China’s African Odyssey

Posted by Reading Time: 7 minutes

By Andy Scott

Part One: The Oilmen Cometh

I couldn’t help asking him once what he meant by coming there at all. “To make money, of course. What do you think?” he said, scornfully. Joseph Conrad, Heart of Darkness.

Foreign governments have been attracted to Africa for more than two centuries, greedily pursuing the continents’ timber, minerals and oil, more often than not at the cost of the people living there. Today it’s China that is most interested in Africa’s natural resources, leading critics to accuse the rising economic powerhouse of neo-colonialism.

Much has been said lately about China’s courtship of Africa. From Sudan and Darfur to the China-Africa Cooperation Forum, the growing Chinese presence in Africa illustrates Beijing’s desire to increase their global influence and create, as The Jamestown Foundation says, “a paradigm of globalization that favors China.” China has long portrayed itself as the leader of the third world, and as the country’s influence increases with its gross domestic product figures, Beijing has sought to cultivate its relationships with African nations, hoping to position itself better in the multi-polar, post-cold war world.

In this three part series, we will look at China’s emerging relationship with Africa – from oil and aid to soft diplomacy and African investment on the mainland. Part one looks at China’s chief import from the continent, oil.

“Got fuel to burn, got roads to drive”

The demand for resources to feed its massive economic engine has sent China to Africa in search of cheap oil, cheap minerals, cheap anything. Crude oil imports have increased about 13 percent annually since 1994. In 2006, imports accounted for 47 percent of Chinese oil consumption according to a Center for Strategic & International Studies report. At current rates of growth in oil consumption, China will need to import about two-thirds of its total requirement by 2015.

With the Middle East in turmoil and instability following the September 11 terrorist attacks in the United States, China has turned to Africa to secure its oil needs. The country’s voracious demand has led it to seek oil from African countries including Sudan, Chad, Nigeria, Angola, Algeria, Gabon, Equatorial Guinea, and the Republic of the Congo. According to a report from the Council on Foreign Relations, Chinese companies have invested a total of US$175 million in African countries, primarily on oil exploration projects and infrastructure. In return, China often receives exclusive rights to valuable natural resources within Africa.

To fully understand just how important Africa has become, one needs to take a look at the countries involved in the budding Africa-China relationship – most of them are the continent’s major oil producers.

Sudan regularly captures the headlines these days, and usually not for good reasons. The Christian Science Monitor’s Danna Harman recently reported from Juba, South Sudan, that observers say it is only matter of time before the fragile calm there blows up, reigniting the 21-year civil war that left 1.5 million dead. Harman writes:

Meanwhile, the Darfur crisis that has killed more than 200,000 and displaced more than 2.5 million in western Sudan continues to rage unabated, helping Sudan earn the top spot on Foreign Policy magazine’s “Failed State Index” for the second year in a row.

The Chinese are as much to blame for this situation as anyone, say critics, and not so much because of their economic policies but because of political ones.

Darfur has become a headache for China’s foreign policy, a stumbling block for the theory of noninterference in the internal affairs of other nations. With so much at stake – international clout, the Olympics, oil – China has stepped in to try to both cool the calls for an international referendum on Darfur, and use its influence in Khartoum to pressure the Sudanese to acquiesce to some of the United Nation’s demands. President Bashir conceding to the deployment of 3,500 U.N. peacekeepers in Darfur in April is but one example of what Beijing calls China’s “subtle diplomacy.”

On July 19, President Hu Jintao called on the international community to “seize the favorable opportunity” to solve the Darfur issue at a meeting between the president and Sudanese First Vice-President Salva Kiir Mayardit in Beijing.

“China will continue to play a constructive role,” China Daily reported him saying.

The reason that China is so interested in Sudan is the average 344,700 barrels of oil that Sudan exports daily according to the CIA World Factbook, a majority of it – over 64 percent – sold to China.

A member of OPEC, Nigeria is Africa’s largest oil producer, generating 2.5 million barrels per day. Oil revenues account for nearly 80 percent of the county’s revenues, and the government is planning to expand oil reserves from the current 35.2 billion barrels to 40 billion barrels by 2010. Despite its resource wealth, the majority of Nigerians – 70 percent – live in poverty.

This poverty has lead to a whole rash of attacks by various rebel groups on government facilities, and increasingly on the western – and now Chinese – run oil facilities. In January, five Chinese workers from the Sichuan Telecommunication Company were held hostage for 13 days in the oil-rich region of River State, where militant groups have attacked oil facilities and kidnapped oil workers in the past. While western oil workers have been taken hostage at least 10 times since the beginning of 2006. This was the first time Chinese workers were kidnapped.

Having just emerged from a 27-year civil war in 2002, Angola is a country rebuilding. It is also the second-largest oil producer in sub-Saharan Africa after Nigeria. Its oil production is expected to reach 2 million barrels per day by 2008. The nation also has major offshore gas reserves. It is these resources that has attracted over US$20 billion in foreign direct investment since 2003 according to the Council on Foreign Relations’ report. The oil sector accounts of 40 percent of Angola’s gross domestic product (GDP) and nearly 90 percent of the government’s revenue derives from the sector.

