Increasingly, we can read and hear stories about Chinese State-owned Enterprises operating in Africa. China is becoming an important trade partner and investor in African countries; this interest of China is easy to understand. The abundance of various raw materials that can be found in the African continent is highly desired by Chinese industries. China has already overtaken America as the largest net importer of oil, and this hunger for raw materials will only continue to grow.
China is not a “traditional” donor of development assistance, but it is becoming a main source of new developmental finance in Africa. The levels of development assistance (Chinese official development assistance (ODA) to Africa in 2006 was 8.4% of total ODA to the country), trade (growth of 30% per year, China is the third largest African trading partner) and FDI (growth of around 30% per year) are still not very high (both for proportions of China and Africa), but are growing rapidly. There are several factors behind these developments. Firstly, these developments in Africa reflect a rapidly growing Chinese economy and its engagement globally. Secondly, it is obvious that there is China’s pursuit of Africa’s natural resources, especially oil and gas, which is around two thirds of all African exports to China. Thirdly, there is a commitment at the governmental level in China to speed the growth and development of poorer countries.
Yet does this partnership bring mutual benefits or can it be called a new era of colonisation in Africa? Almost 80% of Chinese imports from Africa are minerals. However this relationship is not only about resources: machinery accounts for approximately 29% of exports to Africa. There are some interesting moments that make the Chinese presence in Africa beneficial for the African economy. Firstly, in an effort to promote trade with the continent, China removed tariffs on around 500 imports and most African exports now receive duty-free access to China’s market. Secondly, Chinese Foreign Direct Investment (FDI) activities are quite different from those which come from North America or the EU. China’s FDI in Africa is more heavily undertaken by either partially or wholly state-owned enterprises, which means that the objective is not simply making short term profits, but also forming long-lasting relationships with the region. Thirdly, behind Chinese commitment to development and poverty alleviation programs for the continent there is no political interest or linkage of aid to African recipients to some values or specific development models for African countries. That is why China is so welcomed by many African governments.
Until recently China focused on a few big resource-rich countries, such as Algeria, Nigeria, Sudan, Zambia and South Africa. Now such countries like Ethiopia and Congo are also getting more attention and more Chinese businesses are getting involved into non-resource sectors. This causes growing number of complaints by local businesses and implementation of restricting rules in particular sector and industries that limit Chinese presence there. Besides creating new jobs (although Chinese companies oftentimes bring to Africa their own Chinese employees), how else do Chinese enterprises contribute to the African societies? Generally Chinese firms do not promote CSR programs in Africa. One of the features of the Chinese politics in Africa is non-intervention, which primarily means indirect help to many African countries in keeping their status-quo with high level of corruption, human rights abuses and other social problems being obstacles on the way of African development. One of the clearest examples of breaches of social responsibility standards in Africa is the relationship between individual Chinese traders with artisanal Congolese miners. This relationship was not based on any initial contracts and Chinese traders bought commodities spontaneously. Nobody knew the real value of the commodities because there was no laboratory analysis. Thus, very often Chinese buyers undervalued (indeed, the Chinese are very often blamed for devaluation of any kind) and paid their Congolese partners less than they had to. While the Congolese artisanal miners were struggling in search for their daily meal, Chinese traders took advantage of the situation. According to a Congolese NGO, Action Against Impunity for Human Rights, out of 200 000 miners employed in artisanal mining, 40 per cent were children under the age of 15 years. However, there is also evidence of Chinese companies engaging in CSR programs. Among such examples there are Aquarius’s CSR activities in Southern Africa, which include waste and environmental management plans, water and sanitation projects, upgrading of schools and trainings, and childhood and community development centres.
Ultimately, it is rather difficult to answer whether Chinese-African relationship is win-win or one-sided deal. There is no doubt that Chinese cooperation with Africa is a well-thought-out, wise and strategic decision of the Chinese government and Chinese market players. But what is in it for Africa in the long run?
- “Caring Without Control: Corporate Social Responsibility” by Claude Kabemba in Open Society Initiative for Southern Africa, October 10, 2012
- “China’s growing economic activity in Africa” by Hany Besada, Yang Wang and John Whalley in National Bureau of Economic Research, May 2008
- “More than minerals. Chinese trade with Africa keeps growing; fears of neocolonialism are overdone” in Economist, March 23, 2013