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1 China and the Horn of Africa Middle East Studies Association Washington, D.C.

2 December 2011

David H. Shinn Elliott School of International Affairs George Washington University

Diplomatic Overview The seven countries of the Horn of Africa, and for the purposes of this paper I include Kenya, historically eschewed competition between Beijing and Taipei for diplomatic recognition. Sudan, which became independent in 1956, was the first of the seven to recognize the People’s Republic of China (PRC), albeit three years after independence. Somalia, Kenya, Eritrea, and South Sudan recognized the PRC the same year they became independent while Djibouti delayed for two years. Ethiopia, under imperial rule for more than 2,000 years and never colonized, waited until 1970 before establishing relations with the PRC, but never recognized Taiwan. China has good relations today will all seven countries, although continuing tension between Ethiopia and Eritrea and between Sudan and South Sudan is testing China’s diplomacy just as it is testing Western diplomacy. Beijing has an embassy in all seven countries except Somalia, where security conditions have deterred most countries from establishing embassies in Mogadishu. All seven countries have embassies in Beijing, except South Sudan, which has not yet opened one. Because of its huge investments in the Sudanese oil sector, China’s most important economic links were, at least until recently, with Sudan. Now that 75 percent of known Sudanese oil is located in South Sudan, China has shifted much of its diplomacy to improving relations with Juba while trying to maintain close ties with Khartoum. Ethiopia, the second most populous country in Africa after Nigeria, is highly important to China because of its location as the headquarters of the African Union and its potential market size. China sees Kenya as the commercial gateway to the rest of East Africa and parts of central Africa and an important hub for its information and communications efforts in Africa. Djibouti is growing in importance as a port to support China’s antipiracy effort in the Gulf of Aden. Eritrea is a diplomatic challenge.

2 China has been active behind the scenes and at the UN in New York in support of the Transitional Federal Government (TFG) of Somalia. Its assistance to combat the famine in the Horn, especially in Somalia, has been modest compared to that of the United States, but has exceeded China’s previous emergency food relief efforts in Africa. China is also expanding commercial ties with Somaliland, which declared its independence in 1991 but has not been recognized by China or any other country. Trade Only Sudan, because of its oil exports, has a trade surplus with China. Of the seven countries, Sudan is also China’s most important trade partner by far. South Sudan did not become independent until mid-2011. Once trade figures reflect China’s oil imports from South Sudan, it will almost certainly surpass Sudan as China’s major source of products in the region. Through 2010, Sudan was the only significant source of products for China. Kenya, Ethiopia, and Djibouti import large quantities of goods from China and, as a result, have huge trade deficits. Although Eritrea and Somalia do not receive significant imports from China, they export almost nothing to China and, consequently, have sizeable trade deficits. Ethiopia, Djibouti, Kenya, and Sudan have experienced impressive growth in imports from China. Only Sudan and, to a lesser extent, Ethiopia have been able to increase significantly exports to China. With the exception of Sudan and, looking to the future, South Sudan, China-Horn trade poses a long-term problem for the bilateral relationships. All of the other countries face big trade deficits with no obvious end in sight to this situation. Even Sudan may soon find itself facing a trade deficit now that its oil exports have declined by about 75 percent following the loss of South Sudan. A reduction in imports from China could preserve its trade surplus. Kenya and Ethiopia have been particularly concerned about the large trade deficit with China. The figures for China’s trade with the Horn in millions of dollars for 2006, 2008, and 2010 appear below.1 Imports from China 2006 Ethiopia Eritrea Somalia Djibouti Kenya Sudan

Exports to China 2010 1,330 39 79 489 1,965 2,151 2006 132 1 3 1 24 1,941 2008 81 2 0 2 35 6,302 2010 274 1 2 1 39 6,654

2008 1,154 29 44 272 1,339 2,036

635 38 30 171 684 1,679

International Monetary Fund, Direction of Trade Statistics Yearbook 2011.

