A Friend in Need? The Relationship as a Development Partnership

Despite the qualifications expressed in the previous paragraph, the relationship between China and the countries researched here has repeatedly been presented as a development partnership, not a commercial arrangement.

Claude Kabemba's picture

Director of the Southern Africa Resource Watch (SARW)

October 5th, 2012

Despite the qualifications expressed in the previous paragraph, the relationship between China and the countries researched here has repeatedly been presented as a development partnership, not a commercial arrangement.

In May 1996, Chinese President Jiang Zemin’s tour of six African countries gave birth to the Forum for China-Africa Co-operation (FOCAC), created to ensure the development of a long-term co-operative relationship between China and Africa. Since then, China’s presence all over the African continent has grown at great pace. For some, FOCAC has provided an alternative to the Washington consensus and its stress on free markets as the engine of growth. It is seen, rather, as an expression of Beijing’s policy of non-interference, which sets no conditions for economic co-operation and does not therefore insist on any particular economic policies or political orientation. Thus Rwandan President Paul Kagame called on his fellow African leaders to prioritise and clarify development objectives and programmes in order to take advantage of the new opportunities offered by FOCAC.The Chinese policy of non-interference in the internal affairs of other countries facilitates its strategic interest in some of its African trading allies, but the approach could also be informed by China’s similar experience in the past when it faced international isolation after emerging from colonialism. The policy is thus seen as opportunism by its critics – particularly when it offers support to governments which abuse human rights – but as an assertion of Southern sovereignty by its supporters.

The country in the region which has most conspicuously taken advantage of this is Zimbabwe, whose government faced increasing pressure from Western powers and responded by proclaiming a ‘Look East’ policy in 2003, in which Chinese resources were seen as a substitute for those previously invested by the West. The shifting world geo-economics spearheaded by Brazil, Russia, India and China provided an opportunity for Zimbabwe to respond to Western pressure for political change by redefining the ownership and destination of natural resources in the favour of its ruling elite . It can be argued that the government’s Look East policy of 2003 provided the necessary framework for the Indigenisation and Economic Empowerment policy of 2007 which sought to transfer foreign-owned assets to Zimbabweans, and that it initiated a ‘win-win’ relationship for China and Zimbabwe’s elite. For those who see China as a development partner, the central argument is that it is consolidating its political relations with Africa that date back to the 1960s through a win-win economic partnership that is driven by its own economic needs and a commitment to attempt to transmit its development experience to the continent. For those who see it as a coloniser, of course, it is taking advantage of the strategic needs of Zimbabwe’s elite to enhance its economic power at the expense of the country’s citizens.

Before the ‘Look East’ policy was proclaimed, China’s role in Zimbabwe had been limited, despite the historic links. During the period of structural adjustment between 1991 and 1996, trade relations with China averaged 1,5 percent of total trade, compared to averages of upward of 30 percent for the EU and South Africa. In the three years after that, which were characterised by crisis management rather than coherent policy, and by the emergence of a strong opposition political party, the Movement for Democratic Change (MDC), Chinese investors began to trickle into the Zimbabwean economic space, initially establishing links with war veterans association (the Zimbabwe National Liberation War Veterans Association, ZNLWVA) by way of donations of tractors, grinding mills, bicycles and the like. There was movement during this phase by small Chinese investors into the mining sector, mainly as buyers of chrome from small-scale indigenous miners in the Great Dyke mining belt. But in the crisis period of 2000-2003, when politically expedient policies were adopted, and strong anti-market and anti-imperial sentiments prevailed, even Chinese investors responded cautiously to an environment dominated by conflict and the seizure of farm assets through the Fast Track Land Reform Program (FTLRP).

