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China and Mozambique

China and Mozambique

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Published by David Shinn
This is a brief analysis of the China-Mozambique relationship dating back to its origin.
This is a brief analysis of the China-Mozambique relationship dating back to its origin.

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Published by: David Shinn on Aug 02, 2012
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11/22/2012

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1
China’s Involvement in Mozambique
 David H. Shinn30 July 2012The Early YearsChina-Mozambique ties are pretty typical of those with most African countries. Unlikemany countries in Africa, however, Mozambique never recognized Taiwan. In 1963, fiveFRELIMO delegations visited China, including one headed by its leader at the time, EduardoMondlane. When a faction broke away from FRELIMO in 1965 and formed COREMO, Chinafavored the new pro-Beijing COREMO organization but also continued to support FRELIMO.When COREMO disappeared in the early 1970s, China threw all of its support behindFRELIMO, which had pro-Moscow and pro-Beijing factions. This policy was dictated by thefact that the Sino-Soviet split had reached its peak.China stepped up its military training for FRELIMO fighters operating out of Tanzania.FRELIMO leader Samora Machel visited China in 1971 and 1975. Mozambique becameindependent in 1975 and immediately recognized Beijing. China granted an interest-free loan of $56 million and sent the first in a continuing series of medical teams to Mozambique that hascontinued up to the present day. The Chinese embassy claims that since the first medical teamarrived in 1976, Chinese medical staff have treated 1.3 million patients and trained more than2,000 Mozambicans.Samora Machel, however, preferred the USSR over China because it had provided moremilitary support to FRELIMO during the liberation struggle. Relations improved briefly in 1978when Machel visited China and about 100 Chinese military specialists were working inMozambique. China provided $60 million in credits, making Mozambique one of its largest aidrecipients in Africa. This was followed by a setback. Mozambique criticized China over itsborder war with Vietnam and took the side of the Soviet Union during its intervention inAfghanistan. China also experienced an embarrassing incident in Maputo in 1982 when a juniorofficer in the embassy had a dispute with other staff members and killed nine of them.China took advantage of a 1983 famine followed by a flood and offered much neededassistance. Machel returned to Beijing in 1984 and obtained more than $20 million in economicaid. China continued to increase its aid; Mozambique did not criticize China during the 1989Tiananmen Square crackdown. In the 1980s, the two countries signed numerous agreements.One in 1988 was between FRELIMO and the Communist Party of China (CPC), followed by
China’s agreement to build Mozambique’s parliament building.
President Joaquim Chissanovisited Beijing in 1988.
 
2Expansion of RelationsChina-Mozambique relations did not advance significantly in the 1990s in spite of thefact that China became
Mozambique’s
natural partner after the collapse of the Soviet Union. Bythe late 1990s, high level contact picked up in both directions with Chissano going to China in
1998 and 2004 and Mozambique’s premier visiting three times.
They signed new trade
agreements and China built Mozambique’s Ministry of Foreign Affairs.
 The relationship took off in the 21
st
century. President Armando Guebuza attended the2006 Forum on China-Africa Cooperation (FOCAC) and returned for the 2008 Olympic Games.Chinese President Hu Jintao visited Maputo in 2007 when he promised several new projects,including a $6 million agricultural technology center that was inaugurated in 2011 and a nationalstadium.
China canceled $52 million of Mozambique’s debt.
 As with most other African countries, the security relationship has consisted primarily of high-level exchange visits. In 2007, however, China gave the armed forces $1.5 million innonmilitary equipment. Two years later it agreed to provide the military $3 million for thepurchase of logistical equipment and to continue to train the military. In 2008, FRELIMO andthe CPC signed a four year memorandum on cadre training; China sends lecturers to
FRELIMO’s Central School.
 
Most of China’s engagement in Mozambique is now focused on the economic
relationship. A third of all roads in the country are being built by Chinese companies in additionto the auditor-
general’s office, Maputo International Airport, national soccer stadium,
nationalconference center, communications networks, and water supply projects. China began offeringfive scholarships annually in 1992; about 200 hundred students were studying in China by 2012.A joint Sino-Lusophone initiative known as Geocapital based in Macau created in 2005-2006 a private fund with the aim of channeling Chinese capital to Mozambique. This resulted ina joint venture called Zamcorp to promote development in the Zambezi River Valley. As of late2011, Zamcorp had no projects under development. On the other hand, two financial institutionsgrew out of this effort: Moza Capital (investment banking) and Moza Banco (primarily corporatebanking). By 2008, Moza Banco established a retail bank with Mozambican investors who haveclose ties to FRELIMO. Although Moza Banco has not funded any big investments, it is lookingat projects in energy and agro-industry. This initiative has had surprisingly little success so far.Nevertheless, in 2008, China became the second largest investor in Mozambique afterSouth Africa and rose from number 26 a decade earlier. As of 2010, China had invested $607million in Mozambique. In 2010, China pledged to invest $13 billion in industrial, tourism,mining and energy projects over the next five or ten years, depending on the source of the report.It is highly doubtful, however, that all of this investment will materialize. The largest Chineseinvestment so far is Wuhan Iron and Steel
Corporation’s
$800 million to develop coal reserves
 
3for export to China and purchase of an 8 percent share of Riversdale, an Australian company, for$200 million that has coal concessions in Mozambique.
Mozambique’s prime minister made two visits to China in 2010 when he received
promises from the Export-Import Bank for $165 million in financing to upgrade MaputoInternational Airport and build cement and cotton processing factories. In 2011, China funded ata cost of $156 million about one-quarter of the total cost of the All-Africa Games held inMaputo. A Chinese company began construction on a $439 million housing project in a middleclass suburb of Maputo.In 2011, a CPC delegation signed agreements to establish a Confucius Institute thatopened in 2012 and a Portuguese-language station for China Radio International. PresidentGuebuza during a six-day state visit to China in 2011 signed 12 financial agreements with China,including $15.8 million for distance education and science and technology programs, half asdonations and half as interest-free credit. Guebuza regularly praises China, describing it as apartner and not a colonizer. China Kingho Energy announced it would provide initial fundingfor construction of a coal terminal at the port of Beira and upgrade the Sena rail that links theMoatize coal mines in northwest Mozambique. One of the most recent projects was thelaunching of a Center for Cooperation on Poverty Reduction, which will draw on Chinesestrategies for dealing with poverty.China-Mozambique trade is modest and consistently favors China. This is a potentialproblem area, although large coal exports to China will probably change the trade balance.While trade with China is greater than US-Mozambique trade, Mozambique is not one of 
China’s
largest African trading partners. Mozambique imports construction material, machinery,motorcycles, motor vehicles, electronic products, footwear and electrical products from China. Itexports primarily aluminum, oil seeds, cotton, seafood and timber to China. MozambiqueAirline (LAM) announced that it will begin direct flights to China later this year.Challenges in the RelationshipThe relationship has experienced a few problems at the governmental level and generatedmuch more skepticism outside the government-to-government structure.
Mozambique’s
 Ministry of Labor has fined a number of Chinese companies and revoked work permits of someChinese workers. In 2007, Mozambique seized 531 containers of illegal log exports valued at $7million purchased by Chinese companies. After paying fines, the shipment went forward.Mozambican civil society and NGOS have been critical of Chinese business persons and theirMozambican associates for the illegal export of forest products and plundering of fisheriesresources, often by bribing local officials.In 2007, Mozambique reportedly granted China leases to establish Chinese-run farms andcattle ranches for 3,000 settlers. The report caused such uproar that the government was forced todeny that there was any such agreement. China remains interested, however, in agricultural

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