Professional Documents
Culture Documents
ABSTRACT
The objective of this article is twofold. On one hand it elu-
cidates the goals and dynamics of China’s foreign trade pol-
icy since the 1990s. On the other hand it assesses the impact
of this strategy on the development of the Central African
Region as a case for China’s influence on other developing
countries. We observe that China is pursuing a pragmatic
mercantilist policy that combines a wide array of diplomatic
and economic devices. As a result the People’s Republic gains
ground slowly but surely. However, China’s ascent does not
lift the Central African states to a more favourable position
in the global division of labour. We conclude that China’s
rise confirms the current economic position of African coun-
tries: that of a commodity supplier and a modest consumer’s
market.
Introduction
In 1963 Deng Xiaoping stated that he wanted his country “to be among
the advanced countries in the world through forty years of hard working.”1
* Jonathan Holslag, Free University Brussels (VUB), specializes in China’s foreign pol-
icy. His mailing address: Mechelsestraat 45, 3000 Leuven, Belgium, E-mail: jhol-
slag@vub.ac.be. Tel: ++32/477 63 82 61.
I would like to thank Jan Gorus and Gustaaf Geeraerts, both professors at the Free
University Brussels (VUB) for their advice. I am also grateful to the reviewers of this
journal (African and Asian) for their constructive comments.
1
Deng Xiaoping, Be Realistic, Look at the Future, Main points of a speech on indus-
trial development at the meeting held by the Industrial Decision Drafting Committee,
August 20, 1963.
Four decades passed by, and China indeed has been growing spectacularly.
Since the mid-1990s however, China’s economic transformation has
entered a new stadium. Ever since, the government’s orientation shifted
from an obsession with growth rates to the ambition to make growth
sustainable. One of the key ambitions was to create direct links to over-
seas markets. It took only a short time before international attention was
drawn to blatant Chinese investments in pariah states such as Sudan and
Iran. China’s economic engagement in Asia turned into a hot issue as
well. Though in several regions, commercial activities escaped attention
despite the People’s Republic (PRC) and is gaining ground there as well.
In this article we assess the impact of China’s “go-out” policy on one
particular region: Central Africa. The seven states mentioned in this sur-
vey constitute a rich sample of what the African continent has or has
not to offer.2 They comprise resource-abundant states as well as com-
modity-poor markets, stable and war-rigged societies, countries that make
their income from the export of agricultural yields and small oil states,
etc. This pattern card also allows us to let a wider array of China’s eco-
nomic interests and aspirations come into play. Consequently, it permits
us also to assess the impact of the People’s Republic’s commercial offensive
from more perspectives. Thus, the objective of this article is twofold. On
one hand we try to explain the goals and dynamics of China’s actual
foreign trade policy. On the other we assess the impact of this strategy
on the development of the Central African Region as a case for the
influence on other developing countries.
To start with, China’s “go-out” policy is contextualized concisely in
the theoretical perspective of neo-mercantilism. In the second and third sec-
tion we focus on the People’s Republic’s trade policy toward the Central
African Region: what are its targets and what are the devices at its dis-
posal to materialize these aims? In this regard we will stress that Beijing
is pursuing a dynamic mercantilism, and that China’s economic activity
in Central Africa arises out of a well-conceived political strategy. On
one hand the government stimulates companies to swarm out via diplo-
2
The 7 countries are: Burundi, the Central African Republic (CAR), the Republic
of Congo (ROC), and the Democratic Republic of Congo (DROC), Gabon, Rwanda,
and Uganda. It should be noted that within the geo-political morphology of Africa as
defined by formal colonial powers and accepted in the global international relations,
Uganda is not considered part of Central African region. It is located in East Africa
and it is also part of the Great Lakes Region of Africa. However, in terms of its
ethnic and cultural ramifications, and within the current geo-political economy, it has
been playing an important role in the re-definition of politics in several Central African
countries.
AAS5,2_f1_133-169 6/29/06 3:57 PM Page 135
Table 1
A trade profile of the region. Source: World Bank (2005);
UNDP (2005); WTO (2005).
mercantilists agree on. For the rest, numerous interpretations exist con-
cerning the different modi in which mercantilism materializes, the state
and non-state actors that influence policy-making, the question whether
mercantilism is good, bad or both, etc. This plethora of discourses enticed
Terence W. Hutchinson to write that: “Mercantilism is one of the most
unpleasant and obscure ‘isms’ in our dictionary.” Nonetheless, terms and
models are attempts to make conceptual continuity a bit more discrete,
not reality. The multitude of notions reflects the unabated efforts to
match a strong paradigm to the intricate flows of reality. Among the
recent derivates of mercantilism, the so-called Asian developmental state
model is most prominent. This Asian blend of mercantilism aims at
developing strategies for national prosperity in a context of intensifying
trans-national competition and a highly fluid globalized economy. It com-
prises two key features. On one hand it promotes openness and com-
pliance to international liberalist standards in order to lure in foreign
capital and to gain access to overseas consumer markets. On the other
hand the state plays a vital role in mooring the accumulated wealth and
creating a well-off society through guidance and redistribution. Asian
mercantilism suggests a compromise between two extremes of full inte-
gration in the globalized capitalist economy and economic autonomy.3
With regard to the foreign trade policy of these states, economic-diplo-
matic activities therefore cannot be conceptualized as pure market-based
transactions.4 Instead, they should be viewed as politically mediated inter-
actions between different nation-states that surpass profit maximization.5
Which factors explain the emergence of this new wave of mercantilism?
