In developing countries hosting Chinese-financed infrastructure projects under the Belt and Road Initiative (BRI), some projects gain public support while others encounter opposition. This article seeks to provide an explanation for these different reactions, testing in particular the extent to which the differences stem from the nature of the investment coalitions, including the local partners that Chinese companies choose to work with, and the social engagement strategies that are adopted. Based on 2 survey experiments conducted among the general public and elite college students in Myanmar, the article concludes that Chinese firms, regardless of whether they are state-owned or privately owned, gain the most support when they partner with independent companies with no links to the Burmese military and when they engage directly with the local community. In addition, public reaction is colored by political affiliation, as supporters of the National League for Democracy and groups with access to non-state media were the most critical of projects involving military-linked companies. Overall, this article debunks the myth that Chinese-financed projects can be treated in a monolithic way and has significant implications for BRI. As the BRI aims to promote high-quality development in host states, projects need to be built through inclusive investment coalitions and companies should be encouraged to engage directly with local communities.
The globalization of Chinese capital has been central to contemporary global political economy. Before China’s President Xi Jinping announced the Belt and Road Initiative (BRI)1 in 2013, Chinese outbound foreign direct investment (FDI) had already profoundly transformed the global economy, particularly in the developing world. Since the global financial crisis in 2008, Chinese firms—both state-owned enterprises (SOEs) and private enterprises—have dramatically expanded their foreign presence.2
Following the announcement of the BRI, trade and investment cooperation between China and other developing countries has accelerated further. The BRI’s objective is to improve connectivity and foster trade and investment cooperation between China and countries along the Belt and Road, most of which are developing countries. Despite that the content of the BRI has substantially expanded, the core part is mega infrastructure projects such as Jakarta-Bandung High Speed Railway and Mombasa-Nairobi Standard Gauge Railway. According to the Chinese government, by the end of 2022, 151 countries and 32 international organizations have signed more than 200 BRI cooperation documents, expanding from the Eurasia Continent into Latin America and Africa.
Public attitudes in the developing world toward Chinese capital have been mixed. In some cases, stakeholders in host states welcome Chinese-financed projects. According to the Global Database of Events, Language, and Tone,3 media from all 5 Central Asian states expressed positive views about whether Chinese FDI in countries signing BRI cooperation documents with China would fit in with international rules and norms regarding green development, social responsibility, and transparency (Tao et al., 2020). The average attitude of BRI-related reports in Central Asian states was much more positive than the global average, suggesting that general publics in Central Asian economies largely supported Chinese-financed projects.
Elsewhere, Chinese-financed projects have encountered varying degrees of resistance (including political, economic, and/or social pushback and backlash). Even in Africa, where Chinese investment has been urgently needed and largely welcomed, protests arise against Chinese-financed projects. For instance, in June 2019, Kenya halted the installation of a Chinese-financed coal power plant—the country’s first—near the coastal town of Lamu due to persistent, large-scale protests against the social and environmental impact of the project.4
Viewed as the “last frontier” (Er, 2016) market in Asia, Myanmar provides an important opportunity to study public attitudes toward Chinese FDI. Prior to Myanmar’s political and economic transition in 2011, China was its most important political and economic partner. Although the 2 countries started to build close economic cooperation in the late 1990s (Than, 2003), China had become a major investor in Myanmar only since the late 2000s. From Myanmar’s fiscal year (FY) 1988 to 2009, China’s FDI in stock only accounted for 3.2% of Myanmar’s total approved FDI (Lu, 2009). From 2008 to 2010, China’s reported total FDI in Myanmar increased substantially due to approval of several large-scale projects, including the Myitsone Hydropower Dam, Letpataung Copper Mine, and China-Myanmar Oil and Gas Pipeline.5 Accumulated Chinese FDI reached US$13.94 billion, accounting for 34.27% of Myanmar’s total FDI in stock by the end of FY2011.6 The Chinese investment in Myanmar was heavily concentrated in natural resources extraction, power and energy sectors that were likely to arouse public backlash (Bolesta, 2018).
