China and Africa trade relations: Are we heading towards a neo-colonialism ‘Made in China’?

Posted Patrick Mbeko from therisingcontinent

By Patrick Mbeko
The author of this essay describes the incumbent state of the economic and commercial relations between China and Africa. He goes on explaining what will probably happen if the appearing unbalance in the relationship is not reviewed rapidly, particularly on the African side. Some negative aspects in the prevailing and increasing trade have already emerged and are singled out.

‘China will forever be a friend, partner and brother to Africa! ‘, such are the remarks of the Chinese President Hu Jintao at the China – Africa business summit, which took place in 2006, during which the Chinese head of state stressed the need to establish a ‘win-win’ economic partnership and strengthen political relations with Africa. It must be said that unlike the West, China has no prior occupation or colonial wars, to be forgiven for; arguments that often come up in the speeches of Chinese leaders are well straightforward: China works to develop and expand a new type of strategic partnership with Africa, characterized politically by equality and mutual trust, cooperation being conducted in a ‘win-win’ spirit in the sectors of the economy and strengthening cultural joint programs.
Many in Africa are already showing their optimism with the new Chinese policy towards Africa, seeing it as the continent’s last chance to overcome its chronic underdevelopment, especially as aid from the Oriental Empire to the continent does not have any strings attached. The Chinese are less prone to linking their investments or provided aid to the progress made by African governments in terms of human rights, democracy, fight against corruption, etc. ‘We respect the sovereignty of African countries to choose their model of development and we never intervene in internal affairs. We do neither link any political condition to our assistance to governments,’ said Gu Xiaojie, Chinese Ambassador to the African Union. Indeed, this is not the case of the West where aid is often tied to a set of conditions for reforming African economies and making them more liberal using structural adjustments, etc. In terms of ‘political’ conditions, the West demands, at least in theory, African leaders to take the path of democracy and good governance. In fact, the argument of promoting democracy stands sometime as double standards when we know about the many complicit relations the West has with a litany of African authoritarian regimes or at least doubtful (Rwanda, DRC, Togo, Burkina Faso, Nigeria …) – and with which they officially collaborate in the fight against terrorism and non-controlled immigration. In the absence of progress in this area, the West reserves the right to theoretically cut off funding. In Africa, where structural adjustments have been disastrous, economical and political strings to aid that accompany and are part of agreements for cooperation are not well perceived. They are considered as an imposition of a neo-colonial type. Furthermore, Chinese investments in Africa are far higher than the money injected by the World Bank. In 2007 alone, Beijing has invested over $ 9 billion in Africa, while the World Bank has been unable to put more than $ 2.5 billion. The IMF has been trying to persuade China to become its partner for the financing of several projects in Africa. The Chinese – Africa summit of 2006, we highlighted earlier, confirmed the central place that now holds Africa in the strategies of foreign policy of the Chinese government. Among these there is the creation of a ‘fund’ of development for Africa with a budget of $ 5 billion, debt cancellation amounting to $ 1.4 billion (for about 31 countries) and a twofold level of aid budget since 2009.
The picture would have been idyllic if behind the declarations of good intentions and the image of China ‘in love’ with Africa, didn’t hide a different reality: the offensive Beijing is the expression of a new type of colonial adventure that Africa – already very weak – will probably emerge bruised from. Do only African intellectuals understand that? And as stated by Rene N’Guetta Kouassi, Director of the Department of Economic Affairs of the African Union,’It shouldn’t come to the situation where Africa escapes one neo-colonialism to jump stupidly bound and gagged into a Chinese neo-colonialism.’ If at first Chinese breakthrough in Africa has been greeted with enthusiasm, today it is no longer the case. It worries. And Africans should be more than alert.
Indeed, there is little to be illusionary about. China does not practice selfless philanthropy it can not afford. It’s no secret that the country has become a major consumer of raw materials. China now use 25% of all copper consumed worldwide, 40% coal, 35% steel, 10% of oil and its demand is continuously increasing, and 90% of all aluminum. An energy-hungry economy, hungry for raw materials has naturally turned towards the region that is best provided with: Africa. Hence, it’s that critical situation, mainly motivating the search for an energy security, which at the outset places Africa and its raw materials at the centre of Chinese national concerns.