Several scholars highlight the cultural fundaments of this policy. Confucian
and legalist values are common to many Asian nations. Both emphasize
the inferiority of individual profits to the general interest that is repre-
sented by a responsible and capable government.6 Others point at the
internal constellation of economic interests. Jayasuriya Kanishka, for
instance, construes Asian mercantilism as embedded in a trade-off between
nationalist-internationalist interest groups.7 Concluding, Asian develop-
3
Jackson Robert and Sørensen Georg, 2003, p. 208.
4
See: Dong Qi and Ma Xiaoye, 2004; Wu Friedrich, 2005; Wang Xiaozu, Xu Lixin
Colin and Zhy Tian, 2004.
5
Yeung T.H., ‘Strategic Governance and Economic Diplomacy in China’ in East
Asia, vol. 21 (1), 2004.
6
See for instance: Katayama, Seiichi and Heinrich W. Ursprung, 2000; Chu Ke
Young, 2001.
7
See: Jayasuriya Kanishka, 2004; Kennedy Scott, 2005; McGuire Martin C. and
Ohta Hiroshi, 2005.
AAS5,2_f1_133-169 6/29/06 3:57 PM Page 137
8
On monopoly capital, see: Baran Paul A. and Sweezy Paul M., Monopoly Capital,
Monthly Review Press, New York/London, 1966. For a recent summary, see: Sweezy
Paul M., ‘Monopoly Capitalism,’ Monthly Review, October 2004, pp. 78-85.
9
On this argument, see for instance the numerous country-by-country analyses in:
Hewison Kevin and Robison Richard ed., East Asia and the Trials of Neo-Liberalism, a spe-
cial issue of the Journal of Development Studies, vol. 41 (2), 2005.
10
Kennedy Scott, ‘China’s porous protectionism: the Changing political economy of
trade policy,’ in Political Science Quarterly, 2005, vol. 120 (3).
11
Johnston Alastair I., ‘Is China a Status Quo Power?’ in International Security, 27 (4),
2003, pp. 5-56.
12
Chen Zhimin, ‘Nationalism, Internationalism and Chinese Foreign policy,’ Journal
of Contemporary China, vol. 14 (42), 2005, pp. 35-53.
13
Surjit Bhalla, Chinese Mercantilism: Currency Wars and how the East was Lost,
ICRIER, New Delhi, 1998, pp. 4-12.
14
Ross Lester and King Susan, ‘Modern Protectionism: China’s Own Antidumping
Regulations,’ in China Business Review, vol. 26, 2005, pp. 30-33.
AAS5,2_f1_133-169 6/29/06 3:57 PM Page 138
15
See for instance: UNCTAD, 2003; Medeiros Evan and Fravel Taylor, 2003; Dong
Qi and Ma Xiaoye, 2004.
AAS5,2_f1_133-169 6/29/06 3:57 PM Page 139
have emerged from the light industry, textile, household appliance and
machinery sectors. These companies are able to go into the global mar-
ket to secure broader space for structural adjustment and optimal allo-
cation of resources.”16 Understandably, trade ownership can be approached
from an outward and an inward perspective.
The former implies China’s eagerness to discover new consumer mar-
kets and lucrative markets for Chinese exporters. It is well known that
a substantial share of China’s Gross Domestic Product (GDP), 34.4 per-
cent, consists of export; the largest part of its new jobs are provided by
industries who’s main activity is to process consumption goods destined
for overseas markets. Nowadays, foreign or international corporations
manage 60 percent of China’s export volume. In se this does not has to
be a problem. Nevertheless, on the long haul it is all but certain if these
Wal-Mart-type companies will also keep their production activity in China.
The PRC can only remain to be the world’s factory if it succeeds to
cement its own production capacity, and if it achieves to create its own
channels to make way into export markets. At first sight, Central Africa
seems not to fit in this aspiration: it concerns an impoverished region,
and thus, does not have that much purchasing power. Even though, it
remains a profitable market to tap. First, China has a strong standing
as a supplier of affordable goods and services. Whereas China does not
have sufficient branding capacity to penetrate the markets of industrial-
ized countries itself; cheap Chinese fabricates such as consumption prod-
ucts and inexpensive robust machines find their way easily to African
countries, without having to resort on foreign retailers. “Our textile com-
panies do not earn a cent more with a Nike logo, so, if they can sell
their fabricates themselves they are eager to do it,” a Chinese diplomat
summarized.17 Second, the Central African economies form a testing lab-
oratory for higher-standard firms. Whereas not yet competitive on Western
markets, Chinese companies can gain experience and reputation through
limited investments and undertakings in developing countries.
The latter, the inward perspective, mainly relates to the supply of
strategic important and often scarce goods: raw commodities to be specific.
