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With China Calling, Is It Time to Say Goodbye to US And Europe?
[April 13, 2006]

With China Calling, Is It Time to Say Goodbye to US And Europe?

( English Via Thomson Dialog NewsEdge)Nairobi, Apr 14, 2006 (The Nation/All Africa Global Media via COMTEX) --By the turn of the century, China had transformed its foreign relations from one hinged on ideology to one governed by the pursuit of economic self-interest, and Africa has not been left out. Mark Sorbara explores Africa's place in China's new world

What do the US, Saudi Arabia, Morocco, Nigeria and Kenya have in common? Not much really. But from next week they will share a common 'bond' as part of the itinerary of a high-powered Chinese delegation led by none other than Chinese President Hu Jintao, from April 18 to 29. What's the big deal about that, one may ask. Well, its simply because China is the place where big deals - of the mind-boggling type - are made these days.

And there is quite some excitement about Hu's visit, at least in Washington, where he is expected to tour Microsoft and Boeing Co. before heading to the White House on April 20. Forget Washington's complaints over human rights violations, piracy, the value of China's currency and unfair trade practices, the importance of China as a trade partner to the United States is crystal clear.

Figure this: "A multi-billion deal for Boeing aircraft has already been signed and Hu's first official trip to the United States as president has also brought into focus a groundbreaking bid by a Citigroup-led consortium to buy an 85 per cent stake in China's Guangdong Development Bank," Reuters reported this week.

"Hu's trip and a trade delegation this month led by Chinese Vice Premier Wu Yi are yielding deals on everything from software to soybeans worth an expected total of about $16 billion." The report quoted Chinese aviation officials as saying that the Boeing deal signed on Tuesday involved the purchase of 80 Boeing 737 planes that have a list value of $4.6 billion.

That's all very well for the US, and we can pretty well guess what the Saudi's will be buying and selling when they host Hu and his delegation. What about Africa? What's in it for the continent?

The man who holds the answer is Li Zhaoxing, China's foreign minister. Li Zhaoxing is no stranger to Africa. From 1970 to 1977 Li served as an attache in the Chinese Embassy in Kenya, from 1983 to 1985 he was first secretary in Maseru, Lesotho.

From January 11 to 19 Li visited Cape Verde, Liberia, Mali, Senegal, Nigeria and Libya. China's increased role throughout Africa has demonstrated that Beijing's Africa policy will be an important aspect of its rapid economic growth. Hence, on January 12, Li officially unveiled an Africa Policy Paper which outlined the future relationship between Africa and China.

As stated in its forward, the Policy Paper was created " with the view of promoting the steady growth of China-Africa relations in the long term and bringing the mutually beneficial co-operation to a new stage." It states, "the one China principle is the political foundation for the establishment and development of China's relations with African countries and regional organisations." If African countries choose to accept this prerequisite, China will "co-ordinate positions on major international and regional issues and stand for mutual support on major issues concerning state sovereignty, territorial integrity, national dignity and human rights."

The focal point of China-Africa relations is resource based, as the policy states, "the Chinese government will adopt more effective measures to facilitate African commodities access to the Chinese market." Investing in African extractive industries is a risky business, but China is desperately in need of raw materials to feed its booming economy, hence the government is willing to shoulder most of the risk for Chinese companies looking to invest in Africa. Therefore, "the Chinese government encourages and supports Chinese enterprises' investment and business in Africa, and will continue to provide preferential loans and buyer credits to this end."

Moreover, the policy states, "China will do its best to provide and gradually increase assistance to African countries with no political strings attached." On peace and security, "China will promote high-level military exchanges between the two states and actively carry out military related technological exchanges and co-operation. It will continue to help train African military personnel and support defence and army building of African countries for their own security."

For not recognising Taiwan, African countries can get government-supported foreign direct investment, aid and military assistance "with no political strings attached." Goodbye US and Europe; Hello China!

In the end, though, China's Africa policy today is largely driven by self-interest, mainly access to resources, therefore it has to work with African countries to make sure the resources increasingly flow towards Beijing and not Paris, London or Washington. But it will not get the resources without some competition.

