African Lions vs. Eastern Tigers in the battle for oil

Posted on February 8, 2011


Tonight on BBC Two Justin Rowlatt is travelling to Africa as part of a series on the domination China is wreaking over the world. The Chinese Are Coming seems to take a personalised, microcosmic view of what’s happening: something television does best, by taking the individual stories and telling them. However it’s worth also looking at the wider picture, beyond the individual tales and having a more detached vision of what’s happening. China’s investment in Africa is looked at in detail in African Lions, my new book, available now online. Here’s just some quotes from the book:

Chinese trade with Africa – working in both directions between the continent and the country – rose 43.5% on 2009’s figures in the 11 months to December 2010, with a total trade volume value of $114.81 billion.[i]

“China is a very aggressive and pernicious economic competitor with no morals. China is not in Africa for altruistic reasons. China is in Africa for China primarily. Chinese authoritarian capitalism is politically challenging. The Chinese are dealing with the [Robert] Mugabe’s and [Sudanese leader Omar al-] Bashir’s of the world, which is a contrarian political model,” said Carson to representatives of Shell, Chevron and ExxonMobil. They are aggressively courting African governments to gain access to their fields through the highest-possible level of representation: President Hu Jintao has visited more than 20 African nations[ii] since he came to power in March 2003.

These are all part of unprecedented international investments from the Chinese: the China Export-Import (Exim) Bank and the Chinese Development Bank handed out loans of at least $110 billion to developing countries from the start of 2009 to the end of 2010; similar arms of the World Bank – a theoretically much larger entity – only handed out a smidgen over $100 billion over a similar timescale.[iii] For China, like the colonialists of the late 19th century, “the business of empire, once an adventurous and often individualistic enterprise, ha[s] become the empire of business.”[iv]

Even though China’s demand for oil and more importantly gas is slipping, it doesn’t mean that they are slowing their investment in the country. This is, on the face of it, a good thing: the Chinese are stepping in with true action and infrastructure building where the west often hides behind well-meaning but misguided charity drives. The charge in Africa from those who are keen to welcome the Chinese into their continent is that they get things done, whereas we obfuscate in our beneficence, then give the heads of government great piles of money for them to disseminate (which they often don’t) amongst the people for good community projects.

The Chinese send people over there and build roads with the massive investments they make; they built football stadia for Angola in time for them to host the 2010 African Cup of Nations, an immense source of pride for Angolans. The main problem is though, that they are liable to become the colonial dominant partners in the relationship precisely because of the terms of the massive loans.

The figures are absolutely enormous: as I’ve said in the book, they have handed out more than the World Bank (which to my mind at least seems completely backwards – that a single nation can outspend more than the bank which is meant to be a level above all nation’s banks, no matter how large, and control the flow of money across the world) in a similar period of time. That’s ostensibly good: more money means that the African nations on the receiving end of these loans can go and build freely and try and spend their way into the big leagues. However, they’re loans, and they have to be paid back.

Loans are problematic enough – anyone who knows anything realises that to lend money (at any level) is to undertake a risk – but the terms of how African nations are paying back these loans is more troubling. They’re paying the Chinese back in deliveries of oil, at what will probably be a rate of exchange that is more favourable to the Chinese. Potentially, because certain African nations that have signed up to such loans from the Chinese are tied in to these contracts, they are losing out on the ability to capitalise on the oil market.

The Chinese obviously aren’t willing to publicise the terms of these loans, and so there might well be some sort of nod towards oil price fluctuation, and the ability for the African producing nations to capitalise on that. Justin Rowlatt, in an article to run alongside the television show, says that at least some of the loans are at or around the prevailing market rate. But it’s never likely to be as helpful – or profitable – as the free market would be. For example, if a nation signed a loan with the Chinese in mid-February 2010 (when the oil price was just about $70/barrel) then they will have to give China more oil for the same amount of money than they would have to now, with the crises in Tunisia and Egypt (and supply disruptions) pushing the price up and around $100/barrel.

Chinese investment is good – any investment is good. But as with any interest in Africa, because of its colonial past, a wariness must be held. There is yet the chance for Africa to sleepwalk into a second wave of colonialism – and it’s not from the traditional western powers.

To purchase African Lions: the colonial geopolitics of Africa’s gas and oil, visit or buy it direct from the publisher now. African Lions will be available to buy on Amazon in March.
Support independent publishing: Buy this book on Lulu.

[i] AP, China will further boost economic ties with Africa (23 December 2010)

[ii] Der Spiegel, Investment with Strings Attached: Cables Reveal Resentment at Chinese Influence in Africa (9 December 2010),1518,733870,00.html

[iii] The Financial Times, China’s lending hits new heights (17 January 2011)

[iv] Edward Said, ‘Two Visions of Heart of Darkness’, Culture and Imperialism (1993)

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