The Big Play for Africa
China elbows its way into a Resource-rich continent
Kigali, RwandaWhen the dusk settles over this swelling capital, Josh Gu simply moves from his downtown office to a modest residence on the outskirts of town and continues to work. Around 2 a.m., the calls from his employer, Chinese telecommunications giant Huawei, begin trickling in from Shenzhen, six time zones away in China. There are questions about the wireless network his team recently installed here. Eventually, Gu may catch a couple of hours of sleep, until it's time to get up and do it all over again. "This is my life, seven days a week," he says. "I love it."
Gu is the new face of China in Africa, part of a second wave of Chinese business people pouring into the continent. While its interest in Africa is still mainly driven by its need for raw materials, China is also increasingly looking to Africa as a massive, largely untapped market for its growing corporations. Some 800 Chinese companies, most linked to the state, now do business in Africa, routinely forcing out the competition. "What's the point of bidding on something when you know that the Chinese will come in and undercut you by 30 percent?" says one U.S. government commercial officer.
China's interests in Africa may be motivated by economics, but China is also advancing its claim to global power. "China now offers a commercial alternative to the U.S. and the West for most African leaders," says David Shinn, a former U.S. ambassador to Ethiopia. "African leaders will tend to pay more attention to advice from Beijing and less from Washington."
Chinese weapons sales, medical training, and the construction of airports and stadiums have been commonplace for decades in Africa. But it is China's more recent pursuit of energy resources that is drawing the most attention. In oil- and natural gas-rich Angola, China's state-owned Sinopec Corp. last year snatched offshore exploration rights worth over $2 billion, a deal aided by China's promise to extend a multibillion-dollar line of credit to pay for Angolan railroads, roads, and public buildings. Another Chinese state oil giant, China National Offshore Oil Corp., recently won permission to search for oil in parts of anarchic Somalia. "That seems to be the common practice with China: Get in early, even when it's risky, to make sure you're ahead of the western majors," says Shinn.
No strings. The biggest advantage that Chinese companies have in Africa is their government's backing of commercial ventures with lavish financing and tax benefits. One deal that emerged from the Forum on China-Africa Cooperation, held in Beijing last November and attended by 47 African leaders, was a $5 billion development fundpart of $20 billion in promised loans and debt forgivenessto be established for Africa and managed by China Eximbank. The bank's lending practices don't include stipulations on transparent governance, improved human rights, and anticorruption practices. "China's aid comes with no strings attached," says Denys Uwimana, a Rwandan Embassy official in Beijing.
The Chinese are rolling out the red carpet for African business people. In a hotel in downtown Yichang, an industrial city along the Yangtze River, a delegation of 100 chamber-of-commerce officials from French-speaking Africa recently met with their Chinese counterparts. The cost of the two-week trip, including airfare, hotels, and a generous per diem, was paid by their Chinese hosts. "We export 98 percent of the cotton we produce," explained Hamadoun Karembe of the three-man delegation from Mali. "Now we would like the Chinese to come to Mali and build a factory that would turn the cotton into clothes for our people."
For China, business deals can pay political dividends, such as African support at the United Nations for the "one China" policy. "The Sino-Africa relationship is necessary to oppose Taiwan secessionism and achieve the reunification of China," said He Wenping, who heads the African Studies Institute at the government-controlled Chinese Academy of Social Sciences.
That may become an issue of concern to the United States one day. For now, U.S. officials have been most troubled by China's dealings with rogue African regimes in places such as oil-producing Sudan and Zimbabwe, with its valuable platinum and other minerals.
Over time, China's investments could spur economic advances in Africa just as Japan had fueled Southeast Asia's transformation, says Deborah Brautigam, a China-Africa specialist at American University in Washington, D.C. For now, Gu, Huawei's man in Rwanda, is doing his part to win business and earn respect for China.