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Introduction
Over the last three decades or so China has rapidly emerged as one of the major players in global matters in almost every sector. The emergence of China as a global player in both political and economic realms has meant that China is currently strategically placed as key player in almost all global sectors than was the case 30 years ago (Carmody and Owusu, 2007). Indeed, as we shall see China’s quest of becoming a global leader which it is currently on the verge has involved strategic planning that is calculated at dominating all the major sectors that are worth controlling, and this has been a long journey, tedious and very capital intensive which is finally paying off. Like US, China’s rapid economic development is largely spurred by the capitalism system, globalization as well as other major reforms that the country set out to implement in line with it vision of becoming the global leader in both political and economic realms.
But these are not the only reasons that have motivated China to aggressively pursue third world countries markets by wooing them as partners, or for that matter to undertake huge investments in such regions, notably in Africa. There are a myriad of reasons why China is squarely focused on making key regions such as Africa its trade partners and why it continues to pump huge investments in such regions. As we shall see the scramble for resources, notably in Africa that are rapidly diminishing is part of the Chinese bigger picture as well as the need to obtain constant market for its trillion dollar trade industry and most importantly, access to oil.
Or perhaps, China interests in Africa is beneficial and is probably the long-awaited savior that is finally going to unconditionally lift the African continent from its depression of economic stagnation by its huge capital investment and trade agreements that are both fair and balanced which are mutually beneficial. This is what this paper intends to find out by analyzing the Sino-Africa relationship at every level, from the political level, trade practices, education investments, infrastructure projects and overall economic investments among others between these two countries. More specifically, this study will undertake an in-depth analysis of Chinese involvement in the African continent by investigating in more detail the nature of investment, trade agreements, infrastructure projects and overall investments activities in two countries in Africa that are of strategic importance to Chinese presence in the continent: Angola and Nigeria.
Thus, the purpose of this study is to process evidence and analyze information that will enable us to arrive at an informed conclusion of whether the current Sino-African relationship that China is so bent on pursuing is beneficial or harmful to Africa in the long run. It is also the purpose of this paper to understand how the process of Sino-African relationship has evolved by evaluating the underlying factors that motivated Beijing to embrace Africa in the first place, and why Africa is key to China’s global dominance. In doing so this paper intends to answer one critical question that is central to this research paper; that is whether China’s presence in Africa, specifically in Angola and Nigeria is a zero-sum game or a positive sum game. Consequently, because determination of this fact is critical for this paper, then a clarification of these two concepts are in order.
Zero sum game and positive sum game
The concept of zero sum game is based on a more general model of game theory that is best elaborated in economic studies; theoretically, zero sum game describes a situation where gains or losses incurred by a participant in a given setting is effectively canceled by an equal measure of gain or loss by a different participant in the same setting (Hsu, Yang and Yang, 2008). In practical terms, zero sum game amounts to naught since addition of positive gains and losses adds to nothing meaning that it is impossible for two different participants to expect to obtain positive gains simultaneously; thus for one to gain, another participant in the same setting must lose an exactly equal amount of what is being gained. This by extension means that zero sum games scenarios are bound to be competitive, aggressive and vicious since for a participant to win, other participants in the same settings must loose. But on the other hand positive sum game is a win-win situation since participants in a setting don’t have to lose for the others to gain, incidentally in this case gains for all the participants is the end objective.
Theoretically, Game Theory is a concept that has been applied in various disciplines from military strategies, study of cartels, understanding oligopoly industries as well as common resources as utilized by communities. The prisoner’s dilemma is an important element in the game theory that highlights the implications of a participant move to the other participants in the game, which is seen to be inherently tied to choices of all the other players (Bhattacharya, 2010; Faysee, 2005). This is very similar to the scenario and range of choices that community members experience in the process of utilizing a common resource.
In the game theory setting a particular participant who is denoted with “I” is allowed to undertake and implement strategic actions “xi” towards utilization of a common resource (Meinhardt, 2002). This set of actions by a single actor is undertaken in consideration of other participants who also have vested interests towards exploiting the same Common Pool Resource (CPR). Actions by any single participant has two immediate implications; one, the isolated actions determines the nature of return that the other players will obtain from the CPR that is being utilized and two, the nature of strategic decision arrived by an actor in the game determines the proportion of returns they get to obtain from the CPR (Meinhardt, 2002).
As such the type of decisions that participants are inclined to undertake primarily depends on the form of regulations that exists at the community level of managing resources. This is the context upon which the Game Theory sets out to investigate the nature of regulations that exist at community level which are crucial to preventing what Hardin originally described as Tragedy of the Commons. In fact, the Game Theory described which advances the concept of zero sum game is one of the few documented models that provide evidence which indicates it is possible to evade what have always been thought to be inevitable when it comes to utilization of commons (resources) (Meinhardt, 2002). In our case therefore, our intention is to determine if China’s engagement with Africa constitutes a zero sum game or a positive sum game.
Justification of the study
With the increasing Chinese presence in many African countries, China’s grip on the continent is becoming stronger by the day as it continues to dominate key sectors in the region, mainly in trade, infrastructure projects and mining (Mol, 2011). With such huge investments being committed by the Chinese government in just a handful of these sectors it is necessary for the African partners to ask themselves if they are in a mutually beneficial relationship or one which is exploitative as has traditionally been the case whenever developed western countries have ventured into the continent. The determination of this fact is by no means a small matter considering that Africa is still languishing in economic stagnation, poverty and technological backwardness because of the choices and agreements that it had made in the past which have eventually turned out to be very costly.
With such high stakes being involved, in as far as Africa being able to intelligently determine its bargaining position in this new relationship and how it stands to benefit, I theorize that Africa cannot afford to mistake this new Sino-African relationship for what it is not as this would leave it much worse than it originally was. Considering that Africa is already worse partly because of many years of unfair trade agreements and exploitation of its resources, the accurate determination of what Sino-African relationship brings on the table is of critical importance. Equally important is the need by Africa countries to take advantage of the China’s development assistance and economic empowerment which for all purposes and intent appears to be genuine as it cannot afford to pass this rare opportunity that will facilitate its self-empowerment. It thus appears, that Africa is at crossroads in deciding whether to fully embrace China where either choice, to partner or not, is detrimental to its economic wellbeing if such a decision turns out to be wrong. This is the justification for this study. Thus, what this study intends to do is to empower policy makers in Africa by aiding them to competently assess and interpret the Chinese partnership in Africa for what it is.
Because many countries in Africa have already embraced Chinese partnership, this paper intends to analyze the resulting relationship between such countries so far and thereby provide a basis for which Africa policy makers can rely on to revise unfair trade terms for instance, or indeed pull out of such a relationship altogether. This study will contribute to the not so many literature sources that exist which investigates the emerging Sino-African relationship, but with a special focus in two countries, Angola and Nigeria which are going to be our case-study countries.
Study Objectives
In line with the purpose and aims for this study, the study objectives for this research paper are going to be four as outlined below.
- To identify the underlying factors that necessitated China to adopt a different foreign policy towards Africa, how this has been achieved and the future long-term strategy for Beijing towards Africa in order to determine if the current Sino-Africa relationship is zero sum game or positive sum game.
- China country-specific strategies in Africa with special emphasis in Nigeria and Angola, and an analysis of the resulting cost-benefit for these two countries in relation to China.
- Determination of China’s involvement in Africa in general; if it is mutually beneficial or just exploitative.
- If Chinese involvement in Africa is long-term plan of promoting its imperialism in the continent.
Background to China’s emergence as a global leader
In order to understand the present Sino-African relations and how it has come about, it is necessary that we evaluate the process of how this have been achieved by China over the last couple of decades during when China started laying the foundation for its present achievement. As previously mentioned, China’s current achievement as a major global player and its heavy presence in Africa is by no means an accident, but a calculated move and part of a long-term strategy that China has hatched to dominate the world; this is what is often referred as China’s soft power. To appreciate how far China has come from and what level of investment has been necessary to enable it attain its achievement, it is essential that we track the progress of this global emerging power from the time that it was no more than an ordinary country in Asia save for it overpopulated borders.
