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Memorandum submitted by WWF-UK Introduction 1. WWF welcomes the opportunity to submit evidence to the select committee enquiry on DFID and China. Our submission focuses primarily on one area of the UK government's engagement with China - China's relationship with Africa. 2. WWF is uniquely positioned to comment on this issue. WWF was the first environmental organisation to hold a Partnership Programme Agreement with DFID. We work worldwide, with offices in more than 50 countries, including China and Africa. WWF was the first international environmental organisation to be invited to work in China, and since 1980 we have been actively working with China's government to address local environmental issues. More recently, this has expanded to include improving understanding of and addressing China's global footprint. This includes a joint programme of work between our offices in China and Africa to promote sustainable trade, investment and aid. We work in partnership with civil society, national governments and multi-national agencies towards our goal to build a future in which humans live in harmony with nature. 3. WWF-UK is keen to ensure that the UK Government's strategy for engaging China promotes and enables China to develop in a way that is supportive of sustainable development and poverty reduction, both within China's own boundaries and the countries in which it invests and imports raw materials from. 4. This submission is based on WWF's ongoing programme of work on Chinese trade, investment and aid to Africa and a number of recent reports that focus on China's outward investment strategy, forest governance in East Africa and EU embedded carbon. These are attached to this submission[1]. China/Africa Trade, Investment & Aid 5. China is a significant economic player and development partner to Africa. Over the past decade there has been a substantial increase in co-operation and political dialogue between the two, accompanied by an increase in levels of investment, trade and aid. In 2006, China became the second largest investor in Africa after the US, providing FDI of around US1.25 billion, trade worth US$55 billion and a promise to double aid by 2009. 6. The majority of China's trade and investment in Africa has been built on exports of non-labour intensive agricultural products and extractive products (timber, minerals and petroleum), and is linked to China's long term strategic objectives of energy security and securing access to key natural resources. For example, in the long term China is aiming to meet 40% of its energy needs (oil & gas) from Africa, up from the current 25%. 7. China's demand for natural resources is not driven purely by domestic need. Consumption patterns in Europe and the US are also an important driver. Over 70% of timber imported into China from South-East Asia is processed into furniture and exported to the US and EU[2]. Whilst there are currently no similar figures for African timber exported to China, it is likely to be of a similar magnitude. Likewise China's demand for energy is driven by consumption patterns elsewhere, at least 20% of China's energy consumption goes towards producing exports for Western markets. Whilst China is now the lead global emitter of CO2 emissions, a recent WWF report has shown that almost 5 % of Chinese CO2 emissions are due to EU consumption and overall China emitted 22% more CO2 than the emissions that are due to it's own consumption[3]. 8. China's increased trade and investment has brought benefits to African countries. These include; higher economic growth; increase in commodity exports; (in some instances) higher commodity prices e.g. oil, copper, nickel and timber; import of cheap products that benefit local consumers and increased investment in infrastructure (an area that has been underfunded by other donors in previous years). Some African countries see China as an attractive partner since its aid, trade & investment comes without conditions that require the recipient country to improve its human rights record or the application of good governance. But the benefits of China's involvement in Africa come with concerns about the sustainability of such investments. These include the lack of transparency in their development, the current weak adherence to international social and labour standards, which is in part due to poor governance structures in many African countries, and their ability to manage and regulate the use of their natural resources. 9. For example, China is becoming a key export destination for timber from some African countries. In Tanzania and Mozambique more than 80% of timber is exported to China and from Gabon over 40%. Around 85% of this wood is exported as logs, limiting the opportunities to produce value added timber products and additional livelihood benefits to forest communities.[4] In addition, much of this timber is illegally harvested and at unsustainable rates. In Tanzania alone it is estimated that in 2005, 94% of timber was illegally harvested and that at current extraction rates the resource will be exhausted within 20 years. This is due in part to the limited capability of Tanzania's government (local and national) to implement and enforce forest law. This has come at a cost to Tanzania: in 2005 the loss in revenue due to illegal logging was estimated at US$ 58 million- the equivalent of 10,000 secondary school classrooms or the provision of mosquito nets to 11 million people, a quarter of the population[5]. 10. China is also playing an increasingly important role in the marine sector. There is evidence that over the past couple of years there has been an increase in Chinese-owned fishing boats in the Indian Ocean. Unlike the forestry sector, little is known about the extent of Chinese catches in terms of species, amounts, final use and destination of these marine products. This is an area in which further investment is needed and which DFID should consider supporting given the importance of fisheries to the livelihoods of poor coastal African communities. 11. There is concern amongst civil society within Africa that the response of African governments to the opportunities of Chinese trade and investment has mainly been ad hoc, opportunistic, uncoordinated and lacking in transparency. There have been no clear regional or continental strategies, resulting in a fragmented approach, which in turn weakens Africa's bargaining position. However, this is also true for many African governments' engagements with other trade and investment partners, including Western corporations and governments. WWF believes that there is a need for DFID to support Africa's civil society and governments to transparently develop strategies and agreements for investment in the natural resource sector that support long term economic growth and provide opportunities for sustainable development.
