A SOUTH-SOUTH CHINA AGENDA?

A COMPARATIVE ANALYSIS OF CHINESE

INVESTMENTS IN SOUTH AFRICA AND BRAZIL

Cleiton Maciel Brito

Lisa Ingrid Thompson
Ana Saggioro Garcia
Hazel Shirinda

1 Introduction

Over the last two decades, China has been searching for foreign markets to expand its
capital and increase its geopolitical weight in the new world order. Two major programs have
supported Chinese economic and political expansion in the Global South. The first was the
“Going Global” strategy, of 1999, which aimed to facilitate the internationalization of
Chinese companies to the access to raw materials, guarantee food supply, enter other
countries’ consumer markets and set up factories in their industrial parks, increase China’s
geopolitically influence, as well as export the Chinese surplus capacity. In 2013, another
Chinese strategy was launched: the Belt and Road Initiative (BRI). Under Beijing’s command
and with the ambition of involving over 140 countries, this project aims to generate a different
global flow of capital, services and communication in which the economic structure and
political influence of the Chinese is at its center.
Brazil and South Africa have become major partners of China in each of their regions,
Latin America and Africa, as well through BRICS and other multilateral arenas. They also
have been important recipients of Chinese loans and foreign direct investment. Thus, it has
become an increasingly important topic of analytical research and case study work as the
economic footprint of China in Africa and Latin America has grown exponentially over the
last two decades. In the case of South Africa, not only has China become a major influencer at
state leadership level, it has also become the dominant trade and investment partner on
country, overtaking the US during the last decade in very sphere. Loans to national states,
extraction of raw materials such as coal, and installation of Special Economic Zones are
examples of the Chinese outreach in the region. In South America, Brazil stands out as the
leading destination for Chinese investments, focusing mainly on mining, energy, oil and gas,
infrastructure, agribusiness sector, technology, and participation in the Brazilian industrial and
production park.
Historically seen, it is significant, for Latin America and Africa, to support the
diversification of economic partnerships that potentially counterbalance the US and European
omnipresence in our regions. However, to what extent can South-South investments generate
new potentialities for regional and national development on fairer and more sustainable social
and environmental grounds? Or, on the contrary, to what extent do South-South investments
reproduce the traditional international division of labor, generating practices of natural
resource and labor exploitation, generating new asymmetries?
Through a comparative methodology and field research, this chapter analyzes the
Chinese arrival in these spaces of the Global South and its attempt to be the leader of a South-
South political economy. We highlight Chinese investment loans, foreign direct investment
(FDI) and active involvement in development projects. Furthermore, in a context where
economic expansion is a cause of concern, we seek to show the concrete dynamics generated
in the territories of Chinese investments in terms of public policies, socioenvironmental
impacts and labour relations. For this, we analyze two case studies carried out in South Africa
and Brazil: the Musina-Makhado Special Economic Zone (MMSEZ) and the Manaus Free
Trade Zone (MFTZ). The chapter concludes by indicating the limits and challenges for these
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countries in promoting strategic development projects, labour, socio and environmental rights
of the working population in the face of China's international expansion.

2 The growth of Chinese trade, investment, loans and International development

assistance to South Africa, 2012-2022

Chinese Investments, loans and foreign direct investment (FDI) have become an
increasingly important topic of analytical research and case study work as the economic
footprint of China in Africa has grown exponentially over the last two decades. As a result,
South Africa’s has developed a deep and complex economic relationship with the Peoples
Republic of China (PRC) over the last decade. China’s influence on South Africa’s economic
public policy and foreign policy has grown exponentially. The PRC government’s economic
influence in the whole of Africa has been enhanced through its close relationship with the
African National Congress led South African government. Through strong bilateral
relationships, China has gradually reshaped how the African continent has prioritized joint
development initiatives through international and regional development platforms.
In this regard, the African Union and the Southern African Development Community
(SADC), to mention just two continental collaborative economic organisations, reorganized
their development initiatives to reflect a continental agenda deeply infused by China’s
Foreign Policy of “Going Out” (Thompson, 2018). The Going Out policy has close linkages
with the Belt and Road Initiative aimed at reviving the centuries old Overland and Sea Silk
Route.
After the establishment of the Forum on China-Africa Cooperation (FOCAC) in 2000,
Chinese trade with Africa accelerated with such rapidity that by 2009, it had replaced the
United States as Africa’s largest trading partner (Carciotto and Chikohomero, 2022).
Investment loans and FDI commitments have also increased dramatically, and South Africa
and China have recently expanded and consolidated their Bilateral Investment Treaty (BIT)
signed in 1997 to a considerable extent, albeit with many omissions relating to, for example,
labour rights and climate change commitments and obligations.
In South Africa, a key area of Chinese economic policy influence is through the
setting up of preferential trade areas for foreign direct investment. These are now branded
Special Economic Zones (Thompson, 2018). Unfortunately, as in elsewhere in developing
state contexts throughout Africa, Latin America and South-East Asia, case study research on
Chinese investments in Special Economic Zones in South Africa has shown that the Zones
allow even more scope to ignore labour regulations and to fudge statistics on how much local
labour is included in investment projects (Thompson and Tsolekile de Wet, 2018; Carciotto
and Chikohomero, 2022).
Chinese development policy influence in South Africa and the region will be
discussed in more detail in relation to the impact on livelihoods impacts on local communities
through the establishment of Special Economic Zones. The Musina-Makhado SEZ near Louis
Trichardt (close to the South Africa – Zimbabwe border post of Beit Bridge) will be discussed
in detail as it is linked to China’s Belt and Road initiative.

