The summit in Beijing
2006-12-14, Issue 282
Stephen Marks introduces the articles in this publication by reviewing the billion-dollar glamour on display in Beijing during a summit between African and Chinese leaders in early November. But behind the glitz, what does it all mean for Africa? Is it colonialism revisited, a mad dash for African oil and minerals? Is there a Chinese model of development that can be followed? And what is the true nature of Chinese involvement in Africa?
Heads of state and dignitaries from 48 countries flocked to Beijing in November 2006 to attend the largest international summit ever held in the Chinese capital. And China pulled out all the stops, not only, or not even, to make the VIP guests feel welcome, but also to leave China’s people and the world at large in no doubt of the meeting’s importance.
Bright red banners lined the streets with slogans lauding ‘Friendship, Peace, Cooperation and Development.’ China’s official news agency Xinhua declared that the visitors ‘brought a trend of the mysterious continent to the capital of China’. Giraffes and elephants frolicking on the savannahs were spread over giant billboards on all the capital’s main streets and squares.
But behind the official ‘Africa chic’ and the predictable warm words of the official communiqués, something substantial was going on. The declaration adopted at the end of the meeting on Sunday 5 November was strong on ‘motherhood and apple pie’ rhetoric promising ‘a new type of strategic partnership’ founded on ‘political equality and mutual trust, economic win-win cooperation and cultural exchanges’. But there was impressive substance too.
On Saturday 4 November, China’s Premier Wen Jiabao proposed that China and Africa should seek to bring their trade volume to US$100 billion by 2010. This would more than double the 2005 level, about US$39.7 billion. In the first nine months of this year, China–Africa trade had already surged to US$40.6 billion, up 42 per cent year-on-year.
On the same day China’s President Hu Jintao announced a package of aid and assistance measures to Africa including US$3 billion of preferential loans in the next three years and the cancellation of more debt owed by poor African countries. China, he pledged, would:
• Double its 2006 assistance to Africa by 2009
• Provide US$3 billion of preferential loans and US$2 billion of preferential buyer’s credits to Africa in the next three years
• Set up a China–Africa development fund, which would reach US$5 billion, to encourage Chinese companies to invest in Africa and provide support to them
• Cancel debt in the form of all the interest-free government loans that matured at the end of 2005 owed by the heavily indebted poor countries and the least developed countries in Africa that have diplomatic relations with China
• Increase from 190 to over 440 the number of export items to China receiving zero-tariff treatment from the least developed countries in Africa with diplomatic ties with China.
• Establish three to five trade and economic cooperation zones in Africa in the next three years
• Over the next three years, train 15,000 African professionals; send 100 senior agricultural experts to Africa; set up 10 special agricultural technology demonstration centres in Africa; build 30 hospitals in Africa and provide a grant of RMB 300 million for providing artemisinin and building 30 malaria prevention and treatment centres to fight malaria in Africa; dispatch 300 youth volunteers to Africa; build 100 rural schools in Africa; and increase the number of Chinese government scholarships to African students from the current 2,000 per year to 4,000 per year by 2009.
President Hu even pledged to build a conference centre for the African Union ‘to support African countries in their efforts to strengthen themselves through unity and support the process of African integration’ – perhaps a visible reinforcement of the final statement’s pledge to support ‘the African regional and sub-regional organisations in their efforts to promote economic integration, and [support] the African countries in implementing the ”New Partnership for Africa's Development” programs’.
Early on Sunday morning, the 2nd Conference of Chinese and African Entrepreneurs concluded with 14 agreements signed between 11 Chinese enterprises and African governments and firms, worth a total of US$1.9 billion. The agreements cover cooperation in infrastructure facilities, communications, technology and equipment, energy and resources development, finance and insurance.
There was more good news to come. The summit was followed by a two-day African Trade Fair in Beijing. According to Xinhua ‘Over 170 enterprises from 23 African countries filled a Beijing exhibition hall on Monday with varieties of their local specialties, including minerals, jewelry, textile, fur, spice, tea and coffee.’
But except for textiles, which are notoriously hard-hit by Chinese exports, all the items listed as on display were primary products which Africa was already exporting in colonial times. Perhaps this influenced Xinhua’s choice of Chinese entrepreneurs to interview on their view of future business prospects in Africa.
