DOT KEET

Paper prepared for an
Africa-Chinese civil society meeting in Shanghai, parallel to the
meeting of the African Development Bank (AfDB) in Shanghai, May 2007.

Evidence
and information is gradually being built up in Africa on the full
extent and rapidly growing role and interest of China in Africa.
This is being noted not only in the
much more evident export penetration from China into African markets
(as elsewhere in the world), but also in

  • the domestic consumer commercial sector

–
wholesale trade through large-scale Chinese importers and suppliers
located within Africa;

  • retail trade through the growing presence of small Chinese traders,
    street vendors etc

  • the extractive mining sector focused mainly on

–
fuel supplies, above all oil and coal (and coal-to-fuel technology
from South Africa) and uranium

  • industrial minerals, such as platinum, chrome, manganese, cobalt,
    nickel, tin, lead, zinc, copper etc

  • the construction sector

–
large-scale infrastructural projects, such as roads, railways, dams,
hydro-schemes, power lines etc

  • many major social projects, such as public housing, hospitals,
    clinics, schools, sports stadiums etc

  • the capital equipment supply sector

–
large scale heavy construction machinery and transport equipment
related to the above

  • information and communication equipment

  • the production sector

  • some agricultural projects especially in basic food crops; expected
    to increase

  • the beginning of some processing – related to minerals – promised
    to increase

  • the financial sector

  • large scale interest free grants to governments and parastatal
    entities

  • concessional 'soft' loans attached to many of the above projects

And
there are some Chinese projects in Africa that combine many of the
above in complex integrated projects on a very large scale (such as
in Gabon); others operate in special economic zones set up for them
by African governments (such as in Zambia).

Further
investigation is still required on the precise nature of the Chinese
entities operating in Africa. This is complicated by the fact that
most governments in Africa are not open and transparent about their
international deals. And the Chinese government and Chinese economy
is similarly opaque and

difficult
to assess. The main questions facing analysts in Africa – concerned
about the current modalities and aims, and what could be the possible
responsiveness and 'accountability' of Chinese enterprises in Africa
– relate to whether these companies are

  • independent private enterprises operating on the same bases as their
    counterparts from the 'West', and that can therefore be expected to
    operate on the same 'profitability' criteria in Africa;

  • private companies that are heavily subsidised by national (or
    provincial) governmental authorities at home, which therefore gives
    them important competitive advantages over African companies;

  • independent enterprises that are directly supported and assisted in
    their operations abroad by Beijing through political accords and
    'tied' financial agreements with African govmts;

  • semi state or state enterprises that are not only backed by the
    Chinese government but could, in significant ways, be potentially
    accountable to political/economic directions, conditionalities and
    requirements from the Chinese government..

Given
the very active and even directing role of the Chinese authorities in
their domestic economy, the significance of the above, and perhaps
other forms of Chinese enterprises operating in Africa, relate to the
question as to: what degree, or whether, it is strategically
worthwhile and feasible for African activists to engage with African
governments and African entities such as the AfDB to engage with the
Chinese authorities to influence or determine the nature of and
criteria for Chinese operations within Africa?

Critical
questions are beginning to be posed by civil society organisations in
Africa – and even by some governments – as to the effects of such
Chinese activities in Africa and on Africa. The
main questions and criticisms relate to spheres such as

  • commerce – where Chinese imports and Chinese traders on the ground
    are ousting small local traders; and this, in turn, is resulting in
    pronounced anti-Chinese xenophobia.

  • mining
    – where little attention is given to health and safety standards and
    workers rights, or to damaging pollution of neighbouring
    communities1
    and broader environmental effects;

  • forestry – where vast extractive operations of precious woods and
    timber are being carried out by Chinese companies with no local
    processing and with highly destructive effects;

  • construction – many of which rely on imported Chinese workers,
    skilled and unskilled, and therefore do not create much local
    employment and do not transfer production/management skills;

  • capital equipment supplies brought in from China – do not draw on
    possible local suppliers and, being subsidised in China, easily
    outweigh -and even pre-empt – the emergence of local production of
    capital goods;

  • manufactured goods which are flooding into African countries and
    wiping out small, and even relatively larger producers which do not
    enjoy the direct and indirect subsidies that industries receive from
    Chinese authorities.

  • financial flows from China to Africa that are taking various forms:

  • enterprise investment in the above projects raise questions about
    the capital transfer rights back to China attached to such
    investments and, with the growing scale of such investments, how
    this will affect African countries' international reserves and
    financial security and stability;

  • unconditional governmental grants given to unaccountable and even
    corrupt governments, which will strengthen such governments,
    reinforce these characteristics and help to entrench such regimes in
    power;

  • 'soft' loans, provided to such governments and/or attached to
    projects, as above, which will over time inevitably accumulate into
    growing African indebtedness to the Chinese government and Chinese
    banks; repeating the pattern that were previously created with
    Western governments and banks.