For example, the influential US-based Council on Foreign Relations published a report in December 2005 entitled More Than Humanitarianism: A Strategic US Approach Towards Africa and has opened the debate on changing the US-Africa relations. The year 2005 supposedly was the "year of Africa", but as the Foreign Relations report stated, "the point was missing - amid the music, communiques, and the commitments -- that Africa is becoming steadily more central to the United States and the rest of the world in ways which transcend humanitarian interests."

Notably, fifteen pages of the US Foreign Relations report are spent assessing the impact of China's increasing role in Africa and bluntly illustrate many of the issues which China's Africa Policy Paper dealt with. For example, the report states, "All across Africa today, China is acquiring control of natural resource assets, out-bidding Western contractors on major infrastructure projects, and providing soft loans and other incentives to bolster is competitive advantage."

It continues, "Perhaps most disturbing to US political objectives is China's willingness to use its seat on the UN Security Council to protect some of Africa's most egregious regimes from international sanction China offers an alternative source of support, even to some of the United States' closest allies, when they chafe under Western pressure for economic or political reform."

On the subject of investment and aid the Foreign Relations report states that "China is also investing and providing assistance in areas that Western aid agencies and private investors have long neglected: physical infrastructure, industry and agriculture." And " Chinese business practices, which serve state interests as much as a profit motive, create unfair competition to US firms bidding for contracts." The Chinese government and businesses see opportunity in Africa, where Westerners see poverty and despair, and they are actively working together to see that the opportunities are transformed into successful ventures.

In 1960s to 1970s, when ideology was the main factor influencing China's foreign relations, almost 25,000 Chinese doctors and agricultural engineers were stationed all over the 'Third World'. By the turn of the century, China had transformed its foreign relations to one governed by the pursuit of economic self-interest. From the first meeting of the China-Africa Co-operation Forum held in Beijing in 2000 to its second meeting held in Addis Ababa in 2003, a lot has changed. Between 2002 and 2003 China-Africa trade jumped 50 per cent to $18.5 billion, and by the end of 2004, over 715 Chinese-funded companies were operating in Africa.

On January 6, 2006, the BBC reported that Chinese trade with Africa jumped 39 per cent to $32.17 billion in 2005 and "in the first 10 months of 2005 alone, Chinese companies invested a total of $175 million in African countries." Moreover, in the next five years, China-Africa trade is expected to surpass $100 billion.

China's thirst for raw materials has dramatically transformed its relations with many African countries. Take Nigeria; the trade between the two countries stood at $384 million in 1998, by 2001 it was $1 billion, by 2004 it was $2 billion and by the end of 2005 trade between Nigeria and China reached approximately $3 billion. In January 2006, the China National Offshore Oil Corporation paid $2.3 billion for a 45 per cent stake in the Akpo oil field, its largest overseas acquisition, which has a reserve of 600 million barrels and potential for an extra 500 million.

China's trade and investment relationship with Nigeria is expanding rapidly outside the oil sector as well. In 2005, Nigeria earned over $500 million from non-oil product exports to China and in 2006 the Nigerian government signed a memorandum of understanding with Guangdong Xinguang International Group, a Chinese government-owned company, to enhance Nigeria's rail network. The $2 billion dollar MOU includes a fast rail system between Lagos and Abuja, a light rail system from Murtala Mohammed International Airport to Nnamdi Azikiwe International Airport in Lagos and Abuja city centre as well.

China and Nigeria have also discussed the possibilities of further Chinese investments in power stations, low cost housing projects, cassava plantations, an agro-research centre, an Aids medicine factory and a medical equipment factory.

Angola, Sub-Saharan Africa's second largest oil producer, is another important element in Beijing's Africa policy. According to state controlled Angola Press, "in 2005, bilateral trade between the two countries reached $6.95 billion, an increase of 41.6 per cent from the previous year." Most of the increase has been due to crude purchases by the China Petroleum and Chemical Corporation (Sinopec) as part of a 2004 agreement which saw the Chinese Eximbank approve a $2 billion (1.5 per cent over 17 years) infrastructure loan to the Angolan government.

In March, CNN reported that " a new consortium jointly controlled by the Angolan government-run Sonangol oil company and Sinopec has been awarded a contract to build a 240,000 barrel per day refinery in Lobito." Angola now accounts for 13 per cent of China's crude oil imports and China's is the second largest consumer of Angolan crude oil after the United States. Hence, 20 leading Chinese firms operating in Angola, such as Sinosteel, China National Overseas Engineering Corporation and Sinopec have recently created a Chinese Chamber of Commerce in Luanda to enhance relations with Angola.

