The Chinese South South Cooperation: To what extent China has been exploiting Africa?

Key points:

  • The idea of South South Cooperation allowed China to look for new opportunity in Africa.  
  • With the establishment of Forum on China-Africa Cooperation (FOCAC), China started investing in Africa with an approach to remain friendly without interfering in its domestic policies.
  • By 2009, China became Africa’s largest trade partner, surpassing the US, with balance share of imports and exports.
  • However, in 2015 Africa’s share of exports to China dropped by 42 percent to US$46.1 billion, while China’s share of exports to Africa increased by 5 percent, reaching to US$106 billion.
  • China’s Foreign Direct Investment (FDI) flows together with its governmental and private loans to Africa also decreased, while the Chinese workers in Africa had been continuously increasing to one million, including illegal Chinese migrants.
  • Hundreds of Chinese companies operating throughout Africa have been increasingly exploiting the market by illegally importing raw materials from Africa, bribing the Africans for securing constructions and railroad projects, and replacing the local African workers with thousands of their own.

 

In 1974, the United Nations General Assembly came together to establish a special unit known as the South South Cooperation, to promote cooperation and technical support among less developing countries. The establishment of the South South Cooperation allowed Chinese leaders to pay many visits to African countries with proposals and incentives. From 1960s, China began investing in mining, agriculture, hydrocarbons, telecommunication, and import and export of materials and goods. In 2009, China became Africa’s largest trade partner, surpassing the US, and by 2015 China’s exports to Africa reached $106 billion and imports from Africa $79.8 billion [1]. In addition to trade, China has 2,500 police and military experts to six UN peacekeeping missions in Africa and has pledged US$100 million in military aid to African Union. This study explores Chine-Africa trade relationships and concludes that China had been exploiting the Africans natural resources by illegally importing materials, bribing them for securing constructions and railroad projects, and replacing the local African workers with thousands of their own.

Background: historical context of Sino-African relationships

The relationship between China and Africa goes back to 960-1279 when the Song Dynasty began trading with the east coast of Africa. Ming’s Zheng He dispatched his mighty fleets towards Africa in the 15thcentury but instead of colonising Africa or enslaving its inhabitants, he left the continent with a legacy of trade and the motivation among local markets for Chinese silk and porcelain [2].

Modern Sino-Africa relationships started in the 1950s when China’s foreign policy determined to break out of international isolation. Africa became a battlefield between China, the Soviet Union and the United States. The foundation of Non-Aligned Movement during the Bandung Conference of 1955 and the Chinese support of Africa’s liberation in 1960s played significant role in modern Sino-Africa relationships.

In the 1970s, the Chinese government replaced Taiwan as the sole representative of China in the United Nations, and secured a permanent seat on the UN Security Council with support of 26 African States, accounting 34% of the General Assembly votes [3, 4]. In the 1980s, China outbid the US, the Soviet Union, the United Kingdom and Japan in provision of aid to African nations.

The South South Cooperation is widely used by scholars and policy makers to describe the collaboration of global south countries, also known as developing and less developing or third-world countries. The establishment of South South Cooperation goes back to 1960s and 1970s when Mao Zedong divided the world into three groups [4]. Mao grouped the United States and Soviet Union as imperialist First World countries, their European allies, Japan and Australia as the developed world, and Asia (apart from Japan), Latin American and the continent of Africa as developing or third world countries. Since then, China’s foreign policy toward south, especially Africa, has remained comparatively important.

Post-2001 China-Africa trade

China’s trade with Africa further increased when the US and European countries engaged in the war against terrorism in Afghanistan and Iraq. Following the September 2001 attacks on the World Trade Centre, China increased its trade with Africa by 60 percent in just one year. China’s import of oil from Nigeria and Angola reached US$3 billion in 2002 and National Petroleum Corporation of China secured 40 percent of Sudan oil firms [5]. In less than a decade, China’s trade with Africa increased from US$10 billion in 2000 to US$107 billion in 2009 – achieving the target of US$100 billion set at FOCAC III two years earlier [6]. A 2008 report shows that China’s trade with Africa remained in balance, with Chinese exports to Africa around US$50 billion in goods and African exports of materials to China at US$56 billion [7].

How China and Africa characterise their relations?

Chinese and African leaders regard their two great civilisations as natural allies: China as the world’s largest developing country and Africa as the world’s largest developing continent [2]. Regardless of rising as economic power, China regularly represents itself to its African counterpart as a developing state – to create an atmosphere of shared interest between them [8].

Likewise, Pew Research indicates that majority of African people are in favour of China’s policy. In Kenya, for example, 91 percent of the population are positive about China’s policy towards their country.  African leaders are also reassured by the benefits of Chinese investment in supporting the growth of African nations. According to former Senegalese President Abdoulaye Wade, “China, which has fought its own battles to modernise, has a much greater sense of the personal urgency of development in Africa than many western nations.” [9].

