Examination of Witnesses (Questions 280
THURSDAY 30 APRIL 2009
Dr Chris Alden and Mr James Keeley
Q280 Lord Jones:
And you are soon publishing Land Grab or OpportunityAgricultural
Mr Keeley: Yes. This is a report that IIED are
doing for the Food and Agricultural Organisation and the International
Fund for Agricultural DevelopmentFAO and IFADand
that will be coming out in June 2009.
Q281 Lord Jones:
Are they targeting?
Mr Keeley: We are trying to take a balanced
assessment for what the evidence is, not just in relation to China
but across the board on land grabs. It does raise a serious set
of issues that the EU might want to engage on in terms of supporting
civil society capacity to scrutinise land deals and host governments'
own ability to ensure that investors really do have the capacity
to deliver what is promised in particular land and agricultural
development deals and to scrutinise some of the issues around
water abstraction, impacts on local land rights, the sustainability
of agriculture and so on.
Why would China buy farms that just operate normally and sell
into their domestic markets anyway? What is the point?
Mr Keeley: Many of these farms are part of the
state farm agri-business corporation, which is part of the Ministry
of Agriculture. It is a bureau that used to manage reclaimed land
which was farmed as state farms, many in the northeast of China.
There are State Farm Bureaus; there is a national one in China
and then each province has onesome of them have now disbanded.
Most of them now have to generate their own revenue so going overseas
to farm has been one strategy to do this and they typically contract
out the farm to Chinese farmers agricultural technicians who have
to meet an income target and then they are essentially farming
for profit. I think it is also a way of demonstrating a Chinese
model. The other point is that China has a "Going Out"
strategy as well, to encourage Chinese firms.
Q283 Lord Anderson of Swansea:
You have talked about China general. Are we talking about the
Chinese National Government; are we talking about provinces; are
we talking about semi-state institutions? What is the profile
of the investment overall by China into Africa?
Dr Alden: Things have moved very quickly over
the last decade within China itselfthe introduction officially
of private property, for instance, and the official ending, closing
down tens of thousands of state-owned enterprises and privatising
them and the like. If we were discussing this ten years ago or
even five years ago the answer to that question differs. The going
out strategy is a government strategy; it has targeted a select
number of state-owned enterprises in particular sectors that they
are encouraging to invest overseas, the initial ones that Africa's
experience resolved with the energy firms. They provide a less
directive way of encouraging this sort of investment through China
XIAMEN Bank, China Development Bank, which provide financial incentives
for Chinese actors, be they state-owned enterprises, be they provincial
actors, to look into exploring new markets, to broaden the economic
outreach of the Chinese economy and Chinese actors. The thing
that we have to capture here is that we talk often about China
but in fact there are many Chinas we refer to. We refer to increasingly,
in the African context in the last five years or so, private actors.
I was thinking of some of these Chinese farmssome of them
were just Chinese farmers who have taken up positions within the
African context to servewhat do they call it?the
truck farm; you are in the periphery of the city and you are providing
vegetables and what have you. So they are very different to the
local market; there are different scales of who China is. I think
the growth area would be to look at the provinces as actors in
this thing. The Chinese Government remains significant in key
sectorsenergy sector with a state-owned company; but even
the mineral sector is much more played at a provincial or even
Q284 Lord Anderson of Swansea:
One of your publications was Chinese Multinational Corporations
in Africa. Do they have an identity?
Dr Alden: Some of them are bone fide
recognised multinationals, others are parastatal and others have
listings on the Hong Kong Stock Exchange and what have you, and
they have been encouraged to do so; yet the state retains the
bulk of the shares and control within these organisations. So
that is at the high end, the big firms, but again we have small
or medium enterprises which may have evolved from this privatisation
of state-owned or provincial enterprises which are increasingly
behaving as private actors.
Q285 Lord Anderson of Swansea:
And enterprising people who seize the opportunity.
Dr Alden: Absolutely.
Q286 Lord Crickhowell:
We now have the notion for the point I was about to put to Mr
Keeley. I was struck by his reference to the produce going to
the local markets and he then cited Zambia. On the couple of visits
that I have made in the recent past to Zambia I was struck by
the scale of the farming enterprise around Lusaka and some of
that is China, but a great deal of the produce is of course going
to the European and British marketsthe vegetable markets
and so on. So presumably these Chinese farms are actually not
as private and trading with the local market but they are actually
trading in the supermarkets of this country as well. Presumably
they tend to be privately owned enterprises, or not?
