gave up fields lament working as low-paid labourers on the site of land they once owned; contact with better-paid migrants as well as villagers now occupying higher-status positions has led to resentment over new forms of inequality; and, while local women may benefit from temporary factory employment, migrant women suffer under the repressive workplace/hostel regime. Like its Chinese counterparts, then, the Indian zone raises questions about how multinational capital, and rural and migrant populations, can be integrated into the new city, and what sort of spatial features, social relations, and governance structures can emerge through management of the resulting diversity. Yet the outcomes for social change and cohesion, and for individual lives and livelihoods, have, in many and perhaps unforeseen ways, been different from those in China, as key actors, practices, and policies remain rooted in local contexts and resistant to convergence.

This essay draws on the authors’ paper ‘Importing Export Zones: Processes and Impacts of Replicating a Chinese Model of Urbanization in Rural South India’, published in Urban Geography in December 2021, doi.org/10.1080/02723638.2021.2014669.

Since Chinese President Xi Jinping first announced it in 2013, the Belt and Road Initiative (BRI) has evolved to become the overarching framework through which China frames much of its global engagement. Among many other countries, Cambodia has enthusiastically embraced the BRI and, during President Xi’s visit to Phnom Penh in 2016, the Chinese and Cambodian governments signed a memorandum of understanding on bilateral cooperation under the initiative (Xinhua 2017).

The BRI has been subjected to much scrutiny in recent years. With the initiative encompassing many projects with high environmental, social, and governance risks, such scrutiny is valid, and indeed necessary. However, many critiques assume the BRI is a clearly defined masterplan and fail to pay attention to the detachment between (often vague) intentions and realities on the ground, overlooking, for instance, how local agency plays a fundamental role in shaping Chinese engagements overseas, for better or worse. Cambodia is an important case in point. As the country has become a major focus of Chinese diplomatic and economic engagement, some observers have raised concerns about the kingdom increasingly coming within China’s ‘sphere of influence’ (Layton 2017), or even becoming a ‘Chinese colony’ (Sukumaran 2019). While China has clearly become a favoured partner of the Cambodian Government, broad-stroke assessments of the relationship often fail to consider host-country agency and the diversity of agendas in play. As we have argued elsewhere (Loughlin and Grimsditch 2021), more grounded assessments that consider local dynamics and interests are key to understanding the BRI and projects that carry its branding.

A longer-term historical perspective is also helpful to put the dynamics we are seeing today in context. In the case of Cambodia, although discussion of the two countries’ ever strengthening ties is now often framed within the narrative of the BRI, the bilateral relationship long pre-dates these developments, with the two countries celebrating 60 years of friendship in 2018. This bond navigated lengthy interruptions during that period, but the mid 2000s marked a new phase (IDI 2021b). The year 2006 was a watershed moment, as a visit from then premier Wen Jiabao resulted in several bilateral agreements and a package of US$600 million in loans and grants (AP 2006). Ties have since gone from strength to strength, with relations upgraded in 2010 to a ‘comprehensive strategic cooperation partnership’—China’s highest level of bilateral relations. Beijing has since become Cambodia’s top source of investment and aid, and its number one trading partner.

An exaggerated emphasis on state interactions also gives a skewed picture of the relationship. In Cambodia, alongside state-backed investment leaving China via formal channels, a parallel world of loosely regulated and often illicit private capital flows has emerged and grown exponentially in the past decade. This has manifested most starkly in the coastal city of Sihanoukville, where a boom in property development and ‘legitimate’ gambling investment became intertwined with illegal online gambling, telecoms fraud, money-laundering, and other criminal activities (Turton 2021). Recent analyses of the Chinese presence in Cambodia have at times conflated these illicit activities with other types of investment (Goldberg et al. 2021). At the same time, a complex geopolitical landscape has shadowed narratives of Chinese investment in Cambodia, with the United States especially scrambling to push back against what it sees as an expansion of China’s diplomatic, economic, and military influence in the region (Nachemson 2021). As a result, attention is often drawn away from the multifaceted push and pull factors that steer the BRI, obscuring what is in fact a nuanced landscape of multiple (and sometimes competing) interests and agendas.

