Huawei taken to court in Zimbabwe

November 20, 2013

In the last year, regulatory challenges against Chinese companies in Africa have become increasingly commonplace, part of what seems to be a trend of greater African state assertiveness in dictating the terms of business with China as well as a more open competition between Chinese companies. In telecommunications alone, Chinese companies have faced investigations over corruption related to telecom tenders in Kenya, Uganda, Nigeria and Algeria, with both ZTE and Huawei being banned from tenders for two years in Algeria as a result,.

Nonetheless, the fact a $218 million telecom tender awarded Huawei to supply equipment to Zimbabwe’s state-owned telecoms operator NetOne has been challenged in an administrative court with allegations of corruption is significant because it questions the assumption that large Chinese companies do well in undemocratic states politically allied with China by integrating into the patronage networks of the ruling elite.

Chinese scholar suggests Africa learn from China’s party-building experience

October 24, 2013

Today, at the workshop “Fifty Years of China-Africa Cooperation,” held in Harare with FOCAC funding and organised by the Southern African Research and Documentation Centre, Zeng Aiping of the China Institute of International Studies, the Foreign Ministry’s think tank, gave a talk on how Africa can learn from China’s development experience. In addition to the usual discussion of agriculture, industry, opening up to foreign investment etc., he foregrounded social stability and the leadership of the Communisty Party, and suggested that African parties, especially ruling parties, can learn from the CCP’s experience in party building, party-state-society relations, and party-military relations.

There has been much discussion of whether China actually wants to export its political model to poor countries in Africa and Southeast Asia; i.e. whether it is consciously strengthening authoritarian regimes or whether this is an unintended by-product to which the Chinese government is largely indifferent but is sometimes forced to become sensitive to, as in the case of Burma. Most people, including myself, hold the latter opinion, but this talk makes me wonder whether at least some parts of the Chinese political establishment are in fact in the former camp.

The symposium’s main organiser, Phyllis Johnson, a long-time Mugabe supporter who blames the country’s problems on Western interference, also pointed in her talk to China’s National People’s Congress as a model of decision making, and  specifically suggested that Zimbabwe should learn from China’s approach to having the military under Party control but still allowing it to play a political role.

Chinese companies contract white Zimbabwean farmers to plant tobacco

October 20, 2013

Just had an interesting conversation with a white Zimbabwean shipping manager in Harare. He told me some of the white farmers who were thrown off their farms by Mugabe in 2002 have come back and are planting tobacco under contract for Chinese companies, which provide seeds and technical support. Would be interesting to know if anyone has done any reserach on this.

New Ethiopian presient has PhD from China

October 18, 2013

As PKU African Tele-Info reports this week (issue 159), the new Ethiopian president, Mulatu Teshome, an Oromo, has a PhD in international relations from Peking University, a department best known for the assertive nationalist Yan Xuetong. This must be the first African head of state — though ceremonial — trained in China.

Chinese company offshores Muslim headgear manufacturing to Ethiopia

September 19, 2013

The following caught my attention in a recent article in China Daily:

The 49-year-old general manager of Suzhou Orient Investment, based in Wujiang, a district of Suzhou, is investing $10 million (7.5 million euros) in a factory on the Eastern Industrial Zone in Addis Ababa, making headdresses for both Muslim men and women.

The company is taking advantage of a seven-year duty free period and will eventually employ 200 people on site. The investment came as a result of meeting Africa officials at a China-Africa forum in Suzhou last year.

“We will be closer to our key markets in the Middle East such as Dubai, Qatar, Yemen, Egypt, Iraq, Iran and Sudan,” he says.

Some 70 percent of Muslim headwear globally is now made in Wujiang, near where a number of chemical substances required in their manufacture are located. The company intends to use its new Addis Ababa base as springboard to operate in 20 other African countries over the coming few years.

“We were the first to introduce headdress making techniques here and the district has since become a major global production center for them,” he says.

So not only is Suzhou the global centre of “Muslim headdress” (kefiya?) manufacturing, but it will now outsource to Ethiopia! In some ways, Chinese globalisation progresses faster than I could think.

Pushback against Chinese oil in Africa?

September 18, 2013

“China Finds Resistance to Oil Deals in Africa” by Adam Nossiter is in today’s New York Times. The article says that governments in Chad, Niger, and Gabon have all either shut down, taken back, or imposed major penalties against Chinese oil projects, and that this seems to represent a turn towards greater assertiveness in Chinese-African investment relations. This in itself is not particularly surprising and indeed fits with what some Chinese politicians and commentators have been saying, namely that African governments should take greater responsibility for regulating investments in ways that benefit their countries. It also makes sense that with some investments already in place and incomes (including those of oil ministers) growing, they would begin fighting for better deals.

