7. In June 2011, hostilities broke out again in Kachin between the Burmese army and the Kachin Independence Army (KIA) near a Chinese-financed and -built hydropower dam in Kachin State. The fighting ended a seventeen-year ceasefire agreement and led to the displacement of an estimated 75,000 Kachins, who according to NGOs suffered human rights abuses. The NGOs argue that, despite the KIA’s ultimatum, it was the Burmese regime that in practice broke the 1994 ceasefire. According to these groups, the Burmese Army had been entering what it considered KIA’s territory under the 1994 ceasefire; at the same time, the Kachin weren’t allowed to set up their own political party and their military contingent was prompted to become a border armed police. Kachin sources assert that during the conflict China allegedly allowed the Burmese Army into Chinese territory, although no evidence was ever presented. Currently, the KIA, which has between 10,000 and 30,000 effective troops, is the only big ethnic group in the country without a truce agreement in place.
8. “Chinese Takeaway Kitchen,” The Economist, June 9, 2011. Kachin people have lived on both sides of the China–Burma border for centuries. Most Kachin families in Burma have relatives in China, as both communities have intermarried for generations. According to media reports, the escalation of the conflict since June 2011 has pushed many Chinese people to flee from northern Burma back to China.
9. Apart from Burma’s large reserves, the only jadeite reserves left in the world include some small reserves in Russia and Central America. Xinjiang (China) is home to a type of white jade which, although valuable, is not of such high quality as the jadeite.
10. For more information, see http://www.kachinnews.com/news/769-russian-firm-after-uranium-not-gold-in-kachin-state.html. According to various unofficial sources, the Burmese regime is trying to develop its own nuclear program, although it is not clear for what aims.
11. Faced with a complete lack of official figures, the estimated number of mining companies operating in Hpakant fluctuates between seventy and several hundred, according to interviews which the authors carried out with various sources. The Burmese government has shares in the mining concessions through the regional military command. This is done in alliance with the concessionary companies, who carry out the investment and take charge of exploiting the resources. Directly or otherwise, the majority of these companies are Chinese.
12. In 2010, the GDP per capita in Burma was $1,400, according to the CIA’s The World Factbook 2010.
13. Blood Jade, 2008, published by the NGO 8-8-08 for Burma, denounced China’s role in Hpakant’s mines in the run-up to the Beijing Olympic Games.
14. The rubble pours into the rivers, blocking their natural course and obstructing the movement of water. During the rainy season, this causes frequent floods that sweep away fragile homes made of wood and bamboo. In November 2010, a landslide on one of the artificial mountains caused the death of over fifty yemase, who were buried under the earth. According to a local source, there is only one public hospital in Hpakant, which charges for its services, as well as a handful of small private practices.
15. Since hostilities broke out in Kachin in June 2011, an undetermined number of Chinese have fled the areas along the border with China. It is unclear whether the conflict has impacted on Chinese businesses in Hpakant in any way, despite the fact that occasional skirmishes have reached the area. The Kachin Independence Organization (KIO) claimed that the Burmese regime was attempting to block its main means of income—taxes—by ordering jade mining companies in Hpakant to halt production.
16. The use of opiates is extremely widespread among the jade industry workers. A source with extensive knowledge of the subject assured the authors that it is a common courtesy for jade traders to offer Kha Pong—boiled opium with crushed banana leaf—whenever they meet to do business.
17. “Our fellow priests tell us that the work is so hard that the miners have to be stimulated with heroin and methamphetamines. We know miners who enter the business clean and come out hooked,” explained one of the priests whom the authors spoke to. The NGO volunteer pointed out that the consumption of these drugs in Chinese mines is “common practice.”
18. “Authorities Feed Heroin Epidemic in Hpakant,” 2009. Founded in 2003, Kachin News Group is Kachin state’s unofficial news agency. Based in Chiang Mai (Thailand), the agency is considered one of the most well-informed sources on events in Kachin.