3 South Africa and Chinese bilateral economic relationships in the context of Africa’s
assimilation in the New Global South

To fully understand China’s expanding economic footprint in both South Africa and Africa, it
is important to unpack how China as incorporated Africa into its geostrategic global
realignment in the global political economy. This has been through the re-alignment of both
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diplomatic and economic relations configured as the Global South. This understanding of
Global South challenges previously understood meanings of North and South. Development
literature posits a bifurcation between the industrialised or developed (North) and developing
states that trade mostly in primary products or commodities (South).
Colonization is claimed to be a defining feature of the nature of the economies in the
South, if only in terms of the mental subjugation in some state cases, where actual full
political colonisation did not take place. China claims to have been a colony as well as
currently a developing state, and as such China’s economic role in the world economy has
been cemented as leader of the new Global South. China’s self-appointed role as Global South
leader is unmistakeably a tactical re-alignment to challenge the hegemony of the U.S. in the
Global North (Thompson and Tsolekile de Wet, 2018).
International Development Assistance or Cooperation (IDA/IDC) is what the PRC
calls Chinese capital expansion in Africa and elsewhere. IDA/IDC, is a form of economic
cooperation entailing Chinese loans, capital investment, infrastructural project collaboration,
and technical assistance and training (Brautigam, 2009). All of these kinds of capital
expansion and economic assistance, according to the PRC, are without the heavy
conditionalities posed by Northern state elites and allied international organisations such as
the Organisation for Economic Cooperation and Development (OECD) and its Development
Assistance Committee (DAC) or the International Monetary Fund (IMF) and the World Bank.
The PRCs IDA now refers to loans without conditionalities imposed by western
donors and are thus understood as “no strings attached” lending to states throughout South-
East Asia and Africa. The term is a misnomer of course as every loan requires repayment and
if funds are used unwisely or recipient states are not able to pay back loans, China has a
reputation for finding other forms of payment, in kind as it were. The most notorious example
of this form of repayment is China’s take-over of the of Hambantota Port in Sri Lanka1.
IDA, despite sounding altruistic, is far from it, and the consequences of African states
taking large loans have caused many states in Africa to become even more heavily indebted.
While Brautigam (2009) argues that the fault of such lending lies in the borrower not the
lender, the fact of the matter remains that many African state leaders have been seduced by
the Chinese lending narrative which uses fluffy terms such as “mutual benefit”, “win-win”
and “no strings attached”. In the southern African region Kenya and Zambia are two examples
of states struggling to repay loans.
A lynchpin of Chinese IDA policy debates on whether it is debt trap diplomacy is on
the degree of public non-disclosure. In the South African case, as we will unpack, this non-
disclosure is perhaps the most concerning aspect to China- South Africa relations.
Deborah Brautigam, who is broadly supportive of Chinese investment in Africa,
nonetheless stated the following in 2009,

Although China has become increasingly transparent about many aspects of its
governance and policymaking, aid figures remain state secrets. The Chinese
government releases only the barest of information about the quantities of aid it gives.
There are no official figures on aid allocations to individual countries or regions, no
breakdown by sector or purpose. The tradition of secrecy fuels misunderstandings,
rumour, and speculation (Brautigam, 2009:12).

1
https://www.indiatoday.in/world/story/revival-hambantota-port-sri-lanka-strengthen-china-position-indian-
ocean-1781171-2021-03-19
3
 The general opacity of Chinese IDA is illustrated at the FOCAC 2 pledges every three
years. The FOCAC 2018 Action Plan shows this vagueness with regards to concessional
loans:

China will extend loans of concessional nature, export credit line and export credit
insurance to African countries, make the loans reasonably more concessional, create
new financing models and improve the terms and conditions of the credit to support
China-Africa Belt and Road cooperation and industrial capacity cooperation, and the
infrastructure construction, development of energy and resources, agriculture,
manufacturing and the comprehensive development of the whole industrial chain of
Africa. China will extend US$20 billions of credit lines and support the setting up of a
US$10 billion special fund for development financing” (FOCAC Action Plan 2018).

