Is China’s relationship with Africa in the oil-industry favourable?

9 Mar

In 2009 China surpassed the United States as Africa’s largest trading partner and in 2012 Sino-African trade was valued at $200 billion. There are over 2000 Chinese companies working in Africa of varying professions but, as to fuel its continuing economic growth, the oil industry is in particular very big. 80% of China’s imports from Africa are in the form of mineral products and 20% of its exports there are of machinery. However, it would be difficult to say, economically, that Sino-African trade was purely advantageous to the Chinese. Africa has had a GDP augmentation annually of 5.5% which is now slowing as China’s economy begins to plateau (Chen & Myers, 2013). The question is whether this collaboration is overall beneficial.

Reasons for China’s interest in African oil could be many but are mainly focused around oil fulfilling China’s transportation and industry needs, with its oil consumption being second only to the US (Alessi & Hanson, 2012). The future disquietudes concerning the need for oil as an energy resource in China are many. Taylor (2010) says that political analysts in China feel that the country is vulnerable until and unless it can find and secure a range of oil sources and that there are worries that if there is a fuel shortage in years to come, that the US’ energy requirements will eclipse its own. And yet, Brautigam (2011: 279) references a Nigerian diplomat who quotes: “The Chinese are trying to get involved in every sector of our economy. If you look at the West, it’s oil, oil, oil and nothing else” and Alessi et al (2012: 4) mention a quote from the deputy assistant for East Asia and Africa at a 2008 July Congressional testimony that Chinese firms are more interested in competition with each other than securing oil. From this viewpoint, China seems less to be interpreted as an exploiter of the Third World’s resources, and more as an example of encouraging mutualistic trade in developing countries.

A point of contention in Sino-African trade could be how China secures each oil deposit. With regards to this, China is documented to offer many integrated aid packages and credit lines as sweeteners for the deal agreement. However the question of whether this is unscrupulous must be considered. Firstly, in relation to what was stated by the Nigerian diplomat, the Chinese overall are taking interest in many sectors of the African economy and improving it. Not only in poor yet oil-rich countries but also in more developed, financially stable countries such as South Africa and Mauritius. Additionally, when dealing with poorer countries, it not always concerns the payback value of oil as Brautigam (2012: 279) tells of the project self-reimbursement of a cement telephone pole factory set up in Kenya and subsidised by the Chinese. In countries where oil is the means of payment, the Chinese have been known to give large sums to finance infrastructure, which included schools and hospitals (Alessi et al, 2012). Therefore the oil industry could be seen as favourable and can affect the general population. And yet, Hanson (2008) would contrast that in Angola many railway projects have halted or encountered serious problems and the Tazara line, completed in 1975 and quoted as a means of Beijing to “hold its own with Washington and Moscow in an era when Cold War competition over Africa raged fierce” is described as unreliable and is racking up $700 million in maintenance debts for Zambia and Tanzania when it’s construction cost the Chinese $500 million (French, 2010).

Following for this is the next argument that due to China’s “non-interference” policy with the African countries it trades makes the oil industry unfavourable. This is as it was documented that much of the revenue for oil wasn’t invested in the local population and that, as Taylor (2010: 48) quotes: “About 80 percent of Nigeria’s oil and gas revenues accrue to just 1 percent of the country’s population”. He continues to show that in Sudan and Nigeria, China has provided armament to use against rebels. In Sudan Chinese weapons were seen in Darfur which killed civilians and in Nigeria arms are used since the Movement for the Emancipation of the Niger Delta (MEND) rebels kidnapped and killed Chinese workers as a violent protest against the fact that so little oil profit reached the general population. It can be stated that these examples are not directly linked to the Chinese and that, for example, they did not provide arms directly to Darfur, instead to Khartoum, but some responsibility seems due and to ensure that the oil industry is more favourable, it seems that the Chinese must rewrite their non-interference policy. It could also be mentioned in line with corruption scandals, that China’s ‘overbidding’ for oil, which could technically be undervaluing Africa’s resources’ possible profit, is similar to Western tactics used in the past. However, to show globally its respectability China should surely not follow suit. It could be mentioned however that China played a key role as negotiator of a peace agreement in the Sudan/ South Sudan split but yet this could also be attributed to the desire to maintain amicability with South Sudan after supporting Khartoum troops, since South Sudan has many of the oil resources.

The favourability of the Sino-African oil industry trade is also undermined by reports of human right violations. These include the Chinese firms not hiring African workers and those that do of not giving those just labour laws and in some cases opening fire on protesting workers (Alessi et al, 2012: 6). And yet, these problems cannot be traced back to Beijing and in some ways are solely the corruptions of individual, private firms.

Finally it can be concluded that in comparison to some Western interest, the Chinese oil industry in Africa is more financially beneficial as it concentrates on the development of business to pay back investment loans. French (2010) quotes: “It has focused on trade and commercially justified investment, rather than aid grants and heavily subsidized loans.” It is evident through the Nigeria and Sudan problems that the non-interference policy should be revised and that perhaps the Chinese firms should be influenced to become more involved and active in the destination of their payments for oil, so that it touches more sufficiently upon local communities. In this way, instead of receiving criticism, the Sino-African trade could set more of an example. If China’s interest in oil was a springboard for African development, surely in this way, it could be received as beneficial. In years to come, as China switches fuels to more renewable sources, this relationship might be also less environmentally-damaging.

Word count: 1,106

Chen, X, Myers, G. (2013) China and Africa: The Crucial Urban Connection. The European Financial Review. [Online] [date accessed: 08/03/14]. Available from: http://www.europeanfinancialreview.com/?p=7605

French, H. W. (2010) The Next Empire. The Atlantic. [Online] [date accessed: 08/03/14]. Available from: http://www.theatlantic.com/magazine/archive/2010/05/the-next-empire/308018/

Alessi, C., Hanson, S. (2012) Expanding China-Africa Oil Ties. Council on Foreign Relations. [Online] [date accessed: 08/03/14] Available from: http://relooney.fatcow.com/0_New_14317.pdf

Hanson, S. (2008) China, Africa, and Oil. Council on Foreign Relations. [Online] [date accessed: 08/03/14] Available from: http://www.relooney.info/SI_Oil-Politics/Africa-China_52.pdf

Brautigam, D. (2011) The Dragon’s Gift: the real story of China in Africa. Oxford: Oxford University Press

Taylor, I. (2010) China’s New Role in Africa. Boulder: Lynne Rienner Publishers Inc.

Advertisements

Leave a Reply

Fill in your details below or click an icon to log in:

WordPress.com Logo

You are commenting using your WordPress.com account. Log Out / Change )

Twitter picture

You are commenting using your Twitter account. Log Out / Change )

Facebook photo

You are commenting using your Facebook account. Log Out / Change )

Google+ photo

You are commenting using your Google+ account. Log Out / Change )

Connecting to %s

%d bloggers like this: