China’s Presence in Africa
China and the African continent are currently celebrating the renewal of their partnership. For China Africa is a source of coal and oil, and for the African states China is an ideal commercial partner that imposes no special political conditions upon its suppliers, and even gives them diplomatic backing. But Sino-African relations come into conflict with the interests of the United States, itself concerned about diversifying the sources of its oil imports. A key issue here is that Africa’s enthusiasm for China may rapidly fade, because in time rises in agricultural prices will have a negative impact on African economies.
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Translated from the French original by Jonathan Hall
1Quite early on, at the time of the 1955 Bandung conference, the People’s Republic of China was still in state of revolutionary euphoria, and displayed an interest in Africa because the dark continent had become a battleground in the struggle between the West and the Soviet Union 1. One visible sign of China’s interest was the building of the so-called Tazara 2 in East Africa, to provide support to independence movements like Unita in Angola 3. China was also the first non-Arabic country to recognise the provisional government of Algeria, which was set up in 1958. Nonetheless, after the death of Mao Zedong, China’s presence in Africa became more discrete, confining itself to certain states like Benin. For the last few years, however, China has been showing a more marked interest in Africa, as can be seen from Hu Jintao’s visit to Egypt and Gabon, followed by Algeria in January 2004.
2This article will outline the present state of Sino-African relations, before analysing the reasons behind the current rapprochement and its possible lines of development.
3Trade between China and Africa may still be modest, but it has grown significantly. In 2003 the total value of the transactions between the two was US$18.5 billion, as opposed to US$12.39 billion the previous year. Currently China is one of the major trading partners with many African countries (Gabon’s second largest client after the United States, second largest supplier of goods to Benin, fifth largest to South Africa, sixth largest to Algeria, etc.). Chinese companies in the field of Building and Public Works (BPW) have become competitors with French conglomerates like Dumez and Bouygues. In recent years China has vastly increased its infrastructural building projects 4, this being a sector in which it has undeniable expertise and competitive ability. Despite all this, Africa is still terra incognita for China.
4In West Africa, when the president of Benin, Mathieu Kérékou, took power in 1972, he was supported by Peking, and he re-established the diplomatic relations severed since 1967. Mr. Kérékou made three visits to China, in 1976, 1986 and 1998. China built the Benin Friendship Stadium in 1982, followed two years later by the Manucia factory for making cigarettes and matches. From May 1987 to April 1993, China and Benin were partners in the Associated Benin Textiles Industries (SITEX)5. China also built the Lokassa hospital for them in 1997.
5However, the African continent currently accounts for only 2.3% of China’s exports, and 2% of its imports6. And Sino-African commerce consists predominantly of trade with South Africa, which represents 20% of the trade with the continent as a whole. This situation is perfectly normal, since the South African economy is still the most dynamic in the region, with a GNP equivalent to that of all the other sub-Saharan African states combined. China’s second major customers are Nigeria, Egypt, Morocco and Algeria, followed by Sudan and Benin (See Table 1).
1- Trade between China and Africa in 2003. (in billions of dollars)
6China’s financial activity in Africa is another notable feature. Everyone knows nowadays that China is the primary recipient of direct overseas investments, amounting to US$53 billion in 2003, but is actually also now one of the major sources of such investments. In 2003 China was fifth in the world, after the United States, Germany, the United Kingdom and France. Its overseas investments totalled US$2.087 billion, which represented an increase of 112% over the amount for 2002, and made it an active presence in 160 countries. China is investing massively in raw material deposits overseas, and is multiplying its trading partnerships in order to secure regular supplies. China’s presence has undergone rapid expansion in both Latin America and Africa. In 2002 its total overseas investments (leaving aside Hong Kong and Macao) amounted to US$5.083 billion, of which 25% were in North America, 9.5% in Latin America, 8.7% in Africa, and 8% in Australia. The main recipients of Chinese investment in Africa are Zambia 7, South Africa, Mali, and Egypt (see Table 2).
2- China’s total investments in Africa between 1979 and 2002.
