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CHINA IN AFRICA: Give and take

By Steve Bloomfield
26 May 2010

China’s influence in Africa is growing at an unprecedented rate. Amid the criticism of Beijing’s pursuit of natural resources lies an opportunity for African states to turn a one-sided relationship to their advantage

The Chinese characters on the grey concrete wall implore workers at the Beijing Construction Engineering Company to “love the country, work for the country”.

Inside a nearby building, two workmen are watching the news on CCTV 4, Chinese state television. Another Chinese workman, an electrician, walks into the store next door and buys a pack of Chinese cigarettes from the woman, also Chinese, serving behind the counter.

Lin Wei, a 25-year-old engineer from Jiang Xi province, waves his arms around the compound. “Look! This is China,” he laughs. “If you came here you would never think this was Tanzania.”

China’s influence in Africa is growing at an unprecedented rate. Across the continent the country is building stadiums, parliaments and roads, offering its expertise as well as its wallet. But China is not just giving to Africa, it is taking too: the Asian nation is the world’s largest importer of oil, the bulk of it from Africa. China’s ever-expanding economy has brought with it an insatiable appetite for other natural minerals, including copper, aluminium and iron ore – and African nations are willing to provide them.

But Africa gets something in return. From national stadiums in Tanzania to parliaments in Guinea Bissau, Chinese construction firms are rebuilding Africa’s crumbling or non-existent infrastructure.

The projects may not always turn a profit. In fact, in some cases China might lose money. But this is a form of aid nonetheless, albeit a very different type from what western countries, the World Bank and the IMF have long provided African countries. China is not just providing money, it’s offering labour too. Vast armies of Chinese workmen have moved to the continent to work on construction projects managed by Chinese firms.

China has become the world’s third-largest economy, rapidly expanding at a faster rate than any country before it. By offering to carry out large-scale construction projects, China is able to get access to Africa’s vast supply of natural resources.Deborah Brautigam, associate professor at the American University’s International Development Program and the author of a new book on China in Africa, The Dragon’s Gift, believes the West could learn a lot from the way that China operates on the African continent: “The Chinese understand something very fundamental about state building: new states need to build buildings and dignity, not simply strive to end poverty.”

China’s modern links to Africa can be traced back to 1955 at the Bandung conference between Asian and African countries. China gave its support to independence movements in Angola, southern Rhodesia and Algeria; backing which ultimately helped China in its quest to take over the permanent seat on the UN Security Council that had been given to Taiwan following the Cultural Revolution.

The relationship between China and Africa has changed dramatically in the last decade. Trade between China and Africa was valued at just $2 billion in 1999. By 2005 it had risen to nearly $40 billion, and by 2008 it had reached $106 billion. China is now Africa’s third most important trading partner after the United States and France.

Much of that investment has concentrated on roads, power plants and other infrastructure, but analysts say a growing number of Chinese companies are beginning to buy building and other materials locally. They are also eyeing Africa’s rapidly growing consumer markets.

The clearest example of this was Industrial and Commercial Bank of China’s $5.5 billion investment in South Africa’s Standard Bank in October 2007 – to-date the largest single foreign direct investment in the continent and the largest ever by a Chinese company.

The investment suggests China’s growing investment ambitions in the continent. It could also go some way towards assuaging critics who claim China’s strategy boils down to little more than a quick grab for Africa’s resources through cheap loans from state development banks. But China’s investment in Africa’s most stable and sophisticated financial services group is seen by many analysts as an attempt to deepen its relationship with the continent.

Nevertheless, Africa’s mineral wealth remains China’s primary target. At current projections, China will overtake the US to become the world’s largest importer of oil within the next decade. Aside from South Africa, all of China’s main trading partners in Africa are oil-producing states.

As China has scrambled to extract natural resources to fuel its booming industrial complex, oil-for-infrastructure deals have become commonplace across the continent – and at ever more staggering volumes. In May, China agreed to spend up to $23 billion to build oil refineries and other petroleum infrastructure in Nigeria, strengthening its hand in the country as it seeks to secure 6 billion barrels of crude reserves.

THE ANGOLA CONNECTION

More than a quarter of all China’s trade with Africa is done with Angola. The country could supplant Nigeria as the continent’s number one oil producer in the next five years, and has already overtaken Saudi Arabia as China’s largest supplier of crude oil. The country’s reserves are estimated at just over 9 billion barrels, and by 2011 production is expected to reach 2.2 million barrels a day.