Pressure needs to be kept on China with respect to human rights while continuing to engage constructively with it on Africa.
Effectiveness of DfID's engagement with China on Africa Moving from research to dissemination and dialogue 12. Since 2004, DFID has engaged in dialogue with China on International Development issues with the aim of maximising the impact on poverty reduction of China's increasing economic and political profile. This has included understanding China's impact in Africa and encouraging them to take a more multi-lateral approach to their engagement with Africa. 13. DFID has supported strategic research to understand China's impact on Africa's development across a number of sectors e.g. infrastructure, forestry & manufacturing. They have also reviewed the way in which China delivers aid. This has provided good grounding and understanding of the situation and recommendations for building upon the opportunities that China presents for Africa WWF believes the effectiveness and impact of this work would be greater if this material were to be: · more widely disseminated, especially within Africa to civil society, research institutes and Government; · available in more accessible and usable formats e.g. policy briefs, discussion papers; · part of a DFID strategy to encourage dialogue between Chinese and African actors to discuss and take forward the issues presented in these reports. Developing complementary work between DFID China and DFID offices in Africa 14. DFID's work on China-Africa is pre-dominantly focussed on influencing key government institutions in Beijing to improve their policies and practices. However, it is not enough to have good policies and practices within Beijing institutions since this will not always translate to impact in Africa. Weak governance, transparency and capability, especially within the natural resource sector of African Ministries, has the potential to limit the implementation and enforcement of improved policies and practices. To ensure impact, DFID should develop co-ordinated strategies between DFID China and key DFID offices in Africa to address these governance issues.
Strengthening African voice 15. Both DFID's strategic research[6] and reviews by civil society recommend that there is a need to strengthen Africa's voice within China/Africa discussions in particular in relation to agreements over natural resources. DFID should broaden the scope and focus of its China/Africa work beyond Beijing to address this. WWF recommends that DFID should support African governments and civil society to: · develop strategic visions for the natural resource sector; · strengthen their negotiating skills and regional co-ordination over natural resource related agreements; · develop transparent investment frameworks that support sustainable development and poverty reduction; · be transparent in the management of revenues generated from natural resources, · develop their capability for added value in the natural resource sector through encouraging donor co-ordination in investment in infra-structure and skill development.
Working beyond Beijing 16. DFID is predominantly working to influence policies and practices at the central government level in China. However, central government recently gave 22 Chinese cities and provinces the mandate to approve overseas investments of up to US$200 million without requiring approval from Beijing. DFID should monitor this development and if necessary develop ways of working that enable them to engage with decision making at the city / province level. Improving understanding across Whitehall of the impact of UK consumption patterns on China/Africa 17. As noted in paragraph 7, China's demand for resources is in part driven by consumption patterns elsewhere, including in the UK. This is not explicitly recognised in DFID's China/Africa strategy. There needs to be improved recognition and understanding across Whitehall of this, and co-ordinated work between DFID China and relevant UK departments to identify and implement policies that influence markets to support sustainable development practices in the countries from which China procures.
14 April 2008
[1]"Africa China, Promoting a new partnership for sustainable development" WWF UK briefing paper, Julie Thomas, July 2007
[2] Re-think China's outward investment plans", WWF's Trade and Investment Programme, Denis Pamlin and Long Bajin, April 2007. [3] EU Consumption, Global Pollution ", WWF's Trade and Investment Programme and Industrial Ecology Programme, Norwegian University of Science and Technology, John Kornerup Bang, Eivind Hoff and Glen Peters , March 2008; [4] China and the Global Market for Forest Products. Implications for forests and rural livelihoods. K Canby, J Hewitt, L Bailey, E Katsigris, S Xufang [5] Foresrty, Governance and National Development: Lessons learned from a Logging Boom in Southern Tanzania, TRAFFIC 2007, S Milledge, I Gelvas & A Ahrends
[6] How China delivers development assistance to Africa, Dr M. Davies, H. Edinger, N. Tay & S. Naidu (Feb 2008), China and the Global Market for Forest Products. Implications for forests and rural livelihoods. K Canby, J Hewitt, L Bailey, E Katsigris, S Xufang |