- Sustainable Economic Systems
- New Chinese guidelines are a step in the right direction, but dont go the distance
New Chinese guidelines are a step in the right direction, but dont go the distance
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Earlier this year, China’s ministries of Commerce and Environmental Protection jointly issued new guidelines for the environmental practices of Chinese companies doing business abroad. The new guidelines are an important step toward improving China’s global green reputation – but ultimately fail to go far enough in compelling Chinese firms to abide by environmental or social safeguards.
China’s ministries issued this new policy to standardize environmental protection practices of Chinese companies operating abroad, and it is the latest in a string of policies aimed at regulating Chinese enterprises investing overseas. The guidelines are broad, including calls for companies to respect the historical and cultural heritages of their host countries, to monitor pollution and make the results public, as well as protecting the rights and job opportunities of non-Chinese workers.
But they do not provide enough concrete guidance, nor are they backed up by real governmental muscle. For example, the guidelines say enterprises should set up a system of communicating with local governments, environmental regulators and the general public. They require companies to develop emergency plans, carry liability insurance, and carry out restoration should their operations degrade the environment. These are necessary and important steps indeed, but the guidelines fail to specify how companies should meet those requirements.
Neither are the new guidelines backed up by mechanisms to ensure and enforce compliance. There is no mention of an office in charge of monitoring and ensuring implementation of the guidelines, nor assessing penalties in cases of noncompliance. The lack of clear, concrete compliance mechanisms or instructions leaves a gap between rhetoric and implementation — a gap the Chinese government does not seem keen to fill.
So if the guidelines are vague and unlikely to be enforced, why issue them? Perhaps the guidelines are meant to primarily reassure host countries that China is standing by its pledge to reject the legacy of Western exploitation masked as development. Yet the record of overseas Chinese investment speaks much more loudly than Beijing’s policy pronouncements.
In Gabon, Peru, Zambia, and other places, Chinese-financed projects have been tainted by a colonialist tendency. Even today, there are signs that Chinese companies are adopting imperialistic and uncomfortably paternalistic attitudes towards local communities. In Burma, Chen DeFang , the president of the Chinese mining company Wanbao that is at the center of a dispute over a controversial copper mine, acknowledged the company’s mistake: failing to consult with local communities. In an interview with The Wall Street Journal, Chen DeFang said the Burmese people did not yet understand the benefits of the project: “Sooner or later they will say: ‘Thank you, Mr. Chen.’”
If China truly wishes to show itself as a superior alternative to Western development, creating formal mechanisms to enforce this new overseas investment policy would be a perfect place to start. On the other hand, by failing to manage the actual performance of overseas investments, including ensuring that locally impacted communities have appropriate channels for resolving their grievances, China runs the risk of not only tarnishing its global reputation, but also damaging its diplomatic relationships with foreign countries. This is already happening in African countries that have grown wary of Chinese investment.
The guidelines are an encouraging example of how China is pioneering innovative policies at the frontier of sustainable development. Certainly, in comparison to other countries, China has taken the lead in the race to curb the negative impacts of its overseas companies. But to get the finish line, reality must replace rhetoric.
Photo Courtesy of The Economist.