After the political liberalization initiated by former President Thein Sein in 2011 and before the coup conducted by the Myanmar military in 2021, the Myanmar government suspended several Chinese-financed megaprojects due to public concerns about political, social, and environmental impacts. Although China is by far the biggest foreign investor in FDI stock, Chinese investors have been hesitant to enter the country after the suspension of the Myitsone Dam—a planned US$3.6 billion hydropower dam project in Northern Myanmar—in 2011 (Sun, 2017). Myanmar’s domestic and international media report that anti-China sentiment is on the rise due to the influx of Chinese FDI and associated citizens (Zin, 2012). However, there is no systematic, large-N evidence to support this argument. Moreover, existing research on Myanmar does not distinguish among various types of FDI in terms of firm ownership, local partner, social engagement strategy, among other factors (e.g., Bissinger, 2012).
This article seeks to enquire more deeply into the causes of differential reactions to Chinese-financed investment. The main research question in this study, then, is: Why does the Myanmar public respond differently to various types of Chinese investment projects? To offer nuanced data on public attitudes toward Chinese firms, we disaggregate Chinese FDI along different lines of local coalitions: type of local partners (military-affiliated enterprises or private enterprises) and type of social engagement strategy (direct consultation with local communities and civil society organizations or not). By disaggregating Chinese FDI, we aim to better understand why public perceptions of Chinese firms and their investment activities may differ from one another. We further examine how political party support, ethnic groups, and media sources mediate public attitudes toward Chinese FDI. In addition, we examine how these perceptions shape the Myanmar people’s attitudes toward the BRI.
The 2 survey experiments we conducted in Myanmar between 2017 and 2019 yielded 3 main findings. First, partnership with non-military-affiliated firms, combined with a direct community engagement strategy, can significantly increase public support for Chinese FDI projects. Second, the impact of firm ownership on public attitudes toward Chinese investment projects is not significant. Third, public opinion on specific FDI projects spills over to broader perceptions of the BRI.
The rest of this article is structured as follows: We first present theoretical arguments and main hypotheses on how Chinese firms’ local investment coalitions in host states shape public attitudes toward Chinese-financed projects. Second, we discuss our research design and country case selection. Third, we test our main hypotheses through both comparative case studies and survey experiments in Myanmar. We conclude by presenting our main findings and highlighting policy implications and future research avenues.
Theory on investment coalitions and public attitudes
The international business literature has long acknowledged that multinational corporations (MNCs) entering foreign markets face costs to entry due to their lack of external legitimacy7 (Kostova and Zaheer, 1999; Lu and Xu, 2006). Due to their lack of legitimacy, MNCs have to dedicate significant resources and employ diverse strategies, such as providing financial support for local social programs, to build a positive corporate image in local markets (Li et al., 2014). Proponents of resource dependence theory argue that firms can affect their environments to make them more favorable for their economic activities (Pfeffer and Salancik, 1978; Hillman et al., 2009). More specifically, MNCs mitigate risks by leveraging the resources of other relevant stakeholders (Holtbrugge et al., 2007), including host governments (Ramamurti, 2004; Blumentritt and Rehbein, 2008; Arnoldi and Villadsen, 2015), host-country partner firms (Yan and Gray, 2001), and civil society (Nebus and Rufin, 2010).
Based on the discussion above, we argue that foreign investment coalition is the primary factor affecting the public attitudes in host countries toward MNCs and their projects. On the one hand, foreign investors need to obtain a legal license from host governments by forming joint ventures (JV) with local partners and shareholders in accordance with host governments’ requirements. On the other hand, foreign investors need to obtain a “social license” to operate from the affected communities and other stakeholders, such as civil society organizations and non-state-run news media.
