assessing the chinese influence in ghana, angola, and zimbabwe
TRANSCRIPT
Assessing the Chinese Influence in Ghana, Angola, and Zimbabwe: The Impact of Politics, Partners, and Petro
Reagan Thompson May 21, 2012
Stanford University Center for International Security and Cooperation (CISAC)
Dr. Thomas Fingar
Table of Contents
Abstract
Acknowledgements
List of Figures
Chapter I: Introduction
Overview of the Chinese Influence in Africa……………………………………………1
Chapter II: Literature Review…………………………………………………………..8
Chapter III: The Chinese Influence in Ghana
“Talk Does Not Cook Rice”………………………………………………………….….34
Chapter IV: The Chinese Influence in Angola
A Thirst for Oil……...…………………………………………………………………...62
Chapter V: The Chinese Influence in Zimbabwe
Diamonds are Mugabe’s Best Friend…………………………………………………….98
Chapter VI: Conclusion and Policy Recommendations…………………………….…127
Assessing the Chinese Influence in Ghana, Angola, and Zimbabwe: The Impact of Politics, Partners, and Petro
There has been a dramatic increase in Chinese economic activity in Africa since 2000.
By examining Ghana, Angola, and Zimbabwe, this paper explains how Chinese economic
activity has impacted these countries using a politics, partners, and petro argument. Models by
Kastner and Brautigam and data from the World Bank and the Millennium Challenge
Corporation provide a framework for analysis.
Trade has characterized China’s relationship with Ghana. Accra has many partners and
receives much Western aid. Ghana’s strong democracy has ensured that Chinese aid benefits
the general population. Chinese economic activity in the petro-state of Angola is very similar
to Western aid and investment—both are guilty of perpetuating poor politics. However,
Beijing is now the largest importer of Angolan oil and has strictly dictated how its aid can be
used. China is interested in Zimbabwe for its raw materials and is one of Mugabe’s few
friends today. President Mugabe’s dictatorship enables China to make investments that mainly
benefit Beijing.
A close look shows that China and the West generally invest similarly in Ghana and
Angola, and somewhat in Zimbabwe. By supporting the development of sound democracies,
the U.S. can ensure that Chinese economic activity benefits those in Africa.
Acknowledgements:
I would like to thank Stanford University’s Center for International Security and
Cooperation (CISAC) for the chance to pursue this honors thesis. My advisor, Dr.
Thomas Fingar, has been incredibly patient and thorough throughout the entire process. I
thank him for helping me move beyond simple explanations of what the Chinese are
doing in Africa. It was an honor to be able to work with someone of his experience and
caliber. Dr. Chip Blacker and Dr. Martha Crenshaw were great program leaders and I
appreciate the time they dedicated to the program. Thanks also to my seminar
classmates—your comments, laughs, and friendship helped make this process so
beneficial. I am especially grateful to those who assisted with editing: Ram Sachs, Matt
Boswell, Joel Samoff, Barry Shutz, and Peter Davis. I am so thankful for the support,
encouragement, and even snacks from my friends and family. We can spend time
together now! Finally I owe all praise to Jesus Christ who has blessed me with life and
this opportunity.
List of Figures:
Chapter I: Introduction Figure 1.1: China’s trade with Sub-Saharan Africa, 1990-2006 Figure 1.2: China’s Trade with the Top Sub-Saharan African Countries, 2004 Figure 1.3: Chinese investment by country, 2001-2007, % & US$ billion Chapter III: Ghana Figure 3.1: Visits by top Ghanaian and Chinese officials, 2000-2012 Figure 3.2: 2007 FDI in Ghana in non-extractive sectors Figure 3.3: Imports to Ghana from China and other nations 2000-2006 Figure 3.4: Chinese vs. Total Investment to Ghana, 2001-2005 Figure 3.5 Chinese aid and investment in Ghana: 2000-2012 Figure 3.6: ODA to Ghana, 2006-2010 average (in US$M) Figure 3.7: Changes in Ghana’s WGI, 2000-2010 Figure 3.8: Percentile Rank of Voice and Accountability in Ghana Figure 3.9: China-Ghana Trade + Loans with WGI, 2000-2010 Figure 3.10: Changes in Ghana’s MCC Governance Scores, 2004-2012 Figure 3.11: China-Ghana trade and loans with MCC data Chapter IV: Angola Figure 4.1: China’s Oil Demand and Domestic Production, 1980-2030 Figure 4.2: Visits by top Angolan and Chinese officials, 2000-2011 Figure 4.3: The “Angolan model” of Development Figure 4.4: Value of Angolan Trade with China, 1996-2006 Figure 4.5: Angola’s Oil Exports to China as a Percentage of Total Exports, 1995-2005 Figure 4.6: China’s Imports of African Oil by Country as Share of China’s Oil Imports Figure 4.7: Dollars per barrel of brent crude oil, 1990-2012 Figure 4.8 Top Ten ODA Donors to Angola, 2005-9 average Figure 4.9: Angola’s oil exports to the U.S. and China, 2001–08 (US$ millions) Figure 4.10: Angola’s Crude Oil Exports by Destination, 2010 Figure 4.11: Changes in Angola’s WGI, 2000-2010 Figure 4.12: Percentile Rank of Control of Corruption in Angola Figure 4.13: China-Angola Trade + Aid with WGI, 2000-2010 Figure 4.14: Changes in Angolan MCC Governance Scores, 2004-2012 Figure 4.15: China-Angola Trade + Aid with MCC, 2004-2010 Chapter V: Zimbabwe: Figure 5.1: Visits by Top Chinese and Zimbabwean Officials, 2000-2009 Figure 5.2: China-Zimbabwe Trade, 2000-2012 Figure 5.3: Zimbabwe’s 2010 exports by product Figure 5.4: ODA to Zimbabwe, 2006-2010 average (in US$M) Figure 5.5: Changes in Zimbabwe’s WGI, 2000-2010 Figure 5.6: Percentile Rank of Government Effectiveness in Zimbabwe Figure 5.7: China-Zimbabwe Aid + Trade and WGI, 2000-2010 Figure 5.8: Changes in Zimbabwe’s MCC Governance Scores, 2004-2012
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Chapter I: Introduction
Overview of the Chinese Influence in Africa
“The Chinese are coming” is a popular mantra
when describing Chinese investments in Africa.1 Many
worry that Beijing is seeking to spread its communist
model of governance, or that Beijing is helping keep
despots in power. This thesis attempts to critically examine
the Chinese influence in Africa, through the experiences of Ghana, Angola, and
Zimbabwe. These three nations represent varying levels of development, governance,
and economics, providing an enlightening comparison. A new framework, politics,
partners, and petro, is used to ascertain Beijing’s influence in these countries and the
effects of China’s investments and aid. This framework seeks to examine the recipient
country’s governance, extent of investment and aid from other countries and entities, and
the share of the economy focused on extractive industry. Kastner’s “Buying Influence”
model and Brautigam’s The Dragon’s Gift hypothesis, as well as data from the World
Governance Indicators and Millennium Challenge Corporation provide the methodology
for examining a country’s standing in governance, diversity of foreign investment, and
economic development.
This introduction provides a brief historical overview of China’s engagement with
the continent. While this generalized description misses country-level details, it is
important to underscope the scope and variety of Beijing’s actions.
1 The Economist, “The Chinese are Coming…to Africa,” April 22, 2011, http://www.economist.com/blogs/dailychart/2011/04/chinese_africa.
2
China’s relationship with Africa has deep historical roots. African nations helped
China gain a seat in the United Nations in 1971 and the Chinese Presidents Jiang Zemin
and Hu Jintao traveled to China a total of nine times during their terms in the 1990s and
2000s. For the first half of the 1960s, Beijing established relations with left-leaning or
radical states, including Ghana, Angola, and Zimbabwe, as China itself was going
through an ideological period.2 More
recently, the relationship seems to be
focused on resources and economic
gains.
There have been several large
Chinese projects, starting in the 1950s
that set the tone for engagement between Africa and China. The Tanzania-Zambia
(Tanzam) Railway was a huge undertaking that connected land-locked Zambia with
Tanzania’s ports. The project was completed in 1976 after over half a decade of work.
The venture employed 25,000 Chinese workers and cost $500 million.
Within the past decade, Chinese investment and economic activity have grown
dramatically. In less than eight years, China-Africa trade increased from $10 billion to
over $100 billion.3 Last year, two-way trade between Africa and China exceeded $120
billion.4 Africa is now the fourth largest destination of Chinese investment.5 Figure 1.1
2 Jackson, Steven, “China's Third World Foreign Policy: The Case of Angola and Mozambique, 1961-93” The China Quarterly, No. 142 (June, 1995), Pg. 393. 3 Ministry of Foreign Affairs, People’s Republic of China, “Article of Yang Jiechi: A Decade of FOCAC Fruitful Achievements and A New Chapter of China-Africa Relations” October 11, 2010, http://www.mfa.gov.cn/eng/zxxx/t760880.htm. 4 BBC News “African Union Opens Chinese-funded HQ in Ethiopia,” January 28, 2012 http://www.bbc.co.uk/news/world-africa-16770932. 5 Ministry of Foreign Affairs, “An Article of Yang Jiechi”
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shows the rapid growth in China’s trade with Sub-Saharan Africa since 1990.6 China
has also begun construction of six economic and trade cooperation zones in Africa. To
encourage bilateral trade, China has zero tariffs on 60% of imports from Africa, with
plans to expand to 95% of exports from Africa. At least three-quarters of the tariff-free
products are industrial goods, including vehicle spare parts, bicycles, soap, and plastic
products.7
China has also been working to develop Africa through aid projects. From 1956-
2006, China gave more than $5 billion for 800 aid projects in Africa.8 By 2006 there
were 259 China Export Import (ExIm) Bank projects in 36 African countries.9 Since
6 International oil prices also increased significantly during this period as well, contributing to the increase in price. This issue is discussed in greater detail in the Angola chapter. Zafar, Ali “The Growing Relationship Between China and Sub-Saharan Africa: Macroeconomic, Trade, Investment, and Aid Links”, Oxford University Press, 2007. pp. 116 7 Brautigam, Deborah, “The List of Zero-tariff Products Is Now Here!” China in Africa: The Real Story, April 13, 2010, http://www.chinaafricarealstory.com/2010/04/list-of-zero-tariff-products-is-now.html. 8 Burgis, Tom and Wallis, William, “Continent Drives a Harder Bargain,” Financial Times 14 June 2010 http://www.ft.com/reports/africa-china-trade-2010 9 Wang, Jian-Ye, "What Drives China's Growing Role in Africa?" IMF working paper,
Figure 1.1: China’s trade with Sub-Saharan Africa, 1990-2006
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2005, Chinese infrastructure projects in sub-Saharan Africa exceeded, in value, those of
the World Bank.10 In 2000 China cancelled 168 debts totaling $1.6 billion owed by 33
African countries.11 In contrast, Organization for Economic Cooperation and
Development (OECD) countries provided $107.4 billion in debt relief to Highly Indebted
Poor Countries (HIPC) from 2000-2010.12 In 2009, the China-Africa Development Fund,
which hopes to encourage Chinese investment in Africa, had $1 billion to use for project
implementation. From 2006-2010, China also trained 15,000 Africans from across the
continent in different professions, including science, medicine, and administration.13
A comparison of Chinese aid to U.S. aid reveals the paltry state of Beijing’s
charity however. For example, in 2010 alone, the U.S. Agency for International
Development (USAID) gave $6.4 billion in assistance to Sub-Saharan Africa—this one-
year of giving is greater than the historic entirety of China’s aid giving to Africa.
However, China is still only a developing country itself, and the country does not adhere
to Western definitions for humanitarian aid. Chinese aid, unlike Western aid, does not
assign money to specific health or education related projects, thus making it quite
complicated to figure out exactly how much Beijing is giving. Despite the differences in
naming, Chinese humanitarian assistance to Africa is much smaller than aid from
Western nations and institutions.
Issues 2007-2211 http://books.google.com/books?id=tbeeX46Xqf8C&printsec=frontcover#v=onepage&q&f=false. 10 McKinsey and Company, “Lions on The Move: The Progress and Potential of African Economies” McKinsey Global Institute, June 2010, pg. 15. 11 Burgis 12 OECD, “External Debt,” Mutual Review of Development Effectiveness in Africa, http://www.oecd.org/document/0/0,3746,en_39862406_39906520_49370432_1_1_1_1,00.html. 13 Becker, Rose, “China-Africa: A Partnership with Equal Benefits?” University World News, October 3, 2010, http://www.universityworldnews.com/article.php?story=20101002094654507.
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Africa-China trade is similarly still relatively small in the global context—only
16% of Africa’s total exports went to China in 2006.14 However, China wants to see its
trade with Africa increase and it has reached its goal of doubling two-way trade with the
continent.
China seeks to institutionalize its relationship with Africa and the two countries
participate in many meetings to further bilateral relations. The 2000 establishment of the
Forum on China-Africa Cooperation (FOCAC) helps encourage cooperation through
frequent conferences. 48 African presidents participated in the November 2006 Beijing
Summit, which brought together the largest number of participating leaders since the
founding of the People’s Republic of China.15
14 Wang 15 Ministry of Foreign Affairs, “An Article of Yang Jiechi”
Figure 1.2: China’s Trade with the Top Sub-Saharan African Countries, 2004
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China frequently holds political consultations between Chinese and African
leaders at the U.N. and China recently finished construction of the African Union
headquarters in Addis Ababa. China has also increased its troop contributions to U.N.
peacekeeping forces in Africa.
Human Rights Watch reports however that Chinese aid creates new options for
African dictators who were previously dependent on those who insisted on human rights
progress.16 Instead of providing reform-incenting investment, Chinese aid, like other
countries’ aid, can be entirely self-focused. For example, China generally imports
African raw materials while Africa imports Chinese finished products.17 As Figure 1.2
shows, Chinese activity is varied throughout the continent and
many countries have extreme balance of payment differences.18
Although China invests in every African country, the majority of
its investment and trade is concentrated in four oil rich African
countries, as Figure 1.3 indicates.19 Chinese businesses in Africa do
not always adhere to local laws. Chinese contractors’ low wages, lax
safety standards, and poor environmental standards frequently give
rise to African indignation against Chinese firms. For example, in
2005, an explosion at a Chinese-owned copper mine killed 51
16 Brautigam, The Dragon’s Gift, pg. 284. 17 Reisen, Helmut, “Is China Actually Helping Improve Debt Sustainability in Africa?” G-24 Policy Brief No. 9, 2008, http://www.g24.org/pbno9.pdf. 18 Zafar, pp. 116 19 McKinsey and Co. pg. 16.
Figure 1.3: Chinese investment by country, 2001-2007, % & US$ billion
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Zambian workers, causing much outcry. In response, the Chinese company paid
compensation to the victims’ families and permitted unions to organize at the labor site.20
However, it does not appear that there were any legal or legislative ramifications for the
company’s lax standards however and there have been similar problems since.
The case studies in this paper represent a variety of governance types, foreign
investors, and economic development. Ghana is a small country with a strong democratic
government. Many foreign countries and entities invest in Ghana and its industry is not
focused on natural resources. Angola is a larger country with an autocratic leader that
has ruled the country for many years. Western nations, other countries, and China are all
competing to invest in Angola’s oil reserves. Zimbabwe is a smaller country with a
failed democracy turned dictatorship and significant mineral deposits. While there are
some countries that still invest in Zimbabwe, the regime is increasingly isolated
politically.
This thesis is organized as follows: the literature review reviews China’s
motivations for investing in foreign countries, including commercialism, realism, and
idealism. This section also includes an explanation of the politics, partners, and petro
model. Case studies of each country examine each’s historical dealings with China and
the current economic relationship, and how Beijing compares to the country’s other
foreign investors. The paper concludes with policy recommendations for the U.S.
government and world.
20 Hong Kong Liason Office of the International Trade Union Movement (IHLO), “China in Africa,” http://www.ihlo.org/CINTW/Zambia.html.
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Chapter II: Literature Review
“Of the seeming and real innovations which the
modern age has introduced into the practice of
foreign policy, none has proven more baffling to
both understanding and action than foreign aid.”1
–Hans Morgenthau
China’s activities in Africa are closely linked to Being’s foreign policy and its
role as a rising power in the world. Over the past decade, China’s international economic
activity has grown and Beijing is increasingly utilizing foreign aid. As shown below, the
literature has focused on broad explanations for China’s presence in Africa, without
examining cases across countries. Work needs to be done to determine if China’s
investment strategy varies according to regime type and understand if, and how, Chinese
investment and aid has influenced the political development of African nations. The
proposed politics, partners, and petro model provides a way to assess the state of the
recipient country and how it will be affected by Chinese aid and investment.
The literature on foreign aid can be generally divided into two parts. One set
looks at the motivations for aid—that is, which countries give aid to specific nations and
why. The other set studies the effects of foreign aid on the recipient countries. This
paper follows a similar pattern and begins with an explanation of the motivations for
foreign aid: idealism, realism, and commercialism.2 The missing piece in our
understanding of Chinese foreign aid, that investment must be included into discussions 1 Morgenthau, Hans, “A Political Theory of Foreign Aid,” American Political Science Review 56, no. 2 (June 1962), pg. 301. 2 From Hook, Steven W.; Peter J. Schrader; and Bruce Taylor “Clarifying the Foreign Aid Puzzle: A Comparison of American, Japanese, French, and Swedish Aid Flows” World Politics 50.2 (1998) 294-323 for part of this naming.
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on aid, is next and a short discussion on the political environments of Ghana, Angola, and
Zimbabwe concludes. This paper seeks to delve into questions not addressed in the
literature, including how the recipient country’s governance, industry, and foreign
relations impact the effects of Chinese aid and investment.
Foreign Aid as Foreign Policy
I will work under the assumption that “foreign aid is first and foremost a
technique of statecraft.”3 It is argued that a country, in this case China, uses its aid
budget to achieve foreign policy goals. There are three prevailing explanations for why a
country provides foreign aid: idealism, realism, and commercialism. 4 As shown below,
commercialism and realism help explain China’s behavior.
Idealism
Idealism presents a positive view of a country’s motivations for giving foreign
aid—one that is based on humanitarian concerns.5 Idealist countries are optimistic about
cooperation in the international realm. They seek to avoid competition and conflict and
do not imagine a solely “we or they” structure.6 In this system, states act on ethical
concerns and seek to help some countries are not as developed, or those that are dealing
3 There is some debate in the literature on whether aid is an aspect of foreign policy. Baldwin, David A. Economic Statecraft (Princeton, NJ: Princeton University Press, 1966), pg. 3 4 While other such as Hook, Steven W. National Interest and Foreign Aid (Boulder, CO: L. Rienner Publishers, 1995) and Weissman, Stephen R. The Trojan Horse: A Radical Look at Foreign Aid, (Palo Alto, CA: Ramparts Press, 1975) cite a structuralist model, this explanation is less prevalent in the literature and generally does not apply to China’s foreign aid policy. Structuralism sees foreign aid as helping to preserve or widen the economic disparities between wealthy and poor states. With the rise of international aid institutions and the interconnectedness of globalization however, this explanation fails to provide relevant insight into why Beijing gives aid. 5 Lumsdaine, David Halloran, Moral Vision in International Politics: The Foreign Aid Regime, 1949-89 (Princeton: Princeton University Press, 1993). 6 Cook, Thomas I. and Malcolm Moos “Foreign Policy: The Realism of Idealism” The American Political Science Review, Vol. 46, No. 2. (Jun., 1952), pg. 355.
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with natural disasters, civil wars, and the like. Idealists such as Cook and Moos describe
aid that is geared towards humanitarian arenas such as education, health, and gender
equality, all of which contribute to a “creative peace.”7 Idealist assessments point to the
empirical relationship between bilateral aid flows and the demonstrable human needs of
third world countries. For example, economists Maizels and Nissanke examined aid to
80 countries and found that a donor’s humanitarian interests best explain multilateral aid
flows.8
David Lumsdaine, a supporter of the idealist school, examined foreign aid since
WWII and concluded that “donors’ humanitarianism and their perception of the world as
an interdependent community” motivated aid giving.9 Indeed, the Organization for
Economic Cooperation and Development (OECD) notes that international cooperation on
humanitarian giving is necessary to launch countries out of poverty.10 While not all
idealists ignore a country’s national priorities as motivation for giving, they believe moral
considerations play a decisive role. The United Nations has helped formalized these
humanitarian concerns through agreements such as the Monterrey Consensus where
nations agreed on a framework for financing development.
An idealist argument sees Beijing making aid and overseas development
assistance (ODA) decisions based on the need of the recipient country. Likely targets
include many countries in Africa, and nations that are going through humanitarian 7 Cook and Moos, pg. 352 8 They also found that a donor’s state interests best explain bilateral aid flows. Realism includes the state interests argument and will be discussed in greater detail below. These two different findings are evidence of the disagreement among experts about the motivations for aid. Maizels, Alfred and Machiko Nissanke, “Motivations for Aid to Developing Countries,” World Development 12, no. 9 (1984), 879-900. 9 Lumsdaine, pg. 4 10 OECD, Development Co-operation: Efforts and Policies of the Members of the Development Assistance Committee. (Paris: OECD, 1985).
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disasters. Even though China is a developing country itself, it is wealthy enough to reach
down and help poor nations.
Reality however, shows that Chinese foreign aid, and most aid in general, does
not generally fall into the idealist school.11 While China does give some ODA to poor
African countries, many agree that this is due to realist or commercial motivations, not
due to an honest desire to help these countries flourish.12 In fact, many go even further
and accuse Chinese foreign aid of being detrimental to a country’s well being for its
support of dictators and human rights violators.13
Realism
Scholars acknowledge that governments are not charitable institutions, but rather
strategic-minded entities that act in line with their national interests. According to
realism, these national interests dominate decision-making in countries and foreign aid
should give primacy to donor interests. Realists assume a Hobbesian international
system that is dominated by competition.14 According to realist Arnold Wolfers, states
are lone actors that constantly fear violence and they act out of a desire for power and
security.15 Neo-realists provide additional insight with the assertion that a state’s
economic situation in the global balance is just as important as traditional security arenas
11 Knorr, Klaus Power and Wealth (New York: Basic Books, 1973). 12 Medeiros, Evan S., China's International Behavior: Activism, Opportunism, and Diversification. Santa Monica, CA: RAND, 2009 points out that, on the whole, Chinese aid is not motivated by idealism. However, he does note that Chinese humanitarian assistance is growing. 13 Brooks, Peter and Ki Hye Shin “China’s Influence in Africa: Implications for the United States,” (Heritage Foundation, No. 1916, February 22, 2006). 14 Hook, Schrader, and Taylor 15 Wolfers, Arnold, “The Pole of Power and the Pole of Indifference,” World Politics, Vol. 4, No. 1 (October, 1951), pg. 39-63.
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such as alliances and military strength.16 Humanitarianism and other interests enter into
the equation, but foreign aid is ultimately a tool to ensure the longevity of the donor.
Morgenthau, the originator of realism, says that all types of foreign aid, including
humanitarian aid, are very political; they all are opportunities for the donor country to
gain political advantage.17 George Liska agrees and further explains that aid can advance
the donor’s position in three ways, by consolidating a friendly regime’s legitimacy,
increasing the donor’s access to resources, or expanding the donor’s power and influence
at the expense of a third actor.18
Realism focuses on the relationships between powerful countries while
dependency theory is more relevant to how strong states interact with weak ones, and
how China works with African countries. A.G. Frank suggests that the international
system is divided between capitalist countries and satellite nations and that these satellite,
or dependent, countries are locked into a subordinate status.19 Steven Krasner asserts that
dependent countries are unable to exert influence over their own national economic
decisions because the system dictates that they export natural resources to the powerful
countries.20 One reading of the international system suggests that, while Beijing might
have been a dependent state in the past, it is now a capitalist nation that is extracting raw
goods from the dependent nations of Africa.
16 See Gilpin, Robert The Political Economy of International Relations (Princeton: Princeton University Press, 1987). 17 Morgenthau, pg. 301. 18 Liska, George The New Statecraft: Foreign Aid in American Foreign Policy (Chicago: University of Chicago Press, 1960), p. 12. 19 Chernotsky, Harry; Geller, Daniel; and Kaufman, Robert, “A Preliminary Test of the Theory of Dependency,” Comparative Politics, Vol. 7, No. 3 (April 1975), pg. 304. 20 Krasner, Steven, Structural Conflict: The Third World Against Global Liberalism, University of California Press, 1985.
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Realism, when applied to the Chinese case, would lead to aid policies that help
strengthen the legitimacy of countries friendly to Beijing, increase China’s access to
resources, or raise China’s standing in the world. This includes promoting good relations
with, and real influence in, recipient African nations.21 Projects should be high profile,
well-publicized, large, and focused on states that are critical to China’s strategic interests.
If realists in Beijing controlled the foreign aid budget, they would focus aid on African
nations with significant political influence, resources, or regional clout. Realism helps
explain Beijing’s concern with its international reputation as well. While this concern
has not led China to cut dies with dictators such as Mugabe, Beijing still understands that
its relationship with the United States and other powerful nations is more important than
its friendship with a small African dictator. As this paper shows, realist arguments
explained the origins of Chinese aid, when Beijing was struggling with the Soviet Union.
However, as globalization has helped make China an economic powerhouse, there
are aspects of Chinese aid that do not entirely fit into the above realist structures. China
invests in every African country, though the majority of these nations have little political
power in the region.22 It seems unclear what geopolitical weight China is seeking in the
land locked Malawi or the small nation of Djibouti.
Commercialism
21 Kastner’s “Buying Influence” challenges the conventional wisdom that China’s foreign economic ties are translating into increased influence over the foreign policies of other states. His work is discussed in greater detail below. Kastner, Scott, “Buying Influence? Assessing the Political Effects of China’s International Economic Ties” Working Paper. 22 While speculation on the validity on realism is warranted, the theory does carry explanatory power as the vast majority of Chinese aid to, and investment in Africa is concentrated in four countries: Angola, Nigeria, Ethiopia, and Sudan.
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“There is a strong commercial interest in [aid-giving].”23 This commercial
interest might more fully explain China’s foreign aid practices and its investments in
countries such as Malawi and Djibouti. The commercialism argument is an extension of
the realist school in that it assumes aid is for the benefit of the giver, not the receiver.
This economic self-interest argument is supported empirically.24 In commercialism, aid
is directed towards trade, markets, and resource interests. The donors seeks to promote
growth in developing countries that are trade partners, either as a way to create a market
for exports, or to cultivate a source of imports.25
McNeill argues that donors tend to provide aid to countries with which it has, or
hopes to have, strong trading ties. Mason takes the argument one step further and asserts,
“essentially all aid consists in providing increased access to imports.”26 In true
commercialist fashion, donor countries can often make money from aid deals.27 In fact,
the international system almost requires that developed countries expand their trading
partners in order to continue to grow.
Tied aid is an example of commercialism in practice. Countries “generously”
provide aid, but on terms favorable to the donor’s interests. Tied aid is the practice of
23 Clifford, Juliet Mary and Ian Malcolm David Little. International Aid: a Discussion of the Flow of Public Resources From Rich to Poor Countries. (Chicago: Aldine Pub. Co, 1966), pg. 82. 24 See the Little & McKinlay study of aid from the United States, France, Germany, and the United Kingdom during the 1960s. Little, R., and R.D. McKinlay, “A Foreign Policy Model of U.S. Bilateral Aid Allocation,” World Politics Vol. XXX No. 1 (1977). 25 Maizels. 26 Mason, Edward S. Foreign Aid and Foreign Policy. (New York: Published for the Council on Foreign Relations by Harper & Row, 1964), pg. 10. 27 This depends on interest rates in both countries and is generally unlikely. In fact, donors frequently do not profit from aid. For example, data from the OECD’s Development Assistance Committee shows that the commercial advantage gained from giving aid is relatively low. These results however look purely at interest rates earned, and do not consider factors such as access to resources, or long-term market potential.
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requiring grant money to be spent on goods from the donor country. While aid money
goes to a foreign country, the funds can actually support domestic constituency groups in
the donor country. Both Western nations and China tie their aid. For example, the $5
billion China-Africa Development Fund that will be used to invest exclusively in Chinese
companies.28 This paper will explore China’s practice of tying aid, not through political
“ties,” but with economic “ties.”
The commercialist model as applied to the Chinese case sees markets and
resources as the main motivations for Beijing’s foreign aid. China’s economy is booming
and the country needs inputs like platinum and oil for its industries as well as markets for
its exports. It is hard to grasp the immensity of China’s energy needs but its growing
population and economy have sent it on a mad rush around the globe for fuel. Medeiros
describes these forces as China’s “economic diplomacy” which characterizes Beijing’s
never-ending quest for markets, investment, technology, and natural resources.”29 The
government is also encouraging Chinese companies to “go global” to create powerful
international brands. Beijing’s aid and investment patterns reveal that economics are
upmost on Chinese leaders’ minds when thinking about foreign aid, though other
priorities influence the decision as well.
Missing Pieces in Understanding Chinese Aid:
The above explanations have focused on Chinese “aid.” However in order to
understand the full nature of Chinese aid to other countries, one must consider Chinese
economic investment part of the picture as well. Below are two reasons why considering
28 Anderlini, Jamil, “China Insists on ‘Tied Aid’ in Africa,” Financial Times, June 25, 2007, http://www.ft.com/intl/cms/s/0/908c24f2-2343-11dc-9e7e-000b5df10621.html#axzz1updJsrZa. 29 Medeiros, pg. xviii
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economic investment with foreign aid helps us better understand the extent of the
Chinese influence in Africa.