In the subsequent period, China‘s economic presence increased markedly. Following Zimbabwe’s stand-off with the UK, the EU and the US and the declaration of the Look East policy, Chinese goods (in particular textile goods known as mazitye or zhingzhong, footwear and gadgets) invaded the Zimbabwean market. There was also an upsurge in investment in sectors such as manufacturing and the service sector. The Chinese population became much more visible. What is easily noticeable from available statistics is that there was a major shift in the geographical origin of investment, with Europe and the US contributing less to inflows during this phase. The bulk of the investment projects approved by the Zimbabwe Investment Authority (ZIA), especially as from 2003, were from the east: 98,3 percent of the manufacturing sector projects approved by ZIA in 2007 were from China and South Korea. The proportion of approved manufacturing sector projects to the total cumulative investment projects approved by ZIA in 2007 was 44,2 percent. Exploration joint ventures between Chinese and Russian mining houses and the Zimbabwe Mining Development Cooperation (ZMDC) started around 2005.

The meteoric rise of China as an economic power over the last 20 years, the economic decline of Zimbabwe, and the shift in policy and key policy drivers (particularly over the last 10 years to 2010) have given new meaning to the relationship. While emphasis was initially on the appreciation of the new Zimbabwean government for the assistance granted to the former liberation movement during the struggle, the relationship has transformed into ‘all weather friendship’ at the political, diplomatic and economic levels, particularly since the turn of the millennium. The two-day visit by the Chinese Foreign Affairs Minister Yang Jiechi in February 2011 was viewed as solidifying Zimbabwe’s position as one of China’s key partners in Africa.

South Africa has not seen its relationship with China as an alternative to other international relationships, but here too the parties have sought to present it as a development partnership. The South African Department of Foreign Affairs (DFA) identified the promotion of bilateral trade and investment as the focus of Mandela’s visit mentioned earlier and stressed the need to improve two-way trade. During April 1998, then South African Deputy President Thabo Mbeki undertook a five-day visit to Beijing, which included meetings with Premier Zhu Rongji and Vice-President Hu Jintao. The visit was seen as the first step towards consolidating relations after formal diplomatic recognition earlier in the year. Official discussions focussed on the potential for economic co-operation and the possibility of working together to establish a ‘fair and just world economic and political order.’ Hu Jintao paid a reciprocal visit to South Africa in February 1999, when he officially opened new consulates in Cape Town, Johannesburg and Durban. While in South Africa, Hu stressed China’s objective of enhancing trade, suggesting that the new consulates would be important in this regard. Chinese ambassador to South Africa, Zhong Jianhua, has indicated that Sino-South African relations are to focus on enhanced co-operation in agriculture, trade, science and technology, education, and human resource development.

A key focus has been an attempt to portray the relationship as an exercise in South-South solidarity. In April 2000, President Jiang Zemin paid a state visit to South Africa, where he signed the Pretoria Declaration with his counterpart Thabo Mbeki. The ‘Pretoria Declaration on the Partnership between the People’s Republic of China and the Republic of South Africa’ commits both countries to a spirit of partnership and constructive dialogue, while uniting in the ‘moral imperative for developing countries to strengthen capacity for co-operation and mutual support in the international system.’ The most important outcome of the agreement was the establishment of a bi-national commission (BNC) which would meet regularly to guide and co-ordinate all government-to-government relations between China and South Africa, while providing an effective forum for consultation on matters of mutual interest in bilateral and multilateral affairs. While South Africa has established BNCs with other several countries, an indication that the partnership was presented as a great deal more than a commercial arrangement is that the Pretoria Declaration committed China and South Africa to a ‘constructive dialogue’, a concerted effort to expand economic links, and a joint initiative to advance, peace, security and development on the African continent.

Besides the Pretoria Declaration, China and South Africa signed six agreements including police co-operation, maritime transport, preventing the spread of deadly pathogens, animal health and quarantine, arts and culture, and avoidance of double taxation. However, the emphasis of Jiang’s and Mbeki’s public statements at the time was on the need for both countries, along with the developing world, to work together to ensure benefits from globalisation. President Mbeki stressed South Africa’s desire to ’deepen existing relations’ and to ‘extend relations to broader areas of co-operation.’ Mbeki also emphasised the need for South Africa and other developing countries to seek closer co-operation in international affairs with the objective of restructuring the global economic architecture.