It is under these premises that Africans should analyze the impressive interest of the Oriental Empire in their continent; instead of being complacent thinking that Chinese are invading our continent because they are ‘in love’ with us. Moreover, while receiving Chinese in their countries, Africans have nothing to manage effectively the relationship. This is the usual scenario. By giving them all sorts of administrative incentives, Africans just hope the Chinese will be more like friendly, nicer and more keen to wealth redistribution than ‘Westerns’ have been. The most secret satisfaction of Negros would seem to be: that the West finally feels so cuckolded by this new romantic and idyllic rivalry.
Still, unlike the U.S. and Europe, China does not seem to have a clearly defined strategy to ensure its supply of raw materials. However, its strong economic growth for some time has greatly stimulated its appetite for them. Thus, to compensate for the high demand for raw materials it has become virtually dependent of and to guarantee permanent access to them, China encourages private companies to source raw materials abroad in exchange for funding infrastructure sectors and related services. China therefore proposes to African leaders what it calls win-win deals (“win-win agreements”) – this is the new economic scenario where, according to Beijing, there would be no a priori loosing partner. This makes at ease almost everyone in Africa. But beware! Appearances are often deceptive, the ‘win-win’ is more subtle than anything else. We will come back to this in the next lines.
Nearly 85% of Chinese imports from Africa are related to hydrocarbons and metals, hence the emphasis on the sectors related to the exploitation of raw materials by Chinese authorities. Chinese extract copper and cobalt in Zambia and DR Congo, platinum and chrome in Zimbabwe. They buy huge quantities of timber from Gabon, Cameroon, Mozambique, Equatorial Guinea and Liberia, as well as steel, gold, coal, nickel in all countries in the area who own or produce them. Angola provides half the oil imported from Africa by Beijing. In January 2005 the Angolan government was granted a Chinese loan of $ 2 billion oil-backed, which increased by one billion dollars the following year. Officially this was aimed at repairing the deficient Angolan infrastructures. Between 2000 and 2007, notes the South African Institute of International Affairs (SAIIA), the value of mineral imports from Africa rose from 286 million to $ 2.6 billion.
It must however be noted that the billions provided by the Chinese in exchange for natural resources in Africa are far from benefiting domestic economies. In fact, China brings its own engineers and workers for the completion of infrastructure works; understandably it’s better for African governments that purchase these services at competitive prices, but too bad for the local workforce country where the unemployment rate skyrocketed. Yet nothing prevents African leaders to impose, in negotiations with the Oriental Empire, clauses which ensure a certain level of technology transfer and training for local employees. Clearly, we have in place with the Chinese version of ‘strings attached to aid’ often practiced by Westerners towards Africa. Specifically, Chinese aid is conditional in two ways since firstly, projects funded by the Oriental Empire are mainly commissioned to Chinese companies and delivered by Chinese labor to the detriment of the local workforce. This situation causes tension between concerned local populations seeing Chinese arriving to their places – and secondly, funding for infrastructure projects (roads, bridges, dams, hospitals, etc..) or prestige (stadiums,  presidential palaces) are systematically tied to the granting of oil concessions and mining. This was particularly the case of the DRC-China agreement signed in 2007. In practice, there is no difference between loans packaged by large international financial organizations and the Chinese cooperation – which provides funding without conditions and advocates the ‘turn-key’ formula of its investments – with African states.
Furthermore, by awarding contracts to the Chinese mining and oil products for very long periods of time, African leaders do not seem to project themselves in space and time, they do not seem to rightly project for the future since there is no indication that agreed raw materials’ prices at the time of signing the contract, will stagnate or decline in the long term. Quite the contrary, the strong demand for raw materials and scarcity looming in the near future indicate that there will be an explosion of their prices, which means that Africa will mortgage for a long time its resources that will prove more than strategic and whose prices will rocket in the future. And let’s not forget that these resources are not inexhaustible. More importantly, it is essential to ask if African governments do assess effectively the actual quantity of minerals and oil they promise to Chinese private enterprises in return for work to be performed.
