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Lunch at the site of the future Ramu nickel and cobalt mine in the remote hills of Papua New Guinea is a hurried affair, food shoveled into eager mouths. But the menu is as divided as the two distinct groups of workers squatting in the heat, swatting away flies and filling their bellies before their nine-hour, seven-day-a-week shifts begin again. In one huddle are local laborers chewing chunks of sweet potato and the canned fish known in pidgin dialect as tinpis. In another clump are imported workers from China who dig into rice topped with pork belly and chili – black bean sauce. The Chinese, who were shipped in by the state-owned China Metallurgical Group Corp. that has invested $1.4 billion into this faraway outpost, can understand neither English nor pidgin, two of the national languages. The Papua New Guineans speak no Mandarin. Even at mealtime, an event during which both cultures would normally encourage community and hospitality, the air is weighted by mutual incomprehension. "How can we eat together if everything about us is different?" asks Shen Jilei, whose first overseas experience transferred him directly from China's Sichuan province to a South Pacific nation he hadn't even known existed.

Notes of culture clash ring everywhere I wander in the vast construction zones that by the end of this year will turn a pristine stretch of virgin forest and grassland into one of the world's largest nickel-extraction sites. On the palm-fringed coast of Basamuk Bay, where the Ramu refinery will be situated, a chatty Beijing-born building engineer tells me that before the Chinese arrived, "the natives were completely uncivilized and running around almost naked." I voice my doubts, telling him that I've just talked to a nearby villager who described a PowerPoint presentation she recently made detailing environmental concerns about the mine. The engineer, like many other Chinese I meet, remains unimpressed. "All they do is chew betel nut and act lazy," he says. "They don't know how to work hard like we Chinese do."

The impression the Chinese have left on many P.N.G. nationals isn't much better. A local landowner whose ancestral territory lies in the middle of the mine site alleges, improbably, that the nickel will be used to feed a secret Chinese weapons program. In the capital Port Moresby, my driver announces that if a gang to evict Chinese from P.N.G. is formed, he will be the first to join. "I will sharpen my bush knife and chop 10 or 20 heads," he says. The unease about Chinese influence extends to government circles, even if the Ramu mine promises to add 8 percentage points to the country's GDP. "I know the Chinese are going out everywhere in the world and investing successfully," says Rona Nadile, an assistant secretary of labor and industrial relations. "But what I don't understand is why are they are so stubborn to not respect our local culture. We are a democracy. They have to play by our rules or we will rise up."

Mixed Blessings
When China began its global investment push in the early part of this century, the flood of new money was welcomed, particularly in those parts of Asia, Africa and Latin America that felt abandoned by the West. China's promise not to politicize aid and investment by attaching pesky conditions like improved human rights pleased many governments. Between 2003 and 2008, Chinese direct investment overseas skyrocketed — rising from $75 million to $5.5 billion in Africa, 1 billion to $3.7 billion in Latin America and jumping from $1.5 billion to $43.5 billion in Asia. The People's Republic now ranks as the No. 1 foreign investor in countries as diverse as Sudan and Cambodia. In exchange for the natural resources needed to feed China's economic engine, Beijing began an assiduous campaign to win foreign hearts and minds by financing stadiums, hospitals and lavish government offices. The Foreign Ministry in East Timor was built courtesy of the Chinese, while Guinea-Bissau's marble-accented parliament building was a gift from Beijing.

Some countries, however, are no longer as willing to extend a red carpet toward the globetrotting Chinese. Although political strings might not come with Beijing's cash, there are economic catches. The roads, mines and other infrastructure on offer are most often built by armies of imported Chinese labor, cutting down on the net financial benefit to recipient nations. Chinese companies investing abroad also tend to ship in nearly everything used on building sites, from packs of dehydrated noodles to the telltale pink-hued Chinese toilet paper. It's not only the contracted Chinese workers who show up, either. Within a few years, their relatives invariably seem to materialize to set up shops selling cheap Chinese goods that threaten the livelihood of indigenous entrepreneurs. Locals who do get work on Chinese-funded projects complain that their bosses don't heed national labor laws ensuring minimum wage or trade-union protection. Over the past three years, anti-Chinese riots have erupted everywhere from the Solomon Islands and Zambia to Tonga and Lesotho. Tensions are also simmering in India, where the Chinese are involved in several major infrastructure projects. Even high-level officials are speaking up. In Vietnam, plans for a $140 million Chinese-operated open-pit bauxite mine were publicly excoriated by none other than revolutionary hero General Vo Nguyen Giap because, he said, of "the serious risk to the natural and social environment."