The BNC was officially launched during President Mbeki’s state visit to Beijing in December 2001. A range of discussions were held at ministerial and senior official level including the ministries of foreign affairs, economics and trade, public security, the judiciary, science and technology, energy and tourism. The initial BNC meeting led to the establishment of sectoral committees on foreign affairs, economy and trade, science and technology, and national defence. A number of other government departments from both counties subsequently established direct channels of communication and also maintain a regular and constructive dialogue. The BNC provides a framework for the further development and enhancement of bilateral China-South African relations. Moreover, the BNC agenda has been complemented and strengthened by a frequent exchange of high-level visits between the two countries. Mbeki’s visit to Beijing focussed on expanding relations to include scientific and nuclear research, while the Department of Foreign Affairs confirmed that South Africa was looking to the PRC ‘both as a market and an investor.’

Mbeki was accompanied by the ministers of trade and industry, agriculture, tourism, defence and technology as well as a group of business people seeking investment opportunities in China. He stressed that the launching of the bilateral commission was a ‘historic moment’ in the development of China-South African links and initiated a new phase of positive and constructive relations with opportunities to work together in a wide variety of areas. Mbeki specifically called for a strengthening of bilateral ties to include political, economic and multilateral issues. Building on the BNC dialogue and numerous high level visits and interactions, South Africa and China have to date signed 32 agreements covering a wide range of political, social and economic issues.

At the close of the 2004 China-South Africa BNC meeting in Pretoria, Deputy President Jacob Zuma confirmed both countries’ satisfaction with their broadening interaction in trade, culture, education, science and technology, and co-operation on international issues. The specific areas of co-operation noted by Zuma included an agreement on China’s offer to provide human resource development; formal recognition of China’s market economy status; an agreement on South African export of agricultural products to China; an undertaking to begin negotiations on a free trade agreement (FTA); a range of business-to-business agreements including chambers of commerce; a letter of intent by Sasol to go ahead with investments in China; and an agreement to co-operate in strengthening South-South co-operation in the context of WTO negotiations. The key mechanism for China-South Africa interaction is through regular BNC meetings, which bring together senior policy-makers from both sides to promote co-operation and ongoing diplomatic interaction. The most recent took place on 23-26 September 2007 in Beijing. The South African delegation was led by Deputy President Phumzile Mlambo-Ngcuka, accompanied by three ministers, three deputy ministers and thirty businesspeople.

In June 2006, President Mbeki and Chinese Premier Wen Jiabao signed an agreement to help protect the South African textile industry from the ongoing influx of low-cost Chinese textiles. In so doing, Beijing was seen to have signalled its willingness to assist a fellow country of the south to ameliorate the impact of globalisation. The agreement provided a breathing space for the recovery of South Africa’s textile industry, giving local manufacturers an opportunity to modernise and restructure manufacturing processes. In addition to Beijing’s concession on textiles, China and South Africa signed an additional 13 agreements including co-operation in agriculture, minerals and energy, technical co-operation, investment and trade promotion, customs co-operation and nuclear non-proliferation. The range of agreements concluded and the broad synthesis of international perspectives provided further impetus to the China-South Africa relationship.

Despite mutual commitments to partnership, the relationship has been a difficult one since domestic interests which are negatively affected by Chinese investment have pressed the government to curb China’s role. The South African government has thus adopted a hard line on China’s engagement with the mining sector. As former Deputy President Phumzile Mlambo-Nguka suggested:

South Africa wants to boost foreign mining investment, but not if it fails to help develop a country still suffering from a huge inequality of wealth... the danger is that China is going to colonise us, take our minerals, with its big appetite for commodities and leave us just nothing. We need to make decisions about what is in our best interests.

China’s mining investments in South Africa are distinctly different from investments in other parts of the continent. The legal complexities of South Africa’s mining environment, along with intense international competition, has required the development of a new investment model for Chinese corporations operating in South Africa. Thus Sinosteel’s partnership with Samancor offers the Chinese investment company a ready-made solution to navigating South Africa’s complex legal environment, and a well-established corporate structure which efficiently produces chrome ore for the Chinese market. Sinosteel requires no direct interface with South African labour or mining legislation, while benefits in the form of guaranteed supplies at competitive rates are available for the Chinese market.

