In late March this year, the Democratic Republic of Congo (DRC) signed a deal with China Development Bank, described by the Congolese prime minister's office as a “framework agreement for a win-win co-operation between China and the DRC”. Neither party has disclosed the amount agreed in that deal. A few months earlier, Chinese vice-premier Hui Liangyu had met with Joseph Kabila – the president of the central African state, up for re-election at the end of this year – in the capital Kinshasa, and announced that the two sides had “built political mutual trust and expanded cooperation in all sectors.”
As far as can be seen, the details of this expanding cooperation between the two countries are impressive. In September 2007, two Chinese state companies – China Railway Group and Sinohydro, the world's biggest hydroelectric firm – signed another deal, a US$9 billion (58 billion yuan) agreement with Gécamines, the state copper company of the DRC. This deal, which was renegotiated down to US$6 billion (39 billion yuan) in 2009, promises the Chinese companies up to 10 million tonnes of copper and hundreds of thousands of tonnes of cobalt in exchange for building a range of infrastructure, including new mines, roads, railways, hydroelectric dams, housing, hospitals and two universities.
But did that deal really constitute a “win-win” agreement? Certainly, Congo is in dire need of infrastructure – western donors have not been forthcoming, and it's very rich in natural resources. But according to a recent report by UK-based NGO Global Witness, China and Congo: Friends in Need, the lack of information around the agreement makes the benefits for Congo too difficult to judge. The negotiations took place behind closed doors, without any open bidding among Chinese companies, and important details about the financial aspects of the agreement are not public: how will the minerals be priced? Exactly what infrastructure will be built? Some details have emerged about roads and railway projects, but it's unclear what else is planned. One version of the agreement, from April 2008, promises the Chinese parties an internal rate of return – a measure of profitability – of 19%, a high rate that arguably removes much of the risk for Chinese investors, but doesn’t say how this will be calculated.
A major concern here is what Global Witness calls a “clear potential conflict of interest for the Chinese state-owned companies”. Since the Chinese state will probably be both buyer and principal seller of the minerals, the report suggests that “Congo would benefit from the maximum price for the minerals, [but] it would be in the Chinese state’s interest to purchase the minerals at the lowest possible price.”
The renegotiated deal from October 2009 is now available online. There are reasonable doubts about the capacity of the Congolese state to conduct oversight and implement labour and environmental regulations in these projects. The agreements released so far do not mention environmental or social issues and there is little indication that civil-society oversight will be permitted.
Expanding the discussion
The public debates around such issues – and this isn’t the first time the China-Congo deal has been criticised – can quickly become heated. All the more so, since many western countries have an appalling and bloody history of colonialism in what is now the DRC – and indeed across much of Africa. China's former ambassador to the DRC told the Global Times late last year that the few Chinese projects that have had negative impacts on local people “are merely isolated ones. But they are exaggerated by western media and used to discredit the Chinese government.”
Others argue that much of China’s outbound investment has been overwhelmingly positive. For example, Tsinghua professor Xiong Lei wrote on chinadialogue in 2007 that sustainability guidelines for Chinese companies operating in overseas forestry projects had broken new ground in terms of social responsibility. Those guidelines, she said, not only “push Chinese enterprises to do more than just abide by the law in their host countries”, but also support “local efforts to manage and preserve the environment and develop communities even if these are not provided for by local legislation.” One can also point to the decision of China Export-Import Bank (Exim Bank) to freeze financing on an iron ore mine in Gabon, west Africa, after it was shown to violate Gabonese laws and impact negatively on the environment and local communities.
Unfortunately, such discussions are still quite rare in the Chinese public sphere. While the emergence of Africa-focused Chinese publications may be a step forward, such outlets so far contain a lamentable lack of debate. But Chinese academics and civil-society activists are starting to engage seriously with their African counterparts. Xiao Yuhua, lecturer at the Institute of African Studies at Zhejiang Normal University, recommends for example that “people-to-people exchanges and civil society cooperation” be added within the economics and trade-focused framework of the Forum on China-Africa Cooperation. The Global Environment Institute, a Beijing-based NGO, last year launched the first book in Chinese to address these topics seriously, Environmental Policies on China’s Investment Overseas, which includes proposals for overseas investment regulations.
It's clearly time to open the discussion further and deepen the debate. So, tomorrow Yi Yimin argues on chinadialogue in a two-part article that Chinese investments in energy, extractive industries and agriculture are having complex and often negative social and environmental effects in Africa – some of which mirror existing problems with development in China. Later in the week, Andre Vltchek gives an on-the-ground account of a contested energy project on Lake Kivu, which borders the DRC and Rwanda. Finally, Johanna Jansson and Jiang Wenran will bring the focus back to the DRC on Monday and assess the Global Witness report discussed here, considering its strengths and weaknesses – and suggesting where future research might improve our discussion about China’s growing and complex role in Africa’s development.
Sam Geall is deputy editor of chinadialogue.
Homepage image from documentary "When China Met Africa"