Let us focus concisely on the evolution of China’s need for raw mate-
rials; how China’s demand for commodities translates into commercial
aspirations was already described supra. A recent CLSA report predicts
that China’s consumption of steel, iron ore, nickel, copper, aluminium
16
‘Go Global investment strategy needed for Chinese enterprises,’ in People’s Daily,
December 12, 2001.
17
Conversation with Chinese diplomat, Brussels, November 11, 2005.
AAS5,2_f1_133-169 6/29/06 3:57 PM Page 140
and oil will grow at double-digit annual rates for the next five years,
taking an annual growth of the Chinese economy of 7 to 9 percent for
granted until 2010. Over the past twenty years, China’s primary energy
consumption increased by 70 percent. Whereas it still possesses an abun-
dance of coal reserves, it is running out of oil and natural gas deposits.
By result the PRC has to rely more and more on foreign providers. In
1993, it became a net-importer of oil. For natural gas too, its surplus is
diminishing. Nowadays, 47 percent of the amount of the oil it consumes
originates from foreign wells; for 2020 the government estimates to have
to import 60 percent of its oil.18 Annually 4 million new cars hit the
road; the gasoline consumption is expected to grow 6.3 percent each
year. Another cause for China’s surging oil appetite concerns the pro-
duction of petroleum derivates in the chemical industry: still good for
as much as 70 percent of the average oil demand. Petroleum is also
replacing coal as an energy source for heating.
16000 10
12000 8
7
8000
6
5
4000
4
0 3
1996 1997 1998 1999 2000 2001
Figure 1
China’s import of minerals. Source: UNCTAD (2004).
18
Development Research Center of the State Council, China’s energy strategy, State
Council Beijing, 2003, p. 11.
AAS5,2_f1_133-169 6/29/06 3:57 PM Page 141
19
‘China to slow mineral imports,’ People’s Daily, June 1, 2005.
20
UNCTAD, 2005, p. 5.
21
Muekalia D.J., 2004.
22
Fieldhouse D., 2000.
AAS5,2_f1_133-169 6/29/06 3:57 PM Page 142
23
See for instance: State Council, China’s Policy on Mineral Resources, Information Office
of the State Council of the People’s Republic of China, Beijing, 1994, chapter 4.
24
The U.S. Congress barred a Chinese oil company to take over the American energy
firm UNCOAL.
AAS5,2_f1_133-169 6/29/06 3:57 PM Page 143
and Gabon declined by respectively 18.2 and 29.4 percent. Except for
cobalt (24.70 percent) and diamonds (18.00 percent), the region’s min-
ing output contributes only very modestly to the world’s aggregate total:
copper 6.34 percent, tantalum 3.72 percent, and gold 0.02 percent.25
Most of these commodities can be found much nearer, for instance in
Australia, Canada, Indonesia, Myanmar, and Russia. Nonetheless, these
limited assets remain to be an interesting investment for Chinese com-
panies. First, in this area they do not have to face that much competi-
tion from more potent international concerns: the big international players
are not prepared to invest as much in the less productive sources here
than in the bonanzas elsewhere, and are concerned having affected their
image in dealing with war-shattered and corruption mired countries.
Second, the impoverished governments of this region are easier to deal
with compared to larger suppliers in which their omnipotent monopo-
lies control most upstream activities. Lastly, China, as most other pow-
ers, attaches great importance to diversife its lines of supply and to limit
dependence on a limited number of countries.
25
USG, Geological Mineral Survey Yearbook, USG, Washington, 2004, various pages.
26
People’s Congress, Foreign trade law of the PRC, the Standing Committee of the Eight
National People’s Congress, Beijing, 1994, art. 3.
27
For instance, provinces lobbied for preferential policies to attract foreign investments
AAS5,2_f1_133-169 6/29/06 3:57 PM Page 144
29
‘China, Congo agree to further economic, trade cooperation,’ People’s Daily, March
22, 2005.
30
‘Sassou Nguesso en Chine: place aux affaires,’ see: Congopage via: <www.con-
gopage.com>.
31
‘Chinese official stresses cooperation with Africa,’ People’s Daily, July 8, 2004.
32
‘SADC to further boost relations with China, India,’ People’s Daily, August 12, 2004.
AAS5,2_f1_133-169 6/29/06 3:57 PM Page 146
The main points of this vision have been restated over and over again.
What is the significance of this official view for China’s commercial rela-
tions? A first element to consider is the principle of “non-interference”.
Whereas Western governments and international concerns are under
strain to pay attention to human rights, the respect of democracy, and
environmental norms whenever they deal with third world countries,
Chinese actors do not have to confine themselves by these contempla-
tions and are permitted to operate freely. This gives them a leap in
countries and situations that are not in line with the common standards
of the international, read Western, community; cases in which Chinese
enterprises sneak between the meshes are rife.35 The promise not to inter-
fere with internal affairs also sets local governments at ease, and makes
33
For the complete version of Hu Jintao’s six pillars, see: ‘China’s Africa Policy,’ via:
<www.China.org.cn>.
34
‘Chinese Leaders on Sino-African Relations,’ December 10, 2003, see: <www.
china.org.cn>.
