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China-Africa Cooperation

Tag Archives | China-Africa Cooperation

Chinese Investment in Africa: How Much?

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A Chinese worker walked with Guinean workers carrying bags of cement on the construction site of a 50,000-seat sports stadium in Conakry. Photo: Olivier Asselin

How much has China invested in Africa?

A Chinese worker walked with Guinean workers carrying bags of cement on the construction site of a 50,000-seat sports stadium in Conakry. Photo: Olivier Asselin

I just received a slightly breathless invitation to an event to be held at the Ritz-Carlton in Beijing, which led off with this statement: “China’s investment in Africa has increased a staggering 30-fold since 2005, with 2,000 Chinese firms now present in 50 African countries.”

Really?

Let’s look first at the math. Here are the annual official figures for Chinese investment in Africa from MOFCOM:

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Obama’s Missed Opportunity in Africa

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President Barack Obama participates in a joint press conference with President Macky Sall of Senegal at the Presidential Palace in Dakar, Senegal, June 27, 2013. Pete Souza/White House

President Barack Obama participates in a joint press conference with President Macky Sall of Senegal at the Presidential Palace in Dakar, Senegal, June 27, 2013. Pete Souza/White House

Africans anxiously awaited President Obama’s return to sub-Saharan Africa, but they may be disappointed when he leaves Wednesday unless he announces a major initiative to promote trade.  Many remember his first trip — a 24-hour visit to Ghana in 2009. During that brief stay he said, “Development depends on good governance — [the] ingredient which has been missing in far too many places, for far too long. That’s the change that can unlock Africa’s potential.”

Obama — who visited Senegal, South Africa and Tanzania on this trip — spoke Sunday to an audience of future African leaders at the University of Cape Town.  Obama could have used that opportunity to stress a new vision for Africa, where 50 percent of the population lives in poverty. He could have emphasized that trade is worth five times more than aid.

The Cape Town speech could have been a defining moment for Mr. Obama, with millions of Africans tuned in.  He had a chance to set the tone for a new engagement policy for sub-Saharan Africa and to continue the legacy of his predecessors.  Instead, Obama pledged more aid — $7 billion for electricity projects in five African nations — and warned the audience not to trust any foreign country or company offering to build projects unless they benefit Africans themselves.  Obama also alluded to the U.S. holding a summit with African leaders next year.  Obama squandered a chance to announce that he would work to make the African Growth and Opportunity Act (AGOA) a permanent program and spread the benefits of free trade throughout the continent.

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China’s Investments in Africa

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Chinese and Chadian oil workers worked side by side at the exploration site in southern Chad. Ruth Fremson/New York Times

There is agreement among those who follow China-Africa relations that state-owned and private Chinese companies have become major investors in Africa over the past 10 years.

Chinese and Chadian oil workers worked side by side at the exploration site in southern Chad. Ruth Fremson/New York Times

Even Chinese individuals are investing small amounts in enterprises ranging from restaurants to acupuncture clinics. It is possible that in the past several years, China was the single largest bilateral source of annual foreign direct investment (FDI) in Africa’s 54 countries. There is, however, considerable confusion as to what constitutes Chinese investment in Africa. Many analyses, especially journalistic accounts, conflate investment with multi-billion dollar loans from China to African governments that often use the loans to build infrastructure by Chinese construction companies. These loans tend to go to resource rich countries such as Angola, Democratic Republic of the Congo and Ghana and are usually repaid by shipping natural resources to China. These loans are not FDI; they are commercial deals, albeit often with a concessionary loan component. It is important to keep them separate from investment.

So how much have Chinese companies and individuals invested in Africa? I have concluded that no one, including no one in China, knows the answer to this question. For that matter, it is not even clear how China defines FDI. China’s Minister of Commerce, Chen Deming, stated in mid-2012 that as of the end of 2011 China’s cumulative FDI in Africa “exceeded $14.7 billion, up 60 percent from 2009.” Also in mid-2012, China’s ambassador to South Africa, Tian Xuejun, in a wide ranging speech on China-Africa relations, said: “China’s investment in Africa of various kinds exceeds $40 billion, among which $14.7 billion is direct investment.” He did not explain the difference between investment of “various kinds” and “direct investment.”

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U.S. and Chinese Interests on African Security

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Liberian children hold Chinese flags before the arrival of China's President Hu Jintao in Monrovia in 2007. Christopher Herwig/Reuters

There has been intense interest in and outright alarm expressed by western civil society and governments on the rapidly increasing Chinese presence in almost all spheres in African life.