Mr Keeley: I do not have good information on
whether they are actually trading with Europe. The farms I visitedand
these were some of the largest Friendship Farmswere only
selling in the regional markets.
Lord Crickhowell: But some of the Zambian
trade is into the British market.
Chairman: I suspect that Tesco has more
land grab in Africa than China does but maybe that is another
inquiry! Lord Inge.
Q287 Lord Inge:
We have touched to a certain extent on peace and security but
I am still not clear what China's approach now is to peace and
security in Africa, in peacekeeping. Is it on a country by country
basis or is it country specific? Actually we talk about the European
Union approach to Africa but in terms of security a lot of that
is done on individual nations dealing with African nations. Does
that also mean that some of the regimes they are supporting are
regimes that we would consider undemocratic, repressive and dictatorial?
It is quite an easy question to answer, is it not!
Dr Alden: Generally a yes or no question! Peace
and security, there is an official position always in favour of
it, etcetera, etcetera. I think their interest in Africa is stability,
first and foremost. As they become more deeply involved and their
investments are more exposed to the African environment, it could
be said more generally that they are beginning to recognise some
of the insights and experiences of longstanding actors, hence
their change of position on questions of intervention, but with
some key caveatsthe intervention has to be accepted by
the host government and obviously has to pass through African
scrutiny, be it probably the African Union but also the UN Security
Council if it is brought to the Security Council. I think they
are looking currentlyand in a way it comes to your question
about Chinese security for its own interests and investmentsat
emphasising multilateral means of sustaining their interests and
promoting stability. They see that as the avenue in Africa for
doing that, as opposed to intervention, of course, which they
would not favour. So that is their general policy. It is country
by country. Sudan has experienced a very different change from,
say, 2003the position of the Chinese to the contemporary
position. De facto they do supportthis non-intervention
policy does support repressive and dictatorial regimes. The western
interventionalist policy none the less manages in certain instances
to happily work alongside the same sorts of regimes. I am not
an apologist for the Chinese in this but I do recognise that there
are some hypocrisies at play in this.
Q288 Lord Inge:
Does that also affect arms' sales and things like that?
Dr Alden: Chinese arms' sales?
Q289 Lord Inge:
Dr Alden: SPRIthe Swedish Peace and Research
Institutehas put together some work on this recently but
the bulk of Chinese arms' sales have been small arms. They have
gone to primarily the Horn of Africa. They have found their way
into the DRC. Again, how much of this is state policy or how much
of this is the policy of the arms producing industry, which is
increasingly active in seeking out new markets itself. The arms
to Zimbabwe that came around the period of the election, looking
at that closely these were deals that were done with perhaps a
nod and a wink on the part of the government, but certainly between
Chinese firms and the Zimbabwean counterparts the Chinese diplomats,
once this hit the press, were as upset about it because it went
against their own interests. This is about this diversity of interests.
Q290 Lord Inge:
Are you saying that the Chinese Government has no control over
Dr Alden: No, I am saying that as far as I know
that China is seeking to gain market share in the arms industry
in Africa; that it is a very, very minor player with a few exceptions
that I have mentioned; that probably Norinco and other companies
would like to take up a larger position in that. I know in South
Africa they have been unable to do so, probably the South Africans
are in the same business themselves, and the degree of which that
is conformed to as a closeness to Chinese policy generally, I
cannot answer that particular question.
Q291 Lord Inge:
There seems to be a conflict between what we think the European
Union and the UK should be doing about Darfur and what China is
doing. Do you think that the European Union therefore ought to
engage in a more robust discussion with China about what is happening
Dr Alden: I do not think China is the key any
longer to solving the Darfur problem; I think China is actually
on side. The current debate of course is around al-Bashir and
the International Criminal Court. They have a different position
which they draw from their own outlook but also they draw from
the African governments which, on the whole, have been critical
of this. I think that engagement is already there.
Q292 Lord Inge:
Are you saying therefore that the European Union and China, as
far as that is concerned, are on the same path?
Dr Alden: No. I am saying that on most areas
they are; they still have some debates around things such as the
question of al-Bashir and the criminal court, but coming to my
very first comment on this set of questions the Chinese recognise
that stability is a prerequisite to securing their interests and
in general terms they would like a stable Africa and for those
reasons they have changed their viewpoint on the Darfur question.
