Peter Bosshard
29 May 2008
analysis
China has great strategic interests in Africa, and Africa will benefit from a continued strengthening of its cooperation with China, says Peter Bosshard.
Such South-South cooperation will promote growth and much-needed investment. However, economic growth should not come at the cost of environmental destruction. China has a self-interest in strengthening the rules on the social and environmental impacts of its overseas projects. African governments can learn from China's experience by being selective in the types of investments which they invite, and by making sure that investments do not undermine the long-term environmental foundations of growth and prosperity.
China and Africa have rapidly expanded their political and economic relations since the turn of the century. China - 'the world's factory' - is trying to secure access to resources in Africa which it lacks at home. Africa also offers a welcome market for Chinese companies facing stiff competition at home. The Chinese state supports this investment in African resources and creation of jobs to stave off the country's permanent unemployment crisis.
Africa has for a long time been a primary source of natural resources for the European and American markets. China's strategy is to access resources which have so far not been exploited because they were considered by Western companies to be too small, remote or politically risky. This strategy requires massive investment in mines, oil exploration and auxiliary infrastructure such as pipelines, roads, railways, power plants and transmission lines.
China's economic expansion in Africa is carried forward by thousands of individual entrepreneurs, a small number of large, state-owned enterprises, and a host of companies owned by provincial and municipal authorities. While small private enterprises dominate investment in commerce and manufacturing, state-owned enterprises typically invest in extractive and infrastructure projects. In integrated investment packages, government institutions and state-owned companies work closely together. The Chinese government's active involvement in resource extraction is not fundamentally different from the financial, political and military support granted to oil and mining operations by the US, French or South African governments.
The Chinese government does not directly interfere in the investment decisions of the enterprises it owns, but offers support and incentives in the form of finance and diplomatic support. China Exim Bank is a key source of finance for the Africa projects of state-owned enterprises. The Chinese export credit agency was created in 1994 to promote Chinese exports. With new loan approvals of $36 billion, China Exim Bank outgrew the World Bank and all other export credit agencies in 2007. In May 2007, China Exim Bank pledged to commit approximately $20 billion for loans to Africa over the next three years [1]. In comparison, the World Bank approved projects for $4.8 billion for Africa in 2006.
THE ENVIRONMENTAL IMPACTS OF CHINA'S EXPANSION IN AFRICA
Rapidly growing economic ties with China have contributed to Africa's strong economic growth in recent years [2]. As a developing country, China can offer experiences and goods that are better suited to the needs of African societies than the advice and products from industrialised countries. For example, China is a world leader in renewable energy technologies, which are essential for rural electrification in Africa. Chinese investment and consumer goods are usually more affordable than Western products. Finally, Chinese loans and aid flows allow African governments to eschew the often dogmatic economic policy conditions of international financial institutions. However, the primary focus of China's Africa strategy is not on exporting appropriate technologies but on accessing raw materials. It mirrors what has been the dominant approach of Western governments and corporations to Africa's development for many decades.
Civil society and academic observers have expressed concerns about the impacts of China's economic expansion on Africa's governance, human rights, environment, local employment and labour conditions, product quality, and the sustainability of the continent's debt burden. This paper focuses on the environmental impacts [3]. Concerns over China's environmental footprint in Africa have arisen for at least four reasons:
- China's investments in Africa are concentrated in sectors which are environmentally sensitive (such as oil and gas exploration, mining, hydropower, and timber), and in infrastructure projects which help to facilitate environmentally sensitive investments (such as roads, railway and transmission lines).
- While investments in the mining, oil, gas, hydropower and timber sectors generally carry high environmental risks, China's strategy of making previously inaccessible resources accessible compounds these risks. Chinese investors are developing projects in remote, ecologically fragile regions, in areas that have so far been protected as national parks, and in countries with weak governance structures.
- China's domestic policies have prioritised economic growth over the protection of the environment, with harrowing results. The Chinese government has set in place laws, regulations and institutions to protect the environment, but with limited success [4]. China risks exporting its domestic environmental track record to other parts of the world through its foreign investment strategy.
- International financial institutions have since the 1990s adopted environmental guidelines and standards to address the environmental impacts of their projects. Major Chinese investors, financiers and equipment suppliers have so far not adopted such standards, or have developed policies which are not necessarily in line with international standards.
Some high-profile examples illustrate the risks created by Chinese investments for Africa's environment. In Sudan, China Exim Bank is financing the large Merowe Dam Project on the Nile. The dam's reservoir will displace more than 55,000 people from the fertile Nile Valley to arid desert locations. In violation of Sudan's environmental law, the project's superficial environmental impact assessment has never been approved by the Ministry of Environment.
In Gabon, Sinopec explored for oil in Loango National Park until the country's national park service ordered exploration to stop in September 2006 [5]. Conservation groups had pointed out that oil exploration threatened rare plants and animals, and the environmental impact study had not been approved by the environment ministry. China's Kongou Dam, which has been proposed to power the Belinga iron ore project in Gabon, could negatively impact the forests of the Ivindo National Park. Sinohydro's Bui Dam, a project being financed by China Exim Bank, will flood about a quarter of Bui National Park in Ghana. The Lower Kafue Gorge Dam, a Sinhoydro project being financed by China Exim Bank in Zambia, will put additional pressure on the ecologically important Kafue Flats and its national parks.
AFRICAN AND WESTERN REACTIONS TO CHINA'S ENVIRONMENTAL FOOTPRINT
African governments of all political stripes have strongly welcomed China's growing presence on the continent. They have expressed appreciation not only for the economic boost triggered by Chinese investment, but also for the pragmatic and speedy way in which China has delivered aid projects, often irrespective of concerns over corruption and environmental impacts. Sahr Johnny, Sierra Leone's ambassador to China, summarised a meeting with Chinese investors in 2005 as follows:
'The Chinese are doing more than the G8 to make poverty history. If a G8 country had wanted to rebuild the stadium, we'd still be holding meetings! The Chinese just come and do it. They don't hold meetings about environmental impact assessment, human rights, bad governance and good governance. I'm not saying it's right, just that Chinese investment is succeeding because they don't set high benchmarks' [6].
African governments have expressed concerns when cheap Chinese investors wiped out local textile (and other) industries, preferred Chinese over African workers, or did not comply with local labour laws. Very few concerns have been recorded regarding the environmental impacts of Chinese investments. In January 2008, Sierra Leone banned timber exports because, as the country's environment minister said in an interview with the BBC, Chinese and other logging companies were plundering forests with no respect for the law [7]. And a task force of the African Union urged all actors in September 2006 to '[e]nsure that China pays more attention to the protection of the environment in its investment practices' [8].
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