Angola was decimated by three decades of civil war, which came to an end only five years ago. Railways were bombed to pieces; roads, schools and hospitals fell into disrepair.

In return for access to Angola’s oil, China has embarked on a massive reconstruction programme, including new roads, three new major railway lines and a massive new airport, large enough to cater for 30 jumbo jets every day. All four football stadiums used in the recent Africa Cup of Nations were built by the Chinese.

Driving from Luanda on a perfectly smooth tarmac road to the town of Catete, some 30km further north, a series of trucks with Chinese characters emblazoned across the front pass by on the other side. Further on, a group of half a dozen Chinese workmen look on as a steamroller flattens out an extra lane.

Many of the houses and buildings in Catete appear run down. There is one exception. A vast gated complex has been built at the side of the main road. Billboards outside announce the arrival of ‘China Jiangsu’, a shopping centre made up of more than 20 thatched roof gazebos, a restaurant, bar and basketball court. It was allegedly built to cater for the local population, but Catete’s residents appear bemused by the Chinese mall and say it is more likely to be used by the region’s growing Chinese population.

A 30-minute drive up the road is the reason why China’s investment is grabbed with both hands by African leaders. Chinese involvement is not as simple as a large cheque: it also comes in the form of men like Shao Quon, a supervisor helping to construct the new railway linking the capital, Luanda, with the city of Malanje, 180km to the north.

Wearing a wide-brimmed straw hat to keep out the unbearably bright afternoon sun, Shao explains the scale of the project. “We make everything for the train,” he says, gesturing to the massive outdoor factory behind him. Towering piles of concrete sleepers surround the railway, ready to be loaded onto trucks and driven a further 50km up the road to where most of the work on the railway is now being carried out. Chinese technicians make the concrete and place it in the mould, while a couple of dozen Angolan workers do the manual labour – lifting rocks to be crushed and cleaning out the moulds once the sleepers have been removed. According to Shao, more than 3,000 sleepers are made here every day.

With its new-found wealth, Angola has been able to almost double its national budget in the space of a year, from $13 billion to $25 billion. In order to guarantee access to the oil, China has handed out one $2 billion loan and is set to deliver another one this year.

No strings attached?

China’s loans have been criticized for having no strings attached. While similar sized loans from the IMF would require strict adherence to good governance and a proper anti-corruption strategy, China’s are a blank cheque to be spent however Angola’s government feels is necessary. The country is ranked one of the most corrupt in the world by Transparency International.

The scale of China’s investment in Africa is breathtaking. More than 800 Chinese companies, most of them state-owned, operate in more than 40 countries across the continent. The country is either drilling or exploring oil in at least 12 countries and also buys timber from a further five. Platinum, chrome, cobalt, copper, iron ore, nickel and aluminium are among the other minerals China sources from across the continent. China has also struck fishing deals with Sierra Leone on the west coast and Kenya on the east, and is looking to invest in mobile phone companies in Nigeria.

Growing clamour

Criticism of China’s involvement in Africa has been growing – and not just from the West. After a Chinese firm constructed a new road linking Kenya’s Jomo Kenyatta Airport with Nairobi city centre, they built an arch commemorating the link between the two countries. Within days part of it had been torn down.

Elsewhere on the continent there have been protests, most notably in Zambia and the Democratic Republic of Congo, about the poor working practices of some Chinese mining companies, and China is increasingly sensitive to the criticism. While it has not always conformed to western social and environmental standards, there are signs that this is beginning to change.

Trade between China and Africa has been overwhelmingly one way, but that too is starting to change. China has lifted tariffs on some 4,000 African products and commodities, but while the trade imbalance remains large – it is around $45 million a year between Kenya and China – exports from Africa to China are gradually beginning to increase.

But the most important change over the next decade should be the creation of a series of special trade and economic cooperation zones in Africa. There are seven currently planned, which will be built and managed by Chinese companies, and the hope is that some of China’s biggest manufacturing plants will move lock, stock and barrel to the new African zones.

It may not be pretty – pollution could be high and wages could be low – but all countries that went through an industrial age experienced the same messy beginning. It will bring jobs, infrastructure and new technologies.

Says Brautigam: “This is an opportunity for African states to ride into the global economy on China’s shirt-tails rather than remain natural-resource suppliers to the world.”

By Steve Bloomfield
26 May 2010