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Trading with China, the fears and hopes
By Gideon Sackitey

Accra Oct 18, Ghanadot.com - Earlier this month, President John Agyekum Kufuor told the Economist Conferences meeting in Accra that Ghana will pursue its trade and economic partnership with China, the world’ biggest emerging economic bloc.

He was of the opinion that the US and the UK, indeed Europe, were all trading in large volumes with China, and wondered why countries in Africa who need the full benefits of a powerful trade bloc are being told not to do so.

President Kufuor said Ghana would be cautious though, not to fall into the trap of colonialism with China as it did with a number of European nations that ended with the United Kingdom.

He said he expected that as leaders from some 40 African countries converge in Beijing with Chinese leaders early next month, they will discuss how to explore the tremendous business opportunities available for mutual benefits,

“I hope they will focus on key issues including trade, technology transfer and investment during the Beijing Summit of the Forum on China-Africa Cooperation (FOCAC) from Nov. 3-5, 2007.

President Kufuor mentioned that trade would be a big issue during the conference arguing that it would be so since the World Trade Organization talks and policy transformations had not been advanced to protect the economic development and benefits of developing countries, especially those within the African Caribbean Pacific states..

With China emerging as a world economic power, African countries "definitely" want to explore the China-Africa trade possibilities.


"China should buy from Africa and Africa should buy from China. I'm talking about a win-win situation," President Kufuor emphasized at the meeting

The comments were very opportune and significant in that it brought to the fore Africa’s willingness and ability to go out there and trade with her so-called partners.


It was an occasion for Africa to say that what is on offer now is in sharp contrast to offers by Western states that only come in the form of aid.  Also,  it points out the irony in the effort by these same countries that offer us aid and very little trade who now are warning us against the kind of alliance and trade pacts we enter with China!  For some us, we are just at a complete loss as to the real intentions out there.

Indeed, at the recent World Bank Annual Meetings in Singapore, the US led a major campaign to warn Africa of Chinese gestures which were running into billions of dollars. Their point was that China was spreading perhaps too fast with its aid and support. This support, they claimed was going to almost everybody who knocked on their door irrespective of the quality of governance.

China has always and ever since rebuffed the claim saying they were ready to tango with anyone who was ready to do so with them and showed mutual respect for their efforts!

The effort against China is strange.  We are talking about the country with the largest population on earth. How anyone could think that the poorest group of people on earth should not trade and cooperate with one of the richest and hard working, just for the fact that they think that they (China) may be habouring some sinister motives at some future date is just incomprehensible.

This is especially so when others who have shown sinister motive in times past are still our friends and partners today under the guise of development partners, donors etc?

Let us get it all clear. Amid the growing concerns about the People’s Repub­lic of China’s burgeoning influence around the globe, is the fact also that China has a lot to offer its friends. It is offering money, technology, international political clout and massive infrastructure development.

China’s interest in Africa is not new. It is estimated that in the 1960s and 1970s, Beijing’s interest centered on building ideological solidarity with other underdeveloped nations to advance Chinese-style communism and on repelling Western “imperialism.”

In recent years, Beijing has identified the African continent as an area of significant economic and strategic interest. America and its allies and friends are finding that their vision of a prosperous Africa governed by democracies that respect human rights and the rule of law and that embrace free markets is being challenged by the escalating Chinese influence in Africa.

This is especially so when China is been very forthright and speedy with its aid and trade programmes. Loans and funding agreements are completed and monies released within three months in some cases as compared to the three to four years of disbursements by the World Bank and International Monetary Fund and other Western donor partners.

According to Mr Kwadwo Baah-Wiredu, Minister of Finance and Economic Planning, this situation is most disturbing for a government to sign a loan agreement and actually receive the money in three years when they are going to elections the next year.

“What this does is that, governments who rely on donor funds (and Ghana, like many African countries actually rely heavily on donor funding, about 60 per cent of their national budgets) have very little funds to go round for projects in their initial years and this could affect their electoral fortunes,” Mr Baah-Wiredu stressed.

To him, anything that goes beyond six months and beyond is not the best for a country. Can you imagine a beggar standing by the corner having people come only to say, I will give you money, but wait till evening or two days time? That is how I see the whole picture and it is bizarre.

The argument from the West is that China aids and abets oppressive and destitute African dictatorships by legitimizing their misguided policies and praising their development models as suited to individual national conditions.

Beijing holds out China’s unique development model—significant economic growth overseen by a disciplined, one-party totalitarian state with full authority, if not control, over all aspects of economic activity—as an example for others to emulate.

Another aspect of the argument is that China rewards its African friends with diplomatic attention and financial and military assistance, exacerbating existing forced dislocations of populations and abetting massive human rights abuses in troubled countries such as Sudan and Zimbabwe. As a consequence, Chinese support for political and economic repression in Africa counters the liberalizing influences of Africa’s traditional European and American partners.

The most pernicious effect of the renewed Chinese interest in Africa is that China is legitimizing and encouraging Africa’s most repressive regimes, thereby increasing the likelihood of weak and failed states.

These are real issues that actually bother the minds of African leaders as they engage China on many fronts. The foolery of Mugabe for instance is something of great concern to his peers and most importantly to his people.

But we must not forget that for African countries to be able to stand up to China over some of these issues, they must gain some leverage and clout by perhaps forming a negotiating bloc with China on how development and assistance could be structured.

Political pundits on both sides of the debate agree that the West’s interest are only in the raw materials from Africa and will now have to compete with China for it. Hence, the call for concern. Countries like the United States are alert to the potential long-term disruption of American access to important raw materials and energy sources as these resources could be “locked up” by Chinese firms for their domestic market.