Unfortunately, the actual agreements are bilateral and the paper trail on where exactly
the pledges go is non-existent. FOCAC meetings thus resemble a China-Africa Christmas
Party with lots of celebrations, ceremony and gratitude (from African leaders) but the pledges
remain invisible, untraceable and thus doubtful gifts.
However, China has ensured that IDA is deeply integrated into the international
system of norms and values. For example, in its official articulation, endorses all 5 UN
principles. The Global Sustainable Development Goals (SDGs) developed by the United
Nations3 aim to pick up on what the Millennium Development Goals did not achieve in
encouraging equitable global development.
China is also careful to intermesh their foreign policy objectives into the national,
regional and continental African development plans. For example, in his State of the Nation
Address in his February 2021, President Cyril Ramaphosa announced that the R100 billion
Infrastructure Fund, for which large scale Strategic Infrastructure Projects (SIPs) provide a
foundation4, was fully operational. These three SIP projects link Chinese IDA funding
through FOCAC to both funding and constructing of the SIPs, because they will also
integrate other ports and Zones in South Africa and the region to BRI. Similarly, as we will
explore, the Musina Makhado SEZ is a Zone designed to link transport and regional
industrialisation and development to the African Continental Free Trade Agreement
(AFCTA). These new articulations of South Africa’s development policy have gained traction
due to China’s redoubled efforts to establish strong bilateral relationships with African states,
South Africa in particular.
South Africa-China relations have been officially described by the Chinese
government as “comprehensive, strategic partnership”, indicating the highest level of
economic and political support that Beijing offers to emerging economies in Africa and the
Global South. The rapid increase in agreements between the two states, alongside of robust
bilateral trade became increasingly obvious after President Jacob Zuma’s visit to Beijing in
2014. While President Thabo Mbeki had emphasised a more African Centred approach to
South Africa’s Foreign development policy during his presidency years (1999 to September
2008) including his much-heralded calls for an African renaissance, after President Zuma
assumed office, clear shifts towards global partnerships, especially after joining BRICS in
September 2010.

2
Forum on China Africa Cooperation.
3
https://sustainabledevelopment.un.org/content/documents/21252030%20Agenda%20for%20Sustainable
%20Development%20web.pdf
4
https://www.iol.co.za/news/politics/sona-2021-r100bn-infrastructure-fund-is-now-in-full-operation-0db49c53-
7fdd-4160-919a-fd109e27629e
4
 As a result, as the figure 1 illustrates, Chinese FDI to Africa, and to South Africa, has
risen exponentially compared to the United States.

Figure 1

It was on the 2014 FOCAC Heads of State meeting that the particular emphasis on
cooperation on the development of Special Economic Zones was reiterated as well as the
related training for South Africa’s industrial agenda as it was called in the official
documentation (Naidoo, 2015).
According to the OEC, in 2021, China exported $20.5B to South Africa. The main
exports are Broadcasting Equipment ($1.4B), Computers ($1.18B), and Coated Flat-Rolled
Iron ($504M)5. Furthermore, according to the OEC’s most recent data, “during the last 26
years, the exports of China to South Africa have increased at an annualized rate of 14.3%,
from $637M in 1995 to $20.5B in 2021”6.
In terms of FDI, the predominant areas of Chinese capital investment expansion have
been in South Africa’s mining industry, transport infrastructure and in Special Economic
Zones. The largest capital Investment has been in the Musina Makhado Special Economic
Zone, which has been approved by government despite many environmental and livelihoods
impacts. This will be discussed briefly below.

