Summary Report ISS-EIIPD PUBLIC SEMINAR SERIES. China-Africa Partnerships: Implications and Prospects for Africa

Transcription

1 Summary Report ISS-EIIPD PUBLIC SEMINAR SERIES China-Africa Partnerships: Implications and Prospects for Africa Wednesday, November 3, 2010, Harrar Grill Conference Room, Hilton Hotel, Addis Ababa, Ethiopia The African Conflict Prevention Programme (ACPP) of the Institute for Security Studies (ISS) Addis Ababa Office and its Partner the Ethiopian International Institute for Peace and Development (EIIPD) organized a public seminar on China-Africa Partnerships: Implications and Prospects for Africa. The Chinese activities in Africa and its phenomenal economic growth over the last twenty five years or so with an ever-growing demand for oil, timber, minerals, and other natural resources have not gone without serious questions. A number of questions have been asked about the motives of China in Africa and its mode operandi. The impact of Chinese products on local market and domestic industries, the quality of their goods and works in infrastructure are highly debated. Questions which are engulfing the issue of China such as: What lessons will Africa able to learn from China? What should Africa do now to benefit in its long-term economic and diplomatic relationship with China, in ways that will truly reflect mutual respect and mutual benefit was the aim of the seminar. In addition, China's role in the regional and sub-regional as well as continental organizations including the RECs and AU to address the socio economic, political and peace and security issues were also part of the aim of the seminar. The ISS Public Seminar Series is an important part of the ACPP effort in building consensus by providing a platform for sharing information, encouraging policy debates and dialogue on Africa's peace and security, development and environmental agenda. The aim is to stimulate quality discussion as well as, in-depth and constructive interaction between policy makers and participants. 1

2 Chair H.E. Ambassador Akuei Malwal, who was chairing the seminar, noted that the China-Africa partnership deserved a critical analysis. The Ambassador then invited the Director of ISS- Addis to make the opening remarks. Opening Remarks In his opening remarks, Ambassador Olusegun Akinsanya, ISS-Addis Director, noted that the seminar was yet another collaborative effort in the series of public seminars organised by the African Conflict Prevention Programme-Addis in conjunction with the EIIPD within the framework of the on-going cooperation between ISS and EIIPD. The friendly relations that have developed between China and Africa are deep and historic dating back to many years despite the fact that the two regions are separated by distance and culture with the major engagement focused on trade and commerce. It is a well-known fact that China has today, become the world's second-biggest economy, overtaking Japan. The transformation and development of Sino-African relations are vivid testimonials to China's great achievements in its foreign relations since the country adopted its Reform and Opening-up Policies thirty years ago, displaying the unique dynamics of China's out reach and meaningful cooperation with African countries either bilaterally and at the continental levels. Nevertheless, China's involvement in Africa has provoked much debate and discussion. Our intention in conducting this seminar is both to reflect the current thinking on the subject as well as to help nurture further research and engagement. In his opening remarks, Mr. Sebhat Nega, Excutive Director of, EIIPD, said that the collaborative seminar was convened with the ongoing cooperation between ISS and EIIPD as part of the continuation of the Memorandum of Understanding signed between ISS and EIIPD to work together and collaborate with issues related to peace and security, development and democracy in Africa. We feel that the seminar is very timely and important and China's growing engagement with Africa deserve more attention. Indeed China's economic activities in Africa may produce opportunities for Africa's economic development. This economic cooperation has had development effects, including 2

3 infrastructure building; increased trade; deployment of a concessional capital model; and foreign direct investment. Trade with China could integrate Africa more closely into the world economy, while the Chinese government's concessional capital deployment model could also hold opportunities over the use of private banks. In conclusion, African governments should craft and implement strong regulatory frameworks and policies in dealing with overseas investment, including environmental protection and sound labour relations. Presentations H.E. Ambassador Gu-Xiaojio made a presentation on Chinese perspective on China-Africa partnership. The Ambassador noted that China-Africa relationship is not new. China has always been a friend of Africa starting from the decolonization struggle to the present. We have a very strong tie which has been tested though time. He said that China s partnership with Africa, unlike some say, is not simply resourcesspecific approach. China is a real partner of Africa in many respects. It is infect of a South- South Cooperation based on win-win and mutual benefit. We are more of a friend by experiencing more or less similar situations. The Ambassador further discussed the issues of labour, trade, investment and cooperation as well as peace and security in the continent. He also noted that the Chinese companies are trying to engage in knowledge and know-how transfers instead of simply employing its own people. Regarding brining labour from China, the Ambassador explained that the reason why we sometimes bring a Chinese labourer is that sometimes we have to be time-bounded activities such as the AU Convention Centres which we promised to be finished in a specific time. The Ambassador explained that in spite of the shinning economic development, there are more than 150 million Chinese who are living under poverty line. This shows how much the Chinese has yet to do in order to bring its people from poverty. The ambassador reiterated that China-Africa relations are more of complementary than competitive. Dr. Debay Tadesse, Senior Researcher, ACPP, made a presentation on China-Africa partnership: Challenges and opportunities. Dr. Debay first gave a detailed background of the Sino-China partnership and went on discussing on the Forum on China-Africa 3