Despite all, caution needs to be maintained because soon, as China is aware, Africa will raise the question of a purposeful policy or alliances made toward sub-Saharan African states. While China and Africa are tied by mutual economic interests, China needs to provide full assurance that its commercial ties will never end in exploitation or colonisation of Africa [10].

Current imbalance trade

In 2017, China become the top oil importing country in the world, surpassing the United States, by importing 8.4 million barrels per day [11]. Africa, after the Middle East, is China’s second-largest source of crude imports. Angola and Congo are the two major suppliers of oil to China.

In 2014, the collapse of global commodity prices significantly changed the balance of Chinese-African trade. Between 2014-2015, with generally lower oil export values, Africa’s export of goods to China dropped by 42 percent, from US$79.8 billion to US$46.1 billion [1]. In the same period, China’s export of goods to Africa increased by 5 percent, reaching to US$ 106 billion [3].

In addition to imbalance in trade, Foreign Direct Investment (FDI) flows from China to Africa also fell to US$3 billion, compared to US$3.4 billion in 2013. Additionally, Chinese loans to Africa, both government and commercial, also decreased to US$11.8 billion in 2015 from US$13.5 in 2014. Furthermore, Chinese workers in Africa continuously increased in 2015 from 187,400 in 2009 to 263,508, with the majority of them hosted by Algeria and Angola [1].  Overall, China’s exports to Africa has been growing in magnitude while Africa’s exports to China were slashed by 42 percent between 2009 to 2015.

Top 5 African exporters to China 
Rank 2014 origins (US$ Billion) 2015 origins (US$ Billion)
1 Angola 31.11 Angola 16
2 S. Africa 8.68 S. Africa 5.8
3 Congo 5.48 Sudan 3.06
4 S. Sudan 4.33 D. R. C. 2.66
5 Eq. Guinea 3.22 Congo 2.62
Top 5 African export products to China 
Rank 2014 imports (US$ billion) 2015 imports (US$ billion)
1 Oil 53.21 Oil 27.54
2 Ores 11.07 Ores 6.35
3 Copper 4.13 Copper 3.35
4 Wood & timber 2.44 Wood & timber 1.98
5 Pearls & Gems 1.46 Oil seeds 1.13
Top 5 African buyers of Chinese products 
Rank 2014 destinations (US$ billion) 2015 destinations (US$ billion)
1 S. Africa 15.7 S. Africa 15.88
2 Nigeria 15.39 Nigeria 13.72
3 Egypt 10.46 Egypt 11.96
4 Algeria 7.4 Algeria 7.6
5 Angola 5.98 Kenya 5.92
Top 5 Chinese products exported to Africa 
Rank 2014 exports (US$ bn) 2015 exports (US$ bn)
1 Electrical Machinery 15.04 Electrical Machiner y 16.77
2 Machinery 12.09 Machinery 11.41
3 Vehicles 7.21 Vehicles 5.85
4 Iron & Steel Articles 4.97 Iron & Steel Articles 5.18
5 Furniture 4.72 Not-knitted Clothing 4.68

Controversy in China’s aid

China granted US$75 billion in aid to Africa between 2000 and 2011 [12]. Since 1956, China has provided 900 aid projects in Africa [13]. In December 2015, China pledged a combined US$35 billion in a basket of concessional foreign aid loans, of which only US$5 billion is in grants and zero-interest loans.

The Chinese government and African leaders often stress that no political strings are attached to Beijing’s aid. China argues that contrary to its Western competitors in Africa, Chinese aid comes without any pre-conditions such as democracy, human rights or other political agendas. The only concern for China is the issue of Taiwan, insisting  that China’s African counterparts recognise Beijing as the legitimate representative of China [8].

However, some analysts believe that China in return wants the Africans’ vote on UN to protect itself from the humiliation of its human rights violations [14]. Others argue that Taiwan was on China’s agenda three decades ago; today, China is increasing its African support to compete with the US for energy resources, market and geostrategic position [5].

To what extent has China been exploiting Africa?

In 2011, the US Secretary of State Hillary Clinton warned the Africans about a “new colonialism” as China expanded its resource-extraction activities in Africa. In a television interview in Zimbabwe, Clinton said “we saw that during colonial times it is easy to come in, take out natural resources, pay off leaders and leave.”  [15].

The former economic advisor to the Development Bank of Southern Africa, William Gumede, believes that China most often deals with strong and autocratic African States such as Sudan, Angola, Cango, Zambia, and Zimbabwe, which are perceived as being stable and where the contacts are not constantly changing. China identifies key people, generally heads of the government or of the ruling party, and tries to buy them off with financial aids or grants [16].

