- Thursday, January 6, 2011 9:31 - 2 Comments

If You Want To Know About Africa’s Future – Ask China!

Introduction: Why invest in China?

Africa is still a poor continent. 1.03 billion are living there. Of this 1 billion¹ 65% live on under $2 per day² and 59% of African households do not have electricity³, and the number increases to 69% if you only look at Sub-Saharan Africa. Nevertheless Africa is no longer about famine, poverty, and war. That was the Africa of the 20th century. The 21st century Africa is about opportunity, technology, and entrepreneurship. You may read about Sudan, Somalia, Zimbabwe, Eastern Congo, and the Ivory Coast in the New York Times and hear about these countries on the nightly news. But these are only five of the 54 countries in Africa. The real untold, narrative of Africa is what’s happening in the other 49 countries. Tremendous economic growth, investment, and rapidly rising living standards. What happened in South East Asia from 1950 – 2000 (rapid growth and poverty reduction) is now happening in Africa from 2000 – 2050. Most of the world just hasn’t realized it yet.

In East Africa (Kenya, Rwanda, Ethiopia, Uganda, and Tanzania) the GDP has grown at an average annual rate of 7.6% the last four years compared to just 0.5% for the USA. Africa will be the economic lion of the 21st century as McKinsey proclaimed in their July Report “Lions on the Move: The Progress and Potential of African Economies.” WE think Africa is ready now for private investment – we’ve seen in many countries around the world, that the private sector has huge power to drive positive change in the world. The best way WE believe investment can contribute to positive change is to help high-growth companies that are creating jobs expand and create more jobs. At the end of the day, the cause of poverty is a lack of jobs and productive capital. If you have been to Africa, you can feel this everywhere. Low education, low health care, and low nutrition are the symptoms of poverty, not the causes. If you increase someone’s income they can afford better education, health care, and food for their family. And this is what most development aid and most countries which invest in China don’t see.

One of the biggest investors in Africa is China … and its investments are viewed critically in many ways⁴.This is why WE placed this topic among the first in the line-up!

¹ http://prb.org/Datafinder/Geography/MultiCompare.aspx?variables=84&regions=6
² http://prb.org/Datafinder/Geography/SelectTopic.aspx?category=2&regions=6
³ http://www.iea.org/weo/electricity.asp
⁴ http://news.bbc.co.uk/2/hi/africa/7086777.stm und Martine Dahle Huse & Stephen L. Muyakwa: China in Africa: lending, policy space and governancePublished by: Norwegian Campaign for Debt Cancellation, http://www.slettgjelda.no
Norwegian Council for Africa, http://www.afrika.no

Chinese Investments in Africa

Sofia Fernandes

… is a PhD candidate in African Studies at ISCTE-Lisbon University Institute. She holds a degree in International Relations and a MsC in International Development and Cooperation. Her main interest areas are the economy and internal and external politics of China. Her present research project is on Chinese engagement in the economy of Angola. Her past research includes “Macao and Luso-Chinese Relations” and “Inequality in China: from 1978 to the Present”. She has published an article on “Turkey: an European Country?” in Janus, an International Relations Annual publication, in 2005.

Center for African Studies, ISCTE/IUL, Lisbon

The general objective of the CEA is to promote interdisciplinary studies in the social sciences on Sub-Saharan Africa. This objective is pursued mainly through research, but also through (mostly international) conferences, publications, and support for studies in this field at ISCTE as well as in other (Portuguese, African) universities, through the dissemination via its website and email of information relevant to the field and through the constitution (since early 2005) of a central library of African studies for Portugal. In this context, special attention is given to the five Lusophone African countries, but concern is with the continent as a whole. http://cea.iscte.pt/

The incentives to foreign investment in China started in 1978, when the economy steadily opened to foreign investment, but the big push to Chinese outward investment started in 2002 with the announcement of the “Go Global” policy, aimed at the internationalization of Chinese enterprises.

In what concerns Africa, the recent surge in Chinese investments started in the mid 1990’s, after the first oil supply agreements were signed. Even though Chinese foreign direct investment is still small on a global scale and highly concentrated in Asia and Latin America, its importance in most African economies is growing rapidly.