First, Chinese foreign aid amounts are not public, thus the world lacks reliable
information on how much China gives and to whom. Further, China does not adhere to
OECD aid definitions, so it is difficult to make aid comparisons with other countries.30
Because of the differences in definitions, Chinese “foreign aid,” as defined solely as
grants, ODA, and concessional loans, is quite small when compared to its economic
activities in the rest of Africa. Chinese “aid” does not follow Western patterns of
reporting and does not assign money to specific health or education related projects that
are implemented by locals. In order to understand the full picture, we need to consider
all of Beijing’s economic activities in Africa. Here an example is helpful, Brautigam
notes that in 2009, China provided $1 billion in aid to Africa. However, Beijing provided
an additional $1 billion in concessional lending and about $8 billion in development
finance.31 To understand the full picture of Chinese aid in this case, we should consider
Chinese “aid” to Africa as $10 billion. Chinese aid encompasses a range of economic
tools besides just grant giving, including low interest loans, export credits, and subsidized
infrastructure projects.
It is also reasonable to assume that many, if not the majority of, Chinese
economic activities are an extension of the state’s will.32 There is quite the close
30 “Practices governing Chinese aid and development finance generally diverge from clear OECD standards and norms on transparency and definitions, the management of concessional export credits, and the management of sovereign debt” in Brautigam, Deborah, “China, Africa and the International Aid Architecture,” Working Papers Series No. 107, (Tunis, Tunisia African Development Bank, 2010), pg. 44. 31 Rotberg, pg. 8. 32 This relationship between the government and industry has recently come under pressure and can be described as falling prey to the “principal-agent dilemma.” Gill and Reilly define this
17
relationship between the Chinese state and private industry, in addition to the large
number of state owned enterprises (SOE). As is common in China, the state and private
corporations often work hand-in-hand and the government will often provide access and
preferential treatment for Chinese firms. Brautigam notes that government-owned banks
and companies carry out the bulk of China’s economic activities in Africa.33 Further,
there is “murkiness about the distinction between public and private in China” due to the
close connections between government and industry.34 With this understanding of
Chinese economic activities as part of Beijing’s aid package to African nations, this
paper’s hypothesis suggests using the two ideas interchangeably.
While the commercial and realist arguments are most compelling for
understanding Chinese aid, it is not clear how Beijing decides where to focus
economically. Further, do these explanations for aid vary according to the recipient
country’s regime type? Does China follow realist prescriptions when dealing with fellow
authoritarian countries and rely on commercialist motivations when dealing with
democracies? Perhaps China sees an authoritarian like Mugabe in Zimbabwe and acts
according to realism because Beijing is more comfortable with a similar government
type. Or maybe history shows that China focuses on economics when dealing with well-
situation as “the increasing set of tensions and contradictions between the interests and aims of government principals…and the aims and interests of ostensible agents-the companies and businesspersons.” While the economy opens more fully, we will see the government’s hold over industry relinquish, but this phenomenon is really only just beginning. Gill, Bates, "The Tenuous Hold of China Inc. in Africa". The Washington Quarterly, Volume 30, Issue 3, July 2007. pp. 38 33 Brautigam in Waldron, pg. 207. 34 Saavedra, Martha and Julia C. Strauss, “Introduction: China, Africa, and Internationalization” The China Quarterly, 199, September 2009, pg. 152
18
governed nations like Ghana in a desire to stay clear of any accusations of promulgating
the “Beijing Consensus?”35 These questions will be explored below.
Traditional Arguments for China in Africa:
With an understanding of the general motivations for foreign aid, and an assertion
that Chinese “aid” includes other investment, we turn to an examination of theories of
why the Chinese invest in Africa. Scholars generally assume markets, resources, and
influence drive Beijing’s economic decisions in the continent.
Commercial Expansion Argument:
The commercial argument states that China is interested in Africa because of the
continent’s growing economy and potential for domestic demand. This economic
expansion model sees China seeking out new markets for its growing economy and
parallels nicely with the general theory of commercialism as a motivator for aid.
Wang notes that China’s private sector is at the forefront of the country’s
investment expansion.36 Chinese businesses are often leading the way in investing in
Africa. Their primary motivation is revenue and they see Africa as a growing market
with huge potential. As China seeks to employ its 1.4 billion people, Africa can serve as
an outlet for Chinese workers. Further, because China is the world’s factory, it is
constantly seeking new markets for its goods and Africa’s future consumption is
immense.
Like any company, Chinese businesses are focused on profit. Instead of training
Africans and employing locals in their business ventures, Chinese companies often bring 35 See Ramo, Joshua “The Beijing Consensus” (London, The Foreign Policy Centre, May 2004). 36 Wang, Jian-Ye, "What Drives China's Growing Role in Africa?" IMF working paper, Issues 2007-2211 http://books.google.com/books?id=tbeeX46Xqf8C&printsec=frontcover#v=onepage&q&f=false, pp. 17.
19
their own labor. Chinese firms mainly rely on Chinese project managers, engineers, and
designers, thus not contributing to the indigenous development of African leaders.
Political Concerns Argument:
A second assertion says that Beijing sees Africa as the ‘last unconquered frontier’
and a place where Beijing can foster friendships. This political concerns argument sees
Chinese economic investment leading to political clout for China. This is a manifestation
of the realism argument—in the contest for global power, Beijing is making friends and
allies to utilize in the future.
In fact, “China’s interests in Africa go well beyond the continent’s wealth of
resources and include important political and diplomatic aspects.”37 As China’s profile
rises in the world, Beijing seeks new allies and friends in an effort to counter the U.S. and
other established nations. While the Chinese are pursuing economic opportunity in
Africa, they are also looking for political favors. Chinese ministers are careful to ensure
that African nations agree with the “one-China” policy. And they have been successful
for only five African nations recognize Taiwan.
China is becoming a more assertive player in the international arena and Africa
may be part of China’s plan to improve its standing in the world. China’s assertiveness
can be seen in its U.N. activity. In 2000, China won only 43% of UN votes on human
rights as compared to Europe’s 78%. But in 2010, they won 82%, as compared with
Europe’s 52%.38 China and Europe seem to be trading spots of power, at least at the
37 Bates, Gill, “The Tenuous Hold of China Inc. in Africa,” The Washington Quarterly, Volume 30, Issue 3, July 2007, pp. 37 38 Leonard, Mark “How to deal with a more assertive China?” European Council on Foreign Relations, February 4, 2010, http://ecfr.eu/content/entry/commentary_how_to_deal_with_a_more_assertive_china_mark_leonard/.
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U.N. Similarly, Beijing was quite assertive at Copenhagen and worked to avoid binding
environmental targets for itself and for the developed world.39 In the world trade talks in
Doha, China took action and worked with India to derail discussions on a global trading
system.40 And on Iran, China has used its role in the P5+1 process to slow action on
sanctions, while increasing its own trade and investment in the country.41 China needs
allies to support its forward action in the world. There are 53 African nations and their
votes at the UN, or their public statements can help support China.
Energy Resources Argument:
The resource argument asserts that Africa is home to oil and other raw resources
such as aluminum, gold, and rubber that Beijing needs for growth. China’s quench for
energy is seemingly endless and, as the argument goes, Africa has the materials to fuel
China’s continued development.
Large notes that resource extraction is the primary motivation behind current
Chinese engagement in Africa.42 Beijing seeks to secure its energy future in order to fuel
its continued growth. Especially in light of the unrest in the Middle East, Africa seems to
be a reliable oil provider. Currently 85% of Africa’s exports to China come from five oil
rich countries: Angola, Equatorial Guinea, Nigeria, the Congo, and Sudan.43 The
majority, 64% to be exact, of these exports are made up of oil and gas while another 13%
are comprised of crude materials such as minerals and metals. Thus three-fourths of
African exports to China are from extractive industries.
39 Leonard 40 Leonard 41 Leonard 42 Large, pp. 55 43 Hanson, Stephanie, “China, Africa and Oil,” Council on Foreign Relations Report, 6 June 2008, http://www.marshallfoundation.org/documents/ChinaAfricaEnergy.pdf.
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China’s investment is not solely oil-focused however. A more nuanced look
shows that China is active in many African countries that do not have significant natural
resources. Interestingly, China gives aid to every country in sub-Saharan Africa that
follows the one-China policy.44
Many scholars, such as Kirshner, argue that China’s increasing economic
presence in Africa will lead to enhanced political clout for Beijing.45 In his 2008 Three
Faces of Chinese Power, Lampton says that China’s role as a buyer, seller, investor,
development assistance provider, and innovator provide ample opportunity for Beijing to
dictate political favors from Africa. Similarly Baldwin’s 1985 Economic Statecraft
argument says that economic instruments can be deliberately used to shape policy choices
in other states. In this sense, China’s aid, debt relief, and contracts influence African
nations’ decisions. Hirschman’s influence logic says economic integration leads to
foreign policies that do not antagonize key trading partners, in this case, African policies
that do not upset Beijing. 46 It seems intuitive that increased trade between countries will
lead them to desire cooperation and friendly relations.
There are two recent examples of economic investment leading to political
influence. The Clinton administration reversed course on its earlier decision to link
China’s trading status to improved human rights in the face of pressure from the U.S.
business community. In this case, the U.S. understood the value of its trade with China
44 Braugtigam, pp. 278 45 Kirshner, Jonathan “The Consequences of China’s Economic Rise for Sino-U.S. Relations: Rivalry, Political Conflict, and (Not) War.” In Ross and Zhu, eds., China’s Ascent: Power, Security, and the Future of International Relations. Ithaca, NY: Cornell Press, 2008. 46 Hirschman, Albert O. 1945. National Power and the Structure of Foreign Trade. Berkeley: University of California Press.
22
and altered its policies accordingly. France too agreed in the 1990s to halt weapon sales
to Taiwan after China made it clear that French companies would be penalized.
Politics, Partners, and Petro Model:
The above theories provide an enlightening context for understanding the Chinese
influence in Ghana, Angola, and Zimbabwe. However, the conventional wisdom is full
of sweeping generalizations about China’s role in Africa. The academic literature also
presents a fairly negative and monochromatic view of the situation. In order to better
understand how Chinese investment is affecting African countries, this paper proposes a
new model. In examining the effects of Chinese investment and aid in Ghana, Angola,
and Zimbabwe, three factors emerged as essential for dictating how Beijing’s money
affected the recipient country—that is politics, partners, and petro. Politics looks at
issues of governance, including the strength of a country’s democracy, or the extent of an
authoritarian leader’s power. When governance is strong, the recipient country has more
power to dictate how aid is used, and to ensure that the loans and grants are on terms
favorable to the recipient. “A positive institutional setting in the recipient country means
that the detrimental dynamics of aid flows…can be largely avoided.”47 If there is an
isolated government, or one that is highly corrupt, such as in Zimbabwe, donors that are
willing to work with the country have much leverage. Further, countries with poor
governance often experience that aid does not benefit large segments of the population.
Burnside and Dollar’s empirical examination of foreign aid shows that aid would be more
47Abuzeid, Farah, “Foreign Aid and the “Big Push” Theory: Lessons from Sub-Saharan Africa,” Stanford Journal of International Relations, Fall 2009, www.stanford.edu/group/sjir/pdf/Aid_11.1.pdf, pg. 21.
23
effective if it were conditioned on good policies and governance of the recipient
country.48
The number of investing countries and how much they give, the partners aspect, is
also important. Is Beijing in a crowded room of investors who are all competing with
one another, or are they the only country providing assistance? It seems that when there
are many development partners in a country, donor countries have to act similarly and not
in total self-interest. Many foreign investing countries and institutions means that there
are multiple checks and balances on how aid is given and used. And generally Western
countries are sure to include aid that incentivizes reform. When there are many countries
investing in many industries, the host country has the upper hand and can take advantage
of the seller’s market situation. However, having only a few foreign partners, and having
them concentrated in one industry (such as petro), means it is a buyer’s market, which
gives the host government fewer negotiating advantages.
A country’s resource endowment is included in the petro aspect. If a nation is an
oil state, its entire industry is focused around crude oil. Petro is used to mean all types of
commodity and resource based industries. The “Dutch disease” means that other
industries are not as established, resulting in low employment and generally
underdeveloped civil society. In The Oil Curse, Michael Ross explains that ironically,
good geology often leads to bad governance.49 Foreign investment tends to shy away
from developing domestic industry in that country and instead focuses on extracting and
48 Burnside, Craig and Dollar, David “Aid, policies, and growth,” The American Economic Review, Vol. 90, No. 4. September, 2000, pp. 847-868, http://links.jstor.org/sici?sici=0002-8282%28200009%2990%3A4%3C847%3AAPAG%3E2.0.CO%3B2-0.
49 Ross, Michael, “The Oil Curse: How Petroleum Wealth Shapes the Development of Nations,” Princeton University Press, 2012.
24
exporting material for already advanced economies.50 At the same time, oil is a very
fungible commodity and countries with oil are generally able to find multiple buyers for
their exports. No purchaser is guaranteed power over the seller. By examining three
very different African countries—Ghana, Angola, and Zimbabwe, the thesis attempts to
see how domestic conditions help mitigate against any negative effects of Beijing’s
economic activity.
Determining Politics, Partners, and Petro:
This paper takes four cuts at determining the influence of Chinese aid and
investment in these three countries using two models and two data sets. These four tools
shed light on the politics, partners, and petro of each country. Scott Kastner examines the
link between economic investment and political influence and Brautigam argues that
African governance is essential for understanding the Chinese impacts. The World
Governance Indicators (WGI) and Millennium Challenge Corporation (MCC) scores are
well-recognized statistics that measure governance.
As shown in later chapters, Kastner’s argument holds in Ghana and Angola—
Chinese investment and aid has not led to strong support from Accra or Luanda. His
conclusion was only slightly off in Zimbabwe. Similarly Brautigam’s hypothesis rings
true as Ghana’s governance has resulted in benefits for the population while Angola’s
and Zimbabwe’s corrupt elite has siphoned off funds. The WGI and MCC data reveal
positive trends in Ghana’s development and negative tendencies in Angola and
Zimbabwe.
Kastner’s Buying Influence Model: 50 Nurkse, Ragnar, “Some International Aspects of the Problem of Economic Development,” The American Economic Review, Vol. 42, No. 2 May 1952, http://www.jstor.org/stable/1910629.
25
Scott Kastner’s Buying Influence model challenges the conventional wisdom that
China’s foreign economic ties are translating into increased influence over the foreign
policies of other states.51 The sentiment, as expressed by Kirshner in 2008 that “China’s
economic attraction…will, especially over time, translate into greater political influence
for China”52 is widely accepted, though not necessarily empirically based. In order to test
influence, Kastner defines China’s core interests as territorial integrity, regime stability,
and economic development. The 2008 Taiwan referendum for U.N. membership, 2008
Chinese crackdown on Tibetan unrest, and Beijing’s Word Trade Organization (WTO)
status are recent tests of these interests.
China opposed the U.N. referendum and Tibetan protests and supported WTO
market status and sought support for these positions abroad. China vehemently opposed
the 2008 Taiwan referendum on U.N. membership and has pursued a global campaign
against Taipei. The U.S. did not support the ballot measure and it ended up failing. The
second event was Beijing’s crackdown on unrest in Tibet, which threatened Beijing’s
regime stability. In 2008, there were 95 peaceful protests in Tibet and Tibetan areas,
which the government quickly squashed. With at least 56 ethnic groups in China, the
government has the tenuous task of keeping the country united and it often employs
violent force to ensure stability. In regards to economic development, Kastner looked at
China’s quest to be classified as a “market economy.” As part of its WTO membership,
Beijing agreed to allow other countries to treat it as a non-market economy for the
51 Kastner, Scott “Buying Influence? Assessing the Political Effects of China’s International Economic Ties” Paper presented at the American Political Science Association Annual Meeting, Washington DC, September 2010.
52 Kirshner, pg. 241.
26
purposes of dumping and subsidies investigations. China is anxious to drop this
classification in order to join the ranks of developed economies.
Kastner examines an aid recipient country’s responses to these three events and
correlates it to Chinese investment in that country. Looking globally, his research
surprisingly shows that there is no statistical relationship between Chinese economic
investment and its effect on a country’s foreign policy decisions. A country’s responses
to the Taiwan referendum, crackdown in Tibet, and Chinese economy classification were
not related to the level of Chinese investment in the economy. The data did not support
that hypothesis that country X was more likely to support China to the extent that
bilateral economic ties with China represented a larger percentage of country X’s
economy.
Kastner himself admits that official statements made by countries could be just
“cheap talk.” So what if a country supported the one-China policy? The country had to
expend little political capital and could easily go back on its words. Kastner’s data set
also does not include all African countries. The next chapters examine Kastner’s model
in Ghana, Angola, and Zimbabwe.
Brautigam’s Local Governance Hypothesis:
Deborah Brautigam, in her seminal work, The Dragon’s Gift, asserts that a well-
governed African country will experience net gains from Chinese investment, while
corrupt and unstable countries will not see broad gains.53 Democratic pressures and
watchdogs in a well-governed country can ensure that Chinese projects are completed
and the benefits spread throughout society. Further, a government that is concerned with
53 Brautigam, Deborah The Dragon’s Gift, Oxford University, 2009.
27
the next election will be much choosier when determining foreign nations’ access to their
country. Authoritarian governments on the other hand are less accountable to their
people and can keep the benefits of foreign investment to the elite. Similarly, recent
statistical research has shown that
…aid generally has a positive effect on growth in countries with good
macroeconomic and trade policies, strong investments in health and education,
good governance, and less corruption, while it tends to have little or no effect on
growth in countries with weak policies and high corruption54
This hypothesis can be applied to any investing country and any recipient country.
Chinese aid may not be that different from Western aid. What may set apart Chinese aid
is its willingness to work with the corrupt countries while the West shies away. This
paper examines Ghana’s, Angola’s and Zimbabwe’s responses to these three events to
determine correlation.
Using the World Governance Indicators to Determine Conditions on the Ground:
Since 1996, the World Bank has compiled information from 30 sources on the quality
of governance in over 200 countries.55 The World Governance Indicators (WGI) seek to
represent the opinions and experiences of those in the public, private and NGO sectors
regarding the state of governance throughout the world. As a former IMF official said,
“the WGI are now well established as one of the standard sets of measures that
any…policy analyst must consult.”56 WGI includes information from diverse sources
54 Burnside, Craig and Dollar, David “Aid, Policies, and Growth,” World Bank Working Paper #1777, June 1977; World Bank, The Role and Effectiveness of Development Assistance: Lessons from the World Bank Experience (2001). 55 The World Bank does not provide data for the year 2001. 56 World Bank Institute “Governance Matters 2009,” Development Research Group, www.info.worldbank.org/governance/wgi/pdf/WBI_GovInd.pdf.
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including the Asian and African Development Banks, Gallup Polling, and Freedom
House. Each country is assigned a score on one of the six categories, as well as a
percentile rank, as compared to countries throughout the world. There are six dimensions
of governance:57
• Voice and Accountability: Extent to which citizens are able to participate in
selecting their government, as well as freedom of expression, freedom of
association, and a free media.
• Political Stability and Absence of Violence: Likelihood that the government will
be destabilized by violent means, including terrorism.
• Government Effectiveness: Quality of public services, the capacity of the civil
service and its independence from political pressures, and the quality of policy
creation.
• Regulatory Quality: Ability of the government to provide sound policies that
promote private sector development.
• Rule of Law: Degree to which agents abide by the rules of society, including the
quality of contract enforcement and property rights, the police, and the courts.
• Control of Corruption: Extent to which public power is exercised for private gain.
The World Bank cautions against taking these scores too literally, as numbers
cannot always accurately depict the situation on the ground. As the authors note: “any
observed empirical measure of governance will only be an imperfect proxy for the
broader dimensions of governance that it reflects.”58 The huge variety in the comparison
pool (199 countries) also skews the utility of the percentage indicators. Percentages
across the globe are not helpful for understanding how each country is doing in context.
It is unrealistic to compare Angola, Ghana, or Zimbabwe to the United States. Further,
57 World Bank Institute “Governance Matters 2009” 58 Kaufmann, Daniel, Kraay, Aart and Mastruzzi, Massimo, The Worldwide Governance Indicators: Methodology and Analytical Issues (September 2010). World Bank Policy Research Working Paper No. 5430, pp 20.
29
the WGI do not include information on economics or civil society development. Despite
these flaws, the WGI provide a dependable way to measure governance.
Using Millennium Challenge Corporation Statistics to Determine Conditions on the
Ground:
Since its founding in 2004, the United States Millennium Challenge Corporation
(MCC) has sought to reward countries for good governance. President Bush instituted
the program in an effort to focus aid on a select number of countries that are already
taking independent steps towards reform. The MCC provides aid to governments that are
committed to establishing policies and institutions focused on economic growth and
poverty reduction.59 In order to get a well-rounded sense of situations in the country,
MCC uses 15 metrics for determining a country’s program eligibility. The criteria are
divided in three sections, made up of several subgroups:60
• Ruling Justly: Control of corruption, rule of law, voice and accountability,
government effectiveness, civil liberties, and political rights.
• Investing in People: Immunization rate, primary education spending, public
expenditure on health.
• Economic Freedom: Credit rating, inflation, regulatory quality, budget deficit,
trade policy, days to start a business.
Each year, the MCC scores countries for their achievement in the above criteria.
The MCC relies on statistics from organizations including the World Health
Organization, the Heritage Foundation, and the International Monetary Fund. Angola
and Zimbabwe have both been excluded from receiving MCC funding due to their low
59 Radalet, Steve “Will the Millennium Challenge Account Be Different?” The Washington Quarterly 26:2, 171–187 2003. 60 There has been some variation over time in these categories, but the listed criteria have been used most often.
30
scores on the above 15 criteria. The MCC criteria improves upon the World Governance
Indicators for its inclusion of data on civil society and economics, and for its percentage
comparison to a group of peer countries, not every country in the world.
Political Environment of Ghana, Angola, and Zimbabwe:
“In determining the developmental impact of Chinese aid and economic
cooperation…the deciding factor in each case is likely not to be China, but individual
African countries and their governments.”61 The majority of the literature on foreign aid
focuses on the donor and its intentions. But the other part of the relationship is also
interesting—the effects of foreign aid on the receiving countries. What do the above
idealist, commercialist, and realist motivations mean for African nations? Below is a
short overview of the development of Ghana, Angola, and Zimbabwe, and a short
summary of each’s interaction with China. There is a plethora of studies on the
effectiveness of foreign aid for improvements in health, education, and agriculture, but
little scholarship focuses on Chinese aid specifically, or the independent political
development of these nations.
Ghana:
Ghana is an African success story. The country was the first sub-Saharan nation
to achieve independence and has survived coups to arrive at its present day democracy.
Ghana is marked by political stability, seen in the smooth transition to power in 2000.62
China and Ghana established relations in 1960 and have since remained close partners.
61 I use this quote to highlight the importance of understanding the effects of aid on Africa. However, I still very much believe that comprehending why China is investing assists us in ascertaining how their aid projects are conducted. Brautigam, The Dragon’s Gift pg. 21. 62 Country Review Report of the Republic of Ghana. (Midrand, South Africa: African Peer Review Mechanism RM Secretariat, 2006).
31
China focuses its aid on infrastructure such as the large Bui Damn project, as well as
communications upgrades, military buildings, vehicles, and jets.63
Very little work analyzes China’s economic role in affecting Ghana’s
development as a whole. Has Chinese aid pushed President Atta Mills and others to
promote stability as a way to ensure more investment? Can we partly thank Beijing for
Ghana’s model democracy?
Angola:
Angola’s history is significantly tumultuous than Ghana’s. Civil war engulfed the
country from 1975-2002 and President dos Santos has ruled the country in a centralized
and authoritarian manner for over 30 years. Interestingly, when the Soviet-backed
MPLA came to power in 1979, China was supporting the losing side. Relations between
the two countries were strained after independence and were not formally established
until 1983. Since then, Chinese aid has focused on oil purchases and communications
infrastructure.64 Many countries purchase Angola’s significant oil resources.
It is traditionally argued that China has taken on the role of the “knight in shining
armor” coming from the East with rolls of cash. However, the Angolan government has
indicated its desire to cooperate with groups such as the Paris Club and does seek more
than one development partner. Further, the United States was, until recently, the top
purchaser of Angolan oil and has provided many loans as well. Work needs to be done to
analyze if Beijing has had a role in isolating Luanda from the transparency and reform
requirements of international aid.
63 Rotberg, Robert I., “China’s Quest for Resources, Opportunities, and Influence in Africa” pg. 1-20 in Robert Rotberg in China Into Africa: Trade, Aid, and Influence. (Washington, D.C.: Brookings Institution Press, 2008). 64 Rotberg, pg. 9.
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Zimbabwe:
China’s role in supporting Zimbabwe’s President Robert Mugabe is quite
damning for Beijing. China is the largest foreign investor in Zimbabwe and can be
described as the country’s only real supporter.65 Mugabe has ruled for more than 20
years and espouses an inflammatory rhetoric that frequently criticizes the West. China
has been complicit with Mugabe through its support for controversial moves such as
endorsement of the flawed 2005 elections and Mugabe’s decision to raze shantytowns
and institute unequal land reform.66
On the other hand, Zimbabwean relations with the United States and Britain have
deteriorated over the years, culminating in Western sanctions against Luanda in 2002.
The United Nations reports a weak judiciary, hyperinflation, and high unemployment in
the country.67 But how much Chinese aid has enabled Mugabe to stay in power? And is
Beijing to blame for some of the mess in the country, or can we thank Chinese aid for
preventing even further decay?
Conclusion:
As explained above, idealist, realist, and commercialist explanations for aid all
carry merit and can frequently explain the actions of donor states. In the case of China,
realism and commercialism seem to dominate its motivations for investing in Africa.
While this much is clear, the literature is essentially silent on the question of how these
motivations relate to the regime of the recipient country. The politics, partners, and petro
65 Eisenman, Joshua, “Zimbabwe: China’s African ally,” in Arthur Waldron. China In Africa. (Washington, DC: Jamestown Foundation, 2009). 66 Rotberg, pg. 15. 67 Looking Forward Together: United Nations Development Assistance Framework: UNDAF for Zimbabwe. Harare: United Nations Country Team, 1998.
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model emerge as a way to determine how Chinese aid and investment will affect a
recipient country
This paper seeks to look across countries and delve into the question of whether
China invests differently based on regime type and resource allocation of the recipient
country. For the purpose of this study, Chinese economic activity will be considered
foreign aid because investment is frequently state-sponsored, or at least state approved.
It is also important to understand how aid affects the recipient country. Literature
on the political and economic development of Ghana, Angola, and Zimbabwe is a bit
lacking, but a general picture of their history emerges. The Chinese did not participate in
Ghana’s early political history, and the country is now a thriving democracy. Angola and
Zimbabwe provide a different story and show how China has been tied up with civil war
and dictators in these two nations for decades. But further work needs to delve in the
exact effects of Chinese aid in these countries.
34
Chapter III: The Chinese Influence in Ghana
“Talk Does Not Cook Rice”
Ghana is a democracy with an optimistic future. Its governance is strong, many
foreign partners support the country, and developed industries exist outside the oil sector.
Applying the politics, partners, and petro framework, Chinese activities in Ghana have
been mediated by a strong democracy, aid and investment from many other countries,
and few natural resources, until the recent discovery of oil. Chinese aid has generally
benefitted the population, though there are some projects and loan constraints that are not
favorable to Accra.
In 1957, Ghana peacefully gained its independence from Britain. Ghana has a
population of 24 million and is roughly the size of Oregon. With a successful
democracy, a developing economy, and a fairly healthy and educated populace, Ghana
gives hope that colonialism has not poisoned the continent’s prospects for growth. Ghana
is the continent’s second largest gold miner and the world’s second largest cocoa grower.
Although the country recently began pumping oil, Ghana’s economy does not depend on
natural resources, and thus is not a petro state. Ghana also is the largest troop contributor
to the African Union peacekeeping forces.
Below is a short history of China-Ghanaian relations with a focus on the major
projects and aid. A section on history is followed by information on the current China-
Ghana relationship. An example of four Chinese projects and China’s investment in
Ghana’s oil sector and infrastructure, as well as a comparison with Western investment,
is next. The chapter ends with applications of Kastner and Brautigam’s model for
35
determining the effects of Chinese aid as well as an examination of World Governance
and Millennium Challenge data.
History of China-Ghana Relations:
In the fifteenth century, the Gold Coast, as Ghana was known before its
independence, was a land of organized tribes. Beginning with the Portuguese in 1471
and continuing even after the beginning of British rule in 1896, the Dutch, English, and
Swedes vied for control of commercial activity and the slave trade. The British
developed the country’s infrastructure and ruled until the Ghanaian Parliament requested
independence in 1957.
Kwame Nkrumah from 1952-1966. He was a Marxist who promoted “scientific
socialism.” In pursuit of these ideologies, he collectivized agriculture and took over
many private industries. Ghanaian-Chinese relations were friendly during this period and
he visited China in 1961 and Chinese Vice Premier Zhou Enlai reciprocated in 1964. He
lobbied for China’s membership in the U.N. and supported Beijing in the 1962 Sino-
Indian war. Due to poor economic conditions and other grievances, Nkrumah’s
government was overthrown by military officers in 1966, ironically while he was on a
state visit to China. Today, his statue stands in front of the Chinese-constructed African
Union headquarters in Ethiopia.