3 Economic Aid China does not provide aid figures for individual countries. For that matter, China does not have a clear definition as to what constitutes aid. Any attempt to put a cumulative total on China’s aid to a particular African country is futile except in the rare case when the African country provides such a figure. Even then, questions remain as to the amount of disbursed aid versus promised aid, whether the figures are based on the OECD definition of aid, and whether they take into account subsequent debt relief, which China has provided in the case of Africa’s poorest countries. The best one can do is to draw on anecdotal information from African, Chinese and third party sources. China’s economic aid was a minor factor in its Africa policy until the 21st century. In the past several years, it has reached about $2 billion annually for all of Africa, but still falls well below the totals for the United States and European Union. Sudan has never been a major recipient of China’s assistance. Following the production and export of oil in the late-1990s, there has been little justification for aid. In 1970, China provided its first loan to Sudan. Among other projects, it financed the building of Friendship Hall, which remains a major landmark in Khartoum. China began sending medical teams to Sudan in 1971. It continues to offer low cost assistance such as the establishment in 2009 of a Confucius Institute at Khartoum University. When it became apparent that the much less developed South Sudan would likely opt for independence, China began to focus on assistance to the emerging country to preserve its oil interests there. China reportedly earmarked $300 million for development of the South.2 On the day South Sudan gained independence, China promised to help with its economic reconstruction. It announced training for thirty South Sudanese who are expected to become the core of its petroleum industry. China subsequently made a $31.5 million grant for unspecified development projects.3 In relative terms, Somalia was a significant recipient of Chinese aid in the 1960s and 1970s. China provided $130 million in credits between 1963 and 1971. It focused on technical assistance, especially in agriculture, and scholarships for Somali students. During the 1960s, however, China’s aid constituted only 2 percent of Somalia’s total aid compared to 20 percent from the Soviet Union and 17 percent from the United States. Chinese aid changed in the 1980s with fewer loans and reliance on World Bank funding that it used to build the major north-south road. After Somalia became a failed state in 1991, Chinese assistance ended except for occasional budgetary support to the TFG, modest amounts of emergency food aid, and small grants to the African Union peacekeeping mission in Mogadishu. Soon after Ethiopia and China established diplomatic relations, China provided an interest-free $84 million loan and sent several technical assistance teams. China began sending medical teams in 1974. In the late 1970s, it built a diesel power station and constructed a 185mile road that became widely known as the China road. In 1988, China began a scholarship
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12 July 2007 meeting between senior South Sudan official and the author in Khartoum. “China Grants South Sudan $31.5m for Development Projects,” Sudan Tribune, 24 October 2011.

4 program for Ethiopian students. In subsequent years, China provided $12 million to fund a technical and vocational education training program that led to the assignment of two hundred agricultural experts. Ethiopia was the first African country to receive a group of young Chinese volunteers, a program similar to the U.S. Peace Corps. China invested about $30 million to establish the Ethio-China Polytechnic College and established a Confucius Institute in Addis Ababa, which recently signed agreements to open Chinese language centers at the University of Addis Ababa and Hawassa University. Ethiopia has signed loan agreements with China’s Export Import Bank in excess of $3 billion. While these loans are highly competitive with commercial rates, they do not constitute concessionary loans. Eritrea and Djibouti have been minor recipients of Chinese aid. China built a hospital in the capital of Asmara and, beginning in 1996, sent experts on sports and culture and the following year medical teams. In Djibouti, China financed construction of the “People’s Palace” convention center and subsequently provided $7 million to rehabilitate it, a stadium, an outpatient building, housing, the Ministry of Foreign Affairs, and a regional hospital in Arta. It has a long-standing scholarship program for students and began sending medical teams in 1980. Soon after Kenya’s independence, China provided a cash grant of about $3 million and a long-term credit of $18 million. There was a long period of minimal assistance until Kenya decided to improve relations with China. Between 1980 and 1985, China provided Kenya with $46 million in economic aid, including the Moi International Sports Center outside Nairobi. By 2005, Chinese aid reached $56 million or 13 percent of total development assistance to Kenya. Most of it financed a rural telecommunications project using equipment from Chinese companies. China has had a scholarship program going back many years and established Confucius Institutes at the University of Nairobi and Kenyatta University. China also makes periodic contributions of equipment and material to Kenyan institutions such as $1 million worth of drugs to the Ministry of Health. Investments and Commercial Contracts As in the case of aid, China does not release cumulative country figures for the amount of its FDI. There are also questions as to what constitutes FDI. The issue becomes especially murky when you try to separate FDI from commercial contracts that have little or no investment component. With the possible exception of Sudan, commercial contracts are far greater by dollar value than China’s FDI totals in the countries of the Horn. China announced that its total FDI in Africa as of the end of 2009 reached $9.33 billion.4 This figure significantly understates the actual amount of FDI in Africa, which other sources suggest is as high as $40 billion.5 Because of its involvement in Sudan’s oil sector, China has invested more heavily there than in all the other Horn countries combined. In 2007, China’s investment in Sudan was
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China State Council, white paper titled “China-Africa Economic and Trade Cooperation,” December 2010. “China-Africa Think Tank Forum Holds First Meeting,” Xinhua, 27 October 2011.