Today China ranks fourth among Asian investors in Africa in terms of FDI stock (after Singapore, India and Malaysia) according to data from the 2007 UNCTAD report on “Asian foreign direct investment in Africa”. Chinese companies in Africa have been increasing from less than 80 in 1988 to 499 in 2000, to more than double to 900 in 2006, according to data collected by Peter Kragelund a researcher on the theme, who published the article “Chinese drivers for African development? The effects of Chinese investments in Zambia”, in 2007. This data also allows us to identify an important trend in Chinese investments in Africa i.e the importance of smaller private enterprises: while the average size of investments in 2000 was around 2 million dollars, in 2006 this amount has decreased to 1.4 million dollars. Despite the fact that Chinese investments concentrate in the oil sector, Chinese FDI increasingly dominates investments in all sectors in many African countries.

The search for new markets to sell Chinese overproduction in the so-called light industries and also the possibility of setting up units of production with the aim of exporting to third countries taking advantage of such initiatives as the ACP agreements (Africa, Caribbean and the Pacific) with Europe and AGOA (Africa Growth and Opportunity Act) that allow fiscal and entry advantages to exports with origin in African countries, are other important drivers of Chinese investment in Africa. Another important factor is the Chinese search for land plots for agricultural production to export to China. This seems to be an important driver for the Chinese presence in Africa, with its origins going back to the 1970’s. At that time Chinese assistance teams arrived in Africa to build rural extension programs, namely those regarding the hybrid rice developed in China. Chinese activity in what concerns food production for local consumption, can be also perceived throughout the continent.

Furthermore in analyzing the patterns of Chinese investment in Africa one can understand that it embraces the entire continent: from oil rich countries such as Angola and Nigeria, to land rich countries such as Zimbabwe to countries with no natural resources like Cape Verde, an archipelago of nine islands, but where Chinese shops have spread consistently since 1997 creating fierce competition among Chinese shop owners. It is important to mention that the countries where Chinese engagement is more noticeable are the ones that have initially been more prone and willing to take foreign investment liberation policies, pressured by the West. That is the reason why analysts like Kragelund comment that without Western influence it would be very difficult for China to maintain its current investment pace throughout the continent.

Zambia is an example of a country where Chinese investment has been growing steadily since 1997, although concentrated in the mining sector. In 2006 the stock of Chinese FDI was 528 million dollars, considering that 75% of that amount was in the mining sector, according to data from the Zambia Development Agency and the Association of Chinese Companies in Zambia. The other sectors involved were manufacturing (15% of FDI), construction (7%), and services (2%). It is important to notice also from the available data that the FDI in mining is concentrated in only 8 companies whereas investment in manufacturing makes only for a quarter of the amount invested in mining, but is spread through 76 companies. This data may indicate that mining investments come from big state enterprises, while investment in the manufacturing sector comes from smaller enterprises, probably where private companies are in the majority.

Kragelund (2010) noted that many Zambian-run shops are in fact owned by the Chinese, as well as construction and manufacturing companies which have only a “ghost” Zambian partner allowing them to win tenders specifically aimed at Zambian companies.

In Namibia the relationship with the Chinese goes back to the national liberation struggles when the current president received broad support from the Chinese government including diplomatic and financial support. Since 2003 the Chinese have been present in Namibia’s economy, mainly in construction and the retail trade. Although at first their investment was very well appreciated, in the last years there has been growing resentment against the Chinese that has gone even further in the Parliament, with the opposition accusing the government of corruption in the public tenders won by the Chinese.

Chinese construction companies have been winning contracts, both at the public and private level. Only in 2005/6 Chinese companies won six of the sixteen public contract tenders. On the private level too Chinese companies have actually won 15% of the market quota in the construction business, according to data by Dobler in “Solidarity, Xenophobia and the regulation of Chinese business in Namibia”, 2008. To outweigh the Chinese presence in the economy the government has to change the bidding rules for public contracts – foreign companies are not allowed to bid for contracts inferior to 6 million Namibian dollars – as well as the Affirmative Action Act of 1998 announcing that work permits can only be issued if the workforce skills cannot be found among the nationals.

The retail business is very lucrative in Namibia, especially in its northern border area because of the increasingly good living conditions in Angola. Two big warehouses sell directly to Angolan traders.

In South Africa investment relations have been growing steadily since the early 1990’s, especially since 1994 when the Apartheid regime fell. South Africa was in fact China’s first trading partner until 2008 when Angola outpaced it as China’s main partner on the continent. By 2006 Chinese companies had invested 180 million dollars in more than 80 projects in the areas of agriculture, textiles, electronics, mining, banking, transport and communications, according to Garth Shelton in “South Africa and China: a strategic partnership?”. In fact the biggest outward investment of China up to the present was its buying of a 20% stake in the South African Standard Bank in October 2007.

