China, the Fierce Partner

In two countries of "Bolivarian" regimes, Ecuador and Venezuela, Chinese investment has found avid business partners over the last ten years. The Asian giant has injected vast financial resources and resources for infrastructure works into both nations, many of them unfinished. But the other side of the coin is the conditions imposed on the partners in draconian contracts that the Chinese entities and companies have subscribed by their local counterparts. In the height of the 21st Century, the foreseeable power of the future imposes terms and conditions of the 19th Century, like the suspension of labor laws, importation of labor, exclusive use rights, more expensive financing, payments in foreign currency, among other nineteenth-century privileges.
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The
aggressive expansion of China in Latin America has marked the last decade.
Ecuador and Venezuela have been two of the main destinations for Chinese
financing, technology and labor in the region. The alliance took shape in
Venezuela with the creation of the Venezuelan Chinese Fund, from which the
government of the self-styled Bolivarian Revolution awarded millionaire
contracts to Chinese companies for the execution of infrastructure works,
housing construction or constructions for the electrical system, among other
areas. Meanwhile in Ecuador, the close relationship with China marked the
ten-year management of Rafael Correa, who has just left power. Seven out of ten
works in that period were performed by a Chinese company, almost always tied to
financing by a Chinese bank. Some of these projects, both in Ecuador and in
Venezuela, are today failed projects. The review of some of these agreements
shows the "fine print" and the requirements imposed by the Chinese when doing
business with these countries.
The Formula in Venezuela
Venezuela
holds onto China. In mid-September 2017, the state oil company Petróleos de
Venezuela (Pdvsa) published for the first time the price of Venezuelan oil in
yuans. It was Caracas response to the financial sanctions imposed by the Donald
Trump administration to prevent the Venezuelan government from issuing a new
debt. "We have decided to start a new stage of foreign trade with the use of
internationally convertible currencies beyond the US dollar," Venezuelan
President Nicolás Maduro had warned in early September, after the US measure was
known.
The
price of the Venezuelan crude oil in yuans seems more than a symbol. It looks
like the corollary of the relationship that Caracas and Beijing forged from the
government of Hugo Chávez as soon as the new century began. Although initially
conceived as the formula for the "development" of "socialist" Venezuela, it has
resulted in an increasing dependence on the Caribbean nation with the Asian
nation.
The
moment in which Venezuela joined its destiny to that of China could be 2008.
That year, the office of the Venezuelan Chinese Fund was opened, which
ultimately resulted in a peculiar and questioned financing system of at least
50,000 million dollars, supported by Venezuelan oil, the purchase of Chinese
merchandise and the hiring of its companies for works of infrastructure, housing
or the electrical system, among other areas.
"This
is a wonderful formula, financing for development. It is a socialist
development," Chávez predicted in May of that same year. More than a decade
later, after three sections of that binational fund having been executed, with
Venezuela heading for the fourth consecutive year of contraction and on the
brink of hyperinflation, the results for the South American nation are more than
just doubtful.
Only
Odebrecht, the Brazilian giant that fell from grace due to accusations of
corruption in almost all of Latin America, can boast about such favorable
agreements with chavismo as those achieved by companies like China
Railway Engineering Corporation (CREC), China Camc Engineering (CAMC) or Citic
Construction Co Ltd (CITIC), among others.
Opacity "Ad Hoc" in Ecuador
The
relationship between the Ecuadorian Government and several Chinese companies is
deep and hard to unravel. The contracts that bind them are difficult to access.
Knowing the precise amounts, conditions, institutions involved is a complex
task: there is no state office or a single web portal that gathers all the
information. The information is scattered among the government entities that
have signed the contracts, where everything happens slowly, and not all the
information requested is obtained: only three out of thirteen requests for
information received a positive response through the submission of seven
contracts. Give reasons to explain what motivates the labyrinth that has to be
walked to find the contracts of Chinese companies would be speculating. However,
there is an obvious truth: the lack of transparency is one of the roots of
corruption, both here and in China.

The
lack of transparency also has a cost. A study by the FARO group —made in
2011 with support from the Inter-American Development Bank (IDB)— determined
that, for example, the lack of transparency in the oil area entails a cost to
Ecuador of at least 2.87% of the gross domestic product —more than 2,000 million
dollars, a lot of money. And if it is public money, it is even much more. For
example, is it enough to pay in full for the Coca Codo Sinclair hydroelectric
plant (the largest dam in the country, in the northeast, on the Napo
province).