In Zambia, as noted earlier, the most celebrated Chinese development assistance project is the Tanzania-Zambia Railway (TAZARA), which was constructed over the period 1970-75. This railway was built to link Zambia’s rich Copperbelt to the coastal port of Dar Es Salaam, to break dependency on white-ruled Southern Rhodesia. Both Zambia and Tanzania benefited from a US$405 million interest-free loan for the project, representing then one of the largest single offers of economic assistance granted to an African state by a communist country. Recently, and as a response to the management and efficiency challenges that the TAZARA has been facing, the Zambian government has yet again accessed an interest-free loan to assist with the recapitalisation of the railway company. Besides TAZARA, notable bilateral projects arising from the China-Zambia relationship include the Mulungushi Textile Mill in Kabwe.

While the evidence suggests that the current relationship is purely commercial, there is still a tendency on the Zambian part to see the co-operation as government-to-government – and based on South-South principles. The People’s Republic of China is seen as a full market economy within the framework of trade regime agreements. There have been some signs of solidarity – the Chinese government signed a protocol with the Zambian government on partial debt remittances in July 2001. The objective is to support the country’s efforts in developing its national economy and reduction of its debt burden. Cancellation of debt owed by the heavily indebted least developed countries is one of the announcements made by China to enhance African development. Moreover, Zambia was exempted from paying 12 batches of interest-free loans which matured before 31 December 1999 (RMB 174 million, £7000 and US$9 million). In 2007, China cancelled Zambian foreign debt amounting about US$200 million. Zambia subsequently requested a complete debt cancellation, which was offered in 2010.  When President Sata swept to power in 2011, many people in and outside of the country sensed a looming downward spiral in bilateral relations between Zambia and China, especially economic ties that have seen a booming multi-billion dollar Chinese investment in Zambia. However, Sata shocked many because soon after he ascended to power what was anticipated did not happen. His first formal engagement after being inaugurated as Republican President was a meeting with Chinese Ambassador Zhou Yuxiao in Lusaka and it seemed, despite expectations of a rift, the bond between the two countries has since grown stronger.     

Commercial relations between Angola and the Republic of China date back to the colonial era. External commerce statistics indicate that in 1968 China was a country to which Angola exported (and from which it imported) nutritional products, beverages and textile products. Both exports from Angola to China and imports from China to Angola were rather small, the quality and value of these being minimal. At this stage China was not a significant external commercial partner for Angola. In the post-independence period, relations between the two countries remained negligible. It was only in September 1979 that the two countries effectively developed a partnership, and it was only in 1983 that diplomatic relations were established. This led to strong economic links between the two in subsequent years, but more specifically in 2000.

Relations between China and Angola are not always smooth – there have been times of serious disagreement. For example, in 2009 the Anglolan government awarded the contract to design and construct the oil refinery in Lobito (Benguela province) to the US giant Kellogg Brown and Root. The project will cost $6,4 billion paid for by the state oil company Sonangol. A previous agreement with the Chinese company Sinopec to build the plant fell through in February 2007. According to Sonangol, there was no agreement with the Chinese company on the products that would be produced. There have been suggestions that Sinopec wanted to focus on products for the Chinese market, whilst Sonangol wants to concentrate on the home market.

But in October 1998, Angolan President Dos Santos visited China and had meetings with Chinese premier Zhu Rongji and other officials. Following the end of the internal Angolan conflict in 2002, China’s relationship with Angola shifted quickly to an economic one. Since China’s infrastructure loan in 2004 (See Chapter 2), co-operation between the two countries has been characterised by frequent bilateral visits of important state officials aimed at strengthening the partnership further. These visits have contributed to the normalisation and consolidation of bilateral relations and have resulted in the signing of various political, diplomatic, economic, cultural, and social agreements. China currently maintains an embassy in Luanda with 17 officials. Likewise, since 1993, Angola maintains an embassy in Beijing. In April 2007, increasing investments in Hong Kong led Angola to open a consulate there, and in November 2007 an Angolan consulate was also opened in the former Portuguese colony of Macau. A new consulate opened in Shanghai in 2008.Increased political activity between Angola and China has enabled bilateral economic ties to progress quickly.

