Doubts about Development: Civil Society and China’s Role

China enters the continent at a time when civil society is questioning why resources (especially minerals) are not contributing significantly to the development and growth of Africa’s cities and people. Civil society, governments, and the private sector are engaged in finding new ways of managing resources so that they benefit the people. Equally, companies are being requested to observe higher corporate social responsibility (CSR) standards when doing business on the continent.

Claude Kabemba's picture

Director of the Southern Africa Resource Watch (SARW)

October 5th, 2012

China enters the continent at a time when civil society is questioning why resources (especially minerals) are not contributing significantly to the development and growth of Africa’s cities and people. Civil society, governments, and the private sector are engaged in finding new ways of managing resources so that they benefit the people. Equally, companies are being requested to observe higher corporate social responsibility (CSR) standards when doing business on the continent. Government and companies are also being requested to adhere to good governance practices when managing revenues from the extractive industries. African civil society has embraced the Publish What You Pay (PWYP) campaign and is lobbying governments and companies to join the Extractive Industries Transparency Initiative (EITI) to ensure that revenues are properly managed. Inevitably, Chinese investment has faced scrutiny, and has at times been found wanting.

In Mozambique, civil society concern has been expressed, as noted in Chapter 4, by journalist Marcelo Mosse who complained about the ‘rampant plunder’of the country’s resources by Chinese investment. His view reflects many of the concerns felt throughout civil society, which come in stark contrast to the opinions expressed by the country’s political elite. They also reflect the concerns of civil society elsewhere in the region.

South Africa’s leading trade union federation, the Congress of South African Trade Unions (COSATU), has been particularly critical of China’s growing exports to South Africa. Over the last few years, the South African footwear industry was essentially eliminated by cheaper imports from China. More recently, the textile industry has been the victim of China’s export tsunami. (China is now the world’s largest exporter of textiles, with increases from US$7,2 billion in 1990 to US$41,1 billion in 2005, a 469 percent increase over fifteen years.) COSATU has been increasingly outspoken against Chinese imports and the impact they are having on employment in South Africa. Rudi Dicks, co-ordinator for COSATU, estimates that job losses in clothing and textiles are between 75 000 and 85 000, where there is little prospect of re-employment in the industry, or in a related industry. The South African Clothing and Textile Workers Union (SACTWU) calculated the loss of jobs at 75 000 between 1995 and 2005 (from a high of 230 000 people employed in the industry in 1995). Given the already high levels of unemployment and poverty in South Africa, these losses were described by SACTWU as ‘unacceptable’

The Southern African Labour Research Institute (SALRI) tracked retrenchments, company closures and liquidations, identifying a significant and ongoing decrease in employment over an extended period. The International Textile, Garment and Leather Workers’ Federation Africa Region (ITGLWF-Africa) identified the flood of Chinese garments as the major threat to South Africa’s industry. Moreover, it warned that China’s trading patterns were becoming increasingly ‘colonial’ in character, with African countries exporting raw materials and China returning manufactured products. South Africa’s Textile Federation pointed out that Chinese-made denim jeans were arriving in the country at a landed cost of US32c (R1,92) per unit, way below the lowest possible production cost in South Africa. The major Western Cape clothing manufacturer Rex Trueform confirmed a loss of US$10 million over a six year period as a consequence of low-cost imports from China.

Historically, the clothing and textile industry has been an important source of employment in South Africa, especially for women. During the 1990s, the industry was the sixth largest in South Africa and a significant exporter. For example, in 2000 the clothing and textile sector recorded exports of over R34 billion. Since 2000, globalisation and WTO rules have brought significant new challenges to the industry. The generally inefficient and uncompetitive industry was further challenged by a massive increase in Chinese imports. Pressure from COSATU on government led to an agreement with China, in terms of which China agreed to limit textile exports to South Africa for a period of three years. However, independent analysis of the agreement suggested a marked weakness on South Africa’s part in negotiating the arrangement. Gustav Brink concluded that South Africa’s poor handling of the negotiations did little to protect the textile industry and save jobs in the face of Chinese competition. SACTWU dismissed the clearly flawed textile agreement as “too little too late”, pointing out that jobs had already been lost.

An antagonistic trade union movement, operating in a robust legal environment, makes Chinese investment in South Africa a complicated and challenging undertaking. Moreover, COSATU is implicitly suspicious of China, given that COSATU’s general secretary Zwelinzima Vavi has publicly described China’s policies towards Africa as distinctly ‘colonial’, because in his opinion they focus on the exploitation of mineral resources while exports of low-cost products undermines the continent’s manufacturing capacity. China’s commercial engagement with Africa is thus seen as mirroring the exploitative and self-interested approaches of other external actors.

National Union of Mineworkers General Secretary Frans Baleni has been critical of the safety record at Aquarius mines. In 2009, NUM criticised Aquarius Platinum’s suggestion that it had received a clean bill of health after a government safety audit. According to NUM, Aquarius has in the past claimed the successful completion of safety audits, without the completion of safety inspections and assessments.

But, despite all this intervention, the debate on China-South Africa relations lacks an effective and consistent input from civil society. Some research institutes and trade unions have voiced opinions, but a broader consensus is required to build an appropriate response to the challenges posed by China’s engagement with South Africa. Although discussions by civil society on China’s South African and African footprint have begun, there has been little progress in building a comprehensive and appropriate response to China. The promotion of a China-South Africa interaction which advances pro-poor, people-centred development should be the core issue for debate and deliberation.

