3.2. Territorialization
3.2.3. Land Concessions
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the government, including Ministry of Foreign Affairs, Commerce, and the Overseas Chinese Affairs Council, etc. (2014, 19). In Cambodia these people have managed to infiltrate the local political elite. Yang and Hsiao (2014, 32) observe that CI enjoys vast support from Cambodia’s political elite, which proves the political dependency on Beijing. In addition, support also comes from local Khmer-Chinese leaders, who are essential in terms of promoting the Chinese culture and values. Therefore, one of the main goals of CI is, yet again, to cultivate the national sense of belonging to Chinese culture and unconscious inclination towards political decisions made by Beijing. To achieve this goal, CI tries to establish firm connections with educational institutions in the host country via generous promises of funding, scholarships, teaching materials, cheap courses of Mandarin language and other cultural support (2014, 20). In return, host schools have to prove the right attitude towards cooperation on many matters, including some request that might raise controversy regarding the academic freedom as it is known in the western world. In Europe and USA there have been cases, where universities decided not to prolong the contracts with CI on the campuses due to suspicions of self-censorship and other forms of intervention projected by CI in favor of China’s image.34 Yang and Hsao (2014, 25) point out, that CI operates under CCP as the tool, which is supposed to generate the condition of dependency on China in host countries’ schools. Summarizing the situation in Cambodia, it was found out that CI involvement is not only highly supported by Cambodian leadership, but it also “[…] reflects Cambodia’s dependence on the Chinese government and Chinese investment”, since to local people “[…]China represents commercial opportunities and interests that could enhance their lives and increase their incomes” (Yang and Hsiao 2014, 32). All in all, it is obvious that China successfully pulls the strings of knowledge within the Cambodian society in order to create the favorable and supportive pro-Chinese environment in this strategically important country.
Creating such environment is beneficial for China’s influence in sense of cultivating the China-friendly Khmer population right from the bottom. Even though such engagement comes with side-agenda, Cambodia cordially welcomes any demonstration of help, since the leadership is incapable of any significant progress in education; and after all, promise of brighter prospects for future embraced in the perspective of Chinese modernization is appealing both among the common population and authorities.
3.2.3. Land Concessions
The matter of land concessions as the part of China’s strategy is the reason why we should distinguish between projection of territorialization and soft power; since unlike previous examples of increasing China’s commitment in Cambodia, land grabbing is a serious problem which undermines China’s accumulated goodwill among the Cambodian lower class. Economic
34 “About-face”, Available online: http://www.economist.com/blogs/analects/2014/09/confucius-institutes, [Accessed 5th -Aug-2016].
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land concession (ELC) is “[…] a mechanism implemented in order to allow special permission to use the land for (industrial) agricultural exploitation” (Mills 2015, 16). Simply said, it is the legal transform of state-public-land to the private hands with intention of economic development of the given area; creating a state-private-land, since the allocation contract is temporary, usually in the range of decades (99 years in Cambodia). ELC go hand-in-hand with FDI, and under the right set-up they generate employment, profit, improve food security, and stimulate the exchange in technologies (Deninger and Byerlee in McInnes 2015, 7). In practice, governments support the inflow of foreign investments in form of implementing legal land reforms in order to smooth the process and make the country attractive for possible entrepreneurs, in spite they might risk the growing dependency on the country of origin (Goetz 2015, 13-14). In exchange, investors gain the access to cheap labor, opportunities to expand distribution, and other advantages like tax holidays, for instance. At this moment it is however important to note that some studies consider that land concessions are much more complex issue to take it solely as the intentional activity lead by Chinese government. As Goetz points out (2015, 10), “[It] remains crucial to acknowledge the diversity of actors and interests at play in Chinese land-consuming investments […], and to admit the oftentimes contingent nature of events that such investment projects can be part of (rather than a long-term plan).” On the other hand, Mills (2015, 8) looks into the real distribution of Chinese land investments, pointing out that majority of land deals are purchased by Chinese SOE with exclusive connections to the central or provincial leadership, which brings about advantage in making the deals with Cambodia; since, as we are about to find out, this country is something like a huge Christmas tree with stocks of lands hanging instead of decoration. Thus, before I tackle this issue in detail, it might be helpful to firstly introduce the Cambodia from its darker side of governance, because that is relevant in understanding the context of injustice which is present in daily life in this country. Table number ten compares two indicators of quality of governance, first being corruption and second being rule of law. In fact, Cambodia records terribly in both. Respectively, if we take into account only year 2015, Cambodia ended up last in both categories in comparison with other GMS countries.35 The fact that corruption and bribery is tightly related to land concession is exposed in MacInnes (2015, 7), who observes that:
The negative consequences of these interactions between land grabbing and corruption are multiple, transformative and reinforcing. They range from lost or perverted revenue streams, the consolidation of power and influence of the elites, the further disenfranchisement from state functions of the victims of such land grabs, all of which ultimately undermines state accountability.