To suggest an alternative, more grounded approach to studying the BRI and, more broadly, Chinese engagements overseas, this essay takes a deeper dive into the case of the Sihanoukville Special Economic Zone (SSEZ), a landmark BRI project where both Chinese and Cambodian state development objectives align. Strong state backing from China has enabled Chinese commercial actors to realise the project, supported by top-level political backing from Cambodia and well-positioned local elites. This comes in the context of host-country development strategies that have prioritised the pursuit of an export-oriented development model that has long been promoted by a range of actors, including Cambodia’s multilateral, Western development partners. Chinese investment and development projects in Cambodia are extremely diverse and each tells its own story, but by focusing on the SSEZ, we seek to illustrate how deeper dives can cut through the competing narratives around the BRI, to reveal how China’s global interactions often build on existing initiatives and development models, and show how they are able to align with, adapt to, and support prevailing local and global dynamics.

Archaeology of a Showcase BRI Project

China is now by far Cambodia’s top investor, but this is just one aspect of the countries’ bilateral ties (IDI 2021a). China is also the number one trading partner—with bilateral trade surpassing US$11 million in 2021 (Xinhua 2020)—and the largest source of development aid, according to Cambodia’s own tally (CDC 2020). At the same time, Chinese contractors have become a mainstay of the Cambodian construction industry, making infrastructure projects possible and facilitating the property boom Cambodia was experiencing before the onset of the Covid-19 pandemic—generating significant revenues for China’s state-owned firms in the process. Private capital from China also dominates the manufacturing sector, which is largely focused on garments and footwear (IDI 2020). Military cooperation has also increased in recent years, with China’s ambassador referring to bilateral military ties in 2021 as a key pillar of the two countries’ ‘steel friendship’ (钢铁友谊) (PRC Embassy 2021).

High-level bilateral meetings between Cambodia and China are often followed by joint statements identifying priority cooperation areas and projects. Communiqués over the past few years have made specific reference to the SSEZ, as well as other key projects such as the Phnom Penh–Sihanoukville Expressway and the Angkor International Airport in Siem Reap (Kingdom of Cambodia and PRC 2019). These projects are routinely referred to as priority BRI projects in statements from Cambodian and Chinese officials, but the scope of the two countries’ development cooperation extends far beyond them. China is Cambodia’s top source of concessional finance, which flows to transport, energy, and irrigation projects, among others, and in 2019 alone came close to US$500 million (CDC 2020). Commercial finance from Chinese state-owned banks has also supported extensive infrastructure developments, and private investment from China now eclipses that of other nations (IDI 2021b).

As one of the earliest cooperation projects launched under the post-2000 phase of China–Cambodia relations, the SSEZ is a useful case study, showing how a plurality of diverse stakeholders is helping to realise both Chinese and Cambodian state objectives via what has become a landmark BRI project. One of Cambodia’s largest special economic zones, the SSEZ covers more than 11 square kilometres. When fully developed, it will accommodate 300 factories and, according to the developer, will employ 80,000 to 100,000 industrial workers (SSEZ n.d.). Its initial phase focused on textiles and apparel, luggage, leather goods, and wood products, with the second phase broadening this to machinery, equipment, building materials, and other industries (SSEZ n.d.). By the end of 2021, more than 170 factories had been established within the zone, the majority of which were Chinese, reportedly employing 30,000 people (Zhang 2022). Satellite images of the SSEZ indicate about 50 per cent of the zone had been developed by October 2021.

The project is a joint venture between Jiangsu Taihu Cambodia International Economic Cooperation Zone Investment Company Limited and Cambodia International Investment Development Group Company Limited (CIIDG). Jiangsu Taihu is owned by four Chinese companies, with Hongdou Group holding the largest stake. Hongdou is a major private company from Wuxi, Jiangsu Province (CCPIT n.d.). CIIDG is owned by family members of an influential Cambodian tycoon and senator (IDI 2021a).

