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The perils of Beijing's Africa strategy

Author: Elizabeth C. Economy, C.V. Starr Senior Fellow and Director for Asia Studies
November 2, 2006
International Herald Tribune

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On November 3rd, Beijing will host nearly 50 African leaders at the third Forum on China-African Cooperation (FOAC), marking 50 years of friendship and diplomatic ties. Chinese and African leaders will undoubtedly herald the recent dramatic expansion in trade and investment, the stream of high-level diplomatic visits and agreements, and the newly-forged south-south strategic bonds. Yet beyond the celebratory remarks there is growing unease on both sides about the future of the relationship. Deeper integration has introduced new social, political and economic tensions that if not resolved, make the prospects for the next fifty years of Sino-African relations far less optimistic.

Outwardly, China’s “Year of Africa,” has been a striking success. Since January, President Hu Jintao, Premier Wen Jiabao and Foreign Minister Li Zhaoxing have all traveled to Africa, visiting a total of 15 countries. Skyrocketing trade and foreign direct investment have made China a major player in Africa’s economic development. African leaders now routinely cite China as the ideal development model for their countries. Two-way trade has quadrupled in the last five years to reach $40 billion in 2005, making China Africa’s third largest trading partner after the European Union and the United States. While China’s voracious demand for commodities has driven investment priorities, it is diversifying into the apparel, food processing, telecommunications, and construction sectors. At $1.2 billion, Chinese FDI in Africa is small compared to the $29 billion total recorded last year, but if the influx of Chinese firms is any guide, a ten-fold increase since 2003, future capital inflows likely will multiply.  

Politically, China’s “hands off politics” approach was initially a welcome change for many African leaders who bristle over the conditionalities imposed by the US and Europe and multilateral institutions. An editorial in China’s English language newspaper, the China Daily, makes the contrast clear noting that China “has been encouraging the African countries to develop their economy through trade and investment in infrastructure and social institutions, without dictating terms for political and economic reforms.”

Yet gradually it has become evident that China’s approach to Africa comes at a steep price. The situation in Sudan is the most pernicious example of the implications of not mixing business and politics. By refusing to press Khartoum to accept the Security Council mandate for a UN peacekeeping force in Darfur, Beijing is effectively condoning atrocities and contributing to the spillover of violence and refugees into Chad. In Zimbabwe, Beijing’s economic largesse is helping to keep Mugabe’s repressive regime in power and contributing to refugee problems in Mozambique and South Africa.

Burgeoning economic ties also belie the challenges that have arisen from greater economic integration. Beijing’s unwillingness to press its state-owned firms on issues of good governance and social responsibility is producing a backlash in several African countries. Last month, Gabon ordered the Chinese energy firm, Sinopec, to halt exploration in Loango national park, designated a nature reserve in 2002 with funding from international donors, after a US conservation group accused it of desecrating the forest and operating without an approved environmental impact study. In Zambia, mineworkers rioted at a Chinese run-mine over poor working conditions and a failure to pay wages.

Anecdotal evidence also suggests simmering grass roots resentment of the growing Chinese presence. Legal and illegal Chinese immigrants are moving to Africa by the tens and sometimes hundreds of thousands. Chinese laborers are brought in to work in extractive industries, construction and manufacturing projects fueling charges that Chinese investors are taking rather than creating jobs. In Angola, a Chinese $2 billion dollar credit line is contingent on Chinese firms getting 70% of the contracts. In South Africa, where an estimated one hundred to two hundred thousand Chinese dominate the retail and wholesale clothing industry, unions have pressed Pretoria to put quotas on Chinese apparel and textiles imports to protect local industry and jobs. 

Ultimately, it is up to African leaders to decide whether Beijing’s “strictly business” strategy is compatible with their commitment to principles of transparency and good governance stated in their New Partnership for Africa’s Development (NEPAD). Every day brings new evidence that getting China on board with these goals will be critical to the continent’s long term development and stability. As a first step, China and its energy and mining firms should be encouraged to sign on to Publish What You Pay and the Extractive Industries Transparency Initiative that require extractive industry companies and host governments to publicly disclose transactions to curb corruption. Chinese firms can also prove their commitment to transparency, environmental issues and safe and equitable working conditions by submitting transparent, untied bids for projects funded by multilateral institutions. Finally, World Bank President Wolfowitz has said the Bank wants to work directly with China in its development projects on the continent. The US and Europe should follow suit by inviting China to participate in its initiatives focused on promoting sustainable development  and eradicating poverty in Africa—including the G-8, the OECD, the UK’s Commission for Africa, and even the US Millennium Development Account.

During his Africa trip last summer, Chinese Premier Wen Jiabao stated, “We encourage African countries to improve democracy and the rule of law, social justice and equality.” He continued on, however, to note that China had “full confidence” that the African people could “properly handle their own affairs.” With hundreds of thousands of Chinese living and working throughout Africa, with China rapidly becoming the largest trading partner and investor in the continent, and with its rising profile within the international system, however, China must realize that it cannot merely voice support but must work proactively to help realize Africa’s aspirations. Africa’s “own affairs” have become China’s as well. Africa’s future, as well as China’s, is at stake.

This article appears in full on CFR.org by permission of its original publisher. It was originally available here.

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