China's Rise: Hope or Doom for Africa?

New Vision- Kampala
June 16, 2007

China ranks high on the 2006 Bribe Payers Index of Transparency International. Chinese companies are the second most common to offer bribes when doing business abroad, the international watchdog on corruption found. It is at position 29 out of 30 leading exporters surveyed. Only India scored worst. These companies are more likely to pay bribes in less developed countries where anti-corruption institutions are weak, such as Africa, than in highly industrialised ones, Transparency International noted. "Less developed countries with poor governance and ineffective legal systems for dealing with corruption are the ones that are hardest hit."

The involvement of Chinese companies in illegal timber trade in Africa has been documented at length. The Royal Institute of International Affairs in London estimates that 70% of China's timber import from Sub-Saharan Africa is illegal. First, loggers break the law by evading concession or export taxes, wrote the institute in a 2006 study. In Gabon and Cameroon, it estimates that taxes are not paid on 60% of the areas allocated to Chinese companies as forest concessions. Second, timber companies neglect production ceilings that are imposed by local administrations. In the Republic of Congo, Chinese companies are reported to clear five times more trees than allowed. Third, they do not live up to the obligation to process a part of their exports in the country of origin. In order to promote employment, the Gabonese government decided in 2001 that 85% of the trees should be sawn or transformed locally before being shipping overseas. In practice, more than 80% of Gabonese forest products arrive in China as round woods. In Cameroon, the World Bank also discovered that a Chinese company had been falsifying the origin of logs to deceive export controls. Extensive research by several environmental organisations revealed that Chinese companies were able to continue their illegal activities by bribing government officials, from the lowest administrative level to the higher echelon of cabinet ministers.

Another research by four prominent professors at the University of Brussels found shocking practices by Chinese mining companies in eastern Congo. "Congolese diggers, mostly artisan miners who extract ore illegally, carry out the groundwork. Their yields are collected by individual Chinese traders, operating without residence or work permits and without registering," according to their report ‘China's resources and energy policy in Sub-Saharan Africa'. "These intermediaries collect the ores in comptoirs that are situated in artisan mining centres like the sites near Luisha and Kolwezi. From there, the ore is exported to Zambia without being processed. Taxes and custom duties are evaded by bribing the border control officials. The truckloads finally arrive at Ndola, where they are processed in a number of furnaces built by larger Chinese companies."

For many Chinese investors, the main reason for setting up activities in Africa is to circumvent the competition at home and to bring down production cost to levels that are even lower than in China, the professors argue. "Chinese factories in Africa mainly belong to companies that are not able to compete in their own country because of lack of quality, lack of scale or very low profit margins."

Poor labour conditions and lack of standards by Chinese companies have already led to protests in some African countries, the study notes. In Namibia, home to an estimated 40,000 Chinese, the Congress of Democrats' President Ben Ulenga introduced a motion that was "specifically targeted towards Chinese malpractices in the building industry, like non-compliance with tender regulations, lack of standards and the role of foreign contractors". In Zambia, the researchers found that Chinese mines were employing their workers on short-term contracts. In some cases, Zambian workers were forced to sign forms before going underground to declare that they were working at their own risk.

China is also triggering a surge in Africa's illicit ivory trade, they further argue. "In several countries, Chinese smugglers are reported to promote the hunting of elephants. South Africa has frequently attacked the unwillingness of the Chinese government to take a stand against the soaring inflows of illegal ivory." The same goes for fishery. "Illegal Chinese trawlers have been confiscated in Mozambique, Madagascar and South Africa."

Though these mainly involve private companies, China's state enterprises are not blameless either. In Gabon, Sinopec was blamed for dynamiting and polluting the Loango National Park and destroying the forest, the study documents. The Gabonese environment ministry announced that the Chinese company was acting illegally because the environmental impact had not been approved.

But China has been the most criticised over its proclaimed ‘non-interference' policy in Africa, which contradicts with the West's approach of demanding transparency, accountability and respect for human rights. "The emphasis on sovereignty is clearly rooted in China's own internal situation, where issues such as human rights and democracy are under permanent scrutiny of external players", the Belgian professors claim.

China's approach is at times directly at loggerheads with the West's policy. A case in point is Angola. Desperate for foreign funding to rebuild the country after the war, Luanda initially asked the IMF for a reconstruction loan. "From the beginning, IMF negotiators made it clear that the government had to open its books before new credit could be considered," the report notes. "At the same time, however, China was bargaining with Luanda to obtain access to its oil deposits and immediately offered a $2b loan for several reconstruction projects." Because talks with Beijing were going smoother than with Washington, Angola decided to cut off its negotiations with the IMF. "It agreed to supply China with 10,000 barrels of crude oil per day, to be increased to 40,000, as well as to award construction contracts to Chinese companies."