Founded back in the late 1950s, Hongdou has traversed complex political and economic waters throughout its existence. Soon after the patriarch of the Zhou family established a small cotton-processing operation in 1957 in Wuxi, party officials ordered that it merge with several local collective enterprises. In 1983, when Deng Xiaoping’s reform and opening-up strategy was well under way, Zhou Yaoting, the patriarch’s son, took over the business, which was still ostensibly state-owned. By 1992, the Zhous and other private individuals had gained a 50 per cent share in the company. They then spent the next decade increasing their shareholding and purchasing government-held shares until 2004, when the Chinese Government sold its remaining stake in the company, which along the way had picked up the name ‘Hongdou’. Today, Hongdou remains a family enterprise, with the third generation Zhou Haijiang at the helm and various family members holding senior management positions (Flannery 2005). In the past two decades, the company has also developed its activities overseas. As production and salary costs increased in China during the 2000s, like many other Chinese apparel producers, the company began to feel the pinch. In a Forbes interview from 2015, the chairman put the company’s continued success during these ‘changing times’ down to diversification into new areas domestically and overseas (Flannery 2015).

The Cambodian partner CIIDG also navigated an evolving domestic landscape and its owners emerged from Cambodia’s post–civil war settlement among the top players in Cambodia’s business community. The company was founded by Senator Lau Meng Khin in the late 1990s, when he made his fortune through logging and other ventures (Diepart and Schoenberger 2016: 161). CIIDG is now chaired by his wife, Choeung Sopheap, with directorships held by their children (MOC n.d.). The family has been described as a ‘magnet for capital from China’ and, through CIIDG, they have secured multiple lucrative joint ventures with Chinese investors in real estate, agriculture, mining, and energy (Bahree 2014).

The SSEZ has been a joint priority of the two governments since 2006, when it was designated one of a handful of pilot ‘foreign economic trade cooperation zones’ by China’s Ministry of Commerce (Hang et al. 2017). These pilot zones received subsidies from China’s Ministry of Commerce to support their establishment (Bräutigam and Tang 2012), and the SSEZ received financing from the Export–Import Bank of China (Eximbank of China 2019) and insurance from the state policy insurance provider, Sinosure (n.d.). Chinese state-owned commercial banks have also expressed support for the development and financed specific parts of its infrastructure (Xinhua 2018). When the project experienced delays early on, as it ‘ran into difficulties with the Cambodian partner’, China’s Ministry of Commerce brought the Chinese parties together, along with representatives of Wuxi Municipality, to seek a solution. This resulted in the restructuring of the joint-venture (Bräutigam and Tang 2012: 811). The high-level intervention from both the commerce ministry and the Wuxi Government illustrates the lengths the Chinese Government is willing to go to support these kinds of overseas pilot projects.

Although pre-dating the BRI by seven years, the SSEZ is now fully absorbed into Belt and Road rhetoric, with the zone often referred to as ‘a landmark project’ of the initiative. It enjoys high-level support from both governments and, in 2019, China’s state media quoted Cambodia’s then deputy prime minister Hor Namhong referring to the project as ‘the biological child of the Royal Government of Cambodia and the Chinese Government’ (Mao and Nguon 2019). As mentioned above, the SSEZ is explicitly labelled a priority project in numerous joint statements from the two governments, including joint communiqués from 2015, 2016, and 2019.

Cambodia has demonstrated its high-level support for the project throughout its life, committing to ensure its smooth development and guaranteeing its stability. For instance, in 2014, amid national labour unrest following the 2013 elections, a division of Cambodia’s counterterror unit under the leadership of the Prime Minister’s son visited the SSEZ. Its deputy commander stated that one of their most important tasks was ‘to take responsibility for the stability and harmony of all the SEZs in Cambodia for counter-terrorism special operations … and to eliminate signs of unrest initiatives’ (SSEZ 2014b). This was published in the news section of the SSEZ’s website in English and Chinese. The same year, after a meeting with the incoming Preah Sihanouk Governor, the general manager of the zone said the provincial government was a ‘powerful supporter’ of the SSEZ, ready to help resolve difficulties, ‘including illegal worker strike[s]’ (SSEZ 2014a). These strong public statements from senior officials indicate the high priority the government attaches to the success of the project.

Overlapping Agendas

While a major project in its own right, the SSEZ fits into broader Cambodian and Chinese development strategies, with Cambodia seeking to attract industrial investors and China supporting its investors to ‘go out’. This also aligns with regional economic models that have been promoted by other international and multilateral actors for the past three decades. While the SSEZ has come to represent a ‘model’ BRI project, it is important to note that this sits within policy and regulatory frameworks that emerged from the overlapping agendas of a range of stakeholders—Chinese, Cambodian, and international—rather than simply the exportation of Chinese industrial capacity.