What caught my attentions are two claims: First, that Chad expelled the GM of an (unspecified) Chinese oil company’s local operations in response to environmental violations — this seems a highly unusual and very face-damaging step for China. Second, that one of the points of contention in Niger is that a refinery built by CNPC and jointly owned with Niger has been overcharging the Niger side, particularly for a bloated and “benefits-freighted” payroll of Chinese employees. Now this is interesting because one would usually think that the relatively low salaries and modest living conditions of Chinese expats distinguish them favourably from Westerners, at least from the perspective of locals.

On the face of it, it may simply be that Chinese big oil is becoming (or has always been) much the same as any other big oil, but I am curious about the inside story in these two cases. Can there be a connection to the arrest of several CNPC executives in the current anti-graft crackdown in China?

CWE challenges Sinohydro contract in Uganda

July 12, 2013

In recent months — spurred by the attacks on Chinese gold-diggers in Uganda — Chinese media have been reflecting on the worsening perception of Chinese investment in Africa and the responses that this might need from China.

But one of the most recent news — an article in a Ugandan newspaper about a lawsuit filed by 54 households demanding more compensation for the effects of the Karuma dam project, awarded to Sinohydro — suggests another interesting trend. In parallel to this lawsuit, CWE, another state-owned Chinese company, challenged the award of the tender to Sinhohydro. The article gives no details, but this must be one of the first instances for two large Chinese state companies to battle with each other in a foreign court. This suggests that, at least in some instances, the state’s mitigating role is fading and the companies are increasingly behaving like market actors, even risking the loss of reputation abroad.

Guest post: An Agricultural Going-Out? The Case of Russia’s Far East

May 31, 2013

This is a guest post by Jiayi Zhou (Institute of Social Studies, The Hague), who has done research on Chinese in the Republic of Georgia and is preparing to write a PhD dissertation on Chinese “land grabs” in the Russian Far East. Her literature survey has come up with some fascinating information on this little-known subject.

Agriculture, though one of the target sectors of China’s Going-Out policy, remains a very small portion of Chinese OFDI (0.82% in 2010) and lacks any macro-level strategy. Amidst concerns over the world-wide “land grabbing”, China’s NDRC has tried to make clear that overseas agricultural projects and land acquisitions are not a part of its national food security strategy. But though China does remain largely food self-sufficient, it has become increasingly dependent on imports of soybean and livestock feed, and still faces pressing challenges of limited water resources, environmental degradation, and urbanization. But currently, according to Remin University’s Zhu Xinkai, agricultural investment abroad reflects more the “individual behavior of enterprises.” Now whether or not they have strong state backing, the presence of Chinese agribusinesses in Africa, Southeast Asia, and Latin America has been keenly noted by western media. Very little attention however has been paid to Russia, a fascinating case which might add much to analysis of the actors, motivations, and character of China’s so-called ‘Agricultural Going-Out’:

Russia borders China’s northeast, has vast amounts arable land lying idle, and is suffering from demographic decline and labor shortages – particularly in Siberia and the Far East. In recent years, Russia has been eager to stimulate foreign investment and agricultural production there, evident at the 2012 APEC summit, which was hosted in Vladivostok, and whose theme Russia chose to be global food security. Russia’s land-demography dilemma is the exact opposite of China’s, where in at least in one small village named Sunrise (太阳升村)in Heilongjiang province, peasants are grumbling about the ‘人多地少 ’  [too many people, not enough land] issue (see full story; Sunrise Village, in Dongning county, has only 1000 mu (67 hectares) of land for over 400 people. According to the source, as of 2011 it had some 50-60 villagers operating farms in Russia and even more going abroad as hired help). Chinese agribusinesses also have similar complaints, constrained as they are by village ownership rights – the Household Responsibility System – from easily acquiring large and contiguous plots of farmland (see Zhang and Donaldson 2010). Such factors can at least partly explain the phenomenon of Chinese agribusinesses, entrepreneurs, and peasants crossing the border into Russia to farm – where land is not only abundant, but also cheap.

Some of the larger-scale Chinese agricultural investment projects in Russia include that of Dongning Huaxin Group, with 40,000 hectares (ha) in Primorsky Krai; branches of the Heilongjiang Land Reclamation Bureau, which had some 80,000 ha in Russia’s Far East at the end of 2011; Baoquanling Far East Group, with over 6000 ha; among others (source).  Dongning Huaxin Group and Beidahuang Group have also collaborated to set up a ‘Friendship Farm’ which hopes to reach 200,000 ha by 2016. Larger businesses usually lease large plots of land (for up to 49-years), often in joint-ventures with Russians, and grow mainly soybean and grains, with some livestock projects as well. Export back to China seems to be the goal, but many of the afore-cited sources mention that due to shipping costs, tariffs, and a general lack of policy support from China, much of the production is still sold on the Russian market (source, source).

