B. Diplomatic and economic ties
To ensure good relations with African countries, China has sought to expand and consolidate its diplomatic and economic ties throughout the continent. All over Africa, for example, Beijing has tried to establish “Confucius Institutes”, which would provide programs at leading local universities devoted to China studies and Chinese language training.[4] Noticeably, Beijing has been trying to build a long-term relationship with African elites.
Beijing has also multiplied diplomatic ties in Africa. Since 2004, when Hu Jintao became president of China, he has made three tours through several major African countries, such as Angola and Sudan. In 2006, fifty African leaders came to China for a Sino-African summit. Beijing has also used its permanent seat at the UN Security Council to position itself as a kind of intercessor for African interests. It has supported fairer global trade on the one hand and an enlarged UN Security Council on the other. It has also advocated for Africa’s various reform-oriented institutions, such as the New Partnership for Africa’s Development (NEPAD) and the African Union.
Through major meetings or “summit diplomacy”, Beijing is trying to mold a long-term economic cooperation with Africa. Indeed, in 2000, the first forum on China-Africa Cooperation (FOCAC) founded the China-Africa Joint Business Council, an organization which provides support (in the form of information, coordination mechanisms, and financial assistance) for investments in Africa by Chinese firms. In 2006, the FOCAC granted a special fund of $5 billion to encourage these investments.[5] In 2006, the White paper, promulgated by the Chinese government, set out practical steps to formalize its relationship and to broaden the exchanges far beyond friendly trade deals. As we can see, through diplomacy and economic summits, China is trying to build a very solid relationship with African countries.[6]
II. ECONOMIC COLONIZATION
A. Neo-colonization through investments
African countries represent a major attraction for Chinese investments with respect to its globalization strategy. Indeed, Chinese enterprises, encouraged by the Chinese authorities, are constantly testing new ways of doing business in African countries.
Today China imports 64% of Sudan’s oil. This is partially due to the fact that Chinese firms built Sudan’s oil industries, superintending everything from exploration to oil refining and transport. The need to find resources (especially oil) is now a driving component in Chinese foreign policy. By 2045, China is projected to rely on imported oil for 45% of its energy needs. And according to the US Energy Information Administration, China accounts for 40% of the total growth in global demand for oil in the last four years. Accordingly, Beijing offers packages to African countries providing everything necessary for the development of the country. For instance, in Angola, which currently exports 25% of its oil to China, Beijing to secure a future oil source offered a two-billion-dollar package of loans and aid (including funds for Chinese companies) in order to build roads, hospitals, railroads, schools, bridges and offices in that country. China’s strategy in Africa, then, consists principally in offering poor countries comprehensive and exploitative trade deals combined with aid and investments.
China’s foreign direct investments in Africa represented $900 million of China’s $15 billion total FDI in 2004, and the next year, Chinese companies invested a total of $175 million in African countries, primarily in oil exploitation projects and infrastructures. These initiatives involved some 820 Chinese firms, most of them state-owned. Chinese national firms have invested in Africa in everything of interest to the Chinese economy: construction, oil, raw materials, and telecommunication... Above all, Chinese national companies have taken over many African enterprises and markets. For example, Chinese national firms own more than 50% of the African market devoted to the construction of infrastructure. Concerning energy, in Sudan, which exports annually 30% of its oil to China, 40% of the Greater Nile Petroleum Operational Company (GNPOC) is owned by the Chinese national company China National Petroleum Corporation (CNPC). Beijing has also made its presence felt in Africa in the public construction market, for instance with Urban Construction Group, and in telecommunications (in Congo, for example, with Congo-China Telecom, controlled 51% by China), wood (the “green gold”), and minerals.[7]
B. A “win-win” relationship?
Obviously for China, investing in African countries is a great economic benefit. On the other hand, however, from the African perspective it can be seen as a new attempt at economic colonization disguised as South-South development.