Other investments are concentrated mainly in the mining sector, such as the 75 million dollar investment in the Limpopo Province Development Corporation to establish a company named ASA minerals aimed at chrome mining. Shanghai Industrial and First Auto Works have invested in manufacturing plants. In this regard it is also important to mention South African investments in China, which according to official sources amounted up to 2008 in 400 million dollars in over 200 projects in China, in the areas of the brewery business with SABMillar, entertainment and television with MIH and Landpac in road building technology. A Free Trade Agreement between the countries have been under discussion since 2004, but there were negotiations to ensure that South African textile production was protected against Chinese competition in the first years. Angola is currently the country where Chinese economic engagement is more noticeable, mainly at the level of concessional financing that is used to finance public construction projects. In what concerns FDI we can highlight the investment of ZTE, China’s number one telecommunications company, that has invested so far 400 million dollars in the telecommunication network as well as in the military communication system.

It is also very important to mention the role performed by China’s Special Economic Zones (SEZ’s) in Africa. Up to the present there are eight Chinese SEZ’s in Africa, namely in Zambia (2), Mauritius, Egypt, Ethiopia, Nigeria (2) and Algeria. These SEZ’s similar to Chinese SEZ’s have tax incentives and are favoured by local governments namely in what regards land concession. Sometimes SEZ’s are explored through joint ventures set up between local African enterprises and Chinese state enterprises, like in Egypt and Zambia. It is also worth mentioning that sometimes the Chinese companies operating are actually township and village enterprises, i.e. they are managed by local authorities in China, such as Tianjin Economic-Technological Development Areas, operating in Mauritius.

The Zambia-China Economic and Trade Cooperation zone operating in the mining region of Chambishi in the copper sector, was inaugurated in February 2007 with a total amount invested of 900 million dollars, according to data from “China’s investment in African SEZ’s” by the World Bank published in January 2010. In January 2009 a new Zambia-China Cooperation Zone was inaugurated near Lusaka aimed at light manufacturing and services, with an investment of 500 million USD.

The SEZ in Egypt is aimed at four clusters: textiles and garment, petroleum equipment, automobile assembly and electrical equipment. There are plans for a second development phase for electronics and heavy industry. As of July 2009, 16 enterprises had already moved into the first square kilometer start-up zone. This start-up phase is planned to conclude around 2011, when the zone targets to have around 50 companies. In March 2009 the joint venture formed between the local municipal Chinese company, Investment Holdings, Egyptian interests and the China-Africa Development Fund won a tender to build a “Chinese-style” SEZ, meaning that it should include a portion destined to residential use.

The Ethiopia Oriental Industrial Park was originally formed by two private Chinese steel product makers with a total investment of 101 million dollars. The completion of the zone is to be in 2010, but the first cement plant has been working since September 2009. Eleven enterprises have signed letters of intent to move into the areas of construction materials, steel products, home appliances, garment, leather processing and automobile assembly.

In Mauritius the Chinese developer has been the Tianli Group, a provincial owned enterprise, run by Shanxi province local authorities.

At the beginning the economic zone built a spinning mill that supplied much of the demand for cotton and synthetic yarn on the island, as well as exports to other countries. The second phase of the project is targeted for 2016 focusing on solar energy, pharmaceuticals, medical equipment and processed seafood.

In Nigeria there are two SEZ’s: the Lekki Free Trade Zone and the Nigeria-Guangdong Free Trade Zone. The first, with a total investment of 369 million dollars, is a joint venture between a group of four Chinese companies and Nigerian interests aimed at transport equipment, textile and light industry, home appliances, communication, warehousing and export processing. The second is also a joint venture between two Chinese companies and Ogun state (Nigeria). The zone, with an initial investment of 500 million dollars, will focus on the manufacturing of construction materials, ceramics, ironware, furniture and a high-tech agricultural demonstration park may be added in the future.

The Algeria-China Jiangling Free Trade Zone was projected to be developed by a Chinese automobile company, with no local partner. However in early 2009, reforms in Algeria’s investment regime required foreign investors to have Algerian partners as majority shareholders. The project has been on stand-by since November 2009.

Other projects however have been established without the official approval and support of the Chinese Ministry of Commerce (MOFCOM), mostly originated in provincial government enterprises and in private companies. These projects are characterized mainly by a lower investment amount and more flexible forms.

