China’s trade safari in Africa

Jean-Christophe Servant – Le Monde Diplomatique

China first became involved in Africa during the cold war, when
it made friends and did business in parts of the world
overlooked by the West and the Soviet Union. Its investment is
paying off now in oil and raw material imports and markets for
manufactured goods.
by Jean-Christophe Servant
___________________________________________________________
SOME of the Chinese officials who visited Angola’s president,
José Eduardo dos Santos, last December, must have been
embarrassed. Nine months before, China’s export bank,
Eximbank, had approved a $2bn line of credit to enable Angola
to reconstruct infrastructure – including electricity,
railways and administrative buildings – destroyed during 30
years of civil war. In return China would receive 10,000
barrels of oil a day. But just a few days before the visit,
the British watchdog on transparency, Global Witness,
announced that the money was in danger of being diverted to
other uses.
Some of the money went to fund government propaganda for the
2006 general election. On 9 December Chinese pressure forced
the business go-between Antonio Pereira Mendes de Campos Van
Dunem to resign from his post as secretary of the Angolan
council of ministers. In a moment of weakness Chinese
business had forgotten a basic principle of its long march
into Africa: never get mixed up in the internal politics of
countries with which it deals. But there was little danger
that this momentary moral qualm, no doubt explained away as a
sop to international investors in a notoriously corrupt
country, would slow the pace of dealings between China and
Africa.
China originally broke off relations with newly independent
Angola, regarding it as too close to the Soviet Union. Thirty
years later it has rectified this mistake. The former
Portuguese colony has become China’s second-largest
commercial partner in Africa and exports 25% of its oil
production to China. Direct flights to Beijing are being
discussed, as is the establishment of a Chinatown in Luanda
as a home for Asian managers.
The line of credit – at 1.5% over 17 years – might look
disadvantageous to China in the short term, but Chinese
companies will secure the lion’s share of lucrative contracts
for national reconstruction. Local people are unhappy. As
independent economist José Cerqueira pointed out: “There is a
condition in the loan that 30% will be subcontracted to
Angolan firms, but that still leaves 70% which will not.
Angolan businessmen are very worried about this, because they
don’t get the business, and the construction sector is one in
which Angolans hope they can find work” (1).
Times have changed and pragmatism has overcome ideological
rhetoric in Beijing, where foreign trade and economic
cooperation portfolios are handled by a single ministry.
Until the mid-1970s cooperation meant building solidarity
between two continents that belonged to the same
under-developed world. The Chinese presence in Africa was
typified by technicians sent to boost nations newly liberated
from colonial tutelage; some 15,000 doctors and more than
10,000 agricultural engineers went to areas of the third
world that had become arenas for the cold war.
In its role as an anti-imperialist counterweight to the West,
China infiltrated parts of the world overlooked by the United
States and the Soviet Union. It took on ambitious projects,
such as the construction of the Tanzam railway between
Tanzania and Zambia, and concluded agreements for military
cooperation, concentrating on ideological friends in east
Africa (Ethiopia, Uganda, Tanzania, Zambia) and major
non-aligned countries such as Egypt. Between 1955 and 1977
China sold $142m of military equipment to Africa. It also
threw open the doors of its universities: 15,000 African
students have studied in China since their countries became
independent.
In 1977 trade between China and Africa reached a record
$817m. Throughout the 1980s, when the big cold war powers
were pulling out of Africa and western development aid
halved, China kept up its contacts. But it had packed away
its revolution to concentrate on fostering external trade and
foreign investment. By the time that post-cold war
geopolitics and developments in the Middle East had drawn the
traditional players back into Africa, China had turned itself
into the workshop of the world and had its eye on Africa’s
raw materials.
China is now the world’s second largest consumer of crude
oil, bringing in more than 25% of its oil imports from the
Gulf of Guinea and Sudan. Its thirst is limitless: by 2020 it
will be forced to supply 60% of its energy needs from abroad,
even from nations such as Chad that have maintained
diplomatic relations with Taiwan (2). Although in 2004 only
2% of Chinese trade was with Africa, the continent has done
particularly well as China has opened up to the world: during
the 1990s Sino-African trade grew by 700% (3) and since the
first China-Africa Forum (4) in Beijing in 2000, more than 40
agreements have been signed, doubling trade to more than
$20bn over the four years to the end of 2004. By the end of
2005, China is expected to become Africa’s third most
important trading partner, behind the US and France and ahead
of the UK. Long experience of projects with the World Bank
will help build a “presence in Africa [that] is illustrative
of Beijing’s efforts to create a paradigm of globalisation
that favours China” (5).
