CHAPTER 9: CHINA AND THE
EU IN AFRICA: COMPETING MODELS OF DEVELOPMENT COOPERATION?
275. China's interest in Africa stems mainly
from domestic concerns about economic growth and the need to secure
energy, mineral and agriculture resources (Dr Alden, London
School of Economics, Q 256). These concerns are particularly acute
because China has limited natural resources and a high rate of
economic growthGDP has grown on average by 9% a year over
the past 25 years.
276. DfID wrote that Africa currently possessed
about 9% of the world's proven petroleum reserves compared to
almost 62% for the Middle East. African reserves remained largely
unexplored. China was a growing market, accounting for around
14% of Africa's exports; oil accounted for around 80% of African
exports to China. However, the EU and the US accounted for a greater
proportion of imports of oil from Africa (p 260).
Destination of African oil exports (approximate figures)
277. While the EU also has commercial interests
in Africa, it has different policies on poverty reduction, good
governance and human rights. Minister for Europe Chris Bryant MP
told us that China's economic relations with the developing world
should be welcomed in the context of the Millennium Development
Goals (MDGs). China invested more in Africa than "all of
the G8 countries combined" (Q 800). While we have concentrated
on Africa during this inquiry, many of the issues would apply
to other developing countries, such as in Latin America.
China's growing role in Africa
278. China's trade, investment and aid to Africa
have grown dramatically in recent years (Dr Alden, Q 255).
Two-way trade grew from $10bn in 2000 to $70bn in 2007 according
to DfID figures. China has also built up its political relations
with African countries, with the summit meeting of the Forum on
China-Africa cooperation being held in Beijing in November 2006.
Following the summit, China announced an expansion of all programmesconstruction,
technical aid, education and health, trade and investment.
279. Dr Chris Alden told us that China's
main trading partners in Africa are all resource exporters, including
Angola, Sudan, the Democratic Republic of Congo and Nigeria. South
Africa is also an important partner (Q 257).
280. Mr Keeley (International Institute
for Environment and Development) said that it was possible to
overstate the extent of China's engagement: overall investment
and development aid were still small relative to that provided
by traditional donors (Q 260). China is only one of a range
of actors, including India, Malaysia, and Brazil, that are building
closer relations with African countries.
281. Dr Alden pointed out that the profile
of Chinese investment and activity in Africa was varied, ranging
from the Chinese central government to individual farmers. The
Chinese presence included state-owned enterprises and provincial
governments, as well as, increasingly, private actors. Chinese
banks provided incentives to invest abroad. "We often talk
about China but in fact there are many Chinas ..." (Q 283).
282. China's commercial presence in Africa predominantly
consists of privately-owned small to medium sized enterprises
which have little or no relationship to the government of China.
There are a few large Chinese state-owned enterprises operating
in the extractive and infrastructure sectors. The Chinese government
actively supports these sectors through the provision of credits,
concessional financing and diplomatic support (Ivan Lewis MP,
then Parliamentary Under-Secretary of State, Department for International
Development, p 259).
283. Chinese individuals are increasingly moving
to Africa. Chinese official statistics say that 120,000 Chinese
are on labour contracts in Africa, but Dr Alden's estimate
was that there were 200,000 to 600,000 north of South Africa.
These tended not to be permanent migrants (Q 276). Africans
now had more ambivalent feelings towards China than a few years
ago due to Chinese immigration into Africa (Q 308).
284. China's worldwide search for resources
to feed its economic development has implications for the EU's
own economic and industrial needs. The EU must monitor Chinese
commodity deals, whether on food, minerals or energy resources,
to ensure that Europe's strategic interests and access to global
resources are safeguarded.
285. Our witnesses thought that the EU and China
had shared interests in Africa, but that their approaches differed.
Gareth Thomas MP (Minister of State, DfID) believed that
there was scope for trilateral cooperation between the EU, China
and the African Union in: peace and security; support for African
infrastructure; environmental and natural resource issues; and
agriculture and food security (Q 526).