3.1 Local Responses to Chinese Capital expansion: the case of the Musina Makhado
Special Economic Zone

5
https://oec.world/en
6
https://oec.world/en/profile/bilateral-country/chn/partner/zaf
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South Africa’s Special Economic Zones Act of 2014 has been modelled on the SEZ
investment tax haven model, and as such is a perfect example of incentives including minimal
corporate tax, customs and vat concessions, one stop shops to assist with setting up business
rapidly, greatly reduced water and electricity tariffs, and often, as mentioned earlier, a blind
eye to labour rights, regulations and the minimum wage.
However as mentioned, while the Zones are seen as major employment creators, there
are other potential drawbacks for example, SEZ guidelines on labour contracts with investors
and operators to ensure minimal production disruptions but which can also limit labour rights.
Nonetheless, until quite recently, South African labour organisations remain broadly in
favour of SEZs as a way to create large scale employment.
The Musina Makhado SEZ as a complex industrial and manufacturing metallurgical
zone fits in with the image of the creation of local, regional, continental and South led
economic and development innovation. Government, through the Department of Trade and
Industry, designated the MMSEZ in 2017. In the same year, the Department of Trade and
Industry appointed the Chinese operator, Shenzhen Hoi Mor, a Hong Kong company, from
the famous Shenzhen Zone. In the MMSEZ Master Operational Plan, Shenzhen Hoi Mor is
now referred to as the South African Energy Metallurgical Base (SAEMB). The SAEMB is
now the registered name of the Chinese Company and is the Operator of the Zone.
The MMSEZ Master Operational Plan also underlines that security and labour within
the SEZ will be tightly controlled and public oversight virtually impossible. Shenzhen Hoi
Mor, operating as the SAEMB, purport to be investing US $3.8 billion, or R55 billion. As of
the end of 2022, however, although first high-level Environmental Impact Assessment (EIA)
was approved in early 2021, despite resistance from legal environmental organisations, social
movements and activist academics, environmental organisations, such as the Centre for
Environmental Rights (CALS) have underscored that MMSEZ does not comply with the
South African state’s environmental legislation.
In response to environmental resistance, the coal plant size has been reduced, and
more recently there have been official comments as to whether it could be mothballed.
However, the approved EIA of February 2022 contains the suggested 1320 MW coal plant
along with the metallurgical industry components. A further environmental and livelihoods
problem is that the Zone has been approved for the Vhembe Biosphere. The biosphere
contains a rich diversity of flora and fauna which the Zone will impact drastically. The
mitigation referred to in the EIA does refer to the fact that environmental degradation will
take place but that this will be offset by economic growth and employment creation.
An important component of assessing the environmental, livelihoods and socio-
economic effects of communities in Vhembe has been through fieldwork research, both
during the authorization process on the Zone as well as for this chapter. Fieldwork has
entailed stakeholder interviews with key informants in both Provincial and local government
in Limpopo as well as community consultations with affected communities close to the Zone.
Affected communities, especially those close to the MMSEZ, namely, the Musina
communities and the Mudimele and Mulambwane communities, have been regularly engaged
to both inform and capacitate them as to their rights, and to understand their interests and
concerns.
Most recently, interviews and focus group meetings were organized between the 31 st
of January and the 4th of February 2023 (Mudimele Focus Group Meeting. 2 February 2023;
Musina Focus Group Meeting, 2 February, 2023). Recent fieldwork discussions with
communities has revealed that, as with previous rounds of fieldwork, that government has not
provided communities with sufficient information on the SEZs livelihoods impacts for them
to be able to make informed decisions. It is abundantly clear that communities do not

6
understand the nature of the MMSEZ and its impact on their livelihoods in the medium to
long term.
In the face of all this, we can say that the expanding economic relationship between
China and South Africa has changed the nature and ideational content of South Africa’s
Foreign Policy on the African continent, both politically and economically. While ideals of
Pan-Africanism still abound, these are scoped in “Global South, and South-South
Cooperation” lenses which place interests outside of the continent before the dreams of the
1970s through to the 1990s, of a continental community and evolving historical continuity.
South Africa, through the leadership of the Presidency, could of course be more focused in
ensuring a non-dilution of national and continental priorities. However, given the urgent need
on the continent for better transport infrastructure and for more diversified economies it is
clear that the positive financial ‘take-up’ of the benefits of South-South collaboration is too
high to dwell on the potential disadvantages of the African agenda. Thus, South African
Foreign Policy in the last decade shows a clear shift away from a continental based agenda to
a Global South agenda.