Despite its being the most populous country and the third largest country in the world, China’s involvement as a global player in any realm was insignificant for the most part of the 20th century; in 1978 for instance, China was ranked as number 32 globally in terms of trade volume (Dellios, 2005). Before then, and the main factors that are cited as being behind the Chinese economic stagnation were lack of trade liberalization and poor economic reforms (Deng, 2003). During this period Beijing exerted tight control on all sectors of the country from economic to political realms, which unfortunately it still does when it comes to political issues given it persistent poor track record in human rights. It was not until the start of the 1970s that China dramatically adopted new reforms that it was finally able to break from it poor economic growth that has stagnated the country’s development for many years and started achieving a turnaround that was long overdue (Deng, 2003).
It’s these economic reforms that particularly liberalized trade in China and promoted privatization that Beijing adopted in the late 1970s that largely spurred its economic growth which can be attributed to its present achievements. Certainly, as Ajakaiye (2006) and Deng (2003) observes Beijing was able to transform China through economic reforms that involved “phasing out collectivized agriculture, gradual liberalization of prices, fiscal decentralization, privatization of state enterprises, the foundation of a diversified banking system, the development of stock markets, the rapid growth of the non-state sector, and opening to foreign trade and investment” (Ajakaiye, 2006). These particular reform policies laid the foundation for China’s turnaround and set the direction that the country’s economic development was to take since then.
Other studies have attributed the current Chinas economic turnaround largely to what has now come to be known as “socialism with Chinese characteristics” that China embraced after ditching it long standing traditional of imperialism and Chinese communism that Mao Zedong had sustained during his reign (Dellios, 2005). However, a critical analysis of underlying factors that spurred China’s economic development indicates that various interrelated factors combined together to make China what it is today, key of which included the demise of the long serving country president Mao Zedong, separation of the country’s politics from the economic affairs and implementation of radical economic reforms (Deng, 2003). But there is no doubt that it was after the passing of Mao Zedong in 1976 and the coming of power by Deng Xiaoping that the stage was set for China’s reforms in every sector, and the foundation upon which economic growth could be achieved (Dellios, 2005).
Indeed, it was Deng’s reform ideas that were implemented shortly after his coming to power that China was finally able to break from it past of economic underperformance, widespread poverty and political persecution that had badly tainted its image for ages. This much, various literature sources recognize as the turning point and the lucky break that China caught in its quest to become a global leader, and the rest like they say is history if the current success that China has achieved in Africa and globally since then is anything to go by.
With a charismatic, visionary leader who had great reform ideas at the helm, China was now set to start the thousand mile journey and in barely just few decades the results were immediate. Because China has great experience in the construction industry which has traditionally been its specialty gained from its construction revolution in the early 50s, it was obvious that construction was one of the major developmental aid that the country was best positioned to provide. Even more importantly as it would later turn out, the construction developmental aid such as those of infrastructure and dams is what Africa needed most, so this was very fitting in every way since China was mostly focused on Africa. Thus, in line with the shift in foreign policy adopted by Deng, China amended relevant legislations to facilitate what were then mostly State owned construction companies to operate abroad, particularly in Africa (DFID China, 2006).
This were among the very first steps that China was taking towards accessing Africa resources and inevitably opening it up for more serious partnership in other sectors such as trade as would happen in later years. In just few years by 1985, China had made inroads to 45 countries internationally having been awarded contracts valued in excess of $170 million (Dellios, 2005: DFID China, 2006).
About twenty years later in 2003, the Chinese firms which now totaled 7,400 have made significant progress in winning global construction contracts in 160 countries, additionally it was disbursing developmental aid in form of construction projects mainly in Africa that were in excess of $33 billion (UNCTAD) (Dellios, 2005). So by the dawn of the 2000 era Chinese firms have for decades been operating in Africa and have positioned themselves to “access advanced technology, raw materials, foreign exchange and expanded export markets (Dellios, 2005).
Elsewhere, having put in place mechanisms to access African vastly untapped resources through developmental aid, China now turned towards securing market for its finished goods and raw materials for its factories. Thus, at about the same time China set out to diversify its trade partners by bringing Africa onboard; but it was in the early 1990s that China was actively engaged in embracing Africa trade-wise by hammering modalities through which Sino-African trade agreements would be undertaken (DFID China, 2006). In fact, throughout this decade, Sino-African trade is documented to have expanded by a whopping 700% (DFID China, 2006); and generally even in other countries China trade ties were also increasing (Dellios, 2005). Based on this trend, there is no doubt that it was in the last two decades or so that China global dominance has rapidly increased and caught western countries by surprise; what is not in contention based on the same analysis is that Africa was the launching pad that China needed to attain global dominance. Indeed, China global dominance is inherently intertwined with its conquering of Africa valuable resources and finalization of the existing trade agreements and is what has come to be termed as Chinese soft power in Africa. Based on the look of things it will appear that Africa is probably all that Beijing will need to keep in its pocket to continue enjoying this status of a global leader. In the following section let us briefly describe what China’s soft power entail and its implication in the current balance of power.
China’s soft power
The term soft power was first coined by Joseph Nye in early 90s in which he simply defined it as “the ability to get what you what through attraction rather than coercion and payment” (Nye, 2004). More fittingly, other studies define soft power as “the ability to shape the preferences of others through appeal and attraction” (Young and Jeong, 2005); this as we shall see is what China finally appears to have perfected in Africa. However, the very concept of soft power is in fact a Chinese philosophical principle that dates back to 7th century which has historically been taught by China’s notable philosophers and is largely attributed to Lao Tzu (Young and Jeong, 2005). Thus, in Chinese ancient teachings the term soft power was first described by Lao Tzu in which he explains it by saying
“water is fluid, soft, and yielding but water will wear away rock, which is rigid and cannot yield; as a rule, whatever is fluid, soft, and yielding will overcome whatever is rigid and hard, this is another paradox: what is soft is strong” (Young and Jeong, 2005).
With this background in mind we can now see where China is coming from when it chooses to exercise soft power instead of hard power; in fact throughout this paper we shall see how Beijing deliberately cultivates and wields this power in Africa, which is very differently from western developed countries hard power.
Soft power is explained by Nye (2004) to be comprised of three fundamental features; emotional intelligence, visualization of future that is appealing to followers and finally impeccable communication skills. Having known this knowledge for centuries, Beijing sought to apply this concept from the onset, not only in winning Africa but also in making global allies and clinching key trade deals in strategic countries. From Latin America, South East Asia to Africa, China has exercised soft power through several ways key of which include use of its economic power to win over new partners, dissemination of its culture to other countries, its appealing foreign policy especially in Africa and its success story elsewhere in the world where it has partnered with other countries. The evidence of China’s soft power globally and more so in Africa will become very apparent in later sections of this paper as we get to analyze the strategy it has adopted for Africa, its policies and how it has achieved this.
China and Africa’s historical background
As we have seen above the rise of China as a global leader has largely been shaped by it ties with Africa, consequently Africa and China historical ties are inherently tied with the later rise to global dominance. However, it is notable to mention that China only turned towards Africa much later, but not too late for reasons that we shall discuss at a later section; prior to that China number one trade ally and partner was the US and other western developed countries. Nevertheless, China despite its commitment towards Africa had actually sought to engage with Africa at a much earlier time than is thought to be the case; one notable summit that is widely recognized as the first Chinese overture to embrace the continent is the Bandung Conference of the 1955 (DFID China, 2006). It was during this forum under the auspices of the “Afro-Asian economic and cultural co-operation” that China first saw the strategic importance that Africa could offer now that they have been brought together on the same table (DFID China, 2006).
However, it was almost a decade later in 1963 that China first took practical steps to pursue Africa, and thus the first high profile visit by Chinese dignitaries including the Premier Zhou himself took place in which a total of ten countries were toured in Africa (DFID China, 2006). The major aim of this African tour however was to dissuade Africa from recognizing and embracing Taiwan as a country which was at the time embroiled with China after it had seceded from it (DFID China, 2006); all the same the trip had undertones of the need for Africa to partner with China. Throughout this decade and 1970s it is largely observed that China interests in Africa was “predominantly based on political and ideological” philosophies as one study by Broadman (2007) asserts.