After further coups in 1972, 1979, and 1981, Jerry Rawlings came to power. He
was the last Ghanaian leader to take power in a coup. John Kufuor’s 2000 election was
the first successful democratic change of power. In 2008, current president John Atta
Mills won a run-off election. The country was the first Sub-Saharan nation to achieve
independence. The country’s next elections are in December 2012.
36
Since the country’s turn to democracy in 1993, its leaders have “attempted to
enthrone the liberal state in all its ramifications.”1 As a result, Ghana is marked by
political stability, seen in the smooth transition to power in 2000.2 The government is a
republican democracy with a constitution, powerful president, legislative Parliament and
independent judiciary.3 Since independence, the country has faced difficulties in
entrenching democratic institutions and underinvestment is still an issue. Dzorgbo points
out that although the government threatened to nationalize foreign-owned companies and
the policy environment was risky for foreign investment in the 1980s, Accra is now
anxious to create trust with large foreign investors.4
Diplomatic relations between China and Ghana began in 1960, a few years after
Ghana’s independence. The two countries signed the Peace Treaty of Friendship and
Cooperation in 1961 and the Ghanaian ambassador to Beijing moved to China that same
year. When President Nkrumah’s government was overthrown in 1966, diplomatic
relations between the two countries were suspended for six years. It seems the Ghanaian-
Chinese relationship rested primarily on Beijing’s friendship with Nkrumah. However,
relations and some stability were restored when General Acheampong came to power in
1972.
China and Ghana Today:
1 Boafo-Arthur, Kwame, “The Liberal Ghanaian State and Foreign Policy: the Dynamics of Change and Continuity” in Kwame Boafo-Arthur. Ghana: One Decade of the Liberal State. (Dakar, Senegal: CODESRIA Books, 2007). 2 Country Review Report of the Republic of Ghana. (Midrand, South Africa: African Peer Review Mechanism RM Secretariat, 2006). 3 The country still has a weak legislature. Department of State, Bureau of African Affairs, “Background Note: Ghana,” September 17, 2010, http://www.state.gov/r/pa/ei/bgn/2860.htm. 4 Dzorgbo, Dan-Bright S., Ghana In Search of Development: the Challenge of Governance, Economic Management and Institution Building. (Aldershot: Ashgate, 2001).
37
The China-Ghana relationship has been friendly and, according to President Mills,
the Chinese have promoted Ghanaian economic growth and social development. In 1992,
China built Ghana’s National Theatre as a reward for Ghana's diplomatic support during
the 1989 Tiananmen Square protests. The two countries recently celebrated the 50th
anniversary of their diplomatic relationship. During the visit of Li Zhaozhuo, vice
chairman of the National Committee of the Chinese People’s Political Consultative
Conference, President Mills declared that China was Ghana’s “best friend”5 for its aid,
projects, and loans.
Following the first Forum on China-Africa Cooperation meeting in 2000, there
has been an increase in the frequency of diplomatic visits between the two countries.
Figure 3.1 provides a listing of visits by top officials from each country. Note the
reciprocity that governs the trips.
5 Xinhua “China, Ghana seek closer ties, cooperation” February 15, 2011, http://news.xinhuanet.com/english2010/china/2011-02/15/c_13733043.htm.
38
Although Ghana has targeted China for increased investment under the Ghana
Investment Promotion Council’s strategy, China’s share of Ghana’s total exports has
been low. However, in terms of the number of projects, China is the largest foreign
investor in Ghana.6 Figure 3.2 illustrates the value of foreign direct investment projects
in 2007 in non-extractive sectors.7 The U.K. invested the most in Ghana during 2007
with China in far second place.
6 Daily Graphic, “More Investors Show Interest in Ghana’s Economy,” Government of Ghana Official Portal, May 11, 2011, http://www.ghana.gov.gh/index.php/news/features/12867-more-investors-show-interest-in-ghanas-economy. 7 Idun-Arkhurt, Isaac “China and Ghana: A Case Study Engagement,” South Africa Institute of International Affairs, 2008, pg. 18.
Date Personnel Destination January 2000 Chinese State Councilor Yi Ghana January 2000 Ghanaian Foreign Minister Gbeho China July 2000 Ghanaian Vice President Mills China June 2002 Chinese Vice Foreign Minister Yang Ghana August 2002 Speaker of the Ghanaian National
Assembly Adjetey China
October 2002 Ghanaian President Kufuor China March 2004 Chinese Vice Commerce Minister Wei Ghana March 2005 Governor of the People’s Bank of China
to Ghana Ghana
June 2005 Chinese People’s Political Consultative Conference (CPPCC) delegation
Ghana
June 2006 Chinese Premier Wen Jiaobao Ghana April 2007 70-member delegation of the Chinese
National Standing Committee of the CPPCC
Ghana
2008 63-member delegation from the Ghana Investment Promotion Center
China
September 2010 Ghanaian President Mills China December 2010 Chinese Hubei Provincial Sino-Africa
Business Council Ghana
February 2011 Chinese parliamentary delegation of the CPPCC
Ghana
April, 2012 Ghanaian Vice President Mahama China
Figure 3.1: Visits by Top Ghanaian and Chinese Officials, 2000-2012
39
The European Union is Ghana’s largest
trading partner and tops the list for exports and
imports. Ghana’s second largest import partner is
Beijing, with Chinese goods making up almost 17%
of imports in 2010, a great increase since 2006.
During the same year, China was the 9th largest
importer from Ghana with only 2.5% of the trade.8
Figure 3.3 shows the dramatic difference between imports to Ghana from China and from
other nations. 9 Ghana receives investment from many partners and China is one of the
many knocking at Accra’s door.
Broadly speaking, Ghana exports raw materials to China and imports manufactured
goods. Ghana’s main exports to China include: oil products, cotton, gold, aluminum,
8 European Commission, “Ghana: Bilateral Trade and Trade with the World” Director General for Trade, January 10, 2012, www.trade.ec.europa.eu/doclib/html/122456.htm, pp. 6. 9 Aryeetey, Ernest; Fenny, Ama Pokuaa; Tstikata, Dela, “China-Africa Relations: A Case Study of Ghana,” African Economic Research Consortium, January 2008, pg. 17.
Figure 3.2: 2007 FDI in Ghana in non-extractive sectors
Figure 3.3: Imports to Ghana from China and other nations 2000-2006
40
manganese, timber, cocoa beans, and frozen fish. China exports textile goods and
mechanical and electronic equipment to Ghana. In comparison, the United States
generally imports Ghanaian agricultural products and exports transportation equipment
and energy related materials.10 Further, there is little engagement with Ghanaian
companies as Chinese companies are reluctant to use local equity and local loans for their
investments. Approximately 95% of the total cost of operations by Chinese companies is
made up of foreign loans and equity.11 The isolation with which China operates in Ghana
is one-sided and is not helping develop Ghanaian industry.
Chinese-Ghanaian trade has increased significantly in the past decade and shows
no signs of slowing. While trade numbers vary by source, in 2010, Chinese exports to
Ghana totaled more than $1.9 billion and China imported $123 million worth of
Ghanaian goods.12 In 2008, Ghana received $10.9 million in Chinese FDI flows and this
amount rose to $49.3 million in 2009—a whopping 352% increase in one year.13
Similarly, in 2008, China sent $58 million to Ghana in FDI stocks, and $185 million in
2009.14 Trade between China and Ghana reached $2 billion in 2010,15 though that is only
2% of the total China-Africa trade.
China remains one of many foreign investors in Ghana. Figure 3.4 shows total
10 African Growth and Opportunity Act Info, Trade Law Center for Southern Africa http://www.agoa.info/?view=country_info&country=gh&story=trade. 11 Aryeetey, pg. 11. 12 Statistical Bulletin of China 2011. 6-7 Value of Imports and Exports by Country (Region) of Origin/Destination http://chinadataonline.org/member/yearbooknew/yearbook/ybcdata.aspx?yc=F88F0ED0C6279E70148150AA6B635573&cc=P0607. 13 Statistical Bulletin of China's Outward Foreign Direct Investment, Table 1 and Table 2, 2009. http://chinainvests.org/2010/12/22/2009-statistical-bulletin-of-chinas-outward-foreign-direct-investment/. 14 Statistical Bulletin 2009 15 Xinhua “China, Ghana eye more trade, investment” February 17,2011, http://news.xinhuanet.com/english2010/china/2011-02/17/c_13735575.htm.
41
investment in Ghana from 2001-2005. It is clear that other nations are investing much in
Ghana.16
Chinese businesses are competing in many sectors in Ghana, though competition
is particularly injurious in the textile industry. For example, Chinese firms have brought
their “copying” abilities and provide cheap, though fake, versions of African cloth.
When one shops for Kente cloth in Accra, there is the option to purchase the authentic
hand woven version, or the Chinese mass-produced printed option. Of the $250 million
of African prints sold each year in Ghana, only about a quarter of demand is met by
locally produced textiles.17 Not only is China competing in the Ghanaian cloth sector,
but Chinese merchants are also importing large quantities of Chinese textiles. In 2006,
almost 30% of textile imports to Ghana were from China.18 But China has also helping
to develop local industry by providing Ghana with cotton-textile machinery. In Ghana’s
famous outdoor market, which is the largest in Africa, one also finds inexpensive Chinese
goods. Street sellers vend trinkets with the “Made in China” sticker. Some take a more
16 Ayeetey, pg. 7. 17 Taylor, Ian, China’s New Role in Africa, Lynne Rienner Publishers, 2009. 18 Ayeetey, pg. 22.
Figure 3.4: Chinese vs. Total Investment to Ghana, 2001-2005
42
sinister view and believe that Chinese developmental assistance is just a strategy for
entering the Ghanaian marketplace.19
While the increased competition may be a result of globalization in general, the
flooding of the Ghanaian market with cheap Chinese goods is crippling the indigenous
development of Ghanaian industries. Ghanaian citizens may be able to purchase Chinese
goods at low prices, but if they are unable to find jobs due to these same goods, they have
reason to be resentful and push against foreign trade, especially Chinese imports.
Looking solely at the humanitarian sphere, China has pledged to give over $10
billion in aid to Africa for development projects. It is unclear how much of this is
intended for Ghana as numbers on Chinese humanitarian aid are hard to locate, though
likely low. For example, the Chinese have recently built the Burma Conference Center,
renovated the National Theatre, assisted in an irrigation project, treated malaria, and built
a hospital, all for under about $15 million, or about $2 million per year over the past
decade. These humanitarian aid figures are quite small when compared to the U.K.’s
$149 million in aid over five years.
The Chinese generally focus their investment on large-scale construction projects
and small-scale manufacturing enterprises in Ghana. Figure 3.5 helps illustrate the
magnitude and types of Chinese aid to and investment in Ghana. Note the vague nature
of many of the Chinese projects.
19 Davies, Martyn “How China Delivers Development Assistant to Africa.” Centre for Chinese Studies, University of Stellenbosch, February 2008, pg. 43.
43
Date Amount (US$) Type Description 2001 $3.6 million grant economic development 2003 $1.2 million grant construction of Burma Hall Complex 2003 $28 million interest free loan construction of the 17.4-mile section
of the Accra-Kumasi Road 2003 $.963 million grant military 2003 $2 million grant restorations of the National Theatre 2003 $3 million Grant Afefi Irrigation Project 2003 $3.9 million grant construction of barracks for the
military 2003 $66 million debt cancellation - 2005 $75 million loan telecommunications equipment, ZTE 2005 $53 million debt cancellation - 2005 $3.6 million grant economic and technical cooperation
projects 2006 $66 million - upgrading telecom network, school
and malaria center construction 2006 $30 million Concessional loan security communication between
agencies 2006 $.25 million donation treatment of malaria 2006 $3.75 million grant foster economic and technical
cooperation 2006 $3.75 million interest free loan - 2006 $275 million loan construction of Takoradi stadium 2006 $38.5 million loan construction of Tamale stadium 2006 $1.25 million grant military 2007 $30 million Concessional loan foster closer military ties, construction
of the Ghanaian Ministry of Defense 2007 $662 million export credit Bui Dam 2007 $30 million 2nd loan agreement communications, contractor is ZTE 2007 - Grant in kind Training of Ghanaian government
officials in China 2007 $5.33 million Interest free loan
and grant Various developmental projects
2007 $24 million debt cancellation - 2008 $99 million Interest free loan Landing sites for fishing communities 2008 $1.34 million - Predause Presidents Lodge 2009 $3 billion Loan Oil and natural gas development 2010 $10.4 billion Concessionary loan Kumasi to Paga railway development,
energy infrastructure, education 2011 $7.3 million grant 100-bed hospital in Teshie 2011 $3 billion - Infrastructure projects
Figure 3.5 Chinese aid and investment in Ghana: 2000-2012
44
Four Chinese projects in Ghana are notable for their scope and provide insight
into the Sino-Ghanaian relationship. They are the Bui Dam, Essipon Stadium, the
telecommunications agreement with Ghana Telecom, and the Teshie Hospital. These
four examples help illustrate how China goes about funding projects in Ghana, and the
impacts of Chinese investment on local workers and industry.
Bui Hydroelectric Power Project
The Bui project has been the largest Chinese-funded venture in Ghana. It cost
$622 million in the form of concessional and commercial loans from China’s Export-
Import (ExIm) Bank. ExIm provided $292 million in funding while the Chinese
government supplied $270 million and the Ghanaian government contributed $60
million. 58% of the loan was on commercial terms (typically LIBOR plus a margin) with
a 17-year payback and a five-year moratorium. 42% of the loan qualified as overseas
development assistance and was on concessionary terms of 2% over 20 years. Payments
from Ghana were backed by cocoa revenues that were deposited in an escrow account
with the ExIm Bank.20
The dam is helping solve the acute energy crisis in Ghana, which is a result of
capacity problems at the Chinese-constructed Akosombo Dam. The Chinese SinoHydro
Corporation Ltd. completed the Bui Dam in 2008 in five years. While there were
concerns that the Chinese were not utilizing the local population, the Chinese employed
about 550 Ghanaians and 100 Chinese. The Ghanaian workers were all casual, not
20 Idun-Arkhurt, pg. 10 http://www.google.com/url?sa=t&rct=j&q=&esrc=s&source=web&cd=1&ved=0CF4QFjAA&url=http%3A%2F%2Fwww.africa-union.org%2Froot%2Fua%2Fconferences%2F2008%2Fsept%2Fea%2F08sept%2F2008%2520i%2520arkhurst.pdf&ei=kP2mT_CWBomfiQKau8zgAg&usg=AFQjCNF6606t7sJcskeZilyMm93lR8Pp8w&sig2=8PwYhWFp9xuSBDum4cffyQ.
45
contractual, and worked longer than usual hours. In this case, China provided a loan to
Ghana and then a Chinese firm completed the project with local workers. The project
provided employment for Ghanaians, but did not help develop Ghanaian industry, nor
provide high-level technical job opportunities.
This project is touted as Chinese benevolence toward Ghana as it assisted the
country in building critical infrastructure. However, the majority of the loan was on
commercial terms, a Chinese company benefited from the contract, and the venture did
little to develop Ghanaian expertise.
Essipon Stadium Construction
The Essipon Stadium was one of two Chinese-funded stadiums for the 2008
African Cup of Nations. A Chinese firm completed this project and the majority of the
funds came from the Ghanaian government. The Chinese Shanghai Construction Group
(SCG) finished the project early with a soft loan of $39 million from China and a $275
million commercial loan from Barclays Bank of Ghana. SCG employed double the
amount of Chinese workers over Ghanaians. Like with the Bui dam, all the workers were
employed on a casual basis. These stadium projects seem extravagant when compared to
Ghana’s GDP/capita of $3,000/year.21 However, Ghanaian President Kufuor argued that
the stadium would benefit the country’s economy and he further expressed his desire to
build a stadium in each regional capital in Ghana.
Ghana Telecom and Alcatel Shanghai Bell Agreement
The agreement between Ghana Telecom and the Chinese Alcatel Shanghai Bell
(ASB) will upgrade and expand Ghana’s telecom network access and seems to be solely
21 World Factbook, “Ghana,” Central Intelligence Agency, April 23, 2012, https://www.cia.gov/library/publications/the-world-factbook/geos/gh.html.
46
commercial. After a bidding process, Ghana Telecom selected ASB for an $80 million
contract to provide switching lines and help grow mobile network capacity. When the
project is completed there will be telecom services available to all secondary schools,
towns, and villages in the country.22 This project is similar to the Chinese Huawei
Technology’s construction of a fiber optic cable from Accra, the capital, to Tamale in the
Northern region.
Since the 1976 construction of the Tanzam railway in Zambia, the Chinese have
been investing in Africa’s infrastructure. However, Chinese involvement in other
countries’ strategic infrastructure has caused some consternation. The close relationship
between business and government in China leads some to believe that, in a crisis, Beijing
would have control over other countries’ important infrastructure. As Beijing helps
rebuild Africa, they frequently utilize Chinese contractors and materials. Further, the
access to capital available to Chinese state owned enterprises (SOE) allows them to
undercut their competitors (both Western and local) and operate on lower profit
margins.23
Construction of the Teshie Hospital
The Teshie hospital project is an example of Chinese humanitarianism, though via
solely Chinese firms. The China Geo-Engineering Corporation (CGC) built the hospital
with a $7.28 million Chinese government grant. The hospital has several departments
and will serve an estimated one million people in Accra. In this case, a Chinese firm,
22 Red Orbit 23 Burke, Christopher; Corkin, Lucy; and Davies, Martyn, “China’s Role in the Development of Africa’s Infrastructure,” African Studies Program, The John Hopkins University, 2008.
47
GCC, worked in Ghana using the Chinese government’s money.24 While China is
concentrated on construction of medical buildings in Ghana, U.S. humanitarian aid in the
health sector has focused on training to doctors and nurses.
China’s Investment Attempts in Ghana’s Oil Sector:
The 2007 discovery of offshore oil provided a chance for the international
community to invest in Ghana’s energy sector. Due to bidding politics and Western bias,
China does not currently have a stake in Ghana’s Jubilee oil fields. Production began in
2010 and Jubilee’s reserves are estimated to be between 370 million and 1.8 billion
barrels. The targeted output is 120,000 barrels per day by 2012, which is a relatively
small amount. For some context, the top ten oil producers all produce at least 2 million
barrels per day. Thus, we can consider Ghana a non-petro country and one that must
develop its economy through industries other than those related to natural resources. Last
year, China imported approximately 2,500 barrels a day of oil from Ghana, .05% of
China’s oil imports.25
In 2010, the China National Offshore Oil Corporation (CNOOC), an active
shopper on the world’s energy market, submitted a joint $5 billion dollar bid with Ghana
National Petroleum Corporation (GNPC) for a 23.5% stake in the field. Kosmos Energy,
the stake owner, rejected their offer for unstated reasons, though price might have been
an issue. Currently, Tullow Oil, a London-based company and U.S. companies Kosmos
Energy and Anadarko Petroleum hold the majority of stakes in all locations. GNPC owns
a small share as well. 24 Nuamah, Samuel “100 bed Teshie hospital inaugurated” The Ghanaian Times, December 22, 2010. 25 Bloomberg News, “Ghana Signs $1 Billion Loan with China for Natural Gas Project” April 16, 2012, http://www.bloomberg.com/news/2012-04-16/ghana-signs-1-billion-loan-with-china-for-natural-gas-project.html.
48
In December 2009, the China Development Bank provided GNPC with a $3
billion loan for development of the oil and gas sector. This loan was likely intended to
bolster CNOOCs’ prospects of receiving the oil stake, but was unsuccessful as the
Chinese bid was rejected.26 The funds came full circle as GNPC contracted with the
Chinese oil firm Sinopec to build gas processing plants using this money. This deal-
sweetening loan is in addition to the $10.4 billion the China Export Import Bank loaned
Ghana for infrastructure projects in September 2009. The $10.4 billion credit will be
repaid with exports and will likely not qualify as overseas development assistance. The
Chinese have not released details on the loan, so it is unclear what percentage of the
amount qualifies as concessionary versus commercial.27
During the bidding process, China’s ambassador to Ghana said that China “would
not hesitate to operate in Ghana’s new oil industry if the [Ghanaian] government [gave]
us the opportunity.”28 China is very focused on acquiring energy resources but Beijing
does not seem to have been rewarded yet for its support to Ghana. However,
ExxonMobil, a Western company, also submitted, then withdrew its $4 billion bid after
coming under fire for circumventing normal government approvals. Officials from the
GNPC did not want to “subordinate Ghanaian law governing a strategic natural resource
to a private contract made between two U.S. companies.”29 President Mills is very
26 This Day Live, “GNPC, CNOOC Bid $5bn to Buy Kosmos Stake” November 8, 2010, http://www.thisdaylive.com/articles/gnpc-cnooc-bid-5bn-to-buy-kosmos-stake/74749/. 27 Bruatigam, Deborah, “Unpacking China Eximbank’s $10.4 Billion Ghana Credit,” September 25, 2010, China in Africa: The Real Story blog, http://www.chinaafricarealstory.com/2010/09/unpacking-china-eximbanks-104-billion.html. 28 Boadi, Samuel “China expresses interest in Ghana’s oil industry” Daily Guide, February 16, 2011. 29 Wallis, William “Ghana: Split Decision on Who Wins Jubilee Fields” Financial Times, September 12, 2012, http://www.ft.com/intl/cms/s/0/97e9c716-bc71-11df-a42b-00144feab49a.html#axzz1u7v3Y4Ub.
49
sensitive regarding oil field ownership because of the venture’s potential to help or hurt
Ghana’s development. This hesitancy extends to the Chinese, Korean, French, British,
and Norwegian companies that have also shown interest.
While one could argue that solely free market forces resulted in the current
ownership of the oil fields by Western companies, it is likely that if the Ghanaian
government wished to see CNOOC participate in development, it could have made its
desire a reality. Although the politics and details of the bidding process are murky, it
appears that Beijing was not welcome, even in partnership with a Ghanaian company.
Some argue that the rejected $5 billion CNOOC-GNPC bid was too low, as the stake has
been valued at $6.75 billion. It is possible that politics and the connotations of Chinese
ownership killed the deal.30 To many Ghanaians, Chinese companies have a reputation
for acting in their sole interest, and in a way that does not benefit the local population.
As the oil sector develops, there will be more pressure on the Ghana-China relationship
as CNOOC will likely keep pushing for a deal.31
$3 Billion Infrastructure Loan
Ghana recently completed negotiations with the Hong-Kong based China
Development Bank (CDB) regarding a $3 billion loan for infrastructure projects under
the Ghana Shared Growth and Development Act. This loan is part of a putative $13
billion package of credit lines from the CDB. The loan package is in non-concessional
but competitive terms. On February 20, the Ghanaian Parliament reviewed changes to
the agreement that were made since its initial approval in August 2011. Accra has also
30 This Day Live 31 Ordonez, Isabel; Sharma, Rakesh, “Bid for Ghana Oil Field Rebuffed” The Wall Street Journal, November 2, 2010, http://online.wsj.com/article/SB10001424052748704141104575588111375730330.html.
50
begun negotiations for a $6 billion loan from the Export-Import Bank of China for social
projects.
The $3 billion loan stipulates that 60% (and perhaps even up to 85%) of the funds
must go to Chinese contractors.32 This loan is benefiting Chinese firms and is only
slightly contributing to the domestic development of Ghana’s economy and industries.
The loan even brings money back to Beijing as funds go from the Chinese government to
Chinese contractors that are close to the government, leaving Ghana with little funding.
The Economist Intelligence Unit also reported that Ghana approved 70% of future oil
revenues as collateral for borrowing.33 Ghana is already having trouble with fiscal policy
management, and such a large sum creates concerns of corruption and debt stock. The
Chinese are aware of these problems, and are insulating themselves from risk through
Ghana’s most valuable resource.
Accra received a waiver of conditionally from the IMF that allowed the country to
enter into this type of agreement with the CDB. The Ghanaian Deputy Minister of
Finance and Economic Planning noted that Ghana “cannot subject [its] right to contract a
loan as a sovereign country to our obligation to any international body.”34 As Chinese
aid is resulting in Ghana’s exit from the international finance system, Beijing can be seen
as having a negative influence. Chinese aid, unlike IMF and other Western aid, does not
include incentives for transparency and corruption fighting which prepare Ghana for a
32 Africa-Asia Confidential, “The Three Billion Dollar Question,” April 2012, http://www.africa-asia-confidential.com/article/id/725/The_three_billion_dollar_question. 33 Quartey, Lawrence, “Ghana Cautioned on Chinese $3 Billion Loan Arrangement,” The Africa Report, February 13, 2012, http://www.theafricareport.com/index.php/2012021350181518/west-africa/ghana-cautioned-on-chinese-$3-billion-loan-arrangement-50181518.html. 34 Ghana Daily Graphic, “$3b Chinese Loan Agreement back to Parliament,” February 17, 2012, Joy Online, http://politics.myjoyonline.com/pages/parliament/201202/81551.php.
51
better future. Ghana’s long-term development is likely best served when it is fulfilling its
obligations to international bodies.
According to a 2008 study by the South African Institute of International Affairs,
China’s activities in Ghana, like this loan, have the potential to negatively influence
Ghanaian governance. First, China’s joint state-business approach to project funding
limits Ghana’s ability to determine aid uses. Since China has relationships with many
Chinese companies, Beijing is able to give aid and then require the funds be spent on
specified Chinese contractors. The Ghanaian government is often sidelined or dealing
with new partners, resulting in a lack of local control and poor quality work. Further, this
sole source negotiation circumvents the 2003 Public Procurement Act.35 Second, and as
mentioned above, cheap credits from the Chinese government allow Chinese companies
to underbid their competitors and engage in possible collusion. Ghana has weak policy
on trade and safety, which enables China, and other foreign actors, to engage in dumping
and poor labor practices.
Comparison with Western Aid:
In order to understand China’s impact on Ghana, it is important to grasp the
extent of other foreign investment and influence. Ghana has many partners and has
received aid from international organizations such as the IMF and countries such as the
U.S. and Germany for decades. In 2006, Ghana signed a 5-year, $547 million
Millennium Challenge Corporation Compact, which aims to transform Ghana’s
agricultural sector and is expected to improve the lives of one million Ghanaians. Ghana
recently received its seventh Poverty Reduction Support Credit from the World Bank,
35 Idun-Arkhurt, pg. 19
52
bringing its aid total to an average of $100 million per year since 2003.36 In 2003, the
Paris Club wrote off $821 million of Ghana’s bilateral debt, bringing the total amount
owed by the country to $435 million. In May 2009, the European Union launched a $35
million credit line to support the growth of small and medium enterprises. USAID
assistance to Ghana in 2011 was over $150 million.
Britain is Ghana’s largest bilateral partner and, since 2003, has provided over
$140 million in aid. Additionally, from 2009-2012, London pledged to commit $212
million for poverty reduction.37 Figure 3.6 shows average overseas development
assistance (ODA) to Ghana from 2006-2010.38 Notice that China does not make it to this
list.
36 World Bank “World Bank Approves US$215 Million Budget Support for Ghana,” http://web.worldbank.org/WBSITE/EXTERNAL/COUNTRIES/AFRICAEXT/GHANAEXTN/0,,contentMDK:22812984~menuPK:50003484~pagePK:2865066~piPK:2865079~theSitePK:351952,00.html. 37 Harrison, Jerry Joe E.K., “Toward Sustainable Development in Ghana: The China Factor” in Sharon T. Freeman China, Africa, and the African Diaspora: Perspectives, AASBEA Publishers, 2009. 38 Aid Flows, www.aidflows.org, information from Organization for Economic Cooperation and Development, Development Assistance Committee, Aid Statistics.
Figure 3.6: ODA to Ghana, 2006-2010 average (in US$M)
53
In order to shift growth from public sector recovery projects to investments in the
private sector, Ghana needs to wean itself from both Western and Chinese exchange
loans. Studies have found that these types of loans can force an appreciation of the real
exchange rate and crowd out the private sector.39 According to a recent report, “it is
important for China to provide financing to Ghana within a framework consistent with
the latter’s long-term debt sustainability and Millennium Development Goals progress.”40
Further, Chinese aid has raised concerns in the donor community for its lack of
transparency on the loans provided and missing provisions for improving aid
effectiveness.
As is clear from above, Ghana has many development partners. Western aid far
out shadows China’s humanitarian aid to Ghana. In fact, “there is evidence to suggest
that China’s increased involvement in Ghana has encouraged other nations…to step up
their engagement in the country.”41 Accra welcomes this competition between foreign
nations as it results in more aid pouring into the country.
Using Kastner’s Model to Assess the Chinese influence in Ghana: Kastner’s Buying Influence model tests whether China’s foreign economic ties are
translating into increased Chinese influence over the foreign policies of other states. 42
The argument goes that the more economically connected the two countries are, the more
Beijing will receive support on foreign policy issues. Kastner defines China’s core
39 Younger, Stephen, “Aid and the Dutch Disease: Macroeconomic Management When Everybody Loves You” World Development, Vol. 20, No. 11, (1992): 1587-1597. 40 Davies, pg. 42 41 Harrison, 215 42 For more information on Kastner, Brautignam, and data from the World Bank and Millennium Challenge Corporation, please see the previous chapter, the Literature Review.
