September 26, 2007

Chinese conquest of the African continent

Africa: the Chinese conquest of the African continent

Over the last 15 years the volume of exchanges between China and Africa has constantly increased; this phenomenon could be seen as a generic tendency of a global alliance among developing countries, able to change the traditional trade channels passing through the West. The last China-Africa Cooperation Forum that took place in Beijing in November 2006 showed the great economic interest that China has for the natural resources of the African continent, which are still not exploited. With a constant growth of GDP of 8-10% per year, China needs to have constant sources of energy, and Africa is now its main target for investments.

Federico Flora (26 September 2007)

Oil as a primary interest

Trade between China and Africa increased by 700% during the nineties and the first Chinese-African summit, that took place in Beijing in 2000, inaugurated a new era in the cooperation between these two economic realities which decided to invest in a common strategy for development. Between 2002 and 2003, trade between China and Africa reached 18 billion dollars and almost doubled in the following two years until it reached 32 billion dollar at the end of 2005. The growth trend did not stop: the commercial exchange exceeded 55 billion dollar in 2006 and the Chinese investments in Africa have reached 480 million dollar in the first term of 2007, putting the country at the third place, as to investments, after USA and France. This data represent a further increase by 30% in comparison to last year, considering the data provided by the Chinese Minister of Foreign Trade.

The constant growth of the Chinese economy needs an adequate supply of row materials: steel, cobalt, copper, nickel, iron and oil, resources which Africa owns in a massive quantity. Oil is moreover attracting the Chinese attention; the country does not want to open itself widely to the Middle East nor to depend on Russia, a country which it has often been in conflict with.

American sources indicate that 40% of the growing demand for oil on the global market comes nowadays from China, which exceeded Japan as the second world consumer of oil after USA. During the last 4 years the volume of the Chinese investments in new activities of exploration and oil exploitation in Africa have tripled, moreover in Sudan, Angola, Nigeria, Chad, Equatorial Guinea and the Republic of Congo.

Nigeria is the main producer of oil in Africa, but the Chinese infiltration has there been more difficult due to the steady presence of the Western multinational companies. Recently the Chinese state company CNOOT Lcd has declared its will to buy 45% of an offshore repository for about two billion dollar and a half. Anyway there are still some problems concerning safety in the region of Niger Delta, where armed groups continue to kidnap foreign technicians and to boycott the oil companies activities.

Angola, also thanks to the Chinese investments, has become the second major producer of oil in the Sub-Saharan Africa, with a daily output reaching two million drums by 2008 and is actually the country which supplies China for half its imports. And it is not by chance that last year SINOPEC, a Chinese energetic company, offered more than two million dollar for the rights of exploration of two off-shore sites near its coast. Now, the Chinese interest is likely to increase and new investments will be made in order to improve infrastructure such as roads, ports, airports and pipelines. Angola is in fact a country in growth and therefore a very good point of departure for exports of oil originating in other countries such as Democratic Republic of Congo and Congo-Brazzaville.

The oil production in Sudan has been growing in the last few years of further half million drums per day (two thirds bought by China) even if many repositories still remain unexploited due to the internal instability. Despite the American and UN pressures which would send a contingent of Blue and Green Helmets (troops of the African Union) in order to bring peace into the region and stop the massacre of civilians, China has always been opposed to a strong action towards Khartoum's government, due to the presence of oil and its excellent quality.
The Chinese non-interference strategy

The Chinese strategy of entering into Africa is based on the combination of different elements: guarantee to the access of row materials in exchange for massive investments in the public infrastructures, presence of the Chinese workforce in the industrial activities and direct control on the mining, abolition of the custom duties for the African products entering the Popular Republic and commercial advantages for the import of Chinese goods into African countries and cut of the foreign debts that these countries have with China.

The Chinese strategy is based on the mutual advantage of the commercial exchange -that is at least what the official policy of the Ministry of Foreign Affairs claims- but anyway relative to pure economic questions that do not concern the internal politics of each country. The Asian giant is not putting any conditions on the use of the loans granted to the African Governments as long as a free access to the row material is guaranteed. Paul Wolfowitz, President of the World Bank, believes this to be a deleterious strategy for financial stability of the African countries because it fuels a bad administration of the public money in the hands of governments which are among the most corrupted ones according to the classification of think-tank Transparency International. In the words of Philippe Maystadt, President of the European Investment Bank : “African countries prefer the Chinese financing proposals, because they do not put any annoying conditions on the human and social rights”. Angola has recently rejected the proposal of the International Monetary Fund (FMI): in exchange for a massive programme of loans, it required an international verification on oil contracts and a reformation in the management of the same oil royalties from which only a little part of the population takes advantages.

China usually offers massive programmes of modernization to those countries with which it makes commercial agreements for the exploitation of row materials: railways, roads, hospitals, schools, electric and telephone lines, mining and oil explorations. Nigeria has in fact recently granted the rights for oil drilling to two Chinese state companies in exchange for a loan of 4 billion dollars to build 1,800 km railways.

The main problem of Beijing's investment policy is anyway its decision to commit these tasks to Chinese firms and to use workers sent directly from China. Beyond an apparent mutual benefit, there is an asymmetry in the economic relations between the two regions: a survey of the World Bank has shown that, while 20% of Chinese exports end up in Africa, the quantity of exports of the whole African country in China does not exceed 2%. Often, the African countries with which Beijing has commercial relationships use the Chinese credits for buying weapons from China itself. In this way there is a double advantage for the Asian giant, because credits used for buying the row materials are paid back by selling weapons to the provider themselves. China has actually sold weapons and military technologies to Sudan, Ethiopia, Nigeria, Zimbabwe.
Tensions and contrasts

Anyway there are lots of contrasts and rumours of dissent within the African countries about the benefits that trade with China could actually bring to the population and the local markets. Often these voices of dissent are exploited by groups to the opposition in order to pull down Government policies. At the 7th World Social Forum held this year in Nairobi the main topic was not the AIDS problem, the American imperialism or Neo-liberalism, but the future of the African continent in front of the Chinese advance. Many organizations of the civil society belonging to different African countries complained on this Chinese new-colonialism which is weakening the rising African middle class through the invasion of low-cost products or the use of workforce directly imported from China. In front of the power of an external giant and without a valid support of the State, often the African businessmen find themselves to make business with the Chinese but to their conditions. The criticism of the World Social Forum is anyway addressed to the African Governments which could play a more active role towards the Chinese proposals.

Not all the criticisms show themselves in a peaceful way: last February, 14 technicians of a Chinese oil company have been kidnapped and after released in the Niger Delta. In the same period in Zambiathere were strong riots against the visit of the Chinese President Hu Jintao: Chinese firms are charged to make miners work in the copper mines in Zambezi without guaranteeing the adequate standards of safety and preventing any kind of syndicate from acting. In March there was an ambush in Kenya against two Chinese engineers, in April 9 SINOPEC workers were killed in another ambush in some oil plant by the National Liberation Front of Ogaden, an Ethiopian region with a Somali majority. In South-Africa the traders have strongly protested in last months against the invasion of the low-cost Chinese products which are destroying the local economy. All these episodes are the symptoms of a spread discontent particularly among the ethnic minorities of the various African states feeling betrayed by their governments which agree on the natural resources to be exploited by foreign companies without the local populations taking any advantages.

Even if the path that led China in Africa has been widely different from that of West (Maoist ideology pushed the first Chinese missions to Africa in the Sixties to supply medical and technical assistance to the populations), China is nowadays pursuing only its economic interests. The strategy is anyway double: In the short term China is continuing to guarantee to itself the row materials necessary for its economic internal growth without considering the political internal questions of each single State; in the long term the target is to take the place of the traditional Western powers as an economic and strategic partner of the whole African continent. This will obviously involve specific political and diplomatic positions. Neither the colonial ex-powers, nor the US have been able to guarantee a steady growth to the African country in the last half century. It is still to see if the Chinese 'non-interference' strategy will be able to guarantee a development to the poorest continent in the next future .

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