Knocking on a Wide-open Door: Chinese Investments in Africa

Abstract

The current strong foothold of Chinese enterprises on the African continent concerns many Western observers. They fear that the West will lose leverage in Africa and simultaneously postpone development. Paradoxically, the advance of Chinese enterprises in Africa is not only the result of deliberate Chinese policies to gain access to resources and markets, but also the consequence of liberal African investment policies imposed by Western donors in the past. This article uses Zambia as a case study to challenge the often one-sided view of the local consequences of China's engagement with Africa, and it shows that we need to consider the type of policies that guide investment flows, in order to increase the local benefits of China's growing presence in the continent.

Acknowledgements

The research for this article has been funded by the Consultative Research Committee for Development Research, Denmark (Project 932). The author is grateful for valuable comments from former colleagues at the Danish Institute for International Studies, current departmental colleagues at Roskilde University, and two anonymous referees that helped to strengthen this article. Errors and omissions are my own responsibility.

Notes

All dollar figures in this article refer to US dollars.

CNMC bought Chambishi via its subsidiary NCF Africa Mining Plc (NFC-A).

All data refer to investment pledges to the Zambia Development Agency. Only 70 per cent of pledges are actually fulfilled, and actual investment figures may differ from the pledges (personal interview, ZDA, Lusaka, 27 Feb 2008).

Personal interviews, Hua Chang Infrastructure Engineering (Z) (30 Jan 2008) and ABCEC (20 Feb 2008), both Lusaka.

Personal interview, NCC, Lusaka, 25 Feb 2008.

Personal interview, Chinese Embassy, Lusaka, 6 Nov 2008.

The ZCCZ is in fact located at the former industrial zone CNMC, which is by far the largest Chinese player in the Zambian mining sector owning approximately 60 per cent of the Chinese mining-related companies in Zambia.

Personal interview, ACCZ, Lusaka, 30 Jan 2008.

At the time of the second period of fieldwork in the autumn of 2008, eight Chinese companies were registered in the ZCCZ, including the NFC-A, four subsidiaries of NFC-A and three other companies. The aim is, by 2011, to reach 50 to 60 companies in the ZCCZ that also aims to provide housing for Chinese as well as Zambian staff.

It is unclear to what extent non-Chinese companies will be able to benefit from these physical structures as well as the fiscal and financial incentives given by the Zambian state to companies located in this zone. Originally, ZCCZ was exclusively for Chinese companies and most observers stick to this view (see e.g. Davies 2008), but according to a recent statement by the Minister for Trade and Commerce, Mr. Felix Mutati, other companies are now welcome in the zone (Mutati 2009).

Personal interviews, JICA, Lusaka, 25 Feb 2008; Chinese Embassy, Lusaka, 6 Nov 2008.

ERP here covers both the IMF-led stabilisation programmes, which aimed to resolve internal and external balance of payment problems in the short- to medium-term, and the World Bank-led adjustment proper, which sought to free up market forces and thereby promote long-term growth.

The PRSP is a prerequisite for all countries requesting debt relief under HIPC.

Personal interview, CEEC, 4 Nov 2008.