54
interests as territorial integrity, regime stability, and economic development and uses
three recent events as examples. They are:
• The 2008 Taiwan referendum for U.N. membership
• Chinese crackdown on Tibetan unrest in 2008
• Beijing’s Word Trade Organization (WTO) status
By examining a country’s responses to these events and correlating it to China’s
economic investment in that country, one can test his theory.
In official statements, Ghana seems content to keep generally quiet on China and
its politics. Besides support for the one-China policy, Ghana has remained neutral,
perhaps in an effort to appease both Chinese and Western donors. For issues of Taiwan,
Tibet, and economic status, Beijing has sought support worldwide. There did not seem to
be evidence that China had sought support from Ghana on these issues, nor if Accra
responded negatively to Beijing’s overtures.
Ghana has supported the one-China policy. A recent joint communiqué says
Ghana recognizes that “Taiwan is an inalienable part of China’s territory” and Ghana
stated its support for national reunification.43 This is a strong statement of support,
especially given that many large Western powers still skate around this issue.
On the unrest in Tibet, the Ghana-China Friendship Association “condemn[ed]
any organized violence…by the separatist forces.”44 However, because of this
organization’s close ties to China, it is unlikely that these sentiments are coming from the
43 Embassy of the People’s Republic of China in the Republic of Ghana, Economic and Commercial Counsellor’s Office “China and Ghana Issue Joint Communiqué”, June 28, 2006, http://gh2.mofcom.gov.cn/aarticle/chinanews/200606/20060602538126.html. 44 Ghana-China Friendship Association, “Ghana-China Friendship Association Issues a press release on recent occurrences in Ghana” Ministry of the People’s Republic of China in the Republic of Ghana, March 23, 2008, http://gh.china-embassy.org/eng/xwdt/t418826.htm.
55
Ghanaian government. There do not seem to be statements from Ghana on China’s WTO
market status. Ghana has been a WTO member since 1995, though it is difficult to
determine how much influence Accra’s would have on this issue.
The situation in Ghana matches Kastner’s general findings that there is no
statistical relationship between Chinese economic investment and its effect on a country’s
foreign policy decisions. Chinese aid is not resulting in increased verbal support from
Ghana. The World Governance Indicators and Millennium Challenge Corporation data
below show that there has been little negative impact on the government’s development
as well. Although Chinese investment may have led Accra to support the one-China
policy, Ghana is not overly enthusiastic about supporting issues that bear little relevance
to West Africa.
Using Brautigam’s Model to Assess the Chinese Influence in Ghana:
Brautigam’s The Dragon’s Gift asserts that a well-governed African country will
experience net gains from Chinese investment, while corrupt and unstable countries will
not see broad gains.
In Ghana’s case, Chinese aid seems to benefit the country by providing
employment and telecommunications and energy infrastructure. While some small-scale
Chinese industries may be hurting local businesses, on the whole, Chinese and Western
projects are fairly similar. How the Chinese go about completing these projects is
another issue, though they seem to be less focused on Ghanaian development than
Western nations.
Ghana’s well-functioning democracy, strong civil society, and legislative and
judicial independence have allowed it to benefit from Chinese aid and investment. There
56
is no doubt however that Chinese aid could be improved to help even more Ghanaians,
specifically by utilizing more local workers. The issue of aid dependence is not
examined in this paper, but Beijing’s infrastructure investments, military support, and
humanitarian projects are beneficial for the country. So far there is little negative impact
on the Ghanaian government from Chinese aid, other than perhaps increased electoral
support due to a well-performing economy. And Beijing’s recent shut-out from
investment in the Jubilee Fields shows that, whatever the dynamics were, the Chinese
were not a part of the deal.
Using World Governance Indicators to Assess the Chinese Influence in Ghana:
The World Bank’s data on governance provides a reliable way to measure
changes in how a country’s government and citizens interact. The World Governance
Indicators (WGI) provide a score for six metrics each year. They also give a percentage
rank for each score, in comparison to 199 other countries in the world. Figure 3.7 lists
Ghana’s progress in governance over the past decade. The shaded boxes indicate
improvement in a category.45
Ghana continues to be one of the most well governed countries in Africa. In the
past ten years, Ghana’s voice and accountability, political stability, regulatory quality,
45 World Bank, “World Governance Indicators,” http://info.worldbank.org/governance/wgi/index.asp.
Type Year FY
Voice and Account-tability Total: 2.5
Political Stability Total: 2.5
Government effectiveness Total: 2.5
Regulatory Quality Total: 2.5
Rule of law Total: 2.5
Control of Corruption Total: 2.5
Govern-ance Score
2000 -.05 -.38 .02 -.09 .1 -.08 2010 .49 .04 -.01 .09 -.07 .09
Percentile Rank
2000 48.1% 33.2% 57.6% 50% 55.5% 57.6% 2010 63% 47.6% 55.5% 54.1% 54% 60.3%
Figure 3.7: Changes in Ghana’s WGI, 2000-2010
57
and control of corruption have increased individually, and have increased in comparison
to other countries. Government effectiveness and rule of law have only fallen by small
margins. Figure 3.8 shows the gradual improvement Ghana has been making in voice
and accountability (that is freedom of expression, freedom of association, and a free
media) since 2000.46
Freedom House also provides data on governance and lists Ghana as “free.” Its
freedom rating is 1.5 (out of seven, with seven being the worst), political rights is 1, and
civil liberties is 2.47 An illustrative example of Ghana’s openness is the media’s freedom
of expression. President Obama recognized the country’s openness and visited Ghana
first during his trip to sub-Saharan Africa
Ghana’s governance has been strengthening throughout the decade. Chinese aid
has been increasing during this time as well and there seem to be few, if any, negative 46 World Bank 47 Freedom House, 2012 Freedom in the World, http://www.freedomhouse.org/report-types/freedom-world.
Figure 3.8: Percentile Rank of Voice and Accountability in Ghana (dashed line is the margin of error at 90% confidence)
58
impacts on Ghana’s democracy as a result. Kastner’s findings above indicate that
Chinese aid and investment have not resulted in much verbal support from Accra, nor has
there been negative impacts on Ghanaian political development, as shown in
Figure 3.9.48 Here, Chinese exports, imports, and loans are compared with the average in
Ghana’s WGI percentage scores during the same year. The WGI have been steady
throughout the past decade while Chinese aid has been increasing.
Given Beijing’s authoritarian government, disregard for human rights, and strict
control on expression, many would applaud the conclusion that China is having little
political influence on Ghana and its democracy.
48 Data from All China Data Center and World Bank.
0"
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2000"2001"2002"2003"2004"2005"2006"2007"2008"2009"2010"
!WGI"percentile""scores"
US$""million"
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Figure"3.9:"ChinaEGhana"Trade"+"Loans"with"WGI"2000E2010"
trade"+"loans"
WGI"
59
Using Millennium Challenge Corporation Scores to Assess the Chinese Influence in
Ghana:
The Millennium Challenge Corporation (MCC) adds social and economic aspects
to the WGI political data. The MCC categories are: ruling justly, investing in people, and
economic freedom, and Ghana has made improvements in all of them. The past decade
has brought the country close to perfection in several areas, including regulatory quality,
political rights, control of corruption, government effectiveness, rule of law, and voice
and accountability. In the social sphere, Ghana’s immunization rates and health
expenditures have improved from 2004 to 2012. Figure 3.10 highlights the remarkable
improvements in governance. While there have been drops in primary education
expenditures, trade policy, inflation, and fiscal policy, Ghana still ranks relatively high
when compared to other nations.
Again, Ghana has been making improvements in governance, in social aspects,
and in the economic arena. The increasing Chinese presence has not resulted in drops in
any of these key indicators. While one might argue that Ghana’s progress could have
been faster without the Chinese influence, this counterfactual is difficult to measure.
Figure 3.11 shows the average of the three MCC scores for each year (percentage-wise
Type Year FY
Political rights Total: 40
Civil liberties Total: 60
Control of corruption Total: 2
Government effectiveness Total: 2
Rule of law Total: 2
Voice and accountability Total: 2
Individual Scores
2004 2 2 .41 .78 .63 .58 2012 37 47 .87 .86 .86 1.3
Relative to peer group
2004 97% 97% 80% 96% 92% 82% 2012 100% 95% 97% 100% 98% 100%
Figure 3.10: Changes in Ghana’s MCC Governance Scores, 2004-2012
60
with other countries), as compared to the amount of Chinese trade (exports plus imports)
and aid in that year.49 As with the WGI, the rise in Chinese aid is not correlated with a
decrease in the MCC scores, indicating that Beijing’s investments and aid have not led to
wholesale negative effects on Ghanaian governance, economy, or civil society.
Conclusion:
We can thank China for assisting in Ghana’s development by providing loans and
some humanitarian assistance. We can thank quality politics, many partners, and non-
petro industries for keeping Accra on a sustainable and needed path of development.
Ghana’s democracy has mitigated any possible negative effects of working with an
authoritarian government such as China. Many Western nations such as the U.S. and
49 Data from All China Data Center and Millennium Challenge Corporation.
0"
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2004" 2005" 2006" 2007" 2008" 2009" 2010"
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Year"
Figure"3.11:"ChinaEGhana"trade"and""loans"with"MCC"data"
trade"+"loans"
MCC"score"
61
U.K. have been solid partners to Ghana over many years and have provided millions in
aid. These partners help keep China in check and make Beijing one in a crowd. Finally,
Beijing may have been less interested in Ghana for its lack of natural resources such as
oil. With the discovery of offshore reserves, China is hoping to get involved, though
currently is facing difficulties.
62
Chapter IV: Chinese Relations with Angola, A Thirst for Oil
Angola fits into the pattern of a traditional
resource-based argument of the Chinese influence in
Africa. Conventional wisdom says that China will do
anything, or ignore anything, in its quest for oil. This chapter looks at China’s influence
in Angola, using the partners, politics, and petro model. What have Beijing’s
investments and aid have meant for Luanda’s governance, economy, and civil society?
Analysis using Kastner and Brautigam’s models and data from the World Governance
Indicators (WGI) and the Millennium Challenge Corporation (MCC) indicate that
ultimately, Chinese aid and investment cannot be singled out to blame for problems of
governance and development. Angola is able to play multiple players off each other in
the regime’s strategy of resisting changes in governance. The fungible quality of
Angola’s petro state means that if one party ceases buying oil in an effort to promote
reform, another nation will quickly take its place in purchases. However, there are some
important ways in which Chinese investment is more beneficial to Beijing than Western
investment.
This chapter provides a short history of China’s relationship with Angola, and a
summary of its current economic agreements. A discussion on Beijing’s oil focus, the
Lobito Refinery project, and Marathon oil stake highlight the nuances of Chinese
investment in Angola. A comparison with Western aid and investment shows that China
is one of many foreign nations investing heavily in Angola. Analysis using the Kastner
and Brautigam models and WGI and MCC data sets provides information for the
conclusion.
63
History of the China-Angola Relationship:
War raged in Angola for much of the country’s history. In 1975 Angola gained
its independence from Portugal, which had ruled the country since 1575. Angola quickly
entered a 27-year civil war between the Popular Movement for the Liberation of Angola
(MPLA) and the National Union for the Total Independence of Angola (UNITA). During
this war, China initially supported the Moscow-backed MPLA but switched its support
during the 1960s to National Liberation Front of Angola (FNLA) and then to UNITA.
The driving factor for Beijing’s switch was not affinity to UNITA, but a desire to counter
the Soviets. Some even say that China actually provoked the conflict by sending arms
and military advisors to Zaire in 1974.1 During the war, Luanda was the site of a real
ideological battle—Russia circulated busts of Lenin and pamphlets denouncing Mao
throughout the country. Beijing had its own tactics and hosted the UNITA leader, Jonas
Savimbi, for training in China in 1964 and 1965.2 The U.S. also fostered a friendship
with Savimbi and provided material support to UNITA.
Despite UNITA’s adherence to Maoism as a doctrine, the Chinese pulled away
from the group in the 1970s. Beijing was in a difficult position, as it wanted to prevent
the victory of the Soviet-backed MPLA, but also desired to maintain good relations with
whichever side won the civil war. The People’s Republic of Angola was established in
1974 and power was given to the MPLA, UNITA, and FNLA. At the time the civil war
ended, China was toning down its anti-Soviet rhetoric in all its relations in an effort to
pursue a more sustainable and balanced foreign policy. 1 Snow, Philip, “China and Africa: Consensus and Camouflage,” in Thomas W Robinson and David L Shambaugh. Chinese Foreign Policy: Theory and Practice. (Oxford: Clarendon Press, 1994). 2 Alves, Ana Cristina, “The Oil Factor in Sino-Angolan Relations at the Start of the 21st Century” South African Institute of International Affairs, Occasional Paper No 55, February 2010, pp. 5.
64
As part of its effort in the 1980s to befriend African nations, China established
diplomatic relations with Angola in 1983, ten years before Luanda established relations
with the United States. Beijing’s changing loyalties likely delayed the establishment of a
formal relationship.3 The Chinese and Angolans signed a trade agreement in 1984 and
set up the Joint Economic and Trade Commission in 1988, though the group did not meet
until ten years later, when the country was more stable.
The year 1992 saw continued violence and a disputed election in which José
Eduardo dos Santos claimed victory, and remained the country’s president, as he was
initially elected in 1979. He visited China in 1988, and then, keeping his options open,
visited Moscow a week later. Dos Santos criticized his domestic opponents as too “pro-
Chinese,” which indicates pragmatism in his choice of partners. Fighting in Luanda
continued throughout the 1990s despite conferences, peace accords, and U.N.
peacekeeping forces.
In 2002 the UNITA leader Jonas Savimbi was killed, leading to the end of the
civil war. The MPLA leader and President dos Santos became head of state. China had
been unusually active in the Angolan civil war and attempted to assert itself strongly (and
unsuccessfully) in the complex and shifting currents of African politics.4 Beijing’s
involvement in the war was embarrassing as China failed to pick the winning team.5
From 1991 to 2010, Angola had a democratic interim constitution, which was
recently replaced with a constitution authorizing authoritarian aspects. Citizens no longer
select the president and vice president; these positions are now filled from the party with
3 Taylor Ian, China’s New Role in Africa, Lynne Rienner Publishers, 2009, pg. 86. 4 Jackson, Steven, “China's Third World Foreign Policy: The Case of Angola and Mozambique, 1961-93” The China Quarterly, No. 142 (June, 1995), pp. 389. 5 Rotberg, Robert, “China into Africa,” Brookings Institution Press, 2008, pg. 157.
65
the largest majority in Parliament. The document approves two more terms for dos
Santos and, according to an Angolan law professor, “the president [now] controls
everything.”6 However, Xinhua News Agency, the official press agency of the Chinese
government, described the constitution in a much more positive light—“as a modern and
democratic constitution, which marked a new era in the country’s political life.”7 There
were no comments on what many could regard as a regressive change in Angola’s
constitution.
Dos Santos won his party election in 2003 and MPLA won the 2008 legislative
elections by a large majority. China maintained relations with Angola during the 2000s,
including four meetings of the Joint Economic and Trade Commission. In 2006, the
Chamber for Commerce for Chinese Companies in Angola was established in an effort to
encourage collaboration between Chinese and local companies, though it is unclear the
group has resulted in increased cooperation.8
Currently, Angola is a one-party state. Despite elections and constitutions,
democracy’s development has been curbed in Angola.9 The executive is the highest
power and there are few checks on the President’s power. Angola has the second largest
oil reserves in sub-Saharan Africa and the largest natural gas reserves. A group of
dictatorial elites controls the country’s oil reserves and they are under little pressure to
change their ways. Angola is very much a petro state, where the vast majority of
6 Dugger, Celia, “Angola Moves to Make President Stronger,” The New York Times, January 21, 2010, http://www.nytimes.com/2010/01/22/world/africa/22angola.html. 7 Xinhua News Agency, “Angola’s First Vice President Sworn in under New Constitution,” February 8, 2010. 8 Centre for Chinese Studies, “China’s Interest and Activity in Africa’s Construction and Infrastructure Sectors,” Stellenbosch University, November 2006, www.ccs.org.za/downloads/DFID%203rd%20Edition.pdf, pg. 17. 9 Macedo, Professor Fernando, Lusíada University of Angola [interview information coming]
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government revenues come from oil and the country’s industry is focused on the energy
sector. Incidence of the “Dutch disease” has meant that other industries have ceased to
develop.10 The World Bank describes the investment environment in Angola as
favorable due to the country’s successful history of resource exploration and significant
remaining petroleum and natural gas potential.11
Human Rights Watch decries the immense corruption and mismanagement in the
country, especially in the oil sector. For example, from 1997-2002, over $4 billion in oil
revenues, more than 10% of GDP, bypassed the state system and likely went to dos
Santos and others.12 Dos Santos’ almost three decades in power has shown that even
poorly performing autocracies can last a long time.13 After Libyan Muammar Gadhafi’s
death this year, President dos Santos rivals Equatorial Guinea’s Teodoro Obiang for the
undesirable title of “longest serving African dictator.” While dos Santos’ lengthy rule
has meant some degree of political stability,14 in 2007 Angola ranked 42nd out of 48
nations for worst governance in sub-Saharan Africa on the Ibrahim Index of African
Governance list.15
Current Economic Relationship:
After almost 30 years of civil war, Angola was devastated and in need of much
development. Half a million people had been killed during the decades of violence, and a
million displaced. Roads were in disrepair, over 300 bridges had been destroyed, and 10 Hodges, Tony, Angola: Anatomy of an Oil State. 2nd ed. (Oxford: Fridtjof Nansen Institute in association with James Currey, 2004). 11 Angola: Oil, Broad-based Growth, and Equity, Washington, D.C.World Bank, 2007. 12 Human Rights Watch, “Transparency and Accountability in Angola: An Update” 2010, pp. 1. 13 McFaul, Michael, & Stoner-Weiss, Katherine. (2008). The Myth of the Authoritarian Model. Foreign Affairs, 87(1), 68-84. 14 Hare, Paul “China in Angola: An Emerging Energy Partnership” in Arthur Waldron. China In Africa. (Washington, DC: Jamestown Foundation, 2009). 15 Rotberg, pg. 5.
67
fields were full of landmines. Luanda turned to international organizations for help and
was met with demands for political transparency and reform. Groups such as the
International Monetary Fund (IMF) and the Paris Club required that the country undergo
significant transformation in exchange for aid. From 1995-2004, Angola agreed to four
IMF programs, but failed to complete any of them. Although China was a member of the
IMF at this time, its voting share was about 2% of total votes, giving it little power to
influence decisions.
Interestingly, Angola sought external funding support from Taiwan in the early
1990s by sending several diplomatic missions to the island. This was in addition to
Angolan personnel sent to attend training programs in Taiwan. This aid-seeking
initiative failed, partly due to China’s increased diplomatic efforts towards Angola.
China became a net oil importer in 1993 and securing energy resources become one of
Beijing’s top priorities.16 Figure 4.1 demonstrates just how much oil Beijing will need in
the coming decades.17 This outreach by Angola might have been an attempt to challenge
16 Centre, pg. 18. 17 Besada, Hany; Wang, Yang; and Whalley, John, “China’s Growing Economic Activity in Africa,” NBER Working Paper 14024, May 2008, asiandrivers.open.ac.uk/China%20Africa.pdf, pg. 19.
Figure 4.1: China’s Oil Demand and Domestic Production, 1980-2030
68
Beijing’s one-China policy as a punishment for past support of UNITA, or an effort to
trigger a bidding war between donors.
The failure the international community’s “strings attached” method of funding
frustrated Angola’s ruling elite. Beijing seemed an attractive alternative loan source and
in 2004, China’s ExIm Bank provided an oil-backed $2 billion credit line to the Angolan
government. The loan was to be paid back in two $1 billion tranches over a period of 12
years, with a grace period of five years. The loan was then doubled in 2006.18 The
interest rate was only LIBOR (London Inter-bank Offered Rate) plus 1.5%, unlike the
premium of 2.5% plus LIBOR from other loans.19 This loan was likely the result of, and
further perpetuated, Luanda’s historically negative relationship with international
financial institutions such as the International Monetary Fund.20
President dos Santos declared in 2006, “We appreciate the cooperation…and the
efforts our two countries are making to rehabilitate basic facilities destroyed during the
war in Angola.”21 The conditions of this loan are not available, but it will be repaid
through an allocation of 10,000 barrels of oil per day. As scholar Deborah Brautigam
explains it, commodity!backed infrastructure loans like this one are a pre!commitment
technique that allows Angola to pay for current public works expenditures with future
exports.22
18 Corkin Lucy “All’s Fair in Loans and War” in eds: Kweku Ampiah and Sanusha Naidu Crouching Tiger, Hidden Dragon? University of KwaZulu-National Press, 2008. 19 Brautigam, Deborah The Dragon’s Gift, Oxford University Press, 2009, pp. 275 20 Campos, Indira and Alex Vines, “Angola and China: A Pragmatic Partnership,” Working Paper (London: Chatham House, 2008), pg. 18. 21 Campos, Indira; Markus, Lillian; Vines, Alex and Wong, Weimer “Thirst for African Oil: Asian National Oil Companies in Nigeria and Angola” Chatham House, August 2009, pp. 31. 22 Brautigam, Deborah, “Testimony on China’s Growing Role in Africa before the United States Senate Committee on Foreign Relations Subcommittee on African Affairs,” November 1, 2011, http://www.foreign.senate.gov/imo/media/doc/Deborah_Brautigam_Testimony.pdf, pg. 6.
69
This Chinese loan differs from Western loans for its lower cost and longer
timeframe. But it was not unique in its scope as Angola had received, and continues to
receive, many other large oil-backed loans. The watchdog group Global Witness
estimates that in a little over a year in 2001, Luanda received up to $3.55 billion in seven
high-cost loans.23 Further, the French bank Société General agreed to a $1.15 billion oil-
backed loan in 2003. In 2005, the French Crédit Agricole offered Angola a $2 billion
loan and the U.S. Export-Import Bank financed $800 million for the purchase of six
Boeing aircraft.
Luanda has many financial partners as many foreign countries and banks have
invested in Angola and provided loans. Within months of China’s $2 billion loan, a
group of Western Banks including Standard Chartered, Barclays, and the Royal Bank of
Scotland arranged an oil-backed loan of $2.35 billion for the state-owned oil company
Sonangol. The interest rate is 2.5% above LIBOR, though thanks to high oil prices, the
group was confident that Sonangol could make the payments. This unique Western loan
did not come with strings,24 and thus did not attempt to improve Angola’s governance.
The loan did not require openness in public accounting and it is still unclear where all the
money went. Repayments were over five years and, like the Chinese loans, were
guaranteed from future oil production.25 Below are further loans from Western nations.
Any requirements for reform or transparency that came with these loans are not
publically available.
23 Brautigam, pg. 275. 24 Brautigam, Deborah, “China in Africa: Think Again,” The World Financial Review, http://www.worldfinancialreview.com/?p=197. 25 Pallister, David, “Alarm Bells Sound over Massive Loans Bankrolling Oil-rich, Graft-tainted Angola,” The Guardian, May 31, 2005, http://www.guardian.co.uk/business/2005/jun/01/hearafrica05.development.
70
• April 2007, $500 million from Standard Chartered Bank at 1% over LIBOR for ten years
• August 2007, $3 billion, from Standard Chartered Bank at 1% over LIBOR for seven to eight years.
• November 2008, $2.5 billion, from Standard Chartered Bank at 1.6% over LIBOR26
Both the West and China indulge Angola with non-transparent oil-backed loans.
According to the Economist Intelligence Unit, “The high cost of such borrowing tends to
be outweighed in the [Angolan] government’s eyes by the absence of scrutiny, which has
allowed the diversion of large financial flows.”27 Angolan leaders are opposed to finance
deals that require transparency as they could disrupt their lucrative kickback schemes.
And questions remain regarding the sincerity of China’s anti-corruption efforts.28
While Chinese loans are often cheaper than Western loans, Beijing dictates more
strictly to Luanda what can be done with the money. Beijing offers a good bargain for
Angola and for the Chinese companies selected for aid disbursement. These contractors
have guaranteed business, low financing from the government, and the ability to operate
freely in a relatively lax regulatory environment. Chinese contracts from the ExIm Bank
require that 70% of projects be awarded to Chinese firms29 and 50% of the procurement
materials must come from China.30 These requirements, known as tied aid, can be found
in other nations’ aid packages. Though as discussed below, the Chinese preconditions
are more stringent than Western nations. With its low interest loans and policy of
domestic non-interference, China has begun encroaching on international finance
26 Global Witness, “Undue Diligence,” March 2009, www.undue-diligence.org/Pdf/GW_DueDilligence_FULL_lowres.pdf, pg. 96. 27 Pallister 28 Campos, “Angola and China: A Pragmatic Partnership” 29 This refers to the 70% of the total value of the contracts financed by the Chinese ExIm Bank. Corkin, Lucy “Angola flexes newfound muscle” Business Day Edition, March 23, 2007. 30 Corkin “All’s Fair in Loans and War” pg. 118.
71
institutions’ traditional domain. While the low rates benefit Luanda, the long-term
stability of the recipient country depends on whether or not the government enacts reform
now.
From 2002-2006, China contributed 58% of the total $5.5 billion in loans Angola
had received.31 While Angola may have many aid partners, Beijing does rank at the top
of the list for economic investment. The commodity-backed infrastructure loans are
helping develop Angola, but not Angolan workers or industry. To cite the Chinese
proverb, the Chinese are providing fish for the Angolans, but are not teaching them how
to fish. However, there is no requirement, or perhaps even expectation, that foreign
nations should develop the countries in which they are investing.
The China-Angola relationship has grown strong over decades in part due to the
frequent contact between the leaders of the two nations. Note the continuity of trips and
the diverse high-level officials. Figure 4.2 shows some of the top visits.
31 Centre for Chinese Studies, pg. 18.
72
Date Personnel Destination May 2000 General Secretary of the Angolan MPLA,
Defense Minister, and Attorney General China
October 2000 Angolan Minister of Commerce Hossi China January 2001 Chinese Foreign Minister Tang Angola May 2001 Speaker of the Angolan National Assembly
de Almeida China
July 2002 Chinese Vice-Foreign Minister Yang Angola February 2005 Chinese Vice Premier Zeng Angola June 2006 Chinese Premier Wen Jiabao Angola August 2008 Angolan President dos Santos China December 2008 Angolan President dos Santos China January 2009 Chinese Minister of Commerce Chen Angola November 2010 Chinese Vice President (and likely future
President) Xi Jinping Angola
March 2011 Chinese Vice Premier Wang Angola
Throughout the 2000s, China continued supplying Luanda with loans. Including
additions, the 2004 $2 billion loan is estimated to be worth up to $9 billion.32 In 2005
when Vice Premier Zeng Peiyan visited Angola, Beijing offered a $6.3 million interest-
free loan and another $1 billion loan in March 2006. In June 2006, Premier Wen Jiabao
provided another $2 billion loan during his visit to Luanda.33 According to Angola’s
Deputy Minister of Finance, China’s credit to Angola accounts for 58% of the total credit
Angola obtained after 2002.34 The Chinese ambassador to Angola estimated that three
Chinese state banks, the ExIm Bank, Industrial and Commercial Bank, and the China
Development Bank, have extended almost $15 billion in credit to Angola.35
32 Corkin, “Angola Flexes Newfound Muscle” 33 Free Africa Foundation, “The African Aid Conundrum,” Aspen Institute Italia Review, May 2006, http://www.freeafrica.org/articles/failedleadership/africanaidconundrumfinal.html. 34 Ferreira, Manuel “China in Angola: Just a Passion for Oil?” in eds: Christopher Alden, Daniel Large, and Richard Soares de Oliveira, China Returns to Africa: A Rising Power and a Continent Embrace, New York, Columbia University Press, 2008, pp. 300 35 South African Press Association, “China struggles to hire, train Angolans, ‘flood’ country with Chinese workers” March 6, 2011.
Figure 4.2: Visits by top Angolan and Chinese officials, 2000-2011
73
There have been further projects between China and Angola since the initial loan.
The Chinese group ZTE Corporation and the Angolan Mundo Startel signed a phone
networking agreement in 2005 work $69 million. This same year, China provided a $100
million credit line for upgrading health sector facilities in Huambo Province. 2007
brought a $500 million loan and a $2 billion loan for large-scale infrastructure projects. 36
Besides funding reconstruction efforts, China has also funded projects such as the
construction of stadiums for the 2010 African Cup of Nations. China has written off
about $10 million in Angolan debt, though the country still owes almost $18 billion.37 In
addition, China has provided some humanitarian aid, such as a $1 million donation of
agricultural goods to Malanje Province.
The loans above operate like a current account held in China for the Angolan
government. The money is paid to Chinese companies responsible for construction work.
The Angolan Ministry of Finance determines the uses for the majority of these grants,
though the Chinese Ministry of Foreign and Commercial Affairs must also approve the
projects. This arrangement has been dubbed the “Angola model” of development and can
be characterized by the diagram in Figure 4.3.38 Money is always going to a Chinese oil
company or infrastructure contractor, making a full loop back to China. The return of
funds to China is a reasonable expectation for a country that is motivated to invest based
on commercial reasons.
