China and Africa: What Do We Know? How Do We Know It?

African Studies Association Annual Conference Philadelphia, Pennsylvania 29 November 2012 Panel Remarks by David H. Shinn Adjunct Professor, Elliott School of International Affairs George Washington University

I approach China-Africa relations from the standpoint of a practitioner of diplomacy, having spent 37 years in the U.S. Foreign Service, most of it related to Africa. In the 1960s and 1970s, there was generally no interaction between U.S. and Chinese diplomats in Africa or elsewhere; we simply tried to monitor their activities in Africa based on second hand information and observation from a distance. This situation changed in the 1980s when Chinese diplomats became more welcoming towards American counterparts and vice versa. By the 1990s, diplomatic interaction between Chinese and American diplomats was essentially normal. My interest in China-Africa relations stems from this evolution of U.S.-China diplomatic interaction in Africa. After I left the Foreign Service in 2000, I started teaching at George Washington University and in 2005 began researching China-Africa relations, working with Josh Eisenman, a Sinologist. My methodology has been traditional. It includes a thorough review of available research and journalistic accounts in English and French, including historical material. Our book, China and Africa: A Century of Engagement, published this year by the University of Pennsylvania Press, emphasizes China’s long history with Africa and includes a historical backdrop beginning in 1949 for each chapter. My research also makes extensive use of interviews in China, a selection of African countries and a number of third countries. Deborah Brautigam asked panelists to highlight several interesting research findings. I will suggest three areas where data are particularly lacking, conflicting and/or confusing. Chinese Investment in Africa First, let me turn to China’s foreign direct investment (FDI) in Africa. According to official figures released annually by the Ministry of Commerce, China’s FDI in Africa was almost nonexistent as recently as 1997, grew slowly through 2005 and began to increase dramatically in 2006. As of the end of 2010, China’s FDI stock in Africa according to official figures stood at $13.04 billion, with nearly 2,000 Chinese companies investing in 50 African 1

countries. As of the end of 2011, China’s FDI stock in Africa according to official figures was $14.7 billion and involved investment from more than 2,000 Chinese companies. Anecdotal information on Chinese FDI in Africa from African and Chinese press reports and conversations with African officials suggests the actual figure is substantially higher than $14.7 billion. Interestingly, China’s ambassador to South Africa in a wide ranging speech on China-Africa relations on 4 July 2012 at the South African Institute of International Affairs in Johannesburg said China’s investment in Africa “of various kinds exceeds $40 billion, among which $14.7 billion is direct investment.” The ambassador did not define investment “of various kinds” or “direct investment.” In fact, the matter of definition is unclear. The Chinese National Bureau of Statistics says outward foreign investment refers to “enterprises set up or bought by domestic investors in foreign countries and in Hong Kong, Macao and Taiwan, and the economic activities centering on operation of those enterprises are under the control of domestic investors.” Does this include minority ownership of foreign businesses such as the Industrial and Commercial Bank of China’s purchase near the end of 2007 of 20 percent of South Africa’s Standard Bank for $5.5 billion? It is not clear. I have raised the ambiguity of China’s total FDI in Africa with a number of Chinese officials. The most useful response came earlier this year in Beijing from a Ministry of Commerce official who is part of the team that compiles FDI statistics. He explained to me that many Chinese invest overseas without government authorization and the official figure only captures investments reported to the government of China. In some cases, he said Chinese investors go through tax shelters such as the Cayman Islands with the goal of hiding FDI. He acknowledged that the official figure understates the real FDI number but was not prepared to offer an estimate of the actual FDI total for Africa. I suspect the estimate by China’s ambassador to South Africa of more than $40 billion is much closer to the mark than the official figure, but the fact is that no one knows what the number is and, in any event, we need a clearer Chinese definition of FDI. The Military/Security Relationship Second, I will highlight the problem of developing information on the China-Africa military/security relationship. If it is difficult to obtain reliable and detailed Chinese figures on its investment in Africa, you can imagine the difficulty of documenting the military/security relationship. Information is readily available on Chinese contributions to UN peacekeeping operations in Africa and its contribution to the Somali anti-piracy operation in the Gulf of Aden. The most common feature, however, of the China-Africa military relationship is the highlevel military exchange. These happen frequently in both directions. Many probably result in no new military commitments, but some do. China routinely announces the date of these exchanges 2

and who participated. Beyond that, the press release reads like a form letter. It points out that the two sides agreed to continue or expand cordial military relations or cooperation. The press release spends several more paragraphs making that statement in a number of different ways but rarely offers any other information. Occasionally, coverage in the African press of these high level exchanges provides some useful, if difficult to confirm, detail, especially in countries that have a relatively free press. The information on China’s transfer of conventional weapons to Africa is generally good. In any event, it is difficult to hide large weapons once they arrive in an African country. China does not, however, report its transfer of small arms and light weapons (SALW) and it is believed to be one of the largest providers of SALW to African countries. This is a void in open source research although intelligence agencies probably have a pretty good idea how much Chinese SALW makes its way into Africa. Number of Chinese in Africa Third, is the issue of the number of Chinese living and working in Africa. China’s official estimate of the number of Chinese nationals living in Africa is one million. Chinese officials are quick to underscore that this is an estimate. Nor is it clear if this figure includes members of the Chinese community in places like Madagascar and South Africa whose families go back more than a century and many of whom now have the nationality of the host country. It is clear that most of the Chinese in Africa are relatively recent arrivals and they sometimes migrate from one African country to another. There have been some excellent micro studies on a few of these communities and considerable research on the single largest community in Africa, which is found in South Africa. But the fact remains that not much is known about Chinese communities in most African countries. During my travels since 2007 in Egypt, Ethiopia, Sudan, Tanzania, Kenya, South Africa, Angola, Nigeria and Liberia, I have been struck by the differences in estimates on the number of Chinese living in a particular African country. Inevitably, the lowest estimate came from the Chinese embassy. Estimates from other sources such as host government officials, Chinese businesspersons, African academics and third country nationals ranged as much as ten times higher than the Chinese embassy estimate. I was discussing this issue with Chinese think tank specialists on Africa in Beijing immediately after the evacuation of 35,000 Chinese from Libya in 2011. To a person, they were shocked to learn the number of Chinese in Libya was so high. This is an area where Chinese embassy estimates are probably getting more accurate because of the need to document the presence as Chinese nationals in Africa face growing security threats. Nevertheless, it is an important area that cries out for better research.