5 estimated at $6 billion.6 A later estimate put the amount at about $13 billion.7 Whatever the actual amount, it is impressive and represents a replacement in Sudan of Western oil interests by China and its Indian and Malaysian partners. China’s engagement in the oil sector also led to a sharp reduction of Western, and particularly American, political and economic influence in the country. Chinese construction companies nearly have a lock on infrastructure development in Sudan funded by oil revenue. For example, Chinese companies are building most of the roads in the country and a new dam on the Nile River at Merowe. China has begun to invest in South Sudan. One of the initial investments was a luxury hotel in the capital of Juba. A Chinese company received the contract to design South Sudan’s proposed new capital at Ramciel in the center of the country. Due to the security situation in Somalia, there is almost no investment there. On the other hand, the private Hong Kong-based Petro Trans Company signed a commercial agreement with Somaliland to expand the Berbera Port and build a road between Berbera and Ethiopia. Chinese construction companies are active in Djibouti but there is no significant investment in the country. State-owned Djibouti Telecom has partnered with Chinese telecommunications companies Huawei and ZTE. A Chinese company is building a railway spur linking Djibouti’s container terminal to an existing rail line. Ethiopia has become a major center for Chinese investment. More than 250 Chinese companies invested an estimated $1 billion by 2010. Between 2004 and 2009, Chinese companies provided about 7 percent of Ethiopia’s total FDI. Most of it has gone into manufacturing. Ethiopia is also the location of one of seven Chinese Special Economic Zones in Africa designed to attract investment and increase trade. Chinese companies are a dominant force in the building of highways, bridges, power stations, cell phone networks, light rail line in Addis Ababa, housing, schools, and pharmaceutical factories. A Chinese company received a $1.5 billion contract to upgrade telecommunications services, a new rail link from Addis Ababa to Djibouti, and the provision of nine vessels for Ethiopian Shipping Lines. By contrast, there is much less Chinese investment in Eritrea. Four mining companies are engaged in exploration. Chinese construction companies have shown some interest in locating in Eritrea. Chinese companies are expanding their efforts in Kenya. By 2005, there were about one hundred projects with an investment capital of $52 million. By 2010, some 200 Chinese firms, including small trading companies, restaurants, and clinics, operated in Kenya. Chinese companies are actively seeking construction contracts. By 2005, the China Road and Bridge Construction Company had completed more than $200 million worth of projects. By 2006, Chinese construction and engineering companies accounted for $870 million worth of contracts. China is competing to build and finance a multibillion dollar port and oil refinery at Lamu on the Kenya coast.
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“China Invests 6 Billion Dollars in Sudan’s Oil,” Sudan Tribune, 6 November 2007. Meine Pieter van Dijk, “The Political Impact of the Chinese in Sudan,” in The New Presence in Africa, ed. Meine Pieter van Dijk (Amsterdam: Amsterdam University Press, 2009), 144.