Since then, China obviously less interested in Africa and whatever it had to offer, or perhaps because of its lack of financial resources needed to pursue Africa, mainly because of its not so much developed economy by then, took a backseat in pursuing Africa resources or trade ties. It was not until later after the death of Mao in 1976 as we shall see in the following section that China spurred by wide reaching reforms that it was finally able to mount the necessary resources needed to engage Africa at any serious level. But because of the heavy infrastructure and financial investments that China needed to put in place before any meaningful benefits could be attained by China out of this new partnership, it would take much longer than China probably had anticipated to make the serious impact needed on the continent. This foundation was necessary to obtain much of the strategic resources and trade ties that China needed most. It is this relentless investment in Africa that China is finally reaping from at the moment and which has catapulted it to the global realm. In fact, it is only in the last two decades that China-African ties have been most strong and during when the trade ties and other agreements have been at their most intense; the figure below which indicates the trend in trade volume between Africa and China highlights this fact.
More recent statistics indicates that oil and gas imported from Africa by China has steadily increased every single year to reach 60 million tons in 2009 which was the highest level by then. Considering that oil exports is a major indicator of the trade volume between China and Africa we can conclude that this trend in oil trade applies for all other commodities in which China and Africa does business.
As early as 1990, the Chinese government had successfully sold its idea of developing Africa to several countries in which it had strategic interest and started making high profile visits to the continent during this decade (Melville and Owen, 2005). Less subtle by now, the Chinese President Jiang Zemin was very categorical in spelling out the terms under which China was seeking to engage Africa in 1996 when he visited Africa where he stated “sincere friendship, equality, unity and co-operation, common development, and looking to the future” was the country’s policy in partnering with African countries (DFID China, 2006; Melville and Owen, 2005); this was markedly different from what Africa has known from its western trade allies and former colonial masters for very long.
By 2000, China took Africa partnership business a notch higher by establishing the “Forum for China Africa Co-operation” and a few years later came up with a session paper dubbed “China’s African Policy Paper” (DFID China, 2006). It is no wonder then that the 2000 decade witnessed one of the most intense Sino-African partnerships at every level that ever happened between the two partners; in this decade for instance the volume of trade between China and Africa more than tripled (Carmody and Owusu, 2007). China imports by 2004 had increased by 80% just in one year while a quarter of all oil import to China was just from a single region in Africa; the gulf of Guinea (Carmody and Owusu, 2007; Financialtimes, 2006). As we have seen the trend in which Sino-African trade has grown based on this statistics in just one decade has by any standards been very flourishing. If this trend is anything to go by it would appear that Sino-African trade volumes can only continue to increase in the years to come
Shift in Chinese foreign policy towards Africa
It would appear that China’s shift in foreign policy towards Africa is more of a response towards United States long known foreign policy especially in non-renewable resources like oil. Similar to US, China’s foreign policy too is hedged on the need to preserve its key natural resources and more importantly acquire resources that are of strategic importance. As we have so far seen, China’s energy need though modest compared with it gigantic population size and industries exceeds what might be considered average; because raw materials and energy are central to the economic development of any country, what Beijing needed was therefore a foreign policy that would pursue this objective both in the short-term and in the long term. This figure indicates the trend on oil used in China and it source since it first started partnering with Africa; very stark is the observation that China reduced its domestic oil production while it drastically increased oil import from other countries, notably from Africa.
Not surprisingly then, China’s foreign policy took more shape after Deng took over the reins and since then Beijing has been less subtle in pushing for it agenda in the global platform; in fact, if anything it has just been more assertive in pursuing its new found mission. No better is China’s foreign policy towards Africa well enumerated than in the statement made by Li Peng, the country’s prime minister in 1990 during a time when China frantic efforts were directed towards entering Africa in which he stated
“new order of international politics means that all countries are equal and must mutually respect each other regardless of their differences in political systems and ideology. No country is allowed to impose its will on other countries, seek hegemony in any regions, or pursue power politics to deal with other countries. They are not allowed to interfere in the internal affairs of the developing countries or pursue power politics in the name of ‘‘human rights, freedom and democracy’’ (Naidu and Mbazima, 2008).
It is on this backdrop that we are going to analyze Beijing’s foreign policy towards Africa which incidentally happens to be well articulated in this statement by Li Peng to African leaders which has since formed the terms and conditions upon which Beijing has sought to engage Africa countries. But this statement by Li peng which in a stroke summarizes China’s foreign policy in Africa begs the question why it took Beijing so long to realize that Africa was the perfect strategic partner that it needed and why this particular foreign policy was so fitting as far as Africa was concerned. The answers to this lies in two critical events that had taken place in China not so long ago that are considered to have jolted Beijing to shift its rules of foreign policy engagement to focus more on Africa and not its western allies. The first and most critical of these events was the Tiananmen square protests in 1989 which later come to be popularly known as the “Tiananmen Square debacle” where dozens of people were murdered that greatly served to bring Beijing’s poor human rights abuses records on fore (Naidu and Mbazima, 2008; Ian, 1998).
The second event was the ever increasing trade relations of China and Africa nations that had by this time started to warm up (Naidu and Mbazima, 2008); these two seemingly unrelated occurrences are what are considered to have shaped the current Beijing foreign policy towards Africa. In fact, it was in the late 1980s that China foreign policy towards Africa started taking shape shortly after the happening of these two events, coupled with Deng’s reforms which we can see why on closer analysis. Thus, on this section it is our interest to find out exactly what prompted Beijing to forge this particular foreign policy framework for Africa, the underlying events that motivated it and finally find evidence of this in later sections of this paper.
In the aftermath of Tiananmen Square debacle, China found itself in an overnight deeply isolated by one of its most significant trade partner and ally which it has traditionally relied upon to do business with; the US (Naidu and Mbazima, 2008). Considering that China had not diversified so much in matters of trade and in other partnership, this outcome was disastrous to say the least. As the US put pressure on Beijing to address the Tiananmen Square debacle by out rightly criticizing it in public and taking hard stance against China’s human rights records, it was imminent that the two countries relations especially in matters of trade was significantly going to be affected (Naidu and Mbazima, 2008). Even more complicated was China’s response to US reprimands which it met with equal resistance and thereby straining the two countries any remaining ties. As a believer in its own sovereignty and because it had different ideological perspective of what the limits should be even for long trading partners, Beijing knew that even if it could give in to this one incident it will become increasing difficult to do serious trade with a partner that was constantly on your back watching your every move.
Thus, it was time to hunt for new trade partners, if not for anything else so as to diversify its trade flows and thereby lessen the risk associated with doing large proportion of trade with a single partner; in this case the US. As it would turn out, China choice of Africa was more fitting than it had probably anticipated, not only because Africa had still vast largely unexploited natural resources that Beijing needed but also because of three other critical reasons.
One was because of the cultural nature of most African countries which at the time were still stabilizing in the post-colonial era and also teething in matters of democracy (Ian, 1998). Thus, in the constant power struggles that were commonplace in African countries then, human rights issues in the continent had still no place yet and China could expect a friend in crime so to speak. Secondly and very unexpectedly, Africa could also turn out to be a major consumer which meant that China had also found a new market for their ready goods, albeit not at the same level as was the case in US (Ian, 1998). Finally, besides natural resources such as oil and gas, Africa was also home to most of the raw materials that China needed for its rapidly developing industries (Ian, 1998).
This realization by China was all the reasons that it needed to diversify, or more accurately switch trade partners; indeed, in the days that followed Beijing made frantic efforts to put in place a new foreign policy specifically tailored to fit Africa which it had since upheld and we can now see why Li Peng statement in Africa shortly thereafter resonates well with the backstage events that had taken place earlier. This observation has been documented by many studies not less this one by Naidu and Mbazima which also concludes that “realizing that this would find support in the developing world, China reasserted a foreign policy based on non-interference in state sovereignty and on non-alignment” (2008).
Now that we have analyzed one way that China positioned its foreign policy in Africa let’s look at the real reasons that China agenda for Africa has remained so relentless, which Beijing is so bent on keeping secret but which is central to its policy towards Africa.
