Global social trend

Since China wants oil from Myanmar, it is compromising with protestors

May 21, 2013
Obsession
Energy Shocks
May 21, 2013

China has big plans for mountainous Yunnan province, in the southwest of the country. They include a building boom, a new road and a petroleum industry centered on oil and chemical refineries. The raw materials will come via Myanmar, just across the border—440,000 barrels of oil a day, along with an annual flow of 12 billion cubic meters of natural gas.

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The proposed pipelines will bring Middle Eastern oil and gas to China through Myanmar.(Shwe Gas Movement)

Except that Myanmar is not entirely playing along. While the Myanmar government has permitted the China National Petroleum Corp. (CNPC) to build pipelines—which are almost complete—to carry oil and gas to Yunnan, rebels and ordinary citizens have risen up in protest, forcing a delay in opening the taps. On May 13, militants killed two people in an attack on the working compound of a local CNPC partner.

In response, CNPC has reversed long-standing practice and unleashed a charm offensive in Myanmar. Chinese officials are pushing CNPC to fulfill what they call social obligations, on top of the government-to-government aid and loans for which Beijing is better known. The oil company says it is spending $20 million on Myanmar schools, libraries and roads. It hopes the gas flow will commence by the end of this month.

Around the world, companies and governments are navigating a surge of public pushback against perceived excesses. Western retailers are overturning factory practices in Bangladesh because of an uproar over dangerous working conditions. Mining companies in Congo and South Africa are facing, respectively, criminal probes of bribery and devastating strikes by angry workers. In Kurdistan, ExxonMobil, Chevron and other oil companies are effectively embracing separatist aspirations in exchange for drilling rights. In China, the government is cleaning up pollution and punishing bribery against public ire over living conditions and an official sense of entitlement.

In all these cases, companies and countries are having to perform better, behave better, and be cleaner. Jonathan Macey, a Yale law professor and author of The Death of Corporate Reputation, is unconvinced that we are observing anything more than coincidence. “In my view what we are seeing is simply a happy, albeit momentary confluence of private interest in profits with the public interest in things such as factory safety and corporate social responsibility in Bangladesh and Burma,” Macey said in an email exchange.

But what is unusual about CNPC’s problems is that they are on both sides of the border: Chinese residents of Kunming, the Yunnan provincial capital, have protested one of the planned chemical plants too. So far the government has tamped down the protests rather than give in. Yet in other such cases around China, the government has attempted to reach an accord with unhappy local residents, sometimes even canceling plant construction.

In the case of Myanmar, it’s not that CNPC has suddenly embraced social responsibility abroad. Labor unrest continues in Chinese-run copper mines in Zambia, for example. Rather, as in China itself, it is the leverage of public pressure at work.

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