In Sierra Leone a private joint venture between Henan Guoji and the national Ministry of Trade and Industry, is specialized in project contracting and international trade and investment. Because companies were selling imported duty free products in local markets manufacturing activity in the zone was almost negligible.

In Nigeria the Lishi-CSI Industrial Park is a joint venture between two Chinese companies. The zone started operations in July 2009 with a total investment planned of 600 to 100 million dollars, focusing on rubber and plastic products, home appliances, textiles, construction materials and machinery manufacturing. One of the enterprises, the Nigeria Lishi Group, has been operating in Nigeria since 1964 and owns more than 50 factories in several African countries. Another Industrial Park, is being planned for the textile sector, to build an entire value chain.

In conclusion, Chinese investments have been growing progressively since 2000 in Africa. However the hiring of Chinese labor to the construction projects has resulted in a visible influx of immigrants to these communities, triggering growing resentment against the Chinese community. Local communities believe that these jobs – mostly low skilled jobs in construction – could perfectly well be performed by locals. Moreover the isolation of Chinese communities does not benefit their image, their enterprises nor their goals. The Chinese are seen as unwilling to mix or learn the habits and culture of Africans. In what concerns the retail trade, although many Africans praise these shops for the low price of their products, local sellers always complain about Chinese shop owner’s unfair competition which puts African retail businesses out of work.

In some countries such as Nigeria, Niger, Zambia and more recently Angola, Chinese businesses are linked to the government. Whenever there are outbursts of social discontent it has been readily directed against the Chinese who are considered as the closest allies of political power. It is also important to point out the lack of political freedom in many of these societies which means that the rage against the political power is diverted to the Chinese ally.

In many countries, as in Zambia, Chinese have invested in areas that did not attract the interest of other investors: the Chambishi mines have been unexplored for thirty years, but the Chinese investment has brought them back to production, giving employment to thousands of people. There is however the other side of the coin: the complaints of the workers about bad working conditions and low salaries. In October 2010 there was news about Chinese managers having murdered two Zambian workers complaining on working conditions. Riots between managers and workers in this mine are not new.

One can understand that these conditions – Chinese labour, Chinese labour conditions in African countries and isolation – have a strong negative effect on the ongoing projects as well as on future investments. In spite China does not yet have the practice of corporate communication, the managers of Chinese enterprises should start understanding the principles and constraints that affect the work on the field. As Lucy Corkin, a SOAS researcher referred they care much about establishing high level contacts, but forget about the problems on the ground.

In the present scenario one can expect increased Chinese engagement in Africa since there are unmistakable complementarities between both economies, but the managing of economic and business relations in future should be made more carefully, baring in mind culture, interests and needs of the populations concerned.

we_magazine:
Is there any chance to get more recent data?

Sofia Fernandes:
I would love to have access to more recent data, but I’m afraid I have not. The last World Investment Report from UNCTAD published in July 2010 doesn’t display more recent data than this. Further- more, as you know, the Chinese only now are making their data public (but there is not much anyway …) The other data that can be found are in newspapers but these are mainly guesses, in my opinion.

we_magazine:
What is the impact of Chinese investment on African society?

Sofia Fernandes:
That is the subject of my research PhD project, but with reference to Angola. I’m working on it but according to the gathered information there is no definite answer since it is a rather new phenomenon, so it has not passed enough time to reach a conclusion. As a reflection I can mention that the building or rebuilding of infrastructure is benefiting the population since they have access to roads, trains, hospitals and schools that did not exist before. On the other hand a growing resentment against the Chinese is rising in almost every society I’ve collected data on. The complaints as I mentioned arise as a result of Chinese massive labor “imports”, Chinese labor laws as well as Chinese shops unfair competition together in my view with a deep lack of intertwining between local populations and Chinese expatriates.

we_magazine:
Do you see any indications that Chinese investment goes hand in hand with the distrubtion of Chinese products in the country? Meaning: No product distribution, no investment! Do you have any specific view and data on Chinese investment in technology and infrastructure?

Sofia Fernandes:
I don’t think so. Chinese investments goes hand in hand with the demand that at least 70% of the public works contracts goes to Chinese companies, as well as 70% of the labour employed. I never noticed any mention of Chinese imports.

Regarding technology and infrastructure: most of the contracts are to build/rebuild infrastructure, as mentioned. In Angola, up to the present 8,5 billion dollars in concessional credit lines have been given by Eximbank just for infrastructure. Another credit line managed directly by the President’s cabinet and Gabinete de Reconstrução Nacional (GRN) are supposed to manage similar levels of financing but it’s hard to get the real numbers.

