Chopsticks mercantilism: China’s involvement in Africa

George Ayittey
The Economist
February 15, 2010

To feed the voracious appetite of its economic machine galloping at a dizzying 9% clip, China has been trolling for resources in Africa. It has spent billions of dollars securing drilling rights in Angola, Nigeria, Sudan and Angola; has exploration or extraction deals with Chad, Gabon, Mauritania, Kenya, the Democratic Republic of Congo, Equatorial Guinea and Ethiopia; and has invested in the copper industry in Zambia and Congo as well as buying timber in Gabon, Cameroon, Mozambique, Equatorial Guinea and Liberia. Across Africa, Chinese companies are muscling out Western and other foreign companies, winning contracts to pave highways, build hydroelectric dams, upgrade ports, lay railway tracks and build pipelines.

China’s engagement with Africa should be a boon. Its overall trade with Africa rose from $10.6 billion in 2000 to $75.5 billion in 2008, propelling Africa’s growth rate to 5.8% in 2008, its best performance since 1974. China is now Africa’s second-largest trading partner after the United States, importing a third of its crude oil from Africa. Further, Africa needs the investment, in particular, to rebuild its decrepit infrastructure. A November 2009 World Bank Report states: “The poor state of infrastructure in Sub-Saharan Africa—its electricity, water, roads and information and communications technology (ICT)—cuts national economic growth by two percentage points every year and reduces productivity by as much as 40 percent.” To close the infrastructure gap, an annual spending of $93 billion would be required. Thus, Chinese investment in Africa’s infrastructure should be most welcome. But China’s engagement is increasingly being seen as odious, predatory and brutish. The initial enthusiasm that greeted Chinese investments in Africa has now cooled.

“There is mounting objection to China’s deepening forays into Africa” said News Africa (March 2007). The former president of South Africa, Thabo Mbeki, warned against allowing China’s push for raw materials to become a “new form of neo-colonialist adventure” with African raw materials exchanged for shoddy manufactured imports and little attention to developing an impoverished continent.

In the 1980s, human rights groups pushed Western companies to maintain certain ethical standards when doing business in Africa. An African American pastor, Leon H. Sullivan, developed the Sullivan principles for Western companies doing business in apartheid South Africa. Similar campaigns were mounted against Western oil companies in Sudan on account of the genocide in Darfur. In addition, the 1975 Foreign Corrupt Practices Act prohibits US companies from paying bribes to foreign government officials. By contrast, Chinese companies operate with no such moral scruples or ethical constraints in Africa.

China deals with just about any rogue and unsavoury regime in Africa. It supplies jet fighters, military vehicles and guns to Zimbabwe, Sudan, Ethiopia and other repressive governments. At the UN, China has used its veto power to block sanctions against tyrannical regimes in Sudan and Zimbabwe.

The nature of China’s contracts is most objectionable. They are secured through outright bribery by building presidential palaces (Namibia, Sudan and Zimbabwe) and sports stadiums (Democratic Republic of Congo and Guinea). Namibian prosecutors are investigating allegations of bribery and kickbacks on government contracts with China to supply Namibia with scanners at security checkpoints. Nuctech, the Beijing-based manufacturer and headed until 2008 by the son of Hu Jintao, China’s president, is accused of paying $4.2 million in kickbacks to a Namibian front company (New York Times, July 31st 2009, p. A4). Another investigation involves a Chinese contract to build a key railroad link.

Most alarming, the deals are opaque and on barter terms dictated by China. For example, in exchange for oil exploration slots, China will rebuild Nigeria’s dilapidated railway system. But China will supply nearly all the equipment and technical personnel at prices determined by itself. There is no protection against overcharging or cost overruns. As with other projects in Africa, China will supply most of the workers. The potential for exploitation and plunder of Africa’s resources is enormous in such contracts, leading irate African commentators to denounce what they see as “chopsticks mercantilism”. With chopsticks dexterity, China can pick off mineral dumplings with relish in Africa, all to its advantage.

Further, China’s engagement has devastated local industries in Lesotho, Nigeria and Zambia. In Nigeria, the influx of Chinese products has destroyed Kano’s manufacturing sector. In 1982, 500 factories churned out textile products in Kano, but fewer than 100 remain operational today, most at far less than full capacity. In South Africa, the textile union says some 100,000 jobs have been lost as Chinese synthetic fabrics replace cotton prints in street markets across Africa.

Angry Africans are sounding off. In 2007, South Africa’s unions threatened to boycott anyone selling Chinese products. In April 2007, nine Chinese workers were killed in an attack by armed men on an oil field in eastern Ethiopia. In Nigeria, the Movement for the Emancipation of the Niger Delta (MEND) has vowed to expel all Chinese workers in the area.

Anti-Chinese sentiments even became a campaign issue in Zambia’s September 2006 presidential election because of workplace accidents, poor working conditions and below-minimum wage pay at Chinese-run copper mines. More than 50 Zambian workers died in a 2005 mine explosion. The opposition leader, Michael Sata, called the Chinese profiteers, not investors, in a country where unemployment is about 50% and more than 73% of people live in poverty. “Chinese investment has not added any value to the people of Zambia,” he charged (Washington Post, 25 September 25th 2006, p. A16).

More troubling, China’s increased engagement with Africa has impeded the continent’s halting steps towards democratic accountability and better governance. The West has made its aid conditional on progress on these fronts. But since China attaches no such conditions, African countries receiving Chinese aid have little incentive to improve governance. Indeed in 2003, when the IMF suspended $2 billion in aid to Angola, citing rampant corruption, China came to the rescue with a $2 billion oil deal.

The claim that China’s intentions in Africa are noble is fatuous. Its real intentions are well known: to elbow out all foreign companies and gain access to Africa’s resources at cheap prices; canvas for African votes at the UN in its quest for global hegemony; isolate Taiwan; and seek new markets for Chinese manufactures as European markets become saturated with Chinese goods. Less well known is its quest for African land to dump its surplus population. As a condition for Chinese aid, African states must accept large numbers of Chinese experts and workers as part of their investment packages. Chinese communes are springing up across Africa. In Namibia, the number of Chinese expatriates has reached 40,000, with 100,000 in Zambia and 120,000 in Nigeria. China even has a secret plan, called the ChongqingExperiment, to resettle 12m of its farmers in Africa.

As Rene N’Guetta Kouassi, the head of the African Union’s economic affairs department, warned: “Africa must not jump blindly from one type of neo-colonialism into Chinese-style neo-colonialism” (AFP, September 30th 2009).

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Categories: Africa, Odious Debts

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