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Sino-Congolese relations: A win-win policy?
 

Sino-Congolese relations: A win-win policy?

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China’s investment in Africa has increased since its entrance in the World Trade Organization in 2001. As a result, China’s government undertook huge commercial agreements with many African ...

China’s investment in Africa has increased since its entrance in the World Trade Organization in 2001. As a result, China’s government undertook huge commercial agreements with many African countries. These trades allowed African governments access to the enormous Chinese market and provide their territories with gigantic infrastructures. Particularly, the Democratic Republic of Congo, who has some of the richest resources in Sub-Saharan Africa, represents a long-lasting geopolitical ally in the region. Above all, China’s powerful enterprises and other Sino-stakeholders have been paving the way for Congo’s growth and trade opportunities. This reports shows that China embodies an important opportunity for Congo’s future.

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    Sino-Congolese relations: A win-win policy? Sino-Congolese relations: A win-win policy? Document Transcript

    • Sino-Congolese relations: Jorge Núñez de Arenas -December 2012 A win-win policy? China’s investment in Africa has increased Investments since its entrance in the World Trade Organization in 2001. As a result, China’s government undertook huge commercial Trade agreements with many African countries.Africa These trades allowed African governments access to the enormousChinese market and provide their territories withgigantic infrastructures. Particularly, the Democratic Republic of Congo, who has some of the richest resources in Sub-Saharan Africa, represents a long-lasting geopolitical ally in Congo the region. Above all, China’s powerful China enterprises and other Sino-stakeholders have been paving the way for Congo’s growth and trade opportunities. This reports shows that China embodies an important opportunity for Congo’s future. This article has been prepared for: www.linkedin.com/in/jorgenunezarenas E- Magazinewww.scoop.it/t/chinese-trends @GEEorgx -0-
    • Jorge Núñez de Arenas -December 2012 Sino-Congolese relations: a win-win policy?This article serves as a good example of Chinese investments in the emerging countries.Nowadays, Chinese role might transform the way countries face 21st challenges. DemocraticRepublic of Congo (DRC) short case study could help organizations to understand what arethe pros and cons of Chinese presence not only in Africa, but in Asia, (ex-soviet countries)and in Latin America. However, future in-depth studies could be useful tomake sense of theChinese interactions and exchanges among nations. In addition, this research is aimed atproviding better understanding of the recent problems, focusing on DRC and therepercussions of Chinese landing on their territory.Introduction:Last Forum on China-Africa Cooperation celebrated in Beijing (July 2012) ended with ahistoric great deal. China decided to fund African countries for the three forthcoming years up$20.000 i through infrastructures and investment. At first sight, it seems like might resultprobably just immense figures but, what are the real implications?Since China’s WTO entry in 2001, a new opportunity to make profit propelled China to takeadvantage of African diverse natural resources and install their enterprises on African ground.As far as DRC is concerned, first talks with China began in 1960 as Congolese independencewas reached. In the current context, RDC epitomizes the “exchange model” based onexchanging aid and investments for natural reserves monopoly or partly the control of theextraction of raw materialsExtraordinary investment: the contract of the century:China has not ignored DRC. The enquiry is, might they? Should not The People’s Republic ofChina (PRC) keep an eye on this Middle African country? The answer is not simple, but wecould get close to the problem by mentioning two regional characteristics: firstly, thegeopolitical situation of DRC, which is placed on the core of Africa; secondly, the resourcepotential wealth for China’s industrial factories and technological centers. Particularly, Congois the 5th leading producer of tungsten and 6th of tin and holds 5% of the world’s copper and50% of cobalt. What is more, DRC keeps an estimated 80% of all known coltan ii that, whenrefined as tantalum, is a crucial component of computers, personal electronics, and theworld’s 5.6 billion mobile phones. Under these circumstances, it is clear that not only Chinaneeds DRC but PRC really requires DRC potential to deal with present demands. In fact, theytried to get the most of DRC supplies. In 2008, a multimillion investment agreement wassigned by Sino-Congolese authorities. The amount reached a massive $9billion dollarsfinanced and loaned by the Export-Import Bank (Exim Bank) in exchange for roads, railsystems, transportation routes and the rehabilitation of the mining sectoriii. What will Chinareceive in return? The concession to exploit RDC’s copper and cobalt field for almost three -1-
