Business Features

African 'colonization' fears at Chinese deals rush

By Clare Byrne Jan 26, 2007, 15:45 GMT

Johannesburg - When China signed trade deals worth 1.9 billion dollars with African countries last November, without any conditions on reforms and human rights, a German development official warned Africans they risked becoming Chinese subjects.

'Our African partners really have to watch out that they will not be facing a new process of colonization,' Karin Kortmann, Parliamentary State Secretary at German Development Ministry, remarked.

China's relationship with Africa, fuelled largely by its insatiable appetite for energy and raw materials, has come into focus again ahead of the upcoming visit by Chinese President Hu Jintao to eight African countries: Cameroon, Liberia, Sudan, Zambia, Namibia, South Africa, Mozambique and Seychelles.

Europe isn't alone in feeling uneasy about the inequality of the Chinese-African relationship.

Hu's South African host, President Thabo Mbeki, also recently warned of the possible 'colonization' of Africa.

The 'potential danger' he said in December was of the emergence of 'an unequal relationship,' similar to that which existed in the past between African colonies and the colonial powers.

'China can not only just come here and dig for raw materials and then go away and sell us manufactured goods,' he said, in calling for greater Chinese investment to build up local manufacturing capability.

China's trade with Africa increased ten-fold between 1995 and 2005, from 4 to 40 billion dollars, a figure Chinese President Hu Jintao has pledged to double by 2010.

'The world has been put on notice that Africa is no longer the basket case that everybody had historically thought it was,' Former World Bank chief James Wolfensohn said in November.

China, for one, has been taking note. While the West has dithered in the face of corruption, human rights violations and civil war in Africa, Chinese officials have been scurrying about securing access to the continent's abundant natural resources.

When criticized over its inaction on human rights, China is quick to point out that Washington supports governments with dodgy human rights records in other parts of the world.

Zimbabwe's autocratic President Robert Mugabe has led calls for Africa to 'look East' for investment. Isolated by the West over human rights abuses and grappling with hyperinflation, the autocratic leader is desperate for foreign investment, which China is only too happy to provide.

Zimbabwe has worldwide the second-largest deposits of platinum after South Africa, a precious metal much in demand in China.

In Zambia - another country on Hu's itinerary - China has invested heavily in copper mining, most recently inking a deal for a 200-million-dollar copper smelter in the resource-rich but impoverished country.

At the Beijing summit it also shook with South Africa on a 50-50 joint venture between Sinosteel Corporation and Samancor Chrome to build a ferrochrome mine and smelter, costing China 2 billion dollars.

But the biggest prize for the Chinese in Africa remains oil - the Chinese car market is the fastest-growing the world - which it sources from Angola, Nigeria and Sudan.

The extent of China's thirst for the black gold was made apparent when CNOOC, a state-owned company, forked out 2.7 billion dollars last year for a minority interest in a Nigerian oilfield.

Promises of investment in refineries, power plants and agriculture were a condition for China getting oil rights in Nigeria, while in Angola, now China's largest oil supplier, the Asian state granted 4 billion dollars in loans towards post-war reconstruction.

Sudan's oil industry has also benefited from Chinese investment. The east African country now exports about 2 billion dollars in oil, half of which goes to China, explaining its refusal to condemn Khartoum over the Darfur crisis.

Of growing concern for institutions such as the International Monetary Fund (IMF) is the pace at which African countries are ratcheting up debt with China.

In the 10 years to 2004, China had made over 5 billion dollars in loans to African countries - prompting the IMF to warn of a return to the bad old days of crippling African debt.

Analysts also warn of the threat of low-cost Chinese imports to indigenous African industry, which is doubly penalized by high Chinese tariffs on African imports.

The South African textile industry, for one, has started to shove back. Trade unions succeeded in getting the government to negotiate quotas on Chinese clothing imports last year during a visit by Chinese Premier Wen Jiabao.

Jiabao, during his seven-country African tour, reiterated China's disinterest in 'exporting its own values and development models' and promised increased aid towards education, health and cultural development and debt relief.

As The Economist news weekly said in an October report on Chinese business in Africa: 'It is up to Africans to ensure that they get a fair deal from it. If so, both China and its African partners can be winners.'