4 China in South America: Brazil and Tropical Silk Road

China-Brazil relations date back to the 1970s. In 1974, the Brazilian military government
recognized the People’s Republic of China as the sole representative of the Chinese people
and severed its ties with Taiwan. The resumption of diplomatic relations led to an important
technological and scientific partnership between the countries, namely the joint satellite
monitoring of earth resources and climate programme (CBERS).
A fundamental milestone in the dialogue between China and Brazil was the visit of
Chinese leaders to Brazil in 1993. The bilateral agreement called the Sino-Brazilian Strategic
Partnership was, on one hand, to serve their common objective of joining forces to push open
the gates of the international political-economic agenda; on the other hand, the agreement was
also anchored in China’s interest in securing access to Brazilian agricultural products and raw
materials for its rapid expansion. Brazil, for its part, aimed to preserve and strengthen the
bilateral space cooperation efforts and use the deficiencies in China’s infrastructure as a
springboard for Brazilian service exports to that country (Leão, 2011).
During a second phase of the partnership, which lasted until 1999, Brazil’s main
interest was in the Energy Cooperation Project, as it attempted to secure important contracts
for Brazilian construction companies to build dams in China. China, in turn, was more
interested in increasing the supply of iron ore from the Companhia Vale do Rio Doce (Vale)
than in hiring Brazilian companies to build hydroelectric dams. It also focused its attention on
Brazil’s potential to supply food to China, especially soy (Biato Junior, 2010).
The third phase of the strategic partnership went from the early 2000s, the time of
China’s accession to the World Trade Organization, until now. In this period, Brazilian
exports to China grew over 500%, as it took Japan’s place as Brazil’s main trade partner and
priority in the Asian region. In 2000, Brazil exported a total of US$1 billion to China. By
2014, this amount had climbed to US$40 billion and in 2021, to approximately US$70 billion.
As a result, China is now the main destination for Brazilian exports, absorbing over
one-third of Brazil’s total exports. The Joint Action Plan 2010-2014 and the Ten-Year Plan
2012-2021 (signed in 2010 and 2012, respectively), the volume of Chinese capital already
invested in Brazil and the announcement of new investments all confirm the interest of both
countries in pursuing the path of cooperation further.
During this phase, the flow of Chinese capital into Brazil increased rapidly. Data
indicate that between 2007 and 2020, Chinese companies implemented 176 projects, totalling
US$66.1 billion in investment. Brazil was the recipient of almost 50% of Chinese investments
7
in South America (Cariello, 2021). The major part is destinated to the energy sector (fossil
and renewable), followed by mining, manufacturing, agriculture, and financial services. In
terms of investment volumes, Chinese investments in Brazil are mainly led by state-owned
enterprises (SOEs).
These investments have been directed to various regions of Brazil, according to the
interests of Chinese capital. On the Brazilian coast, for example, Chinese oil companies stand
out. In the Midwest, an agribusiness zone, there is a strong presence of grain exporters. But it
is in the Amazon that the new front of China's advance has been standing out, mainly in the
purchase of land, participation in hydroelectric plants, mining, and the production of
manufactured goods.
The city of Manaus, capital of the state of Amazonas, has become the main
destination for Chinese factories. This is explained because, since the 1960s, the city has had
a Special Economic Zone: the Manaus Free Trade Zone (MFTZ), which has an area destined
for national and global factories, the Manaus Industrial Park (PIM). As a way to attract
capital, the MFTZ has a differentiated tax system, with skilled labour, but cheaper than other
industrial regions in Brazil.
In the 1970s, the dominant capital in the PIM was European and North American.
Then, in the 1980s, the Japanese capital arrived. In the 1990s, it was the turn of South Korean
capital. At the beginning of this millennium, the participation of Chinese capital in the MIP
has been increasing, jumping from only one factory in 2000 to more than 20 today.

4.1 China and the Amazon: the case of Manaus Industrial Park

The arrival of Chinese capital has not ceased being a kind of ghost haunting the region. We
say that because there were several views on what Chinese investments meant for host
countries in terms of labour relations and the impacts on the economy and production
processes. At the global level, the literature spoke of the Chinese presence as the deployment
of “bloody Taylorism”, “managerial despotism”, a “Trojan horse” and “Chinese enclaves”. At
the national level, reports claimed that 42% of the employees of Chinese companies in Brazil
quit their jobs within their first year of employment. Regionally, especially in the first years of
the arrival of Chinese capital, leaders and managers said that “the Chinese dictatorship was
coming”, “the Chinese wanted to enslave people in Manaus” and “the Chinese would not
adapt to the ZFM” (Maciel Brito, 2023).
Given this scenario, we seek to highlight what is the Chinese form of work
implemented in Manaus? And what are the impacts on local workers, even more so in a
context of managerial culture that has been dominated by the so-called "Japanese model" of
organizing capitalist production, in theory, with greater worker participation? To answer this,
we conducted field research in four Chinese factories in the Manaus Free Trade Zone, with
interviews with workers, union leaders, business leaders, public managers, labour prosecutors,
Brazilian managers, and Chinese expatriates who held various positions in the companies.
The main results are as follows.

5. The ways in which Chinese factories operate in Manaus

Our research in Manaus showed that Chinese capital uses expatriation as a way to reduce
management costs, and as a mechanism for global control of its factories. Although
expatriation is a common practice in corporate management, the Chinese way is different.
Among these differences is the number of expatriates. In many of the factories located
in Manaus, especially the European and North American ones, foreign managers have

