Economy / Sino-african summit 2006

A new type of strategic partnership between China and Africa

The Beijing Summit of the Forum on China-Africa Cooperation adopted a declaration in Beijing hosting the heads of 48 African countries on Sunday, proclaiming the establishment of a new type of strategic partnership between China and Africa.

The declaration was read out by Chinese President Hu Jintao, Ethiopian Prime Minister Meles Zenawi and Egyptian President Mohammed Hosni Mubarak following the two-day grand gathering. After the reading-out ceremony, the leaders took group photos at the Great Hall of the People.

The strategic partnership features "political equality and mutual trust, economic win-win cooperation and cultural exchanges, " said the declaration, which was adopted by leaders of China and 48 African countries attending the summit.

"We hold that the world today is undergoing complex and profound changes, and that the pursuit of peace, development and cooperation has become the trend of the times," said Chinese President Hu, reading out the declaration.

"We declare that the development of our friendly relations and cooperation are in accordance with the Five Principles of Peaceful Coexistence as well as all the international principles that promote multilateralism and democracy in international relations," Hu said.

The declaration called for enhancing South-South cooperation and North-South dialogue to promote balanced, coordinated and sustainable development of the global economy to enable all countries to share its benefits and realize common development and prosperity.

On the UN reform, the declaration said that the United Nations should strengthen its role through the reform and priority should be given to increasing the representation and full participation of African countries in the UN Security Council and other UN agencies.

The declaration also said China reaffirms its support for the African countries in their efforts to strengthen themselves through unity and independently resolve African problems, supports the African regional and sub-regional organizations in their efforts to promote economic integration, and supports the African countries in implementing the "New Partnership for Africa's Development" programs.

The declaration also urged developed nations to increase assistance to African countries.

"We urge the developed countries to increase official development assistance and honor their commitments to opening market and debt relief," said Meles, while reading out the declaration.

The declaration urged the developed nations to provide more financial and technical assistance to enhance Africa's capacity in poverty and disaster reduction and prevention and control of desertification, and help Africa realize the UN Millennium Development Goals.

It also called on the international community to encourage and support Africa's efforts to pursue peace and development.

The African countries attending the high-profile Beijing Summit also reiterated in the declaration that they are firmly committed to the one-China policy.

"They (the African countries) reiterated that they adhere to the one-China policy and support China's peaceful reunification," said a declaration.

"We hold that the adherence of China, the world's largest developing country, to peaceful development and the commitment of Africa, a continent with the largest number of developing countries, to stability, development and renaissance are in themselves significant contribution to world peace and development, " the declaration said.

To further promote the China-Africa strategic partnership, the declaration said China and African countries will take a series of measures, including enhancing high-level visits and personnel exchanges, improving international cooperation and promoting cultural exchanges.

The leaders also agreed to deepen and broaden mutually beneficial cooperation, encourage and promote two-way trade and investment and explore new modes of cooperation.

Priority should be given to cooperation in agriculture, infrastructure, industry, fishing, information technology, public health and personnel training to draw on each other's strengths for the benefit of the two peoples, according to the declaration.

The leaders also promised to properly handle issues and challenges that may arise in the course of cooperation through friendly consultation in keeping with China-Africa friendship and the long-term interests of the two sides.

"We hold that the establishment of a new type of strategic partnership is both the shared desire and independent choice of China and Africa, serves our common interests, and will help enhance solidarity, mutual support and assistance and unity of the developing countries and contribute to durable peace and harmonious development in the world," said Egyptian President Mubarak, reading out the declaration.

The exchange between the two partners is however five times higher in recent 5 years, which attained 50 millions of dollars. The number is likely to double within another 5 years. More than 800 Chinese companies already settled in Africa, investment deals are operative in 28 countries. While African goods, mostly mineral oils, ores, cotton and crops, exported to China moved up to 30 times higher in 15 years.

However, some experts fear that this bilateral relationship is not built on equitable terms. Africa's trade deficit with China has increased significantly, and many countries still lack local knowledge and expertise.

Nonetheless, China's own path of economic development could offer good lessons for Africa's development today. African countries seek policies to promote technology transfer and management training through joint ventures and bilateral trade agreements.

In addition, African governments could learn from the Latin American experience with China, in which countries such as Brazil and Chile were able to strike trade agreements giving preferential access to key sectors or products. To achieve these goals, effective diplomacy will be crucial to ensure the balance of economic and strategic interests.

China's renewed engagement with Africa, coming as it has on the heels of years of global neglect of the continent, has been welcomed enthusiastically in capitals across Africa. China has expended significant resources in foreign assistance toward African states, forgiven African debt and embarked on an unprecedented peacekeeping mission in Liberia – activities that are all bolstered by a steady stream of high-profile diplomatic and commercial missions.

