Chinafrica: The Dawn of Prosperity or Neo-Colonialism?

Chinafrica: The Dawn of Prosperity or Neo-Colonialism?

Richard Pass

China’s involvement in Africa has been visible for well over a decade, however, in the last four full fiscal years, total trade between Africa and China has increased by 400% from $28 Billion in 2005 to $108 Billion in 2009, a startling increase. Such figures come at a time when China’s Premier, Wen Jiabao, has announced a new $10 Billion low interest loan package to African states, adding to the $26 Billion China has already invested in the continent. It has long been known, that Africa needs FDI and a dramatic increase in trade to pull itself out of relative poverty. Looking at numbers alone, it seems China is bringing this change about, however, many are now seeing China’s involvement in Africa as a new wave of colonialism, where the long term interests of African’s come second to the needs of more developed countries and the governmental elite in those troubled and impoverished states which China is investing in.

There can be no doubt that many African states such as Angola are set to benefit in an immediate way never seen before. Last year, China and the Democratic Republic of the Congo signed a $9 Billion deal, the biggest China has ever done in Africa. The agreement is based on an increasingly common ‘infrastructure for minerals’ arrangement whereby the Chinese have promised to build 2,400 miles of road, 2,000 miles of railway, 32 hospitals, 145 health centers and two universities. In return, China gets 10 Million tonnes of copper and 400 000 tonnes of cobalt, which has a value of $70 Billion, the majority of which goes to China. Considering Congo’s infrastructure is effectively non existent following years of civil war and a lack of funding, it is hoped the new roads and railways will spark the DRC’s economic recovery. Deals like this are occurring with increasing pace across the continent in countries such as Guinea, Angola and Nigeria. The latest Chinese investment will provide potentially $23 Billion to the Congo’s economy, whilst also providing the infrastructure outlined above. China wins and the DRC wins. Many African states are hoping that the development of their natural resource endowments will enable their countries to experience a change in fortune similar to that seen in Botswana, where a joint collaboration with the state and De Beers mining corporation to capitalize on the country’s diamonds allowed Botswana to become one of the continents wealthiest nations in terms of GDP per capita, at $7544 which is higher than South Africa’s. Natural resources are Africa’s competitive advantage and the success of Botswana shows resources are not necessarily a curse; it just depends on whether ones government is actually competent and without the plague of corruption like Botswana’s, something that cannot be said for the vast majority of African states

An interesting development over the last couple of years is the fact that Chinese enterprises like Sinopec and The China National Petroleum Company have increasingly been given contracts to develop oil fields over more established players in the energy sector like the French oil company Total, in the case of controlling Angola’s oil fields. In 2004, Total was in the process of renewing its license on a large oil-production block, Angola refused, handing it instead to Sinopec. The reason for this can be explained by a number of factors: In the run up to Sinopec being awarded the contact in Angola, IMF officials were castigating Angola for corrupt oil dealings, China on the other hand gave the government $2 billion in credit to repair railway tracks bombed in the country’s long civil war and to construct new office buildings in the capital. The Chinese government therefore effectively courted the Angolans, putting its state run enterprise, Sinopec, in a more favorable position compared to Total. Other tactics used by the Chinese entail giving prestige enhancing infrastructure such as stadiums in the case of Mali and Djibouti or even a parliament in the case of Mozambique. African states therefore have a vested interest in giving such contracts to the Chinese at the expense of western firms. Another important factor is that China goes to Africa with nothing else but business in mind and hence it loans come with no strings attached, unlike those offered by NGO’s (World Bank & IMF) and governments from Europe or America which often stipulate political and social reform as a prerequisite for receiving the loan. Many African states dislike the paternalistic attitude of western powers and subsequently appreciate the tone of the Chinese which is best represented by their Prime Minister Wen Jiabao’s comment ‘we are here for business, not aid’.

