Multinational Monitor

JAN/FEB 2007
VOL 28 No. 1


Oil Frontiers: The Future of Oil
by Andy Rowell

Half a Tank: The Impending Arrival of Peak Oil
by Mark Floegel

Latin America's New Petro Politics
by Nadia Martinez

China Eyes Africa: The New Imperialism?
by Walden Bello

The Katrina Syndrome: Big Oil's Interest In Tight Markets
by Judy Dugan and Tim Hamilton

20 Things About Corporate Crime
by Russell Mokhiber


Mission: Iraqi Oil - The Bush-Big Oil Scheme to Obtain Iraqi Petrolium Reserves
an interview with Antonia Juhasz

"All the Problems in Iraq Come from the Occupation." Iraqi Labor Leaders Speak Out
an interview with Faleh Abood Umara and Hashmeya Muhsin Hussein


Behind the Lines

Letter to the Editor

The End of Oil

The Front
Sticking It to the Union -- Our of Work

The Lawrence Summers Memorial Award

Names In the News


China Eyes Africa: The New Imperialism?

by Walden Bello

“First, Europe and America took over our big businesses. Now China is driving our small and medium entrepreneurs to bankruptcy,” Humphrey Pole-Pole of the Tanzanian Social Forum said at the World Social Forum (WSF), held in Nairobi in January. “You don’t even contribute to employment because you bring in your own labor,” he told Chinese speakers at a packed panel discussion organized by the semi-official “China NGO (nongovernmental organization) Network for International Exchanges.”

Stung by such remarks, Cui Jianjun, secretary general of the China NGO Network, lost his diplomatic cool and launched into an emotional defense of Chinese foreign investment, saying, “We Chinese had to make the same hard decision on whether to accept foreign investment many, many years ago. You have to make the right decision or you will lose, lose, lose. You have to decide right, or you will remain poor, poor, poor.”

At this point, Dale Wen, a Chinese environmentalist, intervened: “That’s not true. The Chinese people did not decide to accept foreign investment. Deng Xiaoping [the late Chinese leader] decided.” An African in the audience added: “You have to treat us with respect.”

Into Africa

The debate at the WSF took place amidst a marked elevation of Africa’s profile in China’s foreign policy. President Hu Jintao in early 2007 conducted his third trip to Africa in three years, following the success of the Forum on China-Africa Cooperation (FOCAC), which took place in Beijing in November 2006. Attended by 48 African delegations, most of them led by heads of state, the event was the largest international summit ever held in Beijing.

At the start of the meeting, Beijing unveiled a glittering trade and aid plan designed to cement its “strategic partnership” with Africa. The key items in the package were raising the volume of trade from $40 billion in 2005 to $100 billion by 2010; doubling of 2006 assistance by 2009; provision of $3 billion worth of preferential loans and $2 billion worth of export credits; setting up a China-Africa Development Fund that would be capitalized to the tune of $5 billion to support Chinese companies investing in Africa; and cancellation of all interest-free government loans owed to China by the heavily indebted and poorest African countries that matured at the end of 2005.

If not yet the biggest external player in Africa, China is certainly the most dynamic. It now accounts for 60 percent of oil exports from Sudan and 35 percent of those from Angola. Chinese firms mine copper in Zambia and Congo-Brazzaville, cobalt in the Congo, gold in South Africa and uranium in Zimbabwe.

Its ecological footprint is massive, says Michelle Chan-Fishel of Friends of the Earth, consuming 46 percent of Gabon’s forest exports, 60 percent of timber exported from Equatorial Guinea and 11 percent of timber exports from Cameroon.

Contrasting Images

China is popular with African governments. “There is something refreshing in China’s approach,” says a Nigerian diplomat who asked not to be identified. “They don’t attach all those conditionalities that accompany Western loans.”

Adds Justin Fong, executive director of the Chinese NGO, Moving Mountains, “Whether accurate or not, the image Africans have of the Chinese is that they get things done. They don’t waste their time in meetings. They just go ahead and build roads.”

An African development specialist working with a Western aid organization claims that Chinese projects are low-cost affairs compared to Western projects. “Labor costs are low, they integrate African labor, so some transfer of skills takes place, and the Chinese workers live in the village, and this means living like the villagers, down to competing with them for dog meat!”

This characterization of the Chinese impact would be disputed by many observers. However, most NGOs are nuanced in their assessment of China. They acknowledge that China has a different trajectory in Africa than Europe and the United States. Whereas the West began by exploiting Africa, China initiated its relations with Africa with “people-to-people” medical and technical assistance missions in the sixties and seventies, the most famous of which was the now-fabled construction of the Tanzania-Zambia (Tanzam) Railway. But with China’s rise as a modernizing economic superpower, the old solidarity rationale has been replaced by a single-minded pursuit of economic interests — in this case, mainly oil and mineral resources to feed a red-hot economy growing at 8 to 10 percent a year.

