Does China need Tibet, when it has the world?

TURTLES, TIBETANS, TONNAGES:

MAKING TIBET PERFORM IN THE GLOBAL ECONOMY

#13 in a series on THE FUTURE OF TIBET

China is learning fast how to do deals globally, working its way up the value chain, able to not only buy mineral deposits and mines but do mergers and acquisitions with major competing players. The dealmakers may be Chinese corporations but they  have the party-state alongside, to sweeten deals, whether it be the building of a sports stadium, financing a government office, a Confucius Institute or whatever the local elite wishes. In that sense it is China that is doing the deals, China Inc. As the renminbi becomes a globally traded, convertible currency, those deals will increasingly be denominated in renminbi.

It may be a little premature to say China is buying the world, but the turtles are swimming home, because China is now where Chinese who know how global capital works can best lay their eggs and prosper. The returning turtles, as Chinese fondly call the  generation making it big, as bankers and entrepreneurs in the US, with an American education after swimming from China, swim home to become the new elite, the dealmakers of tomorrow, who will succeed despite the earlier setbacks, such as when a Chinese oil giant failed to buy America’s Unocal.

Eventually they may succeed in creating Chinese brands –of cars, computers, mobile phones- that become global brands. They may take China past its reputation for doing everything as cheaply as possible. But in the more immediate future, the deals China needs to make are in minerals and energy, to source the producer goods, the raw inputs that keep the world’s factory going. It may not take long before China is able to buy not only riskiest deposits –in Sudan and Congo- but in locations where political risk is low, and profits are more assured.

Peter Nolan (Is China Buying the World? Polity Press, 2012)  is right that China’s oil giants, bigger than the biggest American or European multinationals if measured by the market valuations given by shareholders, still struggle to source more than a small proportion of their energy needs globally, and domestically sit on reserves that are small by international standards. But this may not be true much longer. While there is little likelihood that domestic reserves will grow, despite the push into shale oil and gas exploration, China will be able to buy the world’s minerals and energy deposits. It will be able to extract, ship and process those mines and wells, bring them to China, and make what the world wants out of those raw materials.

This will be done by a party-state-corporate hybrid that is keenly aware of costs and benefits, including the opportunity costs of not investing that money elsewhere. One of those elsewheres, in a world defined by capitalism as “geographies”, is the Tibetan Plateau. Is Tibet just another geography?

From the viewpoint of corporate headquarters, the systems integrators at the heart of the modern corporation juggle geographies, ore deposits, finance, political risk, haulage costs and myriad other factors, in deciding when and where to invest. The factors are multiple, as are the choices. It is not a simple dualistic either/or choice, as it was when autarkic self-sufficiency was a foundational principle of the revolution. It is no longer that domestic supply always is preferable to global sourcing. The prospect of a modern economy implanted into Tibet, with minerals as its pillar, still awaits. But for how much longer?

If Chinese corporations had as much independence as the multinationals that have outgrown the attempts of sovereign states to regulate them, these corporate decisions would be made purely on the prospects for profit, short and long term. In such a world, a geography is just a single variable in the host of factors to be balanced, weighed and given a value. But China’s unique state capitalism works not only to benefit the state owned mining and energy corporations, they in turn must bend their business models to accommodate the demands of the party-state.

When it comes to the “geography” that is the Tibetan Plateau, the party-state has long insisted that wealthy provinces and wealthy corporations must aid Tibet, and be very publicly seen to aid Tibet. There is an elaborate system of pairings between prosperous coastal provinces and impoverished counties or prefectures of the Tibetan Plateau. Similarly, major corporations must show a philanthropic willingness to assist their weaker, younger brothers of Tibet, to use metaphors common in China. When it comes to a natural disaster in the Tibet/China borderlands, such as the Sichuan earthquake of 2008, even individual brand names such as China’s star tennis player Li Na must be quick to announce a major donation, in the name of national solidarity with the unfortunate.

Few Chinese corporations stand to gain from this required largesse. Only a few brands, such as Chrysler Jeep, can make capital from Tibet by marketing their product as so special it is even capable of reconquering Tibet. For most corporations their “aid Tibet” work is minimal, a cost of being in business, sometimes even an opportunity to shift depreciated old equipment and look good.

But the party-state has many agendas in Tibet that go beyond profit. Tibet is far from being assimilated or even secured. China’s policies in Tibet, notably its civilising mission, have been remarkably counter-productive, resulting in a panTibetan nationalism far stronger than ever before. The Tibetans feel much as did the Poles, whom Rousseau addressed in 1772: “You may not prevent them from swallowing you up; see to it at least that they will not be able to digest you. If you see to it that no Pole can ever become a Russian, I guarantee that Russia will not subjugate Poland.”

The nationbuilding task is unfinished and remains a worry to a party-state that sees the threat of chaos in many directions. Nationbuilding is, by definition, the work of the nation-state, but under state capitalism, there is a happy conjunction of what is in the corporate interest of the biggest state owned miners and the security fears of the state. Under the slogan that development is the answer to all problems of Tibet, the state is keen to extend all necessary infrastructure across the Tibetan Plateau, to make a mineral extraction economy feasible, and attractive to the miners. Supporting the expansion strategies of favoured corporations is one of the basic growth strategies of developmental states such as China, both at national and local level. “The local developmental state model refers to developmentally oriented activities where the local government as a whole facilitates the development of the local economy by providing supportive infrastructure and conditions for enterprises, whether state, collective or private.”[2]

The willingness of the state to invest heavily providing supportive infrastructure for enterprises is especially evident in the Tibet mining industry. All metals (except gold) require bulk freight haulage capacity, especially in the Chinese model which encourages smelting far distant from the mine, thus requiring heavy freight haulage of ores and concentrates. The extension of a rail line to Lhasa was the necessary precondition for a much forecast but long delayed boom in two “pillar” industries foreshadowed in several successive Five-Year Plans: tourism and mining.

Since the railway began operation in 2006, Chinese domestic tourism to Tibet has boomed, spurring the construction of many new hotels, including some pitched at international tourists who are fewer but higher spending. Since tourism is overwhelmingly attracting Chinese drawn to an exotic destination that remains within the Chinese economy, it also provides fast growing employment and business opportunities for Chinese immigrants to central Tibet, who not only speak the language of the visitors but have many more years of schooling, greater numeracy and literacy than most Tibetans. This not only fulfils China’s nationbuilding goal of populating Tibet with politically reliable immigrants, it normalises Tibet in global circulation of leisure services, and attaches Tibetan destinations as appendages to the tourism industry of Nepal.

The railway is yet to take anything much out of Tibet, except returning tourists. Mining will soon reach tonnages that will for the first time make much use of rail freight capacity. While the oil sent by tanker wagon from the Tsaidam Basin to Lanzhou seems to have peaked and is slowly declining, after having pumped approximately 60 million tonnes of Tibetan oil; other minerals are about to come online. The copper, gold and silver concentrates of Shetongmon to the west of Lhasa, the copper and gold of Gyama and Chulong to Lhasa’s east, the chromite southeast from Lhasa, and the copper, gold and silver of the Yulong cluster of substantial deposits, are, in 2013, already in production on a modest scale, or about to scale up to major extraction, with rail lines either due for completion soon, or soon to be built.

[2] Ling Liu, Local government and big business in the People’s Republic of China –case study evidence from Shandong province, Asia Pacific Business Review, 14, 2008, 473-489

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