6 Military and Security Relations China has or, at least, had some kind of military interaction with all countries in the Horn. The most important current relationship is with Sudan, although historically it was significant with Somalia. Its military ties with Somalia are dormant because of the limited control the TFG has over the country and the fact that the extremist al-Shabaab organization controls most of south and central Somalia. China supplies some equipment to the remaining countries and conducts high-level military exchanges with all of them. China first offered to train the Sudanese armed forces in 1971 and has sold advanced aircraft to Sudan since the late 1960s. China delivered six or seven F-7M fighter aircraft in 1997 and continued aircraft sales after the outbreak of conflict in Darfur. Between 2000 and 2006, China sold thirty-four Shenyang jet fighters, twenty A-5C Fanton aircraft, and six K-8 jet trainers. China provided more than 200 Dong Feng military trucks and trained fifty Sudanese pilots on helicopter gunships. While China has been Sudan’s largest supplier of small arms, by dollar value Russia is a more important arms supplier. China helped Sudan establish the Military Industrial Corporation, which produces weapons, ammunition, vehicles, communications equipment, and rockets. Sudan is now Africa’s third most important manufacturer of military equipment after South Africa and Egypt. Some Chinese weaponry supplied to the government of Sudan was used in the Darfur conflict.8 At the same time, China has been an important contributor of personnel to UN peacekeeping operations in both Darfur and South Sudan. As of October 2011, China had 378 military/police personnel in South Sudan and 319 in Darfur.9 Concerned about the reaction in both Ethiopia and Kenya, China was initially careful in its military cooperation with Somalia. When the Soviets switched their support from Somalia to Ethiopia in the late 1970s, China and the United States picked up the slack. Beijing emerged as a major arms supplier to Somalia by the early 1980s, providing fighter aircraft and a variety of equipment for the army. Between 1980 and 1985, for example, China signed military assistance agreements with Somalia totaling about $48 million and continued to provide military aid until the fall of the Siad Barre regime in 1991.10 China and Ethiopia were on opposite sides of the 1950-1953 Korean conflict and China covertly supplied weapons in the 1960s to an Eritrean group trying to secede from Ethiopia. In fact, Eritrea’s current President, Isaias Afwerki, received military training in China in 1966 and 1967. China ended support for the Eritrean rebels when Ethiopia recognized Beijing in 1970. China’s close military ties with Somalia and the United States’ military assistance program to Ethiopia until Emperor Haile Selassie was deposed in 1974 circumscribed, however, China’s

David H. Shinn, “China and the Conflict in Darfur,” The Brown Journal of World Affairs, vol. 16, issue 1 (Fall/Winter 2009), 89-90. 9 10 Thomas Ofcansky, “National Security,” in Somalia: A Country Study, ed. Helen Chapin Metz (Washington: USGPO, 1993), 213.

7 ability to engage there. After the overthrow of Selassie, the Soviets became the principal source of military support of the new Mengistu Haile Mariam regime. This occurred during the height of the Sino-Soviet conflict, again leaving China on the margins. The declining influence of the Soviets in the late 1980s and the overthrow of Mengistu in 1991 opened the door for China to expand relations with Ethiopia. When war broke out in 1998 between Ethiopia and Eritrea, China became an important supplier of arms to both countries. This also led to an increase in high level military exchanges, especially with Ethiopia, which continues to the present day.11 Both France and the United States have military bases in Djibouti. China minimized its military interaction with Djibouti until it began sending late in 2008 two frigates and a supply ship to support the Somali anti-piracy operation in the Gulf of Aden. As a result, Djibouti has taken on added importance as a port of call for the resupply of Chinese vessels. Early in 2010, the Chinese guided missile frigate Ma’anshan made a resupply visit to Djibouti and Chinese Navy ships now call there regularly. Military ties with Kenya began poorly in the 1960s when China supported the opposition political party and provided military training for about twenty of its followers. By the time China’s relations improved with the Daniel arap Moi government in the late 1970s, Kenya had consolidated its military cooperation with Western countries, especially the United Kingdom and United States. In recent years, China donated thirty-two transport vehicles to the Kenyan military and provided a $2.3 million grant to improve its operations. In 2010, China provided weapons, ammunition, supplies, and textiles for uniforms to support Kenya’s future initiative across the border in Somalia.12 Political Relations China’s political interaction with the countries in the Horn is similar to its engagement with countries in the rest of Africa. China works with whatever government is in power—an Islamist one in Sudan, an autocratic one in Eritrea, a relative democracy in Kenya, and one with minimal control over the country in Somalia. When regimes change in these countries, China will move quickly to develop cordial relations with the next government. Hallmarks of Chinese policy are its ability to move quickly and its focus on frequent and sustained high-level government-to-government contact. It does this at the level of the executive branch, party-toparty contact with the Communist Party of China (CPC), parliamentary contact, and through a host of other official or semi-official Chinese organizations such as Xinhua, its official news agency. All countries in the Horn welcome China’s policy of non-interference in their internal political affairs and no political conditions attached to aid except acceptance of the “One China Principle.” China does not encourage these or any other African governments to democratize or
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“China, Ethiopia Vow to Build Closer Military Ties.” Xinhua, 28 June 2010. U.S. Embassy Nairobi cable dated 17 February 2010 reprinted in The Guardian on 8 December 2010.