‘Wang Jianping, president of the Hashan Company in eastern Zhejiang Province, told Xinhua that after the summit, he decided to increase investment in Nigeria from two million dollars to six million dollars so as to boost the development of local shoemaking industry’.
’Sheng Jushan, general manager of the Guoji Group in central China's Henan Province, said his company has just set up an economic cooperation zone in Sierra Leone, which attracts about 20 Chinese small and medium-sized enterprises’.
A similar processing zone in Nigeria, according to Xinhua, ‘when completed and put into operation, will help boost economic activities in the state through processing local raw materials into manufactured goods, especially those that have to be imported now in the country.’
China’s race for Africa is certainly due in large part to the same causes as Europe’s 19th century scramble – the need for raw materials to fuel industrialisation. As the Economist summarised it before the summit: Its economy has grown by an average of 9% a year over the past ten years, and foreign trade has increased fivefold. It needs stuff of all sorts—minerals, farm products, timber and oil, oil, oil. China alone was responsible for 40% of the global increase in oil demand between 2000 and 2004.
‘The resulting commodity prices have been good for most of Africa. Higher prices combined with higher production have helped local economies. Sub-Saharan Africa's real GDP increased by an average of 4.4% in 2001-04, compared with 2.6% in the previous three years. Africa's economy grew by 5.5% in 2005 and is expected to do even better this year and next’.
In Beijing in 2005 Moeletsi Mbeki, deputy chairman of the South African Institute of International Affairs, spelled out to a conference organised by the Chinese Parliament what many feared might be the result; Africa sells raw materials to China and China sells manufactured products to Africa. This is a dangerous equation that reproduces Africa’s old relationship with colonial powers. The equation is not sustainable for a number of reasons. First Africa needs to preserve its natural resources to use in the future for its own industrialisation. Secondly China’s export strategy is contributing to the de-industrialisation of some middle-income countries ... it is in the interests of both Africa and China to find solutions to these strategies.
Clearly, many of the decisions announced at the summit reflect Chinese awareness of these fears of a ‘new imperialism’. So did the People’s Daily article before the summit indignantly denouncing ‘The fallacy that China is exercising “neo-colonialism” in Africa’ which was ‘apparently aimed at sowing discord between China and Africa’.
And on the eve of the summit the state council, China's cabinet, issued ‘Nine Principles’ to ‘Encourage and Standardise Enterprises' Overseas Investment.' The principles require Chinese companies operating overseas to ‘abide by local laws, bid contracts on the basis of transparency and equality, protect the labor rights of local employees, protect the environment, implement corporate responsibilities and so on.’
Is there a Chinese model?
Like Japan and the smaller ‘Asian tigers’, China did not develop by following the rules of the Washington consensus. Critical attention in the West and also in Africa, has been focused on China’s avoidance of good governance and human rights conditionality now commonly insisted on by the West, and this undoubtedly lies behind much of the enthusiasm for the ‘Chinese model’ on the part of Africa’s more repressive regimes.
But there is also substance to the idea that ‘South–South’ cooperation has merit in its own right. In areas such as rural development and intermediate technology China’s experience does indeed have much to offer that is of greater relevance precisely because China too is a developing country.
Code such as the African Peer Review Mechanism were not intended to be part of an aid conditionality package, and the perception that they are externally imposed has damaged their reputation even in the eyes of campaigners and activists who support their objectives.
Conversely, China’s avoidance of conditionality means that she can move faster to produce visible results on the ground. The statism which still characterises China’s economy means that China can offer a ‘one-stop shop’ approach, in which contracts guaranteeing China its desired access to oil or key minerals, as in Angola, or Nigeria, can be combined with soft loans and much-needed infrastructure projects such as highways and railways, and low-cost, high-impact ‘add-ons’ such as rural development projects, industrial parks for small firms, and training and scholarships.
This integrated approach can be a genuine plus-point, and not only for such regimes as those in Zimbabwe or Sudan. As in this example, the whole deal can be tied up and delivered in visits by top governmental figures, reciprocated by red-carpet treatment for African leaders, as at the recent Beijing summit.