In particular, we focus on 2 dimensions of local investment coalitions. The first dimension is the nature of local partner, that is, whether foreign investors work exclusively with government-affiliated firms or collaborate with private firms without government affiliation in host states. The second dimension is the form of social engagement strategy, that is, whether foreign investors engage with local communities directly (embedded) or indirectly through local government agencies (detached). The more inclusive and embedded an investment coalition is, the higher the degree of public support it receives in host states. We illustrate the main hypotheses in detail in Table 1.
|Local Partner \ Social Engagement .||Government-Affiliated Firms .||Non-government-Affiliated Firms .|
|Indirect social engagement||Low support||Medium support|
|Direct social engagement||Medium support||High support|
|Local Partner \ Social Engagement .||Government-Affiliated Firms .||Non-government-Affiliated Firms .|
|Indirect social engagement||Low support||Medium support|
|Direct social engagement||Medium support||High support|
To begin with, we focus on the different local partners of foreign investors who can shape host country’s public preferences through lobbying, coercion, and interest transformation, echoing the findings of the broader policy diffusion literature (Simmons et al., 2006). Assembling a carefully designed investment coalition is a way to increase an MNC’s local legitimacy (especially in unstable political environments), mitigate the effects of under-established institutional frameworks (Cui and Jiang, 2012), and lower transaction costs (Li and Ferreira, 2008). The literature on the political economy of MNCs demonstrates that MNCs can increase their bargaining leverage over host states through strategic alliances with local economic agencies (Henisz and Delios, 2004; Pinto, 2004), other foreign investors (Stopford and Strange, 1991), and subnational governments (Jensen et al., 2012). Given the distributive effects of FDI, which create political cleavages among various social and economic groups, the broader and more inclusive the alliance that MNCs build with local actors and the more integrated that MNCs are into host states, the more likely MNCs are to gain support from the general public in host states. Thus, because their interests are more likely to align with policymakers in control of government processes, MNCs with broader local economic and social support can wield greater political influence.
In addition, we focus on different forms of social engagement strategies. In recent years, corporate social responsibility (CSR) has become a diffused norm through the grassroots empowerment process in many developing countries. CSR requires a company to gain a “social license”—consent from informed community members (Wilburn and Wilburn, 2011). Unlike an official license that gives legal permit to a company, a social license allows a company to operate without local opposition and resistance in both short and long terms. While the CSR concept was once considered a sideshow or tokenism, it is now seen as a more mainstream tool to build community support across the globe.
There are 5 reasons why this article focuses on the case of Myanmar. First, Myanmar has been one of the most important economic partners of China along the Belt and Road. Between 2011 and 2021, despite the plummeting Chinese investment in Myanmar after the suspension of the Myitsone Hydropower Plant, as well as the diversification of Myanmar’s sources of FDI as Western countries gradually started to lift economic sanctions, China remains the biggest source of Myanmar’s FDI in stock. The Chinese government has proposed China-Myanmar Economic Corridor and continues to plan mega projects such as railway, port, and industrial zones.
Second, Myanmar’s abrupt political transition presents a rare chance to examine the linkage between local investment coalitions and public support for Chinese-financed projects. While public opinion during the pretransition period was not as important, it has become a key factor that influences the success of many Chinese-financed projects. This dramatic change in Myanmar’s political climate offers us an opportunity to observe how Chinese firms’ engagement with host state actors shapes public perceptions of Chinese-financed projects (Mark and Zhang, 2017).
Third, Chinese firms have used various engagement strategies in Myanmar. While some firms ally with military-affiliated companies in Myanmar and shy away from directly engaging communities, others choose to collaborate with private enterprises and communicate directly with local communities. Thus, the Myanmar case allows us to examine how variation in local engagement strategies shapes public responses to Chinese-financed projects.
Fourth, Myanmar has experienced variation in its public responses to Chinese-financed projects. Some Myanmar scholars and political analysts welcome China’s investment as long as it can bring benefit to the Myanmar people, while others are wary of China exporting its “China Model” for development and governance and the possibility of Myanmar turning into a “democracy with Chinese characteristics” (Kyee, 2018). Some warn the public that Myanmar’s legal framework and governance capacity are not ready for the BRI.
Finally, cases from Myanmar can shed light on understanding China’s investment in other developing countries undergoing drastic political transition. The explanations put forward in the case of Myanmar are likely to apply in similar scenarios. Similar to Myanmar, many BRI countries are politically, economically, and/or socially risky. These countries generally have prominent problems, such as weak governance capacity, inconsistent policies and deeply rooted corruption, and underlying political and social conflicts, which bring many risks to BRI projects (Fu, 2018). In this article, we focus on Myanmar to showcase the obstacles that China’s investment is likely to face in countries undergoing similar political and economic transition.