One of the key objectives of the overseas industrial zone model was to support Chinese companies to ‘go global in groups’ (Bräutigam and Tang 2014: 79). The SSEZ is a strong example of this, with Chinese companies representing more than 85 per cent of the zone’s tenants as of 2018. For inexperienced companies, investing in foreign countries is an intimidating prospect, but within the safety of a zone that is Chinese-managed, has state backing, and provides the infrastructure necessary to support industry, the prospect is likely much more attractive. In addition to creating overseas bases for these companies and expanding Hongdou’s production empire, the SSEZ has generated business opportunities for a host of Chinese contractors who have provided construction services and built telecommunications and energy infrastructure within the zone.

The SSEZ also illustrates how Chinese state-backed capital and private commercial interests intertwine overseas. The state seeks to support Chinese enterprises to go global and access new markets, while also offshoring excess capacity. In the manufacturing sector, this relies heavily on Chinese private sector actors who develop local connections, integrate with local business communities, and establish and operate factories and production lines. In addition to providing subsidies and mobilising capital, other state-backed infrastructure projects link the zone to the transport, telecommunications, and energy networks needed to make such industrial projects possible. For example, the soon to be opened Phnom Penh–Sihanoukville Expressway passes by the zone, and Sihanoukville hosts three Chinese-financed and built coal plants that connect to the provincial grid and beyond. The development of this infrastructure seeks to support Cambodia’s industrialisation, makes Chinese commercial investments viable, and generates further contracts for state-backed construction and engineering firms (Grimsditch 2019).

The SSEZ showcases the interaction not only between Cambodian and Chinese development priorities, but also of other international and multilateral actors and, crucially, linkages to global value chains. Cambodian factories mostly feed Western export markets, and the United States has now become Cambodia’s top market, with exports exceeding US$9 billion in 2021 (Hin 2022a). A major pull factor for Chinese companies establishing manufacturing bases in Cambodia has been the access to preferential trade terms with Europe and the United States—described on the SSEZ website as Cambodia’s ‘favourable trade status’ (SSEZ 2012). Even where factories are wholly Chinese-owned and utilise materials produced in China, they can benefit from relaxed tax regimes and quotas when exporting certain products to Europe and the United States, provided their products are assembled in Cambodia.

When looking at the broader set of agendas at play in Cambodia’s industrial sector, it is also important to take a step back and consider the evolution of the SEZ model, which is the result of years of interventions from a range of development partners. The current phase of the Cambodia–China relationship initially developed against a backdrop in which Cambodia remained heavily dependent on foreign aid from the West and Japan, along with finance from multilateral institutions including the World Bank and Asian Development Bank (ADB). While these actors provided financing for infrastructure and state capacity-building, they also encouraged market reforms, economic liberalisation, development of export-oriented industries, and enhanced physical connectivity within Cambodia and with the region.

This is illustrated well in the Greater Mekong Subregion (GMS) Economic Cooperation Program, which was established in 1992 by the ADB and includes the Mekong countries plus Yunnan and Guangxi provinces in China (Raymond 2021). The GMS program is structured around ‘economic corridors’ that traverse the region. Along with energy and transport infrastructure, SEZs play an important role in these corridors. As the GMS action plan for 2018–22 states: ‘The development of SEZs, especially in border areas along economic corridors, should be given special focus. SEZs will play an increasingly important role as investment locations that offer a competitive environment to support global supply chains’ (ADB 2018). Rather than replacing or subverting prevailing development models, the BRI in many respects integrates with the existing direction of travel. The BRI’s ‘vision and actions’ document discusses building ‘key economic industrial parks as cooperation platforms’ to ‘promote industrial cluster development’ and explicitly refers to the GMS program as an existing mechanism of which the BRI should ‘make full use’ (NDRC et al. 2015).

China’s efforts to offshore excess capacity and lower-end manufacturing pre-date the BRI but have now been absorbed by the initiative. Likewise, SEZ development was a priority for Cambodia for years before the ascent of Chinese capital in the country but is now a central feature of the two countries’ cooperation. Nonetheless, the SSEZ provides a useful snapshot of how the two countries’ economic and policy objectives have aligned, building on a host-country development model that was heavily influenced in its formulation by Western, Japanese, and multilateral development actors promoting an export-oriented development model as part of a push towards economic liberalisation in the post-socialist, post-conflict nation.

