this chapter
from American Chronicle, 2008-Jun-17, by Gary Ater:
China Continues to Absorb Africa's Natural Resources - Part II
In Part I, I detailed the comparison of China, with the world's largest population and their aggressive approach to Africa versus the US's somewhat benign approach for obtaining Africa's vast natural resources. In Part II, I will detail what China is doing in the different regions of the "Dark Continent" and what long-term effect it could have on Africa, China, the US and the rest of the world. If you missed Part I, you can still access it at; http://www.americanchronicle.com/articles/64968 .
Looking back at the world's population growth, it took until the year 1800 for all of the world's human population to reach the first one Billion. Unfortunately, it then only took 130 years later to reach the second Billion. Today, the population in developing countries is increasing at the remarkable rate of 2.5% per year and these countries hold more than 70 percent of the world's total population. If this rate continues, the world's population could double every 27 years.
The demand that this growth is placing on the earth's resources and the world's increasing inability to grow the necessary crops for sustaining this growth has gone to the top of their priorities in countries such as China, India and in the developing Muslim countries of Southeast Asia, the Middle East and Africa. Even the major oil giants such as Royal Dutch Shell Corporation, are looking at possible scenarios that consider what could happen if a future scramble for oil, food or natural resources would trigger global conflicts between the planet's major industrial countries. Based on these possible scenarios, Shell's CEO, Jeroen van der Veer, has stated that the "Time is seriously running short." and that man-kind is at the juncture for either putting together a "blueprint" for countries to work together or for a possible massive political scramble or a potential world war developing over all of the planet's oil and natural resources.
Years ago, the Communist Party of China, with its population of 1.3 Billion, was the first major national government to seriously recognize and react to these issues. Decades ago they selected the continent of Africa as their answer for fulfilling the majority of China's vast current and future needs for oil and other natural resources. As explained in Part I, exports from Africa to China (mostly oil and raw materials) increased 2,126% over the last 8 years, versus an increase of only 402% in exports from Africa to the US. Below, I will demonstrate what China is doing in various regions of Africa to maintain this movement of Africa's natural resources to China and what the US will potentially be losing if the current US-Africa trade strategy is maintained. It must be said at this point that because of China's policy of massive internal secrecy and Africa's lack of a centralized data base for all the African nations, the information shown this article was collected via reports from the US and other countries that have been doing business with China, or Africa, or perhaps with both countries. Please note however, even if the information in these articles were determined to only be 50% correct, the enormity of the potential for the lack of availability to the other countries of the world for sharing Africa's natural resource exports would still be astounding.
Shown in the following are the major Chinese activies in the key regions of Africa:
ZAMBIA:
Due to the long-term agreements between China and the South African country of Zambia, Zambia is referred to as "China's Mine Shaft". China's interest in Zambia is very simple. China is the world's largest user of copper. They absorb one fifth of the world's raw copper demand. Even though there is very little raw copper available in China's mainland, they are the world's eighth largest exporter of refined copper. Needless to say, they require vast amounts of raw copper to maintain China's many copper refineries and other than the African Congo region, Zambia has the world's second largest reserves of raw copper ore.
When Zambia became independent from British rule in 1964, the country nationalized all of its copper mines. They then set up a socialist welfare system for all Zambian citizens that covered them from cradle to grave. For the country's first few years, it was deemed a very successful region and with its high GDP, (supported mainly by its copper mines), it was listed as a "middle income country", the highest at the time of any African nation.
Between 1969 and 1974, copper prices had collapsed and declined world-wide by 50%. By 1990, the country reversed course and privatized all of their mines and divided them into seven regions. China saw their opportunity and purchased the rights for mining copper from one of those regions. The price and details were never made public. (China today also continues to buy Zambia's smaller mining and prospecting rights as they become available.) In addition, the area that China acquired; Chambishi, now has 13,000 Chinese peasant farmers that were convinced to move from the Chinese province of Chongqing to become "landlords abroad". (China would like to move even more of the 12 million Chongqing peasants to Chambishi, as there are not enough jobs for them in Chongqing.)
Since the collapse of the copper market in the 1970's, the average weekly Zambian pay check of $200 per week has dropped to $200 per month. The working conditions in Zambia are deplorable with no job security (for many people, copper mining is the only available work in Zambia). There is also no health care or regular working safety standards. The local Zambians have grown to hate the Chinese. And Chambishi, the largest of the Chinese owned mines, is located in the heart of Zambia's copper belt.