35 Worldwide Cambodia ranks 160th out of 177 countries.
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Table 10: Corruption Index in GMS countries and Rule of Law score comparison36
Corruption 2012 2013 2014 2015 Rule of Law: 2015
Source: Transparency International World Justice Project
Therefore, this issue offers various perspectives. One is the angle of win-win situation, where both China and Cambodia benefit from cultivating the land for the purpose of development. The second one is the perspective of the process itself that bears sign of injustice and serious lack of transparency, resulting in concerns about who really profits from such development – authorities with connection to China or ordinary population of Cambodia? Since this thesis discusses the fruits of Chinese foreign strategy of influence, I reckon two of these perspectives are equally important. In that case, the first crucial question would be how these land concessions are beneficial for China, and second one asking for the implications of Cambodian shadow state37 practices on the China’s promotion leverage. Introducing the first option, the conjunction between Chinese OFDI and its foreign policy was already mentioned in the previous chapter.
China encourages the economic expansion in order to secure its hunger for resources, sustain its economic growth, and achieve the promised modernization of the Chinese society. In fact, from the point of view of energy and food security, it is essential for China to gain the access to the foreign lands, because for China it is simply impossible not only to keep up with the local demand in those sectors, but also facing the environmental impact is a huge challenge for Chinese authorities. For instance, considering the massive Chinese population, 40 percent of the world’s farmers cultivate only 9 percent of the world’s farmland (Mills 2015, 1). China is also the biggest consumer of energy in the world, according to International Energy Agency. Thus, although the commercial drivers for land investments are significant, the role of Chinese foreign policy in this issue should not be underestimated, because in terms of territorialization, focusing on land concessions is inevitable in order to secure the economic expansion. Li (in Laungaramasri 2015, 118) describes the clear causality between all side-effects of China’s quest for modernization:
36 Corruption index- higher value goes for smaller corruption. Rule of law index – higher value goes for better condition.
37 “[A] state where political power is wielded as a means to personal self-enrichment and state institutions are subverted to support those need […]” (Country for Sale,2009, Global Witness definition,).
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Massive flows of Chinese capital into this region and other places have been made possible by land concession policies in many countries that are designed for fast-track economic change. The control of vast areas of land in the national territory, the influx of Chinese workers and entrepreneurs, the privileging of Chinese currency and language over those available locally and nationally, and the unclear enforcement of legal jurisdiction have all been carried out in the name of modernization or “the will to improve” the marginal population of the country.
This all means that due to existential challenges, Beijing simply has to underline its dream for modernization by facilitating expansion of mining, manufacturing, and agricultural production through encouragement of OFDI, and deployment of SOE to abroad. In addition, Chinese foreign policy is embedded with the promises of win-win situation in order to promote the reasons for such regional cooperation. So, naturally mutual benefit must be achieved also in the case of ELC in Cambodia. Actually, it is very unlikely that China would encounter any sort of obstacles in dealing with the local leadership over the control of those lands. Quite contrary, several studies suggest that situation in Cambodia is so critical that probably most of important political figures are deeply in the pockets of Chinese businessmen; and therefore, the cooperation really meets the requirement of satisfaction on the both sides.38 For instance, Nyiri (2012, 99) describes the process of wide web of rich Chinese-Cambodian tycoons, who hold a title of ‘oknha’ that literally opens the door to the right business connections. Such people “[…] are great demand by investors from China, particularly those who wish to acquire land concessions, since such concessions, by law, require a majority stake of a Cambodian company.”