Nested within large-scale land deals are also small- and medium-sized enterprises, so-called ‘family farms’ [家庭农场], and individuals who cultivate through sub-leases and contracts. Wutong River Farm, for instance, which had “surplus labor, idle machinery, advanced planting technology – but no more available land on which to plant” signed an land concession agreement with Dongning Huaxin Group in 2010, for 3,000 ha of land near the city of Ussuriysk. There are also even smaller-scale Chinese ‘family farms’ which dot the landscape of Russia’s countryside, many of which operate independently and grow greenhouse vegetables for the local markets. One source even reported that Chinese farmers provide some three-fourths of the local vegetables in Russia’s Amur region.

When and how precisely this “farm panning” [种地捞金] rush began is unclear. One official suggests somewhere around the year 2000 (the first intrepid few from Sunrise Village to go farm in Russia left in 1998). According to the Heilongjiang Academy of Social Sciences, the farming boom in Russia is strongly correlated with the rise in the two countries’ cross-border trade (source). No credible statistics about Chinese agricultural activities abroad are collected at the national level, but some local governments have been keeping track: according to what is hopefully a reliable news report published in 2011, Dongning county’s official data showed that locals and locally-based businesses had concessions amounting to over 200,000 ha of land in Russia, with some 160,000 ha actually in development. For some perspective, Dongning county’s own arable land amounts only to some 50,000 ha. The city of Heihe’s data showed that as of 2011, Heihe businesses and persons had contracted some 60,000 ha of Russian land, with 40,000 ha in development.

Situating Chinese agricultural activity in Russia within broader discourses about China’s Going-Out and foreign economic activities, as well as global ‘land-grabbing’, will of course require deeper and more conceptual analysis – but it’s clear that the case of Russia’s Far East has much to add to the debate. Certainly, this is not the caricaturized case of a ‘weak’ state subjugated by a rapacious economically dominant one (a rather unhelpful framework; see Danielle Tan 2012). And it also does not seem that Chinese agricultural investments negatively contribute to local Russian food security or siphon off jobs – in fact, the opposite may be the case (see Anatolii M. Shkurkin 2002). Layered upon this are also Russia’s domestic politics and geopolitical considerations, which have resulted in policies towards Chinese investment and migration that are ’tangled and fickle’ to say the least.  In September 2012, the Minister of Development of Russian Far East Viktor Ishayev outright stated that in the field of agriculture, Russia prefers cooperation with Japan and South Korea to working with China. In 2013, Chinese agricultural workers have also been effectively banned from working in certain areas (the Amur and Krasnoyarsk regions, among others) for use of harmful chemical additives.

Anbound Consulting: Africa will solve China’s problems

March 30, 2013

On 15 January, the Peking consultancy Anbound released a report that argues that a Chinese “Marshall Plan” for Africa would not only solve China’s problems of an industrial transition (by offshoring labour-intensive low-tech industries and by creating markets for outdated products) but also slow the yuan’s inflation by creating a pool of the currency in Africa.

None of the suggestions are original in themselves — nor is the recommendation for China to radically increase funding for research on Africa and exchanges with African NGOS — but Anbound proposes all this under a comprehensive ten-year, $400bn government- financed plan that would help the expansion of Chinese exports and manufacturing. The last of the 12 recommendations is facilitating family migration in both directions: in China, African migrants are to rejuvenate an aging labour force, while in Africa, Chinese are to bring capital, technology, and kn0w-how. The price label, and of course the advocacy of a comprehensive plan that includes migration, is exactly what suspicious Western critics have always feared: a grand Chinese strategy to take over Africa.

I am not sure what Anbound’s standing in China is. It is very unlikely that the government will take their advice, but I would be curious how widely shared such views are in policy circles.



Chinese review of The Silent Chinese Conquest

March 14, 2013

The English edition of Heriberto Araujo and Juan Pablo Cardenal’s The Silent Chinese Conquest, which was apparently published under the title China’s Silent Army, has been reviewed by Bristol University psychology lecturer and blogger Zeng Biao, who also owns a consultancy on Chinese-British relations, for the newspaper 21st Century Economic Herald. Zeng notes the author’s “betrayal” of their interviewees, the Chinese entrepreneurs and managers who proudly showed them around their businesses, but add that such betrayals are the stock in trade of “political and social affairs journalists”. He adds that he feels some empathy for the small traders the authors describe, and wagers that,

if China’s global influence continues to increase and develop bit by bit, as it has, then history’s take on these Chinese peddlers will surely be full of the humour and intimacy of today’s British writings on the East India Company.

Overall, Zeng’s opinion of the book is favourable; his “only regret is that it was not written by Chinese.” And, “in order to avoid more regrets,” he recommends that it be published in Chinese.

Does Zeng agree with the authors’ alarmist tone and sees it as a positive thing, as some Chinese nationalists tend to do with Western books warning of China’s “rise?” Or does he agree with the warning, that the “silent army” has dire consequences in terms of crime, environmental hazards, exploitation and so on, as well? Or does he simply think the authors’ research deserves discussion? This is not clear.