Free By All Means Necessary by Elizabeth Economy Michael Levi Page B

for the state (including state-owned companies) than is familiar in the West.
    Just as in China, though, significant economic activity takes place outside the central government’s purview. Large SOEs typically (though not universally) explore resource investments as purely commercial endeavors, though still helped by Beijing through cheap capital and other assistance. And smaller nonstate firms—either private ones or those supported at the provincial or township level—are increasingly going out not as part of a coordinated effort to ensure Chinese resource security but with a mind to heed Deng Xiaoping’s 1992 admonition to get rich quick. Even individual Chinese, like the gold miners who caused trouble in Ghana, now independently seek their fortunes abroad, relying on personal funds and connections to support their ventures. When things go awry, Beijing only reluctantly becomes involved.
    Institutional weaknesses within China, including in the areas of environment, labor, transparency, and the rule of law, are often exploited by Chinese firms when they operate at home. Similarly,firms often take advantage of weak state capacity abroad. Chinese players often assume it is the responsibility of the host government to enforce its own environment, labor, and governance rules. In this respect they are not so different from many other multinationals. Yet unlike Western multinationals, which sometimes export relatively good social and environmental practices when they invest abroad, Chinese companies have little to contribute on this front.
    The impact of China’s resource quest on international politics and security has been more modest thus far. Warnings of resource wars and political tie-ups with resource-rich despots have largely come to naught; claims that Chinese pursuit of natural resources has been a core contributor to civil conflicts like the one that raged in the 2000s in the Sudan fail to withstand scrutiny. Yet there is little question that China’s resource quest is changing the international political landscape in important ways. Willingness on the part of Chinese companies to invest in some Iranian oil and gas production has helped blunt the impact of Western sanctions. Chinese efforts to build pipelines that circumvent the Strait of Malacca are lessening—though far from eliminating—Chinese vulnerability to potential resource cutoffs in wartime. Conflict with neighbors in the South and East China Seas—driven in part by pursuit of resources and a desire to secure the sea lanes through which they are transported—is becoming more heated every year. Chinese efforts to use large volumes of water from rivers that cross international boundaries have stoked tensions with some neighbors, even as pipelines that connect China with nearby oil and gas deposits draw Beijing closer to others.
Changing China
    As China has ventured abroad, though, it is not only the world that is being changed. China is changing as well.
    This is already apparent in efforts to respond to the high commodity prices spurred in large part by China itself. Since the mid-2000s, Beijing has sought with some success to improve energy efficiency and rebalance the Chinese economy away from heavy industry, in part as a way to blunt the impact of sky-high costs. It has also pressedto increase its domestic resource production, most notably in grain, helping blunt the global impact of its rising resource demand.
    The impact of the resource quest on China itself can be seen far more broadly in Chinese efforts to invest globally. Chinese firms’ behavior is being altered by the laws and regulations of the countries where they invest, as well as by those countries’ capacity to enforce their rules. Firms’ interactions with other multinationals are also shaping Chinese behavior. In the oil and gas industry, for example, companies are partnering with foreign firms to acquire access to advanced technology and