Friday, 18 April 2014

AFRICA: China's Capitalism in Africa

China, Asia's economic superpower, is hungry for natural resources, energy, food and markets for its products. Africa can offer all of these things: about 40 percent of global reserves of natural resources, 60 percent of uncultivated agricultural land, a billion people with rising purchasing power and a potential army of low-wage workers.

For years, China has engaged in an intensive campaign of visiting the continent. Presidents, heads of the government and ministers have traveled to almost all sub-Saharan countries that support China's policies and do not recognize Taiwan. They have forgiven debt, granted billions in loans, sealed defense deals and handed out generous aid packages. Most of all, however, they have secured access to Africa's natural resources.

China's economic offensive in Africa precisely began before the turn of the millennium. At first, it was very gradual and inconspicuous. But, since 2000, trade volumes between China and Africa have grown twentyfold, reaching $200 billion in 2012. China has surged ahead of the old major powers - France, the United Kingdom and the United States -- to become Africa's most important trading partner. Chinese companies have pumped billions into Africa to secure access to natural resources, boosting countries' economies along the way. Ordinary citizens aren't reaping the benefits, though, and have become increasingly wary of the new investors.

Tanzania is one of the focal points of the Chinese globalization strategy in Africa. In 2011, a large Chinese company invested $3 billion in coal and iron ore mines in the country. The enormous natural gas reserves off the Tanzanian coast -- an estimated 40 trillion cubic feet, allegedly more than in the Netherlands -- are of strategic interest. The China National Petroleum Company is currently installing a 532-kilometer (333-mile) pipeline from Mtwara, a port city in southeastern Tanzania, to Dar es Salaam. Despite Tanzania's economic growth rate of about 7 percent in 2012, the majority of the 45 million Tanzanians haven't benefited much from the upturn. On the contrary, the gap between rich and poor has only grown wider.

China's "irruption onto the African scene has been the most dramatic and important factor in the external relations of the continent -- perhaps in the development of Africa as a whole -- since the end of the Cold War.

There are now more than 2,000 Chinese companies and well over a million Chinese citizens in sub-Saharan Africa. They can be encountered in the major cities, in mining centers and oil fields, on plantations and even in the most remote jungle villages. They include managers and military advisers, doctors and agronomists, engineers and importers, itinerant traders, small business owners and contract workers employed on countless construction sites.

The Chinese are building conspicuous signs of their presence everywhere: presidential palaces, ministries, military barracks, conference centers, museums, stadiums, broadcasting companies, hotel complexes and large-scale agricultural operations. They are renovating railroad lines, paving thousands of kilometers of roads and building airports, dams, power plants and hospitals. Indeed, the Chinese are modernizing a large segment of the continent's infrastructure.

The Washington-based Center for Global Development estimates that, between 2000 and 2011, China provided about €75 billion in aid to Africa for a total of 1,673 projects, or roughly as much as the United States did in the same period. However, it is sometimes hard to tell where profitable investment ends and altruistic initiatives begin.

The competition from the West is often left empty-handed. Chinese state-owned companies operate with less bureaucracy, are faster and cheaper and, as a rule, provide financing for projects with low-interest loans from state-owned banks. In return for developing the infrastructure, the Chinese receive lucrative licenses to exploit natural resources and fossil fuels. For instance, Angola, a war-torn and marginalized country until not too long ago, has become one of China's key oil suppliers, competing with Saudi Arabia for the top position.

The concept of "West is best" is now a thing of the past. Disappointed by Europe and America, where their continent has often been written off as a hopeless case, Africans have instead looked to the Far East. There, they have found a strong ally, one that is mainly interested in doing business and doesn't interfere in their internal affairs. China attaches no political conditions to economic cooperation, unlike the West, which, at least on paper, demands good governance, the rule of law, anti-corruption measures and protections for human rights.

This is one of the reasons that despots like Zimbabwean President Robert Mugabe hold the Chinese in such high regard. Cooperating with China fills their empty coffers and enables them to secure their hold on power. And Africa's dictators are not badgered when they oppress and prey on their own people.

For example, Beijing wasn't overly troubled when the regime in Sudan waged a criminal war of forced displacement in Darfur. It continued to supply the Sudanese government with weapons and blocked resolutions in the United Nations Security Council. Beijing's primary concern was that Sudanese oil would continue to flow. Next to Angola, Sudan is China's second-most important source of oil in Africa.

With Chinese economic dominance, the West's political influence is gradually being eroded. In authoritarian countries like Ethiopia, Rwanda and Uganda, the model of the Chinese development dictatorship, which prioritizes growth over freedom, has long been a welcome alternative to liberal democracy.

At the same time, Europe's and America's cultural influence is waning. China's Xinhua state news agency now has 28 offices in Africa, more than any Western competitor. The state television broadcaster CCTV, which opened a new headquarters in Nairobi last year, is gaining more and more viewers. Instead of airing the usual disaster reports, the station tends to broadcast "good news" from Africa and portrays China as a "true friend."

Nevertheless, there is growing resentment in South Africa, where there are reportedly already 250,000 Chinese. In the townships, the new immigrants are berated as "yellow masters." Among South Africans, the Chinese are often seen as greedy, ruthless and racist, as people who are exploiting Africa, flooding its markets with cheap products and ruining an already weak domestic industry.

Union leaders in Angola complain that Chinese companies are creating too few jobs for local workers. There are rumors in the capital, Luanda, that the Chinese are using prisoners as forced laborers on construction sites.

In Zambia, there are frequent protests against the starvation wages and inhuman working conditions in Chinese-run coal and copper mines. Chinese guards have repeatedly fired on striking miners in recent years, causing bloodbaths. One of the miners, after being struck by a bullet in July 2006, said: "They simply don't see us as human beings." Angry workers killed a Chinese manager during a wage dispute in August 2012.

In Zimbabwe, Chinese products are called ''zhing-zhong'', or junk products that don't last. Chinese vendors were recently attacked in the Kariakoo market in Dar es Salaam.

The most recent Africa Progress Report serves as a warning to the African governments. In it, a panel headed by former UN Secretary-General Kofi Annan concludes that Africa would lose about $38 billion a year due to non-transparent natural resource deals and tax avoidance, a loss far greater than the development aid it receives.

In the current boom, which is primarily driven by China's offensive, the old asymmetry is still in place: Africa remains a supplier of natural resources, while added-value creation occurs somewhere else. A small clique gets rich, while the masses remain poor. That's the curse of the natural resource bonanza. This is what I would like to call: China's Capitalism in Africa.

By Guylain Gustave Moke
Political Analyst/Writer
Investigative Journalist
African Affairs Expert

Photo-Credit: Rachel Morelle-AFP: China's construction site in Dar-es-Salaam-Tanzania.