WHAT is ”The String of Pearls?”
If you are a mainland Chinese ”bizoid”, it is your toil for the motherland in joining strategic points of the globe, including Australia, to secure China’s imminent dominance of the world economy. And in doing so, you’ll be ably assisted by compliant locals wherever you labour, all eager to help if there’s some quick yuan to be made.
Quietly, efficiently and persuasively, from East Timor to Greece and myriad points in between, ”China Inc” is building a self-sustaining, vertically integrated network of quasi-sovereign economic entities to secure its supply lines.
But the pearl string’s primary intent is to keep China’s ravenous economic beast back home fed, while placating those who tend it – a guaranteeing of the proverbial iron rice bowl of 1.3 billion Chinese, lest they get uppity.
But if it happens that good money is made from other customers, apart from one’s own, then so be it. Modern China is nothing if not pragmatic.
Understandably, just a generation after Mao, there’s a little feel of business trainer-wheels about China Inc. When the world’s biggest mobile phone company, China Mobile, had a rare loss in misjudging the intrigues surrounding the $3 billion privatisation of Pakistan’s PTCL, the greenhorn young executives Beijing sent to do the deal said they had ”learnt a lot”. A year later, they bought rival Paktel for about a 10th of the price of PTCL and are now investing to overtake it. China Inc is also a fast learner.
There’s nothing really like China’s string of pearls in world business – perhaps the Japanese zaibatsu and Korea’s chaebol, or Coca-Cola’s bottlers all linking in some way back to Atlanta, or the French Groupe Bel’s remarkable ability to place its Boursin and Laughing Cow cheeses in nearly every supermarket. Or in recent history, Washington’s post-World War II Marshall Plan, or the networks of colonial trading houses that plundered from Europe’s docks during the 17th and 18th centuries.
But Coke, the Koreans and Japanese, the colonials and ”la vache qui rit” essentially served a private plutocracy, and the Marshall Plan was designed to rebuild a devastated Europe, albeit for American profit.
By contrast, China Inc’s pearl necklace is very much an officially directed and planned machine. It is ultimately in the employ of the ruling Communist Party, built by massive government-owned entities of the one-party state, their endeavours lubricated by trillions of China’s cash reserves.
China’s string of pearls first began attracting attention in the Bush White House of the early to mid-2000s, when America noticed Beijing was quietly building a presence in ports and sea lanes to and from the Middle East, ostensibly to protect its energy interest and lessen its dependence on Washington’s military control of international waters.
There were new naval bases in Bangladesh, Burma, Pakistan and Sri Lanka, poor places largely forgotten by the West but only too keen to accept Chinese largesse.
Beijing placed greater diplomatic attention on strategic choke points in the Gulf and Panama. And it openly worried about the ”Malacca Dilemma”, where China’s oil supply from the Gulf could be cut or crippled by incidents in the tight shipping lanes around Singapore, Sumatra and peninsula Malaysia that separate the Indian Ocean from China’s pond, the South China Sea.
Beijing’s subtext was that the Malacca Straits were US-friendly – there is a de facto US naval base in Singapore – and Washington had the capacity to block this crucial supply route if need be. Around this time, there was renewed talk of a China underwriting a proposed Kra Canal that would cut through Thailand just north of Phuket and the troublesome Malacca Straits. There still is.
It seems to matter little that the West, Europe in particular, is in decline. Last month, China’s state-owned shipping company, Cosco, virtually took control of Greece’s Port Piraeus in a $5 billion deal to lease its biggest pier.
Quoting Chinese proverbs about eagles building nests, Cosco pledged to restore Piraeus to its former glory as the Mediterranean’s busiest port while old Greek salts lamented they’d sold their soul to China.
But now China has extended its string of pearls – and the soft and dollar diplomacy that goes with it – beyond shipping lanes to pretty much anywhere that can satiate its unending resources appetite. In East Timor, many of Dili’s new ministerial buildings are being built by Chinese grants, companies and labour, as Beijing angles that such generosity will be rewarded by contracts in the undeveloped Timor Sea oil and gas fields.
Much of northern Burma around Mandalay has become a Chinese economic colony, as Beijing extends its reach south-west to the Indian Ocean. Likewise in southern Sri Lanka, where Chinese labour has almost completed a new port and is about to start a new airport and sports stadium.
Last week, a Colombo newspaper complained that: ”Sri Lankan people get little or no benefit from the large amount of monies spent on the projects. The money lent from China is going back into the pockets of Chinese construction firms and workers.”
China is building railways in impoverished Nepal, much to India’s chagrin. Once mortal ideological enemies, Indonesia and China are now chumming up as China eyes the coal in Kalimantan. Where Chinese were banned and too often killed, many Indonesian schools now have Mandarin on their curriculums.
On China’s western and northern flanks, Beijing arm-wrestles with Moscow over influence in resource-rich Kazakhstan and Mongolia. The Chinese are also pioneers into the more remote and dangerous reaches of Afghanistan, pre-dating the interest around a recent US government study that estimated $1 trillion worth of mineral wealth.
China is also bankrolling great slabs of the infrastructural development of sub-Saharan Africa, particularly its oil and mineral-rich nations. It’s all very impressive.
Which brings us to the World Cup in South Africa. Few sporting entities are as financially savvy as FIFA and its matches are not just a measure of football prowess but also of who’s rising in world business. This year, among the usual Visas and Coca-Colas, and Emirates and adidases adorning the terraces, there’s a new global face – China’s YingLi energy group. Call it another pearl in Beijing’s lustrous string.