State-facilitated Industrial Parks in the Belt and Road Initiative: Towards a framework for understanding the localization of the Chinese development model

Abstract

Industrial parks are a cornerstone of Chinese infrastructure development, both domestically and overseas. We examine how they are localized through negotiations and contestations by host country stakeholders using the cases of Indonesia’s Morowali Industrial Park and the Malaysia China Kuantan Industrial Park. Negotiations involving Chinese and host country goals, norms, and agendas co-produced those parks. Both were sited in relatively undeveloped areas. Chinese firms brought in new technology and built infrastructure, albeit not without socio-environmental impacts. In Indonesia, the political elites’ goals of achieving import substitution industrialization resulted in their bartering access to high-grade nickel ore for better extraction technology and upgraded smelting capacity. In Malaysia, a market-oriented government insisted on bringing investments to the underdeveloped state of Pahang, resulting in a park that imports ore, manufactures steel products, and exports goods to the rest of the world. The analysis produced a framework that shows how the state-led model of Chinese industrial parks exported through the Belt and Road Initiative is an example of “directed improvisation,” an adaptive model that is localized through two levels of host country processes – negotiations and contestations, which in turn produce feedbacks towards corporate governance and the host country environment. This model, however, gives host country actors enormous influence over the outcome of such projects.