More Chinese involvement in Zimbabwe agriculture

 Posted by at 5:40 pm  In the News, The Beijing Consensus  No Responses »
Dec 102010
 

Just when I think I have a grip on what Chinese people are doing in Zimbabwe something like this throws me for a loop:

Sino-Zim Development Company has registered 180 000 cotton farmers in Zimbabwe for contract growing and acquired 40 000 tonnes of fertilisers and 6 000 tonnes of seed ahead of the 2010/11 farming season.

The firm is targeting to contract over 300 000 cotton farmers* this farming season.

Sino-Zim operations manager Mr Tanga Matema said the organisation had mobilised enough inputs to cover 130 000 hectares of land so far.

“Our initial target was 200 000 hectares countrywide. Due to a few problems, we have managed 130 000 hectarage at the moment, but we still hope to reach our target. We have registered farmers from such districts as Chiredzi, Gokwe, Mt Darwin, Rushinga and Mhangura,” he said.

Mr Enderani said farmers would clear their debts at the end of the season after marketing their crops, but stressed that they would not victimise farmers for failing to meet their end of the bargain in the event of a bad season.

“In fact, we are flexible and will give a grace period in which we will try to work out a method of payment that will enable the farmer to survive and complete payments later.

“What we guarantee at the moment is that we will be offering good prices just like we did this past season so farmers contracted to us can bring their crop to us and we debit our dues leaving them with enough to go back and finance their operations. We do not export the cotton we buy, but intend to process it locally so we have no shipment costs, hence our capacity to pay good prices,” he said.

As I’ve mentioned elsewhere on this site, China is heavily, and somewhat bafflingly, involved in Zimbabwe’s agriculture industry. Chinese companies have received contracts for irrigation systems as early as 2003. China has also supplied a large amount of food aid, and has also been sending piles of machinery.

Though the system here seems to be somewhat deliberately opaque, as far as I can see they are transforming the small scale farming operations which Zimbabwean agriculture has turned into, into a sort of contract farming. Which would be a clever work around to the farm ownership laws – farmers could at least make use of economies of scale in financing and purchasing even if they can’t in the actual process of farming. The trick here though is that Zimbabwe has also recently passed laws that require 51% black ownership of all corporations based in Zimbabwe.

I talked to someone recently from Huadian Power who said that this new law kept them from investing in Zimbabwe despite originally being interested. This was just one man at a cocktail party, so who knows if it is representative of the situation with most Chinese investment. But in this case they either found a work around, or they have something else in mind other than profits. Like low-cost inputs for Chinese textile mills.

*There was an interesting study published by the BBC that showed that over the past decade Zimbabwean agriculture has transitioned away from tobacco and towards cotton. (The graph to the left shows the basic trend.)

While I’m sure there are a number of reasons that this took place, I don’t think its too far fetched to point out that during that time China became Zimbabwe’s number 2 trading partner (after South Africa), and China has the largest textile industry in the world and as well as being the world’s largest producer of tobacco. Which is fine. That’s just how trade works, and with cotton at a 140-year high it’s pretty good that Zimbabwe started growing it. But it does make the textile input idea a bit more appealing.

Correction: The story in the Guardian which I linked to above was later shown to be incorrect. The contract which was awarded to China International Water and Electric Corporation, was in fact for an irrigation system, and not farming. The project never got off the ground. (source: The Dragon’s Gift by Deborah Brautigam)

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The Zambian Shootings in the Chinese Media

 Posted by at 1:27 pm  In the News, The Beijing Consensus, Translations  1 Response »
Dec 062010
 

The two Chinese workers arrested for attempted murder

There was an interesting story in New Century Weekly (新世纪周刊) a few weeks back that is worth a look (available here in Chinese). It is a lengthy investigative piece by journalists Chen Zhu and Zhang Boling on the shooting of local workers at a Chinese-owned coal mine in southern Zambia, following protests over working conditions and lack of pay. Eleven were injured after two Chinese supervisors, apparently fearing for their lives, opened fire with shotguns. The supervisors (pictured) were later arrested on charges of attempted murder but have since been released on bail. The incident has led to protests outside the Chinese Embassy in the Zambian capital of Lusaka and has again put Zambia’s relations with China under the spotlight. Tensions will likely be further exacerbated if the trial is perceived to be a whitewash, as some have predicted. The case has also received some coverage in the international media.

