China in a world of Resource Nationalism

STATE CAPITALISM & PRIMITIVE CAPITALISM IN TIBET

#16 in a series on THE FUTURE OF TIBET

Resource nationalism is a worldwide trend. Those endowed with plentiful resources of minerals and energy struggle to control and profit from managing their extraction for maximum national benefit. Increasingly the world’s nation-states resent handing over their resources to multinational corporations, to mining giants, or letting the end-users control the upstream supply.

China once was proud of being self-sufficient, in oil and minerals, dependent on no-one. That era ended long ago. China is now accused of selective resource nationalism when it rations who may get access to rare earth minerals which China currently monopolises. But China, the world’s factory, needs massive imports of raw materials from oil to mineral ores, and generally has much more to lose, from the resource nationalism of others, than it could gain by itself playing the resource nationalist game.

In the 1990s and since, China has been more worried that the resource nationalism of others might crimp its access to raw materials. India, for example, became a major source of iron ore for China’s steel mills, in the first decade of this century, as China sought to break the hold of just three supplying companies –one Brazilian, two Australian- on global iron ore traffic to China, amid sharply escalating prices. India’s resource nationalists argued that India’s iron ore reserves would be exhausted in a few decades, and that a handful of rich and powerful mining companies were sacrificing India’s long term patrimony for quick profits. After much indecision, the Indian government finally took the resource nationalism option, and slapped a punitive export tax on Indian shipment. Mongolia, to the immediate north of China, and rich in resources in demand in China, notably copper and coal, attempted the resource nationalist move of owning, financing and operating its own mines and processing plants, but found itself unable to raise the investment capital in advance of production, and backed down.

Resource nationalism in one country invites others to do the same. Not only does that contradict the ideology of free trade, and the global treaties which enact and enforce it, such as the World trade Organisation, but it triggers retaliatory resource nationalism in trading partners. China could not go it alone, as it did in the 1960s, when the timely discovery of the Daqing oil field enabled China to be self-reliant for all its oil needs up until 1993.

These are powerful reason for China to resist the temptations of resource nationalism, knowing  Chinese chauvinism would give an excuse all round the world to those who express disquiet at Chinese investment, not only in mineral deposits but also forests and agricultural land.

But there are other reasons, less often discussed, why China resists the resource nationalism route; and why its exploitation of Tibet has been so patchy. Mineral exploration and exploitation remain state owned, with few exceptions.

A major reason for curbing resource nationalist impulses is China’s adherence to the global trade regime effected and policed by the World Trade Organisation. In an anarchic world where there is very little international law holding states accountable for their actions, the WTO stands out as the only effective agency of global governance. While the UN has withered and there are few international courts to which states are answerable, the global neoliberal regime has a highly evolved governance regime.

The 2012 WTO ruling against China, over its export restrictions, and quotas on sale of a wide range of minerals which China monopolises, curbed China’s creeping tendency towards resource nationalism. But China did enjoy five years of overt favouritism for companies –Chinese or feorign owned- that are built in China, guaranteeing them privileged access to minerals that are not used in great quantities but are essential to many high tech uses, including mobile phones, laptop computers and many military applications. The subsidies to Chinese manufacturers and export quota penalties imposed on manufacturers outside China, were part of a calculated strategy to build national champions which will dominate global production in industries with strong growth potential, such as renewable energy.

China’s central planners are looking ahead to the time when unlimited supply of cheap labour will be insufficient to maintain China’s competitive advantage. Dominance of high tech industries which are capital intensive and technology intensive rather than labour intensive, is a major strategy, as the central planners pick the likeliest winners in a world running out of oil. Wind turbines and solar panels are among those favoured by Beijing, which no longer expects manufacturing to absorb as many rural migrants as before.

China’s carefully orchestrated push into industries it can dominate is directed by the state, in complete contradiction of neoliberal norms which insist that state control  and strong government are relics of the past, echoes of the dirigiste command economies which failed to generate growth and only bloated bureaucracies. China, which has never let go of central planning and direct state ownership of the primary means of production, has never fully embraced the market economy, leaving orthodox neoliberals contorting to explain China’s state-driven, state-investment-financed growth.

That Tibet is now playing a part in this global debate is extraordinary. Tibet was more integrated into the global economy a century ago, when its wool regularly found its way to woollen mills in the US and UK. If ever there was a “fourth world” economy with no linkages to metropoles and global trade, it has been Tibet. State-driven infrastructure spending has been massive, but concentrated in towns and transport corridors, in military garrisons and security surveillance technologies.

Far from being part of a master plan for global dominance in tomorrow’s key global industries, Tibet has remained too far, too remote, too cold and unattractive for corporate investors, be they private or state, Chinese or foreign.

This does not mean Tibet has remained unexploited. Far from it. Instead, a form of capitalism that obeys almost none of the logic of global commodities market has flourished. Tibet is increasingly at the mercy of what Marx called primitive capitalism. This is the most unregulated, unaccountable, anti-social, exploitative mode of early capitalism, now evident in many areas of Tibet, extracting whatever is quick to find, requires little capital, is easy to transport out of Tibet, requiring neither heavy freight bulk transport nor regulatory permissions other than payments to officials to look away.

This boom economy is as far as possible from the image China seeks to project, of an orderly, centrally controlled, top down economy under strict orders from Beijing. It also contradicts the most popular image of China from afar, of a strong centralized state able to command and enforce obedience to its will, even in remote areas. To a remarkable degree, people read official policy statements and simply assume that what is decreed at a policy level by central leaders must be what is actually happening on the ground.

The primitive accumulation phase –a Marxist term used by Chinese scholars- is especially rampant in Tibet in the  two boom commodities: gold and yartsa gumbu. The gold boom invokes echoes of gold booms that “opened” the American West, the rushes that magnetized the poor and landless immigrants from Europe to make the trek to California, Alaska, Australia etc., as well as the poor from China’s southeastern coastal villages, all drawn by the hypnotic prospect of instant wealth awaiting the diligent and the lucky. The similarities, of lawless frontiers, are apt, even if this is hardly the picture we usually have of China, or of Tibet, where the state appears to reach far, ruling with iron discipline, until one looks more closely.

Gold mining is hardly ever done by Tibetans, not only because they find the dredging of riverbeds repugnant, and the use of cyanide and mercury abhorrent, but also because the capital required to buy a dredge is beyond them, and the connections needed to bribe local officials to look away are also unavailable.

The current boom in extraction of medicinal caterpillar fungus (ophiocordyceps sinensis to scientists, yartsa gumbu to Tibetans   Dōng chóng xià cǎo to Chinese: 冬虫夏草; literally “winter worm, summer grass”) from the grasslands is done by both Tibetans and other Chinese ethnicities, both at the hands-and-knees level and throughout the commodity chain during which prices escalate sharply.

In both booms, the state is shadowy, secondary, even subservient to the fact fortunes being made, if anything acting as enforcer for those on the ground who seek to maintain their local monopoly access to treasure yielding territory. One could even say these fortune seekers have captured the state, at the only level where it matters, which is local, and  there is no effective manifestation of state power other than the local authorities who are paid off, or partners with, those making it rich. This may not be the picture commonly held of Tibet, or of China, but it is well documented by anthropological fieldworkers, especially in the yartsa harvest areas of eastern Tibet.

There are economic sectors, in China and Tibet, where the state has largely withdrawn, because so much money is being made. It is not true that the party-state is always in control. When huge fortunes can be made, even the party-state apparatus serves the accumulators. It is not only in entrepreneurial Wenzhou, on the coast, that entrepreneurs run everything, with official support. Unseen, this happens too in some of the remotest areas of the Tibetan Plateau.