286. Ivan Lewis MP (then Parliamentary Under-Secretary
of State, DfID) highlighted differences in the European and Chinese
approaches to Africa on harmonising their aid with other donors,
conditionality (see below) and transparency of aid flows. The
Chinese regarded political equality and non-interference as particularly
important in their relations with African countries (pp 256-7),
and believed that European aid models had not been as successful
as their own (Q 269). Gareth Thomas MP suggested that
the Chinese government was not motivated purely by self-interest:
poverty reduction was also a Chinese objective in developing countries
(Q 528). A 2006 Chinese White Paper stated that its policy
was to promote peace and stability, development and common prosperity
(Ivan Lewis MP, p 256).
287. China has gradually become more willing
to work with other donors to promote development in Africa. China's
EXIM Bank has signed Memoranda of Understanding with several multilateral
development banks, and in 2007 China contributed to the replenishment
of a major development fund of the World Bank (Ivan Lewis MP,
288. Professor Godement thought that the
Chinese approach to development in Africa could be complementary
to the EU's, but more cooperation was needed. The Chinese presence
in Africa was in many cases welcome from an economic point of
view. However, the Chinese had not studied all the strategic implications
of their economic and human presence throughout Africa and were
not prepared for the "backlashes" that might occur (Q 594).
289. The EU was not competing with the Chinese
in the area of development cooperation, according to Mr Delphin
(European Commission). Similarly, the EU did not interfere to
assist European companies in winning contracts from African governments.
Rather, the EU was promoting good governance as a way of ensuring
a level playing field for European companies. In contrast, he
questioned the way in which the DRC had recently awarded mining
contracts to the Chinese and whether Chinese loans to the DRC
were good value (Q 385) (see Box 5).
290. Scott Wightman of the FCO told us that there
was an incipient dialogue between the EU and China on African
issues (Q 806). He cited one interesting example whereby
DfID was funding an environmental impact assessment of a Chinese
road building project in the DRC (Q 807).
291. The role of Chinese central and provincial
governments, state corporations and businesses in Africa has increased
substantially in the last decade. China has become one of the
leading trading and investment partners for African nations. In
many cases Chinese trade, investment and know-how have boosted
economic growth and employment opportunities in Africa. We support
the continuing dialogue between the EU, China and African regional
organisations, governments and civil society on development. We
believe there is scope for greater cooperation in the interest
of achieving poverty reduction, through roads and railways.
Transparency in Chinese aid
292. It is difficult to assess the breakdown
by country and overall volumes of Chinese aid and investment,
as China does not publish aid statistics in the same way as members
of the OECD. One of the EU's main concerns about Chinese aid to
Africa related to transparency and the unwillingness of China
to share information, according to Ivan Lewis MP. Civil society
in Africa was concerned about a lack of transparency related to
deals that African leaders had signed with China (pp 256-60).
293. The Extractive Industries Transparency Initiative
(EITI) seeks to improve the transparency of revenues paid and
received by governments and companies once a mining contract has
been agreed. It currently has no impact on the transparency of
contracts themselves, although there is a growing interest in
extending transparency beyond revenues. The UK is "strongly
supportive" of China joining the EITI in some form. Several
Chinese subsidiaries already provide information according to
EITI requirements, e.g. in Liberia. This is mandatory in some
of the countries where they operate. The structure of the Chinese
energy sector means that the EITI would benefit most from Chinese
companies joining, rather than the Chinese government. The UK
Government's initial objective is for major Chinese companies
to express their support for EITI. DfID is currently organising
a conference in China on "corporate social responsibility
and voluntary initiatives", at which the EITI will be a core
theme (Gareth Thomas MP, DfID, pp 168-9).