These are mainly two and include access to natural resources and raw materials which mainly include oil since it’s the single most essential resources that is rapidly becoming depleted and which has great implications on economic growth of any country, and secondly market for it finished products. This makes sense when you consider that the United States technological leaps and strong economy over the last century and it continued prosperity for instance in every aspect from healthcare, education, technology, and military can be attributed to the availability of reliable and plentiful oil reserves from within its borders and elsewhere which makes up the single most factor that directly impacts on the running of it economy.
Indeed, United States is the only country where per capital usage of oil resource on average exceeds those of other developed countries in Europe or Middle East. Available statistics indicates that U.S consumes 25% of overall oil produced worldwide while its population is only comprised of 5% of the world population (Kraemer, 2006). It is on this context of US foreign policy on energy needs particularly oil that we can best understand China’s strategy for the same in Africa, which like we mentioned earlier was to a large extent shaped by US strategies by then. Considering that China is home to 1/6th of the world population, Beijing felt threatened by US spendthrift on a resource that was globally being depleted at much fast rate that it could possibly be sustainable. Notable to mention is that Africa has finally been identified as a strategic partner by both these heavyweights for good reasons; this is when you consider that by 2008 Africa had proven oil reserves and gas that amounted to “about 125.6 thousand million barrels of oil and 14.65 trillion cubic meters of natural gas underground, accounting for 10.0% and 7.9%, respectively, of the world’s total reserves” (British Petroleum, 2009).
China’s energy needs
Globally, China is rapidly growing to become the world’s second largest energy consumer; in just one decade, between 1999 and 2009, energy (oil) consumption in China almost doubled from 4,477,000 barrels a day (b/d) to 8,625,000 b/d (British Petroleum, 2009), with most of it being imported from foreign countries (Leung, 2010). Despite the fact that it has higher oil demand, China’s oil consumption is now projected to reach 9.6 million b/d in the year 2011 (EIA, 2007).
China which has the highest population of people 1.3 billion and which has just surpassed Japan as the 2nd largest economy, has current oil demand that is projected to reach 80% import in order to meet it needs (Pachauri and Jiang, 2008). Currently it only imports 35% of it requirement but with the need to conserve its domestic reserves while faced with increasing oil demand at home is actively exploring and engaged in conquering foreign oil reserves through it foreign policies (Pachauri and Jiang, 2008). Faced with competition from these former allies and from other major players such as Russia, Japan, Germany, US and Britain, it’s evident that China’s energy demand is an intricate challenge (Hanson, 2008). More so, since US has over the recent past become more aggressive in its quest to obtain the remaining available oil reserves; India has equally high demand due to its high population and industries which continue to heavily rely on oil (Hanson, 2008).
Currently, as the demand for energy globally increase, the new competitor in the field China, is actively racing to ensure that it secures long term supplies of energy to its huge populations. As parts of its efforts to sustain its rapid growth, China is struggling to secure massive amounts of oil reserves worldwide making it the world second largest oil consumer just behind United States (BeijingTimes.com, 2010). Although the country has previously mostly relied on coal for energy, China has now turned to Africa for future oil security and has been aggressive in partnering with countries that have known vast oil reserves such as Nigeria. This is in a bid to cater for its growth in oil consumptions in the coming years which is projected to reach 13.1 million barrels per day by year 2030 (BeijingTimes.com, 2010).
Considering that Africa holds 9% (Moody-Stuart, 2004) of the world’s proven oil reserves plus significant amounts of undiscovered oil reserves as well as various other resources, China is determined to increase its oil importation from the African continent, and this is largely the major reason why Beijing strategy shifted to embrace Africa as we have previously seen. As far as energy is concerned China is squarely focused on a handful of countries in Africa that have this rare natural resource in abundance; these are Angola, Nigeria, Equatorial Guinea and Sudan (Moody-Stuart, 2004).
In fact, combined these five countries make up more than a third of all oil imports that China sources from Africa as indicated in the pie chart below (Hanson, 2008).
To address its energy needs, the Chinese government has sent its national oil companies on a multibillion mission around the world to explore oil reserves and win oil concessions. China’s international oil strategies have also empowered the oil companies to fully pursue oil investments around the world primarily in African countries. Recent estimates indicates that China has spent more than $15 billion to acquire more than 100 foreign oil reserves and companies (IEA, 2007). In addition to that China has successfully acquired 60% of Sudan oil concession; it also own $2 billion oil refinery in Nigeria and is currently working at securing oil reserves in another African country, Angola (Leung, 2010). To fully understand the extent of China’s energy demand, let us briefly review China’s energy demand by sector.
China energy demand by sector
Industrial sector
Like most other economies of a world that is rapidly globalizing, the backbone of China’s strong economy is the industrial sector which happens to be the most dominant and major contributor to the success of China’s economy. Consequently, it’s the largest energy and oil consumer in the country; this is because the industrial sector requires oil fuel virtually in all processes and mainly in the production of manufacturing processes (Leung, 2010). In addition, high demand for oil in the industrial sector has been compounded by the frequent expansion of highway networks which requires manufactured raw materials. This is not to mention that oil is currently the only energy used to power heavy construction machines that are used at every step of all construction projects. It is thus not surprising that the industrial sector demand for oil has dramatically increased to reach 19.5% of all energy demand in 2007 which has continued to increase (Chen, Deng, Gu, Liu, Lu, Su, Fu, Wang, Wang and Wei, 2006).
Transport sector oil consumption
The transport sector in china is rapidly growing as the years go by in tandem with the overall growth of the country’s economy; the driving force to this is that there is rapid increase in vehicles production and ownership. This is further attributed to the fact that the Chinese government policy is to encourage each Chinese to own a motorized means of transport (Chen et al, 2006). Additionally, the improved economy has facilitated the high production of cheap vehicles that are affordable, and because China is highly populated vehicles ownership by citizens has contributed to higher consumption and demand for oil.
For example, the numbers of personal vehicles driven in china has reached saturation point and they all depend on oil, this is not to mention transport trucks and freight vehicles which have also increased the demand for oil.
Besides, railway transportation has also been intensified all over China to cater for quick and cheap transportation; this has also contributed to high consumption and demand for diesel in the country. The aspect of improving and developing individual domestic air transportation in China is also one of the factors that have led to the increased demand of oil. Many rich families and businessmen own personal air plane, increasing the domestic air route from 385 to 1216 while the domestic passenger transportation routes increased from 15,766 million persons to a whooping 217,331 million persons currently (NBS, 2011; Yan and Crookes, 2010). This high energy demand is also propelled by the fact that China is now the world second largest auto market; in fact it is forecasted that by the year 2015, more than 100 million vehicles will be consuming oil in the country thereby further increasing the demand for oil in the country (Yan and Crookes, 2010).
Agricultural sector oil consumption
Agriculture remains to be the pillar of Chinese economy and serves a fundamental role of ensuring constant supply of food to the densely populated China. Agriculture offers 40.8% of total employments in china with 314.4 million people working in the sector by the year 2007 (NBS, 2011). But surprisingly, this sector is neither a huge oil user nor a large energy consumer, but still it accounts for sizable energy consumption in the country. In 2007 for instance, the sector energy use was only totaled 6.3% overall (Tan, Wang, Zhong and Wang, 2006); this is mainly achieved by the fact that famers consume a small amount of oil since the agricultural activities such as land cultivation, harvesting and weeding are all seasonal.
About 300 million rural famers face a severe challenge of acquiring cheap and reliable supply of oil energy due to seasonal agricultural activities and the fact that their oil purchases are small (Tan et al, 2006). Oil as a fuel in agriculture is widely used in running farm machinery used for cultivation, spraying and harvesting; the same machinery including tractors and trucks are used to supply the products to the local market for sale (Tan et al, 2006).
Household and commercial oil consumption
Presumably, due to high population in China, there is high energy demand required to cater for household and commercial use. This tremendous demand of traditional biomass energy, including biogas, firewood and stalks increased from 200 to 280 Mtce, while the household oil energy consumption rose from 1.4 to 22.7 Mtce between 1990 and 2007 (Chen et al, 2006). Out of this, more than half of it (53%) of the total oil consumption was being used for heating bathing water and cooking (Chen et al, 2006). As far as household energy consumption is concerned there are two major factors which are contributing to high household and commercial energy consumption in China.