Liberian children hold Chinese flags before the arrival of China’s President Hu Jintao in Monrovia in 2007. Christopher Herwig/Reuters

Many articles paint a picture of a saintly west and a demonic China in Africa, charging the Chinese on the hearsay evidence of abuse of African workers and poor Chinese workmanship of roads and infrastructure projects. The Chinese focus on resources and infrastructure and its pragmatic and self-interest motivated policy of non-interference in domestic affairs is paraded as the smoking gun of Chinese responsibility for a range of African ills from unemployment here in Cape Town where I write, to the Darfur genocide. The intense interest by the west in China-Africa relations - arguably a natural development of the globalization process - betrays a deep seated unease on the part of the west as Chinese companies, government and Chinese models of development are shown to be more adaptable, better liked and more suitable in Africa compared to the western counterparts.

Instead of criticising the Chinese for not acting like westerners or pretending the history of western engagement in Africa was more good than bad; it will be more productive to analyse and understand Beijing’s perspective on Africa and through this identify points of common interest and areas for cooperation. An area of cooperation that is drawing increasing interest in Addis Ababa, Beijing and Washington is African security. Given China’s increasing dependence on African resources and its increasing vested interests in many weak states, it is in Beijing’s interest to cooperate with local, regional, continental and international actors to foster better security in weak African states.

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China’s Dangerous Game: Resource Investment and the Future of Africa

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Chinese and Chadian workers at an oil site in southern Chad, part of China’s growing economic presence in Africa. Ruth Fremson/New York Times

It was an important day for Angola, June 20th, 2006.

Chinese and Chadian workers at an oil site in southern Chad, part of China’s growing economic presence in Africa. Ruth Fremson/New York Times

Amid the diplomatic pomp and handshakes of an official visit Chinese Premier Wen Jiabao opened the Luanda General Hospital and had his picture taken peering into a microscope surrounded by officials in suits and medics in white smocks. The capital’s General Hospital, a sprawling eighty-thousand square meter complex, was constructed with Chinese funds and meant to symbolize the growing partnership between Beijing and Angola, a symbol replicated across the African continent in countless roads, bridges, and other infrastructure projects funded by Chinese investments.

Premier Wen stayed only 24 hours but the hospital remained; a physical reminder of Sino-African trust and cooperation. Four years later the hospital was in imminent danger of collapse. Deep cracks ran through its walls, bricks crumbled under the structure’s weight. Personnel and 150 patients were evacuated with some forced to live in tents on the hospital grounds. Beijing dispatched an investigatory team and their findings concluded that faulty Angolan surveys resulted in flawed Chinese designs, a diagnosis that has come to symbolize the greater Sino-African relationship: great ambitions built on uncertain ground. China has a vested interest in developing Africa’s infrastructure through loans underwritten by the continent’s vast natural wealth and it is clear why.

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China’s Deft Sudan Diplomacy

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South Sudan's President Salva Kiir in Juba, the country's capital. Isaac Billy/UN

Beginning in the late 1990s, China made major investments in Sudan’s oil sector.

South Sudan’s President Salva Kiir in Juba, the country’s capital. Isaac Billy/UN

When Sudan was still one country, China developed the oil fields initially discovered by the American company Chevron, built the pipelines for transporting crude from Sudan’s interior to Port Sudan on the Red Sea and built the oil refinery. China obtained control of 40 percent of Sudan’s oil production and shared the remainder with the governments of Sudan, Malaysia and India. When the oil fields were operating at maximum capacity, China obtained between 5 and 6 percent of its total crude imports from Sudan.

During the six year period during which southern Sudanese decided whether to remain part of a unified Sudan or opt for independence, it became apparent they would vote for independence, China understood early in the transition process there would eventually be two Sudans and concluded that it had to improve its strained relations with southerners in order to assure continued access to its oil investments in an independent South Sudan.

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Emerging Powers expand ties with Africa

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Chinese and Chadian workers at an oil site in southern Chad. Ruth Fremson/New York Times

The end of the Cold War resulted in the strategic disengagement of western countries, including the United States, from Africa. They continued their trade, aid and assistance relationship with Africa, but once the threat of communist expansion disappeared, the West interacted with the continent in a different way. This change permitted an opening for several emerging countries to expand their ties with Africa.

Chinese and Chadian workers at an oil site in southern Chad. Ruth Fremson/New York Times

As some of these emerging non-African countries became economically strong, they increasingly replaced western influence and engagement in Africa, particularly in certain countries. This new development has fundamentally changed the relationship between the fifty-four countries of Africa and the rest of the world.

China is the most important emerging actor in Africa today. In fact, China has become the principal non-African presence—western or non-western—in a number of African countries. Other emerging countries are also rapidly expanding their activities on the continent. Most notable is India, which has long-standing ties to East Africa and South Africa.

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Assessing China’s Role and Influence in Africa

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China’s interest in Africa has grown rapidly in recent years. In Chad, China bought the rights to several oil exploration zones from a Canadian company and has gone from bit player to center stage in Chad’s affairs. Ruth Fremson/New York Times

Remarks by David H. Shinn to the House Subcommittee on Africa, Global Health, and Human Rights.

