Saturday, October 08, 2011

Chinese capitalism

Chinese investment in Zambia, Africa's leading copper producer topped $1 billion last year and came with the promise of 15,000 jobs as well as an additional $5 billion investment over the next few years. Almost all of the money went into Zambia's copper-mining industry, with only 10% invested in construction, agriculture, retail and manufacturing. In a country where almost two-thirds of the 13 million citizens live under the poverty line of $1.25 a day, economic growth is the government's priority but Zambians have begun to realize that "economic growth has not translated into significant poverty reduction," as the latest World Bank country assessment states.

Copper — responsible for 70% of Zambia's export earnings — largely contributed to the country's 7.6% economic growth in 2010. Critics complain that those revenues hardly benefit all Zambians. Unions and watchdogs note that most profits are taken out of the country instead of being reinvested in much needed infrastructure, hospitals and schools. There are also widespread allegations of Chinese firms ignoring environmental and labor laws to reap higher profits — and of the government turning a blind eye.
"The government lets Chinese investors act above the law," explains Edward Lange, coordinator of Southern Africa Resource Watch in Zambia. "Corruption is rife. We have lost control over our resources."
Tens of thousands of mine workers and their families are growing increasingly disgruntled with Chinese-run mining operations. Previous protests against low pay and poor working conditions have shown few results, only worsening tensions among workers and managers. During a strike in April, Chinese managers shot and wounded eleven protesters.
"We are discontent with the political and economic situation," confirms Charles Muchimba, research director of the Mineworkers' Union of Zambia. While Chinese investors have reaped massive profits, workers have borne the brunt of Zambia's free-market economy and suffered salary cuts of up to 40% during the recession, he says.

China is on a resource grab. Beijing doesn't do gifts; it does deals. The ambition, speed and scale of Chinese involvement in Africa is extraordinary. According to Chris Alden, author of China in Africa, two-way trade stood at $10 billion in 2000. By 2006, it was $55 billion, and in 2009 it hit $90 billion, making China Africa's single largest trading partner, supplanting the U.S., which did $86 billion in trade with Africa in 2009. Today the Chinese are pumping oil from Sudan to Angola, logging from Liberia to Gabon, mining from Zambia to Ghana and farming from Kenya to Zimbabwe. Chinese contractors are building roads from Equatorial Guinea to Ethiopia, dams from the Congo to the Nile, and hospitals and schools, sports stadiums and presidential palaces across the continent. They are buying too. Acquisitions range from a $5.5 billion stake in South Africa's Standard Bank to a $14 million investment in a mobile-phone company in Somalia. What's happening is a new scramble for Africa.

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