36 Corkin “All’s Fair in Loans and War” pg. 110. 37 Xinhua, “Angola becomes China’s largest trade partner” 38 Sieber-Gasser, Charlotte, “The Legal Character of Sino-African Tied Aid: Cunning Fox or Wise Dragon?” Working Paper no 2011/47, May 2011, NCCR Trade Regulation, http://www.nccr-trade.org/fileadmin/user_upload/nccr-trade.ch/wp4/publications/AfricanIEL_workingpaper_CS.pdf, pg. 2.
74
Brautigam has another name for the phenomenon: “resource backed
infrastructure loans.” Some argue that this model ensures that aid to Angola results in
roads built, instead of bank accounts enlarged. There are many positive aspects of these
types of loans as things actually get built because the funding is more difficult to steal.
While this method of lending does not develop Angolan industry or capabilities, it
presents fewer opportunities for corruption as little cash changes hands. A report for the
British Department for International Development (DFID) notes “China is willing to
inject large amounts of capital into the Angolan economy, albeit as a loan and not
necessarily as direct investment.39 It is hard to determine what currency these loans are
in, though it seems that at least some of them, including the 2007 debt cancellation, 2009
medication donation, and debt relief up to 2009, are held in the Chinese currency, the
RMB.40 This means that the aid, though not politically tied, is definitely economically
39 Centre for Chinese Studies, pg. 17. 40 Kiala, Carine, “The Impact of China-Africa Aid Relations: The Case of Angola,” April 2010, http://www.google.com/url?sa=t&rct=j&q=&esrc=s&source=web&cd=1&ved=0CGIQFjAA&url=http%3A%2F%2Fcloud2.gdnet.org%2FCMS%2FgetRepoDoc.php%3Fcommunity_group_docu
Figure 4.3: The “Angolan model” of Development
75
tied. Because the loans are not in the global currency of the dollar, Angola must spend
the loans in China, or with Chinese firms. These loans most often come in the form of
export credits that are tied to Chinese goods and services. This means they do not come
in cash, thus reducing the potential for corruption.41
Bilateral trade between Angola and China topped $25 billion in 2008.42 As
discussed below, approximately 99% of these exports to China are oil.43 According to
the Chinese ambassador to Angola, there are approximately 50 state-owned firms and
400 private companies working in Angola with about 70,000 Chinese workers.44 The
largest immigrant group in Cabinda Province (which has the most natural resources
deposits) is Chinese.45 Beijing is also helping Angola diversify its industries and has
started to reduce or waive tariffs on Angolan imports to China. The stated goal is for
Angolan businessmen to export non-energy goods such as agricultural products, fish, and
diamonds.
China exported $2 billion to Angola while Angola exported $20.3 billion to China
in 2010.46 In 2008, Angolan imports from China grew 139% from three years prior. The
vast majority of this increase in import was due to increased oil prices and purchases.
China-Angolan trade makes up about 1/5 of China’s trade with all of Africa.47 Because
of the high price of oil, Angola is one of the few countries that enjoys a trade surplus with
ment_id%3D47&ei=TVCrT_C6EdHXiQLm88yEAQ&usg=AFQjCNGHO6tLaWOexdld9umJtUtf8DCRHw&sig2=-SuOSd-FLNIsY6xAs-1jBg, pg. 45. 41 Brautigam, “China in Africa” 42 Xinhua, “Angola becomes China’s largest trade partner in Africa” China Daily, January 19, 2009, http://www.chinadaily.com.cn/bizchina/2009-09/27/content_8742652.htm. 43 Centre for Chinese Studies, pg. 22. 44 South African Press Association 45 Centre for Chinese Studies, pg. 19. 46 European Commission, “Angola: Bilateral Trade and Trade with the World” Director General for Trade, January 10, 2012, www.trade.ec.europa.eu/doclib/html/122456.htm, pp. 6. 47 Corkin “All’s Fair in Loans and War” pg.113.
76
China. Figure 4.4 shows the huge increase in Chinese-Angolan trade in recent years and
the inequality in trade between the two countries.48
Beside extractive industries, Chinese investment is also focused on
telecommunications infrastructure and construction. China’s ZTE Corporation recently
signed an agreement with Mundo Startel, an Angolan telecommunications utility. ZTE
will invest $400 million to improve Angola’s military telecommunications system,
among other projects.49 In helping to rebuild Angola, the Chinese company Jiangyuan
Fujian recently rehabilitated the highway between Luanda and Obito.50 Similarly, the
China Construction Bank and ExIm Bank funded the $90 million rehabilitation of a
48 Corkin “All’s Fair in Loans and War” pg. 113. 49 Corkin “All’s Fair in Loans and War” pg. 115. 50 Ampraturm, Edward Fokuoh; Baah, Anthony Yaw; Otto, Kwabena Nyarko “Country Case Study: Ghana” Labor Research and Policy Institute, Ghana in eds: Anthony Yaw Baah and Herbert Jauch, Chinese Investments in Africa, A Labor Perspective, African Labor Research Network, June 2009.
Figure 4.4: Value of Angolan Trade with China, 1996-2006
77
section of the Luanda railway and a $55 million expansion of the electrical network in
Luanda, Lubango, Namibe, and Tombwa.51
China also built the Nossa Senhora de Monte Multi-Functional Pavilion and three
other stadiums for the 2007 Afro Basketball Tournament and the 2008 African Handball
Cup of Nations. SinoHydro completed the project and used mostly Chinese workers.52
Research by Dr. Emmanuel indicates that none of the local workers signed employment
contracts and they worked long hours without formal training or vacations.53 In a country
where the majority of the population lives in extreme poverty, these types of stadium
projects seem excessive. There are projects and buildings that are more needed in
Angola than this stadium. However, China’s resource acquisition strategy means that
Beijing is looking to ingratiate itself with the Angolan regime. It is not clear where the
initiative for this project came from, but it is clear that dos Santos did not refuse the
project.
Many Chinese projects undermine the development of local industry in Angola.
The Chinese requirement that 70% of projects be awarded to Chinese firms means that
the majority of the funds are going to Chinese firms. In an attempt to further benefit
Chinese companies, projects financed by the Chinese ExIm bank must have at least 50%
of the procurement materials from China. While many goods are often cheaper in China,
the Angolans are often getting a road, or stadium and nothing else, no market
development or local business growth. Angolan scholar Pinto de Andrade wrote in 2007
51 Emmanuel, pg. 369. 52 Ampraturm 53 Kiala, “The Impact of China-Africa Aid Relations,” pg. 40.
78
that Chinese aid has had litte impact on Angolan job creation and there has been minimal
technology transfer from Beijing to Luanda.54
The U.S. Agency for International Development (USAID) and other Western aid
agencies also participate in this practice of tied aid, though to a lesser extent than China.
Earlier this year, USAID modified its procurement regulations to allow the agency to
purchase most goods and services from developing countries.55 The United States has
been making large strides to “untie” the majority of its foreign aid (except food aid).
Estimates indicate that the percentage of total aid that must be used on American goods
has been reduced dramatically—from about three-fourths to somewhere between one-
third and one-half.56 The U.K. officially “untied” its aid in 2001, though the transition
away from reliance on British firms has been slow.57 Beijing clearly understands that its
aid to Angola can also be a domestic stimulus that benefits China. Beyond tied aid, there
are other ways in which Beijing’s aid is not fully benefiting Angola. For example,
Chinese workers frequently live in secluded work compounds and do not engage in the
local economy. And after construction of large infrastructure projects, Luanda often
faces difficulties in maintaining the Chinese ventures58 because Angolans are frequently
excluded from construction and there are generally few technically trained Angolans.
54 Kiala, “The Impact of China-Africa Aid Relations, ”pg. 23. 55 All Africa, “Africa: USAID Now Free to Buy Goods From Companies in Poor Countries,” February 9, 2012, http://allafrica.com/stories/201202090707.html. 56 Oxfam America, “Smart Development in Practice: The Tied Aid “Round Trip,” AidNow Series, January 26, 2009, http://www.oxfamamerica.org/publications/the-tied-aid-round-trip, pg. 1. 57 All Africa 58 Campos, “Angola and China: A Pragmatic Partnership”
79
Many worry that there is also insufficient Angolan participation in Chinese-
funded projects.59 Chinese firms are often reluctant to enter into joint ventures with
Angolan companies and whatever partnerships do form are often just a way for Chinese
companies to use the Angolan companies’ local knowledge to navigate the corrupt
political landscape.60 There is a strong perception that Chinese companies have an unfair
advantage because of the extensive support by the Chinese government.61 Local, and
even foreign, competitors often cannot operate at the low profit margins of many Chinese
firms because they do not have state support. There have also been concerns over the
quality of Chinese construction. For example, the Chinese constructed Luanda Provincial
General Hospital had to be closed due to large cracks in the walls.62
The Chinese Focus on Oil:
59 Maques, Rafael “The New Imperialism: China in Angola” World Affairs, March 2011 http://www.worldaffairsjournal.org/article/new-imperialism-china-angola. 60 Corkin “All’s Fair in Loans and War” pg. 117. 61 Centre for Chinese studies, pg. 17 62 South African Press Association
Figure 4.5: Angola’s Oil Exports to China as a Percentage of Total Exports, 1995-2005
80
The majority of Chinese trade with Angola is focused on oil. As President dos
Santos stated in 2007, “China needs natural resources and Angola needs development.”63
Figure 4.5 shows just how oil-focused Beijing’s purchases were from 1995-2005.64 In
the first quarter of 2012, Angola was the second largest oil supplier to China. Angola is
estimated to have reserves equivalent to about 20 years of production at current rates, or
almost 1% of the world’s total reserves. In fact, from 2000 to 2005, China accounted for
18% of the growth in the world’s demand for oil.65 45% of Angola’s oil goes to China
and makes up 15% of China’s total oil imports.66 99.9% of Angolan exports to China are
oil.67
In 2008 Angola was China’s
largest trading partner in
Africa and it briefly surpassed
Saudi Arabia as the top
supplier of oil to China.
Figure 4.6 shows just how
much Beijing relies on
63 South African Press Association 64 Centre for Chinese Studies, pg. 22. 65 Moss, Todd and Rose, Sarah “China ExIm Bank and Africa: New Lending, New Challenges” Center for Global Development, November 2006. 66 Corkin “All’s Fair in Loans and War” pg. 112. 67 Kiala, Carine and Ngwenya, Nomfundo, “Angola’s Strategic Co-operation with the BRIC Countries,” South African Institute of International Affairs, May 2011, http://www.google.com/url?sa=t&rct=j&q=&esrc=s&source=web&cd=5&ved=0CGgQFjAE&url=http%3A%2F%2Fdspace.cigilibrary.org%2Fjspui%2Fbitstream%2F123456789%2F31657%2F1%2Fsaia_sop_85_kiala_ngwenya_20110531.pdf&ei=3rOuT6GyJsmgiQK4zM2HBA&usg=AFQjCNEaKk_k_UPQ3gLw9N5hIz672h-wdQ&sig2=jpxVM6id-W3siaoJqliCOQ, pg. 15.
Figure 4.6: China’s Imports of African Oil by Country as Share of China’s Total Oil Imports, 2005
81
Luanda for its oil.68 One scholar described the relationship as “characterized by China’s
growing thirst for oil and swelling financial might…and Angola’s national reconstruction
needs and rising crude oil production.”69 Although there has been a significant
increase in Chinese oil purchases, part of
the explanation for the dramatic increase in
trade value is the world rise in oil prices.
Figure 4.7 shows the recent spike in the 200-
day moving average of brent crude oil, in
dollars per barrel.70 Oil prices increased
89% from 2000 to 2005 meaning vast profits
for Angola’s elite.
The Lobito Refiner Project:
The joint venture between China’s state owned oil company Sinopec and
Angola’s partially state owned oil company Sonangol highlights the complexity of
Chinese-Angolan investments. This project was the largest amount of foreign direct
investment (FDI) in Angola and is one of the most tangible forms of cooperation between
the two countries. Sonangol-Sinopec International (SSI) was created in 2006 and owns
20% of Angola’s block 15, 27% of block 17, and 40% of block 18. Interestingly,
discussions about this partnership began during negotiations for Angola’s first $2 billion
loan from Beijing in 2004. And, in early 2007, China loaned $1.4 billion to SSI at 1.4%
68 Corkin “All’s Fair in Loans and War” pg. 119. 69 Alves, pp. 6. 70 The Economist, “High Drama,” February 25, 2012, http://www.economist.com/node/21548272.
Figure 4.7: Dollars per barrel of brent crude oil, 1990-2012
82
over LIBOR.71 China has a controlling share in SSI— Sinopec owns 55% and Sonangol
owns 45%. The partnership also includes oil exploration and refinery construction. In
2007, the agreement boosted Angolan oil production by 100,000 barrels a day.72
Angola’s other refinery is located in Luanda and is operated solely by Sonangol.
Additionally, a group of Western oil companies developed a $5 billion liquefied natural
gas plant at Soyo and the U.S. company Bechtel built it.
There is tension in the relationship and work on a $3.5 billion refinery in Lobito
has stalled probably due to Beijing’s and Luanda’s differing priorities. Work was slated
to begin in 2007 but negotiations collapsed. The probable point of contention was
disagreement on the target markets for the refinery’s products.73 Sinopec wanted 80% of
the production to go to the export market (and thus likely to China) while Sonangol was
more focused on African markets such as Zambia and its domestic markets. There was
great potential as this refinery was to be the second in Angola and could have tripled
production. Even though Angola has one of the largest oil reserves in the world, it
currently imports 70% of its refined products. As the Angolans saw it, a new refinery
would be the perfect solution to the country’s refining capacity shortage. Rising
government aspirations led to Luanda’s desire to develop its own refining capabilities.
This strain may be emblematic of the future of China-Angola relations as Angola
becomes more assertive against Beijing’s self-focused investments.
This situation was complicated by the fact that, in 2007, Angola became a
member of the Organization of Petroleum Exporting Countries (OPEC) and thus had an
incentive to reduce its oil supply in order to drive up the international price. Sonangol 71 Global Witness, pg. 96. 72 Corkin “All’s Fair in Loans and War,” pp. 116. 73 Corkin “All’s Fair in Loans and War,” pp. 116.
83
has now decided to develop the Lobito refinery on its own and commissioning is
expected in 2015. In 2008, Sonangol selected a U.S. company as the engineering
contractor. However, progress has been slow and Sonangol is reported to be looking for
partners to help fund the $8 billion venture.74 In February, Western oil companies
including French Total, British BP, and Italian ENI were vying to partner with Sonangol
for construction. Each of the firms are planning for a 50% stake in the refinery.75 The
competition between foreign investors in Angola means that when negotiations with
China fail, Luanda has the option to begin discussions with many other partners.
Sonangol is hoping to “Angolanize” the extractive sector by encouraging local
companies to be more involved in the oil industry. The Lobito refinery is not the first
time Angola has pushed back against Chinese commercial advancement in the oil sector.
In July 2009, the U.S. company Marathon Oil, owner of 30% of block 32, agreed to sell
20% of its stake to China’s CNOOC Ltd. and Sinopec. But before the deal could go
through, Sonangol exercised its right of first refusal, effectively blocking the two Chinese
companies from purchasing the $1.3 billion stake.76 Sonangol bought the stake for the
same price as the Chinese companies and doubled its stake in Block 32 to 40%. France’s
Total, Exxon Mobile, and Portugal’s Galp hold the rest of the block. Whether or not
geopolitics entered into the equation is not clear, though according to one source,
74 Petroleum Africa “Lobito Refinery Jumps in Slow Lane” March 30, 2011, http://www.petroleumafrica.com/en/newsarticle.php?NewsID=11282. 75 The Herald Online, “Angola’s Sonangol in Refinery Talks with Total, BP, ENI,” February, 25, 2012, http://www.herald.co.zw/index.php?option=com_content&view=article&id=34863:angolas-sonangol-in-refinery-talks-with-total-bp-eni&catid=45:international-news&Itemid=137. 76 Associated Press, “Sonangol to buy Marathon Angola stake for $1.3 billion, blocking sale to CNOOC and Sinopec,” Minneapolis-St. Paul Star Tribune, December 11, 2009, http://www.startribune.com/templates/Print_This_Story?sid=79059937.
84
“Luanda has made no secret of its efforts to diversify its portfolio of investors, ensuring
that no one partner becomes too powerful in the oil industry.”77
The Sinopec-Sonangol story highlights the commercial focus of the Chinese-
Angolan relationship as well as the changing dynamic of power. Though the Lobito
refinery and Marathon oil stake purchase fell through, on the whole, Chinese-led oil
investment is still increasing. The China Petroleum and Chemical Corporation signed a
$2.5 billion deal in 2010 for a deep-water oil stake and refinery construction.78 But,
cracks are beginning to show in the relationship as the Chinese continue to import their
own labor force instead of employing Angolans. As more and more countries become
financially involved in Angola, Luanda has the option to use its economic leverage and
rely on partners other than China for investment.
The Angolan government is beginning to maintain control over its natural
resources. For example Sonangol now holds 70% of the shares in the Lobito refinery,
while Sinopec has 30%. As Luanda begins to look away from Beijing, it is essential that
the country build local capacity in construction and other industries. It is important to
remember that because Angola’s credit line is linked to oil, a non-renewable resource that
is currently slated to run out in two decades, Angola’s leverage to negotiate is finite.
77 Africa-Asia Confidential, “Luanda Diversifies its Portfolio,” September 2009, http://www.africa-asia-confidential.com/article/id/289/Luanda-diversifies-its-portfolio/. 78 McKinsey and Co. “Lions on the move: the progress and potential of African economies” McKinsey Global Institute, June 2010.
85
Comparison with Western Aid and Investment:
Since the end of the war in 2002, there has been a pronounced shift in foreign
interest from aid, to investment.79 And China is not alone in its economic assistance to
Angola. International relief agencies such as the U.S. Agency for International
Development (USAID) and the U.K.’s Department for International Development
(DFID) regularly give Angola substantial support and aid. USAID provided
approximately $84 million in 2010 in development assistance, global health, and disaster
relief.80 The U.S. spent $56 million in 2009 and DFID gave about $4.7 million for
security, governance, and health sectors.81 Multilateral institutions such as the United
79 Ferreira, Patricia Magalhaes “State-Society Relations in Angola” Institute for Peace Building, June 2009, pp. 25. 80 USAID “Angola Fact Sheet 2008-2011” http://www.usaid.gov/locations/sub-saharan_africa/countries/angola/. 81 Department for International Development, Project Search, http://projects.dfid.gov.uk/Default.aspx?countrySelect=AO-Angola.
Figure 4.8 Top Ten ODA Donors to Angola, 2005-9
86
Nations and European Union aid agencies are also very active in the country. Figure 4.8
shows the five-year average since 2005 of overseas development assistance (ODA) in
Angola.82 European Union institutions and the United States lead the pack in giving,
while China does not provide ODA.
In 2010, China was Angola’s largest trading partner, with the United States and
the European Union in second and third places. The European Union was Angola’s
largest import partner with 42% of trade, followed by China with 14%. This same year,
China was Angola’s largest export partner with 46% of exports. The United States was
second with 25%.83 Figure 4.9 shows how China recently supplanted the U.S. as the
largest export destination for Angolan oil.84 This phenomenon occurred simultaneously
with the decline in U.S. imports of world oil and the growth in Chinese oil demand.
Figure 4.10 shows the destinations for Angola’s crude oil in 2010.85 China is now the
most important export market for Angolan oil. Although there seems to be general parity
in opportunity and influence among all the foreign
82 Aid Flows, www.aidflows.org, information from Organization for Economic Cooperation and Development, Development Assistance Committee, Aid Statistics http://www.oecd.org/countrylist/0,3349,en_2649_34447_25602317_1_1_1_1,00.html. 83 European Commission, pp. 6. 84 Alves, pp. 9. 85 Energy Information Administration, “Angola,” August 2011, http://205.254.135.7/countries/cab.cfm?fips=AO.
Figure 4.9: Angola’s oil exports to the U.S. and China, 2001–08 (US$ millions)
87
investors in Angola, this equality has the potential to change as China supplants Western
countries as the top loaner and oil purchaser.
Using Kastner’s Model to Assess the Chinese Influence in Angola:
With an understanding of some of the critical issues in China-Angola relations,
one can apply Kastner’s model to determine if Chinese economic investment has meant
political influence for Beijing.86 Of China’s three core interests, Angola has upheld the
one-China policy, which greatly pleased Beijing.87 This places Angola in the majority as
only 23 countries in the world recognize Taiwan. In a recent meeting with President dos
Santos, President Hu said China “appreciated Angola’s adherence to the one-China
policy and support on issues related to Taiwan and Tibet, which touch the core interests
86 For more information on Kastner, Brautignam, and data from the World Bank and Millennium Challenge Corporation, please see the Literature Review. 87 Xinhua “Chinese PM, Angolan president discuss ties, stability in Great Lakes region” June 21, 2006.
Figure 4.10: Angola’s Crude Oil Exports by Destination, 2010
88
of China.”88 Similar to the situation in Ghana, there were no statements from Angola on
the unrest in Tibet, nor China’s market economy status.
The conclusions could fall on two sides, though the Angolan case seems to uphold
Kastner’s results. Kastner finds that, on the whole, Chinese economic investment does
not have an effect on a country’s foreign policy decisions. The Chinese are heavily
involved in Angola and the Angolan government has awarded Beijing with support of the
one-China policy. At the same time however, it seems Angola is not overly enthusiastic
about supporting China. Luanda is conforming to the international norm of non-
recognition of Taiwan. Dos Santos is willing to back China on its most important
objective, Taiwan, but it is not a puppet for the Chinese that will speak out regarding
relatively minor issues such as unrest in some faraway Chinese province, or the specifies
of Beijing’s membership in an international organization. These findings indicate that
fears of Chinese economic activity resulting in communist-friendly regimes that follow
China’s directives appear to be misguided. The Chinese government seems satisfied with
the current situation. It is able to import tons of oil, and the Angolans are not hostile
towards Chinese policy objectives.
Using Brautigam’s Model to Assess the Chinese Influence in Angola:
Deborah Brautigam’s The Dragon’s Gift asserts that a well-governed African
country will experience net gains from Chinese investment, while corrupt and unstable
countries will not see broad gains.89 Democratic pressures in a well-governed country
can ensure that benefits from Chinese projects are spread throughout society.
88 Xinhua, “Chinese, Angolan presidents discuss promoting bilateral cooperation” December 17, 2008. 89 Brautigam, Deborah The Dragon’s Gift, Oxford University, 2009.
89
Alternatively, authoritarian governments are less accountable to their people and are able
to capture Chinese investment.
Angola’s society is extremely unequal. As Irish rocker and political activist Bob
Geldof recently stated, Angola is a place where “few have millions and millions have
next to nothing.”90 Vast oil revenues have yet to reach rural citizens and the poor.
Almost one in every five infants dies in Angola and more than 70% of the population
lives on less than $2 a day. At the same time, dos Santos and other elites grew wealthier
year by year. The reason for this inequality is outlined below.
Brautigam’s work is valuable for its focus on local conditions as determinants of
the affects of Chinese aid. While the Chinese could include transparency and reform in
their loans to Angola, ultimately the Angolans must dictate the terms of the loans they
agree to and determine to whom they will sell oil. It is hard to place blame for Angola’s
poor governance on any one party. China, Western nations, and Angola all act in ways
that negatively affect the country’s governance. Thus the people of Angola continue to
suffer.
Using World Governance Indicators to Assess the Chinese Influence in Angola:
The World Bank’s World Governance Indicators score countries individually on six
categories, as well as provide a percentile rank, as compared to countries throughout the
world. WGI reports on six dimensions of governance: voice and accountability, political
stability and absence of violence, government effectiveness, regulatory quality, rule of
law, and control of corruption.
90 Fitzgerald, Mary “Angola’s Poor Have Yet to Taste Fruits of Country’s Oil Riches” Irish Times, September 1, 2008 http://www.globalpolicy.org/security-council/index-of-countries-on-the-security-council-agenda/angola/41547.html.
90
In the past decade, Angola has shown small improvements in its governance
scores. On an individual score basis, Angola has yet to break into the positive scores—
all its indicators are still below zero on a scale from -2.5 to 2.5. Figure 4.11 shows
Angola’s scores from 2000 to 2010.91 Angola still has much progress to make
percentagewise. Its greatest improvement was in political stability, which increased from
1.9% to 36.8%, relative to 199 other countries. However, during this period, the Angolan
Civil War ended and dos Santos consolidated his power. This is hardly the way the World
Bank wishes to see countries improve their scores. When stability is achieved at the price
of repression, is it worth it? The shaded boxes indicate improvements in score and
Angola has done well in the past decade. At the same time however, Luanda has
increased its scores from a very low level. Great strides still need to be taken to raise the
control of corruption score from 3.8% and the rule of law score from 9%.
Figure 4.11: Changes in Angola’s WGI, 2000-2010
While Angola deserves praise for the progress it has achieved, the world must
remain cognizant of the need for immense continued improvement. As Figure 4.12
shows, Angola’s control of corruption has improved slightly, but it is still worse than
91 World Bank, “World Governance Indicators,” http://info.worldbank.org/governance/wgi/index.asp.
Type Year FY
Voice and account-tability Total: 2.5
Political Stability Total: 2.5
Government effectiveness Total: 2.5
Regulatory Quality Total: 2.5
Rule of law Total: 2.5
Control of Corruption Total: 2.5
Govern-ance Score
2000 -1.54 -2.09 -1.46 -1.82 -1.59 -1.52 2010 -1.14 -.22 -1.12 -1.05 -1.24 -1.33
Percentile Rank
2000 7.7% 1.9% 3.4% 3.9% 2.4% 2.4% 2010 14.7% 36.8% 12.4% 17.2% 9% 3.8%
91
96% of countries in the world.92 Even in a ranking with 14 of its peers, Angola is only
above Zimbabwe for its control of corruption.93
The WGI relies on
data from Freedom House
(FH) and their scores
provide further insight into
the dismal state of political
rights and civil liberties in
Angola. In 2000, FH
ranked Angola a six for
political rights—seven is the
worst score and represents the lowest degree of freedom. 94 Ten years later in 2011,
Angola had made little progress and still received a six. For civil liberties, Angola also
received a six out of seven in 2000 and, after a decade, improved this to only a five.
These rankings qualify Angola as a country that is “not free.”
Angola has been receiving foreign aid from many sources for decades. Despite
the billions of dollars flowing in from around the globe, Angola has struggled to move
towards democracy or curb corruption. Aid has generally not been reform-incentivizing
and while Angola has made some strides in improving governance, the state is still very
much an autocracy. Can we point the finger at China to blame for this reality? We
92 Kaufmann 93 Peer group includes Botswana, Cameroon, Central African Republic, Chad, Cote D’Ivoire, Ethiopia, Gabon, Ghana, Guinea, Kenya, Malawi, Mali, Mauritius, Namibia, Nigeria, Senegal, Tanzania, Zambia, and Zimbabwe. 94 Freedom House, 2012 Freedom in the World, http://www.freedomhouse.org/report-types/freedom-world.
Figure 4.12: Percentile Rank of Control of Corruption in Angola (dashed line is the margin of error at 90% confidence)
92
cannot as Western countries have bought the same oil and provided very similar loans to
Luanda. Every country that buys Angolan oil props up dos Santos’s regime. Angolan
elites have captured the political process and understandably resist change.
Figure 4.13 shows Chinese trade (exports plus imports) and loans, together with
an average of Angola’s WGI percentage scores over the past decade.95 The huge increase
in Chinese money into the country, beginning around 2004, did not result in a drop in
WGI scores. Angola’s governance has remained fairly steady, though very low, over
time and there does not seem to be a correlation between low scores and Chinese
investment.
Using Millennium Challenge Corporation Scores to Assess the Chinese Influence in
Angola:
The U.S. Millennium Challenge Corporation (MCC) uses 15 metrics in order
95 WGI percentage scores indicate Angola’s ranking in comparison to 199 other countries. Data from All China Data Center and World Bank.
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93
to get a full of a country’s development. Each year, the MCC scores nations in the
following criteria: ruling justly, investing in people, and economic freedom.
Since 2004, though excluding the year 2008, the MCC has measured Angola’s
progress on governance, civil society development, and financial liberty. These scores
provide a reliable metric for assessing Angola’s development. For governance issues,
Angola has improved slightly, but compared to its peers in Sub-Saharan Africa, Angola is
regressing. Angolan civil society development is difficult to assess, as the scores vary
widely, but there has been gradual improvement. Economically, Angola has been doing
well and has seen improvement in its individual scores and has fared well in comparison
to its neighbors. Below is a closer look at each of these areas, with a focus on the
changes in the past eight years.
Angola has slightly improved its scores in the governance indicators. For
example, on a scale of 40, Angola has improved from a score of six in 2004, to a score of
ten in 2012. Civil liberties have increased from four to 21, on a scale of 60. Corruption
control, government effectiveness, rule of law, and voice and accountability has seen
minor, to zero, improvement. Figure 4.14 chronicles the changes from 2004 to 2012 in
Angola’s individual scores and percentage scores, relative to the peer group median.96
Figure 4.14: Changes in Angolan MCC Governance Scores, 2004-2012 Type Year
FY Political rights Total: 40
Civil liberties Total: 60
Control of corruption Total: 2
Government effectiveness Total: 2
Rule of law Total: 2
Voice and accountability Total: 2
Individual Scores
2004 6 4 -.3 -.39 -.77 -.83 2012 10 21 -.85 -.66 -.77 -.98
Relative to peer group
2004 37% 41% 12% 19% 7% 14% 2012 21% 17% 3% 14% 7% 14%
96 Data taken from: Millennium Challenge Corporation Country Scorecards, Angola http://www.mcc.gov/pages/selection/scorecards.