According to the World Bank, Angola accounts for nearly half of China’s oil imports from Africa. Beijing has invested heavily in the African nation because the country is generally politically stable and its oil production has surged in recent years. Chinese workers can be found all across Angola, rebuilding roads, railways and technical institutes. The work is financed by a US$2 billion oil-backed loan from China’s Export and Import bank (Eximbank) that is to run until 2016.

Despite its oil wealth, Angola – like Nigeria – is a country where 70 percent of the population lives in poverty, and the nation ranks among the bottom 10 countries on the United Nations development scale.

Equatorial Guinea
The tiny country of Equatorial Guinea, located in Central Africa and one of the smallest on the African continent has seen rapid economic growth in the past decade thanks to the discovery of offshore oil reserves in 1996. The nation has become sub-Saharan Africa’s third largest oil exporter, resulting in a massive increase in government coffers. Despite this increase in revenue, there have been few improvements in the population’s living standards in a country where the life expectancy is below 50 years.

Equatorial Guinea produces an estimated 420,000 barrels of oil per day, which accounts for nearly 90 percent of the county’s exports. In 2006, the China National Offshore Oil Company (CNOOC) signed a production-sharing contract for an offshore block in Equatorial Guinea, part of the state-owned company’s overall strategy of boosting output of oil and gas more than fourfold by 2010 as part of its effort to enhance China’s energy security.

Having gained independence from France in 1960, Gabon has grown to become one of the more prosperous and stable nations in Africa, thanks in part to a small population, abundant resources and considerable foreign support. Current president Omar Bongo Ondimba – one of the longest-serving heads of state in the world – has dominated the country’s political landscape for almost 40 years while Gabon’s political opposition remains weak, divided and financially dependent on the current government. Gabon enjoys a per capita income four times that of most of sub-Saharan African nations, yet due to high income inequality, a large proportion of the population remains poor. When oil was discovered in the early 1970s, the country was able to move away from its dependence on timber and manganese. Today, the oil sector accounts for 50 percent of Gabon’s GDP, producing about 230,000 barrels per day – down 37 percent from its 1997 high.

Sinopec had been prospecting for oil in the Loango national park in southern Gabon, but was told to halt operations after an uproar late last year over the company’s practices lead the national parks council in Gabon order all workers out of Loango. Sinopec was accused of dynamiting and polluting the national park, known as “Africa’s last paradise,” tearing up the forest to create roads and generally destroying the habitat on which Loango’s plants and animals survive.

The Gabonese government granted China sole rights to the Belinga iron deposits in northern Gabon. A Chinese consortium headed by the China National Machinery and Equipment and Export Corporation (CEMEC) has already began construction on a planned 560 km long railway, a port for the transportation of the ore, a hydroelectric plant and the iron mining factory, using an initial US$3 billion in funds released by the Chinese government in an agreement signed last September in Libreville by Gabonese Prime Minister Jean Eyeghe Ndong and a representative from the Chinese Communist party, Wu Guangzheng.

The Republic of Congo, often called Congo-Braazaville, was once one of Africa’s largest petroleum producers but with declining production – currently an average of 235,000 barrels a day – it will need to hope for new offshore oil finds to sustain its oil earnings over the long term. Especially since the oil industry accounted for almost 80 percent of the country’s revenues, and nearly 90 percent of its total exports.

China receives half of the country’s oil production, it also imports Congo’s other big natural resource – timber. According to statistics from Chinese customs, trade between China and Congo reached US$2.42 billion in 2005 up from US$342 million in 2000.

The relationship

While trade between China and Africa grew by 700 percent during the 1990s, the 2000 China-Africa forum in Beijing – China’s economic play for African resources – really set off a new era of trade cooperation. From 2002 to 2003, trade between the China and Africa doubled to US$18.5 billion, by 2006 it had hit a record high of US$55.5 billion.

A recent World Bank study says increased exports to China and higher commodity prices have led to increased income for African countries, especially those exporting raw materials. China however, continues to be seen, especially in the west, as doing too little for Africa’s long-term needs.

As Peter Navarro, a business professor at the University of California-Irvine told National Public Radio, “China goes in, builds the infrastructure, uses that country’s infrastructure to extract their resources, takes those resources back to China, builds finished goods, then ships them back into that country to sell.” This creates what Navarro calls a closed imperialistic loop. “The bottom line is poverty instead of prosperity in countries that have incredible natural wealth.”

China has long insisted that it makes its deals with sovereign foreign nations, which is completely different from the actions of western imperialist powers of the 19th century. Serge Mombouli, the current Congolese Ambassador to the United States, echoed that sentiment in a recent interview with NPR.

“They are business people. They are not charity organization. They are coming for business. And any contract that the Chinese sign with African country, those are contracts that are negotiated.”