AFRICA: China's great leap into the continent
Mar 27, 2006
JOHANNESBURG (IRIN) - Providing cheap goods to African consumers is one way China is making inroads into the continent, but on a more fundamental level China is also engaged in a scramble for African resources to feed a roaring economy, expected to overtake Britain's as the fourth largest in the world by the end of 2006.
Herbert Chinembiri owns a small stall in a downtown Johannesburg flea market where he sells ostrich eggs and carvings to tourists visiting South Africa - practically everybody else sells goods made in China.
Across the street is the 'Asia City' shopping complex; down the road is 'Oriental City'; both supply the traders and are stocked with everything from low-priced clothes and shoes to televisions and household appliances - all imported from China.
"I don't know what we would do without the Chinese," said Chinembiri, "Finally, now there are things we can afford."
In the 1960s and 1970s China's engagement with Africa was politically driven: doctors, engineers, teachers and weapons were sent to support newly independent countries and liberation movements. Today Chinese officials touring the continent are flanked by businesspeople and bankers.
Western concern over China's renewed interest in Africa appears to be twofold: Beijing provides an alternative to the supposed consensus built around governance and development policies, giving China an "unfair" advantage in competing for the continent's resources.
"Under Western pressure for economic or political reform, China offers an alternative source of support. China's aid and investments are attractive to Africans, precisely because they come with no conditionality related to governance, fiscal probity, or the other concerns of Western donors," the US-based Council on Foreign Relations (CFR) said in a report released in December 2005.
In a strategic overview, the CFR also noted: "American interests are not yet seriously threatened. But the United States does have to recognise that the United States, and the Western nations altogether, cannot consider Africa any more their 'chasse garde' [private hunting ground] as the French once considered Francophone Africa. There is a new strategic framework operating on the continent and it demands new ways of operating."
AN AFRICAN WELCOME
From flea markets in Johannesburg to towering oil platforms off the coast of Nigeria, China has clearly established a presence in Africa.
During a meeting on Africa-China cooperation at the last World Economic Forum in Switzerland, Mozambican President Armando Guebuza said China's interest in Africa was "very welcome" and that cooperation had resulted in "dividends for both parties".
China's relations with Africa have evolved from the ideologically driven solidarity of anti-colonialism and the Cold War to pragmatic, market-oriented economic engagement.
"In the 1950s China developed a very solid relationship in the freedom struggle against the colonialism of many countries, providing moral and material resources. Then, when in the 80s and 90s economic and social development became more important, China adjusted its policy accordingly," the Chinese ambassador to South Africa, Liu Guijin, told IRIN.
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China-Africa trade has rocketed, reaching approximately USD 35 billion in 2005 after growth rates of 50 percent in 2003 and 59 percent in 2004, fuelled mainly by the rise in Chinese textile exports and Beijing's demand for African oil and minerals.
According to Dr Christopher Alden, Senior Lecturer in International Relations at the London School of Economics, "China explicitly stated they were going to shift their focus away from ideology in 1996. The turning point was clearly when China went from being a net oil exporter to being a net oil importer in 1993."
As a result of "marginalisation and Western disinterest", Africa was an underdeveloped but rich source of supply. The eastern giant has been willing to buy stakes in corners of the continent deemed less profitable or "too difficult" by the West.
"China has always depended heavily on the Middle East, and that still remains the main source of supply," said ambassador Guijin. "But China is diversifying to secure its supply, and now imports energy from countries in Africa such as Angola, Nigeria and Sudan. In these countries China is working hard to make sure that energy cooperation is win-win and mutually beneficial."
It first established a presence in Sudan's Muglad oil fields a decade ago. By 2005 it was buying between 50 and 60 percent of Sudan's oil exports - about seven percent of its consumption needs. China has invested more than USD 8 billion in joint exploration contracts in Sudan, including the construction of a pipeline from the southern oilfields to the Red Sea with a tanker terminal at Port Sudan. An estimated 10,000 Chinese are working in the country.
West Africa, with its attractive sweet crude, is a relatively new sector. China National Offshore Oil Corporation (CNOOC), the state-owned oil company, is active in Equatorial Guinea, Chad, Gabon and Angola. On 9 January it announced that it had taken a 45 percent stake in an offshore oil and gas field in Nigeria for USD 2.27 billion - CNOOC's biggest overseas acquisition so far.
"The West, in their development, has also consumed from many countries. With 1.3 billion people - 22 percent of the world's population - it is only natural that China consumes a certain amount of energy," commented ambassador Guijin.
