Authors’ Response: The Continuing Evolution of China’s Resource Quest

Abstract

We wrote By All Means Necessary: How China's Resource Quest Is Changing World to illuminate one of most discussed but least understood dimensions of China's rise, and we are grateful for four kind and thoughtful review essays. Indeed, months since book was published have only made importance of subject clearer. The China National Offshore Oil Corporation (CNOOC) has begun drilling for oil near Paracel Islands, sparking heated confrontation with Vietnam that United States and regional powers are struggling to respond to.1 The China National Petroleum Corporation (CNPC) has signed 30-year gas supply deal with Russian company Gazprom, reflecting mix of confidence on China's part in its ability to manage imports, desire to increase use of natural gas, and, critically, continuing motivation to diversify its sources of supply.2 Meanwhile, countries around world are shifting their policies partly in response to Chinese investment. Chinese investment in Myanmar, for example, continues to fall precipitously-in just three short years, China is estimated to have moved from first to tenth place in overall FDI in Myanmar-reinforcing importance of host-country politics in shaping opportunities for Chinese business.3 As analysts and policymakers struggle to understand and respond to these and other developments, we are heartened that reviewers see By All Means Necessary as valuable guide.Nonetheless, they have some concerns. Llewelyn Hughes writes that we do not convey sense of how effective [state control over Chinese firms] is and what implications are for China's external behavior. Elizabeth Wishnick similarly comments that the focus of By All Means Necessary is primarily on China's commercial relationships, and it would have been interesting for book to explore foreign policy implications of these relationships further. These issues are central thread running through chapters four through six, though many of our findings are dispersed. We summarize some of those findings here.By All Means Necessary does not provide single strong bottom line, but that is because there is none-the answers to these questions, as Wojtek Wolfe observes in his essay, vary with circumstances. We show, for example, that state control is weaker over private firms than over state-owned ones; that state influence varies depending on market structure; that government is only inconsistently able to direct even state-owned firms toward its political ends; and that these limitations are not unique to Chinese firms operating abroad, but rather reflect relationships between state and firms that play out at home too. To extent that Chinese government can harness individual firms toward its political ends, this is primarily by influencing them through general conditions, such as availability of financing for overseas projects or leadership incentives related to party promotion, rather than through specific directives. The most immediate consequence for Chinese external behavior is simple: China cannot use its firms to fulfill its foreign policy goals nearly as effectively as many assume. Indeed, as we show in By All Means Necessary, Chinese experience fits with what Hughes describes as more general one, with poor governance outcomes at home and often result. For example, we document China's repeated but failed efforts to raise standards of its extractives firms operating abroad, and note that firms operating abroad but outside Chinese state control can create foreign policy headaches for Beijing.Hughes also writes that a second important issue given insufficient attention relates to Chinese firms' entry into markets unrelated to fossil fuel-based In particular, he is concerned with our neglect of Chinese firms' activities in green technologies, which he claims are related to growing [Chinese] demand for natural resources. …