The New Century Weekly article traces the origins of the shooting to long-standing problems in the management of the mine. At the centre of the story is the mine owner, Xu Jianxue, a Jiangxi native who first went to Zambia in the early 1990s as a translator for a Chinese company. He ended up staying after the project ended, establishing a construction company that went on to win a series of big infrastructure contracts from the Zambian government. Business was so successful that Xu invited his four brothers to join him in 2000. When Zambia began selling mineral rights in 2003, Xu secured a number of concessions near the southern town of Sinazongwe. Despite the difficulties investors have traditionally had in the area, he has apparently been able to turn over a healthy profit for his venture, Collum Coal Mining Industries.

Xu is described vividly in the article as a believer in “Mao Zedong thought” and as sporting a Mao-style haircut. He is cast as a throwback to an earlier China, reliant on guanxi and bribes to secure business and ignorant of modern management practices. Xu and his brothers are said to live very comfortably in Lusaka, leaving the day-to-day running of the mines in the hands of friends and relatives who have followed them to Zambia from Jiangxi. These men, the authors claim, are mostly uneducated labourers with no language skills, who find themselves suddenly thrust into senior positions on their arrival. They live in a gated compound and have little understanding of local culture. There are 70 Chinese managers working at the mine, who are responsible for around 600 local workers.

The authors claim that the root of the problem is that the workers are employed on temporary contracts, which means they do not receive the food, housing and medical benefits stipulated by Zambian labour laws.  Workers are also, according to one Chinese source quoted in the article, subjected to occasional physical beatings. These conditions have generated a series of clashes between labour and management, of which the shooting is only the most recent and severe. There have been repeated strikes and the local government threatened to close the mine in 2006 until eventually being dissuaded, probably through a combination of bribery and pressure from the central government.

The article is interesting not only for the information it unearths, but for the tone it deploys. Criticisms of Chinese companies operating in Africa are commonplace in the western media but not in China, at least not in a publication as prominent as New Century Weekly. No doubt part of the reason lies in the fact that Collum Coal Mining is not formally a Chinese entity; it is registered in Zambia and has no parent company in China. This perhaps permits a greater degree of licentiousness than might normally be the case. Indeed, Xu’s company is contrasted in the article with the supposedly more responsible behaviour of Chinese state-owned and private enterprises, both of which are subject to tighter supervision and regulation by the Ministry of Commerce. Disparaging quotes from staff at China’s Embassy in Zambia make clear they are frustrated by the free-wheeling behaviour of Chinese entrepreneurs like Xu, whose pursuit of profit risks tarnishing China’s image in Africa.

The final point to make is that the article again highlights the dangers of thinking in terms of a monolithic “China Inc.” in Africa. There are a wide range of Chinese actors operating on the continent, from individual entrepreneurs to huge state-owned oil companies, each of whose interests may run contrary to those of others. Struggling to manage these different forces is the Chinese government, whose ability to offer strategic direction is itself hampered by the existence of competing bureaucratic objectives between departments. The latest incident in Zambia shows that the story of “China-in-Africa” is as much about the freeing-up of market forces in China and the subsequent loss of central government control as anything else.

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China in Africa podcast: The Sino-U.S. Soft Power Showdown

 Posted by at 1:59 pm  China vs. the West, The Beijing Consensus  1 Response »
Nov 192010
 

China in Africa Podcast: The Sino-U.S. Soft Power Showdown by ChinaTalkingPoints

Travel to almost any African capital and there is a high likelihood that even before you make it downtown from the airport you will pass a Chinese construction project. From the new terminal at Jomo Kenyatta Airport in Nairobi to the main road connecting Kinshasa’s N’Djili Airport to the city center, the Chinese construction boom is immediately evident.

Simply put, the magnitude of China’s construction drive in Africa is so vast that only the rapid industrialization of the Chinese economy itself and the U.S.-funded Marshall Plan that rebuilt Europe after World War II can compare in scale.