94
Angola has fallen, or not improved, in all of its governance scores when
compared to its peer group. The percentage score for Angola helps put Angola’s scores
in perspective with the rest of the continent. This comparison provides a bleaker picture
than the individual country scores. For example, civil liberties have fallen 24% and
political rights are down 16% from 2004. Corruption control and government
effectiveness have also fallen. Angola is the bottom of the heap and 97% of its neighbors
have better control of corruption. There has been no improvement in rule of law or voice
and accountability. Similarly, Angola’s score on rule of law is only 7% versus the rest of
the continent.
For “Investing in People,” Angola has seen huge improvement in its
immunization score, and over 90% of the country is immunized against select diseases.
Spending on health and primary education has also increased. When compared to its
neighbors however over the past decade, Angola has seen a small improvement of 3% in
immunization rates and a decrease of 14% in health expenditures. Primary education
expenditures have increased 10%, relative to the peer group median.
Economically, Angola has seen improvements in its regulatory quality (albeit,
small improvement from -.65 to -.5, out of a score of 2) and a huge increase in trade
openness, from 5 to 65. Relative to its neighbors, Angola’s economic progress still holds
weight, though it has a long way to go. Angola’s fiscal policy reached above the peer
group median in 2007, and is now at 92%. However, much improvement is still needed
in trade policy (decrease from 35% to 16%) and regulatory quality (9% to 21%).
The MCC data provides another angle to the World Governance data and reaches
similar conclusions. There is no basis for singling out China for Angola’s lackluster
95
performance. Washington, Beijing, and Luanda all have contributed to the spotty
improvement in governance, civil society development, and economic freedom in
Angola. Figure 4.15 shows this phenomenon graphically—despite high Chinese
investment since 2004, Angola’s rankings in the MCC have stayed steady, and perhaps
even seen some small improvement.97 The graph shows loans and trade from Beijing,
along with Angola’s average percentage ranking (as compared to 199 other countries) for
issues of governance, economics, and civil society.
Conclusions:
Angola, China and Western nations are to blame for the sad state of life in
Angola. As a result of Chinese and Western loans and Angolan corruption, Luanda is
still struggling to implement sound governance practices and develop indigenous
97 Data from All China Data Center and the Millennium Challenge Corporation.
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96
industry.98 The continued purchase of Angolan oil by foreign countries enables the
continued rule of dos Santos and his supporters. As shown above, Angolan politics, or
governance, is in very poor shape and does not have the institutions to ensure the equal
distribution of oil wealth. Angola is a quintessential petro state that relies almost solely
on its crude resources, which draws the attention of China and Western nations.
Fortunately, Angola has many foreign aid and investment partners so that one country
does have a monopoly on influence.
Western countries and institutions have historically pushed for reform-
incentivizing aid worldwide. According to their logic, pressure from all sides is needed
to help Angola equalize its oil revenues. For example, Human Rights Watch and other
organizations have called on Angola to join international groups such as the Extractive
Industries Transparency Initiative. Neither Western or Chinese aid is pushing for
transparency or reform.
As much as culpability is shared, there are some characteristics of Chinese
investment that differ from Western aid. Despite Beijing’s rhetoric that its aid is unlike
the Western aid, Chinese funds are tied economically versus the West’s political ties.
Chinese aid and investment in Angola requires that Angolans utilize Chinese materials
and contractors, which does not fully contribute to Angolan development. Second, China
is focused on getting as much oil as possible from Luanda. While Western nations are
similarly interested in energy, they also dabble in other industries, which helps diversify
industries in Angola. The Chinese also have a long and special relationship with
President dos Santos. They have supported him for about thirty years and could use their
98 Human Rights Watch, pp. 23.
97
history with him to enact changes. Although China is Angola’s most important oil export
market and trade partner, this status has not brought particular power or leverage to
influence Angolan policy. Because oil is a fungible commodity, if China stopped buying
oil in an effort to encourage better governance (an unlikely move for Beijing), its action
would likely have little impact as the European Union, the United States, India and other
nations would probably step in to purchase more oil.
The Chinese have made it clear that political reform and equality is not required
in order to receive aid from Beijing. While Western countries can always do more, they
at least have the rhetoric and past history of incentivizing reform. China has not taken
advantage of its long relationship with dos Santos, nor its decades of involvement in the
country to pressure Luanda to change. Neither is Beijing currently using its strong trade
status to move dos Santos. Unfortunately, the results are tangible and negative.
Inequality is rampant, governance is getting worse, and economic freedom and civil
society development have both basically stagnated.
98
Chinese Relations with Zimbabwe, The Sun Rising in the East
Like Angola, Zimbabwe has had a
turbulent history, and China has supported
President Mugabe for decades. Applying the politics, partner, and petro argument reveals
that weak governance, few fully supportive foreign partners, and the prevalence of
extractive industry plague Zimbabwe. China has emerged as a country willing to work
with Mugabe, despite sanctions and an imperfect business environment. Zimbabwe’s
poor governance and extraction-based economy means that foreign investments do not
benefit large segments of the population, but are easily captured by the political elite.
This chapter is organized as follows: a history of Zimbabwe-Chinese relations
begins, followed by a discussion on the current economic and political relationship
between Beijing and Harare. The chapter closes with applications of Kastner’s and
Brautigam’s models and studies of the World Governance Indicators and Millennium
Challenge Corporation data.
Zimbabwe-China History:
Starting in the late 1800s, Britain ruled Rhodesia, which is modern-day
Zimbabwe. The colony received self-rule in 1923 and in the 1950s, the British dissolved
Rhodesia into separate colonies: modern day Zambia, Malawi, and Zimbabwe.
Zimbabwe is a land-locked country endowed with significant resources including
diamonds, fertile soil, and the world’s second largest deposit of platinum. Zimbabwe has
historically been the second most industrialized country in Africa.1
1 Taylor, Ian, China’s New Role in Africa, Lynne Rienner, 2009, pg. 102.
Mugabe’s mansion with blue Chinese roof tiles
99
The prominent rebel group Zimbabwe African National Union (ZANU) split from
the Zimbabwe African People’s Union (ZAPU) in 1963 over disagreements with Joseph
Nkomo’s leadership as well as ethnic differences. The Rhodesian government, which
pursued policy in favor of the white immigrants, financially supported the ZAPU, leading
to further impetus for the break.2
China supported rebel movements in Zimbabwe in the 1960s and during the civil
war. During this time, the Chinese relationship with the Soviet Union was deteriorating
quickly. Beijing frequently criticized Moscow and sought to oppose Soviet foreign
policy. In 1961, the leader of the future ZANU met with Chinese representatives in an
effort to gain their support and he later visited the country as well. Beijing initially
wooed both the ZANU and its rival, ZAPU, though ultimately choose to support ZANU.
At this time, Beijing’s actions in Africa were dictated by the geo-political struggle
between China and the Soviet Union. Joshua Nkomo, the leader of ZAPU, had a strong
relationship with Moscow, thus Beijing supported the opposite side. As academic Ian
Taylor explains “support for ZANU was a vehicle by which Beijing’s anti-Sovietism
could be pursued in Africa.”3 Beijing helped train ZANU cadres in China and Ghana;
this training provide successful later on. Further, Beijing’s instruction shaped the
ideology of the group.4 Interestingly, ZANU-ZAPU split coincided with the Sino-Soviet
split, partially explaining why China and the Soviet Union were so invested in this proxy-
like war in Zimbabwe. In the midst of all these politics, the United States was seen as
implicitly supporting the white Rhodesian government. China’s support waned in the
1970s, but picked up again in the 1990s. 2 Taylor, pg. 106. 3 Taylor, Ian, China and Africa: Engagement and Compromise, Routledge, 2006, pg. 107. 4 Taylor, China and Africa: Engagement and Compromise, pg. 106.
100
The country was soon engulfed in a civil war, known as the Rhodesian Bush War,
which lasted from 1964 to 1979. The conflict pitted three sides against one another: the
Rhodesian government under Ian Smith, ZAPU under Joshua Nkomo, and ZANU, led by
Robert Mugabe. China’s support to ZANU helped the organization develop into a
powerful liberation movement.5 ZANU adopted Maoist military tactics and utilized
Chinese mass mobilization techniques—these tactics would prove essential in the
ZANU’s eventual victory. In fact, the group became very focused on the teachings of
Mao, Marx, and Lenin, which turned out to be a successful strategy in mobilizing
Zimbabweans.
After much violence, all sides signed a cease-fire. In 1978, the Rhodesian
government signed an agreement with ZANU and held elections the year after.
Zimbabwe came into being in 1980 and Mugabe and his ZANU party won the elections.
Mugabe became Prime Minister and, despite his socialist rhetoric, integrated Zimbabwe
into the global financial, and capitalist, system. His government began as a vaguely
social democratic one-party dictatorship and he promptly established official relations
with China. During the war, Mugabe sought aid from the Soviet Union many times, but
was rebuffed, leading to further solidarity with Beijing. Mugabe knew whom to thank
and he traveled with a large delegation to China the year after his election.
However, Mugabe continued to be pragmatic and personally invited Moscow to
the country’s independence celebrations. His half-hearted turn to Moscow prompted
additional arms shipments from China.6 Mugabe was not always loyal to Beijing and
5 Taylor, China and Africa: Engagement and Compromise pg. 108. 6 Taylor, China and Africa: Engagement and Compromise, pg. 120.
101
spoke out publically against the Chinese, even speaking mistruths about Beijing.7 During
these international maneuvers, Mugabe took over the ZAPU and retained the name
ZANU-PF standing for the Zimbabwe African National Union Patriotic Front.
The China-Zimbabwe relationship grew through loans, projects, and further visits.
Beijing reaped the political capital it had sowed in the 1960s and was invited to construct
hospitals and the National Sports Stadium in the 1980s.8 Mugabe traveled to China again
in 1985 and received $55 million in loans. The Tiananmen Square Massacre provided an
opportunity for Mugabe to provide much-needed support to Beijing, which he was
pleased to provide and which brought him closer with the isolated regime. Beijing would
later reciprocate and support Mugabe when he was isolated internationally. He traveled
again to Beijing in 1993 and an Economic Joint Commission was soon established.
While Mugabe desired to “free” Zimbabwe from its traditional Western partners,
the country did receive substantial aid from them in the 1980s, including $417 million
from the World Bank, $204 million from the U.S., and $156 million from the European
Economic Community.9 And in the 2000s, most of Zimbabwe’s trade, investments,
loans, and arms were from its neighbors and the West.10
Current China-Zimbabwe Relations:
China’s relationship with Mugabe has continued to grow on the basis of
economics. In 2010, the two nations celebrated 30 years of relations and over $560
million in bilateral trade.
7 Taylor, China and Africa: Engagement and Compromise, pg. 120. 8 Ampiah Kweku and Naidu, Sansusha eds “Crouching Tiger, Hidden Dragon?” University of KwaZulu-National Press, 2008. 9 Ampiah 10 Ampiah, pg. 126.
102
Figure 5.1 provides a listing of visits between top officials in each country. It is
impressive that the two nations have been able to achieve such reciprocity in their visits,
especially when Zimbabwe is facing much international scrutiny.
Zimbabwe exports slightly more goods to Beijing than it buys from the country.
Generally, Harare imports telecommunications equipment and manufactured goods from
China and exports raw materials such as tobacco, platinum, chrome, steel, and
diamonds.11 Zimbabweans have come up with a derogatory nickname, zhing-zhong, for
the cheap Chinese goods in the country. Beijing’s commercial intentions in Zimbabwe
include investing in raw materials, seeking out opportunities for investment, and possibly
accessing South Africa’s market.12 Chinese companies have taken over Air Zimbabwe,
the Zimbabwe Broadcasting Corporation and control 70% of the country’s sole electricity
generation facilities.13 Zimbabwe presents a challenge environment for many foreign
11 Mabuse, Nkepile, “Zimbabwe: China’s friend in Need?” CNN, April 26, 2011, http://edition.cnn.com/2011/BUSINESS/04/26/zimbabwe.china/index.html. 12 Taylor, China’s New Role in Africa, pg. 101. 13 Taylor, China and Africa: Engagement and Compromise, pg. 123.
Date Personnel Destination 2000 Chinese Foreign Minister Tang Zimbabwe 2001 Zimbabwean Speaker of the Parliament Mnangagwa China 2001 Zimbabwean National Chairman of Zanu-PF Nkomo China 2002 Chinese Standing Member of the Political Bureau of the
Communist Party Wei Zimbabwe
2003 Chinese Vice Chairman of the National Committee of the CPPC Wan
Zimbabwe
2003 Zimbabwean Minister of Justice and the leader of Zanu-PF in the Parliament Chinamasa
China
2005 Zimbabwean President Mugabe China 2009 Zimbabwean Deputy Prime Minster Mutambra China 2009 Chinese Assistant Foreign Minister Zhai Zimbabwe 2009 Chinese Member of the CPC Standing Committee Gao Zimbabwe 2011 Chinese Vice Premier Wang Qishan Zimbabwe
Figure 5.1: Visits by Top Chinese and Zimbabwean Officials, 2000-2009
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investors, but Chinese firms have some safety net due to Chinese state support for their
investments.
Brautigam points out that China is not focused on giving “aid” to Zimbabwe, but
conducts business with the country.14 At the same time however, China did provide $103
million in official development aid from 2004-2009 through grants, concessional loans,
contributions to the World Food Program, and construction of two schools and a
hospital.15 Further, the China Export-Import Bank has restructured some loans on terms
that are more favorable to Zimbabwe, including reducing the interest rate from 4% and
3% to 2% on two loans totaling $17.9 million.16
The “Look East” Policy:
In 2003, Mugabe launched his “Look East” policy, which intended to increase
investment from Asian countries including Malaysia, Singapore, and China.17 He
declared, “we have turned East, where the sun rises, and given our backs to the West,
where the sun sets.”18 Mugabe took advantage of his speech at the Sino-African Trade
Summit that year to engage in a tirade against Britain and the U.S. and praise China.19
The “Look East” policy was a deliberate turn against Western nations as they had begun
to sanction the regime. This policy was also prompted by the government’s need for
foreign exchange and investment, especially in light of the young population.20 In 2002,
14 Brautigam, Deborah, “China in Africa: Think Again,” The World Financial Review, http://www.worldfinancialreview.com/?p=197. 15 Brautigam, Deborah, The Dragon’s Gift, Oxford University Press, 2009. 16 Brautigam, The Dragon’s Gift, pg. 129. 17 Oxford Analytica, “Zimbabwe’s ‘Look East’ Disappoints,” Forbes, December 28, 7007, http://www.forbes.com/2007/12/27/zimbabwe-harare-mugabe-cx-1228oxford.html. 18 Brautigam, The Dragon’s Gift, pg. 287. 19 Taylor, China and Africa: Engagement and Compromise, pg. 124 20 Approximately 47% of the population is under 15. Sylvester, Christine McNabb Zimbabwe: the Terrain of Contradictory Development. Boulder, Colorado: Westview Press, 1991.
104
the European Union froze the assets of selected members of the government21 and the
United States followed shortly afterwards with similar sanctions.22 International
institutions including the International Monetary Fund (IMF) and World Bank (WB)
were similarly pulling out of the country. In 1999, both groups ceased financial
assistance. The IMF closed its Harare office in 2002 and suspended Zimbabwe’s voting
rights in 2003.23 When Zimbabwe failed to compete the IMF and WB program
requirements, it lost access to multilateral loans. The country suffers from electoral
discrepancies and legislation that restricts the activities of the opposition parties and
press.24
China responded favorably to the “Look East” policy and it was quick to support
Mugabe’s controversial decision to raze shantytowns around Harare, known as Operation
Murambatsina, or “get rid of the trash.”25 The policy began in 2005 and is estimated to
have displaced 700,000 people.26 Although the policy was likely intended to punish
urban-based supporters of Mugabe’s opposition and to push rural migrants back to the
21 HM Treasury, “Zimbabwe,” March 8, 2012, http://www.hm-treasury.gov.uk/fin_sanctions_zimbabwe.htm. 22 U.S. Department of the Treasury, Office of Foreign Assets Control, “Zimbabwe: What You Need to Know about U.S. Sanctions,” November 23, 2005, http://www.treasury.gov/resource-center/sanctions/Documents/zimb.pdf, pg. 1. 23 U.S. Embassy-Harare, “U.S. Sanctions and Bilateral Trade with Zimbabwe 2001-2010,” harare.usembassy.gov/uploads/pz/tK/.../us_zim_sanctions_trade.pdf. 24 Mlambo, Alois and Brian Raftopoulos, Becoming Zimbabwe: a History From the Pre-colonial Period to 2008. (Harare: Weaver Press, 2009). 25 Brown, Stephen and Sriram, Chandra Lekha, “China’s Role in Human Rights Abuses in Africa: Clarifying Issues of Culpability” in Rotberg, Robert, “China into Africa,” Brookings Institution Press, 2008, pg. 262. 26 Tibaijuka, Anna, “Report of the Fact-Finding Mission to Zimbabwe,” U.N. Special Envoy on Human Settlements Issues, June 17, 2005, ww2.unhabitat.org/documents/ZimbabweReport.pdf, pg. 7.
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countryside, it was widely rumored that Mugabe introduced the policy to protect Chinese
traders by removing their competition.27
China has further supported Mugabe rhetorically and in international
organizations. In 2005, Beijing was the only non-African nation to endorse Zimbabwe’s
flawed elections.28 That same year, the United States and the European Union pursued
further sanctions and an arms embargo against Mugabe and his supporters. In almost a
tit-for-tat move, Beijing responded by signing eight wide-ranging agreements on
irrigation, roads, power plants, telecommunications, and electrical power, estimated to be
worth $1.6 billion.29 The agreement was commercially driven Chinese firms required
very large down payments and security in tobacco and platinum exports.30 Despite the
long relationship between Zimbabwe and China, Chinese firms require large down
payments because they are operating in a high-risk environment.
China has supported Mugabe’s controversial land reforms, such as the 2005
nationalization of all farmland. Premier Wen Jiabao said, “China respects and supports
efforts by Zimbabwe to bring about social justice through land reform.”31 The support is
mutual as Beijing and Harare worked together in 2004 to block resolutions at the United
Nations Commission on Human Rights that would have condemned both countries for
27 Brautigam, The Dragon’s Gift, pg. 289. 28 Brown, pg. 262. 29 Brautigam, The Dragon’s Gift pg. 288. 30 Huawei, a Chinese telecom firm, demanded 20% cash down payment and security in tobacco, chrome, or platinum exports. China National Aero-Technology Import and Export Corporation required a $3.6 million down payment and tobacco exports as security. 31 Eisenman, Joshua, “Zimbabwe: China’s African Ally,” The Jamestown Foundation, http://www.jamestown.org/single/?no_cache=1&tx_ttnews[tt_news]=3877.
106
abuses.32 In 2006, Mugabe decreed that Mandarin Chinese be taught in Zimbabwe’s
universities. He also relies on Chinese doctors for medical treatment.33
The 2008 U.N. Veto:
The pinnacle of the Zimbabwe-China diplomatic relationship was likely Beijing’s
veto of a 2008 U.N. Security Council Resolution that would have applied further
sanctions against Mugabe and his supporters. The Resolution came after the highly
contested 2008 presidential election in which opposition leader Morgan Tsvangirai
withdrew in protest of fraud. China utilized its permanent seat on the Security Council
and was joined in vetoing by Russia.34 South Africa also voted against the resolution,
though it did not have veto power. In keeping with its principle of non-interference,
China maintained that Zimbabwe’s problems were internal and did not constitute an
international security threat. China’s Special Envoy for Africa Liu Guijin ironically
explained that China’s vote was also motivated by humanitarian concerns for those that
would suffer under sanctions.35 Actions such as this veto give credence to the argument
that China is supporting a regime that violates human rights, including freedom of speech
and the ability to elect one’s leaders.36
However, China knows its limits with Mugabe and has refused to support him
indefinitely. In 2005, Beijing allegedly refused Mugabe’s request for $1 billion in aid,
32 Eisenman 33 Fisher, Max, “In Zimbabwe, Chinese Investment with Hints of Colonialism,” The Atlantic, June 24, 2011, http://www.theatlantic.com/international/archive/2011/06/in-zimbabwe-chinese-investment-with-hints-of-colonialism/240978/. 34 Libya and Vietnam also voted against the Resolution, though they did not have veto power. 35 Brautigam, The Dragon’s Gift pg. 284. 36 Taylor, China’s New Role in Africa, pg. 125.
107
providing only $6 million for grain imports.37 China also took the unusual step of
publically denying rumors that it was planning on loaning Mugabe $2 billion in 2006.38
China has used its supremacy in the relationship to admirably push for
improvement in the way Mugabe governs. After a cholera epidemic and economic chaos
rocked Zimbabwe in 2009, China, along with South Africa, pushed Mugabe to form a
national unity government with the opposition. China publically expressed “concern with
the constant deterioration of the economic and political situation in Zimbabwe.”39 The
pressure worked and Mugabe formed a government with Morgan Tsvangirai of the
Movement for Democratic Change (MDC). While the power-sharing agreement has
given Mugabe the most power, the compromise is a step back from authoritarianism.40
Perhaps as a reward for this power-sharing agreement, China agreed to provide
foreign capital by investing in a mine. The $5 billion platinum mining deal was not only
extremely lucrative for Beijing as the stake was worth $20 billion, but it also provided a
needed resource as China is the world’s largest consumer of platinum. 41 Further, mining
platinum is an expensive and time-consuming process, and Zimbabwe needed the
assistance of a foreign partner. Tsvangirai had visited the United States and Europe
looking for support, but only received $500 million in pledges.42 It seems that Zimbabwe
was looking for a buyer, which meant Beijing was able to bargain for deal that could
37 Brown, pg. 262. 38 Brautigam, The Dragon’s Gift. 39 Brautigam, The Dragon’s Gift, pg. 292. 40 A 2010 Xinhua article criticized the international community’s frequent encouragement of power sharing agreements, citing Zimbabwe’s failure to reduce Mugabe’s power. Xinhua, “Do Power-sharing Deals Really Work for Africa?” February 16, 2010. 41 Brautigam, The Dragon’s Gift pg. 292. 42 SinoGate Investment Consulting, “Zimbabwe: $5 Billion Deal with China over Platinum Resources,” July 3, 2009, http://www.sinogate.org/zimbabwe-5-billion-deal-with-china-over-platinum-resources/.
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prove quiet lucrative. After the election and mining deal, China also financed the
construction of Mugabe’s $13 million mansion.43 Mugabe’s “successful” experience
power-sharing in 2008 and subsequent economic deal making might have led him to
agree to another power sharing agreement with Tsvangirai and Deputy Prime Minister
Arthur Mutambara in 2010.
Beijing’s pressures on Mugabe should not be construed as part of a larger desire
to see democracies in Africa. When commenting on recent turmoil in Kenya, a People’s
Daily (surrogate for the Chinese government) editorial argued “Western-style democratic
theory isn’t suited to African conditions” and even further that democracy can actually
lead to disaster.44 China is interested in resources and money and, as shown above, will
strategically push for governance reforms.45 A think-tank may have said it best: “in
return for bailing out Robert Mugabe’s regime with injections of cash, machinery,
equipment, and military supplies, Chinese state-owned enterprises have assembled a
portfolio of shares in some of Zimbabwe’s prize assets.”46 Chinese support for Mugabe
has translated into economic opportunities for China, but not governance improvement in
Zimbabwe.
Despite issues of governance, China would likely invest more in Zimbabwe, if
Harare could only keep up its end of agreements. According to Brautigam, “Zimbabwe’s
unreliability, rather than any Chinese reticence, [keep] the Chinese from deeper
43 The Chinese also supplied the architectural drawings and blue roof tiles for the compound. Brautigam, The Dragon’s Gift, pg. 288. 44 Brautigam, The Dragon’s Gift, pg. 287. 45 Taylor, China and Africa: Engagement and Compromise, pg. 125. 46 Melville, Chris and Owen, Olly, “China and Africa: a New Era of South-South Cooperation,” Open Democracy, July 7, 2005, http://www.opendemocracy.net/globalization-G8/south_2658.jsp.
109
investment.”47 Numerous deals have failed because Zimbabwe does not uphold its part
of the agreement. For example, China International Water and Electric Corporation
planned to clear 100,000 hectares of land and build an irrigation system, but withdrew
when Mugabe ceased making payments.48 The China National Aero-Technology Import
and Export Corporation pursued a $1.3 billion venture in coal power generation for six
years before giving up in frustration with Zimbabwe’s lack of progress in raising
electricity tariffs.49
In addition to Harare’s inabilities to complete its deal commitments, there are
other worrisome aspects of the business environment in Zimbabwe. Last year, Mugabe
passed a law requiring local blacks to have majority shares in all foreign companies.50
This indigenization law resulted in companies giving up significant ownership in order to
comply with the new regulations. This legislation represented a sudden change in the
business environment, which delayed further investment. For example, the
British/Australian mining firm Rio Tinto had to give up 51% of its equity in the Murowa
Diamond Mine51 and, after this move, decided to put its plans on hold for a $300 million
expansion of the mine.52
Chinese Arms Sales:
In addition to its focus on extractive industry, Beijing has received much criticism
for its arms sales to countries like Zimbabwe and Sudan. While the United States
47 Brautigam, The Dragon’s Gift, pg. 289. 48 Brautigam, The Dragon’s Gift, pg. 289. 49 Brautigam, The Dragon’s Gift, pg. 150. 50 News24, “Rio Tinto Gives up 51% in Zimbabwe,” October 9, 2011, http://www.news24.com/Africa/Zimbabwe/Rio-Tinto-gives-up-51-in-Zimbabwe-20111008. 51 News24 52 Reuters Africa, “Diamond Output Surges at Rio’s Zimbabwe Unit,” March 30, 2012, http://af.reuters.com/article/investingNews/idAFJOE82T03620120330.
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actually exports more weapons on a global scale,53 many worry that China is willing to
work with pariah regimes. The situation is further complicated by the fact that Beijing
does not publish data on its arms exports. After Zimbabwe’s independence, Beijing
practiced “weaponry diplomacy” by providing Harare with several sales, including:
• 12 jet fighters and 100 military vehicles valued at $240 million in 2004
• six trainer/combat aircraft in 2005
• six additional trainer/combat aircraft in 2006
Mugabe was able to avoid U.S. and E.U. sanctions by purchasing these goods from
China. The method in which the trade is completed is suspicious. The 2004 deal for 12
fighter jets circumvented the government procurement board and went behind the backs
of the Parliament.54 There have been allegations that in 2000 and 2004, China traded
weapons for Zimbabwean ivory, a likely illegal move. Further, the New York Times
reported that in 2005, China sold water cannons to subdue protesters and bugging
equipment to monitor cell phone networks.55 The BBC also stated that China has
provided technology to allow the Mugabe regime to monitor the Internet.56 In 2007, the
Chinese funded a $98 million military compound, known as the Robert Mugabe School
of Intelligence, which will offer degrees in subjects such as human and signals
intelligence.57 These sales and investments have resulted in a close military relationship
between the two countries as Western nations enforce arms embargos and sanctions. The
53 The U.S. provides over $44 billion worldwide in arms sales, compared to China’s $2 billion. In Taylor, Ian, China’s New Role in Africa, pg. 119. 54 Brautigam, The Dragon’s Gift, pg. 289. 55 Wines, Michael, “Zimbabwe’s Future: Made in China,” The New York Times, July 25, 2005, http://www.nytimes.com/2005/07/24/world/africa/24iht-zimbabwe.html. 56 BBC News, “Outrage at Zimbabwe Bugging Plan,” August 31, 2006, http://news.bbc.co.uk/2/hi/africa/5301146.stm. 57 The Zimbabwean, “Chinese to Pay for Spy Centre,” May 15, 2011, http://www.thezimbabwean.co.uk/news/39611/chinese-to-pay-for-spy-centre.html.
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military does not use these technical weapons to control Zimbabweans; the fancy
equipment serves as a way to keep the military happy. However, China is not the only
one supporting the regime militarily as Ukraine supplied weapons worth $12 million
from 2005-2007.58
Partly due to these weapons sales, there has been some pushback in the country
against Mugabe’s close relationship with China. Zimbabwean workers frequently
criticize Beijing for low pay and workplace mistreatment.59 The New York Times
commented, “the sheer intensity of the pro-China drive has…raised eyebrows among the
elite, some of whom question whether Mugabe is simply replacing British political
domination with a more up-to-date Asian economic rule.” Further, a report indicated that
the close relationship between Mugabe’s ZANU and China has not necessarily benefitted
the Zimbabwean people.60 Due to the rampant corruption in Zimbabwe, elites are able to
capture large amounts of foreign aid and other trade. And a recent suggestion to peg
Zimbabwe’s currency to the Chinese yuan was met with much consternation from
Zimbabwean government officials. While it is impressive that this idea even occurred to
the Reserve Bank Governor, the ZANU government made clear that Zimbabwe would
continue to integrate itself in the international economy and would still use the multi-
currency system.61
58 Brautigam, The Dragon’s Gift, pg. 291. 59 Construction workers at the Anhui Foreign Economic Construction Company went on strike over low pay of $4 a day, and regular beatings by their Chinese managers. Fisher, “In Zimbabwe, Chinese Investment with Hints of Colonialism.” 60 Singh, Gunjan, “China-Zimbabwe Relations,” Mainstream, Vol. XLIX, No. 26, June 18, 2011, http://www.mainstreamweekly.net/article2822.html. 61 Miller, Andrew, “Zimbabwe: ZANU-PF and China-Does Zimbabwe Really Yearn for the Yuan?” All Africa, March 5, 2012, http://allafrica.com/stories/201203051524.html.