Hypotheses on investment coalitions and public attitudes
Given the Myanmar military’s enduring dominance in economic spheres over the past decades, the military junta in effect appointed military-affiliated firms (or so-called “cronies”) as shareholders to form JVs with foreign investors (Aung and Kudo, 2014), notably in the extractive industry. Following the adoption of the State-owned Economic Enterprises Law in 1989, Myanmar gradually opened up to private investment in natural resource extraction, via its State-owned Economic Enterprises (SEEs). The SEE law grants the government a monopoly status in various spheres of economic activity, in particular in “exploration, extraction and sale of petroleum and natural gas and production of products of the same” and part of the mining sector through relevant SEEs (Bauer et al., 2018). These SEEs operate through JVs with foreign companies or Myanmar companies, including military-affiliated companies. To guarantee investment security, most foreign investors have to partner with a SEE or a military-affiliated firm. For instance, the Myitsone hydropower project was jointly developed by China Power Investment, the Myanmar Ministry of Electric Power No. 1—an SEE, and Asia World Company (Kiik, 2016). Similarly, the Letpadaung copper mine, a Chinese-financed project, was a JV between the Chinese firm, Wanbao, and a military-affiliated company, Myanmar Economic Holdings Limited.8
In transitional Myanmar after 2011, when partnering with military-affiliated companies was not required, Chinese firms have varied in their type of integration with local economic and social groups. While some Chinese firms have set up JVs with both local private firms and other foreign investors, others have alarmed local communities by allying with military-affiliated companies. The latter alliances have tarnished the image of these Chinese firms among the general public due to the bad reputation of the Myanmar military, in particular among supporters of the National League for Democracy (NLD), the leading anti-military political party. Thus, we present H1:
H1: All else being equal, foreign investors partnering with non-cronies will be more favored by the general public in Myanmar.
With Myanmar’s political liberalization and local empowerment process, the concept of Free, Prior, and Informed Consent, aimed to establish bottom-up participation and consultation of an indigenous population prior to project development, as part of CSR has become a widely known concept among affected communities (Syn, 2014), thanks to civil society education and awareness raising programs (Tang-Lee, 2016). During our interviews with both Chinese and non-Chinese firms in Myanmar as well as local and international nongovernmental organizations, the concept of CSR has been widely mentioned and attached with great importance.
This article focuses not on what CSR is, but how to conduct CSR in an effective way, that is, the mode of engaging with local communities. Through interviewing affected communities, we find that MNCs’ indirect engagement of affected communities, more often than not, leaves room for corruption and political maneuvering, which usually leads to unresolved grievances. We use “direct engagement” with local communities as a proxy to test how different types of CSR influence the extent of people’s support for an MNC. Thus, we present H2:
H2: All else equal, foreign investors engaging with local communities directly will be more favored by the general public in Myanmar.
Potential confounding variables
While the previous 2 hypotheses relate to local investment coalitions, other possible factors that may affect differing reactions to Chinese investment projects have also been examined. One is firm ownership. A distinct feature of China’s “Going Out” strategy since the 2000s is that many Chinese MNCs with large projects in overseas energy and infrastructure sectors are central SOEs. What are the behavioral differences between central SOEs, local SOEs, and private enterprises? Shi (2015) argues that the delegatory relationship between Chinese state actors and SOEs shapes governmental policies to support firms’ activities, which in turn shapes firms’ propensity to internationalize. In particular, Chinese policy banks are increasingly restricting their concessional loans to major government-to-government projects (G-to-G projects), which are mostly conducted by the large and powerful central SOEs. Smaller local SOEs and private enterprises do not have as much access as central SOEs to concessional finance for supporting their projects in the developing world; they thus have to seek both local and international financing support. Because concessional loans became fewer and their conditions more stringent, local SOEs and private enterprises have diversified their financing sources.
