China-Africa Relations: The Big Picture 2011 Achebe Colloquium Brown University Providence, Rhode Island 4 December 2011

David H. Shinn Adjunct Professor Elliott School of International Affairs George Washington University Chinese Interests in Africa China has four hard interests in Africas fifty-four countries. I exclude from this list interests often cited by Beijing such as support for economic development and political stability in Africa. These are goals or objectives of Chinese policy, but they do not constitute Chinas interests any more than they are interests of the United States. Chinas principal interest in Africa is continuing access to raw materials, especially oil, minerals, and agricultural products. China now imports about one-third of its total oil imports from Africa. It is important, however, to put this in perspective. Chinas oil imports from Africa constitute only about 13 percent of total African oil exports. The United States and European Union each account for about one-third of total African oil exports. On the other hand, China imports about 90 percent of its cobalt, 35 percent of its manganese, 30 percent of its tantalum, and 5 percent of its hardwood timber from Africa. All of these products help to sustain Chinas rapidly growing economy, which, in turn, helps to keep the leaders of the Communist Party of China in power. Since the year 2000, Chinas imports from Africa have increased eleven fold. Although far less important than the raw materials that China imports from Africa, China has an interest in increasing its exports to Africa. With a population of one billion and a growing middle class, Africa is an increasingly attractive market. Consequently, China has increased its exports to Africa nine fold since 2000. Increasingly, these exports include high value products that are important to sustaining Chinas industrial production. A third interest is Chinas desire to obtain the political support of as many as possible of Africas fifty-four states, which now constitute well over one-quarter of the UNs 193 members. While the African countries do not vote as a block in international forums, there tends to be considerable cohesion in their voting patterns. China is a permanent member of the UN Security Council and three African countries have nonpermanent seats. China uses the threat of its veto in the UNSC to counter or water down sanctions against certain African countries and African countries oblige by supporting China when it comes under criticism in the UN Human Rights Council. China also seeks African support on a number of other issues such as climate change and those that come before the World Trade Organization.

2 Finally, China has an interest in ending Taiwans diplomatic presence in Africa. Only four countriesSwaziland, Burkina Faso, Gambia, and So Tom and Principe still recognize Taipei. Chinas unrelenting insistence on the One China Principle has kept this interest on the agenda. Since Taiwan elected President Ma in 2008, there has been an informal truce between Taipei and Beijing concerning efforts to undermine each others diplomatic partnerships. This could change quickly if new leadership in Taipei pursued a more hostile relationship with Beijing. China does not object to Taiwans commercial activities in Africa, which, in any event, are modest. American Interests in Africa It is instructive to compare hard American interests in Africa with those of China. First, the United States wants to maintain access to natural resources, especially oil. Second, it seeks to maximize its exports to Africa. Third, it desires to obtain the political support in international forums of as many African states as possible. Do these interests sound familiar? Chinas only interest in Africa that is not shared by the United States is Beijings effort to end Taipeis diplomatic recognition. I would argue that the United States has two additional interests that have not yet reached the same level of importance for China, although they may do so in the future. First, there are negative issues such as terrorism, narcotics trafficking, international crime, piracy, and money laundering that the United States wishes to eliminate or minimize so that they do not harm American interests in Africa or the homeland. Increasingly, China is facing some of these threats and it may soon be appropriate to add this interest to Chinas list. Second, because of its global security responsibilities, the United States relies on the permission of many African countries for U.S. military aircraft to overfly and land, its naval vessels to call at African ports, and use of African territory to counter terrorist threats. The United States maintains a military base in Djibouti and a drone operation in Ethiopia. Chinas global security requirements do not approach those of the United States. A similar requirement for China is many years away, although there are growing numbers of Chinese naval visits to East African ports in connection with its contribution to the international anti-piracy operation in the Gulf of Aden. Chinas Formal Relationship China has diplomatic relations with fifty African countries and has an embassy in forty-nine of them. The only exception is Somalia, where the security situation has precluded a presence by most foreign embassies. By comparison, the United States has diplomatic relations with all fifty-four countries and also has embassies in forty-nine of them. In addition to security concerns in Somalia, there is no U.S. embassy in four countries where the United States has not been willing to pay the cost of operating an embassy. All fifty African countries that recognize China except for the Comoro Islands and recently independent South Sudan have an embassy in Beijing. China attaches extraordinary importance to the role of high level visits in its interaction with Africa. Hu Jintao has made six trips to Africa, two as vice president and four as president, visiting multiple countries. Premier Wen Jiabao has been a frequent