The "resources for infrastructure" deal in the Democratic
Republic of Congo (DRC)
|In April 2008 a consortium of Chinese enterprises signed an agreement with the Congolese government on the extraction of mineral resources from the DRC. The NGO Global Witness viewed this agreement as the most significant example to date of the "resources for infrastructure" model of Chinese investment in Africa. The value of the investments was originally $9.25 billion.|
Global Witness highlighted deficiencies in the approaches of the consortium and the Congolese government: lack of transparency; failure to involve democratically-elected institutions; risks for long-term financial stability; insufficient protection of labour rights; and concerns about sustainable development. A "stabilisation clause" included in the agreement risked undermining the DRC's right to regulate key public policy areas such as the environment and human rights. Global Witness referred to reports of the poor treatment of workers in mines, smelters and other operations under Chinese and non-Chinese ownership in the DRC, and expressed concern that this may be repeated in the infrastructure and mining operations covered by the agreement. There were concerns that the Congolese government might not be getting a good deal from China, as it had shown a dependence on the Chinese for direction and guidance in valuing infrastructure. This reflected broader weaknesses and an "imbalance" in other aspects of the partnership, including negotiation, technical expertise and operational capacity (pp 261-4).
Despite the need for infrastructure investment in the DRC, the international communityincluding DfID and the EUhad serious concerns that the deal would compromise the DRC's longer-term debt sustainability. As a result, it did not approve an IMF programme for the DRC. In late 2009, the Congolese and Chinese governments agreed changes to the deal which mean that it is now compatible with longer-term debt sustainability in the DRC, confirmed by joint World Bank and IMF analysis. The removal of state guarantees on the commercial mining part of the deal has shifted the balance of risk in the DRC's favour. The deal has also been reduced to $6 billion; $3 billion for mining investments and $3bn for public infrastructure projects.
The World Bank is working with the Congolese government to ensure that the infrastructure projects, mainly roads, represent maximum value for money. DfID has been working with the Ministry of Infrastructure to help the Chinese minimise their negative impacts while seeking to ensure that the poorest benefit. DfID has funded the drafting of road sector standards for the Congolese government which are about to pass into law. DfID may fund impact assessments to mitigate the environmental and social impacts of the roads and is working with the Chinese embassy, which has given assurances that all Chinese companies will adhere to the law when passed.
294. James Keeley highlighted the EITI as an
"incredibly important initiative" and a key topic for
European engagement with China. The two sides could consider what
the obstacles were to China joining the initiative and how it
might be reframed to encourage the participation of Chinese stakeholders.
Scott Wightman of the FCO said: "what we really need is for
the African governments who have signed up to EITI to be encouraging
to co-operate with not just the letter but also the
spirit of the initiative" (Q 805).
295. We are concerned about the lack of transparency
of Chinese aid. African parliaments and civil society must have
the information they need to be able to hold their governments
to account. We are concerned that in some cases Chinese loan and
investment agreements are neither contributing to poverty reduction
nor respecting internationally-recognised principles of sustainable
development, good governance and human rights.
296. The Extractive Industries Transparency
Initiative is a key tool for transparency and good governance.
The UK and the EU should attach high priority to securing the
participation of the Chinese government and businesses in the
Conditionality and good governance
297. Our witnesses highlighted conditionality
as a key difference between the Chinese and European approaches
to aid. China does not coordinate its aid conditionality with
other donors. Chinese investment in Africa does not come with
good governance conditionality but with a range of conditions
related to how loans will be repaid and concessions that China
will be granted as part of the investments. This was an "entirely
different approach" to most of the OECD (Ivan Lewis MP,
298. African governments often prefer the Chinese
approach to aid because the Chinese avoid imposing too many conditions,
including in the area of human rights and good governance. As
Mr Keeley said, the governance agenda becomes more difficult
to promote when there are alternatives (Q 260). Yet in some
cases, Chinese and European aid may be complementary. Ivan Lewis MP
wrote that the government of the DRC appeared to share the UK's
position that the assistance provided by China and traditional
partners was "strongly complementary". Therefore, he
did not perceive China's involvement in the DRC as an obstacle
to the promotion of broader governance and human rights objectives
299. The Chinese are paying increasing attention
to political stability in certain African countries, not least
to safeguard their substantial investments. Mr Delphin of
the European Commission told us that although the Chinese may
have engaged in a more "predatory policy of grabbing resources"
in the past, they had realised that stability was essential to
ensure access to resources, and had therefore been forced to deal
with the issue of good governance (Q 384). Gareth Thomas MP
wrote that China was increasingly recognising that its activities
in Africa brought with it greater responsibilities. China had
played an important role in persuading the government of Sudan
to accept the joint African UnionUN force for Darfur (UNAMID)
(p 168). Moreover, the Chinese Special Representative on
Darfur, Liu Guijin, has publicly stated the need for the Sudanese
government to be more active on Darfur (Bill Rammell MP,
then Minister of State, FCO, p 277).
