Chinese Premier Wen Jiabao’s visit to a selection of African countries next week highlights the growing importance of resource-rich Africa to the world’s most voracious consumer of any commodity that can fuel industrialisation. His June 17 to 24 visit will take in Egypt, Ghana, the Democratic Republic of Congo, Angola, South Africa, Tanzania and Uganda.
According to a report by the Chinese state news agency Xinhua the country’s trade volume with Africa totaled $39,7-billion last year, and its direct investment in Africa reached $1,18-billion. China has about 900 assistance projects in Africa.
Deputy Foreign Minister Aziz Pahad and Deputy Finance Minister Jabu Moleketi spent the first week of June in China to prepare for the Chinese premier’s visit. Pahad told Business Day he backs stronger ties with China, particularly the role China could take in the beneficiation of mineral resources.
An opinion piece on Wen’s visit in the Kenyan newspaper The Nation voiced some concerns about China’s effort to woo Africa: “The danger is that China will politely rip off Africa, just as the West did, brutally. More-over, African nations might one day discover that piecemeal deals with China result in conflict among themselves, or worse, that their countries are irreversibly locked in China’s global orbit.”
Chinese Assistant Foreign Minister He Yafei called a press conference to respond to these criticisms. Xinhua reported: “Some people think that energy, the import of oil, is China’s sole purpose in developing economic ties with Africa. This view is erroneous and one-sided,” he said.
China and Africa have very comprehensive economic and trade ties. “We’ve even taken some political measures to help the African nations, including subsidies for imports to balance bilateral trade,” he said. “It fully reflects China’s sincerity.”
Wen’s African tour comes hot on the heels of Chinese President Hu Jintao’s visits to Morocco, Nigeria and Kenya in April on his way back from a meeting with President George W Bush in Washington. At the time, United States magazine Foreign Policy (www.foreignpolicy.com) ran an article arguing that China was undermining the West’s efforts to demand more transparency, human rights and economic openness from African countries.
The article included a grip’-n-grin photo with the caption: “Let’s make a deal: After the West slapped sanctions on Zimbabwe’s President Robert Mugabe for human rights abuses, he was feted by Chinese Premier Wen Jiabao. This week, the two countries announced a deal in which Zimbabwe will receive financial aid in exchange for chrome.”
Foreign Policy said: “The Chinese government builds its influence in Africa by using its state-owned companies to underbid competitors — including Western companies — for government projects. It is a practice the Organisation for Economic Cooperation and Development’s member states have agreed to avoid, because of the unfair competition that results when government aid mixes with private investment.
“That is not a concern for Beijing. Because China’s objective is to make allies rather than quick profits, it is willing to bid low. Chinese-owned companies keep costs low by relying on cheap labor, including prisoners who reportedly receive a reduced sentence for their toil.”
Similar accusations of unfair competition have been raised in at least two local construction projects awarded to Chinese firms. China National Overseas Engineering Corporation (Covec) was awarded a R425-million portion of the Vaal River Eastern Sub-system Augmentation Project (Vresap). Covec, with black-economic-empowerment partner Mathe Construction, pitched itself more than 25% lower than local competitors.
Before the Vresap contract, the local construction industry made a representation to the Department of Trade and Industry when Mittal awarded a large contract at its Newcastle steel mill to Chinese industrial consortium Citic Acre.
The government finds itself caught between gripes from various industries of unfair competition from China and Beijing’s efforts to woo them.
“We need to clarify the nature of our relationship,” Minister of Trade and Industry Mandisi Mpahlwa told Xinhua. “For the first time, there are centres of power that understand our development challenges.”