In the short term, China’s trade with and investments in Africa appear meant to help develop the continent. If we take the oil industry, for instance, it appears that Chinese investments in prospecting, refining plants and other much needed energy infrastructures have been welcome in Africa and have even produced positive results. In addition, China’s demand for energy resources has inflated prices and as a consequence increased African countries’ income. Thus, mainly due to oil exports, the continent’s growth rate rose to 4,5% in 2004. But today, African nations are even more sensible to negative price shocks.[8] Moreover, African countries become more dependent on China’ oil imports. Through investment, trade deals and “aid” packages China has implanted itself financially in the African continent in such a way as to facilitate very effectively the invasion of “made-in-China” goods. But most African producers can’t compete with Chinese companies even in Africa’s domestic market; Chinese production costs are too low. Local retailers too have had to face threatening business competition from expatriate Chinese traders. And in Chinese-sponsored projects, the Chinese contractor tends to use Chinese labor rather than local workers. For decades, African countries exported large quantities of clothes and textiles to developed countries under the Agreement on Textiles put in place to protect markets in Europe and the US from cheap Asian imports. China moved part of its textile production to Africa to enable Chinese companies to get around these trade barriers. Thus China contributed to the rise of textile industries and the lowering of unemployment in Africa. But the trade provision expired in 2005, putting African countries in direct export competition with China. Accordingly textile mills were moved back to China, Africa’s textile boom balanced out suddenly against a commensurate meltdown, and this in turn caused unemployment to rise. South Africa, for instance, lost 100 000 jobs.[9]
So it seems that the evolving relationship between China and African countries is not a “win-win” situation at all, especially since it produces large deficits. South Africa’s trade deficit with China, for example, has risen from $24m in 1992 to more than $400m at present.
III. INVESTMENTS WITH NO STRINGS ATTACHED
A. The negative political effect of Chinese investments
In 2006, the Chinese Vice-Foreign Minister Zhou Wenzhong said: “Business is business… You [the West] have tried to impose a market economy and multiparty democracy on these [African] countries which are not ready for it.” So in this context, the Chinese African policy underlines the respect of the African countries’ interests in opposition to the traditional neo-colonization pattern. Thus China advocates principles such as non-interference in each other’s internal affairs or mutual respect of sovereignty that date back to the Bandung conference of 1955. As a consequence China doesn’t attach any political conditions (except the One China policy concerning Taiwan) to its investments in African countries and uses this tactic meanwhile to drive a wedge between Africa and potential Western investors. Chinese investment policy in Africa in this respect could effectively undermine years of international efforts through aid and investment to achieve a higher general level of governance and transparency in Africa. In 2006, for example, Chad withdrew two oil companies, Chevron Corp and Malaysia’s Petronas, from a project backed by the World Bank because the Bank insisted that a part of the oil profits in Chad must be spent on improving social welfare.[10] Thus since Chad didn’t accept the political interference, the government turned to China for its investments. China’s “no-political-conditions-attached” investment policy in Africa also tends to support governments that don’t respect human rights. Thus African rogue regimes can find alternative sources of foreign support and don’t have to comply with the “conditions” unanimously imposed by Western firms. In general, the state-led business model offered by China can’t be considered a good model to follow concerning governance, seeing that Chinese firms linked to the state usually exhibit poor standards of corporate governance and a lack of transparency. Seen in this negative light, Chinese investments could also contribute to unchecked environmental destruction and poor labor standards since Chinese firms don’t follow green policies. Indeed, the major Chinese investors do not apply the equator principles which define current social and environmental standards.[11]
And yet the development problem in Africa with which China has involved itself goes far beyond investments. It concerns aid, trade and cheap loans too. Unconditional aid risks driving back into debt countries that have only just benefited from debt relief and undermines efforts to create democracy and accountable administration.