While the drive to secure energy resources is at the heart of Beijing's renewed engagement with Africa, there is nonetheless a growing depth and complexity to relations that bears closer analysis. In particular, China's role in the Sudan crisis, where it has supported a military regime accused of perpetrating a humanitarian crisis has cast a new and, for many, disturbing light on Chinese activities in Africa. [The United Nations released an investigation report on 1 February 2005 on the situation in Darfur.]

The need on the part of Africans to understand China and its motives for engagement with the continent is now greater than ever before.

China's phenomenal transformation beginning in the late 1970s from an impoverished country periodically seized by ideological campaigns that served only to further cripple development, to a strong, self-confident emerging super-power, owes much to its reformist leader, Deng Xiaoping. Deng's admonishments, listed below, were crucial signposts in supporting the shift away from ideology to pragmatism that was to lay the foundation for the tremendous revolutionary effects of market-driven development. They offer Africa some salutary guidelines for structuring its own maturing relationship with China.

The emphasis on resource extraction as the core of China's economic concerns, and the accompanying needs of Chinese industry, should be recognised as an opportunity for accountable African governments to arrange for favourable terms on a range of issues.

Experts suggest that tt should be standard practice for African states to insist, as they do with arms procurements, that foreign investors put together a package of 'tie-in' projects that meet local development goals. These might include training programmes, for instance, in addition to the financial requirements of investment in the energy sector. Cases such as Angola's request to China for a $2 billion loan (which Luanda was reluctant to seek from the International Monetary Fund), which formed a part of China's successful 'dark horse' bid for a share in Angola's oil, serve as an example of Beijing's willingness to overlook poor fiscal management in its pursuit of African resources. Chinese investment, especially in moribund sectors of African economies such as agro-processing in Namibia or cotton production in Zambia, should continue to be welcomed, especially against the backdrop of Western neglect.

The main objective of this summit has been to establish a new type of partnership between China and African countries against changing circumstances.

The gathering in Beijing, from Nov. 3 to 5 came as many African leaders seek help to repair their strife-torn countries and China looks for new resources to meet its growing energy needs, as well as new markets for its own emerging domestic companies. It caps growing ties between the two regions over the past several years that have sparked some ire in the West.

Mr. Zhai defended China's human-rights record in Africa and said China isn't interested merely in striking sweetheart deals to tap into Africa's deep oil reserves. Rather, he said, China is eager to raise living standards in the world's poorest continent, and feels it can share lessons and opportunities from its own development.

"Africa is rich in resources and has a big market. We are pursuing our relations by seeking mutual benefits, in an open and transparent manner. China has nothing to hide," Mr. Zhai said.

Last year, China imported 38.4 million tons of oil from Africa, or about 771,000 barrels a day. Mr. Zhai pointed out that is less than one-third of the amount some big Western nations receive from Africa. The U.S., for example, imports about 2.4 million barrels a day from Africa, more than it gets from the Middle East.

Western oil companies fear their Chinese competitors are able to use government backing for aid deals and loans to secure preferential treatment. China says that in terms of business, its deals are purely commercial and transparent. So far, China's companies have a much smaller presence than other international players, but they are looking to expand to feed China's fast-growing needs for fuel.

Mr. Zhai said there would be further cooperation on energy. "For many African countries, energy is a pillar industry. Many nations want to transform their oil into a strength through our cooperation. We are helping them meet such a goal," Mr. Zhai said.

To encourage more imports from Africa, an expansion of the number of African goods that would be subject to zero-percent tariffs in China is likely to be included in the pacts. Currently, some 190 goods, from 28 African countries, are exempt from tariffs. There will also be pledges for more aid, including training in everything from medicine to agriculture, and investment in Africa. Mr. Zhai said the government is actively encouraging Chinese companies to expand their business in Africa.

While he didn't disclose how much in loans African countries owe China, he said China would announce another round of debt cancellation. He said China's loans were a small proportion of the $284 billion in debt Africa owes globally. China has already forgiven some $10 billion of debt in yuan-denominated loans, mostly from infrastructure projects, he said.

Last year, the Paris Club of big Western lenders forgave roughly $50 billion of African debt. Some critics are worried that China is giving fresh loans to regimes that still don't have the ability to spend the money responsibly or fight corruption, and that such waste will only send those nations back into a cycle of carrying loans they can't pay off. Increasingly, Western nations are seeking to tie aid with specific guarantees from governments on fiscal and social policy -- a policy China rejects.

"We don't want the development models, ideologies and values of other countries foisted on our country," Mr. Zhai said. "Likewise we don't impose our development mode, ideology and values on other countries -- not least on African countries. So, it has been the consistent position of the Chinese government when conducting aid with African countries that we do not attach conditions."