19. The report alleges that the companies’ monopoly over distributing the drug in Hpakant is guaranteed because the police are on their payroll. Although there is no hard evidence, the general perception in Kachin is that the alliance between the Burmese military forces, who act like feudal lords in the area, and the Chinese businesses also stretches into the world of narcotics. According to sources from the Kachin Independence Organization (KIO) consulted by the authors, the climate of impunity in terms of drug use forms part of the “silent war against the new generation of the Kachin people” which the Burmese regime has launched to “deactivate dissidence,” putting an end to the region’s aspirations of independence from Burma.
20. According to the National Strategic Plan on HIV (2009) published by Burma’s National AIDS Program, 2,572,641 needles and syringes were distributed in Hpakant that year.
21. At an auction in March 2011, Burma collected $2.8 billion from the sale of 16,939 lots of jade, 206 of precious gems and 255 of pearls. Precious stones provide one of the main sources of financing for the Burmese regime, which invests just 1.31 percent of its budget on healthcare and just 4.57 percent on education.
22. In 2006, cross-border trade with China represented 7 percent of Burma’s total trade. The academic Winston Set Aung has calculated that this percentage would rise to 25 percent if it included the value of illegal trade. The Role of Informal Cross-Border Trade in Myanmar (Institute for Security and Development Policy, 2009).
23. The name for unprocessed jade is written as in Mandarin or du shi in Pinyin, which literally means “stone of risk or bets.” When a particularly large investment is required, several buyers often put money into a common fund in order to minimize the risk.
24. The close-knit relations between the two countries are not enough to hide their mutual distrust. Cables released by WikiLeaks highlighted the anxiety that Beijing feels about Burma’s unstable domestic situation as well as Rangoon’s sense of unease about the excessive economic weight that China is employing in the country. This has coincided with growing economic and military ties between India and the Burmese regime. At the end of 2011, Burma’s regime moved towards what seemed to be a kind of democratic openness, which some analysts link to the country’s willingness to move away from excessive dependency on China. As a result, Washington restored full diplomatic relations with the country.
25. The “democratic transition” undertaken by the former general and current Burmese president, Thein Sein, allowed the release from house arrest of Nobel Peace Prize winner Aung San Suu Kyi, who had been deprived of freedom for fifteen years since 1989. The reforms made room for the easing of censorship in the country, facilitated the release from prison of hundreds of dissidents, and enabled further political reforms, among other things. Although most analysts agree that the reforms are genuine and would be very hard to reverse, some NGOs argue that they are only affecting cities—not rural areas. The new Burmese government is formally civilian, although it is controlled by the military. After being re-elected in November 2012, Barack Obama paid a historical visit to Burma and said that reforms undertaken by the country were “remarkable.”
26. In 2008, a total of sixty-nine Chinese state-owned companies reportedly invested in at least ninety projects in Burma involving mining, hydroelectric power, oil and gas, according to EarthRights International (ERI). In the 2010–11 tax year, Chinese investment in the South Asian country reached $13.5 billion, making China the biggest foreign investor in Burma, even ahead of Thailand.
Furthermore, in 2009 China National Petr
oleum Corporation (CNPC) acquired the exclusive thirty-year rights to exploit one of the biggest deposits of natural gas in Southeast Asia, situated in the waters around the Bay of Bengal. The rights to exploit the deposits previously belonged to an Indian–South Korean consortium. Within the framework of the “Shwe Gas” project, the Chinese oil company is set to complete the construction of a 2,800-kilometer gas pipeline by 2013. The pipeline will stretch all the way from the offshore deposits to Nanning in southwest China, crossing through Burma. At the same time, the oil company will also build a 1,100-kilometer oil pipeline aimed at carrying Middle Eastern crude oil from the west coast of Burma to Kunming, thereby avoiding the Malacca Strait and the maritime routes controlled by the United States. The total investment required for both pipelines is estimated at between $2.5 and $3.45 billion. In order to make the project viable, a deepwater port is under construction; this will form an essential part of a Special Economic Zone on the island of Kyauk Phyu. The zone will include oil terminals, an airport and a railway network with links to China. Through sales of gas to China alone, the Burmese regime will receive almost $1 billion annually over the next thirty years.