In addition, the State-owned Assets Supervision and Administration Commission of the State Council has stricter policies for central SOEs that seek to be financed by foreign donors. Consequently, compared with central SOEs, more provincial-level SOEs and private enterprises get funding from abroad, including international donors (such as the World Bank) and host states.9 Therefore, local SOEs and private enterprises are more likely to engage with host state actors. Thus, we present H3:
H3: All else being equal, investment projects conducted by Chinese local SOEs and private enterprises will be more favored by the general public in Myanmar.
Another potential confounding variable is the source country of FDI. The Myanmar general public tends to compare Chinese investment with Japanese investment because China and Japan are both important economic cooperation partners for Myanmar. Compared with their Japanese counterparts, Chinese firms encounter stronger local resistance and opposition in Myanmar. For instance, comparing the Japanese-financed Thilawa Special Economic Zone (SEZ) and the Chinese-financed Kyaukpyu SEZ, we find the former is more welcome than the latter. One main reason behind this variation is that Japanese firms have been less involved in the geopolitics and domestic politics of Myanmar. While China has long played an important role in Myanmar’s domestic politics, ethnic conflicts, and foreign policy, Japan has been largely an economic partner for Myanmar since the end of World War II. Japanese firms are more cautious, strictly profit-driven, and more likely to stay away from politicized projects. Local media summarize their strategy as “4L”: “Look, Listen, Learn, and Leave” (Schoff, 2014).
In this article, we examine whether geopolitical factors distort the correlation between public attitudes toward FDI projects and types of investment coalition (i.e., whether Japanese-financed projects are systematically more favored by the Myanmar general public even when firms from both countries have the same type of investment coalition). Thus, we present H4:
H4: All else being equal, investment projects conducted by Japanese firms will be more favored by the general public in Myanmar than Chinese firms.
We apply a survey-experiment design to examine public perceptions of Chinese FDI in Myanmar. As we are interested in how different elements of investment coalitions can shape public attitudes toward Chinese investment, we take the vignette experimental approach. The vignette treatment design enables us to estimate the effect of each treatment and measure the interactive effects between treatments on the dependent variable (Mutz, 2011).
We conducted 2 survey experiments. The first survey experiment was among the Myanmar general public, and the second was among college students from top universities across Myanmar. The advantage of the survey experiment approach lies in addressing endogeneity problems and validating the causal relationships between the main independent variables and public support for Chinese-financed projects.
Design of the first survey experiment
The design of the first experiment is as follows: to begin with, we conducted a survey experiment among general public with assistance from college student enumerators. We first recruited around 40 undergraduate students at the University of Yangon to serve as survey enumerators. In the end, we had around 1,000 respondents throughout Myanmar.10 We carried out the survey by taking the following steps: first, survey enumerators collected the basic demographic information of respondents (age, gender, education, etc.); second, respondents were randomly assigned to treatment and control groups, and the treatment groups’ respondents were presented with information on fabricated investment projects varying in terms of types of local partners and social engagement strategies; and third, we elicited responses to a range of issues to assess respondents’ perceptions of investment projects.
In order to ensure the quality of our survey sample, we specifically enforced certain standards for sample recruitment. First, we required 2 degrees of separation between student enumerators and the survey respondents. The student enumerators were asked to contact 10 friends, classmates, and/or relatives—these “intermediary contacts” each referred 2 or 3 people who would become the actual participants of the study. Second, explicitly aiming to cover a wide socioeconomic spectrum in the sample, we instructed each enumerator to recruit a sample of long-term township residents above 18 years old that satisfied the following criteria: (1) 50% male respondents and 50% female respondents; (2) no more than 2 respondents from the same household; (3) a recommended ratio of 4 urban respondents to 6 rural respondents; and (4) a recommended age profile of 7 respondents between 19 and 30 years old, 10 respondents between 31 and 60 years old, and 3 respondents above 60 years old.