If African governments were accountable to their people, say NGO critics, Chinese aid could play a very positive role, especially compared to World Bank and International Monetary Fund (IMF) loans that come with conditions to bring down tariffs, loosen government regulation and privatize state enterprises. But with non-accountable, non-transparent governments, such as those in Sudan and Zimbabwe, say the critics, Chinese loan and aid programs contribute instead to consolidating the rule of non-democratic elites. No conditions, in effect, means intervention on the side of the governing groups.

Deadly Dealing in Sudan

Where China has definitely crossed the line, say the critics, is in Sudan. Using its membership in the United Nations Security Council, China has prevented a multinational peacekeeping force from being constituted that would protect people in Darfur who are being killed or raped by militias backed by the Sudanese government. Even one African diplomat sympathetic to China asserts, “China’s strong backing for the Sudanese government has discouraged African governments that are trying to push it to accept an African Union solution to the problem.”

China has very substantial interests in Sudan. These are set out in detail in an important collection of studies launched at the WSF, African Perspectives on China in Africa, edited by Firoze Manji and Stephen Marks. China obtained oil exploration and production rights in 1995 when the China National Petroleum Corporation (CNPC) bought a 40 percent stake in the Greater Nile Petroleum Operating Company, which is pumping over 300,000 barrels per day. Sinopec, another Chinese firm, is building a 1,500-kilometer pipeline to Port Sudan on the Red Sea, where a tanker terminal is being constructed by China’s Petroleum Engineering Construction Company. Chinese investment in oil exploration is estimated by analyst John Rocha to reach $8 billion.

Chinese interests go beyond oil. Its investment in textile mills is estimated at $100 million. It has emerged as one of Sudan’s top arms suppliers, with one deal being a barter arrangement whereby it would supply $400 million worth of weapons in return for cotton. It is active in infrastructure building, with its firms constructing bridges near the Merowe Dam and on two other sites on the River Nile. It is involved in key hydropower projects, the most controversial being the Merowe Dam, which is expected to ultimately cost $1.8 billion.

The construction of the Merowe Dam has involved forced resettlement of the Hambdan people living at or near the site, and repression and an armed attack on the Amri people who have been organizing to prevent the authorities’ plan to displace them to the desert. Local police and private agencies now provide 24-hour security to Chinese engineering detachments, but civil society observers say the aim of these groups is less protection of the Chinese than repression of the growing opposition on the ground. The Chinese and the Sudanese government “are joining hands to uproot poor people, expropriate their land, and appropriate their natural resources,” says Ali Askouri, director of the London-based Piankhi Research Group.

Chinese and Sudanese officials dismiss such criticism, which they often attribute to the machinations of Western powers who are alarmed at China’s becoming the top international player in a country that they had long treated as being in the West’s sphere of influence. Defending its close relations with the Sudanese government, a Chinese Foreign Ministry official, Zhai Jun, noted the contrast in African governments’ reception of China and the West: “Some people believe that by ‘taking’ resources and energy from Africa, China is looting Africa. ... If this was so, then African countries would express their dissatisfaction. ... They would approach China, as they did ... countries that exploited the continent in the past.”

Chinese officials are, however, wrong to think that African NGOs are merely parroting the rhetoric of self-interested Western governments. Civil society groups are just as critical of such Western hypocrisy. Commenting on the remark of a World Bank official to the effect that “Chinese handouts without reforms” would not be beneficial to Africa, John Karumbidza, a contributor to the China in Africa volume, acidly remarks, “this same Bank and Western approach over the past half century has failed to deliver development, and left Africa in more debt than when they began.”

Mugabe's All-Weather Friend

African civil society criticism of China’s presence in Africa is likely to grow, due not only to Sudan, but the many other cases where Chinese involvement with controversial regimes is deep.

With relations with the West and even South Africa deteriorating over his political record, President Robert Mugabe of Zimbabwe has increasingly turned to China, which one of his key ministers has characterized as an “all-weather friend.”

Chinese investment in Zimbabwe in mining, energy, telecommunications, agriculture and other sectors was estimated at $600 million at the end of 2004, with another $600 million pledged in June 2005. Critics say that Mugabe’s government has handed de facto control of key strategic industries to the Chinese. A contract with China to farm 386 square miles of land while millions of Zimbabweans remain landless has also come under fire, with rural sociologist Karumbidza blasting it as amounting to “nothing more than land renting and typical agri-business relations that turn the land holders and their workers into labor tenants and subject them to exploitation.”

China also has extensive interests in Nigeria, particularly in oil exploration and production. The China National Offshore Oil Corporation (CNOOC), notes Rocha, has acquired a 45 percent working interest in an offshore enterprise, OML 130, for $2.3 billion; the CNPC has invested in the Port Harcourt refinery; and a joint venture between the Chinese Oil and Natural Gas Corporation and the L.N. Mittal Group plans to invest $6 billion in railways, oil refining and power in exchange for rights to drill oil.