As the world's largest user of copper, Beijing has reportedly invested nearly USD 170 million in Zambia's mining sector, one of the main producers, buying the Chambezi copper mine in 1999, now one of the biggest Chinese mining operations on the continent.
The country has also become increasingly active in the Democratic Republic of Congo (DRC), investing in copper and cobalt mines, with road infrastructure to facilitate exports; it is helping Ethiopia build the continent's biggest dam; it will launch a communication satellite for Nigeria in 2007; and is introducing a new anti-malaria drug in Uganda.
Strengthening cooperation with developing countries through economic and technical support has become a key part of China's foreign and economic policy. It has long had a substantial overseas aid programme, but the Organisation of Economic Cooperation and Development does not count this as 'official development assistance'.
Trade, investment and aid ties with Africa are being strengthened through various bilateral and multilateral forums, such as the Asia-Africa Summit and the China-Africa Business Council, a joint initiative with the UN Development Programme to support China's private sector investment in Cameroon, Ghana, Mozambique, Nigeria, South Africa and Tanzania.
In a significant step underlining its growing role, China has contributed military personnel to UN peacekeeping mission in Liberia and DRC since 2003.
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Some Western analysts regard China as a competitor, and are not always comfortable with its growing influence in Africa. "Just like the West, the thrust of the Chinese engagement in Africa is that of resource extraction," said Alden.
Ambassador Guijin takes a different view. "It seems that China understands a little better the situation in, and needs of, African countries. China is the biggest developing country in the world, and Africa has the biggest concentration of developing countries in the world. We also share the same bitter experience of being bullied and oppressed by the West," he commented.
"China is willing to share its experience, to exchange ideas and knowledge, but we do not regard our mode of development as the only option; we do not advise African countries to blindly copy the Chinese model."
TURNING A BLIND EYE TO GOOD GOVERNANCE?
Some analysts have pointed to China's apparent willingness to overlook issues of human rights in the countries it does business with.
"Governance is an important issue here. African states have committed themselves to NEPAD, a new agenda on Africa. They too ought to be, and indeed are, concerned about the Chinese presence - it has the potential of throwing a spanner in the works of the move towards greater accountability of African governments and the governance agenda," Alden noted.
China's move into Sudan's oil fields in 1997 coincided with a break in diplomatic ties with Western governments over Khartoum's human rights record, and it has provided Khartoum with diplomatic support in the UN Security Council, particularly over Darfur, where Sudan has been accused of fomenting genocide.
According to Human Rights Watch (HRW), China gave the Sudanese government financial and military support "even as it was engaged in massive ethnic cleansing in Darfur, [and] Beijing successfully watered down UN Security Council resolutions threatening sanctions against Khartoum for its Darfur atrocities".
Concern has also been raised over China's links with oil-rich Angola, which has been under pressure from Britain's Extractive Industries Transparency Initiative and the Publish What You Pay campaign by a coalition of NGOs to allow greater scrutiny of its accounts.
The International Monetary Fund (IMF) has been pressing Angola to improve the transparency of its oil sector and make fiscal reforms, holding out the prospect of membership in the fund and access to lending.
Angolan oil accounts for 13 percent of China's crude imports, with Beijing the second-largest consumer of Angolan oil after the United States. In 2004, China provided the Angolan government with a crucial billion oil-backed loan.
The credit has been earmarked for reconstruction and development projects in Angola, still recovering from almost three decades of civil war. But according to Jose Cerqueira, an independent Luanda-based economist, the terms of the agreement are highly advantageous to China, with 70 percent of projects to be allocated to Chinese contractors.
"In the short term we see more Chinese people on the streets [of Angola], but in the long term we need to rethink what the consequences would be if all African countries strayed from the Washington Consensus [a set of policies and market-oriented reforms championed by neoliberal economists] and World Bank and IMF imposed discipline," Cerqueira observed.
Britain's foreign secretary, Jack Straw, commented during a trip to Nigeria in February, "What matters to the West is not the fact of China's engagements in Africa, but that such engagement should support the agenda which President Obasanjo and the African Union have set for this continent: support for democratic and accountable governance, for transparent business processes, for economic growth and effective poverty reduction, for human rights and the rule of law."
China's position is that its policy is one of "non-interference" in another country's domestic affairs - just as it expects others not to interfere in its.
"We follow five basic guidelines of peaceful coexistence in our relations: mutual respect for sovereignty and territorial integrity; mutual non-aggression; non-interference in each other's internal affairs; equality and mutual benefit; and peaceful coexistence - and these also apply to Africa," said Guijin.