An Island Apart
Nestled in one of the most backward parts of one of the world's least developed nations, the Ramu mine has emerged as an acute example of resentment against China Inc. In 2004 P.N.G. Prime Minister Michael Somare returned home from Beijing, triumphant at having snared the country's largest foreign-investment project to date. The euphoria was short-lived. Landowners brandished slingshots and announced they wouldn't sign off on their tribal territory being used for mineral extraction, no matter what document was signed in China's Great Hall of the People. Environmentalists cried foul over plans to deposit mine waste in the sparkling Basamuk Bay, while local workers protested conditions that even P.N.G.'s Minister for Labor and Industrial Relations David Tibu described as slavelike and "not fit for pigs or dogs." Skirmishes repeatedly broke out between villagers and the 1,500-plus imported Chinese laborers, some of whom were working illegally in P.N.G. At the same time, anger has boiled over because of an influx of thousands of Chinese who over the past couple of years have monopolized businesses that by law should be reserved for P.N.G. nationals. In May, anti-Chinese riots convulsed cities nationwide, and several people were killed amid the looting of Chinese-owned shops. "Our timber, our minerals, everything, goes to China," says Damien Ase, founder of the nonprofit Centre for Environmental Law and Community Rights in Port Moresby. "But we get so little in return."

For many Papua New Guineans, it's not surprising that their nation stands on the front lines of China's global campaign. Located on the eastern half of the world's second largest island, P.N.G. is the most linguistically diverse region of the world, with at least 800 distinct local languages spoken by just 6.5 million people. Yet despite the tribal diversity, the nation is unified in at least one aspect: suspicion of foreign exploitation of its plentiful resources, ranging from natural gas and timber to fisheries and gold. Tensions exploded in the 1990s on the P.N.G. island of Bougainville, where concerns over the environmental and economic effects of an Anglo-Australian-run copper mine sparked a secessionist struggle that claimed 15,000 lives over the course of a decade. (The mine, one of the world's largest open-pit sites, is now closed as a result of the civil war, which officially ended in 2000.) Separately, the national government was forced to declare a state of emergency in Southern Highlands province three years ago when protests over a multinational consortium's proposed gas pipeline reached a crescendo. (The project has since stalled.)

The Ramu site had lain dormant for four decades, as a series of Australian firms calculated that the low-grade nickel wasn't worth extracting in such a remote area rife with shifting clan allegiances. But Ramu NiCo, the subsidiary of China Metallurgical Group that has developed the mine, thought it could succeed where others were afraid to try. In 2007, Ramu NiCo dispatched battalions of Chinese workers, who macheted their way through dense foliage and built a mirage-like Chinatown where elephant grass and kwila trees used to be. Today, in what was a malarial stretch of hills and valley, huge dormitories, offices and processing plants dot the landscape, along with a 135-km slurry pipeline that snakes its way from Ramu to the coast at Basamuk. (From Basamuk, ships laden with nickel and cobalt will sail to China.) Last December, Ramu NiCo unveiled the first-ever bridge over the Ramu River, eliminating the need for a perilous canoe crossing. The company also paved a ribbon of concrete through the forest, one of the few roads in a tropical country where asphalt is almost as rare as snow. Although the project has displaced thousands of landowners, it has also provided badly needed infrastructure to the area. What just a few years ago was a 10-hour bush walk from the mine site to the river has now been cut to a 30-minute drive.

A Growing Backlash
Roads and bridges aren't enough to placate locals, whose tenacious attachment to their ancestral land is mystifying to Chinese schooled in the communist principle of state ownership. At Ganglau village, a collection of shacks fronting a bay teeming with dolphins and tuna, community elder Mou Bilang complains that most villagers haven't been compensated for the loss of land once used to plant cash crops, save a $125 "dust payment" issued as an apology for the dirt the project has kicked up. "The Chinese promised us free electricity, free water supply, free job training for our boys," Bilang tells me. "But they have delivered nothing." Tensions reached a crisis point five months ago, when a local youth was accidentally injured by a Chinese-driven tractor. More than 100 villagers went on the rampage, targeting the Chinese with stones and bush knives. The foreigners defended themselves with welding torches, but three were so gravely injured — one had his stomach sliced open — that they had to be airlifted to a hospital.