7China’s arrival in Africa provides African countries with a new horizon. Unlike France and the United States, China makes no specific political demands, and allows African countries to retain complete sovereignty. China’s only demand for entering into commercial relations is a complete break of links with Taiwan 8. But Peking allows African countries to vote as they please at the United Nations, does not propose to deploy any troops on their territory, and above all refrains from lecturing African governments on democracy. Its intention to re-establish relations was marked in 2000 by the foundation of the Forum on China-Africa Co-operation (FOCAC). Nearly all African states belong to this organisation 9, and it commits China to adopt measures to support African economies (such as lowering customs duties, and granting tourist exit visas to Chinese citizens etc.)10. The first meeting of this forum was held in Peking in December 2000, and the second in Addis Ababa in December 2003.
8China has agreed to take a more active part in peace-keeping operations in Africa. In January 2005, 598 Chinese soldiers served with UN blue berets in Liberia. China also sent forces, though less numerous, to the Western Sahara as part of UN operations there, and to Sierra Leone.
9Co-operation with Peking offers further real advantages. China provides know-how to its raw materials providers, plus a labour force, low-interest loans, and favourable financial conditions for infrastructural building projects. It does not restrict its presence in Africa to the petroleum-producing countries, and is expanding its commercial activities in East Africa, particularly in Kenya and Tanzania. In Kenya, the China Road and Bridge Corporation (CRBC) is currently among the leading BPW companies in the country. China has also built the Tambach-Kabarnet road in the West and renovated the Mombasa-Nairobi road. The CRBC has set up its regional headquarters in Nairobi, and this provides it with a base for developing its activities throughout East Africa.
10Peking has become very anxious about China’s energy dependency 11. In 2000, it was the eighth leading oil importer, and by 2003 it had risen to number four, after the United States, Japan and Germany. This year it will probably be number three. In 2000, oil imports represented 27% of its total consumption for 1999, rising to 37% in 2002, and are calculated to reach 45% in 2005. Such dependency presents major obstacles to the global role that China intends to play. Until 1990, its principal suppliers were Indonesia, the sultanate of Oman, and Iran. Extending the list of its suppliers has become imperative because of its increasing domestic consumption and the depletion of Indonesian reserves 12. Naturally, Africa has become a tempting territory because, following US intervention in Iraq, that country has consolidated its control over all the countries of the Middle East, with the exception of Iran. Added to which, the deposits in the Caspian Sea have been disappointing, only representing somewhere between 2% and 4% of global reserves, according to conflicting estimates. China is especially fearful of American initiatives in this area of the Caucasus, of which GUUAM 13 is an example. Founded in 1996 with the joint support of the Organisation for Security and Co-operation in Europe (OSCE) and the Council of Europe, this organisation is intended to advance economic and military co-operation between its member states in close collaboration with the United States, and to deal with such matters as the fight against terrorism, the settlement of local conflicts, etc. The five founding members share a common platform in refusing the presence of Russian forces on their territory. But one of the main aims of GUUAM is the building of a supply network, independent of Russia, with the support of the Atlantic alliance. Peking shares Moscow’s view that GUUAM is a mechanism for allowing Washington not only to pursue a policy of encirclement aimed at Russia, but also to expand it later to include China 14. Admittedly, China is attempting to bypass GUUAM through rapprochement with Kazakhstan, but still the threat of encirclement weighs heavily on it. So Africa allows Peking to reduce its dependency on these energy supplies, since the African continent possesses 8.9% of global oil reserves 15 and represents 11% of global production. China is currently the second major importer of African oil, after the United States. Africa supplies 25% of its requirements as opposed to 15% in the 1980s (see Table 3).
3- Percentage share of China’s main oil suppliers
11Hu Jintao’s African tour of Egypt, Gabon and Algeria in January 2004, was part of this drive to extend the number of China’s oil suppliers. In Libreville, Hu Jintao signed a joint accord with his host, Omar Bongo, for the prospecting and production of oil. Likewise, the Total-Gabon company and the Sinopec (China Petroleum & Chemical Corporation) signed a sales contract to supply China with one million tons of Gabon crude in 2004. Peking has become the third major purchaser of oil from Gabon, after the United States and France, and trade relations between the two countries are expanding. For example, over 60% of Gabon’s timber is exported to Asia, mainly to China. And China has given US$2 million to Libreville, and has granted a further US$6 million as an interest-free loan.