Q293 Lord Jay of Ewelme:
I was very interested in what you were saying at the beginning
of your answers to this set of questions about the degree of some
flexibility and the Chinese approach and the extent to which as
they get more involved they listen to perhaps or learn a little
bit from others and that may open up some questions of how we
negotiate or how we talk to them, which we are coming to in a
moment. You also said, I think, that they preferred a multilateral
approach; could you say a bit more about that? With whom and over
Dr Alden: I think at this stage in so far as
there are conflicts, as they become more exposed to the African
environment, and particularly that their biggest investment is
in resources and the resources are in countries where political
instability is either current or just completed a phase and they
have moved out of that, they are looking to multilateral institutionsin
Somalia, into multilateral initiatives. They do not want to be
taking action as the Chinese State in thee things; they want in
a sense the cover, if you like, of having international support,
African support for any actions that would be directed towards
gaining stability and resolving problems of conflict and the like.
Q294 Lord Jay of Ewelme:
Let us take Somalia, for example. Who would they be looking for
in that case as the cover? Are we talking about the African Union;
are we talking about some kind of UN organisation? Who are we
Dr Alden: They took the lead when they were
President of the UN Security Council to authorise action on the
Somalia case. They look to the United Nations and/or the African
Union, since it happens to be in Africathere is the Peace
and Security Council and the like. I think they are quite careful
and systematic about making sure that they subscribe to the recognised
political institutions that go to their bias for governments as
opposed to civil society and other forms of actors.
Lord Jay of Ewelme: It seems to me this
is a rather interesting set of issues because we started off by
talking about China being rather exceptionalist in its approach
and we are coming round to China actually wanting to work with
others in finding solutions to some of these issues, so it has
nuanced as the discussion has developed.
Do you think that is a trend that will continuethat engaging
more in that sort of structure is going to be something that China
Dr Alden: I think it is almost inevitable. It
is a process of taking an observer status on the DAC and participating
or discussing extractive industries, the transparency initiative.
All these are debates within the Chinese Government, the degree
to which they should conform to and subscribe to. I think there
are certain red lines though. I have heard the Chinese say more
than once, quite emphatically, "We are not going to join
the DAC committees; we do not want to be seen in a committee of
ex-colonial donor states; that is a step too far. But what we
will do selectively on certain policy areas, we will change and
play along," particularly if they get African pressure. I
think the key that we often forget is African governments can
set the agenda for China and Africa. We under emphasise that,
maybe because it is a difficult terrain; but they respond to Africa
and they have said it very explicitly.
Chairman: It is an important point.
Q296 Lord Jay of Ewelme:
I have heard it said that the Chinese have said that they would
not wish to join any multilateral organisation in which they did
not have a veto. Do you think that is true?
Dr Alden: I think that they make lots of statements
and they then weigh each particular case individually.
Lord Anderson of Swansea: You have mentioned
the tentative moves towards a political dialogue; are there any
examples where China has involved itself in international financial
or industrial competition? Are there examples where Chinese are
main contractors or subcontractors along with western firms, or
do they put a totally Chinese project before the applicants?
Chairman: I think we come on to that
quite strongly in question 8; so if I could leave that to then,
Lord Anderson, and maybe add into that? Perhaps we could move
logically to Chinese corporations and Lord Crickhowell.
Q297 Lord Crickhowell:
We have already touched on the question of how far the Chinese
Government has control or influence over Chinese corporations
in Africa. Do Chinese corporations in Africa respect human rights
and environmental standards? Is there scope for dialogue with
the EU on these questions? I am aware that China is not always
very responsive to the EU telling them how to conduct human rights
questions and so on, but there are doubts. We referred to the
paper on the Congolese situation and there are fears expressed
in that paper about the lack of transparency about some of the
conditions and the reports of poor treatment of workers and so
on. How do you see these issues and the Chinese relationship,
particularly with Europe? This is a European Committee; is this
area where Europe can talk profitably or is it just going to be
Mr Keeley: I think we can but we probably need
the right starting point, which is to recognise that there have
been issues around labour and Chinese contracts, and that there
are projects where there appear to be negative environmental impacts,
where there are ongoing environmental problemsdamn projects
are ones that are commonly cited. But notwithstanding these issues
China is making serious efforts to develop environmental guidelines.