But not all these factors are unique to China, and future analysis would benefit by looking at China’s approach in a wider context, rather than in the one-track contrast with the conventional model of liberal globalisation which characterises conventional Western approaches.
As Chris Melvile and Molly Owen have pointed out China is not the only player in the ‘South–South’ game, or the only one to promote the idea as offering ‘win-win’ benefits. India, Brazil and South Africa have established their own ‘south-south’ links. Each has also been welcomed as an alternative to the old imperialist powers. And each in its turn has been accused of pursuing its own ‘sub-imperialist’ agenda.
And as Chris Alden and Martyn Davies point out: Chinese MNCs are in many respects like other MNCs operating in Africa, for example France’s Elf-Aquitaine or South Africa’s Eskom. In the French case, Elf-Aquitaine has been highly politicised, building up or even defining France’s Africa policy in particular countries such as Gabon or Angola.
The close proximity between French business and political interests manifested by the presence of oil company executives in the inner circle at the Elysee Palace as well as the circulation of key political elites such as Jean-Christophe Mitterrand within political and business circles, has been a feature of France’s post-independence African policy from the outset.
Moreover the modus operandi of foreign policy makers in Paris has been to construct policy around a network of personal relationships with individual African leaders, bolstered by a web of bilateral agreements in trade, finance, development assistance and defence.
The nature of the Chinese multinational corporations
If the role of the Chinese state is not so different to that of at least some western and ‘Southern’ states, how does the Chinese MNC itself differ from its rivals in the way in which it operates as a firm?
China’s government made its position clear in its official policy statement on Africa; ‘The Chinese Government encourages and supports Chinese enterprises' investment and business in Africa, and will continue to provide preferential loans and buyer credits to this end.’
As Mark Sorbara puts it ‘Investing in African extractive industries is a risky business, but China is desperately in need of raw materials to feed its booming economy, hence the government is willing to shoulder most of the risk for Chinese companies looking to invest in Africa.'
But the purpose of this state backing is not only to secure China’s access to raw materials. As Alden and Davies point out: In pursuit of its broader global ambitions, Beijing is intent on ‘picking corporate champions’ that, with the benefit of active and generous support from the state, are being groomed to join the ranks of the Fortune 500. Roughly 180 companies have been designated by the state to benefit from preferential finance, tax concessions and political backing to ‘go global’ and become true multinationals.
This aim to be global players in their own right was made clear by Fu Chengyu, chief executive of China’s oil giant CNOOC after the US Congress moved to block CNOOC’s takeover bid for Unocal, the US’ ninth-largest oil firm: ‘We aim to be a participant in the global industry, like all the international majors, supplying the global marketplace as well.’
The same seems to apply to the China–South Africa deal, concluded at the Beijing summit, to set up a joint company to expand ferro-chrome production in South Africa. Reuters’ report on the deal commented that ‘China has become a big investor in mining and natural resources in Africa as it seeks the raw materials to feed its economic growth, but unlike many Sino-African deals the purpose of Tubatse Chrome is to make money rather than to supply metal to China’. And the chairman of the South African partner was quoted as saying: ‘Sinosteel is a trading organisation, and Tubatse Chrome will be a profit-driven company. If China offers the best price we will sell it to China, but we will sell to wherever we can get the best price.’
Optimists may view this as a good sign. As Ndubisi Obiorah puts it: As global branding and reputation become more important to Chinese companies, they may become less willing to be associated with human rights abuses and repressive regimes in Africa and elsewhere.
As a result, he suggests, Chinese companies could become more vulnerable to ‘naming and shaming’ from NGO’s in Western countries and elswhere.
Optimists may also see some signs of this on the websites of Sinopec and Petrochina, which feature prominently their awards for corporate governance, and their ‘model’ policies on health, safety and environmental protection.
Does this establish the need for a ‘corporate China watch’ to be set up, for activists in Africa and elsewhere to bring this pressure to bear? But in that case why single out China? As Alden and Davies conclude: ‘Indeed even critics admit that if one sets aside the particular cases of Sudan, Angola and Equatorial Guinea, ”the rest of PetroChina and Sinopec activities on the African continent are not especially reprehensible” or at least no more so than many of their Western counterparts.