12During this same African tour, various agreements were signed a few days later in Algiers, mostly dealing with oil supplies. Relations between Algeria and China have always been close. The commercial and technological links which were established straight after independence have been growing in strength ever since. The China State Construction and Engineering Corporation (CSCEC), which is China’s leading BPW company, has frequently won public works contracts in Algeria. China is currently Algeria’s seventh largest overseas supplier, and in 2002 Sinopec signed a 420 million euro contract to develop the Zarzaitine oilfield in the Sahara. Another Chinese company, the China National Oil and Gas Exploration, is also due to build a refinery in the Algerian desert, near Adrar.
13China is an ever-growing presence in the exploitation of the oilfields in Congo-Brazzaville. In 2003, it imported a million tons of Congolese crude oil, which is 1.5% of its total imports. Oil is the Congo’s primary export commodity, and provides two-thirds of the national budget’s revenues. In 2003 its production levels stood at 11.3 million tons, and official figures forecast the same amount for 2005. The French conglomerate Total produces two-thirds of this Congolese black gold, followed by the Italian ENI. On February 23rd 2005, Sinopec signed a contract to allow it to exploit the off-shore deposits known as “marine 12” and “deep sea C”.
14Operating through the China National Petroleum Company (CNPC), China also takes an active role in the Sudan, together with the Greater Nile Petroleum Operating Company of which it is a 40% shareholder, in the exploitation of the Muglad basin. This joint venture has built a 1,500 kilometre pipeline to take the oil from the south of the country to the Marsa al-Bashair harbour terminal near Port-Sudan on the Red Sea. Currently Sudan alone is believed to account for 7.7% of China’s total oil imports.
15But the United States also has its eye on these African oil and gas fields, so Africa now finds itself as a field of conflict between these two powers.
16Bill Clinton’s whistle stop tour of Africa in 1998 16 marked a visible turning point in US policy towards Africa, because until the 1990s US relations with Africa were characterised by complete indifference. Sure enough, the Americans were quick to recall some of their initiatives in the area, like their support for the creation of Liberia in 1847 or their commitment to the independence movements after the Second World War. But Africa’s share of trade with the United States stood at 1%. Another sign of this indifference was the fact that for three centuries only four American presidents had made an official visit to Africa : Franklin Roosevelt to Cairo in 1943, Jimmy Carter to Nigeria and Liberia in 1978, Bill Clinton in Spring 1998, and George Bush five years later. In recent years the United States has shown far greater interest in Africa.
17With regard to US energy needs, Africa (especially Nigeria and Angola) has become one of its major suppliers of petroleum 17, and US imports from Nigeria amount to over half the quantity imported from Saudi Arabia. With the support of the World Bank, the United States also intends to bring the deposits in Chad on stream 18 and it has participated in building a pipeline leading to a terminal in Cameroon. The relaxation of American economic sanctions against Libya in February 2004 also promises to encourage a return of investments to that country.
18There is no doubt that the clearest example of Sino-American competition in Africa is the situation in Equatorial Guinea. This small country of half a million inhabitants has brought its deposits on stream with the help of American companies, particularly Exxon Mobil, Chevron Texaco, and Triton Energy. At present the US is Equatorial Guinea’s main trading partner, making it the third largest oil producer in sub-Saharan Africa 19, after Nigeria and Angola. But China has maintained close relations with Equatorial Guinea since its independence in 1968, and is also taking a keen interest. China buys a large part of Equatorial Guinea’s timber production, and is its third most important customer after the United States and the former colonial power, Spain. China is multiplying its investments in local undertakings. A new road, from Bata on the coast to Mongomo in the country’s eastern province, is being built with technical and financial assistance from Peking.
19China and the United States are also clashing over oil deposits in Angola. American companies have been present in the country for over twenty years, and half of Angola’s oil production is shipped to the United States. But China has also become a major player, buying one-third of the overall production. In October 2004, in return for financial aid, it obtained a 50% share in the Block 18 oilfield, which had previously been held by Shell, but was also fervently sought after by the Indian state-owned company ONGC-Videsh 20. On February 26th 2005, during a state visit, the Chinese Vice-Premier Zeng Peiyan finalised several contracts with the Sonangol company. And relations are continuing to strengthen. Proof of this is provided by the granting of extraction rights in Block 3/80 (in the north of the country on the same latitude as the city of Soyo) to Sinopec, at Total’s expense, which lost its operating licence. In 2004, China approved a loan of US$2 billion to help in infrastructural redevelopment. There are about twenty projects in progress. Angola repays its creditor with oil exports. The arrival of Chinese joint operatives looks set to make the Chinese community in Angola the largest in Africa.