The Ex-Im Bank has a set of guidelines which are published. The
State-Owned Assets Supervision and Administration Commission,
which is an extremely important body which is basically in charge
of the state-owned enterprises has its own set of regulations
as well; also the Ministry of Commerce, and some of those regulations
I think encourage the use of local labour in construction projects
and so on. So it is important to recognise that there is a positive
trend towards trying to promote better impact assessment and more
environmental responsibility amongst Chinese firms; and Chinese
firms themselves, the large ones, are promoting CSR and publishing
their own statements on CSR and so on. Yes, there is plenty of
scope for dialogue, and one of the issues is whether China would
really accept some of the OECD and World Bank standards on environmental
governance. There seems to be some sort of sensitivity around
Dr Alden: I would just echo this. I think this
is a constructive area for engagements actually. I think the background
to this in some sense is that the state-owned enterprises aspire
to be world class multinational firms and they recogniseand
you can see it on their websitesthey dipped a toe in the
CSR process and the like. They look to western, European firms
as the world class standard to which they hope to aspire. What
worries me is another set of business actorsthe small and
medium enterprises. They are much more of the smash and grab variety
and they are the ones in fact who have been withdrawing from Congo
with the collapsed commodity prices. It is a classic that the
juniors, if you like, in the mining industry, who come in, whose
margins are much narrower, they flaunt labour standards, environmental
standards and the like and they are the ones that are problem
not just forand I think here the Chinese I think would
listen to Europethe Africans and the like but they are
a problem for the Chinese Government. The Chinese Government is
being held accountable for private actors who break the standards
and they are very worried about it; every embassy that has an
economic council, you talk to them and they will tell you, "These
guys do not register with us; we read about them in the press;
we only hear about it when African labourers are killed or rights
are violated," or whatever. So the Chinese Government, I
think, would be quite responsive in this area.
Lord Crickhowell: On the environmental
issue, the growing interest of China and the whole question of
the environment and so on, it is an obvious area where I think
we would expect to talk. I get a sense which I find interesting.
It is obviously much easier to talk to the Chinese about the human
rights issues in the context of Africa than it is about in the
context of China. If we talk about it in the context of China
that is too close to home, but they may be quite happy to talk
about these issues in the international context where they want,
as you say, to measure up to world class standards. It is an interesting
observation; thank you.
Mr Keeley, were you trying to come in at the end there?
Mr Keeley: There is a human rights dialogue
with China on Chinese human rights, and China would also have
a perspective which emphasises a wide range of social and economic
rights rather than just political rights. On the question of environmental
impacts, forestry is another case, in Mozambique, particularly,
where it has been very difficult for the Chinese Government to
control some of these small operators who have been very seriously
involved in the stripping out of tropical hardwoods. In fact the
Ministry of Commerce invited the International Institute for Sustainable
Development and IIED to develop some recommendations on how China
might deal with some of these issues and promote a more sustainable
forestry strategy, and there are a range of issues in there and
the recommendations from that study which provide ground for taking
these things forward.
Can I just clarify one thing? In the UK when we talk about small
and medium sized enterprises we very specifically mean enterprises
with less than 250 people unless it is covered by other definitions.
Are we really talking about businesses in China that are as small
as that and their interventions within Africa, or are we talking
Dr Alden: When I used the term I was thinking
of not China, not the leading firms. I did not put a break as
to a particular definition. Can I just bring back the arms issue
for a second? The thing that surprises meand I continually
talk about this in African citiesthe FOCAC meeting, the
very first one, the Forum for Chinese-African Cooperation, which
we saw in Beijing in 2006, China signed on to a commitment to
reduce small arms sales. Nobody ever talks about it any more but
it was one of their first commitments in their very first meeting
and it seems to me that this is an area that should be pursued,
I would have thought; that the African Union and the like would
have pursued this more readilythey have committed themselves
to publishing what they trade and reducing that. That is just
one observation. On the control of Chinese firms, the fact of
the matter is that China does not control the behaviour of these
smaller firms, however defined, in its own backyard. The flouting
of regulations, the reasons there is so much flouting of regulations
in local settings is one of the reason for the peasant uprisings.
The township ventures are actually selling land that they do not
have the right to sell under the feet of the peasantry and the
government does not seem able to stop that. So one has to ask
the question: the degree to which they would be able to control
the same in a foreign country, a foreign setting.