Rethinking Investments in Natural Resources: China’s Emerging Role in the Mekong Region

The report examines China's increasing influence in the Mekong region through its 'Going Global' strategy, which drives demand for natural resources. It analyzes how Chinese foreign direct investment (FDI), trade, and official development assistance (ODA) operate in Cambodia, Laos, and Vietnam, highlighting a shift where Chinese financiers fill the vacuum left by International Financial Institutions. The study finds that while China is a dominant investor in Laos and Cambodia across agribusiness, hydropower, and mining, its role in Vietnam is primarily as a trading partner, with investment concentrated in mining. The report warns that poor implementation of local regulations and a lack of adherence to international social and environmental standards by Chinese state-owned enterprises pose significant risks to the region's ecosystems and communities.

• China's 'Going Global' (or 'Going Out') Strategy is designed to secure natural resources globally and regionally, supported by financial subsidies and the role of agencies like the China Export Import (Exim) Bank and Sinosure.
• Chinese investment banks and companies are filling an investment vacuum in the Mekong region created by the partial withdrawal of International Financial Institutions (IFIs) like the World Bank and ADB, which avoid controversial mega-projects due to strict environmental and social standards.
• The trade relationship between China and the three Mekong countries is characterized by China importing raw materials and agricultural goods while exporting manufactured goods, often of low quality.
• In Lao PDR, China has become a primary investor, particularly in hydropower and rubber. The government's 'opium replacement scheme' has been used to encourage Chinese investment in cash crops and other sectors.
• China's role in Vietnam is primarily as a leading trading partner rather than a top investor; Chinese FDI is most significant in the mining sector, while Vietnam is a regional leader in hydropower and mining itself.
• In Cambodia, China is a dominant player in hydropower, with the $260 million Kamchay dam led by Sinohydro being the country's largest foreign investment project.
• Informal and illegal trade in commodities, such as coal and rubber in Vietnam and timber and gold in Cambodia, is widespread and often involves Chinese companies and local corruption.
• There is a significant gap between the formal investment regulations of the host countries and their actual implementation, which increases environmental and social risks.
• Chinese state-owned enterprises, such as Sinohydro and China Nonferrous Metals International Mining Co. Ltd. (CNMIC), are key drivers of resource extraction in the region but often have poor social and environmental track records.

APA

Rutherford, J., Lazarus, K., & Kelley, S. (2008). Rethinking Investments in Natural Resources: China’s Emerging Role in the Mekong Region. International Institute for Sustainable Development. https://www.iisd.org/system/files/publications/trade_china_study.pdf

Chicago

Rutherford, Jeff, Kate Lazarus, and Shawn Kelley. Rethinking Investments in Natural Resources: China’s Emerging Role in the Mekong Region. International Institute for Sustainable Development, 2008. https://www.iisd.org/system/files/publications/trade_china_study.pdf.

Wikipedia

{{cite report |last1=Rutherford |first1=Jeff |last2=Lazarus |first2=Kate |last3=Kelley |first3=Shawn |title=Rethinking Investments in Natural Resources: China’s Emerging Role in the Mekong Region |publisher=International Institute for Sustainable Development |date=2008 |url=https://www.iisd.org/system/files/publications/trade_china_study.pdf |access-date=23 October 2026 |via=Climate Insights Directory}}

BibTeX

@techreport{rutherford2008rethinking, author = {Rutherford, Jeff and Lazarus, Kate and Kelley, Shawn}, title = {{Rethinking Investments in Natural Resources: China’s Emerging Role in the Mekong Region}}, institution = {International Institute for Sustainable Development}, year = {2008}, url = {https://www.iisd.org/system/files/publications/trade_china_study.pdf}, urldate = {2026-10-23}, note = {Indexed by Climate Insights Directory} }