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Here is a table indicating some investments between the two countries over the
past decade. Details on many of the projects were difficult to locate.
While the Zimbabwe-Chine relationship is strong, it is also unequal. “For China,
Zimbabwe is economic small fry, but for ZANU, China is the only way out of a deep
hole.”62 As Western nations and banks pull out of the country and apply sanctions, China
is increasingly one of Mugabe’s few foreign allies and partners. There are still some
foreign deals, including a 2006 agreement with a French bank for fuel imports, a
2006 $100 million deal with a South African mining company for platinum investment,63
and a 2008 $400 million chromium mining investment by a British firm.64
62 Sokwanele Special Report, June 21, 2005 in Taylor, China and Africa: Engagement and Compromise, pg. 124. 63 Muleya, Dumisani, “Zimbabwe Signs Mining and Power Deals with China,” Business Day, June 15, 2006, http://www.minesandcommunities.org/article.php?a=4089&l=1. 64 Brautigam, The Dragon’s Gift, pg. 291.
Year Amount (US$)
Type Description
2000 $5.8 million Concessional loan
Used for investment in a cement plant, later terms were renegotiated
2004 $240 million Sale 12 jet fighters and 100 military vehicles 2006 $25 million Preferential loan - 2007 $200 million Export credit Farming inputs 2007 $200 million Sale Sinosteel purchased Zinasco 2010 $700 million Loan Rejuvenating the agricultural sector 2012 $180 million Loan Airport upgrade, neonatal equipment,
economic and technical cooperation
Figure 5.2: China-Zimbabwe Trade, 2000-2012
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In 2010, China-Zimbabwe
trade was $561 million,65
compared to $126 million with the
United States,66 and $588 million
with the European Union.67 South
Africa is Zimbabwe’s main trading
partner, with 44% of total exports
and imports and a total of $2.4
billion in 2010.68
Zimbabwe’s main
industries and trade revolve around its large mineral deposits. The country mines
numerous minerals including coal, gold, platinum, diamonds, copper, nickel, tin, clay,
ferroalloys, and ores. The Marange diamond fields are thought to be among the richest in
the world. The African Development Bank estimated that exports from the mining sector
would contribute half of the 2011 total exports, which are estimated at $4.4 billion.69
Because so much of the country’s revenue is derived from natural resources, it qualifies
65 All China Data Center “6-22 Turnover of Economic Cooperation with Foreign Countries or Regions” China Statistical Yearbook 2010, http://chinadataonline.org/member/yearbooknew/yearbook/ybcdata.aspx?yc=F88F0ED0C6279E704E61E777B33E5ECA&cc=P060M. 66 U.S. Census Bureau 67 European Commission, “Zimbabwe: Bilateral Trade and Trade with the World” Director General for Trade, March 21, 2012, http://trade.ec.europa.eu/doclib/html/147429.htm, pp. 6. 68 European Commission, pg. 6. 69 African Development Bank, “Zimbabwe Monthly Economic Review,” Issue No. 6, December 2011, http://www.google.com/url?sa=t&rct=j&q=&esrc=s&source=web&cd=4&ved=0CGkQFjAD&url=http%3A%2F%2Feeas.europa.eu%2Fdelegations%2Fzimbabwe%2Fdocuments%2Fpress_corner%2Feconomic_review%2Fzimbabwe_monthly_economic_review_december_en.pdf&ei=u5u0T9KlHcOIiAKk4pyAAg&usg=AFQjCNFhTMY59xWUUswNcXrgq9UkXvrTxQ&sig2=lMGpxe4L2OEYswiC0cplFQ.
Figure 5.3: Zimbabwe’s 2010 exports by product
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as a petro country. Based on this paper’s model, a petro state is dependent not on its
human capital or industries, but on its raw materials for economic growth. The
Zimbabwe population is highly literate, but with unemployment at 94% and 79.6 billion
percent inflation, finding sustainable employment is difficult. Figure 5.3 provides a
visual distribution of Zimbabwe’s exports in 2010 by product type.70 Minerals such as
nickel, diamonds, gold, and ferroalloys make up almost 50% of the exports in that year.
Despite strained relations, the United States has been the leading provider of
humanitarian assistance to Zimbabwe, providing more than $1.4 billion in assistance
from 2001.71 Figure 5.4 shows the average in overseas development assistance (ODA) to
Zimbabwe from 2006-2010.72 The United States has given substantially more than other
countries and China did not make the list for the top ten donors.
Western nations such as the United States have been decreasing their trade with
Zimbabwe in an effort to isolate Mugabe. In 2002, the U.S. imposed financial and visa
70 The “unused postage” category is defined as: unused postage, revenue or similar stamps of current or new issue in the country in which they have, or will have, a recognized face value; stamp-impressed paper; banknotes; check forms; stock, share or bond certificates and similar documents of title. From HS4 data. The Observatory of Economic Complexity, “What Does Zimbabwe Export?” MIT, http://atlas.media.mit.edu/. 71 U.S. Embassy-Harare 72 Aid Flows, www.aidflows.org, information from Organization for Economic Cooperation and Development, Development Assistance Committee, Aid Statistics.
115
sanctions against around 250 specific culpable individuals and entities, and then
expanded the list in 2003, 2005 and 2008 to include a ban on transfers of defense items
and a suspension of non-humanitarian government-to-government assistance.73 In 2009,
President Obama extended these sanctions.74 The European Union has a travel ban and
financial freeze on Mugabe and his inner circle as well as restrictions against arms sales
and equipment used for internal repression.75 Earlier this year, the EU lifted some
sanctions, citing the government’s power-sharing agreement.76 General trade and
73 U.S. Department of State, “Background Note: Zimbabwe,” October 14, 2011, http://www.state.gov/r/pa/ei/bgn/5479.htm#relations. 74 Trott, Bill, “Obama Extends U.S. Sanctions against Zimbabwe,” Reuters, March 5, 2006, http://www.reuters.com/article/2009/03/05/us-zimbabwe-crisis-usa-idUSTRE5241BT20090305. 75 European Commission, “European Union Restrictive Measures in Force,” April, 14, 2012, eeas.europa.eu/cfsp/sanctions/docs/measures_en.pdf. 76 BBC News, “European Union Lifts More Zimbabwe Sanctions,” February 17, 2012, http://www.bbc.co.uk/news/world-africa-17075267.
Figure 5.4: ODA to Zimbabwe, 2006-2010 average (in US$M)
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investment into Zimbabwe from Western nations has dropped—U.S. trade has decreased
from over $200 million in 2008 to under $111 million in 2011.77
The United States and European Union do not qualify as significant foreign
partners for Zimbabwe because they apply sanctions and speak against Mugabe. They
are economically involved, but politically very hostile. Although they may carry weight
economically, the U.S. and EU have a very poor relationship with the country due to
colonialism and frequent international criticism. For example, Mugabe used his sister’s
funeral in 2010 to criticize the U.S. and EU saying, “to hell with them. Hell, hell, hell.”78
The Western representatives walked out of the event and Mugabe was bold enough to
later demand their apologies. However, talks between the EU and Zimbabwe to
normalize relations have recently restarted.79 International institutions such as the IMF
and World Bank have been out of the picture for almost a decade, until the restoration of
IMF technical assistance in 2009 and Zimbabwe’s IMF vote in 2010.80
While South Africa is Zimbabwe’s largest trading partner, there is reason to
believe that China still has a significant voice in the country for its historical and
diplomatic support to Mugabe. While looking at economics worked for determining
Angola’s and Ghana’s foreign partners, Zimbabwe’s political situation requires looking
deeper. South Africa is a regional powerhouse and one of Zimbabwe’s neighbors. Like
China, South Africa has supported Zimbabwe diplomatically, though to a lesser degree.
The country voted against the 2008 UNSCR which would have led to further economic 77 U.S. Census Bureau, “Trade in Goods with Zimbabwe,” http://www.census.gov/foreign-trade/balance/c7960.html. 78 Phillips, Leigh, “Mugabe Tells EU, US to ‘Go to Hell’ at Sister’s Funeral,” EU Observer, April, 8 2010, http://euobserver.com/24/30582. 79 The Zimbabwe Guardian, “Zim-EU Re-engagement Talks Resume in Brussels,” May 10, 2012, http://talkzimbabwe.com/zim-eu-re-engagement-talks-resume-in-brussels/. 80 U.S. Embassy-Harare, pg. 3.
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isolation of Luanda. And, South Africa has economic leverage, as its trade with Harare is
scores larger than other foreign trading partners. There may even be aspects of South
Africa’s influence that are not public as President Mbeki was reportedly practicing “quiet
diplomacy” to push Zimbabwe towards reform.81 This patience, combined with behind-
the-scenes maneuvering has yielded few results so far, perhaps in part because both
Mugabe and Mbeki view Tsvangirai, Zimbabwe’s opposition leader, with disdain.82
However, there are clues that lead us to believe that China has significant
influence in Zimbabwe. China has history with Mugabe—Beijing has supported the
dictator since the 1960s and he arguable owes some of his success to the initial support he
received from China. Beijing is also an active defender of Mugabe on the international
stage. Unlike South Africa, China is making very public statements and strategically
voting. As outlined above, a short list of China’s support includes: endorsement of 2005
election results, support of land reform, and cooperation at the Human Rights Council,
arguments against the effectiveness of sanctions. China has even defending its support of
Mugabe after receiving public criticism. Beijing is on similar standing with Western
nations and thus China’s support carries extra geopolitical weight. And Beijing is still a
strong factor economically—it was the country’s third largest trading partner in 2010 and
have an extremely large source of wealth and industries available for investment in
Zimbabwe. 83
China emerges as one of Zimbabwe’s top two largest foreign partners, out of a
relatively small group. The European Union has economic leverage, but because of its 81 Bearak, Barry and Dugger, Celia, “Complex Relationship Keeps South African Leader from Criticizing Mugabe,” The New York Times, June 27, 2008, http://www.nytimes.com/2008/06/27/world/africa/27iht-mbeki.1.14044297.html. 82 Bearak 83 European Commission
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sanctions and criticisms of Mugabe, the EU is not on the same standing as China. The
United States is in a similar position, though with less economic leverage. South Africa
has supported Zimbabwe and is the top trading partner. However, when compared with
China’s standing in the world, historic relationship with China, frequent rhetorical
support, and voice in international organizations, South Africa’s influence diminishes a
bit. Mugabe has further aversion to South African leaders including Nelson Mandela,
Thabo Mbeki, and Jacob Zuma for their roles as the preferred icons of Southern African
liberation movements.84
Using Kastner’s Model to Assess the Chinese Influence in Zimbabwe:
Kastner’s model and empirical results show that China’s foreign trade is not
translating into political gains for Beijing. Kastner quantifies political gains as
statements from other countries supporting Beijing’s policy priorities, that is: regime
stability, territorial integrity, and economic development. He uses three events from
2008 as tests of these priorities: the crackdown on Tibetan unrest, the Taiwanese
referendum for U.N. membership, and Beijing’s Word Trade Organization (WTO)
economic classification.
However, Zimbabwe’s experience does not support Kastner’s findings.
Fairly high levels of Chinese investment in Zimbabwe have translated into political
influence for China. Harare has supported the one-China policy on multiple occasions,
and in detail. It does not appear that statements were made regarding Tibet, nor Beijing’s
WTO classification. In 2005, the Zimbabwean Ministry of Foreign Affairs released a
very detailed statement backing China’s Anti-Secession Law, which authorized the use of
84 Shutz, Barry, email, May 20, 2012.
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“non peaceful means” by China in case of Taiwan’s independence. “We in Zimbabwe
fully support the decision to adopt the Anti- Secession Law, which first upholds China's
basic policy of peaceful reunification and regards the non-peaceful means only as the last
resort to stop Taiwan's independence.”85 Earlier this year, during the signing of a $180
million economic and technical cooperation agreement, Zimbabwe’s Vice President,
Joice Mujuru, stated that Zimbabwe adheres to the one-China policy.86 Upon the
occasion of the 30th anniversary of China-Zimbabwe relations, the Zimbabwean
ambassador to China stated “Zimbabwe has been unwaveringly consistent in its support
for the one-China policy as well as for China’s other core interests.”87 During his 2011
visit, a member of the Chinese People’s Political Consultative Conference’s Standing
Committee, Liu Guchang, thanked Zimbabwe for its support of the one-China policy.88
Similarly, during Vice President (and likely future President) Xi Jinping’s 2011 visit to
the country, he expressed appreciation for Zimbabwe’s firm adherence to one-China.89
This same year, Mugabe and Tsvangirari reaffirmed Zimbabwe’s commitment to the
policy.90
Using Brautigam’s Model to Assess the Chinese Influence in Zimbabwe:
85 Xinhua, “Zimbabwe Supports China's Adoption of Anti-Secession Law,” March 25, 2005. 86 The News Today, “China Extends Economic Assistance to Zimbabwe,” April 7, 2012, http://www.newstoday.com.bd/index.php?option=details&news_id=58111&date=2012-04-08. 87 International Business Special, “Zimbabwe-China Diplomatic Relations” http://www.ibspecial.org/Eng/mess_look.asp?id=429. 88 Machivenyika, Farirai, “Chinese Delegation Slams Sanctions” Zimbabwe Herald, November 22, 2011, http://www.herald.co.zw/index.php?option=com_content&view=article&id=27209:chinese-delegation-slams-sanctions&catid=38:local-news&Itemid=131. 89 Forum on China-Africa Cooperation, “China, Zimbabwe Pledge to Seek Practical Cooperation.” November 18, 2011, http://www.focac.org/eng/zfgx/t878554.htm. 90 Ministry of Foreign Affairs of the People’s Republic of China, “Zimbabwean President and Prime Minister Meet Respectively with Chinese Foreign Minister Yang Jiechi,” February 12, 2011, http://www.fmprc.gov.cn/eng/topics/yjcen/t794415.htm.
120
Brautigam hypothesizes that an African countries’ governance is the most
important factor in determining the effects of Chinese aid and investment. The theory
states that a country with strong governance will reap the benefits of Chinese investment,
while a country with poor governance enables elite capture. Zimbabwe’s poor
governance, few foreign partners, and natural resource-heavy economy mean that
Chinese investment and aid has benefitted few in the country. Mugabe’s hold on power
leads to a situation where he and his supporters control money and power in the country,
enabling them to determine how = Chinese aid is used. China is one of Zimbabwe’s
strongest friends, thus Beijing is free to act in generally non-transparent and sometimes
corrupt ways. Elites in Zimbabwe have been able to capture the abundant mineral
business, meaning that profits and investment in this arena are limited to a select few
Zimbabweans.
Given 90% unemployment, extremely low wages, and vast majority of citizens
living below the poverty line, it is clear that, for whatever reasons, the millions of dollars
in Chinese aid and investment that is pouring into the country is not reaching the masses.
Using World Governance Indicators to Assess the Chinese Influence in Zimbabwe:
The World Governance Indicators (WGI) are a well respected way to measure the
strength of a country’s government. The World Bank scores countries based on their
performance in six governance areas. Figure 4.5 shows Zimbabwe’s scores as well as
percentile ranking in the world from 2000 and 2010.91 The shaded boxes indicate a
decrease in Zimbabwe’s international standing.
91 World Bank, “World Governance Indicators,” http://info.worldbank.org/governance/wgi/index.asp.
121
Type Year FY
Voice and account-tability Total: 2.5
Political Stability Total: 2.5
Government effectiveness Total: 2.5
Regulatory Quality Total: 2.5
Rule of law Total: 2.5
Control of Corruption Total: 2.5
Govern-ance Score
2000 -1.11 -1.41 -.75 -1.45 -1.25 -.94 2010 -1.49 -1.21 -1.56 -2.04 -1.8 -1.39
Percentile Rank
2000 16.3% 10.1% 24.4% 7.8% 10% 16.6% 2010 7.6% 13.2% 3.8% 2.4% .9% 2.4%
Zimbabwe is still in the negative score for every single governance indicator.
There have especially been drops in voice and accountability, government effectiveness,
regulatory quality, rule of law, and control of corruption. Since 2000, political stability,
has slightly increased, though the change could be related to Mugabe’s consolidation of
power and the creation of a more repressive society. Figure 5.6 provides a graphical
visualization of the drop in Zimbabwe’s government effectiveness from 2000 to 2010.92
The WGI use data from the Freedom House for their rankings. The group rates
Zimbabwe’s press as “not free” and “partly free” internet. With seven being the worst
score, Harare ranks six on freedom, political rights, and civil liberties.
92 World Bank
Figure 5.5: Changes in Zimbabwe’s WGI, 2000-2010
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Linking Chinese trade and aid with these WGI, as seen in Figure 5.7, provides a
way to assess whether or not increased Chinese investment is correlated with decreased
governance scores.93 Although the graph is only an estimate, the relationship between
Chinese trade and aid and WGI scores is fairly weak. The line represents the average
WGI for that year and the bar graph is imports + exports, in addition to loan amounts. In
general, WGI have decreased over the past decade, while Chines investment has grown.
But, the correlation is weak.
93 Data from All China Data Center and World Bank.
Figure 5.6: Percentile Rank of Government Effectiveness in Zimbabwe
(dashed line is the margin of error at 90% confidence)
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Using Millennium Challenge Corporation Scores to Assess the Chinese Influence in
Zimbabwe:
The U.S. Millennium Challenge Corporation (MCC) also provides information on
countries’ development in governance and adds indicators in civil society development
and financial growth. The MCC focuses on the years 2004-2012 and provides an
individual score, as well as a percentage. Zimbabwe’s poor progress in the governance
area specifically can be seen in Figure 5.8. Except for a very small increase in voice and
accountability, every indicator has fallen over the past seven years, indicated by the
shaded boxes. In fact, for control of corruption and government and effectiveness,
Zimbabwe ranks in the worst 10% in Sub-Saharan Africa.
0"
10"
20"
30"
40"
50"
60"
70"
80"
90"
100"
0"
200"
400"
600"
800"
1000"
1200"
1400"
2000"2001"2002"2003"2004"2005"2006"2007"2008"2009"2010"
WGI"percentage""scores"US$"
million"
Year"
Figure"5.7:""ChinaFZimbabwe"Aid"+"Trade""and"WGI,"2000F2010"
trade"+"aid"
WGI"
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There are somewhat better conclusions coming from the social and economic
indicators however. Immunization rates have risen (32% ! 49%), as has control of
inflation (0% ! 74%), and fiscal policy (21% ! 63%). There were drops in trade policy
(35% ! 2%) and the ease of starting a business (15% ! 95). Harare still ranks very low
for the vast majority of these indicators.
Implications of World Governance Indicators and Millennium Challenge Corporation
Data:
As Western countries continue to express dissatisfaction with the dismal state of
Zimbabwe’s governance, China looks increasingly complicit with Mugabe’s regime.
While the U.S. and EU are still trading with Zimbabwe, they are using economic
measures and rhetoric to diplomatically isolate Harare. By supporting Zimbabwe, South
Africa and Beijing are frustrating these efforts.
As shown above, China carries much geo-political weight and, on the whole, has
not used this power to push for Mugabe to reform. Beijing’s pressure on Harare in 2009
to form a power-sharing agreement is an important exception. While China could join in
the chorus criticizing and working against Mugabe, realist motivations for foreign
engagement leave little room for this type of morality.
Type Year FY
Political rights Total: 40
Civil liberties Total: 60
Control of corruption Total: 2
Government effectiveness Total: 2
Rule of law Total: 2
Voice and accountability Total: 2
Individual Scores
2004 6 6 -.35 -.02 -.55 -.94 2012 8 13 -.61 -.7 -.87 -.68
Relative to peer group
2004 37% 16% 9% 43% 14% 11% 2012 20% 14% 5% 10% 3% 12%
Figure 5.8: Changes in Zimbabwe’s MCC Governance Scores, 2004-2012
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Zimbabwe’s struggling politics, few partners, and dominant petro mean that
countries such as China can invest and do business fairly freely, and in a self-interested
manner. Though the world must avoid blaming China for Zimbabwe’s wider ills. In the
case of Zimbabwe, “[China] could have done much more, much earlier, to exercise their
growing ability to be a persuasive and responsible stakeholder.”94
Conclusions:
The future of Zimbabwe promises to be tumultuous. Mugabe is 88 years old, and
his succession plans are not clear. Discussions are also currently underway for a new
constitution, which has the potential to upset the current fragile power-sharing
agreement.95 However, Beijing is taking its chances and is believed to be developing a
relationship with Emmerson Mnangagwa, Mugabe’s likely successor within the party.96
If Zimbabwe’s political environment continues to hobble along, the investment
atmosphere will present its own problems. As the 2005 nationalization of land reform
and the recent requirement of local ownership of foreign firms shows, Mugabe and other
Zimbabwean politicians are willing, and able to, take dramatic action affecting
investments. As one policy analyst noted
Beijing would do well to take note of Zimbabwe’s land redistribution strategy.
China’s Zimbabwe investments, particularly in the agricultural and mining
sectors, carry significant sovereign risk and Beijing is gambling it can manage
relations to guarantee its claims in what will almost certainly be the chaotic
94 Brautigam, The Dragon’s Gift, pg. 292. 95 The Christian Science Monitor, “Will a New Constitution Make Zimbabwe More Democratic?” May 4, 2012, http://www.csmonitor.com/World/Africa/2012/0504/Will-a-new-constitution-make-Zimbabwe-more-democratic. 96 Singh
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transition period to come.97
While there has been little change in China’s investment strategy in Zimbabwe recently,
the international consternation at Mugabe’s rule might prompt some self-reflection on the
part of Beijing. However, history shows that Beijing is accustomed to weathering
international criticism regarding its support of dictators. The hope is that the country is
“learning that its previous policy of doing whatever [it] wanted and waving off criticism
has unintended consequences.98 Beijing is not entirely deaf to the cries of the
Zimbabwean people, nor the condemnation of Western nations. Further, the Chinese
leaders seem to be beginning to grasp that a lack of progress on democracy goes hand in
hand with political and economic instability.99
In an effort to protect its investments, and keep a friendly regime in power,
Beijing ironically has incentives to encourage the growth of democracy in Zimbabwe.
97 Eisenman 98 Taylor, China’s New Role in Africa, pg. 125. 99 Brautigam, The Dragon’s Gift, pg. 286.
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Conclusion and Policy Recommendations
This paper examined Chinese investments and
aid in Ghana, Angola and Zimbabwe using the politics,
partners, and petro model to understand if, and how,
China’s investments have affected each country. Kastner’s “Buying Influence” model,
Brautigam’s The Dragon’s Gift hypothesis, as well as data from the World Governance
Indicators and Millennium Challenge Corporation provided a framework for examining a
country’s governance, the diversity of foreign investment in the country, and its
economic development. This chapter discusses how each of four tests held up across
countries, and what trends can be gleaned from across all three countries. An
examination of the sustainability of this Chinese model and policy recommendations
conclude.
Analysis of China’s actions shows that Beijing acts in ways that are consistent
with the literature, including acting out of realist and commercialist motivations and
seeking oil. The case studies provided a diverse representation of African countries, and
a close examination of their political, economic, and social development to determine if
there is any correlation with Chinese investment. Ghana has a strong democratic
government, many foreign investors and well-developed industry. An autocratic leader
has ruled Angola for many years. Western nations, other countries, and China are all
competing to invest in Angola’s oil reserves, the country’s main industry. Zimbabwe is
home to a failed democracy turned dictatorship and significant mineral deposits. While
there are some countries that still invest in Zimbabwe, the regime is increasingly
politically isolated. While it is difficult to group African countries and consider them
128
similar, these three case studies represent a range of African experiences meaning that
some lessons from Ghana, Angola, and Zimbabwe can be applied to other countries in the
continent.
The politics, partners, and petro factors influence are dependent on one another.
The strength of a country’s governance can affect how other nations view investment
opportunities in that country. Countries with resource-focused economies have a
notoriously difficult time in establishing good governance. These states do not have to
collect taxes due to the vast revenues from resources and thus citizens are not as able to
hold their leaders accountable. And plentiful oil and other resources attract foreign
buyers. Further research can be done to explore the weight or relative standing of these
factors in relation to one another, as this paper considered them to be essentially equal. It
seems that that the strength of the group of factors, rather than the sole success of just one
factor bodes well for the country. Equal development of the three factors should be
pursued over the isolated achievement of just governance, just foreign investing countries,
or just economic development. Work can be done in the future to determine if one aspect
of this model impacts an African country more than others.
Kastner, Brautigam, and WGI and MCC Data across the Countries:
Kastner’s “Buying Influence” model held for Ghana and Angola, and was slightly
off for Zimbabwe. Kastner’s results worldwide show that Chinese economic activity has
not meant increased political support from the recipient countries in regards to the one-
China policy, riots in Tibet, and China’s WTO status. Ghana supported the one-China
policy in a joint public statement with the Chinese in 2006. Ghana does not seemed to
have mentioned Tibet or China’s market status. Thus, China’s additions to Ghana’s
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economic development have not resulted in support for China’s core interests, beyond a
general statement in favor of the one-China policy. The experience in Angola is similar.
Luanda has given Beijing overall support for the one-China policy, but little beyond that.
China is one of many foreign investors in Angola and its level of economic engagement
does not single Beijing out for special influence. Luanda has not commented on the riots,
nor on China’s WTO standing. Zimbabwe presents a special case of China’s investments
for the history and close relationship between Mugabe and Beijing. China’s economic
investment in Zimbabwe has resulted in the country’s frequent and historic support of the
one-China policy. While Luanda has not commented on Tibet or the WTO, its public
commitment to the one-China policy has been expressed at least four times. Though
some fear that China’s vast investments throughout Africa are resulting in supportive
friends for Beijing, this has not been the case in Ghana or Angola, nor, to a certain extent,
in Zimbabwe.
Brautigam’s hypothesis from The Dragon’s Gift rings true in Ghana, Angola, and
Zimbabwe. She asserts that a well-governed African country will experience net gains
from Chinese investment, while corrupt and unstable countries will not. Her focus on
recipient country governance provides a key insight, and does not make a moral judgment
on whether or not Beijing’s investments should benefit average citizens. Ghana’s high
scores from Freedom House, the World Bank, and Millennium Challenge Corporation
speak to the strength of its democracy. Accra’s strong governance means that Chinese
aid has benefitted large segments of the population through infrastructure construction
and employment opportunities. The opposite is true in Angola, though Accra’s
experience matches up with Brautigam’s hypothesis. President dos Santos has a firm grip
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on power and corruption is rampant. Despite high levels of Chinese investment over the
years, the vast majority of Angolans still live in poverty due to mismanagement by dos
Santos. Although, Beijing’s money is not directed directly into Angola and is either
directed back to China through tied aid practices, or goes to Angolan elites. President
Mugabe has even greater control over Zimbabwe’s political system and personally
benefits from Chinese investments. There have been few net gains for general
Zimbabweans from China’s investments—unemployment exceeds 90% and the country
has abandoned its currency due to hyperinflation. Brautigam’s simple, though insightful
argument indicates that the solution to development is focus on African nations’
governance, not on donor country’s aid giving techniques. For if a country has a strong
democracy, foreign aid and investments can better support the recipient country’s
development.
The World Bank’s World Governance Indicators (WGI) and the Millennium
Challenge Corporation’s (MCC) data provide a quantifiable way to determine the
political, economic, and social development of the case studies over the past decade.
When combined with knowledge of total foreign investment and aid, this paper provides
a way to ascertain how Chinese aid affected each country. Ghana’s voice and
accountability, political stability, regulatory quality, government effectiveness, and
control of corruption have all risen since 2000. We can thank the strength of Ghana’s
governance, its many foreign partners, and developed, non-extractive industry for leading
to these increases in scores. Plotting Chinese trade and aid figures along with the WGI
and MCC data does not show a correlation between increasing levels of Chinese
economic activity and the steady, though small, improvements Accra has been making in
131
governance, society, and industry. Angola has seen some slight growth in its governance
scores, specifically in political stability, though corruption and the rule of law remain
very low. In rankings with its peers, Angola’s control of corruption is only above
Zimbabwe’s. Social and economic indicators have seen modest improvements. Angola’s
vast oil resources have contributed to these poor results. On the whole, Beijing does not
act uniquely from Western countries and thus cannot be singled out for special blame.
Interestingly, Angola’s many foreign investors have not balanced each other out in
leaning towards reform, but the rivalry between them seems to have prompted no nation
to attempt reform in order to stay competitive. Zimbabwe has similarly low scores across
the board. From 2000 to 2010, Harare’s rankings fell in all but one governance category.
The country ranks a little better for social and economic indicators and has seen increases
in immunization rates, control of inflation, and fiscal policy, but is still below average
when compared with the rest of the world. Zimbabwe has few real foreign partners and
an extractive-based economy, meaning that Chinese seem quite complicit with Mugabe’s
corrupt and ineffective government.