The summit marks 50 years since China first established diplomatic ties with Egypt, the first African nation to reject the island of Taiwan's claim as the sovereign over mainland China, then a deeply ideological, but poor, Communist state. China aggressively wooed African states with help and aid to convince them to switch sides.

Now, only five African countries, including Swaziland and Malawi, recognize Taiwan. Meanwhile, China has emerged as one of the biggest economies in the world with its own brand of capitalist authoritarianism that has transformed the relationship with Africa from a largely political one into a mostly commercial one.

Beijing will pull out all the stops to impress the delegations with its rapid economic growth, arranging trips to the Great Wall, and showing off the signs of its modern wealth, such as the commercial capital Shanghai. It will coordinate some 1,500 delegates and another 1,030 journalists from Africa, China and elsewhere. "Perhaps they will bring some lessons home when they have seen the changes that have taken place in China," Mr. Zhai said.

This comes as some in the U.S. and elsewhere are casting an increasingly wary eye at China's growing involvement in Africa, most recently in Sudan, where China has large oil interests. Mr. Zhai rejected allegations that China isn't doing enough to stem the violence in Darfur. "I believe the Darfur issue and China's economic and energy cooperation and trade are two separate issues. It is not the case that because of the good relationship and cooperation with the Sudanese government that we're turning a blind eye to the situation in Darfur."

He criticized U.S. policy. "The United States has unilateral sanctions -- has it been useful?" he asked.

Yet beyond the celebrations there is growing unease on both sides about the social, political and economic tensions that the integration has generated.

Outwardly, China's "Year of Africa" has been a striking success. Since January, President Hu Jintao, Prime Minister Wen Jiabao and Foreign Minister Li Zhaoxing have all traveled to Africa, visiting a total of 15 countries. Skyrocketing trade and foreign direct investment have made China a major player in Africa's economic development.

African leaders now regularly cite China as the ideal development model for their countries. Two-way trade has quadrupled in the last five years to $40 billion in 2005, making China Africa's third largest trading partner after the European Union and the United States.

While China's voracious demand for commodities has driven investment priorities, it is diversifying into apparel, food processing, telecommunications and construction. At $1.2 billion, Chinese foreign direct investment in Africa is small compared to the $29 billion total recorded last year, but if the influx of Chinese firms is any guide - a ten-fold increase since 2003 - future capital inflows likely will multiply.

Politically, China's "hands-off politics" approach was initially a welcome change for many African leaders who bristled over the conditions imposed by the United States, Europe and multilateral institutions.

Yet it has also become evident that China's approach to Africa comes at a steep price. The situation in Sudan is the most pernicious example of the consequences of not mixing business and politics. By refusing to press Khartoum to accept the Security Council mandate for a UN peacekeeping force in Darfur, Beijing has effectively condoned atrocities. In Zimbabwe, Beijing's economic largesse is helping keep Robert Mugabe's repressive regime in power.

On another front, Beijing's unwillingness to press its state- owned firms on good governance and social responsibility is producing a backlash in several African countries. Last month, Gabon ordered the Chinese energy firm, Sinopec, to halt exploration in Loango national park after a U.S. conservation group accused it of desecrating the forest and operating without an environmental-impact study.

Anecdotal evidence also suggests simmering grass-roots resentment of the growing Chinese presence. Legal and illegal Chinese immigrants are moving to Africa by the hundreds of thousands to work in extractive industries, construction and manufacturing, prompting charges that Chinese investors are taking rather than creating jobs.

Ultimately, African leaders have to decide whether Beijing's "strictly business" strategy is compatible with the principles of transparency and good governance set out in their New Partnership for Africa's Development (NEPAD). Every day brings new evidence that getting China to sign on to these principles will be critical for the continent's long term development and stability.

As a first step, China and its energy and mining firms should be encouraged to sign on to the Extractive Industries Transparency Initiative, which requires companies and host governments to publicly disclose transactions. Chinese firms can also prove their commitment to transparency, the environment and safe and equitable working conditions by submitting open bids for projects funded by multilateral institutions.

Finally, World Bank President Paul Wolfowitz has said the bank wants to work directly with China in its development projects in Africa. The United States and Europe should follow suit by inviting China to participate in initiatives for sustainable development and eradicating poverty in Africa.

On his visit to Africa last summer, Wen said, "We encourage African countries to improve democracy and the rule of law, social justice and equality." He went on to say that China had "full confidence" that the Africans could "properly handle their own affairs."

Yet with hundreds of thousands of Chinese living and working across Africa and with China rapidly becoming the largest trading partner and investor on the continent, Beijing must realize that it cannot merely voice support but must work actively to help realize Africa's aspirations. Africa's "own affairs" have become China's as well.