In
the seven contracts obtained by requesting information, there is a common
denominator: hiring was made under a special system, a modality that allows, in
certain cases, contracting under more flexible parameters. In five of the seven
contracts, the work was tied to the financing of Chinese banks. Both
possibilities are provided for in the Organic Law on Public Enterprises,
approved in 2009. According to the councilor and former mayor of Quito, Daniela
Chacón, this type of contracting is very beneficial for politicians who "want to
do things without transparency". Chacón says that the fact that the contracts
themselves determine the contracting processes (and how they will be regulated)
creates a vacuum to supervise. Transparency loses under these
conditions.
"Small Print" of Big Business in Venezuela
On
July 30, 2009, CREC, one of the companies of holding China Railway Construction
Corporation (CRCC), signed a contract with the State Railways Institution (IFE)
for 7.5 million dollars for the construction of the railway system "eje
norte-llanero (north-plain axis), Tinaco-Anaco stretch, under the
turnkey-total amount closed modality." Hugo Chávez had authorized the hiring of
that company in the 073-2009 "report" of March 3, 2009, based in turn on the
agreement of economic and technical cooperation signed by both Governments on
September 24, 2008, in Beijing.
"Have
credit with the second largest economy in the world, which is a great guarantee
for us. In addition, the important thing is how those resources have been
allocated," presumed in 2011 Jorge Giordani, then Minister of Planning and
economic mentor of Chávez. But today the train is an unfinished project. Despite
the millionaire outlay —the figure today represents 70% of Venezuela's
international reserves and exceeds the cost of the recent expansion of the
Panama Canal—, the work that would allow the train trip between the center and
the east of Venezuela at 220 kilometers per hour is in ruins. According to the
contract, CREC had to complete it in "40 continuous months from the signing of
the initial instrument."
Venezuela
paid CREC 10.66% of the total in 2009, another 26.67% of the "total amount
closed" in 2010, 30% in 2011 and finally, the remaining 32.67% in 2012, as
agreed. Although the payments were subject to "valuations for work performed",
the company guaranteed the possibility that the final price could rise even more
during the course of the work for "additional works". The company also
established that the expenses associated with the importation of machinery and
equipment to carry out the work would be borne by the Venezuelan
Government.
"
IFE will be responsible for paying all expenses related to the temporary
admission of equipment or clearance of materials, parts and pieces required to
carry out the work, as well as all expenses related to the importation and
clearance of those equipment, materials, parts and pieces to be included in the
work," provides clause 95 of the contract. In the event of "delay in the
introduction of the imported goods and equipment into the country, for causes
not attributable to CREC, and provided that the import has been processed in due
time, such delay shall result in an automatic extension of the execution period
for the same term of the delay." This last provision is not a minor condition if
bearing in mind that Venezuelan ports are among the most inefficient in the
region.
Despite
the millionaire amount and the extent of the work, the contract also established
the possibility of CREC outsourcing companies without major restrictions. "CREC
must notify IFE of the subcontractors that it intends to outsource and IFE
reserves the right to disapprove said subcontracts where, at IFE’s sole
discretion, there are well-founded reasons for such decision, which shall be
made within eleven consecutive days from receipt of the notification and the
subcontractor documents," specifies clause 83 of the agreement.
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Thanks
to this provision, the Chinese company, after charging the Government in
dollars, was able to outsource Venezuelan construction companies in bolivars,
which ended up imposing more rigorous conditions than those set by IFE on CREC.
"The price of this contract cannot be modified or adjusted," say the contracts
that CREC entered into with Consorcio Maquivial-Otassca and Basis C.A., two of
the companies outsourced in 2010. This clause was not only a straitjacket for
local companies in the middle of an economy that already accumulated a
double-digit inflation, it also allowed CREC to play in an economy with several
exchange rates, including the "parallel" market, well above official rates.
"Although the work was financed with the Chinese Fund, those payments were made
in local currency. How did they (the Chinese) sell the dollars? That was
something that the Chinese did not detail to contractors," explains a source
familiar with the project, who prefers to remain
anonymous.
The
agreement with Consorcio Maquivial-Otassca even sets forth that "the lack of
payment will not lead to work stoppage by contractor," while in the contract
with Basis CREC it is established that "contractor must work on weekends and
holidays," a provision that clashes with Venezuelan labor laws. “To get on with
the stretches during weekends, the Chinese workers took the machinery of private
companies", adds the consulted source.