300. Mr Delphin noted some inconsistencies
in Chinese policy. For example, China had followed the lead of
the international community in its response to the civil unrest
in Kenya, but in the case of Zimbabwe it had paid no attention
to good governance. However, he echoed the Minister's view that
peace and security was one of the most promising topics of discussion
with the Chinese, pointing out that China had more than 1,000
UN peacekeepers in Africa (Q 384). China's lack of interest
in good governance and human rights did not imply the absence
of a political agenda. One motivation was China's foreign policy,
which included the objective of isolating Taiwan (Q 385).
301. Scott Wightman of the FCO told us that the
way China was engaging in some African countries was a cause for
concern. One such case was Guinea, where a coup took place in
2008. There were reports that the Chinese were offering a multi-billion
dollar mining contract to the Guinean authorities, contradicting
African and international efforts to use aid conditionality and
political pressure to support a transition to democracy. Minister
for Europe Chris Bryant MP agreed that the Chinese approaches
were undermining these efforts. The role of the Africans themselves,
including the African Union, in taking the lead in expressing
these concerns to the Chinese was underlined by our witnesses
(QQ 800-801). Another case was Zimbabwe, where China was
maintaining its relationship with the regime despite external
pressure to the contrary (Q 804).
302. Chinese arms exports to African countries
are another cause for concern. Bill Rammell MP believed that
China had supplied arms to a number of African countries which
were identified as "countries of concern" in the FCO's
Annual Report on Human Rights 2008, including both Sudan and Zimbabwe.
These exports might not be in breach of UN sanctions, but could
destabilise fragile situations. The UK consistently encouraged
the Chinese government to meet international norms on arms licensing,
including not allowing arms sales that could undermine the stability
of other countries or regions (pp 277-8).
303. Good governance and conditionality are
issues on which EU and Chinese approaches diverge. China's reluctance
to take good governance and human rights into account can undermine
African and international efforts. Despite this, China does listen
to African leaders and the EU, and has gradually been prepared
to play a more constructive role in respect of some armed conflicts
Debt and labour issues
304. Several witnesses highlighted concerns about
Chinese loans to African nations and debt sustainability. The
Minister Gareth Thomas MP cited this as another reason why
it was important for China to be more open about its agreements
with African countries (Q 531). The DRC and Zambian governments
were considering taking on new debts that they might not be able
to repay in 10 or 20 years' time. Bilateral and multilateralincluding
Europeancreditors could then be faced with writing off
some these countries' debt burden (Dr Alden, Q 266). Another
concern was that major Chinese infrastructure projects in Africa
often used imported Chinese labour rather than local labour, which
lessened their development benefits for African countries (Scott
Wightman, FCO, Q 809).
305. We are concerned that China is encouraging
African nations to take on unsustainable and inequitable levels
of debt. This contradicts recent international and EU initiatives,
including the Highly-Indebted Poor Countries Initiative (HIPC).
The EU should engage China in a regular dialogue on this question.
113 FCO figures. Available at:
Information provided by DfID. Back