All this construction is a central component of Beijing’s foreign policy agenda where it builds roads, dams, hospitals and other badly needed infrastructure in developing countries in exchange for vital natural resources. On the surface, this arrangement has all the hallmarks of pure mercantilism, but to leave it at that overlooks critical subtleties that are now beginning to sway the balance of international influence across the continent. Continue reading »

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Agricultural development and the spectre of neo-colonialism

 Posted by at 5:45 pm  The Beijing Consensus  No Responses »
Nov 082010
 

A few years back I did some research work for a consultancy looking to advise a Middle Eastern state how to invest in Sudanese agriculture, without running into the kind of political backlash that ruined the South Korean company Daewoo’s investment in Madagascan agriculture (details here and here). The deal ended up dying of its own accord, but these types of “food security” deals have since become a major facet of Asian and Middle Eastern investment in Africa, and have become accepted to the extent that African countries are making similar investments in other African countries:

The Egyptian government is hoping to cultivate wheat and other cereals on fertile land in African countries to feed its growing population of over 80 million.

In early September it signed a deal with the Sudanese government to give Egyptian companies access to Sudanese farmland.

… Egyptian officials say African and Nile basin countries, such as Uganda, Rwanda, Kenya, and Ethiopia, are high on a government list as potential places in which to make agricultural investments. They add that, apart from strengthening links with these African countries, the move would help Egypt avoid depending on its limited water resources.

So have we finally put to bed the spectre of neo-colonialism over these deals? Well perhaps not. The article goes on to describe how these other countries might become a bit testy about leasing their limited water resources to already thirsty Egypt. And let’s not forget that the main reason why Egypt needs to look South for more farmland is colossal mismanagement of their land resources under a pretty much planned economy.

We really should put these concerns to bed though, because in many cases selling land for foreign agricultural development increases the quantity of food sold on the domestic market. Part of this obviously depends on profit and product sharing agreements, but these agreements allow for a quick transition from subsistance farming to industrial farming, which can increase yields substantially, as well as providing other benefits.

Of course food output isn’t the only problem. There’s also the problem of relocations, which, though we’re quite used to them in China, is hardly something you’d wish on people elsewhere. The issue is made more complicated by poorly demarcated land rights in Africa, which can significantly add to the pool of people looking for a kickback in relocation schemes. But this is a governance issue, not an issue with foreign investment in farming. And the move of people out of subsistance agriculture is essentially the definition of poverty alleviation.

With peak oil approaching agricultural substitutes will get more valuable, and Africa’s extensive amount of arable land will be increasingly seen as a sustainable revenue source. Industrialization has to happen sooner or later, and this sort of foreign investment speeds the process up. I don’t expect it to be uncontroversial. But lets just say its better that Africa have this sort of problem, than this sort.

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Economist Dambisa Moyo: Aid Fuels Disfunction in Africa

 Posted by at 7:02 pm  China vs. the West, The Beijing Consensus  7 Responses »
Nov 052010
 
Dambisa Moyo

Dambisa Moyo, speaking at the FCCC Event in Beijing, November 1, 2010.

Dambisa Moyo is an international economist from Zambia who specializes in macroeconomics and global affairs.  A former consultant for the World Bank, Moyo worked for Goldman Sachs in London for nearly a decade before authoring the controversial — but Oprah-endorsed — bestseller, Dead Aid: Why Aid is Not Working and How there is a Better Way for Africa. Moyo holds an archipelago of degrees from world-renowned institutions: a Ph.D. in Economics from Oxford, an M.A. from Harvard’s Kennedy School of Government, an MBA from American University in D.C., and a B.S. in Chemistry from her native Zambia.

Dead Aid incriminates international aid as having made the largest contribution to the disfunction of the continent’s economy by increasing government corruption. Her solution? Unequivocal. Completely phase out reliance on aid — a goal we all have in common, she states — look to the international bond markets to finance public sector investments, to foreign direct investment to finance private sector growth, and to micro-financing for local development.

She recently addressed a group of Beijing-based journalists. Below are a few highlights.