3 visitor to the continent. Every year since 1991, usually in January, the Chinese foreign minister has made his first overseas visit to a country in Africa. Senior Communist Party of China (CPC) officials also make regular trips to Africa. Between 2002 and 2005, for example, CPC officials made sixty-four visits to Africa. The CPC offers a layer of contact that is not even available to the United States because of its different political system. China has developed strong relationships between the CPC and African ruling parties. Beijing is equally welcoming to African officials; there is a constant parade of African leaders through China. This high-level personal contact is at the heart of China diplomacy in Africa and, although it requires a lot of time, costs little. In 2000, China formalized the interaction with the creation of the Forum on China-Africa Cooperation (FOCAC), which meets at the summit level every three years, alternating between Beijing and an African capital. Trade Lets look at Chinas engagement in Africa, starting with trade. In 2009, China became Africas largest trading partner, passing the United States for the first time. In 2010, total China-Africa trade climbed to $127 billion, increasing its lead over the United States. It is important, however, to put Chinas trade with Africa in perspective. It constitutes only about 4 percent of Chinas trade worldwide. For African countries, on the other hand, trade with China is significant and makes up more than 13 percent of Africas global trade. Chinas total trade is almost three times the amount of the trade for all fifty-four African countries. In recent years, China-Africa trade has been nearly in balance. An exception occurred in 2009 when China had a $10 billion surplus due to the fall in the price of oil and minerals imported from Africa. Although overall trade has been roughly in balance, there are huge disparities in the bilateral trade relationships. About fifteen African oil and mineral exporting countries have large trade surpluses with China while more than thirty countries have significant trade deficits with China. This includes many of Africas poorest countries. About 70 percent of Africas exports to China come from four oil and mineral exporting nations: Angola, South Africa, Sudan, and the Republic of the Congo. Some 70 percent of Africas exports to China are crude oil and another 15 percent is raw materials, mostly minerals. This means that 85 percent of Chinas imports from Africa are raw materials. Agricultural products have recently joined the list of important imports. Since 2005, China has tried to make it easier for Africas least developed countries that recognize Beijing to export to China. By 2010, China said that 4,700 items from Africas least developed countries could enter duty free. The fact remains, however, that the overwhelming volume of imports from Africa are primary products. Some 60 percent of Chinese exports to Africa go to six countries: South Africa, Egypt, Nigeria, Algeria, Morocco, and Benin. Since 2000, there has been a sharp increase in the export of machinery, automobiles, and electronic products, which now account for more than half of Chinas exports to Africa. Investment