In July, relations reached a new nadir when P.N.G.'s chief mines inspector ordered all construction on the Ramu NiCo sites to be shut down because of significant health-and-safety concerns. Work ceased for a month before "noticeable progress" by Ramu NiCo convinced the government to allow construction to continue. The dispute echoed another flare-up that erupted last year when locals armed with slingshots critically injured another three Chinese workers over what the P.N.G. nationals considered to be workplace apartheid: everything, from their food and toilets to salaries and dormitories, they alleged, was far inferior to those of the Chinese workers. "The Chinese think we are animals," says a welder named Nenge, who refuses to give me his full name lest he get fired from his job. "No days off, sometimes tinned fish for overtime pay, dirty latrines with a bad smell. How can they respect themselves after treating us so poorly?"

Labor issues are compounded by environmental concerns voiced by international academics. The Australia-based Mineral Policy Institute believes that Ramu NiCo's assurances about mine-waste disposal in the Basamuk Bay not poisoning the fish-rich waters are based on "fatally flawed" data. (Other Chinese companies have been accused of importing vast amounts of illegal timber from P.N.G.'s dwindling forests, even as Beijing tries to protect its own natural bounty by cracking down on illicit logging at home.) "With other countries, we try to make foreign companies accountable by lobbying shareholders or raising public awareness in that country," says Matilda Koma, who runs an ecological watchdog called the Centre for Environmental and Research Development in Port Moresby. "But with China, the state and the company are the same and the public doesn't have much voice — so who can we complain to?"

The Trying Game
To its credit, Ramu Nico has done far more than the average Chinese state-owned enterprise to repair its image and court community approval. Unlike most other Chinese firms, the company responds promptly to international press queries and has published a comprehensive project sustainability report. Ramu NiCo has an English-language website that bandies about the proper catchphrases for a FORTUNE 500 subsidiary: sustainable development, competitive benefits, cross-cultural human resources. The glass-sheathed Ramu NiCo headquarters in the town of Madang, where the fastest pace of life is set by swarms of flying foxes, boasts human-resources and health-and-safety departments. (At four stories, it is the tallest building in town.) Ramu NiCo has expanded several schools and health centers in mine-affected areas and sent P.N.G. engineers on training courses to China. Remarkably for a company owned by the officially atheist Chinese communist state, Ramu NiCo has even funded church activities.

Most notably, the company has agreed to a 2.5% ownership stake in the mine for a group of local landowners, although many others say they have been iced out of the deal. "For Chinese and Papua New Guineans, who are from such different cultures, it will naturally take some time for us to truly understand each other, and sometimes it is not easy," says Wu Xuefeng, deputy general manager at Ramu NiCo. "Our proposal to tackle all these challenges is to address them within our overall sustainability development framework, [and] we are glad that we have been improving along the way and that our linkage with the community has been strengthening." Wu also correctly notes that the obstacles his company has faced are "largely the same sort that most of the international mining companies have faced in P.N.G."

But new classrooms and small ownership stakes don't fully solve the land-compensation issue or another major point of contention: the fact that so many Chinese have descended on P.N.G. — many illegally. Last November, in a low point for Sino-P.N.G. diplomacy, the police raided the construction sites at Basamuk and Ramu and arrested 223 Chinese for immigration violations. The foreign workers, it turned out, had entered on visas that prohibited employment. Ramu NiCo, in turn, complained that government bureaucracy was so slow that getting the proper paperwork would have taken years so they were forced to circumvent the rules. But there were other infractions. Local regulations specify that foreigners can only work in jobs that locals cannot perform and that they must be able to speak either English or pidgin. Most of the Chinese workers couldn't speak a word of either language.

Still, the P.N.G. government didn't want to risk derailing such a major investment. A compromise was reached, part of which required the Chinese working at the mine to attend English-language classes. Yet not a single Chinese I spoke to at Ramu or Basamuk said they had ever attended any of these language courses. Furthermore, despite assurances that the Chinese working on-site were only engineers or other specialists, I saw Chinese sweeping up construction debris and doing other menial labor that locals could surely do.