Moyo’s most emphatic point was about the exacerbated effect aid has had on the numerous African kleptocracies:

“Aid has allowed governments to abdicate their responsibilities of providing public goods for their people. It severs a fundamental link between a ruling government and its people. If the government does not rely on it’s people, then the people also do not rely on their government, and instead they rely on the international community who, for their own motivations, continues to give aid to Africa even though there has been a lack of delivery in the reduction of poverty and any amount of economic growth over the last few decades. The whole continent is hooked on a drug that is unsustainable.”

“There is a desperate need for African governments to be more involved — this needs to take a significant priority — and they moreover need to be the leaders in delivering economic growth. It’s not good enough for people [foreigners] to be concerned with Africa, if the leaders themselves are not concerned with Africa. There is no country on earth that has achieved long term growth and reduced poverty by relying on aid to the extent that African countries rely on aid today. We’re not children; we need to be treated as the adults that we are.”

On China’s presence in Africa, “The Chinese have done more for Africa’s infrastructure and economic growth in the last five years than America has done in the last 50. One of the greatest things they have to offer, at least on the surface, is that they are negotiating business on equal footing; the positive effect this has on governments that are often treated with condescension cannot be underestimated.”

Moyo at one point during the talk referenced the infamous 2007 Pew Global Attitudes Survey that asked Africans in ten countries to compare the influences of China and the U.S. in their own countries. In nine of the ten countries, by margins that ranged from 60-91%, African respondents said Chinese influence was good. “It suggests to me that people feel this new model seems to be working, where Africans are treated as equal partners.”

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A catalogue of China’s labour abuses in Africa

 Posted by at 6:16 pm  China vs. the West, In the News, The Beijing Consensus  1 Response »
Nov 022010
 

China – a Blessing Or Africa’s Curse?, an article published by Uganda’s Sunday Monitor, catalogues a range of labour and other abuses for which Chinese companies, both state and privately owned, have been responsible. Examples range from the recent incident at a Chinese owned mine in Zambia, during which 13 miners were injured, to the China Henan Group (Chico) requiring workers in Mozambique to wear a badge with the word escravo (slave) written on it, in what was apparently a case if mistranslation. “Unwittingly,” the article continues, “those badges have turned prophetic of the nature of labour relations between Chinese enterprises in Africa and their employees. From Mali to Madagascar, Kenya to Zambia, workers’ restiveness abounds.”

Reporting like this is regularly written off as the whining of jealous Westerners, unhappy that China is now so influential in places once the sole preserve of former colonists. In a recent interview, Li Anshan, a professor at Peking University’s School of International Studies and head of its Centre for African Studies, said that Western criticism of China’s involvement in Africa is largely rooted in fear, fear which he said is “a consequence of deep-rooted colonialism; they [Westerners, referring in this case specifically to France] feel something that belongs to them is being taken by China.” Not so in this case. China – a Blessing Or Africa’s Curse? was written by Janet Otieno, Jonstone Ole Turana, Saudah Mayanja and Caesar Abangiraha, all of whom are correspondents for the Sunday Monitor.

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Aid, trade and some indignation

 Posted by at 11:01 am  China vs. the West, The Beijing Consensus  No Responses »
Oct 072010
 

With the end of the UN summit there has been a lot of talk about the Millennium Development Goals, and the need to provide more aid to African states.

And then there has been a lot of talk about why this attitude is supremely misplaced.

But current experience and history both speak loudly that the only real engine of growth out of poverty is private business, and there is no evidence that aid fuels such growth.

Of the eight goals, only the eighth faintly recognises private investment, through its call for a “non-discriminatory trading system”. This anodyne language refers to the scandal of rich countries perpetuating barriers that favour a tiny number of their businesses at the expense of impoverished millions elsewhere. Yet the trade-related MDG received virtually no attention from the wider campaign, has seen no action, and even its failure has received virtually no attention in the current MDG summit hoopla. Continue reading »

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Who’s teaching whom?