The Chinese government firms have gone ahead to invest billions of dollars in foreign exchange and have used Chi­nese engineering and construction resources on infrastructure for developing oil, gas, mineral, and other natural resources in dozens of African coun­tries, including Algeria, Angola, Gabon, Nigeria, Sudan, and Zimbabwe. Their new African energy investments are clearly intended to supple­ment its Middle Eastern oil imports.

Sudan, which now supplies 7 percent of China’s total oil imports, has benefited from the largest Chinese investments. The China National Petroleum Corporation (CNPC) is the single largest shareholder (40 percent) in the Greater Nile Petroleum Operating Company, which controls Sudan’s oil fields, and has invested $3 billion in refinery and pipeline con­struction in Sudan since 1999.

In March 2004, Beijing extended a 2 billion dollar loan to Angola in exchange for a contract to supply 10,000 barrels of crude oil per day. Under the agreement, the loan will be heavily reinvested in infrastructure construction, with 70 percent of the loan funds going to Chinese companies and the remaining 30 percent going to local subcontractors.

In West Africa in July 2005, PetroChina concluded an $800 million deal with the Nigerian National Petroleum Corporation to purchase 30,000 barrels of oil per day for one year.

In January 2006, China National Offshore Oil Corporation (CNOOC), after failing to acquire American-owned Unocal, purchased a 45 per­cent stake in a Nigerian offshore oil and gas field for $2.27 billion and promised to invest an additional $2.25 billion in field development.

Gabon’s declining oil industry also saw massive investment from China National Petrochemical Corporation (SINOPEC), which plans to explore Gabon’s onshore and offshore oil reserves.

Going South, where China has had a long history of historical ties, South Africa and Zimbabwe remain Beijing’s major sources for platinum and iron ore.

In 2004, there were more than a dozen exchange visits of high-level party and government officials between China and African countries. Most of the exchanges have centered on economic and energy cooperation. For instance:
In February 2004, Chinese President Hu Jintao visited Algeria, Gabon, and Nigeria—the three African oil giants—to consolidate further the security of energy supplies.

In June, Chinese Vice President Zeng Qinghong visited Tunisia, Togo, Benin, and South Africa, which have significant mineral reserves.

In October–November 2004, National People’s Congress Chairman Wu Bangguo visited Kenya, Zimbabwe, Zambia, and Nigeria.

All of these visits focused on joint oil, mineral and renewable resource exploration opportunities in the region. In return, top leaders from Kenya, Liberia, South Africa, and Zimbabwe visited Beijing and secured further investment and economic assis­tance from China.

In 1999, the annual volume of trade between China and Africa was 5.6 billion dollars.

After the establishment of the Chinese African Cooperation Forum (CACF), Sino–African trade more than quintupled to 29.5 billion dollars in 2004. By the end of October 2005, annual Sino–African trade for the year totaled 32.2 billion dollars, surpassing the 2004 total.

Comparatively, the volume of trade between the United States and Africa also increased remarkably, more than doubling from 26.9 billion dollars in 1999 to 58.9 billion dollars in 2004. However, African trade with China is growing at a much faster rate: an average of more than 50 percent annually since 2002.

In 2004, Chinese direct investment in Africa reached 135 million dollars, with 77 additional Chinese companies doing business in the region. At the fourth CACF Senior Officials Meeting in August 2005, attended by delegations from 46 African countries and observers from six African regional organizations, China proposed upgrading the third CACF ministerial meeting in 2006 to a summit meeting involving the heads of state from China and Africa, which was welcomed by all participants.

China has also offered aid to its African partners, ranging from building infrastructure to treating infectious diseases such as malaria and HIV/AIDS.

Estimates have it that 15,000 Chinese doctors have worked in 47 African countries treating nearly 180 mil­lion patients. Chinese-sponsored roads, hydro dams and rail­ways are under construction in Ghana, Kenya, Rwanda, and Nigeria, and a mobile telephone network is being built in Tunisia.

As China’s power and influence grows, Beijing is becoming more willing to challenge the United States, EU nations, and others in international are­nas to protect its interests in Africa. Over time, differences between China and democracies over human rights and basic political and civil rights will sharpen.

Some experts have called for the development of a coordinated, comprehensive strategy by the West, led by the US where they engage a consistent, constant, and coherent presence to counter the illiberal forces that stunt African development.

Some are even of the opinion that President George Bush should take an extensive and down to earth visit to Africa and push his cabinet members to do same propagating sound American policy cooperation as well as increasing the American diplomatic profile.

Other have also said that the US should go a step further by denying bilateral economic assistance to countries that consistently violate human rights or resist the transi­tion to representative government and by promoting this policy in both international financial institutions in addition to its “good governance” requirement under the Millennium Challenge Account aid for instance.

Many say that while AGOA is a positive step, the United States should continue to press the region and individual countries for permanent free trade agreements that liberalize trade in goods and services, lower investment barriers, and strengthen property rights.

Such agreements would encourage stronger economic growth and increase economic ties between the United States and trade partners in Africa. “Charity" and international aid will not solve Africa’s problems, but economic reform and growth can.

America and Africa’s partners, if they really call themselves so, should encourage development of energy resources and seek new international partners on the continent in the form of new areas of cooperation that would bring about immediate change in the lives of the millions currently wallowing in poverty, disease and squalor.

China is actively expanding its influence in Africa to secure supplies of natural resources, to counter Western political and economic influence while expanding China’s global influence.

If they do not, Africa in the words of President Kufuor at the Economist Conference in Accra would turn where its cup can be filled most and can trade her way through to growth and strength with her partners:

After all, like he said: “… once bitten twice shy, and we know a snake when we see one.”

Gideon Sackitey, ACCRA, October 17, Ghanadot.com






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