Discrepancies between national immigration policy and local reality are acknowledged even by P.N.G.'s Department of Labor and Industrial Relations. Assistant secretary Nadile bluntly tells me she suspects that most Chinese who entered the country have done so without the necessary visas and work permits. Today, in major cities across P.N.G., the vast majority of so-called kai bars, or fast-food restaurants, are run by recent Chinese immigrants, as are nearly all the grocery stores. But few Chinese have the correct papers to run such businesses. I ask Nadile if she can tell me of a place nearby that she suspects is being run illegally. She takes me to an office window overlooking Port Moresby and points at two low-slung kai bars located within a minute's walk from the government office: the Rickshaw and the Noodle Shop.

Later I visit the Rickshaw and meet its affable owner Liu Lianghua. The tale he tells is like a caricature of the Chinese immigrant story. His in-laws moved to P.N.G. over a decade ago because they had some family who had settled there previously. Liu eventually followed with his family. Several other relatives joined them after that. More than a dozen members of Liu's family now live in P.N.G. The downtown building in which the Rickshaw is located also has a clothing shop, a variety store, a gaming bar and another eatery, all run by Chinese. When I ask about visas, he laughs and says immigration issues are not a problem in Papua New Guinea. "The locals don't know how to do trade, and the government knows that," says Liu. "If locals get money, they spend it immediately on liquor. The Chinese don't come here to enjoy life. We only come to make money."

Strange Bedfellows
In Papua New Guinea, at least, normal citizens can express their reservations about Chinese investment. But in many of the countries where China has made its biggest business forays, such democratic dissent is squelched by repressive governments that are taking the lion's share of any investment profits. Still, tensions can bubble up in surprising ways. In July, an al-Qaeda wing in North Africa vowed to target Chinese immigrants living there as revenge for the recent ethnic strife in China's largely Muslim Xinjiang region. The next month, riots against Chinese traders broke out in the Algerian capital Algiers, where residents accused the foreigners of failing to respect Islam. Last year, nine Chinese oil workers living near the Darfur area of Sudan were kidnapped by an unknown group. Five were later killed. An international trade embargo because of the unfolding genocide in Darfur may have kept most other foreign investors out of Sudan, but China consumes more than 60% of Sudanese oil. For a government keen on keeping economics and politics separate, Beijing is finding that the two have a nasty habit of intertwining. China is also learning that it can't keep a lid on political scandals overseas as easily as it can clamp down on information back home. In P.N.G., for instance, the local press has widely covered a government investigation into claims that corrupt local officials allowed Chinese immigrants to buy passports. In May Prime Minister Somare went so far as to implicate the immigration department, commenting, "We know some are saying, 'You give me a six-pack [of beer], and I'll give you a passport.'"

An even more sensitive case turned up in July. Namibian prosecutors are charging representatives connected to a Chinese state-owned manufacturer of security scanners with bribing local officials to win a $55 million contract in 2008. Until last year, the head of the company, Nuctech, was none other than Hu Haifeng, the son of China's President Hu Jintao. Although the younger Hu has not been publicly implicated in the case, Chinese censors quickly squelched news stories on the bust within China. (Separately, E.U. officials are also investigating whether Nuctech engaged in illegal activity in Europe.)

Still, for all the controversy surrounding the influx of Chinese money in Africa, Latin America and Asia, the truth is that the vast majority of Chinese working abroad aren't going to go home rich. Driving up to the Ramu mine site, I stopped the car at an incongruous sight: against a backdrop of rain forest, a lone Chinese man perched on a piece of cardboard overseeing a crew of local workers struggling in the sun to sheath a pipeline with insulation tape. There was a feudal tinge to the scene, but the life of Chen Ming, the Sichuan-born supervisor, is hardly idyllic. He has been in P.N.G. for 18 months, working seven days a week, though he sees little point in holidays "because there's nothing to do here." By the time he finishes paying hefty deductions for his room and board, he makes less than he would at an equivalent job back home. But unemployment is rising in China, and Chen struggled for months to find alternative work back home. "It's not a good job, but what else can I do?" he asks, fanning himself with the strip of cardboard. "I have to eat and send money home." For Chen and the other workers — Chinese as well as Papua New Guinean — toiling deep in the bush, all they can ask for is survival. But the big Chinese firms, and the local governments they support — they expect nothing less than the kind of fortunes that will reshape the world.

• Hannah Beech / Ramu
• The spreading reach of Chinese companies in poor nations is sparking a backlash against the way they do business