The 674 Chinese state companies involved in Africa have
invested not only in booming sectors such as mines, fishing,
precious woods and telecommunications, but also in others
that the West has neglected, even abandoned, as less
profitable. As a result, Zambia’s Chambezi copper mines are
being worked again and supposedly exhausted oil reserves in
Gabon are being explored. In 2004 Chinese investments
represented more than $900m of the $15bn of foreign direct
investment (FDI) in Africa. Of the thousands of projects
under way, 500 are being exclusively directed by the China
Road and Bridge Corporation, a state enterprise, helping to
place 43 Chinese companies among the 225 global leaders in
the area. In Ethiopia China is involved in
telecommunications; in the Democratic Republic of Congo it
has done work for Gecamine, the state-owned mining company;
in Kenya it has repaired the road linking Mombasa and
Nairobi; and it has launched Nigeria’s first space satellite.
As an incentive to Chinese nationals, eight African countries
have been officially designated tourist destinations.
Beside this economic and commercial offensive there has been
intense diplomatic activity. President Hu Jintao has made a
much-publicised visit to Gabon since he came to power in
March 2003. China’s ministries of trade and foreign affairs,
both of which have African sections, have sponsored 100
official meetings. In countries where relations with the West
are problematic, China is benefiting from its policy of
non-involvement in internal politics. Its relationship with
Sudan, condemned by the United Nations over the situation in
Darfur, is emblematic of a strategy untroubled by ethical
considerations.
He Wenping is deputy director of the Department of
International Relations in the African Studies Section of the
Chinese Academy of Social Sciences in Beijing. “Common sense
about human rights and sovereignty is only one of the common
values shared by China and Africa,” she said. “There is no
doubt that China’s success in Africa has partly benefited
from it, and those common values have laid solid foundations
for further promoting bilaterial relations in future.”
China first established a presence in the unexploited Muglad
oilfields of southern Sudan 10 years ago. Now it imports 50%
of the region’s crude oil, and 13 of the 15 most important
foreign companies operating in Sudan are Chinese, from the
China National Petroleum Corporation to the Zhongyuan
Petroleum Corporation. The cynicism of the government in
Beijing became apparent in September 2004, when the UN
security council passed resolution 1564, announcing an
embargo on arms sales to Sudan. China’s UN ambassador, Wang
Guangya, used the massacres in Darfur as a pretext for
threatening to veto the resolution, before finally
abstaining. The US-proposed resolution had already been
significantly watered down. The incident is an indication of
the strength of the ties linking the governments in Beijing
and Khartoum.
Many African despots have echoed Omar Bongo Ondimba,
president of Gabon and a long-time friend of China, and
praised the spirit of “mutual respect” and the “concern for
diversity” that characterise Chinese trade and cooperation
(6). But this safari to Africa has alarmed the multinationals
that have traditionally exploited the continent’s resources
(7). And the US, officially committed to fostering good
governance, is beginning to lose patience with Chinese
economic policy. According to Gal Luft, a specialist in
energy security and executive director of a neo-conservative
thinktank the Institute for the Analysis of Global Security:
“The Chinese are much more prone to do business in a way that
today Europeans and Americans do not accept – paying bribes
and bonuses under the table. I think that it will be much
easier for [some African] countries to work with Chinese
companies, rather than American and European companies, which
are becoming more and more restricted by the publish what you
pay initiative and others calling for better transparency”
(8).
Rwanda’s minister of finance and economic planning, Donald
Kaberuka, says: “It’s a different way of doing business” – an
alarming prospect for NGOs already fighting cynical western
practices in Africa. In the past international organisations
such as the World Bank have been criticised for making loans
to countries in need conditional upon non-negotiable demands.
Now the situation is reversed, with China granting
unconditional, instant credits that encourage white elephant
projects, without concern for financial transparency.
“My reaction when I hear of this big Chinese loan is that it
distorts the whole process and gives a lot more flexibility
for Angola not to comply with the conditions of other deals,
such as an agreement with the International Monetary Fund,”
says Douglas Steinberg, outgoing director of the Angolan
programme of the humanitarian NGO Care. “It allows the
government to escape transparency” (9). Environmental
organisations are watching the commercial development of a
country that emits more pollution than any other and has not
signed the Kyoto Protocol: 60% of the 4m cubic metres of
undressed timber exported from Africa every year go to Asia,
almost all of that to China.
Chinese arms sales are a cause for concern. In the late 1990s
China made more than $1bn out of the war in Eritrea. It has
also been suspected of using Sudan as an outlet for military
technology. It is still militarily involved in Zimbabwe,
another country cold-shouldered by the West (10). Chinese
military attachés have been concentrated in member states of
the Southern African Development Community (11). According to
a US analyst: “During the cold war, Chinese arms transfers to
Africa were motivated by ideology. Now, profit is the main
objective” (12).
What the Chinese see as a win-win situation – a new economic
game in which neither partner can lose – can also be seen as
fresh neocolonialism disguised as South-South development.
Some African analysts are wondering about the limits of
Chinese trade policy and the direct competition to Africa’s
economy from specific Asian products, from textiles to steel.
South Africa was China’s first African partner and, as a
gesture of solidarity, broke off relations with Taiwan in
1997. Now, according to the deputy chairman of the South
African Institute of International Affairs, Moeletsi Mbeki,
China represents “both a tantalising opportunity and a
terrifying threat”. It is a familiar story: “We sell them raw
materials and they sell us manufactured goods with a
predictable result – an unfavourable trade balance against
South Africa” (13).