Earlier this week, China's head of the Export-Import Bank repeated his country's position that African countries needed to focus on development first, rather than on transparency and reforms. "Transparency and good governance should not be the pre-conditions for development but a result or a consequence of development," Li Ruogu told a press conference at the World Economic Forum for Africa.

Nowhere has China's non-interference policy been more attacked than in Sudan. The Asian tiger has huge economic interests in the oil-rich East-African country. China's state-owned company CNPC controls 60 to 70 % of Sudan's total oil production. It owns the largest single share (40 %) of Sudan's national oil company, Greater Nile Petroleum Operating Company. China also has a nearly monopoly over a vast block in Darfur, it participates directly in three blocks and indirectly in two other blocks. In addition, China built the 1,500km oil pipeline from Sudan's southern oil fields to the Red Sea, invested in oil refineries and an export tanker terminal. Apart from oil interests, Beijing also has a long history of selling weapons to Sudan. Amnesty International last month accused China of continuing to supply the Khartoum regime with arms in violation of an international embargo. Earlier this year the Chinese government even offered to increase military cooperation with Khartoum.

The way Beijing has tried to stop the deployment of a UN force to protect the civilian population in Darfur almost looks like a conspiracy of political elites and economic interests against the suffering population. The researchers of the University of Brussels describe in detail China's frantic efforts to water down resolution after resolution on Darfur at the UN Security Council. "In the winter of 2004, American and British diplomats started to gain information about the position of the other members of the Security Council with regard to the humanitarian crisis in Darfur," the study reads. "In January, they issued three proposals for a resolution. China, however, made it clear that it would refuse to endorse them and announced informally that it would use its veto right if Chinese interests in Sudan came under threat."

The report describes how in February and March, Chinese diplomats commuted between Beijing and Khartoum to convince the Sudanese Government to accept some of the demands. "Meanwhile, in New York, the Chinese representative struck a more conciliatory tone and showed willingness to discuss the resolutions provided that the integrity of the country would be guaranteed. He also insisted that no UN troops could be allowed in Darfur." The results of the bargain were three diluted resolutions, the study continues. "Resolution 1590 stated that, after the consent of Khartoum, peacekeeping troops were sent to South Sudan, not to Darfur. China even objected to any form of communication between the weak observer mission of the African Union that had already been approved and the UN peacekeepers." Four days after the resolution was passed, Minister of Foreign Affairs Li Zhaoxing and his Sudanese colleague discussed the follow-up of the new operation and the second resolution that would be tabled the day after, the report documents. "This resolution contained several sanctions of the armed parties, but at the time of the ministers' meeting, China had already been successful in neutralising the implementation. China abstained during the voting. The days afterwards it explained that punitive measures were counter-productive."

The third resolution was the most controversial, according to the professors. Several members of the Security Council wanted the Darfur question to be referred to the International Criminal Court in The Hague. "An earlier counter-proposal from the Chinese delegation to charge Sudanese courts with the investigation drew a blank. But China was still confident enough that the resolution could be passed without threatening government officials in Khartoum. After all, the scope of the ICC would entirely depend on the cooperation of the Sudanese government."

China's diplomatic skills were put to test again in 2006, when the US and several other members of the Security Council wanted to replace the paralysed AU observers in Darfur by a fully-fledged UN mission. The fact that the African Union supported the proposal put China in a difficult situation. "The options for the Chinese delegation were limited. But then it could rely on other members of the Council who sympathised with Khartoum's oil nationalism: Russia and Qatar." "Bejing indicated that it is prepared to let pass the two countries' (Russia and Qatar) proposed resolution, which linked the deployment of troops to the formal permission of the Sudanese government. Other than that, China demanded to stress the sovereignty of the country and its territorial integrity." The final resolution was approved on August 31. In December, Khartoum only gave its consent to limited logistical UN support to the AU mission.

The row over the deployment of UN troops in Darfur is continuing. Sudan this week finally agreed to allow up to 19,000 peacekeepers in Darfur. But observers are sceptical, given the fact that President Omar el Bashir, backed by his powerful Asian ally, has repeatedly backtracked on earlier proposals. In the meantime, 200,000 people have been killed in the Darfur violence in the last two years, two million people have been displaced and the conflict has spread to two more countries — Chad and the Central African Republic. But as the Chinese deputy foreign minister Zhou Wenzhong told The New York Times in August 2005: "Business is business. We try to separate politics from business. I think the internal situation in Sudan is an internal affair."


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