The party's over for Chinese in Africa
By Jonathan Manthorpe
Vancouver Sun
October 4, 2009
While many ordinary Africans have for years complained and even rioted over the damaging effects of China's decade of targeted investment in the continent, there are some early signs of African governments beginning to chafe at the strings attached to Beijing's munificence.
And those hints of restraint on China's charge into Africa have come in some of the countries where Beijing's carpetbaggers have been most enthusiastically welcomed for the past few years.
Early last month Angola blocked a $1.3-billion US bid by two Chinese state-owned companies, the China National Offshore Oil Corp. (CNOOC) and China National Petroleum Corp. (Sinopec) for a 20-per-cent share in an offshore oil parcel called Block 32.
Angola's state-owned oil company Sonangol decided to exercise its right of first refusal, and step in to buy the 20-per-cent share itself from Houston-based Marathon Oil at the price offered by the two Chinese companies.
This was a slap in the face for Beijing, which buys 18 per cent of its oil from Angola — China's largest single foreign supplier.
At the same time, China has lavished low-interest loans on the Luanda government of Jose Eduardo dos Santos and committed to build vast road and rail infrastructure projects in Angola. The result is that Angola is China's largest trade partner in Africa with bilateral commerce worth $25.3 billion US last year.
But dos Santos has not remained president of Angola for 30 years, survived a generation of civil war and constructed a finely crafted system which sees almost all of the country's vast resources revenues going into the president's office for safe management only to roll over for the smooth-talking salesmen from Beijing.
A few days before the barring of the Angola deal, China hit another brick wall, this time in Libya. The Tripoli government vetoed a Sinopec bid of $462 million US for Calgary-based, but Libya-focused Venerex Energy Inc. This proposal included what might be called a “sweetener” but technically called a “fee” of $47 million Cdn to Libya's national oil company.
But the government of Moammar Gadhafi decided it wanted to keep Venerex and its promising stake in Area 47 for itself. Libya's offer, which is one Venerex didn't feel it could refuse, brings the Calgary company $316 million Cdn.
If the likes of dos Santos and Gadhafi, both of whom nurture deep feelings of socialist solidarity when it serves their purposes, feel able to tweak Beijing's nose, then it is no surprise China is also getting the run-around from those aristocrats of Africa who acknowledge no superiors, the Nigerians.
Beijing's CNOOC hoped to take advantage of some difficult contract renewal negotiations between Nigeria and western companies Royal Dutch Shell, Chevron and Exxon Mobil by offering to buy six billion barrels of crude oil reserves from the Abuja government.
CNOOC floated the story that the company was in extensive negotiations with Nigeria's petroleum ministry to take over the licenses of the three western companies. The company may have misread the state of play because last week the Nigerian minister, Odein Ajumogobia, firmly quashed those stories.
“It's true that the Chinese have made a proposal which we are considering,” Ajumogobia said. “They are asking for six billion barrels from our reserves, but I can tell you that we are not going to give them all that.”
As western traders and investors have become increasingly averse to confronting the corruption and lack of competent administrative and judicial infrastructure in many parts of Africa, China has enthusiastically strode into the vacuum in its quest for resources and markets for its manufactured goods.
And by-and-large they have been welcomed with open arms. African governments not only loved the cash that Chinese companies brought by the barrow-full, but they also appreciated Beijing's understanding that deals should usually be greased with gifts and that pontificating about human and political rights had not won western governments many friends among Africa's “Big Man” leaders.
More than 800 Chinese state-owned companies are managing about 900 projects in Africa, many of them in the oil industry.
Last year Sino-African trade was $106.8 billion US, ten times the level of 2000 and more than double the value of bilateral trade in 2006.
Trade values have inevitably dropped sharply to $37.07 billion US during the recession in the first six months of this year, compared to $48 billion US in the same period in 2008. But Beijing and its companies have long-range vision and they pumped $552 million US investment into Africa in the first half of 2009.
If these recent barriers to China's oil industry ambitions are any indication, China's approach to Africa will get more difficult and may require revision.
There has already been much public outrage from South Africa, through East Africa to Nigeria and West Africa at the often fatal damage done to local textile and consumer goods manufacturing industries by floods of cheap Chinese imports.
Miners and their families in Zambia and across the border into Congo's mineral-rich southeastern province of Katanga have rioted over the appalling safety and slave-labour working conditions in Chinese-run mines.
People on the streets in Zimbabwe, who are not short justifiable complaints, rail at the takeover of locally owned retail businesses by Chinese entrepreneurs.
Another cause of friction is Chinese companies buying or acquiring vast tracts of agricultural land to grow crops to feed the burgeoning population at home and then importing Chinese labour — including prisoners, according to some sources — to work the farms.
Africa may be unjustifiably sensitive so far as China's intentions are concerned, but Africa knows what colonialism looks like and has no desire to go down that road again.
jmanthorpe@vancouversun.com