20For Chinese companies Africa offers new commercial prospects. Although trade between China and the countries of sub-Saharan Africa is still comparatively marginal, it has nonetheless made considerable progress in less than a decade. China sees Africa as a source of raw materials (such as coal from South Africa and ore from Gabon) and a market for its manufacturing industry. There too, just as in the rest of the world, China is eradicating its competitors in textiles and manufactured goods. She also sees in Africa a market which allows it to test its industrial products, and to offer them to less demanding customers. The Zhongxing Telecom company is multiplying its outlets in Africa (for example, renovating the telephone network in Djibouti), including the Maghreb countries. With 900 million potential consumers, the African market holds considerable promise. And as in Europe and the United States, China can rely on well-established communities, in both the French-speaking West African countries and in those of East Africa. Even though the Chinese populations in the Maghreb countries are minuscule (there are barely a thousand in Morocco), they are markedly larger in Senegal, Kenya and Tanzania. And despite the way in which Chinese companies tend to become the focus of discontent, being accused of customs evasion and of competing unfairly with the local less-structured economies, African governments retain a favourable attitude, believing that the Chinese intrusion is a way of injecting competitive dynamism, bypassing traditional commercial methods.
21The African continent is also a scene of confrontation with Taiwan 21. One-third of the states that recognise Taiwan are African : Gambia, Burkina-Faso, Liberia, Malawi, Chad, Swaziland, Saõ Tomé and Principe. Senegal severed diplomatic links with Taiwan on October 26th 2005. On January 1st 1998, Taiwan had lost its leading African supporter, South Africa, when Nelson Mandela opted to open diplomatic relations with Peking, after South Africa had unsuccessfully attempted to persuade China to agree to a policy of dual recognition. For its part Taiwan, despite its contacts 22 and the relations established under the apartheid regime with business and military circles, was unable to dissuade Mandela from recognising the PRC. So the remaining African countries which currently recognise Taiwan have limited economic importance and diplomatic influence 23. But in the diplomatic arena too, China has a major card to play in the attractiveness of its enormous market. With the French withdrawal and the collapse of bipolar relations, some African countries see China as a powerful protector who is less demanding in terms of democratic norms, and less inquisitive about the uses to which its agreed credits are put 24. On several occasions in July 2004, and again in September, China threatened to use its UN Security Council veto to block the adoption of political sanctions and an oil blockade against Sudan over the Darfour conflict. Resolution 1564, which threatens Khartoum with an oil blockade, was only adopted through China’s abstention, to which it agreed in exchange for a textual amendment, mainly giving management of the crisis to the African Union. China also abstained when the UN Security Council’s asserted its control over the International Criminal Court in April 2005, in order to bring those responsible for the crimes in Darfour to justice. In return, China counts on African support for its foreign policy, particularly with regard to its territorial claims in Chinese waters.
22African countries, especially those with sensitive relations with the international community, rely on China, not only to counterbalance pressure from the United States and France, as in Gabon and Congo-Brazzaville, but also to end their international isolation, and even to supply arms. In 1996, Peking had no compunction in supplying Sudan with F-7 surveillance aircraft (modelled on the Soviet Mig 21) and with Y-8 transport planes (based on the Antonov). China and Angola have also strengthened their military co-operation, with Peking delivering light armoured vehicles and equipment.
23China’s economic take-off has brought benefits to African countries, giving them a new export outlet and, more importantly, bringing a welcome and significant rise in the price of raw materials. Between 1992 and 2002, China’s steel consumption rose by 20% while the global average was 4%. Mineral ores like nickel and copper, indispensable to the electrical and electronics industries, have risen considerably since 2001. In 2005 the price of nickel on the London spot market was 16,255 euros per ton as compared with 3,725 in December 1998. China can also take part of the credit for South Africa’s economic growth (3.6% in 2002, and 3.7% in 2004) as well as for the improvement of the financial situation in Algeria and Nigeria (which in 2003 experienced growth rates of 6.8% and 10% respectively). But, as Jean-Pierre Angelier observes, “the current upward trend is the outcome of conjoined factors ... particularly the simultaneous growth in the American and Chinese economies. With a growth rate of 3.1% in 2003, the GDP of the United States increased by US$323 billion in real terms, whereas China’s GDP for the same year, with a growth rate of 7.8%, increased three times less in real terms (by US$96 billion) 25.