 Posted by at 11:18 am  China vs. India, China vs. the West, The Beijing Consensus  No Responses »
Sep 242010
 

A conference was held in Beijing earlier this week between representatives from China, African states and members of the OECD – the “rich man’s club” – to promote “mutual learning” on development and aid policy. Its focus was on the role of infrastructure in stimulating economic growth, looking particularly at the relevance for Africa of China’s experience in building effective transport, telecommunications, energy and water systems. The conference forms part of the effort made by the OECD’s Development Assistance Committee, the body through which the “established” donors coordinate their aid, to engage with “emerging” donors – primarily China – whose approach to overseas development is seen as posing a possible challenge to existing norms.

Choosing infrastructure as the subject of discussion was significant because it has been an area notoriously neglected in international development. From the 1970s, Western donors and the international financial institutions cut funding for “hard” infrastructure projects in favor of policies aimed at building the “soft” infrastructure of good governance, environmental sustainability and civil society. Those “hard” infrastructure projects that were commissioned were often farmed out to private corporations, with typically disastrous results. This reflected the ideological biases of this era, when the ascendance of market economics and “structural adjustment” packages led to deep antagonism to anything that smacked of statism.

As was pointed out at the conference, although China has privatized swaths of its economy over the past 30 years, it has also not exactly conformed to “neo-liberal” prescriptions because the state has retained a key role for itself within the national economy. It has allowed the Chinese government to pursue a program of intense infrastructure development, often against the advice of the World Bank. Initially facilitated by oil-backed loans and technical assistance from Japan, it has since been funded through China’s own considerable reserves. The chief economist of China’s ExIm Bank said at the conference that infrastructure development had been vital to enhancing agricultural production in China as well as giving it “comparative advantage” as a site for FDI. China’s dense network of modern roads, railways and ports are widely seen as central components in its “model” of economic growth, often contrasted, for example, with India. Continue reading »

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A quote from Why Africa is Poor

 Posted by at 12:55 am  The Beijing Consensus  No Responses »
Sep 212010
 

“Africa has the biggest voting bloc in the UN, World Trade Organisation (WTO) and other such organisations. But what does it ‘trade’ its vote for? Help for Cuba and the Palestinians, blocking UN managerial reform, and manoeuvring around tougher action on Burma and Iran. None of this does one bit for Africa or for Africans outside of the New York diplomats, who revel in such posturing, or those leaders overwrought by their own anti-colonial complexes. Africa is often the subject of these meetings, but its leaders generally miss the point.

“As the collapse of the global trade talks in Geneva in 2008 showed, the WTO was perhaps the worst example. Led by South Africa, 40 African votes were locked together with China, India and Brazil, with the aim of resisting European and American demands for the South American and South Asian giants to open their markets.

“Fine for them, but those same countries had as high – or higher – tariffs on African goods as the EU and US did. If African votes in support of their positions had been exchanged for commitment from those countries to provide duty–and quota–free status to Africa (a small price for them to pay given the limited share Africa would gain in their markets), this position would have made sense. Instead, Africa sold its votes for some form of ‘South-South’ solidarity, without any return to serve its own interests. India, China and Brazil must laugh all the way to Geneva for every WTO session…Until the Africans are prepared to use their voting power like every other multilateral bloc – to advance the interests of their own people – the posturing will continue and conferences, not commitments, will rule the day.”

From Stanley Uys’s review of Why Africa is Poor and what Africans can do about it, by Greg Mills (Penguin South Africa, 2010).

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A quick glimpse at the African economic miracle

 Posted by at 7:40 pm  The Beijing Consensus  7 Responses »
Sep 172010
 

A rhetorical question was posed to me recently. “What area of the world has about 1 billion people, horrible infrastructure, increasingly fast growth and a burgeoning entrepreneurial sector.” The answer, the speaker noted, could be either India or Africa.

I wanted to use my first post on this blog to talk about why Africa might seriously become the third in line after China and India for a serious economic miracle, some of the problems that stand in its way, and how China fits into this story. Luckily all those questions are answered by these two graphs:

You can make the argument that Africa is ready for a serious economic miracle because in a large part its already happening. Poverty is steadily decreasing, and African growth is routinely about four percentage points below Chinese growth (and Chinese growth is really fast). Obviously this is more true for some areas of Africa than others (not so true for Zimbabwe for instance), but the overall picture is one of a continent that has gotten some traction based on increasing trade ties with China. Continue reading »

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