China’s interest in Africa has grown rapidly in recent years. In Chad, China bought the rights to several oil exploration zones from a Canadian company and has gone from bit player to center stage in Chad’s affairs. Ruth Fremson/New York Times

I thank Chairman Ileana Ros-Lehtinen of the House Committee on Foreign Affairs, Subcommittee Chairman Christopher Smith and Ranking Member Karen Bass for inviting me to participate in this hearing. For the past six years, two of us have been researching a book on China-Africa relations that is being published by the University of Pennsylvania Press and will be available this June. My comments today reflect some of that research. Unless otherwise noted, the statistics and analysis in this testimony refer to all fifty-four countries in Africa. China tends not to make a distinction between Sub-Saharan Africa and North Africa as the U.S. government often does.

U.S.-China Economic Competition in Africa

The Subcommittee asked that we focus on how China competes economically with the United States in Africa, how China serves as an undemocratic model of governance and issues concerning natural resources, land grabs and human rights. Let me take the economic competition question first. The most important difference between the United States and China is the very structure of the American and Chinese governments and the way their respective systems engage in Africa. American commercial activity (trade, investment and bidding on contracts) in Africa is conducted by private companies with limited involvement by the U.S. government.

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The U.S. Reassesses the China-Africa Relationship

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Chinese Contingent of the United Nations Mission in Liberia (UNMIL) during a medal ceremony held today in the Liberian capital, Monrovia.  Eric Kanalstein/UN

China, India, Brazil and Russia and even smaller non-western countries such as Turkey, Iran and Indonesia steadily have been replacing western influence in Africa throughout the first decade of the 21st century. China has contributed more to this process than any other single non-western nation and perhaps more than all of the others combined.

Chinese Contingent of the United Nations Mission in Liberia (UNMIL) during a medal ceremony held today in the Liberian capital, Monrovia. Eric Kanalstein/UN

China surpassed the United States in 2009 as the largest bilateral trading partner with the combined fifty-three countries in Africa. Although accurate statistics are elusive, Chinese investment in Africa during 2009 may also have been larger than that of any other single nation. Chinese leadership in trade and investment with Africa almost certainly extended through 2010 and will likely continue into the foreseeable future. The United States was slow to react to the non-western challenge to western influence in Africa, especially that which came from China. The United States did not even perceive the situation as a challenge during the waning years of the Clinton administration and through the first four years of the Bush administration.

When the United States finally understood the magnitude of growing Chinese influence in Africa during the second half of the Bush administration, it did not accord it a high priority in U.S.-Africa policy, which has traditionally had the lowest policy priority of major world regions. The West generally had decreased its attention to Africa following the end of the Cold War in the late 1980s. The 11 September 2001 attacks on the United States focused Washington on the Global War on Terror, especially the wars in Iraq and Afghanistan. This created an ideal environment for China, which has now experienced three decades of annual GDP growth of about 9 percent, to assert its economic and, in some cases, political influence in Africa.

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China’s Growing Role in Africa: Implications for U.S. Policy

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Liberian children hold Chinese flags before the arrival of China’s President Hu Jintao in Monrovia in 2007. Christopher Herwig/Reuters

Hearing Held by Senate Committee on Foreign Relations Subcommittee on African Affairs. The following are remarks by Ambassador David H. Shinn.

Liberian children hold Chinese flags before the arrival of China’s President Hu Jintao in Monrovia in 2007. Christopher Herwig/Reuters

China generally does not discuss its “hard” interests in Africa. Rather, it emphasizes several general themes such as respect for African countries’ sovereignty and development policies, support for African development, cooperation with Africa in the United Nations and multilateral forums, and learning from each other. China also urges African countries to accept the “one China” principle by recognizing Beijing.

Based on my analysis, China has four “hard” interests in Africa. Maintaining or increasing access to energy, minerals, timber, and agricultural products. Developing good relations with all African countries so that China can count on their support in regional and international forums. Increasing significantly China’s exports to Africa, especially as the economies of African states become more robust and Africans increase their disposable income. And, ending Taiwan’s official diplomatic presence in Africa and replacing it with recognition of Beijing.

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The Future of China and Russia Energy Relations

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Vladimir Putin with Hu Jintao in Beijing, China. Source: Kremlin Press Office

The predominant narrative about Russia and China’s relationship is one of a cash-strapped energy rich country meeting the needs of a cash-ready energy hungry country.

Vladimir Putin with Hu Jintao in Beijing, China. Source: Kremlin Press Office

China is the largest energy consumer in the world, and Russia, hoping to diversify its energy export market away from Europe, has been more than happy to satisfy Beijing’s needs. As mutually beneficial as this relationship may seem, however, there have been signs that both countries are looking over the other’s shoulders at new potential partners.

The evolving energy relationship between Russia and China has brought into sharp relief a number of their security issues. For China, stability is found in securing a variety of steady and reliable energy supplies for its voracious economy. And for Russia, a more secure future of it oil and gas market is to expand energy sales into East Asia, away from its traditional and often problematic European market.

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