In the Democratic Republic of the Congo, critics have pointed to the poor quality of Chinese work, and inadequate social corporate social responsibilities of Chinese companies. At least one project, the building of a hospital, also encountered resistance from local residents. The site identified was in a residential area, so government needed to move people before work could start, but government and the inhabitants did not agree on the compensation fee. This took time and delayed the entire process. The dilemma was how to balance the national interest (a public hospital) and individual interests (the level of compensation). Home owners in the area were of the view that the government was negotiating in bad faith. Government was proposing to pay all of them the same amount, and people thought that was unfair. The residents’ request to meet the DRC president was unsuccessful. People refused to move without proper compensation, and they suggested that they would rather be destroyed together with their houses. However, the government needed a success story ahead of the elections in 2011 and this ensured adequate compensation. The hospital has been built and is operational.

In Zambia, attention has focussed on the manner in which Chinese-owned mining has impacted on towns. There is also a conflict between farmers and mine management regarding ownership and utilisation of the land. Responsibility to resolve the issue has been given to district stakeholders, including government officials and policy-makers, through the respective members of parliament (MPs).

In Zimbabwe, the Look East policy was criticised for much the same reason as in South Africa – that it was crowding out local businesses. Concerns were raised over China’s trading practices, and a columnist in The Zimbabwe Independent raised concerns about the invasion of the local market by Chinese products in 2004, described as ‘a flooding of Zimbabwe with immense quantities of Chinese textiles, clothing, footwear, steel and other products, retailing at prices which are at a fraction of the price of locally produced products’.The columnist contends that, while it may not be clear whether this is being done by local informal traders or by Chinese traders themselves, the effects are deleterious on local companies and employment:

The embattled Zimbabwean manufacturers also contend that their enquiries and investigations have shown that to a considerable extent the import of Chinese manufacturers has been without any incidence whatsoever of customs duties and value-added tax (VAT). They allege that many container loads enter Zimbabwe under documentation claiming that the container contents are personal effects of Chinese citizens arriving to take up residence in Zimbabwe in order to pursue investment in the country in terms of the present friendship and collaboration circumstances between the Zimbabwean and Chinese governments

The columnist, Eric Bloch, argued that, while no indisputable evidence was given to prove this allegation, there was a need to be concerned about the possibility of such occurrences. This study contends that this might well be the case given the special relationship that existed at state level. Even if not expressly stated, such a loophole would be open to abuse. The issue was that it was difficult to explain the sudden influx of Chinese products onto the local market in the absence of foreign currency allocations by the Reserve Bank of Zimbabwe (RBZ). In any case, the RBZ did not allocate foreign currency for fabric except for manufacturing purposes. The source, therefore, was local cross-border traders who circumvented customs duty, or Chinese traders themselves.

Another bone of contention with Chinese importers was that they were prepared to accept payment in Zimbabwe dollars, and subsequently used the proceeds for new investments, thus obviating the need to bring in new funds. Bloch recommended that ‘... the Zimbabwe Investment Centre and Export Processing Zones Authority must monitor that approved investments are funded with specified foreign currency inflows’. Such reactions are a clear indication of the increased presence of Chinese investors in the Zimbabwean economic space (including the retail, agriculture, manufacturing and mining sectors). Chinese investment found its way into the agricultural sector through the RBZ-coordinated agriculture mechanisation programme, and into chrome mining through acquisition of existing mines, joint ventures with government public enterprises, and small-scale individual investors. It is during this phase (2006) that Zimplats ceded 36 percent of its platinum resource base to government. The Zimbabwe Mining Federation (ZMF) which represents mainly small mining companies in Zimbabwe, while appreciating China’s assistance during the unforgettable decade of the 2000s in spite of the ambivalence displayed by other potential investors, are of the opinion that most of the Chinese attempts at involvement with small-scale miners failed because of what they termed ‘greed’. While the law says that one of the partners in any syndicate formed has to be a Zimbabwean, it would seem that the Chinese investors had other ideas. The basic problem was that even in cases where they brought in machinery as investment, they still refused even 25 percent shareholding to Zimbabweans.

To much of civil society, China‘s role is not that of a valued Southern partner – it is an economic presence which negatively affects local stakeholders, who feel they need to be vigilant in their defence of their interests. While this reaction may at times express the immediate interests of particular economic actors rather than that of society as a whole, it does help to identify a key point – that, despite all the talk of South-South co-operation, the Chinese presence is fundamentally about advancing China’s economic interests. The remainder of this chapter will elaborate on this point, seeking to demonstrate that the relationship is fundamentally based on the desire for economic gain, not on international solidarity.

About the author(s)

Claude Kabemba is the Director of the Southern Africa Resource Watch (SARW). In 2006, the Open Society Initiative for Southern Africa (OSISA) asked him to spearhead the formation of SARW. He holds a PhD in International Relations (Political economy) at the University of the Witwatersrand (Thesis: Democratisation and the Political Economy of a Dysfunctional State: The Case of the Democratic Republic of Congo). Before joining SARW, he worked at the Human Sciences Research Council and the Electoral institute of Southern Africa as a Chief Research Manager and Research Manager respectively. He has also worked at the Development Bank of Southern Africa and the Centre for Policy Studies as Policy Analyst. Dr. Kabemba’s main areas of research interest include: Political economy of Sub Saharan Africa with focus on Southern and Central Africa looking specifically on issues of democratization and governance, natural resources governance, election politics, citizen participation, conflicts, media, political parties, civil society and social policies. He has consulted for international organizations such Oxfam, UNHCR, The Norwegian People’s Aid, Electoral Commissions and the African Union. He has undertaken various evaluations related to the work of Electoral Commissions and civil society groups interventions in the electoral process in many African countries. He is regularly approached by both local and international media for comments on political and social issues on the continent. His publication record spans from books (as editor), book chapters, journal articles, monographs, research reports, and newspaper articles.

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