Perhaps the material distinction is not between Chinese capital and Western, but rather between the merely rapacious, and the more sophisticated. Even these are not two seperate categories, but at least as much two different faces, each of which may be presented as convenient.
In this context, those involved in corporate research could usefully examine the possibility that Chinese MNCs operating in Africa might themselves incorporate some Western capital, perhaps percolating not only through the obvious channel of joint ventures and shareholdings, but also through funds from Hong Kong and Taiwan.
Neil Tottman, head of commercial banking at HSBC China, has laid out aggressive plans for its commercial banking businesses in China, in anticipation of further deregulation of the sector this year. ‘The total volume of business referrals between Hong Kong and the mainland grew at an annual rate of 175 percent between 2002 and 2005. This year to date, volume between Taiwan and the mainland has increased 512 percent over the same period last year.’
The antidemocratic road?
But there is one other aspect of the concept of a distinctive ‘Chinese model’ which is certainly appealing to Africa’s more repressive regimes – the idea that it disproves the argument that democracy is an essential precondition for development. China is widely held to prove the opposite - the need for strong government.
Ndubisi Obiorah quotes a Nigerian example of this invocation of a ‘Chinese model’: ‘leading lights of the Obasanjo faction claimed that an absence of stability and visionary leadership were the principal cause of Africa’s underdevelopment and that it was these same qualities that had enabled Singapore and China to become contemporary economic miracles.’
As Obiorah points out, the rise of India might counter this self-interested vogue for authoritarian government. It could also be pointed out that before 1949 some of the main obstacles to China’s development were to be found in the close ties of ruling elites to forces at home and abroad opposed to modernisation; in archaic patterns of land ownership and authority; and in chronic national disunity and warlordism on a scale whose closest parallel in today’s Africa is the Democratic Republic of Congo (DRC). All of these were swept away by a massive popular revolution ¬– a prospect likely to be at least as unacceptable to Africa’s current repressive elites as a more gradual and reformist path to democratisation!
But the most powerful antidote to the idea that China validates an authoritarian road to development is the growing grassroots unrest in China over the cost of the country’s current economic model in its impact on employment rights, the environment and mounting inequality and social exclusion.
As Dorothy Guerrero has pointed out: China is now the world’s fourth-largest economy and many developing countries envy its record of economic progress. However, China’s phenomenal growth is producing a big misconception in that it is viewed as a big winner of globalisation.
Although it is true that market reforms and China's opening to the global economy gave millions of people there an increased standard of living, more Chinese people are suffering the consequences of its rapid transition to a market-based economy.
The majority of the Chinese people are not too concerned about when China will become the world's largest economy. Rather, they are asking, ‘When will the benefits of China's rise to superpower status start to affect our lives positively?
Even official sources in China and abroad are aware of the social costs of China’s free-market great leap forward. Members of the legislature have warned of the country’s impending employment crisis and the World Bank has confirmed that China’s poor are getting poorer.
As for the environment, no less a figure than Pan Yue, deputy director of China’s State Environmental Protection Administration, sparked controversy with a recent essay On Socialist Ecological Civilisation when he openly charged that: ‘The economic and environmental inequalities caused by a flawed understanding of growth and political achievement, held by some officials, have gone against the basic aims of socialism and abandoned the achievements of Chinese socialism.’
The march of neoliberalism within China and its impact on the Chinese people has advanced hand-in-hand with China’s growing imperialist role abroad. This apparent anomaly of an imperialist power itself subject to growing imperialist exploitation in alliance with local capital is not new – it also characterised Czarist Russia. And difficult though it may currently seem to act on the idea, the connection suggests that an obvious grassroots ally of activist and civil society groups in Africa will increasingly be their opposite numbers in China itself.
• Stephen Marks is a freelance writer and researcher specialising in development and human rights issues.
• This is a shortened version of an article by Stephen Marks . The full version, including references, will be available in a forthcoming book to be published in January by Fahamu and called ‘African perspectives on China in Africa’. The full articles will also be made available as .PDF files on the Pambazuka News website.
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