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Interests of China in Africa

Tuesday, March 15, 2011 - 13:53

The President of the People's Republic of China, Hu Jintao, during his visit to Africa in the beginning of 2004 stated that "China is the biggest developing country in the world, while Africa is a continent where most developing countries are situated. China works together with African countries in order not to miss a historic opportunity, to deepen global cooperation and to promote mutual development." Hu Jintao also said that "there are many natural and human resources in Africa, while China has technologies and experience, needless to say about the huge markets." So China is interested in Africa primarily for foreign-policy reasons and also as mutually complementary economies.
What helped China be able to provide such an abrupt increase of cooperation with African countries in the 90s? There are several reasons:
1. The increased activity of Chinese diplomacy in the continent, including economic activity;
2. The practice of frequent state visits that started in the 60s;
3. Conducting of the Forum on China-Africa Cooperation on regular basis;
4. Support of its traditional partners in the continent, as well as dramatically increased effectiveness of assistance to Africa in its various forms.
Today, China has the developed system of representative offices in African countries. Except for embassies, these offices include bureau of trade and economic advisors (trade offices that are under the Ministry of Commerce of PRC) and Chinese cultural centers that exist in virtually all countries that maintain diplomatic relations with China. The staff has an appropriate education, high qualifications and wide-ranging experience that make it easy to delve into the problems of Chinese private and public companies.
In order to strengthen China-African relations the parties have regularly exchanged state visits since the 60s. This allows establishing personal contacts between leaders, which is especially important for a number of African countries, which leaderships stay unchanged for decades (Togo, Gabon and others).
According to statistics, since the early 60s more than 30 Chinese executives with the rank of deputy prime minister and with a higher rank have carried out more than 180 visits to 47 African countries. The frequency of visits has particularly intensified since the early 90s. Four presidents of PRC, Hu (Lee Syannyan (Li Xiannian), Shankun Yang (Yang Shangkun), Jiang Zemin (Jiang Zemin), Hu (Hu Jintao), visited Africa. On their side, African heads of states also often visited China. President Sekou Toure of Guinea (Sekou Toure) was the first, who visited China in September, 1960. Since then, the Heads of states and governments of 48 African countries have paid more than 200 visits to China, 160 of them were visits of the heads of states. And if in the 70s there were 33 high-level visits, in the 80s there were 51 of them, then in the 90 there were 57 such visits.
At the dawn of the China-African relations high-level visits often had a declarative character and they showed support of China for anti-colonial struggle. In the past decade, visits became more specific, in the course of these visits PRC announced its new initiatives in support, and multimillion-dollar contracts were signed. Today, China has sufficient funds to ensure that trade and economic cooperation "keeps pace with" foreign policy cooperation.
A new mechanism for the development of China's relations with African countries is the Forum on China-Africa Cooperation (Ministerial Conference), similar, for example, to the France-Africa summit, the EU-Africa Forum, the TICAD . At first it took place in October, 2000 in Beijing.
The conference adopted the Beijing Declaration and Program of China-Africa cooperation in economic and social development, which provided the increase of assistance to African countries from China, the reduction of the debt burden of 31 African countries for $ 1.27 billion. Almost all of the obligations of the Chinese side made during the Forum were fulfilled. For a period from 2000 to 2003 were signed 245 agreements on economic assistance (44% of Chinese assistance during this period). Fund for human resource development in Africa was established, according to its program more than 7 thousand Africans were trained in China. "Centers on promotion of the investment, growth and trade" were established in 11 African countries.
In July, 2001 Zambia developed a Procedure for a mechanism to monitor implementation of decisions of the Forum on China-Africa Cooperation. This document was ratified by African countries and in April, 2002 came into operation. It provided calling of the Forum every three years alternately in China and Africa. Accordingly, the third Forum was held in 2006, in Beijing. Between the Forums with an interval of 1 year it is planned to hold two meetings at the highest level. To ensure the decisions of the Forum, in December, 2000 China created the appropriate committee, which consisted of representatives of 21 ministries. Similar committees were established in several African countries.
The second forum took place in December, 2003 in Addis Ababa. The Chinese delegation was headed by Prime Minister Wen Jiabao, and the African side involved a number of Heads of States and Ministers of Foreign Affairs and Cooperation of 44 countries of the continent and the African Union Commission’s Chairman Oumar Konare. As a result of the Forum, China and 45 African countries signed the "Action Plan of Addis Ababa", defining the main directions of cooperation, specific targets for the period from 2004 to 2006. In particular, it was planned to intensify cooperation in maintaining peace and security. China gave an undertaking to participate actively in peacekeeping operations in Africa, and also to provide financial, material and educational support to Peace and Security Council of the African Union.