The first being rise in personal or family income; this allows many people due to availability of money to afford using modern clean fuels like natural gas, LPG and electricity for their daily activities and avoid traditional fuels like firewood and coal (Leung, 2010). All this has contributed to higher energy demand in the country. The second factor is the choice of fuel; once provided with variety of fuel choices, many people in Chinese towns and rural areas are running away from traditional solid fuels like coal and firewood and now prefer clean primary fuels like the natural gas and LPG fuels which have resulted to high demand and consumption of the fuel (Pachauri and Jiang, 2008).
As we have seen, the Chinese energy demand and consumption has drastically risen since 1990 as a result of accelerated economic growth coupled with rapid increasing population, and this can only increase even more as years go by. The two major sectors that have significantly contributed to this energy demand are notably the industrial sector and domestic consumption (Zakaria, 2008). The commercial sector being a major consumer of oil in China has consequently spurred economic growth significantly especially in the year 1990 to 2007 when the commercial oil consumption increased from just 8.4 Mtce to 30.1 Mtce, while the household oil consumption rose from 1.4 to 22.7 Mtce (IEA, 2007). Chinese government pro-auto policy of 1994 which was renewed in 2004 has also facilitated this increase in energy demand by encouraging domestic auto production and car ownership (Zakaria, 2008). This has totally overwhelmed the transport sector industry of oil usage since total number of vehicles driven by 2007 was eight times more than was the case in 1990 (IEA, 2007). This means more oil is required for locomotion purposes alone.
The aggressiveness of the Chinese government to rapidly grow the economy of China through industrialization, urbanization and job creation in just about two decades has made China the second greatest energy consuming country behind United States. The Chinese record in 2003 averaged 1 million tones consumption of primary energy, that had tremendously grown by 70% by year 2008 (Leung, 2010).
Even more notable is the fact that majority of Chinese firms operating both locally and internationally are actually energy-based (Leung, 2010).Thus, based on this energy consumption for China we can only expect this demand to increase further and China must therefore continue to explore and secure long term solutions of meeting its energy demand.
China involvement with other African countries
In discovering how China is extending its development project in Africa continent as a whole, it is evident that China has hugely invested as a major donor in various countries in Africa. Indeed, as previously mentioned, China is seemingly getting involved deeper in Africa on new terms of development that are described as “coalition engagement” (Pflanz, 2009). No doubt then, that Chinese foreign policy towards African continent especially in the turn of the new century has undergone tremendous changes that have been positive, and which have enabled China to put in place strategic and numerous investments projects in various African countries (Martyn, Edinger, Tay and Naidu, 2008).
Following its adoption of the foreign policy developed in the early 80s, Beijing gave African state a renewed optimism in many sectors especially in the extractive industry. Through the launching of China-Africa strategic plan, China was able to pursue different new avenues of cooperation that served to facilitate attainment of major developments in the African continent. Generally speaking, China was able to win most of the African countries because of its unique engagement policy that was radically different from what these countries had known, and which facilitated their self-empowerment.
As such, China was possible to bring on board even the usually small African countries particularly those with little economic and political power; all the same, China was also able to engaged with other African countries notably those that are rich in resources including countries such as Sudan, Nigeria, Zambia, South-Africa, Ethiopia and Egypt among others (Martyn et, 2008).
According to Pflanz (2009) China has made huge investment that exceeds ten billion dollars which is being used as loan to fund development projects and facilitate business expansion in the Africa continent. Egypt is one such country that is incidentally among the major recipients of Chinese Department for International Development (DFID) aid given to finance some of its high profile development projects, notably because of its oil. More funds were allocated to dozens of countries during the last concluded China-Africa summit in 2009 sponsored by Beijing during which it gave more developmental aid to fund infrastructure projects (Pflanz, 2009).
Democratic Republic of Congo (DRC) is among the African countries where China has invested in developmental aid as it seeks to partner with this country; DRC is a favorite country for development because it happens to be one among the many African countries where natural resources are still in abundant. Just recently in 2008, China and DRC Congo signed a trade partnership worth US$9 billion which is among the largest in Africa advanced by China; these interest free loan advanced by Beijing was to be used for construction of “about 2,400 miles of road, 2,000 miles of railway, 32 hospitals, 145 health centers and two universities” in exchange of “10.6 million tons of copper and 626,619 tons of cobalt” (Nieuwoudt, 2011). Thus it would appear that these developmental projects are mutually beneficial because the Chinese government will develop the Congolese non-existent infrastructure in order to access the natural resources by facilitating transportation of minerals while DRC will benefit from the roads, schools and hospitals (Martyn et al, 2008);
Kenya is another country in which China has of recent been increasing its trade relations by increasing its DFID grants; recently in 2009, the Chinese government offered Kenyan government US $7 million as developments grants (Ian, 1998). According to China’s foreign minister Mr. Yang, this grant to Kenya is a form of a supportive program meant to strengthen China-Africa strategic partnership and the newly launched cooperation (Ian, 1998). This is besides the multimillion infrastructure projects that China is currently undertaking in the country today which have been undergoing for the last several years. In East Africa, Kenya is not the only country that China has partnered with since it also has presence in Uganda and Tanzania which happens to be the beneficiary of one of the largest developmental aid, notably the 1800 km Zambia-Tanzania railway in early 70s (Penny, 2010).
Further South in Africa, China is pumping billion of dollars in developmental aid to another African country, Zambia which it has engaged with as early as 1970s. China has been investing in Zambia for years because of various reasons such as political stability, investment friendly environment, availability of many natural resources and raw materials (Penny, 2010). As recent as 2010, China and Zambia signed several corporation agreements in Beijing with one of the projects being aimed at making expansion of the “multi-facility economic zones MFEZs in Zambia” (Penny, 2010). In addition, another agreement was made which involved financing the construction and expansion of the Lusaka international airport at a cost of US$ 100 million while the mines and mineral department also has in place China-Zambia treaty that outlined the modalities of China engagement with Zambia in the mining sector (Thompson, 2005).
In South Africa, China has also extended its Sino-Africa relations through more developmental aid; in the year 2010, China launched one of its major development projects in South-Africa when it announced to build a cement firm worthy about $217 million (Shelton, 2001). The new cement plant is being developed jointly by Women Investment Portfolio holding Ltd and the South African Lime stone Company in collaboration with Chinese company known as Jidong development group as the major financier (Mohan and Mullins, 2009). This particular project was aimed at boosting production of cement and other related products that would be used for various constructions programs in the preparation to the world cup that was held in June 2010.
Case studies
China’s involvement with Angola
Angola being a Portuguese colony has a population of approximately 14 million persons, majority of whom reside in the capital city Luanda (Anyu and Ilfedi, 2008). Angola has recently emerged from a 27 year civil war sparked by political instability, a factor that is responsible for the slow economic developments of the country for decades. The People’s Republic of China established its diplomatic relationship with Angola in January 12, 1983 (Anyu and Ilfedi, 2008). This bilateral tie since then has helped to upgrade Angola in terms of infrastructure developments, loans and many projects currently run by Chinese in the country. In fact, since 2002 when Angola long running war ended China has been the largest contributor of developmental aid ever received by the country, totaling 58% (DFID China, 2006). In kind, Angola supplies China with one of the key natural resource that China is in most need of, oil; given that Angola is currently the single largest trade partner with China in Africa and it’s no doubt a key partner for Beijing in Africa (Anyu and Ilfedi, 2008).
In this section of the paper we shall analyze the nature of China partnership with Angola in specific, the trends, amount of investment and the resulting type of benefits from the two partners, whether it is a zero sum game or a positive sum game. This is not to mention that Angola is certainly one of the major oil and gas producers in Africa and is consequently the major contributor of the country’s GDP as indicated in the figure below.
