China's overseas investments to be managed, but liability still in question

China's Ministry of Commerce (MofCom) recently published the "Procedure for managing overseas investment", which attempts to decentralize the decision-making process of overseas investments to provincial government. It also divides the scope of liability of Chinese governments (with provincial governments) in companies' overseas investments, and details the procedure how the companies can take advantage of the services by MofCom.

This is perhaps an important step the Chinese government defined its liability in Chinese companies' overseas investments. Unfortunately, the Procedure is only promoted in the MofCom's website, and only covered in the media until the final text is released. I believe many people like me are aware of this as late as it was reported.

I took a look at MofCom's website, and was surprised that the draft was brought for a round of consultation between 7-20 January 2009, but limited to online submissions. In other words, there was no public hearing for the Procedure. So I can only find the submissions by the Commerce offices in Chinese embassies, external trade and investment offices of second-tier cities, the law firms that are dealing with external investments, and others from investment banks and private sectors. No NGOs can give timely comments to the Procedure.

Indeed, this is not the first Procedure in China. Shanghai municipal government pioneered in making the first-ever Procedure in China for its overseas investments last year.

In addition, the procedure is only an administrative order for the governments. It is not yet a binding law. The companies that do not register at MofCom will not be penalized.

Decentralization of decision-making process to provincial governments only allow flexibility, but does not necessarily make them liable and accountable to their investments. How can the central government hold the provincial governments accountable to its investments? Simply by sacking the officials involved?

The investments by "natural person" and financial institutions are not covered in this Procedure. That is, the MofCom is unable to hold the investments of both individual and banks accountable. I expect that these two major loopholes are to be managed by other ministries.

A series of complaints from the Commerce office of an unknown Chinese embassy is worth an attention. One of his comments is that the Procedure cannot stop the misbehaviour of Chinese companies overseas. True, even though Chinese government started to put its promises into black and white, it is still far from holding all the Chinese investments accountable to the world.

Yet, we can understand the intention of MofCom's move, i.e. central government is no longer the sole agent of liability for the Chinese overseas investments. We may have to look upon the other binding and non-binding guidelines, such as CSR guidelines, and loan guidelines of banks.

All in all, it is encouraging that the MofCom is the first government department to be held accountable to Chinese overseas investments, though there are still leeway for them.

For the text of procedure

For the submissions of comments to the draft text

(Note: China's overseas investment also refers to investment in Hong Kong SAR, Macau SAR and Taiwan.)


China's hydropower sector is shifting to a stronger stance

It is also a bit surprising to me, not only to the power sector, that hydropower was not listed as a source of clean energy before this year's National People Congress and Chinese People's Political Consultative Conference meetings in Beijing. However, after a series of lobbying, it was finally listed in China's clean energy development framework.

According to a feature article in China Power News Network, the hydropower sector has promised a number of measures to remedy the problems in hydropower development, while demanding energy subsidies from the government. Obviously, the power sector has two major weapons to bargain for the energy subsidies - energy security and solutions to climate change.

While Chinese government is desperate to maintain a stable economic growth and energy security, amid the global economic downturn, the hydropower sector, though being plagued by a series of social and environmental problems, lured the central government with an easy solution, but under the condition that energy subsidies should cover hydropower. In return, hydropower sector can afford compliances of all measures, including paying for environmental exploitation, integrated water resources management and long-term benefit-sharing mechanism (with the affected people).

Such call was even echoed by the Director of the newly-formed National Energy Bureau, Zhang Guobao, and the famous hydropower advocate, Pan Jiazheng.

The listing of hydropower in the national clean energy development, not only laid the ground for speeding up, but may also change the rationale behind such development. That is, free fuel cost will no longer be the main economic incentives for hydropower, but the country's energy subsidies. Electricity stability is also the key to maintaining the economic growth, and therefore an independent energy source like hydropower will become another major advantage over other imported fuel like oil and gas, and costly energy sources like solar and wind.

I can conclude that the discourse of hydropower in China has been shifting to stronger stance, which is more firmly rooted with the country's economic and political interest, after this year's NPC and CPPCC meetings.











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Advocacy communications are part of the Democracy Project

I think everyone in the free world should not deny that the development of mass media and internet promotes the expansion of public sphere and information transparency. Even though the commercialization, "scandalism" and censorship exists in certain political and economic conditions, mass media and internet are both pushing forward the deliberation of certain ideas and the universalization of certain values.

Working as both campaigner and communications practitioner for advocacy initiative, it is always challenging to what I am doing as the political and economic condition is changing. New ideas, values and interests are emerging and competing rapidly and vigorously. Rather than catching behind them, re-positioning ourselves will help establish myself again in the bigger framework, namely the Democracy Project.

Yes, we are heading "Democracy", in a sense that the people's choices will eventually be attained through, not simply intuition or simply elections, but information disclosure, debate, dialogue or even (non-deliberative) direct actions, and finally consensus, particularly over the complicated social issues that involves various stakeholders and interests.

Consensus is definitely not the mission of advocacy groups, but their demands being met. Therefore, instead of "deliberative", I would rather love to use "Democracy Project" as the background and our ideal to justify our current work.

Therefore, information disclosure, and discourse and message framing are the two major streams of our work. Here many practical questions come such as: how can we re-frame the message so as to make our advocacy work favourable towards our goals? How can we refurnish our message so that every stakeholders can easily participate in the discussion, rather than only the technical experts can join?