Supporting the fight against terrorism, China committed itself to assist Center for Research on Terrorism created in Algeria. Africa also gained the support of the PRC for the entry into the WTO, the implementation of NEPAD , the development of continent's agriculture (a Working plan on agricultural cooperation for 2004-2006 was developed), education, health and culture.
In November 2009, in Sharm el-Sheikh during the 4th Forum on China-Africa Cooperation results of cooperation over the past decade were summed up, and further plans for the Chinese investments into the African economy were announced.
Beijing pledged to give $10 billion concessional loans, to establish a fund with authorized capital of $1 billion for lending to medium-sized and small African companies. In addition China promised to introduce a zero duty for 95% of goods from the poorest countries in Africa and to cancel the debts of the continent's most hopeless debtors. Humanitarian cooperation program involved the provision of medical equipment for $ 73 million to 30 hospitals, the building of 50 schools and the construction of 100 projects on production of clean energy from renewable sources.
In exchange for these investments Chinese companies were promised the exclusive rights of access to mineral resources and also the lucrative contracts for the construction of infrastructure in some African countries. Because of very unstable position of the dollar by the end of 2009 for China, holding a significant portion of its reserves ($ 2.85 trillion.) in American securities, investment in African economies became highly successful crisis management solution.
The threat of "hunger of raw materials" was one of the reasons for Beijing to declare a policy of "going abroad" in 1999. The results of the crisis of 2008 - 2009 showed that the global financial crisis only favored the implementation of this strategy: suffering from the global recession and great need of money, Western shareholders sold their shares in mining companies to China. Having concluded several large deals during the year (only in the oil industry, Chinese companies invested more than $ 13 billion in foreign assets), China significantly increased its reserves of raw materials, primarily of hydrocarbons and non-ferrous metals. If during the past several decades, China actively used its own mineral resources, in order to ensure a high level of production, then from now on Chinese enterprises could work using imported raw materials at the increased degree. According to the declared strategy, as a first step, Beijing needed to expand its influence in world markets of raw materials. Thus, a rich variety of resources of Africa became the primary goal for Chinese companies of raw materials.
The total oil reserves of African countries are 16.6 billion tons that make 10% of global reserves. According to this index Africa is the inferior only to the Middle East and Eurasia. At the same time new fields are opened annually. Leaders of the proven reserves of oil are Libya (5.7 billion tons), Nigeria (4.8 billion tons), Angola (1.8 billion tons), Algeria (1.5 billion tons), Sudan (0.9 billion tons). About a third of China's oil imports go to African countries. In 2006, Angola, overtaking Saudi Arabia, became the main supplier of oil to China. Gas resources of Africa are considerable. They account 14.65 trillion m3 that makes 7.9% of the world reserves. According to the proven natural gas reserves, Nigeria and Algeria (5.22 and 4.5 trillion m3, respectively) throughout the world are inferior only to Russia (43.30 trillion m3), Iran (29.61 trillion m3), Qatar (25.46 trillion m3), Turkmenistan (7.94 trillion m3), Saudi Arabia (7.57 trillion m3), UAE (6.43 trillion m3), but significantly ahead of such leading exporter of natural gas as Norway (2.91 trillion m3). It should be noted that in the energy sector China is the major partner of African countries such as Sudan, Angola, Nigeria, Equatorial Guinea and Democratic Republic of Congo (DRC).
However, it is clear that hydrocarbons are not the only African raw materials needed by China. It is also interested in ores and metals such as zinc, cobalt, copper, uranium and bauxite, which are imported from Zambia, Zimbabwe, South Africa, DRC, Gabon and Morocco. Despite the fact that China itself has significant reserves of non-ferrous metals, most Chinese fields are poor and not adapted to the artificial enrichment of ore. The gap between growth of demand for non-ferrous metals because of rapid industrial growth in China and the supply due to reduced domestic reserves can cause serious problems for the economy of the country. Wood imported from Congo is the main raw material for the Chinese furniture industry. China is the biggest buyer of Zimbabwean tobacco, the leading export item in the country. Fruits are also a major area of imports of China.
Significance of Africa in the concept of energy security of China at the moment is inferior to the Gulf countries, Russia and Kazakhstan. However, Africa plays a key role in the food security of China. Beside the fact that the country makes 22% of the world's population, China has only 7% of the total arable land of the planet. Last decade, thanks to the success of socio-economic development, residents of China started eating more and the food became better. Thus, the average Chinese person now consumes twice as much meat and a third more grain than before. The Chinese government sees the solution of this problem in renting land for growing rice abroad, mainly in Africa. Since 1995, Chinese companies have been developing agricultural infrastructure of African countries, offering a much more favorable and fair conditions than the countries of Europe or the Middle East. And by the beginning of 2011 the PRC established about 150 agricultural enterprises in rented or bought plots in Africa.



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