MOZAMBIQUE:
When Mozambique became independent from Portugal in 1975, it immediately became listed as one of the worst places in the world to live. Organized crime, years of government corruption, crooked police forces, a massive AIDS crisis, annual floods, a 16 year civil war that killed a million people by 1992 and their citizens currently live on less that $2.00 a day. Only 8% of the country's houses today have electricity.
Even though it is one of the world's most difficult countries to do business with, the Chinese are everywhere. Trade between China and Mozambique has increased 600% since 2001. China has built many businesses here and provided a $2.3 billion dollar loan for a controversial dam from which the World Bank had previously backed away.
What Mozambique does have is tens of thousands of acres of prime timber that cover 70% of the country. And as is also reality, China, (that has massive, widespread logging bans on its own mainland), is the world's largest importer of unprocessed timber. It is stated that of every 10 trees traded in the world, 5 are destined for China. (The World Bank estimates that 40% of China's largest timber supplier, Russia, is harvested illegally. Greenpeace has estimated that 90% of the timber harvested in New Guinea for China is harvested illegally.) The Smithsonian Institute's chief biologist say that; "Most logs imported into China are effectively stolen." And the majority of these illegal timber logs are turned by the Chinese into finished wood products and furniture that eventually find their way as Chinese exports to the US and other industrialized countries.
The timber coming from Mozambique to China is many times listed as mostly "legal". However, legal or not, rare hardwood species are being obliterated by the Chinese without being replanted. In Mozambique, there is only one local "cop" for every 125,000 acres and law enforcement is considered corrupt and is a virtual "Timber Mafia". The Mozambique parliament passed new anticorruption laws in 2004, but to date, no one has ever been charged under it. China also continues to buy timber-cutting licenses from private land owners for pennies on the dollar, and then they proceed to clear-cut the vast forest areas without replanting.
Even though the country's government has now issued "concessions" (which few locals can afford), they are large tracts of land that are also available to foreigners for 50 years. These agreements require that the tracts also have saw mills to encourage local processing instead of just providing raw timber. Unfortunately, as with all of their laws, even those requirements are easily skirted.
As one citizen of Mozambique stated, "To understand the way the Chinese do things, one must understand America. If America stops buying furniture made from our wood by the Chinese, then perhaps we can preserve our timber. We are all part of the problem."
AFRICAN CONGO:
The Belgian colony of Zaire became the Democratic Republic of the Congo in June of 1960. The Congo has been devastated by years of successive slave traders, starting from the 1800's and was even declared a "personal possession" by Belgium's brutal King Leopold II. The king also used the Congo for what he called a "showcase for civilizing the Negroes". From its beginning, the leaders of the Congo have brought nothing but death to its people by being home-grown, brutal dictators such as Mobutu Sese Seko. For three decades, he also used the state's mining monopoly as his personal check book.
The Congo soil's mineral content is abundant with; 10% of the world's known copper; 30% of its cobalt; 80% of its coltan (used in everything from Playstations & iPods to cutting tools & jet engines) and amazing quantities of zinc, bauxite, cadmium, uranium, gold and diamonds. Tara O'Connor, founder of Johannesburg's, Africa Risk Consulting Corporation, says; "The Copper just bursts through the earth, and geologists wander around in a haze of ecstasy." Under these circumstances, the Congo should be one of the world's richest countries. Unfortunately, greedy dictators, corrupt politicians and civil wars have prevented the Congo nation from fulfilling its potential.
Today, according to the International Rescue Committee, the death toll in the Congo is 10 times larger than that of the highly publicized genocide and starvation killings in Darfur. Nearly 5.5 million Congolese have died since 1998 in the country's two civil wars and their aftermath of starvation and epidemics. On going smuggling and corruption are involved in all levels of the mining processes. Of the the Congo's 65 million inhabitants, 80% live on 50 cents a day.
Between 1998 and 2001, the United States was the world's #1 importer of coltan. China took over the #1 position in 2002. Joseph Kabila, the current President of Congo, and his government, recently decided to accept an offer from China that will now decide the fate of Congo for decades to come.
The Chinese are currently providing a nine billion-dollar mining and infrastructure package. This marks China's single largest commitment in Africa to date and will remake the economic map of the entire continent. Victor Cosongo, the Congo's most powerful mining official says; "If China wants to dominate the world, it's not our business to stop them. Who are we to close the door to them when we don't have water or electricity? If China doesn't come to the Congo, we are in very deep trouble."