Fundamental
questions are being posed about the so-called partnership and
'brotherly' relationships declared between the Chinese and African
governments, as in the Forum on China-Africa Cooperation (FOCAC) in
Beijing in November 2006; whether the rapidly growing role of China
in Africa is "colonial" or "neo-colonial", or
reflecting a "new imperialism". Whatever good intentions
the Chinese government may declare, the objective and fundamental
problem is that these relations are based upon highly uneven levels
of development and very different capacities to benefit from such
interactions. This will result in China making very much greater
gains from what it obtains from Africa …. even IF this is
undertaken 'fairly' and with some generous gestures. Africa may
indeed receive (some) quantitative returns, but it is China that will
achieve the further vast qualitative transformation of its economy
using the material and financial resources it gains from Africa.
These grossly uneven gains are not the necessarily result of
deliberate 'bad intentions' but are intrinsic to relations between
such very uneven 'partners' ….. unless deliberate efforts
are made to compensate for such very different situations and
capacities, to consciously counter the unbalanced effects, and to
conscientiously avoid (or undo) damaging social and environmental
impacts.

In
the political sphere, major problems reside in the assurance by
Beijing that it does not 'interfere in the internal affairs' of other
countries. This, of course, means that it does not concern itself
with the nature of the governments with which it enters into
large-scale economic and 'aid' relations. But this per
se constitutes an
'interference' into the internal affairs of African countries through
the financial and other support provided to highly questionable
regimes, thus helping them to entrench themselves in power. Without
the full democratisation of African countries, the kind of domestic
role that civil society organisations want their governments to play
and the kind of 'developmental' proposals that they want their
governments to put to the Chinese authorities will be prevented.

The
political and the economic dimensions go together. Side by side with
the political and essential human rights and social issues that have
to be posed to the Chinese political authorities, the developmental
demands that independent African analysts need to present to African
governments and African institutions to present to the Chinese
government relate to the economic, environmental, and social terms
and conditions under which Chinese companies operate in Africa.

During
the 'development era' of the 1960s and 1970s the common demand from
development analysts was that foreign investors from the West in the
countries of the Third World should include some significant
undertakings that would increase the 'gains' or improve the effects
of such investment in the host countries, and minimise or reduce the
losses or negative effects. These investment conditions applied by
many Third World governments in various combinations included

  • defined periods or duration for such investment projects

  • agreed re-investment of (a proportion of) profits, for defined
    periods

  • agreed return of forex earnings from exports from the host country

  • payment of company and other taxes, and appropriate royalties

  • limitations on the geographical areas/zones and spheres open to
    foreign investment

  • a defined proportion of shares to be held by the host government
    and/or local shareholders

  • joint ventures or partnerships with local enterprises and/or
    parastatals

  • a defined proportion of production inputs, and services, to be
    acquired from local companies

  • payment of import taxes on equipment and other imported production
    inputs

  • transfer of technology with accompanying training and
    maintenance/services capacities;

  • employment of local management and active transfer of management
    skills

  • employment of local technicians and active skills transfers

  • employment creation for local labour, and active skills development

  • observance of specified wage rates, health and safety regulations,

The
much weaker – or non-existent – requirement that foreign investors
observe full trade union organisational and collective bargaining
rights, at best reflected the frequently paternalistic and
substitutionist nature of many of the 'developmental' governments of
the time; or their active suppression of such rights. Similarly, the
almost total silence on the observance of appropriate environmental
regulations also reflected the shortcomings of the development
paradigm of that era.

Overall,
the terms of the 'development' paradigm sought to 'improve' the
benefits of foreign investment in Africa, but those terms could not
fundamentally substitute for internally generated capacities and
resources. Some governments saw these terms as providing interim
bases for 'industrial take off' in their countries, although, in
practice, the major gains still accrued to the foreign investors and
their home economies. Nonetheless, even those of such regulatory
investment conditions that some of the more determined African
governments (such as Tanzania) implemented, were largely swept away
in the recent decades under IMF and World Bank SAPs. This onslaught
has been reinforced by various WTO trade and 'trade-related'
agreements, and through the terms within bilateral trade and
investment treaties between African governments and the home
governments of the major international investors. These, together,
are central to the neo-liberal counter-offensive that has displaced
the so-called 'development partnerships' of earlier decades…..
inadequate and limited though those were.

However,
a very important 'test' question to be put to Chinese investors and
to the Chinese government is whether they accept that the above terms
and conditions would be very justifiable for African governments to
require; and whether they would be prepared to agree that Chinese
projects and investments in Africa must fulfill all the above terms.
In this scenario, much will depend,
of course, on the will and capacity of African governments, supported
by institutions such as the AfDB, to set and to monitor such terms.
Without such basic 'developmental' terms, African governments, and
their countries will simply be exchanging one set of long-standing
'Western' neo-colonial 'partners' for another new set of 'South
partners'. If, indeed, these new partners from the South are
different to the established masters from the North, then the
question to be put to and through African governments to the Chinese
authorities, is whether they accept and will actively commit to all
these very reasonable developmental terms. Failing this, the further
question must then be asked – how do China's economic operations in
Africa differ from those of the imperialist West?

This
is a challenge to emerging Chinese civil society as well. And this is
not only about their responsibility to and solidarity with their
counterparts in Africa….. but to themselves and their own people,
as well. The terms and conditions posed within the 'development
paradigm' of earlier years – and in recent years reviving – can
be posed, just as importantly, within China, itself; about its own
economy, and about the terms and conditions that the Chinese
authorities should present to internal and international corporations
operating within China.

1
The very neo-liberal government in Zambia was even recently
forced to close down a Chinese manganese mining operation in that
country owing to the outrageous pollution in the neighbouring
community.