China, eager for oil, expands investment in Nigeria and Guinea

The global economic crisis may have forced other nations to put their African investments on hold, but not China.

This week, the Nigerian government announced that China would double its current direct investment from a total of $3 billion to $6 billion, most of that in Nigeria's oil sector. Last week, the government of Guinea – where a coup brought a military captain to power last December – announced that a Chinese firm planned to invest $7 billion in oil and mining infrastructure in return for preferential treatment in all mining projects in Guinea.

China's increasing investment in Africa has raised concerns among human rights activists and others who warn that Chinese money props up regimes such as those in Zimbabwe, Sudan, and the Democratic Republic of Congo who are either undemocratic, corrupt, or carry out mass-scale human rights crimes, or combinations of the above. Yet many African leaders applaud Chinese investment, saying that they create jobs, infrastructure, and business opportunities in African countries where Western companies fear to tread.

"Huge Chinese investment in African companies and infrastructure is helping Africa develop. The Chinese bring what Africa needs: investment and money for governments and companies," Rwandan President Paul Kagame told reporters for the German business daily Handelsblatt earlier in October. "European and American involvement has not brought Africa forward," President Kagame added, complaining of trade barriers erected by the West.

China's long-stated policy of non-interference in the domestic affairs of its African partners plays well here in Africa and is a stark contrast to the starchy human-rights focus of many post-colonial European nations and of the United States. While Western nations balk at investing in a country like Zimbabwe, where state security agencies round up, beat, and sometimes kill opposition members and human rights activists, the Chinese are happy to do business. They also sell arms to those regimes.

Arms for Zimbabwe

Consider China's arms deal with Zimbabwe, which went largely unnoticed until June 2008, when South African trade unionists refused to unload a cargo ship carrying the weapons in Durban harbor (Zimbabwe is landlocked). The Chinese ship eventually unloaded the arms in Angola and Zimbabwean planes carried them the rest of the way to Harare.

"The Chinese ought to be held accountable for that, whether you've got an embargo by the UN or not," says Francis Kornegay, a senior researcher at the Center for Policy Studies in Johannesburg. "On things like that, the Chinese don't like to be taking the heat, in the limelight, and South Africa ought to be able to get China to agree that nobody should be sending arms to Zimbabwe."

But despite the expected "tougher stand" of President Jacob Zuma toward Zimbabwe, no African nation has stood up to either the Chinese or the Zimbabwean government. "There is no leadership on the continent. And China takes advantage of that," Mr. Kornegay said.

China has an advantage over Western countries who keep their government aid and their business interests separate, at least on paper. When a US-based mining company makes an offer to pay for the rights to exploit a mine in, say, the Democratic Republic of Congo, it does so completely on its own. But when a Chinese firm – which is, after all, owned by the Chinese government – bids on the same project, it can also promise significant Chinese government aid for building roads and water systems and electrical projects, a complete package that no Western private company can compete with.

The Chinese government is also flush with cash. So while other governments have simply pulled back from development aid projects, China has actually boosted investment, with $552 million in the first half of 2009. In May, Beijing announced that it would increase its China-Africa Development Fund – which has invested $400 million in Africa since 2006 – by an additional $2 billion.

Trade between Africa and China is now worth about $100 billion per year, most of it generated by mineral and oil sales. That's about 10 times the level it was in the 1980s. Chinese investment in Sudan – a country accused by the International Criminal Court of war crimes and mass murder in its six-year civil conflict in the Darfur region – allows China to take home more than 60 percent of all the oil that Sudan produces. The arrangement works well for Sudan, or at least for the government in Khartoum. More than 80 percent of Khartoum's revenues come from oil.

Faced with no-questions-asked Chinese investment on one hand and the West's penny-pinching aid-with-a-lecture on the other makes competing with China in Africa a tough task, German President Horst Kohler admitted in a June meeting with Ugandan President Yoweri Museveni. "For this reason, Africans believe that China is better than the West because for us we raise issues regarding democracy, corruption and human rights," the German president said in Berlin.