Chinese seek resources, profits in Africa

By Rob Crilly, The USA TODAY

NAIROBI, Kenya, June 21, 2005 — The front room of a residential apartment in the Kenyan capital makes an unlikely nerve center for a 21st-century scramble for Africa.
But five years ago this is where Dang Song set up the Kenyan branch of North China Grid.

Two weeks ago, he opened East Africa’s first concrete pole factory, making posts to support power lines. At $3 million, it represents the biggest single investment by a Chinese company in Kenya. Song explains that the plant just outside Nairobi is only the start.

“We are looking for tenders for putting fiber optics along the power lines. Our target is power construction. The concrete pole factory is only one part of our business,” says Song as he sits in a red velvet armchair. “We would want to put up power stations, substations, and put up power lines.”

All across the continent, Chinese companies are building dams, repairing roads and running telecommunications systems. The modern scramble for Africa resembles the late 19th century, when European nations carved up the continent as they searched for minerals and slaves. Now they have been joined by Chinese companies.

With world attention focused on aid, the challenges in Africa and debt relief during the run-up to the Group of 8 summit July 6-8 in Scotland, Shao Weijian, commercial secretary at the Chinese Embassy in Nairobi, explains that Chinese investment is playing a crucial role in helping impoverished countries move up the development ladder.

“Aid only goes so far,” he says. “The key is development. Chinese companies are building roads, providing telecom equipment and building power networks. It is important to our economy, but there is also a big benefit to the developing country because we bring a lot of experience in this field.”

Trade tripled from 2000 to 2004, according to the Chinese Ministry of Commerce, as China tapped into Africa’s natural resources and foreign earnings it needs to fuel rapid Chinese economic growth.

For Song, that means winning some of Kenya’s ongoing $450 million electricity modernization program. The Chinese government already has offered $60 million for rural electrification, a project that aims to connect 150,000 customers to the grid each year.

“Of course we are here for profit. But we only ask for reasonable profits and make sure that we train local people, provide jobs. But most of all, we are helping the power industry develop,” he says.

With 40 years’ experience of supplying electricity to Beijing, he says, his company has plenty to offer a developing country where blackouts happen on a daily basis.

The same scene is being played out across Africa.

? Chinese government figures show state and private companies have pumped $100 million into Zambia over the past four years, mostly in its copper industry.

? In Sierra Leone, Chinese companies are spending $200 million to jump-start the country’s tourism industry, shattered by civil war.

? Angola signed a $2 billion deal this year to sell oil and future exploration rights to China.

? Chinese engineering companies are providing the bulk of the expertise behind a $1.2 billion dam in Sudan. When complete, its hydropower plant will double the country’s electricity-generating capacity.

The latest figures from the Chinese Ministry of Commerce show trade with Africa has reached $30 billion a year and is rising. China’s trade is a sliver less than the $34 billion trade with the USA.

Weijian, at the Chinese Embassy here, says his government is encouraging companies to invest overseas to support the country’s booming economy. “In the past that meant developed countries – America and Europe. But now it also means Africa and developing countries. This is a very important area to invest in, because if we don’t invest now, then maybe we will be too late,” he says.

The demand for resources – particularly oil, cotton and timber – to satisfy China’s 1.3 billion population and its thriving industries is driving the policy, he adds.

The Kenyan government is enthusiastic about closer economic cooperation. Alfred Mutua, its spokesman, says China is an easy country to do business with. “The Chinese do not peg their economic activity or aid to political conditions,” he says. “You never hear the Chinese saying that they will not finish a project because the government has not done enough to tackle corruption. If they are going to build a road, then it will be built.”

Zimbabwe President Robert Mugabe, criticized by the West for his government’s failure to abide by democratic norms and for human rights abuses, apparently agrees. Last month, he announced closer ties with the Far East. Zimbabwe took delivery of two aircraft from China for the state airline Air Zimbabwe.

China is able to exploit markets in countries with questionable human rights records because its companies are not subject to legal challenges by homegrown non-governmental organizations, says Drew Thompson, China analyst at the Center for Strategic and International Studies in Washington. Chinese companies also don’t worry about corporate image in the same way as Western companies.

Thompson says a key question is whether the United States and Europe can work with China to develop responsible policies toward Africa. “Is China going to encourage people like Mugabe and other questionable regimes to change their leadership style, to promote governance, to clamp down on corruption?” he asks. “Or will they be new-style colonialists?”

The situation in Sudan, torn by civil war for the past two decades, presents a troubling answer to these questions. While a north-south conflict is close to resolution, fighting between nomadic militias and villagers in the western region of Darfur continues. A United Nations report on the conflict accused the government and its allies of war crimes. Among the reason for the fighting: resources, including oil. China National Petroleum owns 40% of the biggest oil company in Sudan.

David Mozersky, Sudan analyst with the International Crisis Group, which monitors conflicts around the world, says China has delayed and diluted the international response to the allegations. China, one of the five permanent members of the U.N. Security Council, has used its influence to argue against harsher sanctions.

“China has made a very strong push to become heavily involved in not just the petroleum sector but throughout the economic and minerals sectors, without concerns for human rights violations,” he says.