Angola’s leaders have welcomed the engagement with China, which offers new opportunities for expanding the country’s global economic activity. Angola, they believe, has been able to move away from the traditional Eurocentric pattern of economic dependency towards a more diversified approach, offering Angola’s leadership new options for trade and investment. Angola, in this view, has been able to move away from importing from the high-cost Euro-zone towards more affordable Chinese options. Consequently, trade with China has grown significantly and is expected to continue growing over the long term. China has made an important contribution to Angola’s infrastructure renewal programme, but approximately US$20 billion is still required to fill the gaps in the country’s communication system. Given that the west has lost interest in financing or building infrastructure in Africa, Angola hopes that China is now well-positioned to provide the foundation for the country’s long-term development. A partnership between Angola and China does have clear advantages for Angola, which requires Chinese know-how and investment to sustain economic growth.

But perhaps the most remarkable relationship is that between China and the DRC which, alone among the countries studied here, invited China to play a role in its economy. According to the Chinese special envoy for Africa ‘contrary to views that China is seeking by all means to access minerals on the continent, in the case of the DRC, it was the Congolese government that approached the Chinese government first.’ And the president whose government did this was initially unenthusiastic about a relationship with China. When Joseph Kabila took power after his father’s assassination, he chose a less antagonistic approach to the west. He chose to be a good partner to both the west and China but, for political reasons (to ensure stability of his regime), he chose in the early years of his presidency to be closer to the west. During the transition period (from 2003 to 2006), his government gave important mining rights to western companies First Quantum (Canadian) and Tenke Fungurume (American). For these actions he was applauded by the west. Joseph Kabila did not attend the 2002 FOCAC meeting. This continued until he was democratically elected in 2006.

Economic and development imperatives inevitably forced Kabila to consider expanding links with China. After the 2006 elections, his government urgently needed to develop the economy. Having learned about the reconstruction projects in Angola that China was involved in, the Congolese government approached the Chinese government. His move came as the west failed to fulfil its promise to give financial support to the new government. It had promised to provide US$ 1,7 billion as part of the multi-sectoral reconstruction and rehabilitation plan, but the DRC has only received US$450 million. Western conditionalities and delays provided a reason for Joseph Kabila to turn to China and to invite it into DRC. China and the DRC, through their companies China Railway Group Ltd and Sinohydro Corporation, and Gecamines, respectively signed a joint venture, called Sicomine. A person with inside knowledge of the contract suggests that in fact it was not the Congolese government that started engaging China, but the publicly owned mining company Gecamines which initiated steps to form partnerships with Chinese mining operators to revive the company, which had been weakened by various internal and external crises. For Gecamines, this project had three main objectives: to replace the aging equipment, to employ new and younger staff, and to improve production and staff salaries. When the Congolese government became involved, the project took on a political dimension. China responded by proposing one of the biggest investments to any country on the continent (US$ 9 billion) to be spent on infrastructure in exchange for minerals. This major commitment was seen to contrast to the perceptual prism and deficit model of the west, which views Africa mostly in terms of a looming apocalypse characterised by chaos, conflict, poor governance and underdevelopment.

China had initially proposed the Angolan model for the DRC. The Angolan model is one of investing massively in infrastructure using money from Chinese banks, and getting reimbursed progressively with oil. Angola is currently implementing an ambitious national reconstruction and development programme, of which the Chinese government is a key partner. Through this process, China has access to Angolan oil. But the Congolese government was doubtful that the Angolan model would work in the Congo considering that the DRC does not have oil production that would allow it to start payment immediately. The Congolese only produce approximately 35 000 barrels of oil per day. Another model was proposed. The two parties agreed to create a joint venture between Chinese companies China Railways Group, Sinohydro, and China Railway Engineering Corporation (CREC) on the one hand, and Congolese public enterprise Gecamines on the other. It is these two parties which are contracted, and not the two governments. The Chinese companies will borrow from the Chinese banks to invest immediately in the infrastructure, and the Chinese will be reimbursed with minerals – not immediately, but when the joint-venture starts production. This agreement is supposed to change the nature of Chinese investment in the DRC from purely trading in ore to mining