35
Even during the butcheries in Darfur, Sudan, Chinese companies continued to do
business with Sudan. Thanks to Europe’s and the U.S.’s embargo to Iran, China suc-
ceeded to carve out lucrative oil concessions. Whereas Western companies are becom-
ing reclusive to invest in Saudi Arabia’s energy sources, Chinese companies are slipping
in. The same counts for countries such as Myanmar, Uzbekistan, North Korea, and
Kazakhstan.
AAS5,2_f1_133-169 6/29/06 3:57 PM Page 147
36
For instance, Hu referred to China and Africa’s shared faith in terms of both being
“burdened with arduous tasks of development” [People’s Daily, September 13, 2005], . . .
Allusions made to Bandung are inter alia Hu’s pledge “to carry on the Bandung spirit
and contribute to the continuous progress in Asia and Africa.” [People’s Daily, April 22,
2005]
37
Ramo J.C., 2004.
38
“Full text of Hu Jintao’s speech at Asian-African Business Summit reception,” People’s
Daily, April 22, 2005.
AAS5,2_f1_133-169 6/29/06 3:57 PM Page 148
Joint Business Council. Its current goals are stressed out in the Addis
Ababa Action Plan and entails issues related to peace and security, mul-
tilateral cooperation, economic development, and social development.39
Let us go more into detail on the economic segment. A first priority in
this regard is the development of Africa’s agriculture “in order to strengthen
the food security of Africa and to increase its exports to China and other
markets.”40 China will also continue to support and encourage strong
and viable Chinese enterprises, through financial and policy incentive
schemes, to develop agricultural cooperation projects in Africa.41 Second,
and particularly emphasized, is the infrastructure development: “China
will encourage its enterprises to take an active part in Africa’s infra-
structure projects and expand cooperation in transportation, telecom-
munication, energy, water supply, electricity and other fields.”42 Third
aim is to promote trade through import-tariff reduction, initially on com-
modities; later on, other goods too might be included after bilateral nego-
tiations between China and each particular African state.43 Fourthly, the
Action Plan addresses the facilitation of investments, “focusing on
simplification of approval procedures for Chinese companies, which are
interested in investing in Africa.”44 African countries are also urged to
hold consultations with the China Council for the Promotion of
International Trade (CCPIT) with a view to establishing a China-Africa
Chamber of Industry and Commerce. Next comes the development of
tourism. In this regard China is expected to grant its Approved Destination
Status (ADS) to more African countries.45 The sixth vow concerns China’s
intention to “take an active part in resources development projects in
African countries and increase its investment in this area.”46 In this field,
African countries are insisted on to provide “all necessary information”
and to “accord facilities for Chinese enterprises.” Other elements of the
economic section of the Action Plan are debt relief and development aid.
State companies are still the main actors that are sought to imple-
ment the aspirations set by the government. However, several structural
39
FOCAC (2003), Addis Ababa Action Plan, Addis Ababa, December 26, 2003. See:
<www.iss.co.za/AF/au/chinaafrica03.htm >
40
Ibid. art. 4.1.1.
41
Ibid. art. 4.1.2.
42
Ibid. art. 4.2.2.
43
Ibid. art. 4.3.
44
Ibid. art. 4.4.
45
Approved Destination Status (ADS) is the permission for Chinese tourists to travel
to a particular country. The granting of an ADS often coincides with the promotion
and facilitation of voyages to these places.
46
Ibid. art. 4.8.
AAS5,2_f1_133-169 6/29/06 3:57 PM Page 149
47
See: UNCTAD (2005), World Investment Report 2005, UN, New York/Geneva, Annex
A.1.9: ‘The world’s top 100 non-financial TNCs’.
48
See for instance: Nolan P., China and the Global Economy, Palgrave, New York, 2001.
49
“The struggle of the champions,” The Economist, January 8, 2005, pp. 58-59.
50
State Council of the PRC, Interim Regulations on Supervision and Management, Decree
of the State Council, adopted on May 13, 2003.
51
See: <www.sasac.gov.cn>.
52
Financial Times, November 14, 2005.
AAS5,2_f1_133-169 6/29/06 3:57 PM Page 150
whose process and assembly with brought-in raw materials from overseas are encour-
aged by the Chinese Government, May 6, 1999.
56
‘Experts Optimistic About China-Africa Trade Prospect,’ People’s Daily, January 5,
2005.
57
Muekalia D.J. 2004, p. 10.
58
‘African Telecom Ministers Visit ZTE Headquarters,’ via: <www.cellular.co.za>.
59
Statement of China’s Ambassador to Belgium at the Royal Military Academy,
Brussels, November 3, 2005.
60
‘Cultural exchanges promote Sino-African co-operation,’ People’s Daily, May 10,
2005.
61
Kindleberger C.P. 1970, p. 145.
AAS5,2_f1_133-169 6/29/06 3:57 PM Page 152
Results
To assess the results of China’s policy is a delicate exercise. To start
with, facts and figures are limited and inaccessible at large. Whereas one
can rely on the standard databases such as these of the UNCTAD and
the WTO for general figures spanning longer periods, more detailed
62
McGregor R., ‘China becomes a net donor of aid,’ Financial Times, April 4, 2005.