As we can see, Angola does not only have oil and gas as its single largest sector at 54%, but also incidentally has very insignificant construction sector at 4% and was largely undeveloped infrastructure-wise by then (DFID China, 2006). Not surprisingly then, China saw the perfect opportunity in this country as a trade partner and Angola is in fact the largest China trade partner in Africa today.
China-Angola trade investments
The bilateral trade ties between China and Angola is currently more balanced than it was several years ago considering that in 2002 for example, China export to Angola was approximately US$61.30 million while Angola exported to China amounted to US$1.08 billion (DFID China, 2006). Despite the close balance in trade between the two, China still continues to benefit from the trade deficit due to heavy investment needed in Angola in the infrastructure sector more than it obtains from Angola resources (Hanson, 2008).
Angola export to China which is primarily crude petroleum products has by 2008 totaled an estimated value of US$6.58 billion, the largest ever from a single country in Africa. This is ever increasing given that China demand for oil product is projected to continue rising every year and is evident in this graph which indicates the trend in Angola export to China between 1995 and 2005 (DFID China, 2009).
In exchange for the access to oil and other raw materials, Beijing has over the recent past donated US$2 billion aid and loan to be used for developmental purposes in Angola, including infrastructure constructions (Zweig and Jianhai, 2005).
China investment in Angola
In 2006, the Chinese government via the leading oil company Sinopec announced a joint venture with Angolan oil company Sonangol to form a united company, SSI (Sonangol-Sinopec international) (DFID China, 2006). The main objective of this new venture was to build a new oil refinery plant at Lobito, Angola and to take on the entire capital of each of the new concession by drilling 10 tests wells which were estimated to produce 120,000 barrels of oil per day (DFID China, 2006). This production would definitely double the quantity of oil that was usually drilled and processed by the existing refinery plant in Luanda; the project which required US$3 billion for investments was fully donated by China with no exploitative conditions attached (DFID China, 2006).
Moreover, China has granted Angola approximately US$211 million loan just to finance the reconstructions and maintenance of roads and bridges that were destroyed during the 1975-2002 civil war (DFID China, 2006). These funds specifically were earmarked to cater for construction of 371 km stretch road between Luanda and the north, popularly known to be agriculture and mining provinces (Zweig andJianhai, 2005).
The civil war in Angola also left the countries Benguela railway line in ruins; however, China International Fund Limited (CFIL) took the tender in 2006 and invested a total of US$300 million to repair the railway line that connected the western part of the country to the east (Mooney, 2005). This railway line was expected to run 1300 km from Benguela to Luau via Lobito 700 km south of Luanda and was estimated to take approximately 20 months to be fully completed and functional; the company still runs maintenance of the railway line up to date (Mooney, 2005).
In addition, to the one and only 4de Fevereiro airport in Luanda, a new Bom Jesus international airport located at northeast of Luanda has been constructed in Angola, courtesy of the Chinese government (DFID China, 2006).
This US$450 million worthy contract was accomplished by the Brazilian construction company in conjunction with a consortium of Chinese firms (DFID China, 2006). In February 2006, the Chinese Oversees Engineering Company (COVEC) completed modern “Luanda general hospital located at Kilamba Kiaxi district; the hospital built was 800,000 square meters on five acres of land” (DFID China, 2006). It had a capacity of 100 inpatients and an estimated number of 800 outpatients attendance daily and took COVEC 15 months to fully complete the US$8 million project (DFID China, 2006).
Additionally, China’s Jiangsu Construction Company was contracted US$41 million to complete the construction of Angolan palace of justice; this was tendered through Angolan ministry of public works, which was thereafter approved by the Angolan cabinet (DFID China, 2006). This was according to the trade agreement between China and Angola in that Angola was to assign China with all its developmental tenders with or without funds, in which Angola was to supply oil for repayment (DFID China, 2006).
In March 2006, China International Fund Limited was issued with tender by Angolan government to build “44 fifteen storey buildings, with approximately 5000 apartments in Cabinda province” (DFID China, 2006). This was to accomplish the Angolan government initiative program to provide 200,000 residences to its citizens countrywide by the year 2008 (DFID China, 2006). Consequently, this operation was also on loan and was funded by the Chinese government and supervised by Angolan National Reconstruction Department (DFID China, 2006). The project lasted for a period of 30 months and in repayment Angola was to supply oil and other natural resources to China (Alden, 2007).
In addition, Chinese CEIEC Company won a tender in may 2006 to carry out developmental renovation in Angola which included widening up of water distribution network in the provinces of Caxito and Bengo; the contract was completed at a cost of US$4 million (DFID China, 2006). No doubt then that China investment in Angola has been substantial and continues to increase as time goes by; we can thus conclude that in this form of barter trade it would appear that China is putting as much in Angola by way of construction projects and other infrastructures as it is taking out of it through oil and other natural resources.
Chinese companies investments in Angola
Most of Chinese companies investing in Angola are primarily of transport, infrastructure and extractive industrial sectors; for Angola, this is a joint venture partnership and comprises the largest direct foreign investment (DFID China, 2006). Most of these Chinese construction companies win Angolan constructions tenders and they also show interest of extending their joint venture to the local partners in Angola.
Apart from oil drilling and refinery sector, most companies invest on other few extensive projects including road and railway rehabilitation. Notable to mention is that, only two out of many companies operating in Angola precisely are registered officially with ANIP Angola. The reason is because, majority of contracts taken by most Chinese companies are always in terms of loans funded by the people’s republic of China; this implies that Chinese companies have advantage over private firms operating in the country or companies from other countries for that matter (DFID China, 2006).
As part of their trade agreement and regulations, when the Angolan government has any construction project the tender is to be first launched in China where the Chinese government will announce the tender to the 35 pre-approved companies to bid (DFID China, 2006). This obviously makes it extremely hard for private companies or companies of other countries to win sizable contracts in Angola; statistics indicate that from 2004 to 2006 for instance, Chinese enterprises alone secured more than US$ 3 billion worth of contracts in Angola that mainly comprised of construction projects and general infrastructures development (Alden, 2007). With the look of things it appears that since this agreement come into place the Chinese firms have never disappointed.
China’s involvement in Angola; is it mutually beneficial or just exploitative
Through developmental effort contributed by the Chinese government, Angola is now enjoying a stable growth in economy since it partnership with China; so far Angola has received technical and financial aid in over 100 projects which has facilitated post conflict reconstructions (Campos and Vines, 2008). Beyond the obvious political rhetoric revolving globally on China-Angola trade partnership, it is evident that Angola is the largest recipient of Chinese investments in the African continent and this bilateral tie is one of commercial interest for both partners. China is aware that it has to outbid other developed countries interested in Angola oil and natural resources, so it turns out it need to negotiate with Angola a mutually beneficial deal for several other reasons (Hanson, 2008).
First, Angola provides a strategic route for China trade activities in Africa since it is geographically positioned to provide critical gateway to China’s oil coming from central Africa where China has agreements with other countries (Mooney, 2005). Secondly, Angola offers great source for agricultural products and other agricultural raw materials since it has one of the most fertile soils in Africa; as such, the Chinese development bank has already released US$1 billion to be invested in this sector (DFID China, 2009). Finally, Angola is a source of Chinese finished goods just as is China to Angola natural resources and agricultural products (Jenkins and Edwards, 2006). The aid from China is part of the bilateral agreement between China and Angola and it will appear that this agreement had mutual advantages since China needs oil than Angola does while Angola priority is to expedite post civil war reconstructions, and of course obtain market for its resources at competitive prices (DFID China, 2006).
All this investments undertaken by Chinese firms aided by the Chinese government has revolutionized construction and other infrastructural projects in Angola; consequently, it has also advantaged the Chinese government by placing it at a strategic position to access and obtain Angola natural resources (DFID China, 2009).
Most importantly, the benefits of this Sino-African trade between China and Angola has spurred Angola economic development to reach it highest in its history at 5.8 GDP by 2007 (Downs, 2007). Modern roads, bridges, buildings, dams and other projects built by Chinese that are cost intensive and of high quality have been completed over a very short time. Definitely then, China involvement in Angola has more positive impacts than had been witnessed in other African countries whenever western developed countries have sought to partner with Africans (Michel, Beuret and woods, 2009).