8 improve their human rights practices. This policy is in sharp contrast to that followed by the West, especially the United States. While China’s approach puts Beijing in good graces with the governments of countries in the Horn, it raises concerns with opposition political parties and civil society organizations. China’s important political ties with Sudan are linked to its support for the oil sector and fact that Beijing purchases about 60 percent of Sudan’s oil exports, which account for about 6 percent of China’s total oil imports. The oil equation has changed dramatically following the independence of South Sudan, but China’s investment in northern infrastructure for exporting oil will continue to underscore its need to maintain close ties with Khartoum while expanding cooperation with Juba. Sudan, which retained about three-quarters of the territory and population of the previously united country, also remains a significant market for China’s exports, including military equipment. The ongoing conflict in Darfur and new problems in contested north-south border regions of Abyei, Southern Kordofan and Blue Nile will severely test China’s ability to balance its interests in Khartoum and Juba. Since 2007, for example, Chinese oil company personnel working in Kordofan Region have experienced several attacks from Darfur rebel movements.13 Sudan’s ruling National Congress Party has developed strong ties with the CPC. China avoids contact with opposition political parties in Sudan, including the Sudanese Communist Party. The ruling Sudan People’s Liberation Movement in South Sudan is in the process of building a partnership with the CPC, which has already sent a delegation to Juba. China and Sudan support each other on human rights issues, especially when they are subject to criticism by Western countries. China and South Sudan will almost certainly follow a similar pattern. China maintains an active schedule of high-level contact with all elements of Khartoum’s government and, increasingly, is developing a similar program with the government in Juba. The Xinhua office in Khartoum also supports the China-Sudan relationship. The current government led by the Ethiopian People’s Revolutionary Democratic Front (EPRDF) has been in power since 1991. Initially, the United States wielded the most influence with the EPRDF government. China now has as much influence as the United States, primarily because it avoids criticism of Ethiopia’s democratization and human rights practices and China’s growing loans, investment, and commercial deals. The EPRDF has developed a good relationship with the CPC. Ethiopia has expressed support for China’s policy in Tibet.14 Xinhua has an office in Addis Ababa for supporting China’s information program. In 2010, Ethiopia’s minister of state for foreign affairs stated that “the golden age of Africa-China relations is ahead of us. But this does not preclude, for both, developing real partnerships with others.”15 The

David H. Shinn, “Chinese Involvement in African Conflict Zones,” China Brief, vol. 9, issue 7 (2 April 2009), 9. Daniel Large, “China’s Sudan Engagement: Changing Northern and Southern Political Trajectories in Peace and War,” China Quarterly, issue 199 (September 2009), 618-619. 14 “Ethiopia Objects to Politicizing Olympics: PM,” Xinhua, 26 April 2008. 15 Remarks by Tekeda Alemu at the Foreign Affairs University in Beijing, 15 April 2010.