63
See: <www.chinafrique.com>.
64
‘The technical cooperation between China and Uganda has achieved remarkable
achievements,’ Xinhua, December 5, 2003.
65
See: Sali B.H, ‘China is 3.8 million richer,’ The Monitor, October 2, 2003.
AAS5,2_f1_133-169 6/29/06 3:57 PM Page 153
data provided by the Chinese agencies themselves are only available for
recent years. Second, there is the question of reliability: without going
into detail, we found official figures often contradicting with data result-
ing from expert calculations. Third, it is obvious that the direct trade
volumes do not necessarily cover all goods that arrive at the final des-
tination: goods exported from China to South Africa, for instance, can
still find their way to Uganda, and vice versa.
As mentioned later, many of Central Africa’s raw commodities, pre-
cious minerals in particular, are exported to China after a stopover in
South Africa, Thailand or Hong Kong. It is a fruitless task, and outside
the scope of this dossier to try to clear out all these hubs and transi-
tions; but even if we take the figures for what they are, they still pro-
vide us useful insights. Hence, how did we specify China’s political
aspirations into measurable targets? In general terms the aim is to increase
exports of manufactured goods and the imports of strategically vital com-
modities. Here we will present the overall trade figures for the last five
years aside from facts concerning the composition of these flows.
Consecutive to this quantitative overview, we will go more into detail
with regard to China’s realizations in the field of the different mineral
resources, but also vis-à-vis the construction of infrastructure and telecom-
munication.
A large number of facts in this part are drawn from numerous writ-
ten as well as oral sources. Open publications are mentioned in the foot-
notes. Oral sources, however, are kept anonymous, given the fact that
most of informants, kind of sharing their expertise, are affiliated with
official institutions, go’s, and companies who are present in the region.
1200 10
8
800 5
4
400
2
0 0
1999 2000 2001 2002 2003
Figure 2
The region’s trade relations with China (mio USD and %).
Source: China customs (2005) and WTO (2005).
AAS5,2_f1_133-169 6/29/06 3:57 PM Page 154
66
EIA, Congo-Brazzaville, via: <www.eia.doe.gov/emeu/cabs/congo.html>.
AAS5,2_f1_133-169 6/29/06 3:57 PM Page 155
1200
Petrol
1000
Minerals
800 Logs
Food
600
Manufactured
400
200
0
2002 2003
300 Rest
Textile
250
Electronics
200 Processed metals
Machinery
150
Chemicals
100 Primary
50
0
2002 2003
Figures 3 & 4
Composition of the region’s imports froom China (mio USD).
Source: China Customs (2005).
AAS5,2_f1_133-169 6/29/06 3:57 PM Page 156
67
Various conversations with mining specialists during the expert meeting: Les tressors
de la RDC, Brussels, November 23-24, 2005. For accessible country-by-country reviews,
see also: USG, Geological Mineral Survey Yearbook, USG, Washington, 2004.
68
‘Quand la Chine réveille l’Afrique,’ via: Gabon Flash, June 3, 2004.
69
‘Une société chinoise autorisée à prospecter du manganèse au Gabon,’ Panapress,
April 4, 2004.
70
Katende J.C., Rapport préliminaire sur l’exploitation illégale des ressources naturelles en RD
Congo, ASADHO, Katanga, 2004, p. 21; Gorus J., Preparatory note and field research
on the mining industry in Katanga, 2005.
AAS5,2_f1_133-169 6/29/06 3:57 PM Page 157
71
Interview via e-mail with Belgian mining expert in the DROC, October 22, 2005.
72
Cobalt News, The Cobalt Development Institute, October 2004.
73
Interview with mining expert, Brussels October 23, 2005.
74
Interview with diplomat, Brussels, November 25, 2004.
75
Global Witness (2004), Rush and Ruin – The Devastating Mineral Trade in Southern Katanga,
Global Witness, Washington, 2004, pp. 18-24. See: <www.globalwitness.org>.
AAS5,2_f1_133-169 6/29/06 3:57 PM Page 158
76
Conversation with Congolese mining industrialist in Brussels, November 23; con-
versation with Congolese human rights activist in Brussels, November 23; conversation
with Belgian army officer, November 17; interview by telephone with Ugandan military
officer, November, 15.
77
Oliver R. and Fripp E., Changing international markets for timber – What can African coun-
tries do? TTF and IFIA, 2004.
78
See: <www.globaltimber.org.uk/congo.htm>.
79
UN Security Council, Report of the panel of experts on the illegal exploitation of natural
resources and other forms of wealth of DRCongo, UN, New York, April 2001.
AAS5,2_f1_133-169 6/29/06 3:57 PM Page 159
80
‘La chine présentée par son ambassadeur en RDC,’ Le Potentiel, October 1, 2005.
81
‘Pékin va construire une route entre Brazzaville et Pointe-Noire,’ Jeune Afrique,
September 27, 2005.
82
‘Les travaux du barrage d’Imboulou vont bon train,’ via: Site Officiel d’Information et
de Conseil sur le Congo, October 25, 2005.
83
‘La chine présentée par son ambassadeur en RDC,’ Le Potentiel, October 1, 2005.