These interests have led to an increasingly tight alliance with the faction of the ruling People’s Democratic Party dominated by President Olusegun Obasanjo. This relationship has a controversial security dimension.

“The Nigerian government is increasingly turning to China for weapons to deal with the worsening insurgency in the oil-rich Niger Delta,” notes Ndubisi Obiorah, director of the Center for Law and Social Action in Lagos. The Nigerian Air Force purchased 14 Chinese-made versions of the upgraded Mig 21 jet fighter; the navy has ordered patrol boats to secure the swamps and creeks of the Niger Delta.”

Not surprisingly, the rebel Movement for the Emancipation of the Nigerian Delta (MEND) has warned Chinese companies to keep out of the region or risk attack.

With their integrated political, military, economic and diplomatic components, China’s “strategic partnerships” with governments such as those of Nigeria, Sudan and Zimbabwe increasingly have the feel of the old United States and Soviet relationships with client states during the Cold War.

Challenging China

Some African critics of Chinese investment in Africa hold out hope that things may yet be turned around. Though critical of current Chinese policies, Humphrey Pole-Pole of Tanzania appealed at the Nairobi meeting for a “win-win-win” strategy — “a win for China, a win for African governments and a win for African people. This is not impossible.”

The key to such a change may be the growth of Chinese civil society organizations, some of which are increasingly independent of, and even critical of, government policies within China, according to Dorothy Guerrero, coordinator of Focus on the Global South’s China program. “If the Chinese government and business interests in Africa are to be moderated by concerns for local people, the environment, human rights, etc., it is of extreme importance that the international voices arguing for this are joined by a constituency of people within China who are also concerned about such principles.” She adds that links must be forged between African and Chinese NGOs, and it was for that reason that representatives of Chinese NGOs went to Nairobi.

But closer ties are not enough, says Fong of Moving Mountains. Mechanisms have to be devised that could be used effectively to press for accountability on the part of the Chinese government. One point of vulnerability he identifies is the practice of Chinese government entities, such as the China Export-Import Bank, of seeking co-financing for their Africa projects from international banks such as HSBC and Citigroup. When it comes to controversial projects, he suggests, pressure might be indirectly placed on the Chinese by lobbying these institutions, which are more sensitive about their image than Beijing.

Others are skeptical that such tactics, which might have worked with Western governments and firms, will succeed with China.

But whatever their differences, civil society activists, African and Chinese, have a consensus on one thing: it will be a hard, uphill struggle to change the Chinese juggernaut’s direction in Africa.

China's Africa Profile

Chinese oil firms work in Sudan, Chad, Nigeria, Angola, Algeria, Gabon, Equatorial Guinea and the Republic of Congo. The biggest Chinese company working in Africa is the state-controlled China National Petroleum Corporation (CNPC).   China has refused to sign the Extractive Industries Transparency Initiative, which is meant to improve governance in resource-rich countries through the verification and full publication of company payments and government revenues from oil, gas and mining.


  • CNPC is part of three consortia in Sudan: the Greater Nile Petroleum Operating Company, of which it has the largest holding at 40 percent; the Petrodar Operating Company Limited, of which it has the largest  holding at 41 percent; and the Red Sea Petroleum Operating Company, of which it holds 35 percent.
  • China Petroleum Engineering & Construction Corporation (CPECC), CNPC’s construction arm, participated in the construction of a 1,500 kilometer pipeline from south-central Sudan to the Red Sea. Operation of the oil field served by the pipeline was the “first overseas large oil  field operated by China,” according to a CNPC press release. CPECC relied on 10,000 imported Chinese laborers to build the pipeline. “Our workers are used to eating bitterness ... they can work 13 to 14 hours a day for very little,” the vice president of CPECC told the Wall Street Journal. CPECC also built a refinery near Khartoum with a 2.5 million-ton processing capacity.
  • China buys between half and two-thirds of Sudan’s oil exports and is Sudan’s largest trading partner.
  • During a state visit to Nigeria in April 2006, China’s President Hu Jintao      announced a $2 billion low-interest loan in exchange for oil exploration rights off the Niger Delta as well as in the Lake Chad region, the International Crisis Group notes. China is to launch a Nigerian telecommunications satellite before the end of the year and has pledged unspecified bilateral cooperation in the nuclear field.
  • In January 2007, the Chinese National Offshore Oil Corporation announced it would buy a 45 percent share in an offshore Nigerian oil field for $2.27 billion.
  • Angola is China’s largest African oil supplier, accounting for roughly half of African oil exports to China. A quarter of Angolan oil ships to China.
  • China maintains substantial financial investments in Angola, including loans of around US$5 billion in 2006. Chinese Prime Minister Wen Jiabao visited Luanda in June 2006.
  • The presence of Chinese companies is very noticeable throughout the   country, according to Human Rights Watch, in particular construction companies working on the rehabilitation of major infrastructure such as railroads.

Sources: Africa Action, Amnesty International, Council on Foreign Relations, Human Rights Watch, International Crisis Group.

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