From nickel processing plants in Indonesia to rare earth mines in Myanmar, Chinese companies are expanding operations in sectors that environmentalists warn could have severe long-term consequences for rivers, air quality and local communities.
The shift is driven partly by stricter rules and excess industrial capacity in China, as well as by the lure of cheaper labor, weaker environmental enforcement and resource-rich landscapes in neighboring countries.
While Beijing has become Southeast Asia’s biggest financier of clean energy, analysts say its green investments are often overshadowed by its involvement in some of the region’s most polluting industries.
The result is a complicated picture: Chinese capital is helping to build solar farms and hydropower dams, but also fueling environmental disputes, health risks and rising political tensions.
It’s also putting the spotlight on whether Southeast Asian governments are as committed to protecting the environment as they say.
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Rising pushback in Indonesia
Since late last year, there have been protests and strikes at several Chinese-run nickel processing plants in Indonesia.
In July, Jakarta announced it would sanction companies for environmental violations at the sprawling Morowali Industrial Park nickel hub, run by the Chinese metals giant Tsingshan Holding Group, on the island of Sulawesi.
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Pushback has also grown over allegations that Chinese firms are polluting vast stretches of the Mekong River through expanded rare earth extraction in war-torn Myanmar.
Communities in Laos and Thailand have complained in recent months about spikes in arsenic and other toxic metals.
In June, Thailand’s pollution agency tested water in northern Chiang Mai and Chiang Rai — across the border from Myanmar’s Shan State, a mining hot spot — and found arsenic levels nearly five times higher than international drinking water standards.
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The international research organization Zero Carbon Analytics reported in June that China poured more than $2.7 billion (€2.3 billion) into clean energy projects in the region over the last decade, largely through the state-led Belt and Road Initiative.
However, Chinese companies are simultaneously expanding into pollution-heavy sectors.
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Fengshi Wu, associate professor in political science and international relations at the University of New South Wales in Australia, noted that several Southeast Asian states, especially Indonesia, have adopted “resource nationalism,” introducing export bans to ensure minerals are processed domestically.
This allows them to gain value-added profits from resource extraction, rather than simply exporting the raw materials for foreign companies to make the bulk of the revenue.
“Indonesia would like to see more minerals processed inside the country. So comes the pollution, unless more effective environmental pollution measures are taken,” Wu said.
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“China has some of the world’s most experienced, capable companies in some of the most polluting, high-environmental-impact sectors,” Juliet Lu, assistant professor in the School for Public Policy and Global Affairs at the University of British Columbia, Canada, told DW.
These sectors are increasingly shunned by development finance institutions but remain attractive to Southeast Asian governments eager for rapid economic growth.
With global competition for rare earth elements intensifying, Southeast Asia’s untapped deposits are becoming more strategically valuable.
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