84
Interview via email with a development aid worker in the DROC, October 28,
2005.
AAS5,2_f1_133-169 6/29/06 3:57 PM Page 160
is another terrain of activity. In the ROC China’s ZTE outbid the Israeli
RCI and the American Vertex to acquire a contract to develop the
country’s telecommunication network; consecutively, Congo Chine Télécom
became a main operator.85 In the same country China Beijing Construction
erected and equipped a new compound for the state radio and televi-
sion.86 In the DROC China Telecommunications Company founded a
local subsidiary with a mobile telephone network that hitherto reaches
not farther than the area around Kinshasa but is expected to expand
in the near future. In other states too, Chinese operators are starting to
found new networks: Netcom in Uganda, Huawei-Onatel in Burundi,
and an up until now an anonymous applicant in Gabon.
How can one explain the progress of Chinese infrastructure projects?
First, whereas firms lack experience in the mining sector, this is not the
case for construction and telecommunication firms. Despite the fact they
do not deliver state-of the-art-products, their results are thought to be
quite solid and trustworthy.87 Second, Chinese contractors succeed to
play out their price competitiveness. By employing cheap Chinese engi-
neers and labourers, and by making use of low-cost techniques, the men-
tioned firms are able to outbid competitors from inter alia the United
Arabian Emirates. A last, utmost important advantage concerns the huge
liquidity flow that the Chinese government put at the disposal of its bid-
ders. Lending institutions such as the Exim Bank and the Construction
Bank provide investing governments with millions of low-interest loans
to enable them to finance the work done by Chinese companies.
Time now to make up a preliminary balance of the progress China
made in the realization of its aspirations. Summed up, these achieve-
ments have been mixed. Relating to the vending of its own manufac-
tured products, it appears that it only takes a limited share of the market.
Despite “Made in China” visible in every household and in every shop,
the monetary value that these goods represent is still modest. China’s
grip on the region’s natural resources is still feeble as well. On one hand,
it is clear that it succeeds to appropriate an increasing share of the
exports of commodities. On the other hand, it does not reach down to
acquire trade ownership: the presence of Chinese companies in Central
Africa’s mining is still juvenile: there are no indications of a far-reaching
85
Gourmelon I., Gestion de la rente pétrolière au Congo Brazaville, FIDH, Paris, p. 55.
86
‘Prêt chinois pour construire le nouveau siège de la radio-télévision du Congo,’ Le
Potentiel, October 17, 2000.
87
Email queries addressed to 15 development aid workers in the region, November
21, 2005.
AAS5,2_f1_133-169 6/29/06 3:57 PM Page 161
Impact
It is doubtful that the Central African population will profit much from
China’s increasing presence. First, the quantitative trade surplus is coun-
terweighted by a qualitative trade deficit: China’s infusion of manufac-
tured goods, although rarely always state-of-the-art products, and its
technical expertise represent a larger added value than the region’s export
of raw materials. Second, the control-over-the-well policy also impedes
Central African states to foster economic sovereignty. By emphasising
the need to seize ownership of local sources, China implicitly vows to
disown African societies of their potential ability to manage these them-
selves. Alien possession of sources of raw materials inhibits them also to
profit substantially from the rising trend in commodity prices. Third, it
is all but certain that the net-incomes originating from the favourable
trade balance come to the benefit of the local populations. China, for
instance, does not pose any demand with regard to the tractability of
the revenues that governments reap out of concessions and taxes. Fourth,
the argument that cheap Chinese consumption goods are curbing inflation
and consecutively engendering purchasing power is partly weakened by
the fact that governments levy high taxes on these imported products.88
Fifth, Chinese products compete the scarce local manufactured goods
out of the market. For instance, the Kampala City Traders Association
recently has complained that their Chinese counterparts are sabotaging
88
Conversation with Rwandan ngo worker, Brussels, November 21, 2005.
AAS5,2_f1_133-169 6/29/06 3:57 PM Page 162
89
Interview via e-mail with development aid worker, October 13, 2005.
90
‘Brazzaville sous l’emprise chinoise,’ in Afrique Echos, September 6, 2005.
91
Interview by email with 2 development aid workers, March 18, 2006.
92
Diplomatic source: Kigali, October, 2005.
93
‘Des prostituées chinoises à Louis!’ via: Gabon Flash, August 18, 2005. <www.flash-
gabon.com>
94
Ibid.