China’s commitment to invest in the DRC is a confidence-builder for the Congolese. It came at a very important period in the history of the DRC. An elected government had just come into office with the objective of reinvigorating the Congolese economy. What is surprising is the speed with which China responded to the DRC’s call. Moreover, China did not impose conditions like the west. The investment challenges the west’s characterisation of the DRC as the ‘Heart of Darkness’, a place where you go to take what you need but not a home for investment. Trade, investment, improved physical and communications infrastructure are but one part of the calculus that defines Sino-DRC relations. Social intervention features considerably in the relations – building of hospitals, clinics, universities and houses. China says it believes that Africa in general (and the DRC in particular) is on the threshold of a developmental take-off. This gives it an opportunity to play a positive and active role in assisting the continent to address its multiple challenges. China thus provides trade and infrastructure development opportunities for the DRC.

Mozambique’s relationship with China began to be rebuilt when, in September 1997, Chinese Prime Minister Li Peng visited Mozambique on a tour of African countries. With this visit came the establishment of a $20 million fund to provide incentives for Chinese companies to do business in Mozambique. There have been several cooperation agreements and commissions between the two countries. In 2001, Mozambique and China set up a Joint Economic and Trade Commission. In 2003, under the initiative of the Chinese Ministry of Commerce, Macau became the headquarters of the Forum for Economic Cooperation and Trade between China and Portuguese-Speaking Countries. This trans-regional forum aims to promote mutual development by enhancing economic cooperation and trade between China and Portuguese-speaking countries. As a result of the 2006 FOCAC summit, China made commitments to set up an agricultural technology centre in Boane worth US$55 million, and another in Moamba worth $700 million. In 2007, Hu Jintao visited Mozambique and pledged a further US$170 million in the form of loans and co-operation in agriculture, technology, education, health, economy, and exploration of natural resources.

While civil society has been critical of China’s role (see below), Mozambique’s leadership has welcomed the growing Chinese interest in the country. In 2006, at the Economic Forum in Davos, Switzerland, Mozambican President Armando Guebuza insisted that the bilateral co-operation had been ‘mutually beneficial’. As recently as July 2010, the president hosted a delegation of 46 investors from China headed by the Chinese Deputy Minister of Trade. During a press conference, Mozambican Finance Minister Manuel Chang declared that he wanted to see strengthened relations between Mozambican and Chinese companies, learning from Chinese experiences.

These dealings between individual countries and China have emphasised the ambiguity discussed earlier. China is sometimes viewed as a partner in South-South co-operation, sometimes as a donor, and sometimes as a source of business opportunities. In many cases, the lines between the three are blurred. Predictably, governments do not describe the relationship as exploitative, nor do they take the less confrontational route of insisting that concessions to China’s needs are made to secure development assistance. They tend to insist, like Guebuza, that the relationship is a partnership which benefits both sides. The view in civil society is, however, often far more sceptical.

The relationship between China and African governments is clearly elitist. China prefers to deal directly with heads of government, while the governments with which it deals do not consult their citizens on the relationship. Our DRC study notes that the infrastructure development that President Joseph Kabila is engaged in is a top-down agenda, and one is not sure if it responds to the immediate needs of the Congolese people. There has never been consultation with Congolese people on what constitute their immediate, short and long term needs. The reconstruction agenda has never been set by the Congolese people. Much the same can be said of the other countries in the region. Inevitably, however, it has affected the interests of local stakeholders who have responded if they are organised enough to make an impact on public debate. In countries such as South Africa, where economic interests are well organised and vocal, civil society has had much to say about China’s role, much of it critical. In other countries too, organised interests in civil society have presented a different perspective to that of their governments.

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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