Chinese Agribusiness Investment in Mekong Countries: Are Overseas Economic Expansion Strategies Doing Local Communities Good? (part 2)

Rubber in Burma

In Burma, the coercive land encroachment caused by army involvement seems to be even worse, since most of the Chinese agricultural investment is located in the areas controlled by the either local or regional military authorities; such as military groups, militia and ceasefire groups. According to the cases in Shan state and Kachin state, both of which are the priorities for Burmese government to welcome the rubber bulk invested by China, it is quite undoubted that Opium Replacement scheme can hardly reach its humanitarian goals.

On the other hand, the enforcement of opium bans in the mid-2000s is depriving the population of its primary source of income. The introduction of Opium Replacement and rubber plantation from China was meant to be offering impoverished ex-opium farmers with comparable income, but what has happened could not accomplish the real income increase generally.

Usually it’s either Burmese military, militia or ceasefire groups which have to endorse over the joint venture between Chinese investors and Burmese company. And many farmers say they were forced to work on plantations, or forced to grow these crops on their land, without clear agreement on payment.[1]

Sometimes they have no compensation after the land concession. Although some farmers get the sources of income, the over-reliance on Chinese market can make their income unstable.

Reflection on the Opium Replacement

In spite of the criticism, during the interview in 2008, Hongzhen Qu, the chairman of rubber industry in China said “I’ve never heard of these bad deeds overseas made by Chinese companies. But I think that Chinese companies should keep good relations with local residents.” Chinese agribusiness still remained its ignorance over the negative impacts made by them.

From the governmental perspectives, there have been some reviews over the shortcomings of Opium Replacement. For instance, China-Burma border has been found that some Chinese traders abuse the schemes by pretending to plant crops, but in fact are only buying up local produce from farmers in Burma, bringing it into China free of customs duty, and making inordinate profit.[2] This problem made Chinese government review the Opium Replacement policy in 2010, but so far there is no possibility that the policy will be suspended.

Moreover, the Chinese government has noticed the over-production of rubber, and has been prohibiting the new rubber investors in recent 2 years. And the proposal for “Development Replacement” has been raised to reflect on the problems of the Opium Replacement which has failed to support the ex-poppy farms with alternative incomes and solve the local poverty.

Pulp and Paper in Southern Laos

In the year since China enacted its logging bans, it became the world’s largest importer of tropical logs, according to the Food and Agriculture Organization. Its imports swelled nearly nine-fold in a decade, reaching USD 5.5 billion in 2006, according to China’s State Forestry Administration.[3]

On the other hand, China has become the biggest pulp consumption market and the biggest pulp production base in the world. It has attracted several world-largest pulp enterprises to establish the Chinese branches. This expansion, along with the domestic increasing cost of land, labour and environmental standards, has pushed China to seek Southeast Asia as the most important supply chains. Southern Laos is the place which gathers the Chinese plantation of eucalyptus and acacia.

Sun Paper is the biggest Chinese pulp and paper enterprise. It has considered southern Laos as the most important plantation base. But there is a history of this sort of project in Laos, and the most notorious being the Asian Development Bank's Industrial Tree Plantation Project. In December 2005, the ADB's Operations Evaluation Department concluded that the ADB project had “failed to improve the socioeconomic conditions of intended beneficiaries, as people were driven further into poverty by having to repay loans that financed failed plantations.” Put another way, the farmers that Sun Paper hopes will grow its trees for them need their land to grow food on.[4]

In 2007, the Lao government suspended the issuance of new land concessions “after learning such arrangements were negatively affecting local communities”, as the Vientiane Times put it.[5]But the lease concession contract is not suspended forever; the formal lease concession contract between Laos Sun Paper Co. and Lao National Land Management Authority was signed in Oct. 2010.[6]

[1] Laos: Chinese company Sun Paper plans eucalyptus monocultures, Chris Lang, 2009

[2] Laos: Chinese company Sun Paper plans eucalyptus monocultures, Chris Lang, 2009

[3] China Green Times, Oct. 12^th, 2010

[4] From Golden Triangle to Rubber Belt? The Future of Opium Bans in the Kokang and Wa Regions, Tom Kramer, 2009

[5] Alternative Development or Business as Usual? China’s Opium Substitution Policy in Burma and Laos, Transnational Institute, Nov. 2010

[6] Corruption Stains Timber Trade: Forest Destroyed in China’s Race to Feed Global Wood-Processing Industry, Washington Post, Apr. 1^st, 2007

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