South Africa’s trade deficit with China has risen from $24m
in 1992 to more than $400m. In September 2004 a member
organisation of the powerful Congress of South African Trade
Unions threatened to boycott anyone selling Chinese products,
which it blamed for rising unemployment. The problem can be
seen in the market stalls of the Senegalese capital Dakar,
where cheap Chinese imports, from shoes to medicines, elbow
rival products aside, while the textile workshops of Lesotho
are threatened by the expiry of the multifibres agreement
last January (14).
China has responded with promises, handouts, allusions to the
spirit of Bandung (see Bandung’s lost illusions, page 14) and
symbolic gestures: since 2000 it has cancelled $10bn in
bilateral debt. The Chinese government’s African Human
Resources Development Fund pays for 10,000 Africans to be
trained in Beijing (15).
From Liberia to the Democratic Republic of Congo, China is
increasingly involved in peacekeeping operations: in 2004 it
contributed more than 1,500 troops to the UN presence across
the continent. While acknowledging that any final decision
rests with the African Union, China has publicly supported
the three African candidates – South Africa, Egypt and, in
particular, Nigeria – for a permanent seat on the security
council.
In trade another great leap forward is expected by 2006, with
the launch of the New Asian-African Strategic Partnership
(16), oriented towards the private sector, from which China
is likely to be the main beneficiary. During his visit to
Gabon in 2004 Hu Jintao promised “economic cooperation with
emphasis on infrastructure, agriculture and the development
of human resources”. This may be no more than a pious hope,
but it is certain that “henceforth [China] will act like any
other power, in accordance with its own well-known interests.
It will concentrate its cooperative efforts in countries
where it recognises high potential, whether it is a matter of
raw materials, potential markets or diplomatic influence”
(17).
How will Africa’s traditional partners adapt to the Chinese
presence, and how far will they be prepared to go? “It is
normal and natural that China’s involvement in Africa could
lead to some conflict of interest with the former colonial
rulers,” He Wenping says. “I don’t think we should worry too
much about it. To help African people become better off and
benefit from globalisation is the common object and aim of
people and countries around the world. The Chinese people and
government would very much like to contribute to this aim.
And history shows that this must be a hard and long journey.”
According to the IMF, Africa should experience growth of 5.8%
this year, the highest for 30 years. In part this will be due
to China. But is Africa, once a sideshow in the cold war,
destined to be at the centre of an intensifying trade war?
________________________________________________________
See also : Asia: in the pipeline.
(1) “Angola: cautious optimism for 2005”, United Nations
Office for the Coordination of Humanitarian Affairs, New
York, 14 January 2005. See Angola: Cautious optimism for
2005.
(2) China has diplomatic relations with 47 of Africa’s 53
states.
(3) See Chine-Afrique : la coopération
fructueuse,Chinafrique.com.
(4) A second China-Africa Forum, held in November 2003 in
Addis Ababa, agreed the terms for cooperation until 2006.
(5) Drew Thomson, “Economic growth and soft power: China’s
Africa strategy”, China Brief, University of Pennsylvania, 7
December 2004; see Economic growth and soft power: china’s
africa strategy, The jamestown foundation.
(6) Ondimba has made nine state visits to China, equalled
only by his opposite number in the DRC, Denis Sassou Nguesso.
(7) See Howard French, ” A resource-hungry China speeds trade
with Africa “, The New York Times, 9 August 2004.
(8) See “Bottom of the barrel : Africa’s oil boom and the
poor”, Catholicrelief.org.
(9) “Oil-backed loan will finance recovery projects”,
Integrated Regional Information Networks, 21 February 2005,
(10) The Commonwealth and the European Union introduced
economic sanctions against Zimbabwe in response to electoral
fraud and political violence.
(11) Angola, Botswana, DRC, Lesotho, Malawi, Mauritius,
Mozambique, Namibia, the Seychelles, South Africa, Swaziland,
Tanzania, Zambia and Zimbabwe.
(12) Logan Wright, “Seizing an opportunity: the changing
character of Chinese arms sales”, Armed Forces Journal,
Washington, October 2001.
(13) See Paul Mooney, “China’s African safari” Yale Global,
New Haven, 3 January 2005,
(14) The agreement, signed by 47 countries in 1974, allowed
developing countries to export a quota of their textile
production to the US and Europe but capped imports.
(15) The fund was created after the first China-Africa forum
in Beijing in 2000. See : Chinafrique.com
(16) This follows the April 2005 Asian-African summit, held
to commemorate the 50th anniversary of the Bandung
conference. Based on political, economic and cultural
exchanges and cooperation, the partnership will promote trade
and investment.
(17) Marc Aicardi de Saint-Paul, “La Chine et l’Afrique,
entre engagement et intérêt”, Géopolitique africaine 14,
Paris, 2004.
Translated by Donald Hounam




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