While Chinas trade figures are generally transparent, it is exceptionally difficult to determine the amount of Chinas foreign direct investment in Africa. It is even unclear what constitutes FDI in the Chinese context. In 2010, Chinas State Council issued a white paper that stated Chinas direct investment in Africa reached a cumulative $9.33 billion by the end of 2009. Curiously, the same paper noted that cumulative direct investment in China by the end of 2009 from African countries amounted to $9.93 billion, i.e. more than Chinas investment in Africa! This is absurd. Two investments Chinas $5.5 billion investment in Standard Bank of South Africa and about $6 billion in Sudanexceed the official total for Chinas investment in all of Africa. A recent article in Xinhua, Chinas official news service, noted that Chinas investment in Africa has reached $40 billion. Frankly, I doubt that anyone knows what the actual figure is, but it is much closer to $40 billion than it is to $9 billion. I have no explanation why China understates the actual amount of FDI. Chinese FDI in Africa also appears to be growing at a more rapid rate than any single Western country. Whatever the dollar amount of Chinese FDI in Africa, it constitutes a small percentage, estimated at 4 percent, of Chinas global FDI. There is significantly more Western investment in Africa than there is from China, but that is due largely to the fact that Western countries started much earlier. Most of Chinas investment has gone to South Africa, Nigeria, Zambia, Sudan, Algeria, and Egypt. Traditionally, most of the investment went into the mining and petroleum sectors. In recent years, there has been a focus on business services, finance, and telecommunications. Chinese companies have also been willing to take greater investment risks than Western companies. As part of its newest initiative, China is developing seven economic and trade cooperation zones in Zambia, Nigeria, Mauritius, Egypt, and Ethiopia where it expects to attract even more Chinese FDI. Foreign Aid and Business Contracts The situation concerning accurate statistics on Chinas foreign aid to Africa is as confusing as the information on FDI. Furthermore, most journalistic accounts fail to distinguish between foreign aid that meets the OECD definition and commercial deals that have little or nothing to do with aid. For its part, China seems to be as confused about the numbers as everyone else. China has no centralized assistance agency; this contributes to the problem. The Ministry of Commerce is in charge of most aid, but the Ministry of Education runs the scholarship programs and the Ministry of Health and individual provinces the medical teams and health assistance. Although China does provide some grant aid, most of it is in the form of concessionary loans. China has a solid record of cancelling debt to Africas poorest countries. Between 2000 and 2009, it cancelled $2.8 billion of debt owed by thirty-five African countries. Specialists who have researched Chinas aid to Africa estimate that OECDequivalent assistance in the past few years has averaged about $2 billion annually. China emphasizes that it does not attach political conditions to its assistance except that a recipient must accept the One China Principle. On the other hand, Chinese aid for construction projects is tied to Chinese companies and most of the material and usually a

5 component of labor must come from China. Even non-construction projects usually involve some material and technical assistance from China. Not surprisingly, the African countries much prefer Chinas non-conditional aid rather than assistance from the West which calls for improved human rights practices, economic policy reform, or more democratic governance systems. As one Chinese official once told me, No African leader has ever asked us to attach conditions to our aid. Countries such as Sudan and Zimbabwe, which are subject to Western sanctions, are especially grateful to receive Chinese assistance. Confusion over Chinas aid is especially common with the huge loans for infrastructure projects offered by Chinas Export Import Bank to countries such as Angola, the Democratic Republic of the Congo, and Ghana. While these loans are highly attractive in comparison to commercial bank alternatives, they do not meet the OECD definition of concessionary loans. Not only is the recipient expected to pay back the loan, usually by exporting raw materials to China, but Chinese companies almost always benefit from the loans by building the project and often with an input of Chinese labor. These are commercial deals and not foreign aid. They tend to dominate, however, journalistic accounts of the China-Africa relationship. Soft Power Ties Cultural, educational and media links to Africa date back to the 1950s and continue to be an important part of the relationship. By the end of 2009, almost 30,000 African students had received scholarships to study in China, which is now offering 4,000 new scholarships annually. China has provided technical training for more than 30,000 Africans in twenty different fields. Several years ago, China initiated a youth volunteer program, which in some respects is similar to the Peace Corps. By the end of 2009, more than 300 volunteers had served in Africa. Since 1963, China has sent 18,000 medical personnel to forty-six African countries and treated, it claims, as many as 200 million patients. China has paid particular attention over the years to interaction with the African media. Xinhua has more than twenty bureaus in Africa and now competes with Reuters and Bloomberg. Xinhua established regional centers in Cairo and Nairobi. China Radio International transmits from Kenya in Swahili, Chinese, and English and has rebroadcast rights around the continent. There are twenty-eight Confucius Institutes in Africa and more are on the way. Although China has had considerable success in developing relations through soft power, it has encountered problems and sometimes outright opposition from African civil society organizations, some non-governmental groups, opposition political parties, and independent trade unions. The Military/Security Relationship Chinas security ties date back to its support for African liberation movements in the 1950s, 1960s, and 1970s. Today, Africa is a low security priority for China as compared to the countries on its periphery and even most of the rest of the world except for Latin America. On the other hand, as China relies increasingly on Africa for primary