8
minimal participation, they went to the Amazon only for training managers. In the case of the
Japanese, the percentage of expatriates in the total workforce is no more than 1%.
In the Chinese factories, expatriates represent 5% of the workforce. In state-owned
plants, expatriates represent about 10% of the total workforce. Similarly, Lee (2009) shows
for the African continent, and Cooke (2012) for India, reaching more than 25% in the Indian
case.
Another difference is the type of Chinese who are expatriates: managers, supervisory
coordinators, which indicates that the Chinese policy has been to have Chinese workers at all
stages of the manufacturing process.
Another difference is that Chinese workers who go to Manaus receive a lower salary
than a Brazilian worker in the same function (around 20% to 30% less). And since they live in
apartments shared by up to 5 expatriates (without being able to bring their families), the costs
for the companies end up being reduced even more. In these apartments, they continue to
work, having to answer to the managers who are in China. They are de facto workhouses, or
controlled dormitories (Maciel Brito, 2023).
It is interesting to note that much of this expatriation process is symbolically justified.
By this we mean that expatriates justify expatriation to themselves and to others as a way to
"make China internationally great," on the one hand, and to help their poor families who have
stayed in China, on the other. Enduring adversity and hard work is, in this context, following
a country project and a personal destiny, a way of making sense of their trajectories and also
of China's place in the world. This whole system can be understood as materially and
culturally disciplined expatriation (Maciel Brito, 2023).
There is also little understanding of the Brazilian legislation. In the conducted
interviews, they said they did not understand why Brazil has so many laws protecting
workers, and that this ends up hindering the country's progress. According to some human
resources managers of the companies and members of the judiciary, right when the Chinese
companies arrived in Manaus, in the early 2000s, there were some cases of deviations of
function of workers and overtime beyond the legal limit, resulting in labor lawsuits. For this
reason, the headquarters, in order to remedy the situation, instituted local "good manners"
consultancies to teach the expatriates Brazilian laws and to accompany the progress of the
lawsuits, which has pacified the disputes, practices, and litigations a little.
On this aspect, in our field research we did not find any formal violations of Brazilian
laws, or even complaints from workers of the type narrated above. What was verified is that
the Chinese do not grant anything beyond what is stipulated by law, cutting what was
considered a "labor benefit," not mandatory by law, but agreed upon with unions.
It is in this aspect, another characteristic of the Chinese presence in the MFTZ comes
to light, which is the low granting of benefits for workers and wages lower than the average of
other capitals, especially Japanese, South Korean, and European. In a comparison with South
Korean and Japanese companies in the television industry, the difference in labor benefits
exceeds 30%. In the motorcycle industry, the difference in wages is almost 40%, and in labor
benefits, about 30%. In the quest to cut costs, the Chinese companies surveyed have cut back
on subsidies such as childcare, dental care, and college tuition, resulting in many complaints
from our interviewees.
These data indicate the need for wage increases by the Chinese in the ZFM. Not
surprisingly, in our field research, many workers spoke of leaving the Chinese companies and
seeking jobs in those that they map as better places to work.
Another element that characterizes the Chinese way of working in the Amazon is
Matrix Taylorism, which means valuing more technical and manual labor than ideas and
worker participation. It is in this sense that, in the interviews conducted, workers reported

9
little or almost no channels for participation, encouragement, ways of listening to the worker
or treating them in a more interactive way.
We mean, then, that Chinese management departs from what has become known as
the Japanese model. In the Chinese model, the managers end up being responsible for
thinking, and the workers, for executing. Changing to something more participative, as the
workers complain, is made even more difficult by the fact that the Chinese managers are
expatriate workers, which has implied linguistic and cultural problems in the relationship with
the worker.
Allied to Matrix Taylorism, we see the return of direct supervision over workers.
According to the Taylorist vision of production organization, the worker had to be supervised
face-to-face because he had a tendency to slowness and idleness. In the Japanese model this
changed under the discourse that the worker has "autonomy", with "indirect supervision" in its
place, with control exercised in the subjective bias, internalized as pressure for more work.
The field research showed that the Chinese institute direct supervision, as in a kind of
return to Taylorism, but with new nuances: a direct global control. With investments now
expanding, control is exercised from China. In practice, the head office supervises the
manager, who supervises the technicians, who supervise the operator.
Therefore, control is more than managerial; it is matrix, because the Chinese managers
that are in China see what happens on the factory floor in Manaus, pressuring the expatriates
for more results, making the worker more subject to pressure not only from the local
company, but directly from the headquarters. It is a supervision that comes from above, from
the political/social form of the country, as an administrative political science, and not as an
administration/organization science.

5.1 Production chains “with Chinese characteristics”

Allied to this is the transfer of assembly lines from China to Manaus. We say this
because a good part of the production structure is imported from the headquarters. In this
system, supervisors are displaced to visualize if the process is being well adapted or not. In
practice, the management discourse to the workers is that production lines that "work well" in
China should also work well in Manaus. Thus, direct supervision works in such a way as to
make the Chinese rhythm of production in the headquarters also be effective in Manaus.
This is why we can say that the Chinese factories move to the Amazon, but are
umbilically linked to their country in all aspects of production. They are regionalized, but not
deterritorialized. They reproduce practices from their home territory in their subsidiaries.
They do not make an international division of labor, as in the Western model (center-
periphery). Chinese expansion is, therefore, a global project, but with strong roots in China.
This is explained by the fact that in the country, production processes of low and high
technological development coexist, with robotized production lines, but also those with a high
demand for manual labor. In light of this, Chinese factories abroad are still, in many aspects, a
"copy" of what happens in China itself.
This becomes even more evident when we look inside the production system of these
factories that arrive in the Amazon. In the companies studied, about 90% of the imported
inputs come from China. That is, the Chinese produce in Manaus those products which have
already been, to a great extent, pre-produced in China. With low prices and cutting-edge
technology, this inputs production chain becomes the manufacturing standard not only for
Chinese factories, but also for other factories in the MFTZ that, in order to survive, end up
following the Chinese wave, contributing to the process of deindustrialization in Brazil.