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The
possibility of hiring Chinese personnel was also allowed in the contract between
CREC and IFE. In principle, the company had to "make use of mostly Venezuelan
human resources" (clause 21), but in the cases of hiring Chinese personnel it
was agreed that "IFE shall cooperate and provide all necessary support to
process and issue work visas or of any other nature, that allow permanence of
such personnel in Venezuelan territory in a legal manner and for the time
necessary to execute the work" (clause 91). This condition appears in other
contracts of Chinese companies with the Venezuelan Government and, in some
cases, has been the subject of complaints by Government-related
unions.
The
questions have also come from China. In July of this year, the National
Railway Administration, the regulatory agency of the sector in China,
sanctioned and imposed a penalty on CRCC, the parent company of CREC, due to
shortcuts and non-compliance in several projects of its subsidiaries, as well as
modifications without consent in the railway works it has participated
in.
The Financier of Pharaonic Works in Ecuador
The
link between China and Ecuador got stronger in 2009. The break between the
government of former President of Ecuador Rafael Correa and the agencies that
had traditionally financed the country (World Bank, International Monetary Fund)
forced him to look for money on the other side of the world. "There is
preferential treatment for China," says Carolina Viola, a professor at
Pontificia Universidad Católica of Ecuador, who studies labor and environmental
issues in Sino-Ecuadorian projects. "Because when Ecuador received zero external
financing, China covered its back."
Under
those circumstances, the big Asian country became the great financier of
Ecuador. According to Paulina Garzón, a specialist in Chinese investment in
Latin America, companies in that country were awarded 70% of the largest public
contracts in the mining, oil and water sectors during Correa’s government.
Researcher Diana Castro has been able to establish that there are 21 companies
contracted by public entities from ten areas for at least 63 projects:
construction of hospitals, schools, bridges, buildings, roads.

Castro
also reports difficulty in accessing contracts between China and Ecuador.
Contracts that are usually tied to the credits to pay for the works to be
executed and are, in general, 5% more expensive than those granted by the
World Bank.
The
past decade was characterized by its hunger for Pharaonic works. The Government
Financial Platform, a mega building constructed to receive 3800 public officials
from the economic areas of the State, is one of them. It was built by Chinese
company CAMC, and the amounts of its contract have varied according to who
reported its costs (and when they were reported). The structure was criticized
for the price increase without apparent justification. Urban planner John Dunn
wrote, "For the first time in Quito, a building has been built that breaks the
geographical condition of the valley containing the city. You can no longer see
the Pichincha (volcano) from avenida de los Shyris and from calle Japón (in the
north center of Quito). Perhaps we have confused "monumentality" with
"hypertrophy".

Days
before its inauguration, after a heavy rain, the gigantic work was flooded. The
parking lots were filled with so much water that the cars were submerged
halfway.
It
is not the only project in the hands of a Chinese company with inconsistencies
and inconveniences. The Quijos hydroelectric plant was promoted as another of
Rafael Correa's emblematic works. Its construction was awarded to the
Chinese company National Electric Engineering (Cneec) for 94 million dollars. It
had to start operating in 2015. But the cost what not as expected, neither was
it finished when expected. The budget went up to 110 million dollars, and the
completion of the work was postponed to March 2016. The latest
information available from Corporación Eléctrica del Ecuador - Celec
(June 2015) says that the Quijos project was completed at just over
45%.
In
December 2015, Celec unilaterally terminated the contract with the
Chinese company. "Due to breaches of technical, quality and engineering
standards in the execution of the work," said Manuel Andrade, head of
civil works of the project and a Celec official. He also explained that the
collection of 25 million dollars for the performance bonds was in progress.
Celec was asked to confirm if the payment had been collected, but it gave no
answer. That same company had been declared a non-compliant contractor due to
faults in the Mazar-Dudas hydroelectric project, one of the eight
hydroelectric plants of the self-proclaimed Citizen Revolution, the government
process led for ten years by President Rafael Correa.
Coca
Codo Sinclair was also an emblematic work and in trouble. Another of the eight
hydroelectric plants built during the government of Rafael Correa, according to
the Ministry of Energy, was 95% finished in April 2017. When it was
tendered in 2008, the international call for tender was conditioned, it was open
but it was tied to financing. The only bidders were two Chinese companies.
Sinohydro Corporation won the heads-up with a proposal of 1,979 million dollars,
about 400 million dollars more than the cost that had been predicted in the
2006-2015 Electrification Plan. Let’s put these numbers into perspective: 1,979
million dollars would be enough to launch a space shuttle four times. The
difference between what was planned and its cost, 400 million dollars, would
have paid for the 80 millennium schools that the government of Rafael
Correa managed to build until he left power in 2017 (when he had to stop
producing them due to lack of resources, and prefer the less sumptuous model of
the so-called 21st century schools, even though that amount would have been
enough to cover around 2,000).
