PPC IDEAS at the IRIS Center, University of Maryland

China 's engagement on the African continent in recent years has been dramatic in both its breadth and scope. In order to continue it's rapid economic expansion, China has looked to Africa as a source of much needed oil, minerals and other raw materials. The Chinese government, through state-run companies, are showering African governments with direct investments, loans, grants, and donations of food and medical supplies in order to gain preferential access to Africa 's natural resources. Yet, what are essentially business transactions by China (oil infrastructure projects in Angola , mining investments in Zimbabwe , etc.) are now influencing political decisions in African countries. In many documented cases, African governments are stalling on governance reforms, combating corruption and stopping human rights abuses (usually required by Western donors in exchange for aid) and looking east to China for politically unconditional aid.

This eBulletin examines this growing trend and its implications for U.S. policy by presenting recent articles and reports focusing on Chinese business and development activities in Africa . One theme running through these articles is clear: politically unconditional aid and investment from China is much more attractive to African leaders then aid from the West with strings attached. This eBulletin shows many examples of African leaders accepting Chinese aid and in the case of Angola , roundly refusing Western aid. Some U.S. government actors and agencies are taking notice. In a recent report , the Department of Energy stated that while Chinese investments in the global oil market are economically neutral to the U.S. , their investments in countries which support human rights violations and authoritarian regimes runs counter to U.S. interests. The House Subcommittee on Africa , Global Human Rights and International Operations also held hearings on the topic last year.

China in Africa

China's African Policy

This document explains China 's official policy towards Africa . Stating its solidarity with Africa as a developing nation itself, China identifies a multitude of areas for increased cooperation including trade, science & technology, cultural exchanges, security, etc. Of more relevance to this eBulletin are Chinese statements regarding its “One China” policy and trade and investment in Africa . Citing African nations' acceptance of China 's reunification policy with Taiwan as key, China says, “The “One China” principle is the political foundation for the establishment and development of China 's relations with African countries and regional organizations.” In regard to trade and investment, China's policy in Africa is to expand trade by eliminating duties on goods from the least developed African countries and signing free-trade agreements where appropriate, activity supporting Chinese enterprise investment in Africa (including the use of preferential loans and credits), and “…providing and gradually increasing assistance to African nations with no political strings attached.”

Ministry of Foreign Affairs of the People's Republic of China . “ China 's African Policy” January 2006.

The Key to Chinese “Soft Power” in Africa
The article's author suggests multiple reasons why China is becoming such an appealing partner to African countries. First, Beijing is consistent in respecting other nations' sovereignty and internal affairs. Coined the “Beijing Consensus”, China 's lack of criticism and demand for political reforms in African countries is attractive compared to the “Washington Consensus” approach. Second, many African countries view China as a fellow developing country which more fully appreciates their situation. Third, China has remained steadfast in its health commitment to Africa . Since 1964, China has sent 15,000 doctors to 47 African countries. Much of the medical team expenses are covered by Beijing through grants and loans.

Thompson, Drew. “ China 's Soft Power in Africa: From the ‘ Beijing Consensus' to Health Diplomacy” in The Jamestown Foundation's China Brief newsletter, Volume V, Issue 21, October, 13, 2005.

China Winning Friends in Oil-Rich Angola at IMF' expense
China and Angola are steadily building a strong economic partnership with each other. Angola recently become the leading oil exporter to China while China has invested billions in Angola , helping to repair the country's war ravaged infrastructure. Infrastructure projects backed by China include rebuilding much of the 1,304km Benguela Railway at a cost of $300-500 million, airport improvements, and a new oil refinery. China 's investment and extension of favorable lines of credit also weakens the ability of Western aid institutions such as the IMF to push for government reforms in Angola . Nicholas Shaxson, Africa fellow of the UK-based think-tank Chatham House explained: "Chinese lending ... has allowed Angola 's government to manage on its own without IMF backing. Angola has used its huge economic potential to secure a number of oil-backed bilateral credit agreements with foreign governments - which further weaken the IMF's leverage."