    • Jorge Núñez de Arenas -December 2012decades, (Cardenal & Araujo; 2011:116)iv and the certainty to secure their future high-techdevelopment.Does it mean China is betting for emerging economies? Is there anything fishy going on? Wemust await see the outcome to prove it in the long-term because Sicomines, the concessionaryenterprise running the project, put on the table $6000 billion dollars, however, the benefits ofcopper and cobalt concession would peak up to $40.000-$120.000 billion dollarsv. On thatcontext, the rational election choice approach may be useful. Rational action in terms ofbenefits maximization may explain China’s interests. China would select the best possiblemeans to achieve their goals vi through money in return to natural resources. CollectiveChinese policy-makers count on unpredictable events, but think rationally and foresee theirregular flows of money indeed.Trade figures: debt relief and local industries:What about China’s trade? On June 30th 2010 the Paris Club comprised of nineteen permanentcountries took a debt relief of 90% of the RDC government debt, allowing RDC topresumably get rid of the vicious circle of poor countries. Wouldn’t it be better to say that thereal RDC independence began from 2010 onwards? In the graph below it illustrates howpowerful China is, not only in spending but tactically playing as the best commercial partnerin RDC, ahead of former Belgian colony. Trade Nosis. 2012Those Sino-Congolese economic relationships constitute what it is called in PoliticalEconomy path dependence, that is,DRC accepts thatthe costs of these Chinese relationsaccumulate over timevii and mark future possibilities. Nevertheless, is China the key to DRCdevelopment? Congolese government representatives largely argue that China is engaging theDRC with a new approach built on principles of mutual understanding exemplified on theprogram Five Building Sites viii . However,what is the perception held by Congolese civilsociety? The prevailing Congolese concern is that China pays their workers considerably lessthan Western firms ix . Moreover, it is common that China’s consortiums bring its ownworkforce instead of calling for native inhabitants, which has an impact on local industries.Conclusion: -2-
    • Jorge Núñez de Arenas -December 2012On the one hand, China’s investments and trade have transformed DRC scenario rapidly. Hitby a civil war, (1998-2003) foreign aid and investment have been crucial for RDC economicexpansion, while Congolese annual percentage growth rate has progressively increased; 6.9%in 2011.x For all these reasons, China’s presence on the territory has been bringing about lotsof opportunities.On the other hand, China’s commercial relationships with RDC have negative impacts ontheir territory. The compensations for China’s presence in DRC are noteworthy. Local powercan be in danger and DRC could face a loss of political and economic sovereignty.Our hypothesis has been partially validated. China embodies a chance for growth, although itimposes Chinese characteristics in its businesses. As we have examined, DRC partnershipwith China has doubled-edged consequences; both positive and negative.New thinking in China’s foreign policy can be summed up by the creative involvementconcept. It advocates more imaginative methods of mediation and ingenious thinking in theface of modern dilemmas and challengesxi. Can it be accomplished? The thing is that the long-term outlook for China’s role in the DRC and African countries is uncertain. Will the Sino-Congolese agreements be the cornerstone of RDC future? Will it totally be a win-wingeopolitical policy? More research is needed to understand the ongoing trends.References:i ABC. M.Díez. Pablo. China concede 16.000 millones de euros a África a cambio de recursosnaturales. Online: http://goo.gl/Hby3g (Visited: November 26th, 2012).ii Foreign Policy Association. Deal of the century: Will Chinese investment save Congo? July 18th2012 Online Resource: http://goo.gl/lHEDL /(Visited: November 26th, 2012).iii This contract had to be reduced by International Monetary Fund and World Bank. Wenran, Jiang.The Jamestown Foundation. Chinese Inroads in DR Congo: A Chinese "Marshall Plan" or Business?Online: http://goo.gl/Zbxlv (Visited: November 26th, 2012).iv Cardenal, Juan Pablo; Araújo, Heriberto. La silenciosa conquista China. Crítica. 2011, page 116.v Ibídem. La silenciosa conquista China. 119.vi Marsh, David; Stoker, Gerry. Theory and Methods in Political Science. Palgrave Macmillan.2002.Page 51.vii C. Boas Taylor. The composite-standard model of path dependence. Journal of Theoretical Politics.19, page 37. Online: http://goo.gl/pK8Up (Visited: November 26th, 2012).viii Joseph Kabila Webpage. Online: http://goo.gl/BPtrB (Visited: November 26th, 2012).The fivebuilding sites: infrastructures, job creation, water and electricity supply, healthcare and education isthe paradigmatic program, example of China’s policy in DRC.ix Jansson, Johana. Patterns of Chinese Investment, Aid and Trade in Central Africa (Cameroon, theDRC and Gabon) Centre for Chinese Studies, University of Stellenbosch. 2009x The World Bank. Economic Policy & External Debt Indicators. 2011. Online: http://goo.gl/DBpmx(Visited: November 26th, 2012).xi Leonard, Mark. China 3.0. European Council of Foreign Relations. November 2012. Online:http://goo.gl/JuUFe (Visited: November 26th, 2012). -3-