I’m aware that Chinese investment has been relevant also in the telecommunications sector. Huawei and ZTE are two important companies in this sector that have been investing in several African countries: both are present in Angola. ZTE has signed contracts to repair and extend the existing telephone landline as well as to extend the military communications system. Huawei has offices in Luanda and has funded a Telecommunications Institute to train local professionals in the sector.

The Impact of Chinese Investment in Africa

Kinfu Adisu, Grand Valley State University

“My teaching goal is to create a rigorous learning environment that is conducive to interaction, collaboration and development of critical thinking. It is very important to respect the diverse ideas and background of my students and reflect fair and equal treatment of them in and out of the class room. I also encourage the understanding of global issues and the importance of knowledge and cultural experience as a contributor to personal and national competitiveness.”

Thomas Sharkey, College of Business Administration, The University of Toledo

Thomas is Doctor of Philosophy (PhD), Indiana University, 1985. He received his Masters of Business Administration (MBA) at University of Akron in 1977. He is also a Master of Science and holds a Bachelor in Arts.

This article was first published in: African Business News, November 6, 2010

Abstract

The purpose of this paper is to explore the increasingly important economic and business relationship between the People’s Republic of China and the countries of Africa. Our focus is on how this partnership manifests itself in investments. The research questions are: first, how has the relationship changed over time and second, from an African perspective has this relationship been beneficial? Finally, how has the recent economic downturn affected their partnership? Our investigation shows that Chinese investment has been motivated by a desire to access critical resources (oil, bauxite, etc.). The Chinese approach was been to downplay political issues (e.g., human rights). Although recipient African nations have received investment inflows, they have come with certain drawbacks. For instance, they have negatively impacted local trade and commerce. Also, in some cases African labor has not benefited from Chinese investment.

Introduction – Phases of Engagement

Historical evidence show that there have been economic and political relationships between China and Africa as far back as 500 years ago (Mohan and Kale, 2007). A profound increase in the last two decades may have been related to the shifts in the world economy, geopolitical competition, and changes in Chinese foreign policy (Brautigam, 2003). According to Mohan and Kale (2007), the Chinese-Africa business contact is divided into three phases. The first phase from 1850 to 1950 related to colonial labor demand called “coolie trade.” Coolie trade focused mainly on plantation, mining, and railway construction. Alongside this were small but enterprising businesses that serviced Chinese labor markets and undertook small-scale export. The second period was from 1960-1980. With the establishment of the People’s Republic of China and the subsequent cold war, relations between China and Africa became political. China challenged the superpowers through foreign aid to Africa in order to cement ‘South-South’ relations. It also encouraged the independence movement in Africa. This is also when Chinese economic reforms were being instituted allowing liberalization, special economic zones, and permitting foreign direct investment (Shenkar, 1994). The last period is from 1990 to present, most noticeable in the last 5 years. According to Broadman (2007), there has been movement of Chinese companies into African countries particularly in the areas of construction, mining, and oil extraction. Such efforts have been encouraged by the Chinese government.

Introduction – Conferences

One of the cornerstones of Chinese-African relationship began after the Bandung conference in 1955 (Muekalia, 2004), in which, “China began to cultivate ties and offer economic, technical, and military support to Africancountries and liberation movements in an effort to unite with them against both superpowers” (pp. 6). This strategy was also reflected at the first ever China-Africa Co-operation Forum held in Beijing from October 11-12, 2000, in which 44 African countries and 80 ministers were present. According to Muekalia (2004), the forum expressed a clear policy goal for dealing with African countries. It involved co-operation on investment, financial operations, debt relief and cancellation, agricultural, natural resources and energy, education, and multilateral matters. Anshan (2007) also reiterates this, explaining how the new Chinese approach enhanced its relations with Africa in many ways including educational, cultural, medical, public health support and training.

Introduction – Motives

In view of the above aid strategy, one may suggest the main motive for Chinese relationship is to gain access to the abundant raw materials that Africa offers. Although this may be a good reason, Alden (2005) states that China’s insistence on recognition of its “one China” policy by Africans as another important requirement. Alden (2005) also lists four factors that have shaped China’s contemporary African policy: China’s need for energy security; new market and investment opportunity; symbolic diplomacy and development; and forging strategic partnerships. According to Konings (2007), the main drivers of the China-Africa cooperation is defined by recent statement by Chinese government on two issues. One is on cooperation, “China will continue to strengthen solidarity and cooperation with African countries in the international arena, conduct regular exchange of views, coordinate positions on major international and regional issues and stand for mutual support on major issues concerning state sovereignty, territorial integrity….” (pp. 360) The other one is the fact that “The one-China principle is the political foundation for the establishment and development of China’s relations with African countries and regional organizations.” (pp. 361). Zweig and Jianhai (2005) concluded that China’s African policy is being driven by its domestic development strategy. First, it wants to access energy resources. Second, it wants to establish export markets for its light manufacturing, services, agro-processing, apparel, and communications offerings. Already, Africa is full of low-cost motorcycles, electronic and consumer goods sourced from China.