After the recruitment of enumerators, we separated the survey participants within each enumerator group. The ethnic Bamar groups, which comprise two-thirds of the total population (Ministry of Immigration and Population of Myanmar, 2015), were separated from non-Bamar ethnic groups. We made sure that each participant received randomly assigned news articles to read. This randomization procedure allows us to overcome the systematic differences across enumerator groups (the most obvious ones being geographic location of residence and ethnicity) and to ensure that our causal inference of treatment effect is not confounded by fixed differences across samples recruited by different enumerators. Advantages of the blocking method include reducing sample variability and allowing for separate ethnic group analysis (Gerber and Green, 2012).
After asking general information questions, we exposed both the treatment and control groups to a fabricated news article on a proposed FDI project in Myanmar. In order to test the main hypotheses (H1 and H2), we varied treatments in terms of firms’ local partners and social engagement strategies. For the control group, we asked them to read a fabricated news article on a project conducted by a firm that worked with military cronies and engaged with local communities indirectly. We then provided the treatment groups with different texts that varied in terms of local partners and social engagement strategies, type of Chinese firm (a Chinese central SOE vs. local and private enterprises), and investor state (China vs. Japan). To achieve effective comparisons, we divided the sample into 1 control group and 7 treatment groups, as listed below, to ensure that we had around 100 participants in each group (see Appendix A for more information on the treatment and control groups).
After splitting the treatment and control groups, we first asked respondents about their views to assess their attitudes toward these FDI projects, and then inquired about whether they supported the overall BRI flagship projects. In addition, we also asked about their party affiliation and ethnicity in order to examine whether the treatment effect varied among political and ethnic groups. In the end, all the participants were debriefed about the manipulations (see Appendices B and C for detailed statistical results).
Design of the second survey experiment
We design the first survey experiment to understand variation in public perceptions of Chinese investment in Myanmar. However, not all groups are equal in voicing their opinions. It is of equal importance to understand how Myanmar elites perceive Chinese investment, as they can influence the decision-making process more directly. More importantly, public opinion is to some extent shaped by elite viewpoints, in particular in countries with long tradition of authoritarian rule like Myanmar. Thus, we need to conduct a similar survey experiment among elite groups as a supplement. If the second survey experiment confirms the above observation, we have more confidence in the causal linkage between local investment coalition and public support for FDI projects.
Undergraduate students are often studied as proxies for elite behavior (Hafner-Burton et al., 2014). In the field of experimental studies, some influential research use laboratory experiments with undergraduate respondents to understand decision-making behavior in foreign policy (McDermott, 2002; Berinsky and Kinder, 2006; Boettcher and Cobb, 2006, 2009). Specifically, Hafner-Burton et al. (2014) have conducted survey experiments on elites and undergraduates, arguing that under certain circumstances, university student samples can be useful for revealing elite-dominated policy preferences. Herrmann et al. (2001) have run a survey experimental study on samples of American elites and the general public to evaluate attitudes toward trade.
For the second survey experiment, we targeted university students who have access to the internet in Myanmar’s major cities. To reach our targeted respondents, we used Facebook as a platform to conduct our online survey, considering the popularity of Facebook among university students in Myanmar. University students, mostly in the 16 to 20 age-group, are active Facebook users. As shown in the first experiment, foreign investors’ local partners and social engagement strategies jointly affected public attitudes. In this experiment, we recruited approximately 2,000 respondents from 25 universities in the winter of 2017 and randomly placed them in 2 groups. Group 1 received a text about a firm with an exclusive and detached investment coalition (military-affiliated partner and indirect social engagement), and Group 2 received a text about a firm with an inclusive and embedded investment coalition (non-military-affiliated partner and direct social engagement). We did not mention the source state in either text. As a result, our findings reflect the importance of investment coalition type for foreign investors as a single group, regardless of national origin (see Appendix D for summary statistics of student participants).
The main finding of the first experiment is that: investment coalitions do matter in shaping public perceptions of Chinese investment. In Figure 1, the higher the value, the more support the project received from the respondents. Comparing the average support rate of Group 5 to Group 1, and that of Group 7 to Group 2, with regard to Chinese firms, regardless of ownership, we find that respondents have a significant preference for collaboration with non-military-affiliated firms and direct engagement with local communities. We also notice that a change in one variable (either type of local partner or social engagement strategy) alone does not affect popular support for the projects, indicating that the interaction effect between local partner and social engagement strategy is the main variable explaining changing public perceptions of investment projects. Thus, instead of confirming H1 and H2 respectively, we contend that firms need to work with non-military-affiliated cronies and to engage with local communities directly so as to gain sufficient support from the general public.
