China in overseas forestry

Over the last month, there has been much heat, but little light, generated by the Kaieteur News over the Chinese company Bai Shan Lin’s investment in Guyana’s forestry sector. The company has been accused of a host of negative activities ranging from being a poor corporate citizen to flagrantly violating the terms and conditions of their contracts that were supposed to be in compliance with the laws of Guyana.

The attacks on Bai Shan Lin are only the latest, albeit the most sustained, on Chinese investments in general in Guyana. Once again it raises the unanswered question as to whether the attacks may have other motives than the claimed “rape of our country”. Since 2001, prompted by its huge accumulation of foreign reserves (now totalling almost US$4 trillion), China embarked on Foreign Direct Investment (FDI) as a strategy to reduce domestic pressures on its currency.

Today, if investments from Hong Kong are included, China stands only behind the USA as a source of FDI – and the largest to the developing world. One question for China’s critics in Guyana, therefore, is if they do not want Chinese investment, whether in fact there are alternative sources waiting to develop Guyana’s vaunted “potential”.

Another question is whether Chinese investment is more exploitive than that from other countries. Forestry is as good an industry to look into the issue as any, because of the sustained interest generated globally and locally by its role in containing global warming through the sequestration of carbon. There are numerous organisations that are focused on monitoring use of the world’s forests and data on comparative usage are not difficult to come by.

From these reports we discover that China is not only the world’s largest manufacturer of forest products, but also among the five countries with the largest forest area in the world. China has made forestry investments in Asia, Africa, Latin America and the Caribbean, but only in Asia has there been a significant investment in value-added downstream manufacturing.

Especially in Africa, there has been the tendency to concentrate in the exporting of logs. And like all other FDIs, while some Chinese companies will comply with good corporate social responsibilities, there will always be some that will attempt to skirt the rules in the pursuit of profits.

Countries such as Guyana that accept the need to attract FDIs then, will have to be diligent  in crafting local laws that secure its interest in sustainable development  and to enforce such laws. Because Guyana has been a pioneer in the utilisation of its forest resources in the fight against global warming and climate change, its legal framework, and monitoring, reporting and verification capabilities are quite advanced. The REDD-based agreement with Norway concerning overall deforestation rates, for instance, utilises such MRV mechanisms to offer quite precise annual reports on the gross amount of forests harvested.

The possibility that Chinese companies may be violating local laws cannot be summarily dismissed but on the other hand, that stricture must also apply to the responses of the designated monitoring body, the Guyana Forestry Commission. Rather than persist in making sensationalist claims and allegations, those that feel that the laws of Guyana are being violated can possibly refer to the aforementioned international groups.

For instance, the Forest Governance Learning Group (FGLG) worked with groups having similar concerns in Africa to create the China-Africa Forest Governance Learning Platform. The latter shares information on forestry matters that have the inputs and hopefully the confidence of all shareholders.

Finally, in responding to similar claims from other jurisdictions, China has promulgated a raft of regulations for its companies overseas, such as the “Guide on Sustainable Overseas Forests Management and Utilisation by Chinese Enterprises”. These can also be utilised to approach the Chinese government to rein in its companies through control over the financial incentives offered to them.

But for sure we cannot allow the witch-hunting that is playing out in the media.