27. This was the name given to the modern-day Yunnan province by Emperor Xian in the Tan dynasty era, recognizing the territory as being situated “to the south of rainy Sichuan.”
28. In November 1992, Shougang Corporation bought 100 percent of the shares in the state-owned Empresa Minera de Hierro de Peru for $120 million, creating Shougang Hierro Peru. The mine was originally the property of the United States’ Marcona Mining Company before passing into Peruvian state ownership after its expropriation in 1975, up until its privatization in 1992. The reserves contain up to 1.662 billion tons of minerals. The investment includes a private deepwater port located 18 kilometers from the mine.
29. According to the Mine Workers Union of Shougang Hierro Peru, the company produced 9.5 million tons of iron in 2011, despite the fall in demand caused by the global economic crisis. Income for that year reportedly reached almost 3.065 million nuevos soles, the equivalent of $1.17 billion.
30. In November 2010, Shougang provided the community with drinking water for just two and half hours each day and power cuts were extremely common, according to local sources.
31. “Shougang does not give interviews about its overseas businesses,” said Wu Chu-Zhang from Shougang’s PR department in Beijing when the authors spoke to him by phone. This was in response to the authors’ written request made several weeks before by fax.
32. La economía china y las industrias extractivas: Desafíos para el Perú [The Chinese Economy and the Extractive Industries: Challenges for Peru], Cynthia A. Sanborn and Víctor Torres (Universidad del Pacífico, Centro de Investigación, 2009).
33. Shougang sent official letters to both employees after the publication of the article “Tensions over Chinese Mining Venture in Peru” in the New York Times on August 14, 2010. The unions see the reaction of the Chinese company as an act of intimidation and perhaps as the prelude to an official dismissal. To find out more, visit http://www.nytimes.com/2010/08/15/world/americas/15chinaperu.html, by Simón Romero.
34. For permanent staff, the basic daily salary for workers aged over forty in the highest pay bracket is 71.6 nuevos soles, or $25.80. On top of this they receive a bonus (for working on public holidays, night shifts or open pit work) and an allowance for milk, transport and light refreshments among other things, which in total represents a wage 30 percent higher than that of the temporary workers, according to the unions.
35. Pneumoconiosis is a type of chronic illness produced by the infiltration into the human respiratory system of dust originating from various mineral substances such as coal, silica, iron and calcium.
36. The wealth gap in China has reached a critical level, according to a survey by China Household Finance Survey (CHFS) published in December 2012. The survey indicated that the Gini coefficient, an index reflecting the rich–poor gap, in China stood at 0.61 in 2010, surpassing the warning level of 0.4 set by the United Nations. China is becoming one of the world’s most unequal societies, competing with countries such as South Africa. Source: “To Each, Not According to His Needs,” The Economist, December 15, 2012.
37. http://www.agubernamental.org/web/informativo.php?id=12425.
38. “La economía china y las industrias extractivas: Desafíos para el Perú,” op. cit.
39. In “La economía china y las industrias extractivas: Desafíos para el Perú,” op. cit., Víctor Torres points out that in 2007 the Shougang group, China’s sixth biggest steel manufacturer, required 20 million tons of iron ore to be imported in order to supply its steel factories in the country.
40. As well as announcing that it would be investing $1 billion to increase production to 10 million tons, Shougang’s president stated in 2009 that the Chinese company had contributed to the economic development of Peru by paying $333 million in taxes and spending $340 million on local purchases, as well as generating a significant number of local jobs. Meanwhile, the company’s income for 2011 alone exceeded $1.17 billion. For more information, visit: http://www.andina.com.pe/Espanol/Noticia.aspx?Id=yS/WcpdTulE=.
41. Relations between the DRC and Angola have deteriorated significantly in recent years as a result of territorial disputes, disagreements over ownership of the region’s oil resources and regional geopolitical differences. Consequently, both Kinshasa and Luanda regularly carry out the mass expulsion of hundreds of thousands of nationals from their neighboring country, which occasionally results in deaths, torture and other types of abuse. For instance, in summer 2010 over 650 women and girls were raped after being deported from Angola to the DRC, according to UNICEF. Source: http://www.un.org/apps/news/story.asp?NewsID=37785&Cr=sexual+violence&CR1=.
