China’s Resource March Through Africa

In the Spring of 2004 there was a spate of thefts of manhole covers in Gloucester and Aberdeen, the craze spread to East London, Montreal, Chicago and Kuala Lumpur. As darkness fell, they would be levered up, sold to local merchants who cut them up and loaded them onto containers. The motives for the thefts were financial.

China's runaway economic growth had forced up the price of steel and scrap metal prices followed suit. The 130 manhole covers stolen in Aberdeen were worth £13,000 and the metal would be shipped to China and used to make washing machines and the like. At the time this incident brought home to me the growing influence of China on our way of life.

Then this autumn I read a news item about an outbreak of rioting in the Zambian capital Lusaka in which supporters of the defeated opposition alleged vote rigging. Nothing new here, you might say. But what really caught my eye was that the opposition's anger had been targeted at Zambia's rapidly growing Chinese community. Beijing had been investing heavily in the country and Chinese firms, some of which came under attack, have been accused of driving Zambians out of business. Just as the manhole cover thefts were a symptom of China's voracious appetite for raw materials, was this evidence of 21st colonialism another manifestation of the same thing?

The Chinese have had a stab at securing influence in Africa in the past. In the 1950s Zhou Enlai backed left wing governments, giving aid and funding lavish infrastructure projects. But the strategy was not very successful. Maoist China was not wealthy enough to establish China as a leading force, while the export of revolutionary ideas did not go down well with African leaders. Now, rather than using ideology, China is using trade...with impressive results.

While African trade with the EU and the US has been declining, its trade with China has been booming, because unlike the west, China imposes no duties on commodity imports. Europe's share of total trade with sub-Saharan Africa has fallen from 44% to 32% over the past 10 years, meanwhile China's has increased from around 2% to 10%. Over the same period trade between China and Africa soared from $3bn in 1995 to $32bn last year. China is now Africa's third most important trading partner after the US and France.

China's push for breakneck economic growth has resulted in an unquenchable thirst for raw materials, including copper, cotton, platinum, lumber, iron ore and most important of all, oil. This year Angola overtook Saudi Arabia as China's largest supplier of crude oil. China realises the strategic importance of oil supplies to its development plans. In January this year the China National Offshore Oil Company paid $2.27bn for a 45% stake in a Nigerian oilfield, trumping a $2bn bid from an Indian rival. China has shown a similar interest in other oil producers like Sudan, Equatorial Guinea, Gabon and Congo-Brazzaville, which already sells a third of its output to Chinese refiners.

Moreover, Africa has found more than a buyer for its raw materials. It has found a new source of aid and investment. China is now Africa's biggest source of aid. This year alone it has pledged more than $8bn in loans to sub-Saharan Africa. By comparison in 2004, the US gave loans of $3.5bn, France $3bn, while this year the World Bank is lending $2.7bn. This investment is often an entry ticket. For example, in Nigeria, Chinese promises to invest $4bn in refineries and power plants were conditional on securing oil rights. In Angola a $4bn low-interest credit line to fund infrastructure rebuilding after decades of war is repaid in oil.

African nations have found that dealing with China offers fewer complications than with the IMF, where loans are sometimes conditional on good governance and human rights records. China has also flooded Africa with workers in straw hats from the Chinese Middle Kingdom.

There are an estimated 44,000 Chinese workers in Namibia. The Chinese are building a railway line in Angola from the capital Luanda to the eastern province of Malange. There are also numerous Chinese traders that sell cheap electronics, plastic goods and textiles manufactured in China, undercutting local traders and manufacturers.

However, given China's unsatisfactory human rights record it is not surprising that it backs the vilest regimes in Africa. When Western nations imposed sanctions on Robert Mugabe's Zimbabwe, China stepped in with aid, arms and electronic communications technology for the corrupt tyrant. From then on Mugabe launched operation Murambatsvina, in which 700,000 had their homes or businesses destroyed. China neutered all attempts at discussion, let alone condemnation, at the UN Security Council.

China's record in Sudan is just as bad. When in 2004 the Sudanese government was said to be fuelling the genocide in Darfur, China resisted UN military intervention and instead invested $150m in the country that year, three times as much as any other donor. In turn China has become Sudan's largest export market.

But China's aid and support for African nations at the UN comes with one important proviso: the ditching of their recognition of Taiwan. To date 48 African countries paid due obeisance to Beijing, which brings us back to the Zambian presidential elections. Given the suggestion that Michael Sata, the main opposition candidate, would have recognised Taiwan, the Chinese ambassador said he would consider cutting diplomatic relations if he won. This is tantamount to a public intervention by China into the internal affairs of a sovereign African country.

There will be plenty of hand wringing in the West about its impotence in these issues, but the actions of its leaders are partly to blame. The war in Iraq has preoccupied the West. Whether the mission was to secure oil supplies for the West, give ordinary Iraqis security or spread freedom and democracy in the region, it has failed dismally on all counts. And there is a wider diplomatic and strategic cost to the West. While Bush and Blair got the West bogged down in Iraq, China has stolen a march on the Western interests in Africa.

With the result that China has an increasingly tight grip on oil supplies and political influence in the region. The West will be regretting playing its first "regime change" card so ineptly.

Regards,

Brian Durrant
for The Daily Reckoning Australia

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