The
multimillion-dollar Coca Codo Sinclair project was surrounded by technical
questions and accusations of irregularities in its execution. In the book”
Ecuador made in China,” political activist Fernando Villavicencio details three
problems of Coca Codo. It had no technical studies to justify the power (the
amount of energy it can generate) of the hydroelectric plant. Nor did it have
the final studies for hiring when the tender was launched. The Comptroller's
Office, in charge of overseeing the use of state assets and monies, determined
that from March 2010 to February 2012, not all the corresponding penalties for
failure to comply were imposed on Sinohydro. The amount should be 425,000
dollars a day, but according to the control entity, only phase I and II of the
project were penalized, leaving out non-compliance of supervisions or delays in
the incorporation of personnel and equipment, among others. "In the development
of the project, it did not comply with the supervision and overseeing orders,
regarding the completion of the plan. It delayed the start of works in several
work fronts, delayed the completion of several contractual milestones, breaches
for which no penalties are provided for in the contract."
The
execution of the contract would begin when Eximbank granted the funds for the
work. Eight months passed until the Chinese bank disbursed 1,682.7 million
dollars to the Ecuadorian Government, i.e. 85% of the total cost of the project.
The works began more than two years later, on July 28,
2010.
On
a radio and television station in September 2014, the then President Rafael
Correa complained about the delays: "This has to be finished in February 2016.
They wanted to convince me that they were four months only because the tunnel
boring machine was locked. Let's accept that. The contract is very clear," he
said in his usual tone, and said that he had ordered for measures to be taken to
penalize the construction company if the work was not delivered in February
2016. "With each day of delay the country loses over a million dollars," Correa
said. But his warning was no more than words. The work was inaugurated on
November 18, 2016, nine months after the date initially scheduled, with the
presence of Chinese President Xi Jinping.
The
growing Chinese presence in Ecuador was born from the interest in the raw
material wealth of the South American country. But it is not the only factor.
According to Yang Yong, a researcher at the Hengduan Mountain Research
Institute, there is also a great political factor. "China is seeking greater
communication, and especially greater economic cooperation with South American
countries. Ecuador is one of the countries that early established diplomatic
relationships with China, and that's why China prefers it." In this highly
politicized scenario, hydroelectric projects have not always gone well. Chinese
companies need to reflect and learn from this, if they want the general
situation to improve, Yang says.
More Tall Tales
Failure
to finish the works has not stopped the hiring of Chinese companies by the
Venezuelan Government. Last July, China Camc Engineering, a subsidiary of the
China National Machinery Industry Corporation (Sinomach), which in 2007
incorporated company Camce Sudamerica in Caracas, was appointed by the Maduro
Government for a nickel mining project. Previously, in February 2016, a
"memorandum of understanding" had been announced for the company to also
participate in the Southeast of the territory in the "certification of resources
of the Orinoco Mining Arc", the plan with which Venezuela seeks to counteract
the fall of oil revenues.
These
businesses are in addition to those achieved by CAMC in areas like power,
agriculture and infrastructure in over a decade, which exceed 3,000 million
dollars, despite the fact that the Office of the Comptroller General of the
Republic noticed irregularities of this company in the execution of its first
contract in 2003. It was the agreement for the construction of the "Bolivarian
Aqueduct of the State of Falcon," in the northwest of Venezuela, considered at
that time as "one of the most important hydraulic projects in Venezuela" and
thanks to the "loan agreement" of December 20, 2002, between the Venezuelan
Ministry of Finance and the Bank of China, according to the 2007 management
report prepared by the Office of the Comptroller General of the
Republic.
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The
document is an inventory of Camc irregularities and breaches. "Deficiencies were
observed in the planning and in its administrative processes that resulted in
the reduction of the scope of the work and additional costs to the project. This
situation was reflected in the delay of 352 days in its completion; expenses the
description of which does not directly relate to the project, nor to the object
of the contract; payments higher than those established contractually; omissions
of relevant aspects in the contractual terms and conditions (guarantee terms of
the works); incorporations of confusing contractual clauses, among others." The
Office of the Comptroller General of the Republic also recommended "to urge
Chinese company Camc to proceed with the replacement of 335 meters of pipeline"
as it did not meet the agreed technical specifications, and it required the
authorities "to ensure that the costs of excavation, extraction and
transportation are not listed through valuations to the Ministry of People’s
Power for the Environment."