Environmental advocacy always suffers from the technical pitfall, and no one can easily join the debate. Finally those who gain the most languages and dominate the discourse will win. This should not be the environmental activists desire. (I would say environmentalists by nature could favour authoritarian tactics.) Therefore, my fellow environmental counterparts should share the value of democracy and stick to the strategies that favour public dialogue.


How do you describe the current status of China?

An authoritarian system at the "macro" level, a set of democratizing practices at the "micro" village and township level; a market-driven individualism at the economic level; and a mix of Marxist, Confucian, and liberal cultural traditions.

I think it is pretty much describing the current status of China. While people are discussing deliberative democracy in the western liberal society, they turn their eyes to China and explore the possibilities of deliberation. I guess they are simply over-excited by the space of deliberation, as shown in the book "The Search for Deliberative Democracy in China". The authors are eager to demonstrate that deliberation has been happening in China!

But as the editors of the book questioned: does China's deliberation lead to democracy? Some even argue that such deliberation may even reinforce the regime and thus become "deliberative authoritarian". The book has also yet to include the other social issues like environmental deterioration in its deliberation experiment. I worry that such deliberation results could violate the environmental interests, without fully informing all the possible impacts incurred from any policy changes.

In addition, as its introduction indicates, without information disclosure, speech freedom and the true citizenship, deliberation cannot truly reflect the results of public debates. It may even become the close-door discussion among the social elites. This is definitely not the desirable outcome of deliberation.

Yet, deliberation is happening in China, given the wider space for public discussion over the local governance / corporate behavior in recent years. However, it is still far from the ideal. While the scholars are taking advantage of the existing liberty for deliberation, how can they advance its effectiveness from simply a process?

And the core question is: does deliberation lead to a meaningful pathway towards democracy? While many of us have already participated in the deliberation exercise, including myself, over controversial issues like Nu River dams, I am doubtful if we can lead to a truly democratic decision-making.

Given the political censorship, deliberation seems to be the only approach. However, can we develop other political strategies to expand the width and depth of our influence? This is perhaps the ambition that every Chinese activists are looking for, while we are not only satisfied by deliberation itself.

Environmentalists need not be deliberative, but need public reason

Under the western liberal democracy, social activists have much wider space than their counterparts in the other parts of the world. While deliberative democracy becomes a hot topic in the academic or political circles, scholars argue that environmentalists need not be deliberative.

True, groups like Greenpeace in many parts of the world enjoy the space for direct actions and campaigning, without any purposes of being part of deliberation. And many activists, even though lacking capacity of taking direct actions, still believe that direct campaigning is the most effective way to reject any compromise and achieve their ideals.

This is particularly true, when we are playing around the environmental standards between the developed and developing world. While the international groups are campaigning for the high standards like World Commission on Dams (WCD) guidelines, it will put pressure on the developing countries to raise their standards, rather than the compromised Sustainability Assessment Protocol developed by International Hydropower Association (IHA).

This is not to say deliberation is not helpful. In the context of the Mekong region where most of the countries have yet to fully develop its open and democratic system, the hydropower development is controversial. Public participation is still absent in any part of the process. The negotiation between the regional countries and the bodies are kept behind the door. Here comes the space for deliberation, which draws public participation through any platforms like forum or media.

That said, international groups are playing a role in, instead of deliberation, campaigning for an internationally recognized standards for the development process. Deliberation in this sense can only be treated as part of the political strategy.

However, as Mathew Humphrey added, even though there are many reasons the environmentalists do not need to pursue deliberation in their campaigning, they still need public reasons. For actions like Greenpeace, perhaps the reasons may not be timely. But for non-deliberative campaigns, how can we justify our call for high standards? How can we draw more legitimacy apart from higher moral grounds? This is perhaps one of the major questions left for our international campaigns.


Environmentalists need to be un-democratic?

While deliberative democracy advocates are getting popular in recent years, and seen as the solutions to the resolving environmental conflicts by information disclosure and public engagement, the Greenpeace-style activism is obviously excluded in such discourse.

So, before taking deliberative democracy as the ultimate solution, I decide to examine its critiques and loopholes. A challenge to deliberative ideal is the ir-reversibility of the environmental problems. Mathew Humphrey in his book argued for the necessity of environmental direct actions, quoting the examples of Greenpeace and Environmental Liberation Front, before coming to the deliberation.

Democracy sometimes cannot effectively deal with the urgent environmental problems. Only direct actions can highlight its urgency. Therefore, the "un-democratic" direct actions come to the scenes.

Should we say due to the very nature of environmental problems, environmentalists do not necessarily pursue deliberative democracy? Do the environmentalists need to take care the issue of legitimacy and justifications of their actions? Are environmentalists legitimate enough to claim themselves the pioneering role and take direct action?

In my opinion, environmental direct actions can be seen macroscopically part of the "deliberative" process, though not so deliberative in itself. As a supplement to the whole discourse, the actions should still acquire a "Public Reason". Given the nature of environmental problems, how can we position direct actions in the whole course of / as an alternative to "deliberation"? This is perhaps the question I am going to ponder.
















Freedom House - Freedom in the World 2009 Survey
The Heritage Foundation - The 2009 Index of Economic Freedom