With an increasing imbalance in trade and aid controversy to Africa, China’s exploitative relationship with African nations is becoming more evident in recent years.

  1. Copper and coal mine: Zambia case study

In Zambia, the Chinese government is bringing their own manpower and materials to extract copper to make everything from coins to frying pans. Zambia has the second-largest reserves of copper in Africa and the country is rich in resources like coal, nickel, uranium and gemstones.

In 2008, China and Zambia set up a zone in which the Chinese investors do not pay tax to Zambia. A 2012 report shows that 500 Chinese enterprises operate in Zambia and the number of Chinese immigrants to Zambia, which has a population of only fourteen million, has reached eighty thousand, [17]. Numerous reports reveal that cheaply paid Chinese workers are not only replacing the locals, Chinese miners are also cited for polluting the air and contaminating water sources in their areas of operation.

These two practices together with protest at Collum mining site and beating of local workers by their Chinese supervisor had increased anti-Chinese criticism throughout Zambia. As result, President Rupiah Banda lost the 2013 election to Michael Sata and the new administration launched several investigations of corruptions against former President Banda [17].

  1. Timber: Mozambique case study

Zambia’s neighbour Mozambique is also criticising China over its illegal activities in the timber trade. China is the largest destination for Mozambique’s hardwood timber, receiving 90 percent of its African timber share from Mozambique [18]. Since 80 percent of all logging in Mozambique is illegal, huge percentages of timber is illegally purchased, smuggled and exported by Chinese traders to China. The cancellation of the Chinese-owned Kings Way licence is one of the examples of Chinese smuggling of illegal timber to China, for which it was caught and fined in 2009. So far, multiple Chinese-owned timber companies such as the Fan Shi Timber, Senlian and Xinfeiyuan have been exposed for illegally smuggling Mozambique’s timber into China [19]. In 2012, the Environmental Investigation Agency (EIA) reported that Mozambique had lost US$146 million in uncollected exploitation and export taxes entirely due to timber smuggling to China [19]. One study concluded that Chinese companies have no interest in the sustainability of Mozambique’s forest; instead, they maximise their daily profits and when the easy money dries up, they go elsewhere.

In addition to Mozambique, all wood that China imports from Liberia is illegal, 90 percent of Cango-Brazzaville wood exported to China is illegal, 70 percent of wood exported to China from Gabon is illegal, and only half of wood that China import from Cameroon is legal [20].

  1. Oil: Angola case study

Angola is the second-largest crude oil supplier to China, exporting half of its oil, 1.4 million tons in January 2018. Since 2002, China has lent US$25 billion to Angola. The Angolan repayment to China is by oil or funds directly going to Chinese construction firms involved in road constructions hospital building and railways across the southern African country [21]. This means, income from oil exports to China does not enter the real economy, leaving the Angolans to survive with US$2 a day and coming 169 out of 175 countries globally in terms of income equality.

There are 50 state and 400 private run Chinese companies in Angola. The number of Chinese workers in Angola has reached 250,000, working directly with Chinese-funded infrastructural projects or projects with close ties to Chinese government. While these projects are supposed to employ 30 percent of Angola’s labour, industry sources reveal that this rarely happens. According to Angolan taxi driver Paulo Nascimento, while “this is our country and we should be in charge … the Chinese are the masters and the Angolans are helpers.” [22].

Additionally, the Chinese infrastructural projects are most often marked by corruption and poor planning, with some of the buildings collapsing soon after finishing and the roads falling apart after a month. The General Hospital in Luanda is one example: it was shut down after bricks started falling out of the wall.

Moreover, in order to receive loans from China, the corrupt Angolan government does not need to fulfil any preconditions such as transparency or human rights values as it must to receive Western aid or to secure a loan with the World Bank. Therefore, Human Rights Watch argues that tens of billions of dollars from oil revenue have disappeared in Angola, a situation that would not have happened if transparency was required [23].

Conclusion

In conclusion, Chinese companies have long been criticised for taking all the money back home and failing to transferskills and technology to their African employees. First, Chinese companies in Africa secure up to 70 percent of contracts in exchange for financial aid, and the remaining 30 percent are open for joint ventures with Chinese groups [13]. Second, the Chinese workers, numbering up to one million including Chinese migrants, fill most vacancies, leaving the promise of job creation in Africa unfulfilled. Third, the Chinese purchase and illegally import raw materials (timber, copper, gemstones and ores) from Africa and supply them with finished goods such as machinery, electrical items and plastic rubber, benefiting China only, and leaving its African counterpart without having access to significant skills development and technology upgrade. Perhaps, the Chinese using of the South South Cooperation slogan served as a Chinese entry ticket to Africa where it worked to replace its western competitors to become another exploiter in the continent.

 

Deedar Raheem-Khudaidad is the founding editor of FutureOutlooks.com


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