4 Cooperation (FOCAC). He also highlighted the potential and existing challenges and opportunities. He said that China-Africa Cooperation Forum, the Africa-South America summit, the India Africa Forum and the EU-Africa partnership, are some the example of such growing mutual interdependence in the world. Dr. Debay reminded the audience that from the 1950s to the end of the 1970s when the Cold War reached its high tide, the Sino- African relationship was characterized by rich ideology and reinforced with political benefits. Then, it became less ideologically-oriented and valued more economic benefits in the 1980s. After the cold war, China has paid attention to both political and economic benefits and developed bilateral relations with African countries in an all-round way. It should be noted that despite the desire to get closer to Africa, it did not turn into a very strong relationship as it is seen today. He further discussed the China's rising role in Africa which can be clearly seen by noting the China s ever increasing control of natural resource asset in Africa, outbidding Western contractors on major infrastructure projects, and providing incentives to bolster its competitive advantage. Currently, china has come to be the world's second largest importer of oil, accounts for 31 percent of global growth in oil demand. It actually imports 28 percent of its oil from Africa, mostly from Angola, Sudan, and Congo. Dr. Debay discussed that challenges that are being faced by the African countries. The Chinese goods are flooding local markets, crowding out exports from other countries and resulting in domestic job losses. Almost all these investments are bilateral as China favor a bi-lateral approach in its African engagements, avoiding complex multilateral negotiations. Some critics have showed that China is impeding the quest for Regional Economic Integration in Africa. For example, China has been criticized by its sluggish support for the RECs such as the ECOWS, SADIC and EAC and even the New Partnership for Africa s Development (NEPAD). Dr. Debay also noted that the activities of Chinese companies in Africa have also been criticized in various African quarters for their environmental degradation; exploitative labor practices; and use of Chinese, rather than African labor. Moreover, he noted that Western commentators suggest that China has returned to Africa in recent years, primarily to seek energy, raw materials and trade and to advance narrow geopolitical interests. This has led many to believe that China has initiated a new scramble for Africa, which is taking place among the world's big powers who are tapping into the 4

5 continent for its natural resources. While the previous scramble was between major European powers, today the continent provides a battleground for competition between the US, the European Union, China, India other emerging players such as India and South America. However, the effects of the new scramble for Africa are yet to be seen. As a conclusion, Dr. Debay said that if Western countries can be a healthy counterbalance to Chinese influence in Africa, they need a policy that requires looking at Africa beyond the images of poverty, famine and conflict. It requires a business look at Africa as it looks at any other market as an opportunity. As far as Africa is concerned, Africa needs access to all markets -West and East, South and North markets based on fair and mutual benefit. Finally, African governments must devise a strategy to transform the geo-strategic rivalry between China and the West into a triangular relationship that benefits the continent's development aspirations. Perhaps the first important thing Africans can do is to reassume responsibility for plotting the paths of development in their respective countries. Mr. Atnafu G. Meskel, Lecturer, Addis Ababa University, made a presentation on Impact of China-Africa Investment Relations: The Case of Ethiopia. The study investigated the investment specifically the Foreign Direct Investment, FDI, in Ethiopia. He pointed out that the lliterature on China related to Africa in general and that on Ethiopia is limited. Generally speaking, studies on the Chinese FDI in Ethiopia are non-existent. But it is possible to examine the motive and impact of Chinese investment in Ethiopia. Theoretically, he said that FDI is usually distinguished according to its motivation. The motivation for the Chinese to invest in Africa can be grouped as a natural resource-seeking, market-seeking, efficiency-seeking and could also be combination these goals. The study was based on secondary data, survey and descriptive analysis. Besides, the study also used the Kaplensky et al (2006 ) conceptual framework. Mr. Atnafu gave a background to the China s FDI in Ethiopia, by noting that a total Chinese owned investment were estimated to be 5,325 million birr (about 0.5 million USD) in the year He further discussed about the trends and the characterization of Chinese FDI in Ethiopia. The study found out that most of the Chinese firms were found to operate in activities other than those for which they were garneted investment license, i.e. most of the Chinese firm s addresses were different from their formally registered addresses. Most of the Chinese did not like to be interviewed and most firms did not want to disclose their 5