Nevertheless, there is also evidence that China partnership in Africa at large could also be harmful to an extent. Transparency International for instance asserts that China’s strategies of operating business where they offer funds with no attached conditions always undermined recipients’ countries efforts to attain good governance both at local level or international macroeconomics levels (Downs, 2007). But this is not surprising when you consider that China’s engagement with African country’s is based on mutual respect and five pillars, two of which emphasize China’s pledge not to interfere with the country’s internal affairs such as governance.
Introduction
China and Nigeria
On 10 February 1971 Nigeria first established its diplomatic trade relationship with the people’s republic of China (BBC.com, 2007). The motivation behind China’s partnership with Nigeria during these early times was mostly to counter Taiwan’s influence in Africa that was increasingly becoming formidable as far as Beijing was concerned. However, as years went by and the two partners continued to interact China would later see the need to partner with Nigeria in trade relations, albeit more belatedly than should have been the case. In 2006, the bilateral trade relationship between China and Nigeria has reached its highest of US$ 3 billion per annum while US$4 billion more funds were to follow suit (Ian, 2007).
More recently, the trade relations between China and Nigeria have grown stronger with China becoming a major trade partner to Nigeria as was the case in the recent trade forum in 2009 organized by China whose theme was agriculture, industrial, infrastructure, oil and manufacturing partnership in Nigeria (Juin, 2009).
China’s interest in Nigeria by this time was access to Nigerians natural resources such as timber, cotton and oil which comprise raw materials for China industries as well as its energy needs.
Key China investments projects in Nigeria
In Nigeria, China’s bid to win over concessions and other contracts for resources has set it against US which has traditionally been Nigeria’s trade partner; thus, in Nigeria China faced an uphill task of displacing US as Nigeria’s favorite trade partner. This in large required substantial development aid grants, in addition to financial investments in key sectors that are critical to Nigeria’s economic growth. Thus, the willingness of Chinese government to invest millions of money and grants with no strings attached appears to have been the perfect strategy that China employed in Nigeria to win its royalty over US, and at the same time keep in line with its foreign policy in Africa which emphasized noninterference in its partner’s internal governance issues and sovereignty (Juin, 2009).
One of the greatest achievements made by China in Nigeria through it trade ties is to secure four oil drilling licenses in Nigeria; in exchange for this, China was to invest a total of US$4 billion to the Nigerian oil projects and infrastructure sectors (Cody, 2007). The deal also required Nigeria to export 110,000 barrels of oil per day from Kaduna oil refinery in return to China’s buying stake in the oil refinery worth £2.3 billion (Cody, 2007). Elsewhere, China was also investing in Nigeria’s economy through the US$311 million stake agreement meant to upgrade the country’s strategic corporation in communication and space programs and to expand internet networks by the year 2010. In 2007, China further invested in Nigeria by developing and financing on behalf of the country an orbiting satellite in space (Cody, 2007); this strategy was meant to establish a strong durable trade relationship with Nigeria.
This is besides the numerous infrastructure and other construction projects that China has been implementing in Nigeria, some of which are still underway. More recently, China has granted US$500 to Nigerian government basically to reconstruct phase one of the Kano-Lagos railway line that had been dilapidated for years (Belgore, 2010). The Chinese government stated its objective in Nigeria which it says is determined to ensure that Chinese strategy remain to make Nigeria one of its greatest African trade partners succeed. Towards this end, China loans towards Nigeria like most other African countries have very low interest rates that are on average about 3.6% that also has grace period (Belgore, 2010).
Besides investments in infrastructures such as railways China intends to build for Nigeria through joint funding a 2,600 MW Mambilla plateau hydropower project in Nigeria that is expected to have one of the largest capacities in Africa (Internationalrivers.org, 2009). This US$1billion worth of project is being implemented by China geo-engineering Corporation in collaboration with China Gezhouba Group Corporation (Internationalrivers.org, 2009). Notable to mention is the corruption allegations surrounding this particular project which has unfortunately delayed its implementation, which incidentally highlights the negative impacts that Chinese developmental aid sometimes brings to Africa.
China in Nigeria: Zero sum game or positive sum game
This bilateral relationship between China and Nigeria can be considered a mutual relationship because of the fact that in spite of most enterprises being owned by Chinese, over 40,000 Nigerian workers, both skilled and unskilled have secured employments in many of this Chinese enterprises operating in Nigeria (Campbell, 2011). Presently, as China’s thirst for oil and gas increases, their import demands also increases at the same level, this consequently creates market to the Nigerian oil exports as it also benefits through increased income which it can channel towards upgrading its infrastructure and other sectors. Additionally, Nigeria benefits further in that it also has China to use in exploring for it undiscovered oil within its borders such as in Chad basin and Niger delta which happens to be essentially a risky capital intensive exercise that Nigeria will be better off leaving to a contractor (Ian, 2007).
China has also played an important role in helping the Nigerian government protect the oil rich Niger Delta against insurgents by supplying it with arms, though it is not clear if this is the diplomatic way of helping the country to develop or polarize it, but this largely seems to have been Nigeria’s choice and not China’s decisions. China has spent millions of money to finance Nigeria in supply of military fire arms, equipments training and technology for the Nigerian armed forces.
More negatively however, China’s presence in Nigeria has been condemned for the evils it has been seen to nurture; Nigeria for instance is lamenting its collapse of textile industry due to flooding of Chinese textile in the country that are cheap and of poor quality, this in fact is not only limited to Nigeria alone (Campbell, 2011; Pei, 2006). To counteract this, the Nigerian government and higher customs authorities have enforced inspections for all textile imports entering the country.
Nigeria being one of the most popular African nation and also being highly populated is ranked among the fastest growing economies in the world today (Campbell, 2011), and despite the negative impacts of China in Nigeria, this Chinese-Nigerian trade relationship is highly advantageous to both parties in terms of developments and marketing of natural resources. This bilateral relationship between china and Nigeria can be considered mutual relationship since in spite of Chinese owning most of the enterprises; a substantial number of Nigerians are employed in their firms.
How China’s differentiates with Western interests in the region
Back in the 1960s and 1970s, China had a very strong political and ideological focus on the African continent but which has over the recent past shifted towards economic interests, investments and trade (Liu, Buck and Shu, 2005). Despite the fact that China is working hard to win Africa’s trust on all these sectors, it is still facing stiff competition from western countries, particularly from the United States who have similar interests in the region. To outwit its competitors requires that China come up with unique and appealing strategies and approaches that are different from what its competitor uses. In this section of this paper we are going to discuss the strategies that China has opted to apply in embracing Africa and analyze how they differ with other developed countries that have previously wooed Africa or are presently pursuing its resources.
Strategies
China having realized that African continent is rich in various types of resources undertook to pursue a different strategy in accessing these resources that was different from its predecessors. To achieve this Beijing has to go back to the drawing room and work out the modalities of engaging Africa that would be most suitable in achieving its objectives and thereby enable it achieve success in accessing Africa resources. This strategy is well articulated in a previous section on China foreign policy towards Africa which we have so far discussed.
By the start of 2000 China formulated a policy dubbed “go out to the world” (Jansson, 2009), which largely zeroed on African resources; this policy fully authorized all Chinese public and private enterprises including banks to procure natural resources globally, and to ensure constant long term supply of the resources to China in future. To achieve this, China opted to approach African countries by the way of providing developmental aid. In fact, the nature of developmental aid that Chinese has offered Africa countries in which they have resource and trade interest is very deliberate in that it is mainly on road infrastructure projects, oil infrastructure projects and social construction projects (Liu et al, 2005). It’s the kind of resources that will actually facilitate the accessibility of the resources and their transportation to China. Now this was very different from what the western developed countries US included were opting to do to access the same resources as they viewed African development as a burden.
Unlike other developed countries interested in Africa, China has historically promoted and financed various conferences that were aimed at promoting trade and close ties between Chinese government and African states such as the “forum on China-African cooperation” held in 2000 and the Bandung Conference in 1955 that was among the first of such conferences (Jansson, 2009). This is not to mention various and annual trips made by high profile Chinese leaders across African states that have now become a tradition aimed at winning African trust and cooperation (Chen, Chiu, Orr and Goldstein, 2007). Through this cooperation, China helps the African countries to develop and in return it gains access to the African natural resources and oil. Again this is very different in the way that developed western countries sought to embrace Africa in the post-colonial era.
