Beijing's new playing field

Massive Chinese investment raises a host of thorny issues. But is it also Africa’s best chance to get ahead?

Per-Anders Pettersson/ Liu JinAFP/Getty Images

The general manager of the Chinese-owned Collum Coal Mining Industries in Sinazeze, the hottest, most remote corner of Zambia, is all of 24. Six months ago, he was busing tables at a Lusaka Chinese restaurant owned by his friend’s mom. Six months before that, he was in university in China. On the side, Alfred Huang is starting an electronics business importing second-hand laptops, DVD players and cellphones to the desperately underserved African market. His moustache is little more than peach fuzz, and his perfect English rolls out so softly it’s hard to make out what he’s saying, but here, the Sichuan native commands respect. He’s a king in the making, with his feet in two markets, and interests stretching from minerals to electronics. Already, he’s told all his friends to come to Africa, the Promised Land for China’s young and nimbly entrepreneurial.

Huang first landed in Zambia in the thick of the global recession, a dark time for the copper-bottomed economy. At the peak of the downturn, the mineral’s price dropped by more than two-thirds. Panicked Western investors fled or dramatically scaled back operations. One in five Zambian miners lost their jobs as the economy ground to a halt. Copper accounts for some 70 per cent of government revenues, and dwindling foreign exchange reserves sunk the local currency.

China’s cash-rich firms, however, insulated from the downturn, saw opportunity in the growing hole investors were leaving behind—and not just in Zambia. Sino-African trade rose by 30 per cent last year, and should hit $100 billion this year. Thanks partly to new investment and a bounce in commodity prices, Africa’s economies are rocketing out of recession, projected to grow an average five per cent in 2010, behind only China and India, which are leading the global recovery.

This is not, by any stretch, Chinese altruism at work. Africa is now the source for fully one-third of the world’s commodities, says Martyn Davies, director of the China-Africa Network at the University of Pretoria.

To continue clocking its giddy growth rate, China, which accounts for 40 per cent of the increase in demand for oil over the last four years, needs Africa’s petrol, its timber for new construction, copper for telephone and electric cables, and cobalt for cellphones and computers. In return, it is throwing up new ports, railways, hospitals, airports and thousands of kilometres of new highway, everywhere from Sudan to tiny Lesotho. At last count, all but four African countries had established trade relations with Beijing.

That rapid growth in Chinese business interests in Africa is helping fuel out-migration from China. But it’s not the only factor encouraging young Chinese to move abroad. One in three college graduates can’t find work, Huang says, and the average pay of those who do is now approaching that of rural migrant workers. With population pressures, some Chinese are being quietly urged to move abroad, with state-controlled banks offering capital, sweetheart lines of credit and project assistance to ease the push. In Africa, the Chinese diaspora recently tipped a million. Some African capitals now run direct, daily flights to Beijing.

China’s “no-strings” investments, friendships with African pariahs like Robert Mugabe of Zimbabwe and Sudan’s Omar al-Bashir, and its disregard for environmental, labour and safety standards, have elicited howls of moral outrage in the West. Yet Western governments, too, have shown a willingness to turn a blind eye to despotism and corruption when their interests are being served, and Africans bristle at the portrayal of Africa as weak and powerless to defend itself against the Chinese onslaught. Many experts insist there is more to this than a simple morality tale, with Africa playing the role of victim.

Clearly, there is an upside to it all: badly needed new infrastructure, foreign reserves, new jobs and technologies destined for a continent dubbed “hopeless” by the Economist a decade ago. To Davies, the Chinese boom is a “phenomenal success story.” Harvard’s Robert Rotberg, who edited the new book China into Africa, calls it Africa’s “last, best chance” to enter the global game. “No country,” says economist Dambisa Moyo, “has had a bigger impact on the political, economic and social fabric of Africa.”

And so a new set of questions is being heard above the din: could China, which has, over the past few decades, moved hundreds of millions of its own citizens out of poverty, be a better agent for change than the West? Can clear-eyed self-interest, and commercially justified investment, succeed where Bono and decades of aid programs have failed? Some of the answers lie in Zambia, home to some of China’s most ambitious African designs.

Two years ago, as its competitors were laying off workers, delaying projects or closing up shop, China Nonferrous Metals (CNM), a mining venture several hours north of Collum’s headquarters in Sinazongwe, doubled capacity in its copper ventures in the Copperbelt province, Zambia’s mining hub. Last year, it cut the ribbon on a bright blue, US$220-million copper smelter in Chambishi, the heart of the region. But in spite of the buzz, the Chinese have not been embraced as saviours. Chinese firms, by most accounts, pay the lowest wages, and have the worst safety record in the Copperbelt.

In Zambia Township, a slum most CNM miners call home, Peter Lungu recounts his dream of working for a Canadian-owned mine. There, the 25-year-old miner, who is raising his three younger siblings and pays school fees for the youngest two, would earn $1,050 per year. CNM pays him $335—“peanuts,” he says, as rain patters against the blue tin roof of the Future Inn. Low pay isn’t the only complaint, here or elsewhere in Zambia. “Every man has a cough, and spits black,” says Patrick Mulenga, an 18-year-old coal miner who works for the Chinese at Collum Coal Mining Industries in southern Zambia. Because they aren’t provided with masks, dust, blasting fumes and smoke enter their noses and mouths, and cause chest pains. Tense relations turned toxic when, five years ago, an accidental blast at a CNM explosives plant killed all 52 Zambians inside. Witnesses reported seeing Chinese staffers fleeing ahead of the blast, failing to alert Zambian staff.