In contrast, the confounding variables fail to explain the variation of public perceptions toward Chinese-financed projects. First, difference between central SOE and local/private enterprise is not significant, nullifying H3 that the Myanmar public makes a distinction between Chinese central SOEs and local/private enterprises. This finding suggests that the existing literature attaches too much political significance to Chinese central SOEs and overstates the notion that the public of the host country cares greatly about firm ownership, which echoes with Lamb and Dao’s (2017) analysis regarding the Chinese-financed Hatgyi project. Instead, both central SOEs and local firms are equally regarded as commercial actors, and public attitudes on foreign investors are less associated with firm ownership and more associated with investment coalition.
Second, source of FDI is also not a strong alternative explanation for why Chinese investment is viewed negatively, hence H4 does not hold. Japanese firms are perceived much more positively than their Chinese counterparts when firms from both countries collaborate with military cronies and engage with local communities indirectly (comparing Group 3 to Group 1 and 2). However, when firms from both countries collaborate with non-cronies and engage with local communities indirectly, the gap in public support for the projects carried out by firms from the two countries is not significant (comparing Group 8 to Group 6 and 7). This finding demonstrates that the general public is more concerned about the specific design of the investment coalition in project implementation and less about the investor state. As long as Chinese firms establish inclusive and embedded investment coalitions, they will receive support rates similar to those of Japanese firms from the Myanmar public.
We also examine the effect of local partner and community engagement strategy on broader economic cooperation issues, such as the BRI. Similarly, public support for the BRI is contingent on Chinese firms’ local partners and social engagement strategies. For instance, cooperation between Chinese central SOEs and firms without military affiliation, as well as direct engagement with affected communities, produce improved public support for BRI infrastructure cooperation (see Figure 2).
A follow-up question is: among the general public, who are more likely to favor inclusive and embedded investment coalitions? We find that the treatment effect of local partnerships and social engagement strategies varies along party affiliation, as it is only significant among NLD supporters with more liberal political, economic, and social values. This finding confirms the prior expectation that those who are relatively less in favor of the military regime are also more likely to object to foreign projects that entail partnerships with military-affiliated firms. Furthermore, NLD supporters who are more concerned about the social and economic rights of lower-income groups are more likely to object to foreign projects that entail indirect engagement with local communities. As NLD came into power between 2016 and 2021, NLD supporters’ viewpoints have gained more momentum.
In addition to party affiliation, ethnic identity is also a salient division among general public. However, we do not find a significant difference between attitudes toward FDI projects along ethnic lines. Hypothetically, this difference may exist as we see anecdotal evidence that ethnic minorities are more against Chinese-financed projects working with military cronies, but there is no evidence from our research to support this argument. One possible explanation could be that the residing location of the respondents mattered more than their ethnic identity. Another possible reason might be that our sample size was not big enough to capture enough data from ethnic minorities to differentiate public attitudes toward Chinese FDI projects along ethnic lines. We will conduct more subgroup analysis in the future.
The second survey experiment among elite university students shows similar results. Figure 3 indicates that inclusive and embedded investment coalitions lead to stronger support for FDI projects among college elites.
We also grouped student participants according to their media sources as a way to measure their political inclination. As government-owned media in Myanmar normally report progovernment news, those students who access nongovernment owned media hold more liberal views. According to Figure 4, the treatment effect is stronger among students with access to nongovernment owned media than those without. This finding is in accordance with the above observation that groups that are relatively less in favor of the military regime are more likely to care about investment coalition type.