Chinese Investment Model

According to Sautman and Hairong (2007), there are factors that made China’s relationship with Africa distinctive. Other than aid and migration policies, the “Chinese model” of investment and infrastructure loans known as the “Beijing Consensus” is a very important approach that needs to be discussed. In Ramos’s (2004) terms, it is a new attitude towards politics, development, and global balance of power. In general, it values the political and international relations concept of multilateralism, consensus and peaceful co-existence (Wenping, 2007). This approach contrasts with Washington consensus, a neo-liberal paradigm that takes into consideration democracy, good governance, and poverty reduction (Fine and Jomo, 2005- in Sautman and Hairong, 2007).

The Chinese model of investment in essence brings economic growth objectives and foreign policy together guiding trade and invest decisions in Africa along with “no strings attached” financial and technical assistance (Zafar, 2007). Chinese bid competitively for resource and construction projects using investment and infrastructure loans. These loans are often advanced at zero or near-zero percent interest or allow for repayment in natural resources (Brautigam, 2003). For example, China offered US$2 billion in aid for infrastructure projects, thereby securing a former Shell Oil block in Angola by outbidding an Indian proposal. In a similar case, a Chinese firm promised US$7 billion in investments and rehabilitation of power stations to secure an oil area sought by western corporations (Alden and Davies, 2006). Many Africans view Chinese investment as different from the western investment. According to This Day (2005), the Chinese are not imposing the neo-liberal package of reform usually required by the World Bank under its ‘‘conditionality provisions.” Chinese aid by contrast comes without strings attached and is seen as supporting initiatives by African states to address development issues not solved by Western investment (Sautman and Hairong, 2007).

Chinese Investment in Africa

Africa, according to Sautman and Hairong (2007) has the highest return on FDI, ranging from 29% in 1990 to 40% in 2005. Although China’s trade with Africa is small compared to US$1.76 trillion in world trade, it has grown from US$3 billion in 1995 to US$55 billion in 2006. It is predicted that Chinese investment will top the US$100 billion mark by the end of the decade (Taylor, 2006). As evidence of this trend, there are more than 800 Chinese companies in Africa in 2006, one hundred of which are medium to large state owned firms (Xinhua, 2007).

According to Kaplinsky, McCormick and Morris (2007), China is having a profound impact on African economies. The increasing economic expansion is particularly evident in Sub-Saharan Africa. In the last decade, the Chinese have built a network of trade, aid and investment with close to fifty countries (Zafar, 2007). Chinese companies are mining oil in Angola and Sudan, building roads in Ethiopia, generating electricity in Kenya,building infrastructure and encouraging tourism in Sierra Leone, and servicing mobile phones in Kenya and Nigeria. China’s rapidly developing oil consumption seems to have a bigger effect on Chinese-African trade (Taylor, 2006; McLeary, 2007). This is the main reason behind the whole raft of new contracts between 2002 and 2006. During this period, Chinese oil companies have signed deals to buy refineries and explore oil and gas in Algeria, Gabon, Angola, Nigeria, Ivory Coast, Kenya, Congo Brazzaville, Namibia, Ethiopia, Madagascar and Sudan. Additionally, China also helped in treating infectious diseases such as malaria and HIV/AIDS and launched the first overseas radio station in Kenya (Brooks and Shin, 2006). Recently, China and Nigeria just signed a major oil deal worth US$23 billion (Swartz and Hall 2010). It calls for China to build three refineries in Nigeria.

As a result, trade between them has increased making China the continent’s third largest trading partner after the European Union and the US. China has continued to push closer ties with Africa and has awarded US$10 billion in aid for the next three years and dispatched volunteers to provide medical assistance and build hospitals and schools (Ewing, 2009). As Tull (2006) explains, Western criticisms of China’s human rights record and other international issues have induced the Chinese to seek closer ties with non-western nations in an effort to build international coalitions.