9 relationship is not free of problems. Ethiopia has expressed concern about the large trade deficit and becomes defensive when China sends Chinese laborers to implement projects that it believes can be done by Ethiopians. Civil society groups and opposition political parties, although not strong in Ethiopia, have lamented the negative impact of China’s influence on their efforts. Djiboutian presidents have been frequent visitors to China, although senior Chinese officials have been much less visible in Djibouti. This probably reflects the modest economic relationship between the two countries. On the other hand, if Chinese Navy ships remain engaged in the anti-piracy operation, one can expect the political relationship to increase. Eritrea’s President Isaias Afwerki has visited China four times since he assumed power; highlevel Chinese visitors to Eritrea have been infrequent. This reflects China’s much stronger ties with Ethiopia, which has strained relations with Eritrea, and the relative paucity of Chinese economic activity in Eritrea. When the UN Security Council agreed in 2009 to impose sanctions against Eritrea for supporting extremist groups in Somalia and threatening neighboring Djibouti, China abstained. President Isaias subsequently expressed concern that China was not more supportive of Eritrea’s position.16 In 2003, China served as the UN Security Council coordinator for the Somali issue. It subsequently helped finance the talks that led in 2004 to the establishment of the TFG. In 2006, China was the first nation to ask the UN Security Council to authorize a peacekeeping mission in Somalia. China continues to support the peace process, the TFG, the African Union force in Mogadishu, and press the UN for more engagement in Somalia. Somalia’s deputy prime minister/foreign minister visited Beijing where he signed unspecified cooperation agreements. China avoided interaction with Somaliland until 2010, when the minister of aviation visited Beijing. Somaliland’s president and four cabinet members then visited in mid-2011. While this does not portend China’s recognition of Somaliland, it underscores Beijing’s willingness to develop commercial opportunities with all interested parties.17 China has no contact with officials from the semi-autonomous region of Puntland.18 Following a rocky beginning and several incidents resulting in the expulsion of four Chinese officials from Kenya in the 1960s, the political relationship became surprisingly close by the late 1970s and strengthened with each passing decade. In 2005, President Mwai Kibaki visited China with a large trade and investment delegation. The following year President Hu Jintao came to Kenya and Kibaki returned to China. Prime Minister Raila Odinga, Kibaki’s political opponent in the coalition government, visited China in 2009. The CPC has an active exchange program with all three major political parties in Kenya. In 2006, China Radio International established in Nairobi a transmitting station that broadcasts in Swahili, English, and
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Eritrea Ministry of Information press release, 20 February 2010. “Somaliland Says Petro Trans to Extend Berbera Port,” Reuters, 20 August 2011; Shinn meeting in Washington on 16 September 2011 with Somaliland Foreign Minister Mohamed A. Omar. 18 Meeting between Shinn and Kadir Abdirahman Mohamud, Special Envoy of the President of Puntland, in Washington on 14 September 2011.

10 Chinese. Xinhua also located its regional headquarters in Nairobi for all of Anglophone SubSaharan Africa. China has become a major player in Kenya, although the country’s strong civil society is less enamored with China’s engagement. Conclusion China’s recent engagement in the Horn has had both positive and negative consequences from an American perspective. On the positive side, China belatedly played a useful role in convincing Khartoum to accept a hybrid African Union/United Nations peacekeeping operation in Darfur and followed a constructive policy during implementation of the Comprehensive Peace Agreement in South Sudan. It provided a significant number of personnel to UN peacekeeping operations in both Darfur and South Sudan. It has contributed three naval vessels for the past three years to the international anti-piracy effort in the Gulf of Aden. China’s policy on Somalia has generally been supportive of American and Western efforts to strengthen the TFG and contain the influence of al-Shabaab. On the negative side, China provided arms even after the imposition of sanctions that eventually reached the conflict in Darfur and contributed to the mayhem. During the 1998-2000 war between Ethiopia and Eritrea, China supplied arms to both countries, again when the UN urged an arms embargo. China has not been helpful in putting pressure on Eritrea to end its support for extremist groups in Somalia. Most important from an American perspective, China’s approach to bilateral relationships has contributed to the unwillingness of governments in the region to pursue democratization, better human rights practices, and efforts to rein in corruption.