“ANGOLA : China Entrenches Position in Booming Economy” IRINNEWS.org, April 17th, 2006.

Central African Republic Finds it Easy to Avoid Western Aid

Central African Republic (CAR) President Francois Bozize is avoiding demands for political reforms from the African Union and Western donors by accepting financial and technical assistance from China . In the capital of Bangui , new buildings are being constructed such as a new soccer stadium and mayors office, among others. Most of the new construction has been financed and built mainly by the Chinese. President Bozize also accepted a $2.5 million interest free loan from China . In return, as in many other countries in Africa which have accepted Chinese assistance, China will have preferential access to the CAR's natural resources such as oil and timber.

Lombard, Louisa. “Africa's China Card” Foreign Policy Magazine, online, posted April 11th 2006.

China supports Sudan in face of mounting international pressure
Investing where virtually no Western company will go, the Chinese state-owned oil firm China National Petroleum Company (CNCP) is helping to fund Sudan 's coffers. CNCP invested billions of dollars in the form of refineries, pipelines and good will during the 1990s. Now, China receives 7% of its imported oil from Sudan and Sudan receives nearly $2 billion in royalties. To protect their investment, China has repeatively shielded Sudan from international sanctions resulting from Darfur by blocking resolutions in the United Nations Security Council. Georgette Gagnon of Human Rights Watch says of the relationship: “ China is now the largest foreign investor in Sudan so it has an economic interest in ensuring that the Sudanese government is not penalized too harshly. It has been opposed to sanctions from day one.”

Blair, David. “Oil-Hungry China takes Sudan under its wing” The Telegraph, April 4 th , 2005.

Zimbabwe finds relief in Beijing
In an attempt to circumvent Western criticism and demands for reform, Zimbabwe 's President Robert Mugabe is increasingly finding support from China for his domestic policies. China recently pledged economic support to Zimbabwe in the form of power plants, airplanes, and lines of credit. And, according to statements from President Mugabe's spokesperson, Zimbabwe will ask China for lines of credit to help soften the effects of inflation and $4.5billion in foreign debt. In return for its assistance, China will receive access to Zimbabwe 's mineral wealth, particularly platinum. Bilateral trade is also increasing between the two countries leaving Western governments and institutions, like the IMF, with less leverage over Zimbabwean domestic policy.

Watts , Jonathan and Meldrum, Andrew. “Mugabe find succour in Beijing deals” The Guardian, July 27 th , 2005.

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Implications for Africa

Taking a southern African perspective, the author weighs the pros and cons of increased Chinese activity in that region in this op-ed piece. On the positive side, the author sees increased opportunity for southern African countries to export minerals and agricultural goods to China as it's economy grows and population becomes more urbanized. Also, South African financial and construction firms have the potential to enter and compete successfully in mainland China , in their respective industries. On the negative side, he finds severe problems relating to China 's export of cheap manufactured goods to southern Africa . The flow of Chinese imports, he contends, displaces domestic manufacturing and raises into question the region's industrial trajectory. Citing recent economic data, the author claims that only 8% of South Africa 's exports to China in 2003 consisted of advanced manufactured good compared to 50% in 1993.

Draper, Peter. “Africa-China Relations Require Reality Check” Business Report. March 9th 2006. Located at The South African Institute of International Affairs website (www.saii.org.za)

Chinese Economic Growth: What's in it for Africa?
The article's authors examine the potential conduits through which African growth prospects might be affected by the economic and political rise of the “Asian Drivers,” China and India . The Asian Drivers, especially China , provide both competition and opportunities including high demand for Africa 's natural resources. African countries are faced with the dilemma of how to fit into the China/India-centered global value chains without being confined to the role of raw materials suppliers, and therefore compromise a future of labor-rich and skill-friendly activities.

Goldstein, Andrea et al.,“ China and India : What's in it for Africa ?” OECD Development Center , May, 2006.