The real challenge comes with the masses in terms of delivering the message of inevitability of taking their lands39 for the agricultural and infrastructure purposes in the name of technological progress with Chinese characteristics. Firstly, that is achieved by the cultural propaganda, already described in the previous chapter. In doing so, China frames itself as a superior technological giant, who brings the development, innovation, efficiency to poorly cultivated farms in Cambodia; in contrast with other investors, who can offer only commodities (Goetz 2015, 15). Secondly, buying out Cambodian soil also brings real advantages in terms of making of living for the labor force. According to ADB40, agriculture sector is the largest source of employment in Cambodia, culminating in 2013 with 5.2 million people working there, making 33.5% of Cambodia’s GDP. Manufacturing sector ranks the second most important with 657 000 people making their living mostly at garment assembles; however, enough to contribute
38 Report made by Global Witness ‘Country for Sale’ (2009) describes the vast corruption among Cambodian elites with strong connections to Chinese sphere.
39 Technically speaking, the land is mostly owned by Cambodian state due to unclear ownership rights in the decades of chaos and lack of any land reform before 90’s. Chienthong (2013, 1086) states that “[The] Royal Government of Cambodia (RGC) holds about 75–80 % of the country’s territory under the status of state land”, and local people are not considered being legal landholders.
40 Key Indicators for Asia-Pacific 2015
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approximately US$ 2.5 billion to GDP. Looking at interactive map mad by LICADHO41, ELC42 in Cambodia mostly consist of plantations of rubber, sugar, paper pulp, cassava and palm oil. As to 2012, authorities leased land overcoming 2 million hectares in 274 concession contracts, which is more than 50% of Cambodia’s arable land. Figure number twelve reveals the estimated share of ownership of Khmer lands. China, closely followed by Vietnam, is the largest foreign investor in ELC. Both countries have purchased, in overall, more than 350 000 Ha. In detail, China leased 17% of all ELC. The biggest holder share is represented by Cambodia citizens, accounting for 43% of all ELC. In this case it is good to be aware of two things. First one – ELC in this figure do not cover the contracts in mining, military sector and energy sector. Second one – even though it looks like that most ELC in Cambodia preferably go to its citizens, there is a tricky catch in it, because in many cases companies set up by white horses with connections to China or Hong Kong, who run the business. According to legal framework, ELC are limited by 10 000 Ha per one investor; however, as Hofman and Ho observe (in Mills 2015, 13), investors take advantage by “[…] using multiple identities allows a company to attain several separate tracts of land and operate them under different names, while still being controlled by a larger umbrella corporation.” In addition, many new Chinese migrants take the role of middlemen between Chinese capital and Cambodian authorities, and between Chinese management and Khmer labor (Nyiri 2012, 94). Consequently, there have been concerns that Chinese companies managed to cut the deals under much more favorable circumstances than other companies. Such argument is supported by Cambodian Centre for Human Rights, estimating that since 1994 more than 50% of all land concessions were allocated to Chinese hands (Touch 2015, 296, 214).
Figure 12: ELC by ownership in 2012 (Ha)
41 Cambodian League for the Promotion and Defense of Human Rights investigated the real ELC data, raising doubts about the official data published by government of Cambodia.
42 ELC does not include Social Land Concessions, Military, Hydro-dam and Mining licenses.
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To sum up, it is obvious that Chinese strategy of economic expansion has met with success in the case of Cambodia, which brings us to the second perspective of raise of Chinese power in this country in terms of ELC. On the one hand, there is no doubt that Chinese companies contribute to improvement of living standards of Cambodian poor labor. On the other hand, China also contributes to exclusion of local habitants from their natural way of living, and to widening wealth inequality. Although Beijing stresses out the factor of mutual benefit, it is often the notorious 1% of population who really profit from these transactions. That means that political ties might be at the peak, but at the expense of China’s image among certain share of rural population. McInnes (2015, 1) claims that more than 400 000 people were negatively affected by granting concessions, since the government usually does not take into account the needs of local communities and takes decisions regardless of any environment or other impacts on living conditions of these people (2015, 2). Do such activities affect China’s cause? Probably to certain extant, in terms of projected goodwill; however, in my opinion under the patronage of current Cambodian regime China does not have to be worried that it will not get what it wants. Most likely, the old migrant communities consist of upper ranks of the society and with the China’s support they are probably well-off; therefore, I do not think that it hurts the geopolitical plans of territorialization and promotion of further regionalization. Most importantly, land concessions are inseparable part of China’s foreign policy, promoted in the good neighborhood rhetoric to fuel “[…]national ambitions that factor in other countries land to meet the interest of key actors of that particular political economy of development (e.g. bureaucrats, industry) in resources, exports markets, international economic integration, and political alliances” (Goetz 2015, 15).