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The Chinese Penetration in the African Continent: the Issue of Land-Grabbing

by Lucrezia Conti 

China has a population of more than 1,3 billion[1] and a density of 146 people per square kilometer[2]; it owns only 8% of global farmland, 6% of annual water reserves[3] and it is highly dependent on energy imports both of oil and natural gas. The urgency of finding solutions to agricultural and energy security is evident and it has been worsened by the 2008 financial crisis, with a suddenly increase of prices and domestic demand for agricultural commodities. These reasons have pushed China to search for new lands and opportunities in foreign resource-rich countries and Africa has been identified as the most profitable and convenient one. By the way, this relationship is not as recent as one may believe, in fact Sino-African relations can be first dated in the 1950s-1960s. This first Chinese approach was put in practice for political purposes, in order to find allies in Third World’s countries and to come out from its political isolation, supporting African national liberation movements and the emerging socialist governments.[4] In the 1970s economic agreements were stipulated and after a consecutive slowdown, in October 2000 China and Africa launched the first Forum for China-Africa Cooperation, carried out in Beijing.[5] The aim of this forum was to define common political objectives, development purposes and to strengthen trade relations and investments.[6]In this perspective, China eliminated 31 African countries’ debts, for a total amount of $1,3 billion and abolished import taxes of 190 items.[7] Thanks to these actions, China has become the second world commercial partner of African countries, increasing its commercial exchanges from $20 billion in 2003 up to more than $200 billion in 2014, with an annual growth rate of 16%.[8] The achievement of these results is also linked to a particular way through which China conducts its foreign investments policy: the so-called “Beijing consensus”, in contrast with the Western countries “Washington consensus”. The Beijing consensus is essentially based on a policy of non-interference in African countries internal affairs and on the promotion of the sovereign integrity of these states, while the Washington one, is based on the priorities of the World Bank and International Monetary Fund, and it imposes restrictions in terms of public spending, commitment on transparency and macro-economic policy making.[9] Moreover, China offers long-term investments that are really flexible and accommodating to African countries requests, without provisions and conditions. The only restriction imposed by China is the non-recognition of Taiwan.[10] It is easy to understand why African states prefer to marry the Chinese alternative.

Having a precise evaluation of Chinese investments in African lands is generally difficult. The Chinese government does not publish data of sector-based investments, it uses different terminology to classify them and the few published are not completely reliable. Furthermore, there are contradictions between investment flows and the amount of goods and services that contribute to the formation of capital stock[11], causing a lack of transparency that may create doubts on the way through which this policy is implemented and, consequently, on its honesty. These investments are commonly implemented as Foreign Direct Investments (FDIs), or Overseas Direct Investments (ODIs) according to the Chinese statistic denomination, and just in the African continent, over the period 1998-2012, they include about 2000 Chinese firms investing in 49 countries.[12] An important role in this field is covered by the China Development Bank[13] with its China-Africa Development Fund (CAD Fund) and the Export-Import Bank of China[14]. They promote trade and development projects, and support firms and contractors in Africa, through incentives such as tax breaks, credit, low-interest loans and customs preferences. Simultaneously, the Chinese government puts in practice a strong diplomatic effort, for example with periodic diplomatic official visits, in order to guarantee successful outcomes. Referring to the lacking available information, there are two main sectors that seem to receive priority: the energy sector and the infrastructure one. Conforming to an American analysis, the energy field, in particular oil extraction, has been the main beneficiary of investments, with more than 90% of total flows coming from state firms, with the objective of creating joint ventures with African energy companies and multinational corporations.[15] These investment flows are focused on a small number of companies and resource-rich countries such as Angola and Sudan, where at the same time the presence of USA and the European Union is completely absent.[16] On the other hand, the infrastructure sector represents another important field of investments, which shift from $500 million in 2001 up to $14 billion in 2011, used mostly to build powers plants, road networks, health facilities, potentially people-living towns and telecommunication services.[17] Infrastructures are crucial and important investment for China, because they permit to introduce Chinese companies and workers on African soil and to obtain those natural resources able to satisfy Chinese national food and energy requirements. However, China investments are addressed to a great number of “intention of investments”, as Land Matrix calls them; and in fact, according to its database, China invests also in agriculture, industry and tourism.[18]