General Trends of Chinese Engagement with Ghana, Angola, and Zimbabwe:
What can we learn about China from these conclusions? While it is difficult to
make generalizations about Beijing’s foreign investments and aid based off of these three
case studies, some enlightening trends do emerge. When China entered the scene, it
needed to secure resources to ensure its continued growth, and create markets that could
purchase Chinese goods. This need created competition with the West and led China to
bend the rules of the international system. For example, in the 1990s when China really
began to need oil, the vast majority of the world’s supplies were accounted for by
132
Western nations. Therefore China had to turn to suppliers like Angola who were a little
less scrupulous, or who had economic problems. Because of the undesirability of these
locations, China bent the rules of doing business, for example by economically tying their
aid and investment and not providing much humanitarian assistance. With China’s
increasingly powerful economy, it remains to be seen whether Beijing’s twisted ways of
business will benefit China in the long term.
Another trend that emerged was the similarity between Chinese and Western
investment in the three case studies. While China is often singled out for blame in
Africa, this paper finds that all investing countries, as well as the host nation are
responsible for problems of governance. Policymakers and the media should not be
fooled into thinking that Beijing is acting in drastically different ways from the West in
many African countries. For example, China and the U.S. invest similarly in Ghana,
though China does not provide near as much humanitarian assistance as Washington. In
Angola, both the U.S. and China provide large loans to dos Santos and purchase large
amounts of oil. However, Beijing is increasingly becoming Luanda’s most important
economic partner, though if China attempts to push around Angola, dos Santos can
immediately turn to other partners. The nature of a petro state means that no foreign
investor ever holds too many cards. Though the U.S. and EU have applied sanctions on
Zimbabwe, they are still trading with the regime just as China is. There is a cut-off of
political engagement with Zimbabwe from the U.S. as EU, as witnessed by their
sanctions, but they are economically engaged on a small scale, thus not fully isolating
Mugabe.
133
Sustainability of the Chinese Model:
China pursues investment in Ghana, Angola, and Zimbabwe to secure resources
and make money. China’s use of a combination of soft loans, infrastructure
development, and economically tied aid, and noninterference in domestic affairs has
perpetuated some dictators. This model has the potential to also hurt the development of
local industry and preclude democratic development. However, strong governance of the
recipient state, many foreign partners, and well-developed industry can mitigate these
negative effects. This way to doing business has served China’s interests well over the
past decade, but harbors many inherent risks that raise questions about the model’s
sustainability over the long term.
But there is a certain illogic in China’s way of thinking about investment in
Africa. While supporting dictators like Angola’s President dos Santos and Zimbabwe’s
President Mugabe enables greater economic access, this same support may eventually
lead to problems. Because many autocrats see non-interference as a green light, dictators
feel free to act in their own self-interest, and not in the interest of the country, and not in
the interest of Chinese investments either.1 There are few true “win-win” situations due
to international reputation concerns and economic facts. While the Chinese may
theoretically understand that “success requires security and stability, as well as economic
rationality,”2 they have not really started implementing policies or encouraging reform
leading to this security, stability, and economic rationality.
1 Taylor, Ian, China’s New Role in Africa, Lynne Rienner, 2009, pg. 111. 2 ibid
134
The Chinese, like other investors, are acting in a pragmatic and self-interested
manner in the short-term.3 However, a more long-term view of the situation would likely
prompt them to push for better governance now. If China wants to make sure that its
investments are safe, it should encourage rational leaders who have the support of their
people. Beijing’s resource acquisition strategy is unlikely sustainable in the long term—
there is only so much international criticism, labor unrest, inefficient infrastructure, and
unpredictable African leadership that China, or any nation, can handle. Brautigam
explains that, if China wants to become a dominant partner in the current economic
system, Beijing will have to look beyond economics, and into issues of governance and
stability in the countries in which China invests.
As experiences in Iraq and Libya show, international investment, property,
businesses, and resources can be taken in a second. While Beijing has sought to ensure
the safety of its investments, they are often working with dictators who have shown
extreme callousness, selfishness, desperation, and even irrationality. Legislation can
change in a moment, as can the leadership. Mugabe’s dramatic land reforms and recent
requirement of local ownership of firms shows how the economic reality of a country can
change in a movement.4 When financially backed into a corner, or when another Arab
Spring occurs, there is no telling how Chinese investments will fare. This same potential
for dramatic change exists in democracies and stable governed countries, though to a
much smaller extent. 3 Taylor, pg. 109. 4 Ernst & Young, “It’s Time for Africa,” 2011, http://www.google.com/url?sa=t&rct=j&q=&esrc=s&source=web&cd=1&ved=0CFMQFjAA&url=http%3A%2F%2Fwww.ey.com%2FPublication%2FvwLUAssets%2F2011_Africa_Attractiveness_Survey%2F%24FILE%2F11EDA187_attractiveness_africa_low_resolution_final.pdf&ei=dNS2T6jqO8KhiQKVnv37Bg&usg=AFQjCNG3srWDreZVty9hBNCh_UKNM5Axfg&sig2=dpAGnU7d3Ei1BvESuopcVg. Pg. 11.
135
U.S. Policy Options:
Of the three factors in the politics, partners, and petro argument, the U.S. has the
most leverage in the politics arena. Washington has tools to incentivize and promote
good governance, though it can also promote economic development and encourage
foreign participation to an extent. By encouraging the development of stable
democracies in Africa, the U.S. is ensuring that foreign aid and investment will lead to
development in that country.
The U.S. can also work with China in this area to benefit all parties involved.
There is potential for cooperation on projects, such as in the health sphere, and
specifically in fighting malaria.5 Aid projects between the two countries should not be
competitive, but are more effective when they are complementary and cumulative.
Washington can also work to engage China multilaterally in institutions such as the
WTO, World Bank, and IMF. Beijing is a member of these groups, but does not always
follow the rules and norms on global engagement.6 Finally, in order to fully understand
what China is doing in Africa, politicians and civil society need information on who in
China is investing, where they are investing in Africa, and how much they investing. The
U.S. government can develop its on research expertise in this area and can also encourage
China to publish its trade and aid numbers more clearly.7
5 Shinn, David, “China’s Growing Role in Africa: Implications for U.S. Policy,” United States Senate Committee on Foreign Relations Subcommittee on African Affairs hearing, November 1, 2011, http://www.foreign.senate.gov/hearings/chinas-role-in-africa-implications, pg. 8. 6 Brautigam, Deborah, “China’s Growing Role in Africa” United States Senate Committee on Foreign Relations Subcommittee on African Affairs hearing, November 1, 2011, http://www.foreign.senate.gov/hearings/chinas-role-in-africa-implications, pg. 11. 7 ibid
136
Because of China’s growing role in Africa, it is “not hard to foresee a day when [China]
could exert its enormous influence over African domestic politics or even foreign
policy.”8
8 Fisher
137
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January 18, 2011, http://af.reuters.com/article/topNews/idAFJOE70H0NM20110118. Wallis, William “Ghana: Split Decision on Who Wins Jubilee Fields” Financial Times, September 12, 2012, http://www.ft.com/intl/cms/s/0/97e9c716-bc71-11df-a42b-00144feab49a.html#axzz1u7v3Y4Ub.
Wang, Jian-Ye, "What Drives China's Growing Role in Africa?" IMF working paper,
Issues 2007-2211 http://books.google.com/books?id=tbeeX46Xqf8C&printsec=frontcover#v=onepage&q&f=false.
World Bank “World Bank Approves US$215 Million Budget Support for Ghana,” http://web.worldbank.org/WBSITE/EXTERNAL/COUNTRIES/AFRICAEXT/GHANAEXTN/0,,contentMDK:22812984~menuPK:50003484~pagePK:2865066~piPK:2865079~theSitePK:351952,00.html.
World Bank, “World Governance Indicators,”
http://info.worldbank.org/governance/wgi/index.asp. World Factbook, “Ghana,” Central Intelligence Agency, April 23, 2012,
https://www.cia.gov/library/publications/the-world-factbook/geos/gh.html. Xinhua “China, Ghana eye more trade, investment” February 17,2011,
146
http://news.xinhuanet.com/english2010/china/2011-02/17/c_13735575.htm. Xinhua “China, Ghana seek closer ties, cooperation” February 15, 2011,
http://news.xinhuanet.com/english2010/china/2011-02/15/c_13733043.htm.
Younger, Stephen, “Aid and the Dutch Disease: Macroeconomic Management When Everybody Loves You” World Development, Vol. 20, No. 11, (1992): 1587-1597.
Zafar, Ali “The Growing Relationship Between China and Sub-Saharan Africa: Macroeconomic, Trade, Investment, and Aid Links”, Oxford University Press, 2007.
Chapter IV: Angola
All Africa, “Africa: USAID Now Free to Buy Goods From Companies in Poor Countries,” February 9, 2012, http://allafrica.com/stories/201202090707.html.
Africa-Asia Confidential, “Luanda Diversifies its Portfolio,” September 2009, http://www.africa-asia-confidential.com/article/id/289/Luanda-diversifies-its-portfolio/.
Alves, Ana Cristina, “The Oil Factor in Sino–Angolan Relations at the Start of the
21st Century” South African Institute of International Affairs, Occasional Paper No 55, February 2010.
Ampraturm, Edward Fokuoh; Baah, Anthony Yaw; Otto, Kwabena Nyarko “Country
Case Study: Ghana” Labor Research and Policy Institute, Ghana in eds: Anthony Yaw Baah and Herbert Jauch, Chinese Investments in Africa, A Labor Perspective, African Labor Research Network, June 2009.
Associated Press, “Sonangol to buy Marathon Angola stake for $1.3 billion, blocking sale
to CNOOC and Sinopec,” Minneapolis-St. Paul Star Tribune, December 11, 2009, http://www.startribune.com/templates/Print_This_Story?sid=79059937.
Baah and Herbert Jauch, Chinese Investments in Africa, A Labor Perspective, African
Labor Research Network, June 2009.
Besada, Hany; Wang, Yang; and Whalley, John, “China’s Growing Economic Activity in Africa,” NBER Working Paper 14024, May 2008, asiandrivers.open.ac.uk/China%20Africa.pdf.
Brautigam, Deborah, “China in Africa: Think Again,” The World Financial Review,
http://www.worldfinancialreview.com/?p=197. Brautigam, Deborah, “Testimony on China’s Growing Role in Africa before the United
States Senate Committee on Foreign Relations Subcommittee on African Affairs,”
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November 1, 2011, http://www.foreign.senate.gov/imo/media/doc/Deborah_Brautigam_Testimony.pdf.
Braugtigam, Deborah The Dragon’s Gift, Oxford University Press, 2009.
Burnside, Craig and Dollar, David “Aid, Policies, and Growth,” World Bank Working
Paper #1777, June 1977; World Bank, The Role and Effectiveness of Development Assistance: Lessons from the World Bank Experience (2001).
Campos, Indira; Markus, Lillian; Vines, Alex and Wong, Weimer “Thirst for African Oil:
Asian National Oil Companies in Nigeria and Angola” Chatham House, August 2009. Centre for Chinese Studies, “China’s Interest and Activity in Africa’s Construction and
Infrastructure Sectors,” Stellenbosch University, November 2006, www.ccs.org.za/downloads/DFID%203rd%20Edition.pdf.
Corkin, Lucy “All’s Fair in Loans and War: The Development of China-Angola
Relations” in eds: Kweku Ampiah and Sanusha Naidu “Crouching Tiger, Hidden Dragon?” University of KwaZulu-National Press, 2008.
Corkin, Lucy “Angola flexes newfound muscle” Business Day Edition, March 23, 2007. Department for International Development Project Search, http://projects.dfid.gov.uk/Default.aspx?countrySelect=AO-Angola. Dugger, Celia, “Angola Moves to Make President Stronger,” The New York Times,
January 21, 2010, http://www.nytimes.com/2010/01/22/world/africa/22angola.html. The Economist, “High Drama,” February 25, 2012,
http://www.economist.com/node/21548272. Emmanuel, Vete Willy “Country Case Study: Angola”, Nucleus of Study and Research,
in eds: Anthony Yaw Baah and Herbert Jauch, Chinese Investments in Africa, A Labor Perspective, African Labor Research Network, June 2009.
Energy Information Administration, “Angola,” August 2011,
http://205.254.135.7/countries/cab.cfm?fips=AO. European Commission, “Angola: Bilateral Trade and Trade with the World” Director
General for Trade, January 10, 2012, www.trade.ec.europa.eu/doclib/html/122456.htm.
Faucon, Benoit and Su, Sherry “Hostility toward workers cools Angola-China
relationship”, The Wall Street Journal, August 10, 2010, http://online.wsj.com/article/SB10001424052748704388504575418990791137242.html.
148
Ferreira, Manuel “China in Angola: Just a Passion for Oil?” in eds: Christopher Alden,
Daniel Large, and Richard Soares de Oliveira, China Returns to Africa: A Rising Power and a Continent Embrace, New York, Columbia University Press, 2008.
Ferreira, Patricia Magalhaes “State-Society Relations in Angola” Institute for Peace
Building, June 2009. Fitzgerald, Mary “Angola’s Poor Have Yet to Taste Fruits of Country’s Oil Riches” Irish
Times, September 1, 2008 http://www.globalpolicy.org/security-council/index-of-countries-on-the-security-council-agenda/angola/41547.html.
Free Africa Foundation, “The African Aid Conundrum,” Aspen Institute Italia Review,
May 2006, http://www.freeafrica.org/articles/failedleadership/africanaidconundrumfinal.html
Global Witness, “Undue Diligence,” March 2009,
www.undue-diligence.org/Pdf/GW_DueDilligence_FULL_lowres.pdf. The Herald Online, “Angola’s Sonangol in Refinery Talks with Total, BP, ENI,”
February, 25, 2012, http://www.herald.co.zw/index.php?option=com_content&view=article&id=34863:angolas-sonangol-in-refinery-talks-with-total-bp-eni&catid=45:international-news&Itemid=137.
Human Rights Watch, “Transparency and Accountability in Angola: An Update” 2010. Jackson, Steven, “China's Third World Foreign Policy: The Case of Angola and
Mozambique, 1961-93” The China Quarterly, No. 142 (June, 1995), pp. 388-422. Kaufmann, Daniel, Kraay, Aart and Mastruzzi, Massimo, The Worldwide Governance
Indicators: Methodology and Analytical Issues (September 2010). World Bank Policy Research Working Paper No. 5430.
Kiala, Carine and Ngwenya, Nomfundo, “Angola’s Strategic Co-operation with the BRIC
Countries,” South African Institute of International Affairs, May 2011, http://www.google.com/url?sa=t&rct=j&q=&esrc=s&source=web&cd=5&ved=0CGgQFjAE&url=http%3A%2F%2Fdspace.cigilibrary.org%2Fjspui%2Fbitstream%2F123456789%2F31657%2F1%2Fsaia_sop_85_kiala_ngwenya_20110531.pdf&ei=3rOuT6GyJsmgiQK4zM2HBA&usg=AFQjCNEaKk_k_UPQ3gLw9N5hIz672h-wdQ&sig2=jpxVM6id-W3siaoJqliCOQ, pg. 15.
Kiala, Carine, “The Impact of China-Africa Aid Relations: The Case of Angola,” April
2010, http://www.google.com/url?sa=t&rct=j&q=&esrc=s&source=web&cd=1&ved=0CGIQFjAA&url=http%3A%2F%2Fcloud2.gdnet.org%2FCMS%2FgetRepoDoc.php%3F
149
community_group_document_id%3D47&ei=TVCrT_C6EdHXiQLm88yEAQ&usg=AFQjCNGHO6tLaWOexdld9umJtUtf8DCRHw&sig2=-SuOSd-FLNIsY6xAs-1jBg.
Maques, Rafael “The New Imperialism: China in Angola” World Affairs, March 2011
http://www.worldaffairsjournal.org/article/new-imperialism-china-angola. McFaul, Michael, & Stoner-Weiss, Katherine. (2008). The Myth of the Authoritarian
Model. Foreign Affairs, 87(1), 68-84. McKinsey and Co. “Lions on the move: the progress and potential of African economies”
McKinsey Global Institute, June 2010.
Millennium Challenge Corporation Country Scorecards, Angola http://www.mcc.gov/pages/selection/scorecards.
Moss, Todd and Rose, Sarah “China ExIm Bank and Africa: New Lending, New
Challenges” Center for Global Development, November 2006. Organization for Economic Cooperation and Development, Development Assistance
Committee, Aid Statistics http://www.oecd.org/countrylist/0,3349,en_2649_34447_25602317_1_1_1_1,00.html
Oxfam America, “Smart Development in Practice: The Tied Aid “Round Trip,” AidNow
Series, January 26, 2009, http://www.oxfamamerica.org/publications/the-tied-aid-round-trip.
Pallister, David, “Alarm Bells Sound over Massive Loans Bankrolling Oil-rich, Graft-
tainted Angola,” The Guardian, May 31, 2005, http://www.guardian.co.uk/business/2005/jun/01/hearafrica05.development.
Petroleum Africa “Lobito Refinery Jumps in Slow Lane” March 30, 2011,
http://www.petroleumafrica.com/en/newsarticle.php?NewsID=11282. Radalet, Steve “Will the Millennium Challenge Account Be Different?” The Washington
Quarterly 26:2, 171–187 2003. Rotberg, Robert, “China into Africa,” Brookings Institution Press, 2008. Sieber-Gasser, Charlotte, “The Legal Character of Sino-African Tied Aid: Cunning Fox
or Wise Dragon?” Working Paper no 2011/47, May 2011, NCCR Trade Regulation, http://www.nccr-trade.org/fileadmin/user_upload/nccr-trade.ch/wp4/publications/AfricanIEL_workingpaper_CS.pdf.
South African Press Association, “China struggles to hire, train Angolans, ‘flood’ country
with Chinese workers” March 6, 2011.
150
USAID “Angola Fact Sheet 2008-2011” http://www.usaid.gov/locations/sub-saharan_africa/countries/angola/.
World Bank, “World Governance Indicators,” http://info.worldbank.org/governance/wgi/index.asp.
World Bank Institute “Governance Matters 2009,” Development Research Group,
www.info.worldbank.org/governance/wgi/pdf/WBI_GovInd.pdf. Xinhua, “Angola becomes China’s largest trade partner in Africa” China Daily, January
19, 2009, http://www.chinadaily.com.cn/bizchina/2009-09/27/content_8742652.htm. Xinhua News Agency, “Angola’s First Vice President Sworn in under New
Constitution,” February 8, 2010. Xinhua, “Chinese, Angolan presidents discuss promoting bilateral cooperation”
December 17, 2008. Xinhua “Chinese PM, Angolan president discuss ties, stability in Great Lakes region” June 21, 2006.
Chapter VI: Zimbabwe
African Development Bank, “Zimbabwe Monthly Economic Review,” Issue No. 6, December 2011, http://www.google.com/url?sa=t&rct=j&q=&esrc=s&source=web&cd=4&ved=0CGkQFjAD&url=http%3A%2F%2Feeas.europa.eu%2Fdelegations%2Fzimbabwe%2Fdocuments%2Fpress_corner%2Feconomic_review%2Fzimbabwe_monthly_economic_review_december_en.pdf&ei=u5u0T9KlHcOIiAKk4pyAAg&usg=AFQjCNFhTMY59xWUUswNcXrgq9UkXvrTxQ&sig2=lMGpxe4L2OEYswiC0cplFQ.
Aid Flows, www.aidflows.org, information from Organization for Economic Cooperation
and Development, Development Assistance Committee, Aid Statistics. All Africa, “Zimbabwe: Harare Still to Receive US $144 Million from China,” March 26,
2012, http://allafrica.com/stories/201203260064.html. All China Data Center “6-22 Turnover of Economic Cooperation with Foreign Countries
or Regions” China Statistical Yearbook 2010, http://chinadataonline.org/member/yearbooknew/yearbook/ybcdata.aspx?yc=F88F0ED0C6279E704E61E777B33E5ECA&cc=P060M.
Ampiah, Kweku and Naidu, Sansusha eds “Crouching Tiger, Hidden Dragon?”
University of KwaZulu-National Press, 2008.
151
Bearak, Barry and Dugger, Celia, “Complex Relationship Keeps South African Leader from Criticizing Mugabe,” The New York Times, June 27, 2008, http://www.nytimes.com/2008/06/27/world/africa/27iht-mbeki.1.14044297.html.
BBC News, “European Union Lifts More Zimbabwe Sanctions,” February 17, 2012,
http://www.bbc.co.uk/news/world-africa-17075267.
BBC News, “Outrage at Zimbabwe Bugging Plan,” August 31, 2006, http://news.bbc.co.uk/2/hi/africa/5301146.stm.
Brautigam, Deborah, “China in Africa: Think Again,” The World Financial Review, http://www.worldfinancialreview.com/?p=197.
Brautigam, Deborah, The Dragon’s Gift, Oxford University Press, 2009. Brown, Stephen and Sriram, Chandra Lekha, “China’s Role in Human Rights Abuses in
Africa: Clarifying Issues of Culpability” in Rotberg, Robert, “China into Africa,” Brookings Institution Press, 2008.
The Christian Science Monitor, “Will a New Constitution Make Zimbabwe More Democratic?” May 4, 2012, http://www.csmonitor.com/World/Africa/2012/0504/Will-a-new-constitution-make-Zimbabwe-more-democratic.
Eisenman, Joshua, “Zimbabe: China’s African Ally,” The Jamestown Foundation,
http://www.jamestown.org/single/?no_cache=1&tx_ttnews[tt_news]=3877. European Commission, “European Union Restrictive Measures in Force,” April, 14,
2012, eeas.europa.eu/cfsp/sanctions/docs/measures_en.pdf. European Commission, “Zimbabwe: Bilateral Trade and Trade with the World” Director
General for Trade, March 21, 2012, http://trade.ec.europa.eu/doclib/html/147429.htm.
Fisher, Max, “In Zimbabwe, Chinese Investment with Hints of Colonialism,” The
Atlantic, June 24, 2011, http://www.theatlantic.com/international/archive/2011/06/in-zimbabwe-chinese-investment-with-hints-of-colonialism/240978/.
Forum on China-Africa Cooperation, “China, Zimbabwe Pledge to Seek Practical
Cooperation.” November 18, 2011, http://www.focac.org/eng/zfgx/t878554.htm. HM Treasury, “Zimbabwe,” March 8, 2012, http://www.hm-treasury.gov.uk/fin_sanctions_zimbabwe.htm. International Business Special, “Zimbabwe-China Diplomatic Relations”
http://www.ibspecial.org/Eng/mess_look.asp?id=429.
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Mabuse, Nkepile, “Zimbabwe: China’s friend in Need?” CNN, April 26, 2011,
http://edition.cnn.com/2011/BUSINESS/04/26/zimbabwe.china/index.html.
Machivenyika, Farirai, “Chinese Delegation Slams Sanctions” Zimbabwe Hearald, November 22, 2011, http://www.herald.co.zw/index.php?option=com_content&view=article&id=27209:chinese-delegation-slams-sanctions&catid=38:local-news&Itemid=131.
Melville, Chris and Owen, Olly, “China and Africa: a New Era of South-South
Cooperation,” Open Democracy, July 7, 2005, http://www.opendemocracy.net/globalization-G8/south_2658.jsp.
Miller, Andrew, “Zimbabwe: ZANU-PF and China-Does Zimbabwe Really Yearn for the
Yuan?” All Africa, March 5, 2012, http://allafrica.com/stories/201203051524.html.
Ministry of Foreign Affairs of the People’s Republic of China, “Zimbabwean President
and Prime Minister Meet Respectively with Chinese Foreign Minister Yang Jiechi,” February 12, 2011, http://www.fmprc.gov.cn/eng/topics/yjcen/t794415.htm .
Mlambo, Alois and Brian Raftopoulos, Becoming Zimbabwe: a History From the Pre-
colonial Period to 2008. (Harare: Weaver Press, 2009). Muleya, Dumisani, “Zimbabwe Signs Mining and Power Deals with China,” Business
Day, June 15, 2006, http://www.minesandcommunities.org/article.php?a=4089&l=1.
Nasaw, Daniel, “China and Russia Veto Zimbabwe Sanctions,” The Guardian, July 11,
2008, http://www.guardian.co.uk/world/2008/jul/11/unitednations.zimbabwe. News24, “Rio Tinto Gives up 51% in Zimbabwe,” October 9, 2011,
http://www.news24.com/Africa/Zimbabwe/Rio-Tinto-gives-up-51-in-Zimbabwe-20111008.
The News Today, “China Extends Economic Assistance to Zimbabwe,” April 7, 2012,
http://www.newstoday.com.bd/index.php?option=details&news_id=58111&date=2012-04-08.
The Observatory of Economic Complexity, “What Does Zimbabwe Export?” MIT,
http://atlas.media.mit.edu/. Oxford Analytica, “Zimbabwe’s ‘Look East’ Disappoints,” Forbes, December 28, 7007,
http://www.forbes.com/2007/12/27/zimbabwe-harare-mugabe-cx-1228oxford.html.
153
Phillips, Leigh, “Mugabe Tells EU, US to ‘Go to Hell’ at Sister’s Funeral,” EU Observer,
April, 8 2010, http://euobserver.com/24/30582. Reuters Africa, “Diamond Output Surges at Rio’s Zimbabwe Unit,” March 30, 2012,
http://af.reuters.com/article/investingNews/idAFJOE82T03620120330. Shutz, Barry, email, May 20, 2012. Singh, Gunjan, “China-Zimbabwe Relations,” Mainstream, Vol. XLIX, No. 26, June 18,
2011, http://www.mainstreamweekly.net/article2822.html. SinoGate Investment Consulting, “Zimbabwe: $5 Billion Deal with China over Platinum
Resources,” July 3, 2009, http://www.sinogate.org/zimbabwe-5-billion-deal-with-china-over-platinum-resources/.
Sylvester, Christine McNabb Zimbabwe: the Terrain of Contradictory Development.
Boulder, Colorado: Westview Press, 1991. Taylor, Ian, China and Africa: Engagement and Compromise, Routledge, 2006. Taylor, Ian, China’s New Role in Africa, Lynne Rienner, 2009. Tibaijuka, Anna, “Report of the Fact-Finding Mission to Zimbabwe,” U.N. Special
Envoy on Human Settlements Issues, June 17, 2005, ww2.unhabitat.org/documents/ZimbabweReport.pdf.
U.S. Embassy-Harare, “U.S. Sanctions and Bilateral Trade with Zimbabwe 2001-2010,” harare.usembassy.gov/uploads/pz/tK/.../us_zim_sanctions_trade.pdf.
Wines, Michael, “Zimbabwe’s Future: Made in China,” The New York Times, July 25,
2005, http://www.nytimes.com/2005/07/24/world/africa/24iht-zimbabwe.html. World Bank, “World Governance Indicators,”
http://info.worldbank.org/governance/wgi/index.asp. U.S. Census Bureau, “Trade in Goods with Zimbabwe,”
http://www.census.gov/foreign-trade/balance/c7960.html.
U.S. Department of State, “Background Note: Zimbabwe,” October 14, 2011, http://www.state.gov/r/pa/ei/bgn/5479.htm#relations.
U.S. Department of the Treasury, Office of Foreign Assets Control, “Zimbabwe: What
You Need to Know about U.S. Sanctions,” November 23, 2005, http://www.treasury.gov/resource-center/sanctions/Documents/zimb.pdf.
Xinhua, “Do Power-sharing Deals Really Work for Africa?” February 16, 2010.
154
Xinhua, “Zimbabwe Supports China's Adoption of Anti-Secession Law,” March 25,
2005. The Zimbabwe Guardian, “Zim-EU Re-engagement Talks Resume in Brussels,” May 10,
2012, http://talkzimbabwe.com/zim-eu-re-engagement-talks-resume-in-brussels/. The Zimbabwean, “Chinese to Pay for Spy Centre,” May 15, 2011,
http://www.thezimbabwean.co.uk/news/39611/chinese-to-pay-for-spy-centre.html.
Chapter VII: Conclusion
Brautigam, Deborah, “China’s Growing Role in Africa” United States Senate Committee on Foreign Relations Subcommittee on African Affairs hearing, November 1, 2011, http://www.foreign.senate.gov/hearings/chinas-role-in-africa-implications.
Ernst & Young, “It’s Time for Africa,” 2011,
http://www.google.com/url?sa=t&rct=j&q=&esrc=s&source=web&cd=1&ved=0CFMQFjAA&url=http%3A%2F%2Fwww.ey.com%2FPublication%2FvwLUAssets%2F2011_Africa_Attractiveness_Survey%2F%24FILE%2F11EDA187_attractiveness_africa_low_resolution_final.pdf&ei=dNS2T6jqO8KhiQKVnv37Bg&usg=AFQjCNG3srWDreZVty9hBNCh_UKNM5Axfg&sig2=dpAGnU7d3Ei1BvESuopcVg.
Shinn, David, “China’s Growing Role in Africa: Implications for U.S. Policy,” Senate Committee on Foreign Relations Subcommittee on African Affairs hearing, November 1, 2011, http://www.foreign.senate.gov/hearings/chinas-role-in-africa-implications.
Taylor, Ian, China’s New Role in Africa, Lynne Rienner, 2009.