Assessments of the SSEZ

Assessments of the BRI in Cambodia can be highly polarised. Unsurprisingly, evaluations from Chinese state media are uniformly positive, including a recent report from Xinhua under the headline: ‘China’s BRI Projects Greatly Benefit Cambodian Economy, People: Officials, Experts’ (Xinhua 2022). Such reports are often republished by local media and boosted on Cambodian Government websites and social media accounts (MPWT 2022). These often unnuanced takes are matched by equally sweeping critical assessments of the BRI, sometimes based on an incomplete understanding of what is occurring on the ground, with many of these reports revolving around the SSEZ.

One recent example of this is a report from the US research organisation C4ADS, evaluating ‘economic development zones’ in the Mekong (Goldberg et al. 2021). As noted above, since the mid 2010s, Sihanoukville has become a base for organised crime, dominated by mainland Chinese actors as well as groups from Hong Kong and Taiwan (Turton and Huang 2021). The C4ADS report conflates this with the SSEZ, and the report’s deep dive into Chinese investment in Sihanoukville concludes:

Belt and Road Initiative investments, including Sihanoukville SEZ, ostensibly espouse the goal of progress for local communities and countries. However, in this case, that progress greatly harmed the local populations with increasing crime rates, higher rents, overwhelmed infrastructure, suppression of the local culture, with locals cut out of the profits. (Goldberg et al. 2021: 35)

While it is entirely legitimate to raise concerns about the troubling recent developments in the city of Sihanoukville, the SSEZ is a self-contained zone outside the city, pre-dating the shift in the city’s development by almost a decade, and is a manufacturing and export hub with no links to gambling or urban real estate investment. Despite the economic downturn that hit the city after a ban on online gambling and the onset of the pandemic, the SSEZ has continued to report strong production and export figures (Hin 2022b).

The reality is that, among Cambodia’s SEZs, the Sihanoukville zone is one of the most successful. This is certainly not to say that there are not concerns worthy of attention. Several companies based in the zone have been investigated for transhipping products via the zone to side-step US import tariffs (Prak 2019). The zone will soon bring online its own coal power plant, which will increase Cambodia’s national carbon emissions and potentially push away global buyers who are conscious of their supply chains’ exposure to carbon emissions (Ham 2021). Furthermore, the expansion of the zone and likely move up the industrial value chain potentially mean more energy and pollution-intensive industries will locate there, which will put strain on the Cambodian Government’s rudimentary environmental regulation and enforcement agencies.

The closed nature of SEZs in general makes study of working conditions extremely challenging and, even though the SSEZ has been operating for more than a decade, no comprehensive assessments of labour practices among zone tenants have been published. The limited literature available indicates that union activity in the zone is limited, with a 2018 report finding only 12 government unions were active in six of the 100 factories operating at the time, with no independent unions (Khuon 2018). Workers interviewed for that report said their factories had no unions and, although some had workers’ representatives, in cases of severe labour violations, they ‘could not help’. In 2014, a Chinese-owned factory reportedly fired 10 union leaders and activists, who then struggled to find work in other factories within the zone due to their activities (CCIM 2018). Interviews compiled by an academic researcher in 2017 also included testimony from people who claimed they were fired and then blacklisted across the zone for their union activities (Thame 2017). A labour ministry official responded to criticism by saying the SSEZ had a committee of representatives from government agencies and complaints could ‘be put in a mailbox’ (Niem 2018).

However, it is important to note that similar issues exist across Cambodia’s industrial sector and have also been observed in SEZs across the region. As Thame (2017: 4) notes in a regional study of SEZs, limited transparency, displacement, labour violations, and selective enforcement of environmental regulations are common. While these issues exist in both Chinese and non–Chinese-owned zones and factories, Chinese companies have an outsized presence in Cambodia’s manufacturing sector and more frequently appear in critical reporting, especially concerning labour issues. It therefore follows that Chinese policymakers face a greater imperative and a clear responsibility to take action to raise the standards of companies operating in overseas industry.