Textiles are the largest manufactured export for Sub-Saharan Africa (SSA). However, in January 2005 with the termination of the Multi-Fibre Agreement, China was allowed to access markets once limited by textile import quotas. Chinese textile exports are causing havoc with SSA economies. In Lesotho , more than 10 clothing factories have shut down since January, laying off nearly 10,000 workers. Chinese textile exports are also interfering with U.S. trade policy in the region. The African Growth and Opportunities Act (AGOA), which allows SSA' goods increased access to the American market, is turning into a failure. In the first ten months after the Multi-Fibre Agreement ended, the value of all AGOA economies' exports fell by 14 percent, whereas the value of China 's exports in this sector rose by 65 percent. Due to China 's textiles being more cost competitive, almost half of US buyers interviewed thought they were likely to decrease imports from SSA over the next three–to-five years. To compound the problem for the SSA, many textile factories are owned by Chinese companies who are increasingly shutting down their operations in the region and moving to China .

Kaplinsky, Raphael and Morris, Mike. “The Asian Drivers and SSA; MFA Quota Removal and the Portents for African Industrialization?” Prepared for “Asian and other drivers of change” conference in St. Petersburg , January, 2006.

“Southern Africa : Textile industry undone by globalization” IRIN News.org, July, 2005.

Implications for U.S. Policy – Risks, Opportunities and Options

The author finds that China 's approach to trade and development in Africa fundamentally diverges from U.S. policy interests. Not only does China increase competition for valuable natural resources, it also undermines the United States ' and other donors efforts to promote good governance and democracy. He recommends the U.S. take the opportunity to encourage China to use diplomacy, aid as well as trade policy to entice African leaders to promote good governance, fiscal responsibility and transparency. He states that these objectives, ultimately, are in China 's best interests as well as the United States '.

Thompson, Drew. “China's Emerging Interests in Africa: Opportunities and Challenges for Africa and the United States” African Renaissance Journal, July/August 2005. Referenced from www.csis.org.

More of the same
In a recent background document on the topic, the Heritage Foundation concludes China is actively expanding its influence in Africa to secure supplies of natural resources, counter Western political and economic influence while expanding China's global influence, and to isolate Taiwan further. To counter Chinese influence in the region the authors suggest the U.S. : Develop a coordinated, government-wide strategy; increase diplomatic efforts; encourage human rights and democratic principles; increase economic relations between the U.S. and Africa ; encourage development of energy resources; increase security engagement, and seek new international partners. Many African nations such as Zimbabwe, Angola, and Sudan have cited such efforts as a reason they prefer to deal with China instead of the West, but the authors maintain it is in the U.S. interest to continue to encourage democratic processes, economic freedom, and respect for human rights across Africa .

Brookes, Peter and Shin, Ji Hye. “China's Influence in Africa: Implications for the United States” Heritage Foundation, February 22 nd , 2006.

In a briefing to the U.S.-China Economic & Security Review Commission, Princeton Lyman of the Council on Foreign Relations pointed out that a new strategic framework is operating in Africa and the U.S. must engage it with new approaches. He outlined some policy options for the U.S. and Europe such as targeting aid in the following areas: judicial reform, democratic institutions, and the Parliament and Human Rights Court of the Africa Union. Most importantly, he suggested the U.S. and Europe could open their markets to African agricultural goods. This action, while difficult to implement from a Western domestic standpoint, would do more for African development then anything China can offer. It is, he asserts, the most “valuable step we can take.” Lyman also suggested the U.S. needs to engage China one-on-one about Africa in a way that acknowledges China 's desire for respect and to be recognized as a great power, not as a supporter of rouge states in Africa . He argues that transparency, development and stability in Africa is in China 's interest too. The U.S. needs to seek common cause with China in Africa around these durable goods, not to exhaust itself trying to limit Chinese influence.

Lyman, Princeton . “ China 's Rising Role in Africa” Presentation to the U.S. - China Commission, July 21 st , 2005.

Articles in this newsletter are for personal review only and should not be replicated without permission from respective content owners.

China in Africa: Implications for the Development Community and U.S. Foreign Policy

Summary

China in Africa

Implications for Africa

Implications for U.S. Policy – Risks, Opportunities and Options