Conclusions
similar to those of the Office of the Comptroller General of the Republic can be
reached based on the contract entered in November 2005 between Citic
Construction Co Ltd, a subsidiary of Citic Group, and the Venezuelan Ministry of
Housing and Habitat. In that first agreement between both parties for the
construction of 20,000 homes for the amount of 905 million dollars, the Chinese
company established confidentiality conditions like "contractor shall not be
required to disclose to employer, or any third party on behalf of the employer,
any financial or trade information, or any document related to the contractor,
its outsourced companies, suppliers, carriers, agents, appointed manufacturers,
consultants and staff (of any nationality, including Chinese, Venezuelan or
third-country)”.
Just
like CREC did for the construction of the Tinaco-Anaco railway, Citic included
in the agreement the option of hiring Chinese personnel. A clause of the
document provided that "employer shall make arrangements for contractor to be
authorized to conduct the activity of non-Venezuelan expatriate personnel of
contractor in accordance with Chinese labor regulations, including, but not
limited to, maximum daily working hours" and that in the event "employer does
not achieve these exemptions, contractor shall be entitled to an extension of
time."
Tax
exemptions, payment of the contract "exclusively in US dollars" ??and the option
of "increasing prices in each payment for inflation of material and labor" were
other conditions imposed by Citic to the Venezuelan authorities in that first
agreement of November 2005. Some of those conditions were softened by the
Venezuelan counterpart in an "addendum to the contract" signed almost a year
later, in August 2006. However, Citic had managed to secure a very favorable
business in Venezuela. In that first modification, the contract was quoted in
euros. "Each home had an average cost of 80,000 euros," says a builder.
According to him, like with CREC or CAMC, the contract with Citic was reviewed
several times to the point that in 2011 more changes were made to the initial
agreement and the price of the homes continued to escalate. The facts seem to
validate his information, since it was only in last July when the President of
the Republic handed over some homes built by Citic at the Tiuna Military Fort in
Caracas, one of the six places where the Chinese company had to build the
homes.

In some cases, Chinese companies have imposed on the Venezuelan Government draconian conditions that entities like the Office of the Comptroller General of the Republic have questioned.
"I
thank China, the Chinese companies, the Venezuelan workers and companies. Thank
you for everything you have done permanently, because our commander laid the
foundations of this new Ciudad Tiuna in the parish of El Valle," said Maduro
that day. On Citic website, a press release also echoed the event.
"During his speech, (Nicolás Maduro) he expressed his gratitude to Citic
Construction for his great contributions to the Great Housing Mission Venezuela
(GMVV) (...) He also read with enthusiasm the names of the main Chinese
attendees one by one and sincerely thanked the Chinese people for their
contribution to the construction and development of
Venezuela."
Both
opinions are far from that of Venezuelan academics and economists. In 2016,
professor and researcher of Universidad de Carabobo Giovanni Gómez Ysea
requested before the Finance Committee of the National Assembly and the then
Public Prosecutor General, Luisa Ortega Díaz, the revision of the financing
system with China "as these are illegal and onerous agreements with draconian
terms and conditions against the interests of the Republic, which have caused
and continue to cause irreversible economic losses to the nation."
For
Alejandro Grisanti, economist and partner of Econalítica consultancy, the sin is
in the terms in which the relationship between both nations was conceived. "I
think the current relationship with China has been extremely negative. Virtually
none of the projects of the basket of investment projects in the non-oil sector
that supposedly China has had to develop is seen or working. Many of them are in
infrastructure and other areas, but from that basket of projects, few have been
finished and can be seen."
Although
Grisanti considers the alliance between the country with the largest oil
reserves in the world and the country with the highest demand of energy as
strategic, he insists that the result for Venezuela is not favorable. "The
balance to this day is negative. To date, the balance is that alliance was
created under highly unequal conditions; with conditions of importation of final
goods instead of capital. It is necessary that Venezuela has a more one-on-one
relationship with China and that it can establish long-term strategic
objectives."
Cases
like the one of Chery, Haier or Yutong, Chinese companies that for years have
flooded the Venezuelan market with their products but hardly investing, confirm
the words of the economist. The 22 billion dollars that Venezuela owes to China,
according to Ecoanalítica, do not allow anticipating changes in the formula used
by the Chinese to date.