There are signals that policymakers in China are increasingly cognisant of the reputational issues Chinese companies face around the world, as evidenced by the now common references to developing ‘high-quality’ infrastructure and building a ‘green’ BRI (Xi 2021). Regulations and guidelines related to Chinese overseas investment and finance continue to evolve and are becoming more detailed. Although most provide guidance rather than mandated rules, they increasingly urge Chinese firms to ensure compliance with local regulation or, where they fall short, to apply Chinese or international best-practice standards (MOFCOM and MEE 2021). In this regard, many Chinese companies have a long way to go, with most still content to rely on simply satisfying local norms and regulatory standards, regardless of their adequacy. As the SSEZ continues to expand, and if it does draw in more projects with greater ecological footprints, scrutiny will increase if appropriate standards are not upheld within the zone.

What Next for the BRI in Cambodia?

While Chinese investment in Cambodia has made important contributions to improving infrastructure and generating employment in manufacturing, it has also enriched already powerful economic elites, who are frequently a gateway for Chinese capital. These business actors often enjoy close relationships with the ruling party, which in turn has proved itself to be adept at associating itself with development projects to boost its performance legitimacy (Loughlin and Milne 2020). During a 2016 event marking the opening of the one-hundredth business at the Sihanoukville SEZ, the Prime Minister asked: ‘[W]ere there no actions taken by Hun Sen, would there be any factories/enterprises in the whole country?’ (Hun 2016). Many Chinese companies have proven capable of navigating both the formal and the informal political dynamics of the country, effectively harnessing the influence of local elite business interests. Before the rise of Chinese investment and aid in the country, the ruling party attempted to draw performance legitimacy from development interventions by other international actors, and business elites were courted by investors from other countries in the region who previously played a more dominant role in Cambodia’s investment landscape. While this dynamic pre-dates the arrival of Chinese investment and the BRI, the huge influx of capital from China has supercharged it.

Chinese aid has reduced Cambodia’s reliance on its traditional donors, and increased investment will potentially reduce the need for aid in the long term. It could be argued that in the near term this will bolster the position of Cambodia’s ruling party and reduce its susceptibility to external pressure for political reform, but there are also challenges associated with such a shift (Loughlin 2021). Simply generating jobs in manufacturing is not enough to satisfy the needs of a population that is increasingly aspirational. Although there have been modest increases in the minimum wage of garment workers in recent years, they do not meet the increased cost of living brought about by the very economic development their labour has helped fuel. In a survey of garment workers in three Phnom Penh factories in 2016, Franceschini (2020) found the minimum wage covered just over 40 per cent of respondents’ perceived monthly financial needs. Chinese investment will have to bring with it industrial upgrading and capacity-building for workers, and quality of life improvements commensurate with the role those workers play in making these developments possible. Furthermore, if Cambodian industry seeks to maintain and expand its links to global supply chains, the country and its investors will be subject to the demands of buyers—including requirements around the environment and human rights.

A More Grounded Approach?

As stated at the outset of this essay, critiques of the BRI and of specific BRI projects are often based on sweeping assessments and assumptions that obfuscate the often complex and multifaceted push and pull factors that drive projects forward. As a flagship cooperation project between Cambodia and China, the SSEZ has often been drawn into these oversimplified debates, and as such this essay represents an attempt at a deeper dive to reframe the project and capture the more nuanced story of its inception and development. This method of excavating the historical roots of projects and contextualising them locally can be applied to all sorts of developments, generating a much richer picture, which is essential if concerned stakeholders are to better understand their drivers and impacts and, ultimately, respond effectively when concerns emerge.

The SSEZ is a useful case study for such an exercise as it demonstrates a complex alignment of multiple agendas and drivers. These include high-level Chinese and host-country development strategies, local political and elite interests, and the benefits (and burdens) this can create for local people. It showcases the interaction of Chinese state and commercial priorities, how they overlap with pre-existing development agendas that China was not necessarily involved in crafting, and how this ultimately feeds into the demand of global supply chains for affordable products for largely Western consumer markets.

China’s ascension to Cambodia’s top economic and political partner has been rapid and, as is the case in many other countries, critical attention is often polarised and does not always facilitate improved understanding of China’s developing role in the world. As noted earlier, all projects tell a different story and, to tell that story, it is essential to explore the historical and contemporary contexts, as well as the multiple drivers and interests in play.