For many in Africa, China is a welcome investor. In 2005, trade between China and Africa reached 35 billion dollars. Much of China’s investments are centered on Africa's oil sector, although Beijing is also an importer of African raw materials such as timber and minerals. Inexpensive Chinese products are now common in Africa's crowded market places. And, as part of its diplomacy, Beijing has forgiven over a billion dollars in debt to 32 African countries.
Martin Davies is the director for the Centre for Chinese Studies at Stellenbosch University and the CEO of Emerging Markets Focus, a management consultancy with offices in Pretoria and Shanghai.
He says Chinese investors include both government-backed companies and private traders and retailers who do business in Africa through a network of established family and regional contacts.
Davies told Voice of America reporter William Eagle, “China is a very aggressive investor in the continent and a provider of low cost engineering development solutions, and that can’t be a bad thing. That’s what Africa requires – infrastructure development. It’s a positive thing to see the Chinese engaging Africa on a constructive commercial basis, where it seems to be almost less cognizant of risk than many other investors on the continent are. In that sense, China should be lauded.”
Much of China’s investment is in the petroleum sector – and with Africa’s largest producers: Nigeria, Angola, Sudan and Equatorial Guinea. The Council on Foreign Relations quotes Chinese official sources as saying that in the first 10 months of 2005, China invested 175 million dollars -- mostly on oil exploration and infrastructure projects. That same year, according to the Council, Beijing purchased half of Sudan’s oil – about 5% of the petroleum needed by the growing Asian economic power.
In Angola, China’s export bank has approved a two billion dollar credit for rebuilding infrastructure in return for 10 thousand barrels of oil a day – about 13% of China’s crude imports. The deal, according to France’s Le Monde Diplomatique, also means that China’s companies will get most of the contracts, with 30% going to Angolan firms.
Another appeal of China’s aid to Africa is that it comes with few strings attached – other than dropping recognition of Taiwan as the legitimate government of China. China says it follows a policy of non-interference in the domestic affairs of its partners – and has come out against sanctions against Sudan and Zimbabwe.
Sierra Leone’s ambassador to Beijing is reported to have told one international broadcaster, “We like Chinese investment because we have just one meeting, we discuss what they want to do, and then they just do it…. There are no benchmarks and preconditions, no environmental impact assessment. If a G8 country had offered to rebuild [a] stadium, we’d still be having meetings about it.”
But critics say China’s support has a down side.
Human Rights Watch says China has given Sudan military and financial support, including ammunition, tanks and fighter aircraft. The journal Aviation Week and Space Technology says among the sales made to Khartoum between 1996 and 2003 were 100 million dollars worth of fighter planes, including 12 supersonic F-7 jets. Human rights activists say Chinese helicopter gun ships have been used against civilians in Darfur.
The Congressional Research Service says Beijing sold Ethiopia and Eritrea one billion dollars worth of weapons before their border war began in 1998. International arms sales monitors say weapons sold to Zimbabwe have included 12 fighter jets and 100 military vehicles worth 200 million dollars and a radio jamming device to prevent outside stations from being heard within the country. In Tanzania, the Overseas Development Institute says Beijing has delivered 13 shipments of weapons to Dar es Salaam labeled as agricultural equipment.
A specialist in energy security at the Washington-based Institute for the Analysis of Global Security says the Chinese are also more likely to use bribery and bonuses than are Western businesses, which have been under increasing pressure to use transparent business practices. Some observers say China’s loans to Angola and others do not include guarantees of transparency and thus allow governments to avoid “good governance” and anti-corruption measures.
But China specialist Martin Davies of Stellenbosch University says Beijing is being singled out unfairly:
“I don’t think external parties should be blamed for Africa’s poor governance. Many countries fall short when it comes to the political ties which should be placed on investments in African countries. [For example], I know China’s engagement in Sudan has been criticized heavily. What about European countries engaging Sudan? There are Indian firms and Malaysian firms [engaged there]. I think we need to ask how can we form a broader view start to change this corporate behavior of all companies in these countries, which may be considered politically undesirable.”
Davies says China’s pursuit of oil in Africa is simply part of a Chinese policy of commercial “realpolitik” – a policy recognizing the reality that the United States has much of the oil market in the Middle East to itself. He says because China is largely unable to gain access, it turns to other more marginal producers, such as Africa. He says China is pursuing its purchase of oil in Africa without violence or a military take-over of the host country.
Like China, Davies does not favor commercial sanctions against Sudan or Zimbabwe, although sanctions were credited with ending the apartheid government and ushering in multi-racial democracy in South Africa more than 10 years ago.
Mr. Davies says sanctions worked in South Africa in part because the country’s leadership and public consciousness were at a different level than those of many other African countries today:
“South African society and the domestic population were pushing for political change. Also, South Africans had access to information and a [high] level of education…. They had political access and [an] aware[ness] of issues and wanted to see change. Thirdly, the apartheid government had strong cultural and political ties to European governments. There were political and cultural linkages to Western Europe…[that reflected] the value system of the political elite. I do not think the value system is as equally developed in the elites of many countries on our continent where the willingness to suppress domestic uprising for political changes is far greater.”
Davies also challenges the critical view of cheap Chinese goods driving African manufacturers out of business. Some critics say the Chinese advantage comes in part from paying lower wages, sometimes even [using] slave labor from Chinese prisons.
But Davies says, “There are about 35 thousand textile and garment manufacturers in China – most of which are private companies competing with other private companies; that can not be a bad thing. Labor rates in Bangladesh, Kenya, Tanzania and Uganda are lower than those in China. China’s competitiveness is largely not determined by the cost of labor but by overcapacity in the marketplace. That results in too many goods chasing to few consumers in China….”
Davies says cheaper products benefits the African consumer, and that African countries must learn to be more competitive: “We should emulate [what works] in the Chinese market and ask what are our private and public sectors doing wrong, which is not attracting investment in the country, or carrying out the necessary incentives or environment upon which manufacturing and business can flourish. Obviously we’re doing something wrong.”