In
Ecuador, not only the central government has favored Chinese companies. Company
China Road and Bridge Construction (CRBC) bought Hotel Quito from Banco del
Instituto Ecuatoriano de Seguridad Social (Bank of the Ecuadorian Institute of
Social Security) (Biess). According to an initial assessment, the hotel - one of
the most traditional in the
city - was sold for 30.8 million dollars, 7
million dollars less than the appraisal made by Price Waterhouse. In October
2017, already in the government of Lenín Moreno, the Office of the Comptroller
of the State, in charge of overseeing the use of public goods and funds in the
country, issued its final report in which observations are made on the sale,
while it works in determining if there are civil or criminal liabilities of
those who were in charge of carrying it out, including the chairman of the board
of Biess, Richard Espinosa. Espinosa could be dismissed based on another report
from the same entity related to alleged irregularities in the management of the
State's debt with the Social Security
Institute.
The
same CRBC is the beneficiary of one of the most controversial road projects in
Ecuador. Driven by the Municipality of Quito, led by opponent Mauricio Rodas,
the so-called Guayasamín road solution —a bridge designed to lighten the
increasingly chaotic traffic of the capital— generated, from its conception,
critics of town planners and citizens. It would not only cause a bottleneck
during peak hours and the potential disappearance of residents of the Bolaños
neighborhood, but it would also make the city less friendly to pedestrians. In
protest against its implementation, town councilor Daniela Chacón resigned from
the Deputy Mayor’s Office of Quito.
In
April 2016, Rodas announced the construction of the project that, in his words,
would benefit 300 thousand people who go from the surrounding valleys to Quito
and back again. The cost of the road solution exceeded 130 million dollars. CRCB
would administer the highway for 30 years and charge a toll for passage, as
provided for in a contract of more than 500 pages.
However,
even the road studies conducted by CRCB say that the work will be efficient for
five years only from its inauguration. Afterwards, the number of cars will
increase so much that the 'road solution' will also collapse. The contract
conditions the next eight mayors of Quito. One of its clauses says that if the
municipality constructs other alternative routes between the Cumbayá valley and
Quito (or an alternative is created that could cause fewer people to circulate
through the road solution ), CRCB can terminate the contract unilaterally and
demand compensation for the losses for the term that the contract is still in
effect.
According
to Daniela Chacón, the technical reports that support the Guayasamín Road
Solution are insufficient. "The feasibility report of the Office of Transport
and Planning has one page and a half covered mainly by background. The financial
report does not clearly explain why a thirty-year concession is granted, nor on
what the value of the assigned toll is based or why the profitability of the
Chinese company must be 15%." To Chacón, it seems that the financial formula is
only approved based on the profitability of the company. Since August 2017, the
work has been suspended because archaeological remains were found on the land
where the highway's bases would go. A year before, the Municipality of Quito and
CRBC agreed that the final studies would be made and the deficiencies detected
in the original project would be resolved. However, to date, the studies have
not been submitted and only 70% have been completed. No more than 3% of the work
in general has been constructed.
Compulsive Exports of "Development"
Since
the early 2000s, the China’s state "zhou chu qu" (Go-global) policy encouraged
large Chinese industrialists, like Sinohydro and Gezhouba, to seek projects
abroad. "These companies were once ministries, and then they became state-owned
companies and then companies in which the government still has a majority," says
Darrin Magee, water expert at Hobart University & William Smith
Colleges.
According
to Magee, these companies have internal divisions and are executing
hydroelectric projects basically anywhere where "development" is needed,
especially if the construction of dams, roads, and other infrastructure
facilitates China's access to mineral, timber, and agricultural resources.
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When
the political map in Latin America turned to the left, the expanding giant saw
the opportunity. Away from their traditional financiers, countries like Ecuador,
Venezuela and Bolivia would look for alternative sources to fulfill the promises
of development of their populist leaders. Chávez (and Maduro) in Venezuela saw
in the Chinese banks and companies the solution of the national progress
equation. Rafael Correa, in Ecuador, followed them very soon. But the results of
the alliance with China, announced as a formula for Venezuelan development for
over a decade, are discreet. Some of them are now failed projects. Something
similar happened -and still happens in Ecuador-, where the construction of mega
projects by Chinese companies has not been exempt from problems, delays and
terminations due to breach. Both stories are just a mark of the influence of the
extension.
This
work is the product of a collaborative project between Armando.info (Venezuela)
and Gkillcity (Ecuador), managed by China Dialogue (United
Kingdom).
*
Mayela Armas contributed to the reporting work in Caracas.