B. “Business is business”
So, it appears that to do more business, Beijing effectively legitimizes human rights abuses and undemocratic practices under the false pretense of respecting state sovereignty and “non-interference”. But it would be unwise to describe China as a cold exploiter who takes advantage of the instability of some African countries. Indeed Beijing takes part in some of the UN peace missions in Africa and sometimes uses its influence to help solving the crises even though these positive changes are due to international pressure. For example China used its influence in Sudanese crises because western countries threaten to boycott the 2008 JO in Beijing. Also, at the demand of the US and Ban Ki Moon, the UN general secretary, China intervened in Sudanese internal affairs concerning the presence of a UN force in Darfur. So, yes China invests for its interests and even though “business is business” policy might sound harsh, we can’t blame China for being too competitive. Beijing is doing what every other emerging market is doing. After all, French policy towards the continent has never be philanthropic – nor that of other western countries. As Felix Mutati, Zambia’s prime minister of finance, said, western criticisms represent “a bad attitude towards the Chinese when they are doing all the right things. They are bringing investments, world-class technology, jobs, and value addition. What more can you ask?” China, as an emerging country, needs to secure its raw material sources. Beijing can’t be expected to only think about African countries’ economic and political development. China is doing business but business doesn’t have to be moral.
So, Chinese investments are presented by China as a help and cooperation between emergent South-South countries, but the reality is different. Through considering Chinese investment and its consequences, we have come to the conclusion that African-Chinese trade doesn’t differ significantly from the Western-African trade pattern (exporting raw material and exporting manufactured goods). But at some point China will have to change policy, especially if it wants to become more respectable on the international scene and gain access to a political power that would equal its economic power. Thus for example in the long term China might have to stop selling arms in Africa, constructing hotels in Sierra Leone that hide corruption, and investing with no concern about governance standards. But we can’t blame everything on China. After all, it’s doing business and it is African countries governments’ role to reinvest their oil revenue so as to diversify their economies in order to escape from the “resource curse”.
BIBLIOGRAPHY
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Alden Chris, China in Africa (August 2007)
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De Lorenzo, Mauro, China and Africa, a new scramble ( the American Enterprise Institute for Public Policy Research ’s website, 2006)
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Eisenman Joshua and Kurlantzick Joshua, China’s Africa strategy ( Current History, may 2006)
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Gaye Adama, Chine-Afrique : le dragon et l'autruche : Essai d'analyse de l'évolution contrastée des relations sino-africaines : saint ou impie alliance du XXIe siècle ?, (2006).
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Gill Bates Gill and Reilly James, A tenuous hold of China Inc. in Africa
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Kurlantzick, Joshua, Beijing’s safari: China’s Move into Africa and Its Implications for Aid, Development, and Governance (Carnegie Endowment for international peace, may 2006)
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Niquet Valerie, La stratégie africaine de la Chine, (Chine et rivalités de puissance from Politique étrangère february 2006)
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Servant Jean-Christophe, : Ambivalence du commerce Sud-Sud (, may 2005)
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Taylor, Ian, China’s oil diplomacy in Africa, in International Affrairs, 2006
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Tull Denis, China’s engagement in Africa: scope, significance and consequences (Journal of Modern African Studies, 44, 3 (2006), pp. 459–479. f 2006 Cambridge University Press)
[1] China’s Africa Policy “The White Paper” (2006). For the full text www.english.peopledaily.com.cn January, 12, 2006
[2] “China and Africa are good friends, good partners and brothers”, June, 22, 2006
[3] Gaye Adama, Chine-Afrique : le dragon et l'autruche : Essai d'analyse de l'évolution contrastée des relations sino-africaines : saint ou impie alliance du XXIe siècle ?, (2006).
[4] Eisenman Joshua and Kurlantzick Joshua, China’s Africa strategy ( Current History, may 2006)
[5] Gill Bates Gill and Reilly James, A tenuous hold of China Inc. in Africa
[6]
[7] Niquet Valerie, La stratégie africaine de la Chine, Politique étrangère, february 2006)
[8] Taylor, Ian, China’s oil diplomacy in Africa, in International Affrairs, 2006
[9] Tull Denis, China’s engagement in Africa: scope, significance and consequences (Journal of Modern African Studies)
[10] Kurlantzick, Joshua, Beijing’s safari: China’s Move into Africa and Its Implications for Aid, Development, and Governance (Carnegie Endowment for international peace, may 2006)
[11] To have another point of view: China and Africa: Policy and Chalenges, by Li Asham. www.wsichina.org/cs7_4.pdf