24African euphoria is likely to fade soon, owing to the significant rise in the price of agricultural products. African countries are still major importers of grain, such as maize and wheat. Here too China’s development is palpable, but in a negative direction. Although the goal of feeding a population of more than a billion has been achieved, the position of agriculture in China is nonetheless precarious. Admittedly, progress since the 1960s has been spectacular. China is now the world’s leading wheat producer (91 million tons in 2004), ahead of India, Russia, the United States and France. It is also the leading producer of rice (176 million tons), ahead of India and Indonesia. In twenty years pig production has quadrupled, and now represents 50% of total global production.
25But we should not be blinded by these flattering statistics. Not only should the figures be treated with caution but, above all, the antiquated storage and transport facilities are the cause of serious losses. In reality, production is stagnant. In 1986, China produced 177 million tons of rice, and fifteen years later the figure was more or less the same. In wheat production too China had the same harvests as fifteen years earlier. The land available for agriculture is particularly restricted (7% of the overall land mass 26) and is constantly being reduced by urbanisation 27. Following its membership of the World Trade Organisation (WTO), China will have to make a big effort to modernise its agriculture and produce larger yields. But the results are likely to be disappointingly undermined by population growth. So in the agricultural domain China is still subject to the need to import from the United States and its allies, Canada, Australia and Argentina. Agricultural foodstuffs represented 5.3% of total imports in 1998, and 4.5% in 2001. But in real terms, the volume of imported agricultural food products rose steadily, albeit less rapidly than overall imports 28. From 1998 to 2001 the agricultural deficit increased threefold 29. China is the fourth largest importer of agricultural products after the European Union, Japan and the United States 30. While there are certainly some measures which can be taken to alleviate this dependence on food imports, through encouraging home production via financial aid packages and increasing prices to reduce the flight from the countryside, such remedies are not always adequate.
26In reality, several factors in China combine to produce a gloomy forecast. The future is clouded by the reduction in useable acreage, the increasing scarcity of water for irrigation, and the rising standards of living which are changing patterns of food consumption. Increasing grain purchases on the international markets will inevitably have negative consequences for Africa. In 2002-2003, Morocco, Algeria and Egypt imported 15 million tons of wheat, mostly from Canada. Sub-Saharan African countries have little impact on the international grain markets because of the low levels of their imports, but any price increases will still have serious financial consequences for them. Nigeria has become the first major African importer of rice, and Africa in general buys a quarter of global rice imports 31. Although there is currently no fixed global price for this cereal (since only 6% of global production is exported), the prices fixed by Thailand, the major global exporter (25%), are a useful benchmark. In Africa, everyone admits that the price of rice is rising continually. In addition to the increase in world market prices (averaging 10% since 2001) rising shipping costs are also having their effect.
27Similarly, the termination of the multifibre agreement in January 2005 is producing real anxiety in Africa. Several countries where weaving is a major economic activity, are fearful of Chinese competition. Textiles are Morocco’s leading export, representing 45% of its industrial employment, but Chinese industrialists can offer prices 50% or 60% lower than the Moroccans or Tunisians. While the geographical and cultural proximity of the Maghreb countries to the European Union operates in their favour (allowing quicker delivery times), this advantage will probably last for only a limited period. In sum, then, relations between China and some of the countries of Africa do not appear equitable. In exchange for its construction projects, China sometimes makes demands that are felt to be excessive, like the granting of large-scale fishing rights.
28China’s dynamic presence in Africa is therefore developing along several different lines. And as Chris Alden emphasises in his paraphrase of the title of Shintaro Ishihara’s booklet, “Africa can say no” 32. African countries must demand more equitable economic relations with China. They should not be satisfied with just exporting their raw materials but should receive technological transfers in exchange. Taking advantage of the potential fears aroused by the emergence of China, India is attempting to offer African countries a more equitable partnership. India, who faces the same problem of energy dependence, is unable to rival China in financial terms but offers its suppliers technical co-operation (such as technological transfers, the Sofcomp information technology project, medicine sales etc.). This competition between the two Asian giants could be favourable to the development of the African continent.
François Lafargue, « China’s Presence in Africa », China Perspectives [Online], 61 | september-october 2005, Online since 18 December 2006, connection on 31 October 2014. URL : http://chinaperspectives.revues.org/519Top of page
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