The Chinese are long on cash and short on rules. As China's ambassador to Congo, Wu Zexian, has said; "China won the contract because its no-strings offer was all upside for the Congolese government, and there are no other competitors." Of the $9 billion, one third will be pumped into the Congo's war ravaged mines. The other $6 billion will take the form of a soft loan (backed by the Congo's mineral deposits.) for the Congo's new infrastructure. This will be built by Chinese construction companies, primarily with Chinese labor. The infrastructure will include 4,500 mile of rail lines and roads, a giant mineral smelter in the hub of an industrial distribution center linking the Congo to to the Chinese-built networks in Zambia and Angola and ultimately to sea ports on both the east and the west coasts of Africa.
The expectation is that the corrupt environment of the past will eventually emerge once more in the Congo. As a case in point, when a new Chinese / Congolese company was approached by a Congolese immigration official that demanded a large bribe, the Chinese company officials contacted the Chinese Embassy for assistance. The advice they received; "You came with money. Pay them."
EQUATORIAL GUINEA (E.G.):
E.G. is a very small small, corrupt country that has been run since 1979 by a 66 year old despot named Teodoro Obiang Nguema Mbasogo. Its population is only 550,000 and the World Bank has put E.G. on the world's "most shameful" lists. Those include the most censored, to the most corrupt, to the "worst place in the world to do business". Geoffrey Wood, a professor of business at U.K."s University of Sheffield and coauthor of The Ethical Business states that E.G. is a "criminal state" that matches or exceeds the "rapacity and brutality of the Duvaliers' Haiti, Somoza's Nicaragua and Batista's Cuba".
E.G. has the second highest per capita income in the world at $50,000 per citizen. However, most of E.G.'s citizens actually live on less than $1.00 a day. This is because the family of E.G.'s president owns virtually everything in the country. There are no ATM's, virtually no banks and no credit cards or foreign currency are accepted. Not one single book store or newspaper stand as no independent newspapers are allowed. Only 8,000 people are approved for Internet access (all are monitored), and the state run radio broadcasts odes to President Obiang calling him the country's "God". Songs are regularly broadcast from the radio station saying that the "citizens will be crushed if they speak out against the state".
The E.G. government takes in $4 Billion dollars a year in oil revenues. Most of this oil went to US companies such as Exxon-Mobil, Marathon and Amerada Hess until the Chinese arrived.
One year ago, China provided E.G. with a $2 Billion dollar credit line. In addition, an army of blue uniformed Chinese laborers are now building what is known as Malabo II, a futuristic new capital city that is rising out of the jungle and stretching for miles. As with other African countries, China sends their convicts to work as construction laborers. These Chinese workers have caused riots in E.G. and some 400 "workers" have been "returned" by chartered jet to China, only to be replaced by more "workers".
The E.G. president's 36 year old son, Gabriel Nguema Lima, educated in the US, is the expected future leader of E.G. When asked to compare the West with China, he responded; "If you were in our shoes - a developing country, with not a lot of funds - and the Chinese came and they will do for $3 what it costs $10 from others, what would "you" do?" He also stated that; "The Chinese listen better, and they understand that sometimes you need to make sacrifices for future gain. They'll do a hydroelectric plant at half price, and in return, they get future projects. With US companies, we feel more squeezed. Americans just take the oil and do nothing else. Of course, the US is losing ground to the Chinese. The World Bank and the IMF also come, and E.G.'s president just says go away, (with the Chinese) we don't need you."
The United States has recently begun to ignored all the corruption and the human rights abuse in E.G. and Bush's state department recently installed its first resident ambassador in E.G. in 12 years. It also gave the okay to open an E.G. consulate, state-side, in Houston, Texas.
However, even with these consolations, China has outmaneuvered the US once again. During a visit to E.G. by China's most senior minister, he described China as E.G.'s "best friend".
Author's note:
In Part III, I will attempt to explain how all of this investment by China into Africa is expected to effect the US and Europe, in the least case, our standards of living or, possible worst-case doomsday scenarios, depending on the future moves and actions of all the involved parties.
For the last 30 years, Gary has been a Marketing and Sales Executive for high-tech companies located in Silicon Valley. In the recent past, he has been a writer on local, national and world politics and events. His articles and comments are published in both local news publications and have also been seen and heard on national TV and radio news and news-talk programs.
He is now regularly published as a Feature Writer in a number of On-Line news magazines. Those publications include the American Chronicle, Los Angeles Chronicle, California Chronicle and the World Sentinel as well as occasionally in Google News. Gary hopes you are encouraged by his articles to respond on-line with your own comments, ideas and perceptions.
He also offers his centrist views on his Internet BLOG: "Uncommon, Commonsense" at: http://commonsense-gater.blogspot.com/ , which is also listed as one of the best BLOG's on the web here.