Despite the immediate short term benefit that China’s involvement in Africa brings, there is a steadily growing dislike of the Chinese amongst many ordinary African’s, especially in Zambia where China has invested heavily in copper mines. Indeed, in the face of significant opposition, Zambia’s government under President Banda has recently signed a $3.5 Billion with China for the use of the mines in the Northwestern and Copperbelt regions of Zambia. Critics suggest that the agreements Zambia’s government have signed with China equate to nothing but short term gains which many doubt are even possible. Instead, they argue that China is returning Zambia to its colonial status as a provider of unprocessed and thus low value added resources, nothing more. Former Presidential Candidate Michael Sata is a vocal critic of the Chinese and points to the poor negotiation of the current contracts with the Chinese which he feels have short sold Zambia in desperation or self interest on the part of politicians. In mines such as the Chambishi Copper Mine in North Western Zambia, wages have fallen under Chinese ownership whilst working conditions have worsened to an extent where workers fear for their lives. Such a fear is not misplaced given the death of 49 Zambian workers in 2005 when the miners were blown up in an explosives depot at the mine due to lax safety measures. Interestingly, all the Chinese workers managed to escape from the depot unharmed. Last year the police shot five miners at the same mine in a riot over working conditions. This certainly isn’t the development that Zambians had envisaged and the Chinese and Zambian governments promised.

The flaws in Zambia’s relationship with Zambia do not stop with lower wages and unsafe working environments. Zambia once had a proud and relatively thriving cotton industry which provided employment to tens of thousands of Zambians. In Kabwe there was once, until a few years back, a textiles factory called Zambia China Mulungushi Textiles which won international awards for the quality of its produce. It employed over 1000 people and provided a livelihood for 1000’s more cotton farmers. Ironically, it was set up by the Chinese 30 years ago in a very different geo-political climate. In 2007, Mulungushi Textiles closed and with it, the local economy surrounding Kabwe. The factory closed as a result of the competition from cheap Chinese imports which beat the price of Zambian made goods. The textile workers lose and so do the traders in Kamwala (the capital Lusaka’s trading district) who have to also compete with Chinese owned retailers such as Heung II who sell the cheap Chinese goods. The only beneficiaries are the consumers who get cheaper goods, but when tens of thousands of jobs are being lost with no alternative forms of employment, the consumers also become the unemployed. In Zambia, Economics 101, where the invisible hand of the free market provides new jobs in more competitive sectors doesn’t apply, just like other African states that are not benefiting from globalisation. The situation is made worse by the fact the Chinese use as few local workers as possible to minimise costs still further. In the future, say critics, governments like that of Zambia should stipulate in any new contracts that the Chinese use Zambian workers, pay higher minimum wages and abide by more stringent safety regulations.

Although the direct impacts of China’s influence in Africa are of great concern, it’s the indirect impacts which are equally as negative. China has a poor human rights record at home and indeed, in Africa, such disregard for human life is evident in countries such as the Sudan. Since 1993, when China purchased several Sudanese oil refineries for $350 Million, the Chinese have also been arming the Sudanese government with small arms, ammunition and military vehicles and aircraft which are then used against the Christian population in the South. According to the government of Sudan’s own reported figures, from 2004 to 2006, Sudan purchased ninety percent of its small arms from China which amounted to over $55 million. Such sales have undermined a United Nations arms embargo imposed on Sudan in 2005 to try and end the conflict in the region of Darfur. In all, it is thought that 400 000 civilians have died in the conflict with almost 2 million displaced, not to mention the pain and suffering of those living. Despite, effectively a genocide occurring, China still exports its weapons to the region. In Zimbabwe, disgraced President, Robert Mugabe is supported by none other than the China. The Chinese not only built President Mugabe’s new $9 million mansion in 2006 whilst Mugabe leveled Harare’s shantytowns, it has also provided $240 million worth of troop carriers, fighter jets, and small arms to quash the little political opposition left standing in exchange for gold, tobacco and platinum. Perhaps Prime Minister Wen Jiabao’s statement ‘we are here for business, not aid’ should be adapted to read; ‘we are here for business, not morality’.

Despite the lavish prestige projects and infrastructure that many African states like the DRC and many other states have received, it seems that China’s real strategy is increasingly becoming exposed: Beijing extracts minerals and other natural resources at knock-down prices while battering the continent’s economies with a flood of subsidised goods and surplus labour. Although Africa is benefiting from the demand China’s economy has for Africa’s natural resources which raises prices, it is arguably not in Africa’s long term interest to let China take control of such resources in its current manner. African states can bargain harder given the world demand for such resources. China is not the only option, especially given Europe and North America’s anxiousness with China’s increasing influence in Africa. However such bargaining depends on efficient, capable and straight leadership from Africa’s governments, something that is as elusive as the dream African’s have of a brighter and more prosperous future.

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