AAS5,2_f1_133-169 6/29/06 3:57 PM Page 163
The Monitor, accused its government for allowing the Chinese and Asian
business people who come in the pretext of investors to deal in both
wholesale and retail trade. “This hinders our operation because how
then shall we operate if someone from outside comes to deal in the same
commodities as we do.”95 The same paper also reports:
Residents and local leaders of Jinja district, especially in the Municipality,
are very discontented over the lack of benefits to the local community from
the huge $70 million (Shs 70bn) Owen Falls Dam civil work being done by
the Chinese company Sichuan International Engineering and Technical
Corporation (SIETCO). They mainly complained that the project has not
employed significant numbers of people from the area; has not consumed
food, and other goods and services. One resident of Jinja West, Isabirye
Ibrahim, said when the project commenced in 1993, he planned to supply
poultry products, fresh vegetables, fish, fruits and other foodstuffs to the pro-
ject. ‘But I have been terribly disappointed by the Chinese. They go fishing
into the Lake or river Nile, and allegedly grow vegetables or go to markets
in Jinja, where they bargain over vegetables, fruits and food stuffs in mar-
kets to the lowest prices,’ said a visibly disappointed Isabirye. He said many
large-scale commercial farmers in Jinja district, had gone into establishing
big farms ostensibly to market their produce to the dam contractors.96
Seventh, China is replacing old debts it has remitted with new ones,
and stimulates Central African governments to buy its own services on
tick. As we already mentioned supra, the PRC uses cheap loans to con-
vince administrations to contract its companies for having paved new
roads, erected telecommunication networks, etc. The Imboulou Dam in
the ROC, mainly constructed by Chinese personnel, was financed by a
loan of 200 million USD loan, repayable within 15 years with an inter-
est of 0.2 percent.97 The same counts for the Moukoukou Dam, financed
by a Chinese loan of 4.6 million USD. In 2000, the Exim Bank sup-
ported a joint venture between ZTE and the Congolese government with
a loan of approximately 10 million USD.
Eighth, there is the risk of creating new white elephants. For instance,
one can have doubts if construction projects are determined to fulfill the
key needs of society, or to accede to the eagerness of Chinese compa-
nies to carve out new contracts. For instance, several ngo workers expressed
their frustration about huge investments in sports stadiums in Brazzaville
95
Harera P., ‘Kampala traders say foreign counterparts unfair,’ in The Monitor, April
7, 2003.
96
‘Jinja mourns lack of crumbs from dam,’ The Monitor, May 10, 96.
97
Gourmelon I., 2003, op. cit., p. 56.
AAS5,2_f1_133-169 6/29/06 3:57 PM Page 164
and Kinshasa while the surrounding slums do not have access to clean
water.98 In the ROC and in Rwanda, hospitals are reported not to fit
the local demands.99 Ninth, China’s demand for recourses is directly and
indirectly nourishing the informal and criminal economy. On the one
hand, Chinese state-owned mining companies were already pointed at
to be involved in the war economy of the DROC.100 On the other, as
an important customer China’s lack of willingness and capacity to con-
trol the origin of its imported goods is indirectly stimulating illicit activ-
ities: via dire filières and via private Chinese undertakers. A survey of
Forest Trends for instance states that: “China is one of the major des-
tinations for timber that is harvested unsustainably or illegally.”101 In this
respect, Global Timber Watch reports that the illegal timber exports
from Gabon to China have been estimated to be as high as 70 percent
of total timber exports.102 A recent BBC report describes how Chinese
businessmen are involved in the illicit mining industry near to Lubumbashi
in the DROC.
“The heterogenite is partly treated in furnaces either in DR Congo
or in neighboring Zambia and then exported mostly to China via South
African and Tanzanian ports. Truckloads of copper and cobalt leave the
country every day. But statistics of DR Congo’s exports are not accu-
rate. [. . .] Joseph Chama Mukinay, vice president representing the trans-
porters in Kasumbalesa, describes how between 18 and 25 thirty-tonne
trucks overloaded with copper and cobalt, raw and concentrate, leave
every day. ‘About 65 percent of the trucks are loaded by Chinese busi-
nessmen and are feeding the Chinese market,’ he says.”103
To assess the profound impact of China’s stronger presence on the
development of Central Africa we need to go more into detail: that is
certain. Nevertheless, the remarks and indications we sketched out in
this section cast a shadow over Beijing’s official discourse of “win-win”
cooperation. Sure, in general financial terms, the intensifying trade rela-
tions appear to benefit the region: beyond this macro-economic picture
however, the Beijing Consensus, aiming at complementarity and non-
98
E-mail queries addressed to 15 development aid workers in the region, November
21, 2005.
99
Ibid.
100
UN Security Council, 2001, op. cit.
101
Sun X. et al., China’s Forest Product Import Trends 1997-2002: analysis of customs data
with emphasis on Asia-Pacific supplying countries, Forest Trends, January 2004.
102
Hewitt J., China: Illegal Imports and Exports, Global Timber Watch, July 2002.
103
Zajtman A., ‘Chinese demand boosts DR Congo mines,’ via: <www.bbcworld.co.uk>,
2004.
AAS5,2_f1_133-169 6/29/06 3:57 PM Page 165
Conclusion
No state is pursuing its foreign trade policy more vigorously than China.
This diligence is not only a matter of the ambition to turn the country
into an important world power. It is as well a prerequisite for the sur-
vival of a party apparatus that embodies the direct interests of millions
of members and functionaries. Forty years ago, this regime embarked
on the dramatic transformation from a society anchored in agricultural
communism and personal cult to a new legitimacy based on the accom-
plishment of the integration of more than one billion Chinese in the
world economy. Whereas the initial steps to achieve these goals focused
on an inward opening up and liberalization, today, Beijing is more and
more conscious of the need to foster an outward-oriented economic pol-
icy as well. In order to make the impressive growth from the first phase
sustainable, the People’s Republic needs to gain direct access to foreign
markets.
