Uneasy allies: China's evolving relations with Angola

Abstract

By conventional accounts, following the so-called ‘Angola Model’, the Chinese government is heavily involved in the national reconstruction programme through various financial institutions as a means to ensure closer relations with Angola and thus access to oil. China's strategy is thus ostensibly to accumulate political capital through the provision of infrastructure, financed by oil-backed concessional loans extended by Chinese state-owned banks. This study briefly traces the history of China's relations with Angola before examining the various parallel structures involved in the two country's co-operation over infrastructure, loans and oil. It examines the so-called ‘Angola Model’ by looking at three key assumptions surrounding risk, access to oil and China's political access in Angola. The study also evaluates the nature of the so-called ‘strategic partnership’ for both Angola and China. Political posturing indicates that both China and Angola see each other as necessary strategic allies for the foreseeable future, but this may mask an uneasy marriage of convenience.

Keywords:

• Angola
• oil
• strategic partnership
• Angola model
• China Exim Bank

Notes

1. . Interview, Beijing, 29 October 2009.

2. . Interview, Beijing, 28 October 2009.

3. . Angolan Minister of Finance, Carlos Albert Lopes, broadcast on Radio Nacional de Angola, 4pm, 9 July 2010.

4. . The interest rate is quoted according to the Angolan Ministry of Finance. Libor, according to the British Banker's Association, is the most widely used benchmark or reference rate for short term interest rates.

5. . Interview, Luanda, 30 May 2007.

6. . The MPLA is reported to have taken credit for large-scale infrastructure projects undertaken by the Angolan government in the run-up to the national elections in late 2008.

7. . Interview, Beijing, 28 October 2009.

8. . The Chinese government has distanced itself from CIF, but it is likely CIF has some Chinese government connections (Vines et al. 2009, 51; Levkowitz et al. 2009, 33). China Development Bank, while currently a state-owned policy bank, is marked to be fully commercialised. This process was, however, halted due to the financial crisis beginning 2008.

9. . Interview with a director of a foreign-invested bank, Luanda, 7 June 2006.

10. . ICBC is China's largest commercial bank and currently the largest bank in the world by asset value. ICBC also has a strategic partnership with Standard Bank, Africa's largest Bank. Standard Bank has had a representative office in Angola for some years but does not yet have a commercial banking license.

11. . Personal correspondence, Beijing, 27 October 2009.

12. . Interview, Beijing, 14 October 2009.

13. . Ecuador was originally required by China Exim Bank to put up the assets of its Central Bank for collateral as the country had no cash crop or natural resource exports to back the loan (Agence France-Presse 2009b).

14. . Interview, Beijing, 29 October 2009.

15. . Interview, Beijing, 28 October 2009.

16. . The deal is widely believed to have been modelled on the co-operation agreement signed with Angola. The IMF eventually succeeded in persuading China Exim Bank to retract its requirement of a sovereign guarantee, but the deal was reduced to US$6 billion for rehabilitating the mining industry and the plans for US$3 billion in ‘social infrastructure projects’ were scrapped.

17. . Interview, Beijing, 29 October 2009.

18. . It was later agreed between Sonangol and Sinopec that China Sonangol International Holding (CSIH), jointly owned by Sonangol and Beiya International Development Ltd., would explore this block. China Sonangol International Holding (CSIH), a subsidiary of Sonangol and Beiya International Development Ltd. that invests in industrial, petroleum and infrastructure investment not only in Angola but also in other countries including Argentina and Venezuela, now has equity in several Angolan blocks, having temporarily assumed management of some of the blocks initially purchased by Sinopec.

19. . CSIH now has equity in several Angolan blocks, having temporarily assumed management of some of the blocks initially purchased by Sinopec (Campos and Vines 2007, 16).

20. . Interview, Beijing, 28 October 2008.

21. . Interviews Shanghai, 17 September 2009; Beijing, 16 October 2009.

22. . Interview, Beijing, 28 October 2009.

23. . Interview, Beijing, 16 October 2009.

24. . Interview, Beijing, 9 September 2009.

25. . Interview, Beijing, 29 October 2009.