10
 Thus, what is evident is that there is a global coordination of the production chain by
the Chinese capital, which makes it in a way that little is actually made in Manaus. In general,
they are just assembled products. This is important to point out because, in the 1980s and
1990s, there was some industrialization in the Manaus Free Trade Zone, with engineering
sectors developing products and processes. Currently, due to the "Chinese cost", this has
changed. The companies sought to reduce costs and found this way out in China. This is true
on one side of the coin. On the other side, the Chinese factories have reproduced and
deepened this trend. In a Chinese company that was researched, which manufactures
motorcycles, the import of inputs is 85%, while in a Japanese company, this rate is less than
30%.
The fact is that this is not just a "production issue", rather, it is about how are we are
developing (or not) the Amazon. Technology-importing, assembly-only factories do not
create better-paying, higher-skilled jobs. They do not require greater skills or engender local
research and innovation for their products and processes. In short, they do not generate long-
term wealth in the region. In this respect, the Chinese model of production in the MFTZ also
ends up not being a differentiator, with some positive balance (besides jobs), as Lee (2017)
saw in parts of Africa. In the Amazon, there actually end up being setbacks.

5.2 Rootless Chinese factories in the Amazon?

In this context, these limitations and setbacks are difficult to change because Chinese
factories, with their strong ties to headquarters, rigid organizational structure based on
controlled expatriation, and being engaged in the Chinese national project, end up becoming
nationally imbricated and inflexible. In the case of research by Lee (2017) in Zambia and
Tanzania, this aspect, according to the author, is different because China has a large
dependence on copper from the region and the historical support of these countries for the
issue involving Taiwan. So, this would make Chinese capital more "flexible" than Western
capital.
This is not what we observed in the South Africa case study, discussed earlier, nor in
the Amazon case study. In Manaus, for example, without political and geostrategic needs in
the relationship with the MFTZ, without a great history of relationship with the local, and
faced with the inability of local managers to bargain with the headquarters - because they
have not yet found a reasonable way of bargaining - Chinese capital behaves in an inflexible
manner.
As a result, it is evident that the Chinese factories in the Amazon are more connected
to China than to Manaus, creating difficulties in relationships with unions, workers, and local
suppliers. The result is a set of factory sites that are few rooted, less flexible, without much
negotiation, and almost independent of supplies in the city, with no political agenda in the
investments, and no needs that engender local ties.
Given this, the Chinese presence has become more a "Made in China" than a
"Produced in Manaus", without much long-term gain for a possible industrialization in the
Amazon region.

6. Approximations and distancing between the Chinese presence in South Africa and
Brazil

When we compare the presence of Chinese capital in South Africa and Brazil, some
issues are closer, while others are farther apart, but all converge in the same direction: the
weight of China in the economies of these countries.