Until now, the strategy for countries aiming to access Africa resources has been what can be described as top-down approach since it was senior government officials and African countries leaders that were directly offered personal financial incentives in the disguise of developmental aid so as to allow access to such resources (Bhattacharyya and Hodler, 2010). Because such funds were never actually accounted for and was most often plundered, Africa remained undeveloped for many decades after independence despite the massive capital injection that has since been pumped in the continent. This is how the western developed countries conceptualized the idea of partnering with Africa and developing it until China come into the picture; thus China barter trade appears to have solved this problem at least to an extent since either way there is always tangible evidence of any transaction that Beijing engages in.
Additionally, the Chinese government has invested hugely in Africa by injecting million of dollars on its firms that are sent to scout African countries, but unlike western developed countries China has and is willing to provide huge financial resources just on exploration of resources alone, mainly oil (Foster, Buttefield, Chen and Pushak, 2008). This is different from western developed countries approach towards Africa since theirs is a cost-benefit approach in which they prefer investing in mining of resources rather than on exploration since the later is a capital intensive exercise.
China’s evidence of its different ideology in Africa is even more stark when you consider the type of countries that it seeks to partner with in Africa; they are the kind of countries that western developed countries prefer to categorize as “failed states” that will offer no returns on their investments (Jenkins and Edwards, 2006). It is these same countries such as Zimbabwe, Liberia and Sudan that China seeks to partner with by offering developmental aid of mainly infrastructure projects that they need most in return of concession on their resources. Certainly, this openly shows that China has a unique type of global ideologies unlike many western countries, US included. This is not all; China is further cultivating deep ties with such African countries which do not have any pre-existing international relations.
These are countries that are recovering from conflict or countries that are politically isolated from the world affairs, more importantly it does so with no strings attached in as far as internal political and governance issues of the recipient countries is concerned. Thus, Chinas strategy has always been not to interfere or involve in African countries domestic and political affairs (Naidu and Mbazima, 2008), which is very much unlike western developed countries.
China occasionally sends its diplomats and leaders to Africa frequently, much more frequently on trade mission to strengthen China–Africa relationship than what other western country does; this for the most part has promoted China in Africa as a serious partner (Zhao, 2011). Besides, China has one dedicated ministry that is responsible for promoting the Sino-African trade ties and facilitating the same; this is the ministry of commerce of China (MOFCOM) which among other things approves loans disbursements and investments package aids to Africa (Zhao, 2011).
It also ensures full implementation of the African trade policy, including approval of African projects and disbursement of loans (Zhimin and Junbo, 2009). China is also investing in expansion of its diplomatic ties in order to increase global awareness of China brand; the media outlet like Xinhua news is now an international newspaper supplied all over the world (Kurlantzick, 2006).
The positive attitude and China’s effort to win African trust on trade and developments through this mutually beneficial cooperation has made many African countries to switch their diplomatic relationship to China with the latest being Senegal (Kurlantzick, 2006). It is then no wonder that China has of recent past doubled the amount of resources imported from Africa especially oil and natural gas, and is now the number one beneficiary of African resources in terms of concessions awarded to extract these resources as well as trade. In fact, the most recent statistics indicates that China-Africa trade has steadily been rising since 1990 as shown on the figure below.
Consequently and unlike the past, this symbiotic relationship now actually benefits Africans with infrastructure developments, constructions of dam, supplies of military arms, development aid in terms of funds fund, loans with very low interest and other projects. Thus, we can see how China has positioned itself very differently in order to win African countries trust from what has traditionally been the case with western developed countries partnering with Africa. It has never been a secret that most developed western countries take advantage of severe poverty and famine facing many African countries for exploitation by for instance providing loans with very high interest rate which they suggest be repaid with the countries resources that they obtain at exploitative prices (Worldpoverty.org, 2011).
In fact, some of the western countries drive to obtain African resources know no boundaries as there exist documented evidence that they at times fund rebel groups operating in countries of interest (that have abundant valuable resources) by providing them with military weapons to destabilize the country so that they would exploit its natural resources (Bhattacharyya and Hodler, 2010; Straub, 2008). Or as has been happening in DRC Congo, promise to arm rebels with demand that they be given contracts on mining once those rebels seize power (Straub, 2008). However, for China it’s very different in that, as they take resources from Africa they also help to develop the country. It’s probably this observation of China’s empowerment in Africa by Robert Mugabe, the president of one of the most isolated countries in Sub-Saharan Africa, slapped with dozen of sanctions by western countries that made him to state “it’s now a high time to move away from west and face east” (Malone, 2008). Indeed, there is no doubt that Africa is currently the field of intense power play that developed and mighty economies are focused on, but which China’s approach and investment appears to be finally paying off mainly because its willing to give back something as it take something else out of it.
Conclusion
Allover Africa, from Egypt, Nigeria, Angola, Sudan, Kenya and South Africa among other countries, China trade partnership with African countries is evident through the many trade agreements and other partnerships that China has secured in this continent. Currently, China presence in Africa is felt in more than 50 countries in which it has directly provided developmental aid or which it has trade relations, and in all these countries the trend for Chinese investment in Africa is very much alike (Looy, 2006). At a glance it would appear that China has earmarked particular types of investment projects in which it is only willing to advance developmental aid; these are notably, infrastructure projects, general construction projects, mining related projects and humanitarian grants in general. This is very convenient to China when you consider that these types of investments serve double purposes for both partners in that African countries are often in dire need of investments of similar nature while China also benefits from the same investments to an extent; in any case it appears that Beijing’s technical expertise is probably limited to these sectors. For instance infrastructure investment in Africa which is the largest recipient sector of Chinese developmental aid and funds serves to facilitate natural resources and other materials transportation from point of mining to ports for onward transportation to China.
This is beneficial to Africa countries in that besides facilitating raw materials and natural resources that African countries need to sell; it also spurs internal economic growth of these countries since improved road for instance facilitates transportation. This mutual benefit is duplicated in almost every partnership that involves an African country and China; in Sudan for example “China has been able to diversify its oil resources and become less dependent on other oil producing countries while Sudan has found a reliable economic partner that does not question its domestic political situation” (Looy, 2006). Yet this very open policy of Chinese engagement with African countries where it does not concern itself with the internal affairs of its partnering countries is what has been cited as the Chinese villainy in Africa.
It would be extremely hard for China for instance to painstakingly build a partnership relationship with African countries that is based on mutual respect and pledge for noninterference on it internal affairs and then make a turnaround later by conditioning its developmental aid grants on the same. In any case, the onus of just governance in a liberalized and global world cannot certainly be expected to lie with the dominating trade partner, and an outsider for that matter as critics might want to assert given that this is purely a commercial venture between two willing trade partners. Thus, what one partner wishes to do with its own money, or how to use it so to speak, cannot be used to inform the resulting trade ties between such partners; these has been China’s perspective all along. Because these two concepts are at opposite ends they cannot mutually coexist and China has opted to choose the latter where it respects its partner’s sovereignty and internal governance matters, not only in Africa but in every region that China economic might exists globally.
It is based on this observation so far that we can assert that Africa-China cooperation appears more than anything else to be a win-win situation. Furthermore, if the analysis of the current investment that China had implemented in African countries is anything to go by, it would also appear that Africa countries benefits as much as China does, perhaps even more since Africa now has the choice of trading with the partner that offers the highest bid on it products which happens to be China. Until now, Africa in fact didn’t have this luxury and that is how it was so privy to exploitation by its past trade partners then, especially given that it had not diversified as much then. Given that Africa as it stands now is more developed, increasingly able to extract its minerals economically because of the Chinese technology and reaping better prices on its resources, we can only conclude that Africa choice to partner with China is certainly a positive sum game as the evidence suggests compared to the small price that it might have to pay for negative impacts emanating from Chinese presence in the continent.
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