6 capital level. Chinese investment in Ethiopia reflects two modalities: joint venture and wholly Chinese owned enterprises. It was stated that the cumulative Chinese owned investment in the year 2007 reached 1, million birr (about 118 million USD) averaging million (15 million USD) per year. In terms of the number of Chinese FDI projects in Ethiopia, they constitute about 11% of the total foreign owned projects under implementation. Mr. Atnafu further noted that the study found out that the Chinese investment in Ethiopia seems to fall mainly in the generic category of market seeking (approximately 96%). The study s survey revealed that the construction sector is the most attractive sector for the Chinese, followed by agricultural activity and manufacturing. The majority of Chinese want to continue their activity in Ethiopia and around 84% believe that Chinese aid is helpful for Ethiopia. However, 80% reported that they did not get any support from either the Ethiopian or Chinese government. The major problems the Chinese are facing in their operation in Ethiopia are shortage of foreign exchange, shortage of skilled labor, and policy instability. Its also found out that most Chinese firms (nearly 90%) do not prefer to work in a joint venture with Ethiopian firms, while the majority of the Ethiopian firms would like to engage with the Chinese in joint venture projects (for example the Lifan/Abay Cars). By way of conclusions and recommendations, Mr. Atnafu said that the last five years of the Ethio-Chinese relation has grown quite strongly both in terms of trade and investment. This is found to be important, in particularly, important in the areas of manufacturing, road construction, supply (and production) of manufacture goods from China, telecommunication and installation of big electric power stations. From a producer's perspective the majority of these industries are believe to have benefit from Chinese investment. From a consumers perspective it is noted that the quality of Chinese goods are poor, price is cheap and easily available. The study has shown that there are both positive and negative impacts that emanate from Chinese investment in Ethiopia. This calls for an appropriate policy direction and incentive scheme designed to benefit both countries. He also noted that the government of Ethiopia does not seem to have any evidence-based policy about its economic engagement with China. Thus, it is high time to engage in that venture. This study also noted that the level of skill and expert difference between Ethiopian business and Chinese counterparts in negotiation and investment engagement might be 6

7 working against the interests of Ethiopia particularly in the short term and against the best interests of both countries in the long term (eg Telecom). Chinese investment in Ethiopia seems to be constrained by a lack of skilled labour, shortage of foreign exchange as well as policy credibility in regard to Ethiopian government policy. These are areas that require the immediate action of the Ethiopian government. The floor was then opened for question, suggestion and comments. The session was lively and robust, reflecting different views. Concluding Remarks Mr. Mehari Taddele Maru, ACPP Programme Head, made concluding remarks by saying that ISS is a think-tank institute aims to provide a forum on issues that are highly relevant on peace, security and development issues of Africa. The current discussions on Africa- China relations unsatisfactorily focus mainly on the interests of China in Africa and China s unconditional assistance extended to undemocratic government in Africa. There is also a need to study how to improve the transfer of technology and skills from China to Africa when Chinese companies take contracts in Africa. Nevertheless, many Africans are also interested in the lesson Africa can take from the unconventional developmental growth China has registered in the past three decades. In this regard, he pointed out that traditionally, the main driving element for economic growth was capital and free-market forces. Under conventional thinking in economics, capital - not productivity - is the driving force for economic growth. However, China's contribution of an average of four per cent productivity to its economic growth average was unparalleled in history. China pioneered a new, unorthodox path of economic growth, different from the economic development of the Adam Smith tradition, which believes in the invisible balancing power of free-market forces. The question there is how did the Chinese create this matchless productivity? How did China grow so fast? Can Chinese growth serve as a blueprint for other countries, in this case African countries? In response to these questions he said, there are many things Africans can learn from the Chinese model. Similarities between the pre-1978 China and many African countries include a predominantly illiterate agrarian population with chronic food insecurity and insufficient clothing, as well as an urgency to meet the demands of legitimately expected public services in the form of infrastructure, education and security. The main general lesson from Chinese 7

8 and Indian growth models is that productivity is a vital contribution where capital is almost non-existent. China's urgency to meet the demands for infrastructure, communications technology, and development projects, in general, should inspire Africa. Its spectacular economic development came from less politically-oriented, more economically-focused, state-led reforms. These reforms focused on effective protection of property, contract enforcement, and strict government control of prices and financial institutions. The reforms were gradual but well-sequenced to remove constraints that would have a multiplier effect. The urgently needed developments of Africa in areas like infrastructure, healthcare, and education, which have quick and visible benefits to the population, are supported by the Chinese development model. He finally said that save artistic taste, it does not matter if a cat is black or white, as long as the cat catches mice, as Deng Xiaoping, one of the former leaders of China said. In the same way, it does not matter if the development assistance and lessons come from the East or West, as long as Africans benefit and learn from both. He sincerely thanked the panellists, the participants of the seminar and the donors who made this seminar possible through their generosity and unreserved usual help. -End of the report- 8