Today, everybody does not see positively the growing economic involvement of China in Africa. In late September 2009, the Nigerian government refused the Chinese proposal to purchase six billion barrels of oil despite the standoff, which opposes it to the major Western oil companies located in the country for years. A contract valued at some 20 billion Euros. ‘I can tell you that we will not give them all that’ simply stated Odein Ajumogobia, Deputy Oil Minister of Nigeria. First African partner of China, South Africa, which in 1997 broke relations with Taiwan to be closer to Beijing, faces all at once ‘a tasty collaboration and a terrifying threat,’ notes Mr. Moeletsi Mbeki Vice-President of the South African Institute of Foreign Affairs of the University of Witwatersrand, Johannesburg. He continued: ‘In exchange for raw materials that we sell to them, we buy their manufactured goods. And this can only have a predictable result: a negative trade balance. Do we attend not to repeat an old story? ‘Moreover, there is an increasing informal Chinese commerce which is taking place in several African countries, hence the dissatisfaction of many traders in a number of them.
On the social, political and environmental fronts, Chinese practices in Africa pose serious problems. Indeed, social rights of African workers employed by Chinese enterprises are routinely violated, for example, wages are poor and workers have no right to unionize. Social responsibility is virtually nonexistent. Thus, in Mauritius for example, Chinese took only a few months to dismantle the textile factories that they had assembled to circumvent the quotas imposed on China by the WTO, once these had been removed. This was done without any concern for the social repercussions of their departure. It is a similar scenario on the environmental front since Chinese companies in their quest for natural resources and the implementation of infrastructure projects, have no respect for international standards. All this does not seem to bother African leaders since China, unlike the Western powers, do not interfere in the internal affairs of African states; they prefer to invest without being concerned by countries where corruption and violations of human rights, reach unimaginable proportions.
That said, this apparent ‘non interference’ that seems to benefit China, will have very negative consequences on the future of many African countries. Why? Chinese money to Africa is not a donation, but a loan. By lending to dictators who don’t miss any opportunity to serve themselves hence diverting funds earmarked for certain projects as evidenced in the past with loans from the West, countries will find themselves trapped for long periods through enormous debts; future generations will find themselves reimbursing debts they did not take and which did not even contribute to the development of their people and nations. Therefore, we have then a new form of ‘odious debt’ Made in China. Cynical Western practices in Africa once decried, resurfacing with the Chinese in a quite sneaky way. An internal memo from the Quai d’Orsay mentioned that: ‘Chinese aid programs may amount to a disguised form of corruption.’
We must not be delusional. Practically, economic relations between Africa and China are similar to North-South trade much maligned in the past by Africans, and therefore also constitutes a serious handicap for the long-term development of the continent. More specifically, Africa is almost exclusively confined to the role of supplier of raw materials (oil, minerals, wood, cotton, etc…), which has the negative effect of keeping the continent in an increasingly unfavorable position in the international division of labor. It is obvious that with such trend, the cycle of poverty is not ready to stop. Like Western powers, China intends to secure its access to raw materials and it will use all the means to achieve that objective. All this brings us back again to the responsibility of African leaders toward their people and future generations as it is up to Africans to make the right choices for protecting their interests. It is inconceivable to negotiate with the Chinese on the sole basis of the bad experience with Westerners. Between cancer and the plague, I would prefer nothing but good mental and physical health. It is not because they offer better than Westerners – though remaining harmful to Africa – that we must accept these unbalanced and unfair agreements. On a practical level, it is not the personality of the partner that counts during negotiations, but instead the pragmatism and seriousness with which they are approached that are most critical. As I said before, nothing prevents African leaders from imposing their terms during the negotiations in lines with the continent interests. And as long African elites do not favor their people’s and countries’ interests during negotiations with other nations, the story of the raven and the fox will be repeated forever. Definitely the solution to the problem lies in the hands of Africans themselves. And as pointed out by the Benin economist Guillaume Moumouni, we Africans must face the fact that a powerful country will not approach our leaders altruistically because we deserve its intervention or we are poor. Presently, it is the case of China, but tomorrow it will be India or Brazil positioning strategically their interests towards Africa in the same way. And we will again be crying out as spoiled children.

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