- The Washington Times - Thursday, May 11, 2006

China is investing in Africa on a vast scale that goes well beyond efforts to meet its growing need for oil.

In Zambia, seven Chinese companies have invested $170 million in the mining sector. In Zimbabwe, exploration of the world’s No. 2 platinum reserve is largely dominated by Chinese companies. China is even sending unemployed laborers to farm and set up small factories in parts of rural Africa.

“We bring machines and expertise that the locals have never seen,” said Liu Jianjun, who has set up 28 Chinese communities in Africa in the past eight years.

“To attract and retain us, they gave extremely good terms, such as charging a symbolic annual fee of $1 per acre for 99 years,” said Mr. Liu, whose efforts have provided jobs and a new life for 15,800 farmers and laid-off factory workers from the city of Baoding, in Hebei province.

Mr. Liu rejects the name “Chinatowns” for these settlements. “They are ‘Baoding villages,’” said Mr. Liu, noting that Baoding means “protection and peace.”

Such villages of 400 to 2,000 Chinese have been set up in African countries including Nigeria, Zambia, Sudan and Kenya.

Mr. Liu negotiates long-term land-use leases from African local governments, then organizes Chinese to work in farming, fishing, light manufacturing and mining. Residents of Baoding villages work hard and have almost no leisure time. They are thus able to earn many times more money than they would have in China.

During the Chinese New Year holidays of 2002, the 380 residents in one Baoding village in Zambia wired home about $9 million.

To minimize resentment and protectionism from local industry, Mr. Liu chooses remote locations to distance the settlements from city violence and tribal conflicts. The villages employ Africans and Chinese at a 1-1 ratio to ensure local support.

Long-term friendship

China is not a newcomer to Africa. Its involvement during the Cold War era sought to counter influence from the West and the former Soviet Union. It sent workers to build roads, railways, sports stadiums, city halls and other landmarks that remain throughout the continent, reminding Africans of China’s friendship after the end of European colonialism.

“African countries still have high solidarity with China, seeing it as a part of the developing world. They think China is in the same boat,” said George Ayittey, an economics professor at American University.

Chinese involvement ebbed as the Cold War drew to a close, but later revived as a catalyst for expanded trade.

In 2000, China created the China-Africa Cooperation Forum, which meets at the ministerial level every three years. China also has signed many economic-cooperation treaties with African governments.

From 2000 to 2005, China’s total trade with Africa more than tripled, from $10.8 billion to $37 billion, making it the continent’s third largest trading partner after the United States and France.

“It’s a new phase of something that is not really new,” said Chester Crocker, professor at Georgetown University and former assistant secretary of state for African affairs. “This time, there is no question that the primary driver here is the economics.”

The world’s No. 2 petroleum importer, China obtains 28 percent of its oil from Africa, mostly from Angola, Sudan and Congo, where Western countries limited investment over human rights abuses.

In recent years, China has moved into West Africa, a traditional oil supplier for the United States and Europe. In January this year, it obtained an offshore deal with Nigeria worth $2.3 billion, and is considering $7 billion of additional investment there, said a report from the Council on Foreign Relations.

It’s not just oil. In Zambia, seven Chinese companies invested $170 million in the mining sector. In Zimbabwe, exploration of the world’s second largest platinum reserve is largely dominated by Chinese companies.

Political sensitivities

“It’s good economically. There are more economic opportunities, and that generates more revenues,” Mr. Ayittey said. “But the benefits are not diverted to the people.”

Mr. Ayittey said China is not sensitive to African domestic political situations. In China’s cooperation with corrupt governments, corrupt official often pocket profits.

Moreover, China’s policy of nonintervention in domestic affairs of other countries allows it to ignore human rights concerns. China is the principal supporter of Zimbabwean President Robert Mugabe. In exchange, Chinese have almost unlimited access to the country’s minerals and roads.

In Sudan, after the United States and European companies pulled out in the 1980s, China soon filled the gap. About 70 percent of Sudan’s exports go to China, mostly oil. In return, China used its position on the U.N. Security Council to block resolutions on the tribal warfare in the Darfur region of western Sudan, near its border with Chad.

“Unfortunately, lots of Africans are not happy with the increasing involvement of China,” Mr. Ayittey said. The Chinese “are willing to do just about everything. The investment should be good for Africa, but it doesn’t have a human face.”

In 2005, the International Monetary Fund told Angola to improve the transparency of its oil revenue or lose aid money. After China stepped in with a $2 billion loan, Angola no longer was concerned by the fund’s threat.

“The thing about Chinese policy in Africa and elsewhere is they seemed to be more interested in cultivating government-to-government relations without asking questions about politics,” Mr. Crocker said.

“If we try to work with certain countries to let the government stay on the democratic track, while China does not, there’s a problem. It creates a difference between us,” Mr. Crocker said.

Negative impact

China is not the only country eager to conduct business in Africa. It is part of the global trend to seek oil and resources. Besides the United States and Europe, Brazil, India, Malaysia, Japan and South Korea all have a strong presence in Africa.

But China’s size separates it from the other emerging partners and catches the limelight.

African manufacturers are struggling to compete with imports from China, and with Chinese exports to other countries such as the United States.

“In the U.S. and Germany, people don’t expect those goods to be produced domestically, but Africa is barely at the beginning of the manufacturing age,” Mr. Crocker said. “Their infant industries such as textiles and light manufactures can be driven out of business.”

China’s soaring trade has had an negative impact in Africa, its cheap goods leaving little opportunity for manufacturers on that continent to compete.

After the Multi Fiber Agreement ended on Jan. 1, 2005, ending quotas on clothing and textile imports, African exports were hit hard by competition from China. South Africa alone complained of a loss of 55,000 jobs in the textile industry since 2003, when Chinese textile exports to that country began, the Lesotho Clothing and Allied Workers Union said last year.

China has promised to facilitate imports of African commodities into its own markets and to grant duty-free treatment to some African countries. It is currently negotiating with South Africa on voluntary limits on Chinese exports there.

China is in Africa to stay. When President Hu Jintao completed his three-day visit to the United States last month, he visited Africa on his return home.

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