"That does not mean China does not care about what happens in countries like Sudan and Zimbabwe. We have been actively advising these countries, based on our own ideas on what to do, and try to exert some pressure on a different level," he added.
Zimbabwe's embattled President Robert Mugabe has turned to China for economic aid in a 'Look East' policy, in response to the suspension of financial support by western governments and the IMF.
"Democracy and human rights are common goals of humankind and we don't believe in embargoes - that just means that the people suffer. From a practical consideration, embargoes and sanctions can't solve problems, just like armed invasion cannot solve problems," Guijin commented.
But Mugabe, desperately in need of a financial lifeline, reportedly came away with much less than he had hoped when he visited China in 2005.
"This means that for the Chinese there are limits to their engagements: they are not willing to commit themselves wholesale to a regime that is violating all economic and political rationale. In the end, Zimbabwe can hardly pay for the things China sells them. It is not a good market," suggested Alden.
"China's Zimbabwe presence is not that strong economically; now it is mainly focused on humanitarian assistance," said Guijin. "China is playing a positive and responsible role."
In the past decade it has become a tradition that the Chinese foreign minister's first overseas trip of the year is made to Africa. On 11 January, Foreign Minister Li Zhaoxing set out on an eight-day tour of six African countries.
The visit, preceded by the release of the 'China African Policy' paper, took the minister to Nigeria, Senegal, Mali, Liberia, Libya and Cape Verde to sign aid and trade deals, debt write-offs and cooperation agreements.
Li attended the official opening of the Chinese embassy in Senegal, which was closed after it recognised Taiwan in 1996. Senegal broke off relations with Taiwan in October 2005, and Li announced debt cancellation worth USD 18.5 million, with USD 3.7 million for the construction of hospitals, roads and other infrastructure.
The new Liberian government of President Ellen Johnson-Sirleaf, another country to ditch Taiwan, received USD 25 million for reconstruction and the offer of a USD 5 million interest-free loan.
While China officially upholds a policy of non-interference, there seems to be at least one political demand: adhering to the one-China policy and withdrawing recognition of Taiwan, which Beijing regards as a renegade province.
"In the early 90s there were still more than 20 African countries that recognised Taiwan, now there are only six," Alden pointed out.
AFRICAN MANUFACTURERS HURTING
While China's engagement with Africa has been welcomed at a government-to-government level, on the ground it can be a different matter, with Chinese exports criticised for driving African manufacturers out of business.
In Southern Africa the textile and clothing industry has been particularly hard hit. Incentives provided by the African Growth and Opportunity Act meant the sub-continent was able to export to the lucrative US market, but in 2005 the World Trade Organisation stripped away the quotas on Chinese exports, allowing them to monopolise the American and European markets.
The Congress of South African Trade Unions (COSATU) has protested that booming Chinese textile imports cost the country thousands of jobs, and last year turned up the pressure on major local clothing retailers to sign an agreement committing them to buy at least 75 percent of their stock from local manufacturers.
China contends that it took the painful step of restructuring its textile industry in the 80s and 90s, closing hundreds of inefficient factories and firing workers while investing heavily in new plants, giving it the competitive edge it enjoys today.
Beijing's response to South Africa's concerns has been an agreement on voluntary restraints on textile exports. "At the same time, China has committed itself to share experiences in the textile industry, to train textile workers, to enhance capabilities and become more competitive, and to develop joint ventures in the sector," said Ambassador Guijin.
"These are very positive, forward-looking steps but, in a final analysis, a sector cannot rely on government protection forever. This is the era of globalisation - they have to become more competitive," he maintained.
South African market stall owner David Mtshaii shared the ambassador's views. "How can [COSATU says everybody should buy South African] while their own shirts say 'made in China'?"
"Why can't South African producers make the same product for a competitive price? The Chinese have to pay for transport, pay duties and pay taxes to get the product here, and still it is cheaper. It is bad for the people working in the textile factories, but they have to move on or become more competitive."
Ambassador Guijin insists that Western criticism of Chinese policy in Africa is unfair. "Many African countries see China as a counterbalance to the heavy domination of social and economic development of Africa by the big powers, mainly in the West. China has always been advocating for African countries, for more representation and a louder say in the world."
Rhetoric aside, many analysts think the issue is one of national interest, and African countries should determine where their advantage lies and drive the best bargain for their people.
According to Alden, "In the end, China is just another investor and Africans need to clearly weigh opportunities and opportunity costs in dealing with China, or any other state, or any other company."
This report does not necessarily reflect the views of the United Nations
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