6 products, its security importance will grow accordingly. There is a loose correlation between Chinese military cooperation and resource rich African countries, although China has some kind of security connection with all fifty African countries that recognize Beijing. High-level military exchange visits have always been an important part of the security relationship. Chinas share of conventional arms sales to Africa was between 3 and 5 percent from the 1960s to the early 1990s. In Sub-Saharan Africa, this rose to 15 percent in the late 1990s and has remained steady at about that amount. This excludes, however, the sale of small arms and light weapons, where China has long been a major supplier. China has about sixteen defense attach offices in Africa accredited to some thirty countries. This is surprisingly small in view of Chinas military sales in Africa. On the other hand, there are twenty-eight African defense attaches in Beijing. As Chinas engagement and physical presence expands in Africa, its nationals have experienced increasing threats and even attacks. Chinese business persons were kidnapped in Nigeria, personnel of oil companies were killed in Sudans Southern Kordofan Province, and energy prospectors were killed in the Ogaden Region of Ethiopia. Early this year, China evacuated 36,000 contractors from Libya. These security challenges underscore that Chinese nationals are subject to the same risks faced by nationals from other countries. Since 2008, China has provided two frigates and a supply ship to the international anti-piracy operation in the Gulf of Aden. Threats to oil destined for China and against Chinese shipping motivated China to take this action. By all accounts, Chinas presence has been positive. China also contributes troops to all six UN peacekeeping operations in Africa and, in fact, has far more troops assigned to them than any other permanent member of the UN Security Council. Most of the Chinese troops are in Darfur, South Sudan, the Democratic Republic of the Congo, and Liberia. Their performance has been widely praised. Problem Areas for China Although China has received almost universal praise from African governments, it has also encountered criticism from others. Western countries, African civil society groups, and some opposition political parties are critical of China for its unwillingness to support better human rights practices and democratization of African governments. While African governments have not in recent years criticized China over its policy in Tibet or treatment of a Muslim minority in western China, the way in which China interacts with African officials on these internal Chinese issues is probably interpreted by at least a few of them as political conditionality. There is no evidence that China is supplying weapons to rebel groups in Africa, yet arms from China, as well as from Russia and even Western countries, do end up in African conflict zones. As China supplies increasing amounts of small arms and light weapons to African governments, they are increasingly showing up in conflicts such as Darfur, Somalia, and the Eastern Congo. In some cases they are purchased on the open market and in others friendly African governments supply them to allied groups. On the one hand, China is increasing its contributions to and engagement with the World Bank and International Monetary Fund. On the other hand, these organizations

7 occasionally express concern that Chinese loans undercut their efforts to encourage good governance and, in a few cases, may be adding undesirably to the debt burden of certain African countries. Some Chinese companies have a poor record on safety in the work place and following local labor laws and practices. This has been a frequent complaint in Zambia, for example, where it played a role in the presidential election this year and contributed to a victory by the opposition candidate. Counterfeit and adulterated Chinese goods sometimes appear in African markets just as they do in other parts of the world. The African countries are less equipped to deal with the problem, which can be serious in the case of pharmaceuticals. Private companies are usually the source of the problem and China is taking steps to deal with it. Likewise, China does not have a good record on encouraging good environmental practices as it engages in Africa. Here, too, China is trying to improve its environmental practices and image. One of the most serious problems is the surfeit of cheap Chinese products that are entering Africa and driving locally manufactured products out of the market because they cannot compete in price. Asian, including Chinese, textile imports hit the African textile industry especially hard. In some cases, particularly in southern Africa, the influx of Chinese traders has driven African traders out of business. With their cheaper products and strong work ethic, some African traders have not been able to compete. If there is time, I would be pleased to take questions on any of the issues I have raised or any other aspect of Chinas relationship with Africa such as China as a development model or the role of Chinese communities in Africa. Thank you.