Conclusion and policy implications
This article has focused on the variation in public support for Chinese-financed projects and attempted to understand the variation from the perspective of investment coalitions. We conduct 2 survey experiments to verify the causal linkage between different types of investment coalitions and public support for Chinese-finance projects. More specifically, this research suggests that 2 key elements of FDI coalitions, that is, firms’ local partners and social engagement strategies, shape general public’s perceptions of Chinese-financed projects. The 2 experiments demonstrate that the Myanmar public prefers Chinese-financed projects that involve partnerships with non-military-affiliated firms and direct engagement with affected communities. In addition to specific projects, these experiments also illustrate the positive effect of partnering with non-military firms and direct community engagement strategy on broader economic cooperation issues, such as the BRI. Overall, this article debunks the myth that Chinese-financed projects can be treated in a monolithic way and has significant implications for BRI. Since BRI aims to promote high-quality development in host states, projects need to be built through inclusive investment coalitions and companies should be encouraged to engage directly with local communities.
Furthermore, this article offers a warning for the BRI and the China-Myanmar Economic Corridor about potential local resistance and highlights the need to assess local contexts as part of investment strategies under their respective frameworks. This article offers Chinese firms constructive solutions to overcome current setbacks in their projects in Myanmar. In particular, after the coup of 2021 when the Myanmar military monopolized state power again, Chinese firms should refrain from working with military-affiliated firms, which may have long-term negative impacts on Chinese investment.
Our findings also have important policy implications for other developing countries, especially those in political or/and economic transition. For Chinese policymakers and investors, understanding public preferences for various types of Chinese firms and their investment activities will provide critical insight into better approaches to the localization of certain FDI projects. Host country governments should be aware of the ramifications of possible local opposition caused by carelessly designed development projects. Therefore, they should make informed decisions regarding the selection of FDI projects in order to promote sustainable development for local communities.
Data accessibility statement
The data that this study builds on are provided as Appendices A–D to this article.
The supplemental files for this article can be found as follows:
Appendices A–D. Docx
The authors declare no conflict of interest.
Contributed to the conception and design: YZ, YY.
Contributed to the acquisition of data: YZ, YY.
Contributed to analysis and interpretation of data: YZ, YY.
We understand BRI as an extension of China’s “Going Out” policy, which has existed since the 1990s. It not only refers to China’s outbound FDI but also includes aid and China’s other financed projects.
According to the 2022 Statistical Bulletin of China’s Outward FDI, 28,600 Chinese domestic investors had established 46,000 FDI enterprises in 200 countries by the end of 2021. The year-end total assets of overseas enterprises reached $8.5 trillion (Ministry of Commerce of China, 2022, p. 1).
The database covers the world’s news media in print, broadcast, and web formats across over 100 languages.
Please check https://www.bbc.com/news/world-africa-48771519, accessed on November 16, 2022.
Myanmar’s official statistics needs to be used with caution, and even these figures do not depict a full picture of China’s investment in Myanmar, which often flows through third party territories or other informal yet thriving avenues.
Directorate of Investment and Company Administration, Government of the Republic of the Union of Myanmar’s Ministry of Investment and Foreign Economic Relations, “Yearly Approved Amount of Foreign Investment,” www.dica.gov.mm, accessed on November 16, 2022.
External legitimacy is defined as the acceptance and approval of a multinational corporation by the government and society in the host country.
Myanmar Economic Holding Limited (MEHL), formerly known as the Union of Myanmar Economic Holding Limited (UMEHL), was the first private company established in Myanmar following the 1988 military coup, during the rule of the military junta.
Field interview with researchers from Chinese Academy of International Trade and Economic Cooperation, winter 2016, Beijing, China.
The respondents cover all provincial regions in Myanmar except for Kayah State.
How to cite this article: Zhang, Y, Yao, Y. 2023. Local partners and social engagement strategies: Explaining public responses to Chinese investment in Myanmar. Elementa: Science of the Anthropocene 11(1). DOI: https://doi.org/10.1525/elementa.2022.00087
Domain Editor-in-Chief: Alastair Iles, University of California Berkeley, Berkeley, CA, USA
Associate Editor: Yuwei Shi, University of California Santa Cruz, Santa Cruz, CA, USA
Knowledge Domain: Sustainability Transitions
Part of an Elementa Special Feature: Inclusive Development and Sustainability Transitions in Emerging Economies