Word of China’s grim record in the Copperbelt has spread like wildfire. Last year, when the Chinese recommissioned the Albidon nickel mine (closed by its Australian owners after nickel lost 56 per cent of its value during the downturn), miners braced for the worst. Sure enough, when the Chinese reopened the mine this spring, salaries were cut, almost by half. Chinese investment came at a time when the country was “desperate,” says Clive Saviye, news editor for the popular local radio station YarFM—“they took advantage of the situation.”

Almost daily, one of the government-run papers, the Daily Mail and Times of Zambia, will run an article praising the Chinese. But a brief piece in the independent Post about a group of Chinese workers mobbed and beaten when their van broke down in rural Zambia signals deeper tensions. In neighbouring Angola, now China’s biggest oil provider, kidnappings and discrimination against the Chinese community recently spiked, and now Zambia, too, has seen angry protests over the flood of Chinese workers. Complaints by Zambians of mistreatment and racism are rampant. “The Chinese won’t mix with Zambians,” says Dominic Sikapola, a 22-year-old coal miner, “even when filling a bus.” They are “violent, they beat you, kick you. They shout a lot.” In the last election, populist opposition leader Michael Sata, who calls the Chinese “infestors,” not investors, ran on a “China go home” platform. He lost by two points. When Chinese President Hu Jintao travelled to Zambia in 2007, the threat of rioting forced him to relocate a planned visit from the Copperbelt to Lusaka, the capital, 300 km to the south.

But despite the bad blood, many Africans see Chinese investment as a “blessing,” says Oliver Belocte, district commissioner for Sinazongwe, a bleak, southern Zambian backwater. There is essentially no economy here: no banks, no ATMs, little for sale except pink Lifebuoy soap and shake-shake, a sour, milky home-brewed beer. Near Belocte’s office in tiny Sinazeze, two women lie in the middle of a gravel road, curled around a fly-blown bucket. They are selling bream fish from nearby Lake Kariba. By late morning, not a single car has passed. That road, Sinazeze’s only connection to the outside world, routinely washes out for weeks at a time with heavy rains that bring cholera, typhoid, malaria—diseases that account for the area’s high mortality. Few here will live out their 30s. The HIV rate in the isolated community is higher than even in Zambia’s cities.

Collum Coal Mining Industries’ five area mines will hardly transform Sinazongwe, but its 1,000 new jobs are chipping away at grinding poverty. The $3.80 per day that miner Rabson Mbulu is earning, four times the national average, affords him a one-room brick home, a relative luxury; his children will attend school because he, unlike many, can afford the fees. Later this fall, a new Singaporean mine will open. With a new road—like the new, Chinese-built highway linking Lusaka to the tourist hub in Livingstone, at Victoria Falls—Lake Kariba fish could be sold in the bustling capital region, just two hours to the north.

Pollution, low wages and dirty jobs are the unfortunate realities of early industrialization, says Deborah Brautigam, one of a handful of experts deeply familiar with both China and Africa. “It is very hard,” she adds, “to industrialize into a microchip factory.” China’s own past, says Brautigam, author of the new book, The Dragon’s Gift: The Real Story of China in Africa, influences its views of development. “Westerners think they know what Africa needs. China is much less prescriptive about what Africa should do to develop.”

The roots of China’s African strategy, she explains, lie in its experience with Japan in the late ’70s, the early days of China’s opening and reform. Back then, China was emerging from the violence of the Cultural Revolution; its economy was in disarray. In other words, it looked like much of Africa today. Japan, then a rising giant, swapped $10 billion in badly needed new roads, ports and industrial equipment in return for Chinese oil and iron ore. Sound familiar?

In poor, resource-rich countries, which are often cursed rather than blessed by their mineral wealth, Brautigam says Chinese-style investment can act as an “agency of restraint” and ensure that at least some natural-resource wealth is spent on development. Take war-shattered Angola, which has stirred some of the shrillest complaints about Chinese involvement in Africa. Three oil-backed loans from Beijing have provided roads, railways, schools, water systems and hospitals. Western institutions, meanwhile, have provided loans to the Angolan government—ranked one of the world’s most corrupt by Transparency International—without demanding transparency, while exporting the country’s oil and effectively ensuring business as usual.

China has also borrowed from its own playbook. President Hu’s 2007 trip to Zambia was to announce the first of seven African special economic zones: two in Nigeria, two in Zambia and one each for Egypt, Ethiopia and Mauritius. They are modelled after China’s coastal SEZs, which helped lure investment and kick-start the Chinese economy. The first of these, a $900-million venture in Chambishi, has 13 Chinese-owned companies, most engaged in mining and processing copper, and employs some 6,000 people. A second zone opened near Lusaka last year, where Chinese companies are assembling electronic goods, computers, TVs and cellphones for export.

When the Chinese look to Africa they don’t see desperate basket cases or reason for pity, says Huang, the Collum manager. When his parents were his age, China’s GDP was on par with Zambia’s. Here, he says, the Chinese see another place to do business, a huge, mostly open new frontier—and a market of consumers who, last year, snapped up $50 billion worth of low-cost Chinese flip-flops, T-shirts, second-hand laptops and cellphones. The implicit signal, says American writer Howard French, who has written extensively on Africa, is one of the most refreshing messages Africans have received in decades.

Nancy Macdonald travelled to Africa on a fellowship funded by the Canadian International Development Agency and administered through the Jack Webster Foundation

Looking for more?

Get the Best of Maclean's sent straight to your inbox. Sign up for news, commentary and analysis.