11
 Both countries, South Africa and Brazil, share a common past of underdevelopment
and search for overcoming economic backwardness. They are still largely exporters of
commodities and primary products. Both have also experienced dependence on the rich
Western (colonial) countries and their international organizations, such as the IMF and the
World Bank, and have had problems with external indebtedness. Besides this, especially
today, both countries share a certain "South-South" vision of the world, as a way of re-
signifying their role in the new global economy, understanding that there is a possibility of the
world power chess changing towards a multipolarity. That is why they participate in the
BRICS, and see China on the horizon of their bilateral relationship possibilities and possible
economic and industrial outlets.
Despite this, there are important differences between the two countries, and the case
studies also helped to show this.
First, the Chinese influence in South Africa is older than in Brazil. In fact, it is not
only older, but also deeper and broader. We may say that it has a continental spectrum
throughout Africa. In South America, until recently, the U.S. was much stronger in the
Brazilian economy, and in South America in general, than China.
In South Africa, not only did China become the country's main trading partner, but it
also began to influence its government, diplomacy, and the South African Congress itself. To
some extent, at least in institutional terms, China had the same weight over South Africa as
the US had over Brazil at the end of the twentieth century.
There is another fundamental difference. China's effective state presence in Brazil
began in the 2010s, with massive investments in the petroleum, mining, hydroelectric, and
even banking sectors. In South Africa, Chinese state investments began earlier, in the early
2000s, with direct involvement in the direction of the South African economy, for example,
through the purchase of shares of Industrial Bank S.A. by the Chinese state-owned Industrial
& Commercial Bank of China.
In terms of types of investments and economic influence, there are other important
differences. In the case of South Africa, the focus has been on the creation of SEZs, with a
strong state presence, which is explained by the greater political appeal of the investments, as
we discussed in the South African case study section. Loans issued by Chinese banks are
leading the country into debt. In Brazil, the focal point is a diversification of investments
across sectors, regions, and by type of capital, ranging from private to state-owned. Having
created international reserves of more than $300 billion, Brazil has managed to stay further
away from the "Chinese debt trap".
When it comes to the creation of SEZs, we observe relevant specificities of the two
countries. In Brazil, this process took place in the late 1960s, due to the need for the
expansion of Western capital (which then went to China and created the Shenzhen SEZ in the
early 1980s) and the desire of Brazil's military dictatorship to integrate the Amazon into the
country’s economy. The MFTZ is a result of this. It was idealized – like other ZEEs of that
period – by the UN7 and has received investments from several countries in the world with the
purpose of selling in the Brazilian domestic market.
The South African SEZs, in turn, are recent, from 2014 onwards, mostly induced by
China. As we have seen, they were born under Chinese influence, are export-oriented,
associated with the Belt and Road Initiative, and most of the companies installed there are
Chinese.
A common feature of the SEZs is the fact that the local elites justified this
development model with the discourse of "job creation". In Manaus, when the Chinese capital
arrived, there was a certain fear about what its behavior would be. But with the Brazilian

7
Through recommendations made by the United Nations Industrial Development Organization (UNIDO).
12
economic crisis from 2014 onward, the discourse changed. The Chinese began to be seen as a
lifeline for the MFTZ model. Today, there are commissions from the Amazonas government
itself to attract investments from the Asian country.
Finally, it is worth noting the specificities of South Africa and Brazil with respect to
the social impacts of the arrival of Chinese capital. Among these, it is clear that the labour
issue is a common topic, with difficulties for Chinese companies to comply with legal
determinations or to grant benefits beyond those provided by law.
The environmental and local subsistence element also stands out. In Manaus, since
the MFTZ is geared toward manufacturing industries and one of the requirements is that the
industries must not pollute, the Chinese have not suffered this type of accusation, something
that has happened in investments in hydroelectric plants and land purchases by China in other
parts of the Amazon, especially in areas with indigenous populations. In South Africa,
accusations of subsoil contamination, air pollution, and impacts on fauna and flora have been
highlighted in this chapter, and show that Chinese capital, like Western capital, has been
environmentally and socially predatory.

7. Conclusion

The central issue of this chapter was to investigate Chinese investments in South Africa and
Brazil, to indicate the specifics of this in each country, and to point out the similarities in
terms of social and economic impacts. We conclude that the Chinese presence has altered the
economies of these countries in different ways, making the issue of the "South-South" agenda
more of a desire or discourse than a reality, yet.
These cases show us that, within the capitalist mode of accumulation, which
systemically extract value from labour and nature, South-South investments do not provide a
concrete alternative for workers, communities and the environment on the ground. It is not to
say that China is “good or evel”, but to reinforce our role, as labour and social movements,
academics, etc, to pressure public officials and state institutions to fight for better terms in
relations with foreign investors, to achieve better living conditions for the working classes, in
a balanced way with nature.
Countries of the Global South, like Brazil and South Africa, need to exchange more
and elaborate common strategies to negotiate with China and extract the best out of it. South-
South technology transfer and strategic effective cooperation in areas such as health,
environment, agriculture, energy, would be fundamental for achieving better social and labour
conditions for the majority of our populations. Otherwise, we run the risk of having a
situation "like a dragon in a China shop”, that is, having countries of lesser strength than
China vulnerable to its gravitational effect. This is further aggravated because it cannot be
ruled out that the division between the countries of the South can of interest to the China, as it
might be more advantageous for China to negotiate individually. Many of the social and
economic limitations that we showed in the field studies, such as labor, environmental, and
industrial issues, and little strength to stand up to Chinese capital, are a result of this.
The South-South agenda, therefore, needs to be more Southern and less Chinese. Of
course, the ideological bias of the "Global South" is important to create an identity and unity
among developing countries, but only up to that point. After a certain point, one should look
at China with a certain pragmatism/realism, even using the Chinese dispute with the US and
Europe to bargain advantages, with one detail in mind: just as the "West" was a creation for
colonization, the "Global South" needs to be a creation for economic decolonization, and this
implies relativizing the "liberating" character and the undisputed leadership of China.

13
 Without this, the South-South agenda will cease to have a transformative role and will
end up becoming a South-China agenda, repeating the history of subordination on this side of
the world.

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