42. The country suffered the most brutal colonization process in the whole of Africa at the hands of Belgium before declaring its independence in 1960. This was followed by decades of brutal dictatorship until two different wars between 1996 and 2003 left almost 4 million people dead and a country in ruins. According to the US State Department, the country’s GDP per capita in 2011 barely reached $210. The DRC ranks at 168 out of 183 in the corruption perceptions index produced by Transparency International in 2011.
43. The mining concession referred to in the contract contains proven reserves containing 6,813,370 tons of copper and 426,619 tons of cobalt. In Appendix A, however, the contract states that the probable reserves could reach 10,616,070 tons of copper and 626,619 tons of cobalt.
44. The contract signed by the Congolese state and the state-owned companies China Railway Group and Sinohydro included a provision for the creation of a joint venture—Sicomines—between the Congolese state-owned mining company Gecamines and the consortium of Chinese companies. The original contract anticipated a total investment of $9 billion, $6 billion of which would go towards the construction of infrastructure while the remaining $3 billion would be spent on creating the necessary structures for exploiting the mines, where access to the mineral is complex and expensive as a result of the lack of basic services (electricity and roads). However, this investment was reduced some months later to a little over $6.2 billion to be shared in equal parts between investments in the mines and infrastructure after the intervention of the World Bank and the International Monetary Fund.
The reason behind this intervention varies depending on the source. The international organizations justify their actions by claiming that the contract threatened to ruin the already poverty-stricken DRC, since the country was offering sovereign guarantees in case the extraction of minerals was not enough to repay the credit granted by the Chinese Exim Bank. Other sources argue that it was in fact a maneuver to protect Western interests, as Western companies feared that Kinshasa might transfer part of its concessions to the Sino-Congolese company. On the other hand, the country’s traditional cre
ditors feared that the DRC would prioritize the repayment of the Chinese credit while its other loans would once more end up going unpaid. In this respect, it is important to point out that while the DRC was signing the contract with China, the country was also negotiating debt relief, which finally came through in July 2010 when Kinshasa was declared exempt from paying the $12.3 billion owed to its traditional creditors.
45. Article 14.2.3.1 of the contract stipulates that “the DRC commits to facilitating the acquisition of visas and work permits for expatriate employees.” China often tries to bring its own contingent of Chinese workers to take part in its infrastructure projects across the world, as the Chinese companies consider their compatriots to be more hardworking and disciplined than the local people, as well as the fact that this allows them to communicate in their own language. However, this practice has been criticized by various sources, as it reduces the real benefit for the local population in terms of job creation.
46. One of the appendices to the original contract referred to the construction of 1,015 kilometers of railways, 3,656 kilometers of roads, 2 dams, 2 universities, 5,000 homes, 31 hospitals with 150 beds each and 145 health centers. It also mentions the restoration of 2,198 kilometers of railways, 3,652 kilometers of roads and 2 airports. In order to pay for this, the contract anticipated a total investment of $6 billion, a figure that was later reduced to half the original amount after the intervention of the IMF and the World Bank. The amount of planned infrastructure has therefore been considerably reduced.
47. A good example of this can be seen in the case of ZTE Agribusiness—a subsidiary of the Chinese telecommunications giant ZTE—which has suspended an investment of $600 million in Mbandaka in the northwest of the country. The company had planned to invest in a palm oil plantation measuring 100,000 hectares in order to produce edible oil and biofuels. In an interview at his office in Kinshasa, the head of the Chinese company in the DRC, Wang Kewen, cited the precarious transport infrastructure as a justification for suspending the project. “Among other factors, the main problem is logistics. If everything goes well, transporting the merchandise to Kinshasa along the Congo river takes no less than two weeks. But if something goes wrong, it’s impossible to know how long it might take,” he assured the authors. Mbandaka and Kinshasa are separated by a distance of 600 kilometers. Rivers provide the main or only form of transport in much of the country.
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