Despite the Chinese penetration seems to be received by African countries in a favorable and convenient perspective, at the international level it has produced, particularly in US and Europe, a large debate regarding the way of its implementation and the possible consequences for the African continent. It is possible to detect three different interpretations of this Sino-African framework. The first interpretation describes China as a great partner for African countries, it sees Chinese investments as long-term ones and believes in its commitment.[19] Thanks to China, African markets are stimulated and, at the same time, African countries are helped in searching new ways of developing, using also Chinese infrastructures and technologies.[20] This interpretation presents the issue as a win-win situation, where both Africa and China can obtain benefits from their cooperation. The second one instead, believes that investments are only short-term ones and that the Chinese mere objective is to exploit, as fast as it can, African natural and energy resources. The situation in this case, presents a predominant role of China, which could be able to overpower both Western countries and the emerging African ones.[21] The third and last interpretation is the most pessimistic. In fact, it describes the Chinese presence in Africa as a new form of colonization, focused on the gradual control of the African political elites and on the introduction of a new development system going to the detriment of that proposed by Western countries.[22] This assertion appears controversial. On one hand, if we look at the Chinese Constitution, we find that it takes position against colonialism, seen as a threat to stability, but on the other hand, its asymmetrical relations with Africa, its lack of transparency, its investment target and its promotion of emigration policies, gives appeal to this perception.[23] From the social point of view, fears are linked to the possible destabilization of these countries, as said in the previous paragraph. If it is true that the Chinese government looks like the most appropriate to deal with African ones,  because of their usually equivalences in terms of political system, the unlimited availability of China to finance anyone who recognizes the “One-China policy”, could create internal struggles for power, further damaging the already unstable political contexts.

 

 

References:

[1] Source Indexmundi, online: http://www.indexmundi.com/china/population.html.

[2] Source World Bank, online: http://data.worldbank.org/indicator/EN.POP.DNST.

[3] P. Kersting, op.ult.cit.

[4] A. Gallia, “Ruolo della Cina in Africa, tra interessi economico-politici, sfruttamento delle risorse naturali e conflitti sociali”, Conferenza di Studi Africanistici, 30 Settembre-2 Ottobre 2010, Napoli.

[5] Ibidem.

[6] A. Richiello, “Perché alla Cina interessa l’Africa”, Rivista Limes Online, 27 Febbraio 2015, online: www.limesonline.com/perche-alla-cina-interessa-lafrica-1/76224.

[7] A. Gallia, op-ult.cit.

[8] A. Richiello, op.ult.cit.

[9] A. Gallia, op.ult.cit.

[10] Ibidem.

[11] A. Richiello, op.utl.cit.

[12] D. Dollar, H. Tang, W. Chen, “China’s direct investment in Africa: Reality versus myth”, Brookings, 3 September 2015, online: https://www.brookings.edu/blog/africa-in-focus/2015/09/03/chinas-direct-investment-in-africa-reality-versus-myth/.

[13] More information on China Development Bank website, online: http://english.eximbank.gov.cn/en/.

[14] More information on Export-Import Bank of China website, online: http://english.eximbank.gov.cn/en/.

[15] A. Richiello, op.ult.cit.

[16] D. Cellamare and N. Baheli, “La penetrazione cinese in Africa”, Istituto di Studi Politici “San Pio V”, Roma.

[17] A. Richiello, op.ult.cit.

[18] Source Land Matrix, online: www.landmatrix.org/en/get-the-detail/by-investor-country/.

[19] A. Gallia, op.ult.cit.

[20] D. Cellamare and N. Bahel, op.ult.cit.

[21] A. Gallia, op.ult.cit.

[22] Ibidem.

[23] Ibidem.