To start with, it has to promote exports in a way that allows oper-
ating independently from alien distributors and brands. China already
has the factories; now it is time to run the shops as well. Besides, in
order to keep the factory operational, it needs to be certain of a sus-
tainable supply of raw materials. Hence, in sum, China’s current mer-
cantilism aims at mitigating its dependence and to foster a certain degree
of trade ownership along the entire production chain. In this regard,
mercantilism and liberalism are operated in tandem. Thus, contrary to
the ubiquitous interpretation that China is still a status-quo power, it is
obvious that economic expansionism is imperative. The PRC is deter-
mined to expand its reach of operation and to conquer its share of for-
eign markets.
What makes the PRC’s “go-out” policy particularly mercantilist is the
wide array of tools the state has still at its disposal, and its capacity to
make use of these in a coherent well-defined strategy that serves the
national interest, rather than the aspirations of individual corporate actors.
AAS5,2_f1_133-169 6/29/06 3:57 PM Page 166
104
Gorus J. en Doom R., 2000.
AAS5,2_f1_133-169 6/29/06 3:57 PM Page 167
References
Amin Samir
1976 Unequal Development. An Essay on the Social Formations of Peripheral Capitalism,
Monthly Review Press, New York.
Bhalla Surjit
1998 “Chinese Mercantilism: Currency Wars and how the East was Lost,”
ICRIER, New Delhi: 4-12.
Chu Ke Young
2001 Collective Values, Behavioural Norms, and Rules: Building Institutions for Economic
Growth, World Institute for Development Economics Research (WIDER).
Dong Qi and Ma Xiaoye
2004 From “Going Out” to “Going Global”: Past and Future of China’s Overseas Investment
Policy, Center on China’s Transnational Relations, Hong Kong University
of Science and Technology.
Gilpin Robert
1987 The Political Economy of International Relations, Princeton, Princeton University
Press.
Gorus Jan en Doom Ruddy
2000 Politics of Identity and Economics of Conflict in the Great Lakes Region, VUB Press,
Brussels.
AAS5,2_f1_133-169 6/29/06 3:57 PM Page 168
Harris Stuart
2002 Globalization and China’s Diplomacy: Structure and Process, National University,
Camberra.
Jackson Robert and Sørensen Georg
2003 International Relations: Theories and Approaches, Oxford University Press.
Kanishka J.
2004 ‘Embedded mercantilism and open regionalism: the crisis of a regional pro-
ject,’ in Third World Quarterly, vol. 24 (2).
Jones Barry R.J.
1986 Conflict and Control in the World Economy, Harvester Press, Sussex.
Kindleberger C.P.
1970 Power and Money: The Politics of International Economics and the Economics of
International Politics, Basic, New York.
Lampton David M. ed.
2001 The Making of Chinese Foreign and Security Policy, Stanford University Press,
Stanford.
McGuire Martin C. and Ohta Hiroshi
2005 ‘Implicit Mercantilism, Oligopoly, and Trade,’ in Review of International
Economics, 13(1).
Fieldhouse D.
2000 ‘A new imperial system? The role of the multinational corporations recon-
sidered,’ in: Frieden J.A. and Lake D.A., IPE: Perspectives on Global Power
and Wealth, Bedford/St.Martin’s, Boston/New York, pp. 167-180.
Ivan S. Medeiros and M. Taylor Fravel
2003 “China’s New Diplomacy,” Foreign Affairs, June 2003.
Muekalia D.J.
2004 ‘Africa and China’s strategic partnership,’ African Security Review, vol. 13 (1):
10.
UNCTAD
2003 China: An Emerging Outward Investor, UN, New York/Geneva.
2005 Commodity Yearbook, UN, New York/Geneva.
2005 World Investment Report 2005, UN, New York, Annex A.1.9: ‘The world’s
top 100 non-financial TNCs’.
Ramo J.C.
2004 The Beijing Consensus, Foreign Policy Center, London.
Seiichi Katayama and Ursprung Heinrich
2000 Commercial Culture, Political Culture, and the Political Economy of Trade Policy: the
Case of Japan, Institute for Economic Research.
Toye J.
1987 Dilemma’s of Development: Reflections on the Counterrevolution in Development Theory,
Blackwell, Oxford.
Wade R. and White G.
1985 Developmental States in East Asia, Brighton, IDS Research Reports, no 16.
Wallerstein, Immanuel
1984 The Politics of the World-Economy: The States, Movements, and Civilizations, Cam-
bridge University Press, Cambridge.
Wang Xiaozu, Xu Lixin Colin and Zhy Tian
2004 ‘State-owned enterprises go public’ Economics of Transition, vol. 12 (3).
AAS5,2_f1_133-169 6/29/06 3:57 PM Page 169
Weiss L.
1998 The Myth of the Powerless State, Cornell Press, New York.
Wolf Charles J.R.
1994 ‘The New Mercantilism,’ The Public Interests (Summer): 96-106.
Wu Friedrich
2005 The Globalization of Corporate China, The National Bureau of Asian Research,
Washington.