When discussing Chinese resource extraction in Africa, Sudan is increasingly emerging as an important player. The China National Petroleum Corporation (CNPC) is the largest investor in the Sudanese oil industry. The decision of the US government to cut ties with Sudan in the mid-1990s pressured Western oil companies to withdraw and opened new opportunities for Chinese investment.

CNPC, in a joint venture with the Greater Nile Petroleum Operating Company, of which CNPC has a 40 per cent stake, have been exploiting Sudanese oil deposits in the Muglad Basin. Together, the CNPC and the Greater Nile company have invested over $8 billion in Sudan, including the 1,500 km pipeline to transport oil to the Marsa al-Bashair harbour terminal near the Port of Sudan on the Red Sea. By 2005, China was purchasing between 50 and 60 per cent of Sudan crude production and Sudan alone accounts for 7 to 9 per cent of Chinese oil imports.

China is also active in Africa's smaller oil exporting countries as well. In 2003, China imported one million tons of crude oil from Congo-Brazzaville, accounting for 1.5 per cent of Chinese oil imports. China is the third largest importer of oil from Equatorial Guinea after the US and Spain. Total-Gabon and Sinopec signed an agreement in 2004 to supply China with one million tons of crude oil a year, making China the third largest consumer of Gabonese crude after the US and France. The Chinese petroleum company Zhongyuan Exploration Bureau is even drilling on behalf of Petronas, the Malaysian state-owned oil company, in the Gambella Basin in Western Ethiopia.

Non-oil resource extraction is also attracting Chinese investment in Africa as well. Over 60 per cent of Gabon's, and a large part of Equatorial Guinea's, timber production is purchased by China. China is the world's largest consumer of copper and has invested $170 million in the Zambian copper mining sector. The Chambezi copper mine, which was purchased in 1999, is now its largest Chinese mining operation in Africa. Moreover, China is increasingly involved the Democratic Republic of Congo, investing in cobalt and copper mines as well.

Although resource extraction is the center-piece of China's new Africa push, non-resource based investments have not been ignored. In Ghana, Sino Hydro signed a memorandum of understanding with the Ghanaian Government to construct the Bui Dam. The $500 million project is expected to augment Ghanaian power supply from the Akosombo Dam and the Aboadze Thermal Plant.

In Zimbabwe, a number of farms seized from white farmers by the government have been leased to the China State Farms and Agribusiness Corporation, which will revive and enhance production on the Fenemere and Dalkeith farms near the Mazvikadai Dam and the Clydedale and Liverdale farms near the Biri Dam. Chinese companies have also leased agricultural land in Zambia and Tanzania.

Even in post-war Sierra Leone, Chinese investors see possibilities. Henon Guoji, a Chinese company, is starting construction of the $200 million Lumley Beach Hotel, which will include a conference centre, a sports facility, casino and night club. The Chinese state-owned company, Beijing Urban Construction Group, has purchased and restored The Bintumani, Sierra Leone's largest hotel, at a cost of $10 million and it is already up and running. Chinese companies in Sierra Leone have also invested in a sugar plant and a tractor factory, and the Chinese government has built a new office block, parliament buildings and a new military headquarters for the government of Sierra Leone.

The list continues: the China Road and Bridge Corporation built the Tambach-Kabarnet road in Western Kenya and refurbished part of the Nairobi-Mombasa road. The Bata-Mongono road in Gabon was built with financial and technical assistance from China, while the Zhengxing Telecom is refurbishing Djibouti's telecom network.

China is constructing one of Africa's largest dams in Ethiopia and is assisting in the construction and launch of a Nigerian communications satellite in 2007. Chinese firms have also entered into fish processing joint ventures in Gabon and Namibia and the Qingdao Municipal Government has invested in a textile factory in the new Mulungashi Industrial Estates near Kabwe in Zambia. China has also constructed a new Foreign Affairs Ministry building in Uganda and Djibouti and built a new stadium in Mali.

Although France, the UK and the US still account for 70 per cent of Foreign Direct Investment inflows to Africa, all that will change with the emergence of China's Africa focus. So maybe Westerners should start to be more honest with themselves and Africans and stop all this useless armchair pitying.

Mark J. Sorbara is a freelance writer and researcher on African issues.

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