Increasing Africa's benefit from China: Developing a strategic approach

During the 1960s and 1970s, Chinese relations with African countries were driven by ideological considerations, with China presenting itself as an alternative to both the West and the Soviet Union. During that time, China’s support consisted mainly of moral and material support for liberation struggles. During the 1980s, the relationship shifted towards economic cooperation based on common aims. After the end of the 'Cold War', China attached importance to both political and economic benefits and portrayed itself as an attractive economic partner and political friend. For African governments, this presented an alternative to the 'Washington Consensus' and was termed the 'Beijing Consensus' – support without interference in internal affairs.

China’s engagement with Africa today is less motivated by ideological considerations but based on a commercial agenda that aims to sustain rapid industrialisation and economic growth rates. China’s 'socialist market economy' is driven by market-oriented State-Owned Enterprises (SOEs) and its interests in Africa are geared towards energy resources and minerals to feed its industrialisation programme. Chinese investments and trade with Africa have increased significantly over the past few years, although Europe and the USA are still the predominant sources of foreign investments and the main markets for African exports. China is now Africa’s third largest commercial partner after the USA and France and – like the former colonial countries – backs its trading relations with aid, debt relief, scholarships, training and the provision of specialists. China also accounts for about 8 per cent of Africa’s military hardware imports. However, Africa is by no means a major destination of Chinese investments as only about 3 per cent of China’s overall FDI (foreign direct investment) outflows were destined for Africa in 2007.

Overall, there are about 450 Chinese-owned investment projects in Africa: 46 per cent in manufacturing, 40 per cent in services and 9 per cent in resource-related industries. The latter accounts for 28 per cent of investment value. This scenario differs significantly between individual countries as Chinese investors focus on oil extraction or uranium in some countries and on construction and retail in others. China’s main export destinations in Africa are South Africa, Egypt, Nigeria and Algeria, while the main African exporters to China are Angola, South Africa, Congo and Equatorial Guinea. Africa’s main exports to China are minerals, petroleum and timber, involving very limited processing on the continent. Africa’s imports from China consist mainly of capital and consumer goods. Overall, the trade balance is slightly in Africa’s favour, although several countries like South Africa, Morocco and Ghana have substantial trade deficits.

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Since 2003, China has become the second-largest consumer of oil and is expected to overtake the USA by 2030. China relies on outside energy resources for its continued industrialisation and currently covers about a quarter of its oil needs through imports from Africa, especially from Sudan, Angola, Nigeria, Equatorial Guinea, Algeria, Chad and Gabon. China’s demand for raw materials has driven up world market prices for several of Africa’s commodities, but Africa also needs to consider the utilisation of its resources for sustainable industrialisation on the continent instead of remaining merely an exporter of raw materials.

There is a danger of the Africa–China economic relations following the colonial pattern of relegating Africa to the role of a supplier of raw materials. The major challenge facing African countries is how to shape this relationship differently and to ensure that beneficiation takes place in Africa, resulting in job creation and economic development. The nature of the current trade relationship needs to be altered if Africa is to substantially benefit from trade with China.

Since 2000, China has established trade and investment promotion centres in Africa and also signed investment promotion agreements with over 20 countries. By 2008, the number of sizeable Chinese enterprises in Africa had reached about 800, with South Africa attracting the largest share of Chinese investments. South Africa is also the only African country with significant investments in China, mainly in mining, brewing and the financial sector.

In the 10 countries covered by our study, 'Chinese investments in Africa: A labour perspective', Chinese investments were concentrated mostly in the energy, mining, manufacturing, construction, retail and finance sectors. The emphasis varied between countries, but investments in large infrastructure projects as well as mining ventures were common across the continent. Chinese investments in small retail outlets – 'China shops' – are mostly undertaken by private business people and hardly create linkages to the local economy as they source cheap consumer goods from China, which are popular amongst poorer consumers. In some instances, however, this has negatively affected local traders as well as local manufacturers who could not withstand the Chinese competition. As a result, thousands of jobs were lost in countries like Zambia, Ghana, South Africa, Nigeria, Ethiopia and Sudan.

Chinese construction projects in Africa, on the other hand, are usually carried out by State-Owned Enterprises and they often resort to the utilisation of large numbers of Chinese workers. In some cases, like the construction of a stadium in Ghana, Chinese migrant workers accounted for up to two-thirds of the labour force.

China’s presence in Africa is welcomed by African governments due to the offer of trade, aid and investments with no strings attached. China is also seen as a solution to the creation of local infrastructure where local capacity is lacking. In general, African leaders consider their engagement with China as a viable alternative to the often neocolonial relations they have had with the West, as exemplified by the neoliberal policies of the 'Washington Consensus'.

Labour relations in Chinese firms in Africa, as well as working conditions in China, are a bone of contention. China has a labour force of 770 million, of which 193.5 million are urban workers. China has achieved a significant reduction of people living in poverty during the last 30 years, but levels of inequality have increased and reached a level comparable to Latin America. A new middle-class emerged in the cities while the earnings of farmers in rural areas declined. Rural farmers account for 47 per cent of the population but earn only 19.9 per cent of the national income.

One strategy used by China to address the problem of unemployment is to send workers overseas to work on projects carried out by state-owned companies or through labour brokers. This explains the relatively large number of Chinese workers at construction sites as well as in some manufacturing ventures in Africa. Within China, workers in SOEs earn significantly higher wages than migrants from the rural areas. Migrants are also excluded from benefits such as maternity and unemployment benefits and social assistance. The 'household registration system' makes it very difficult for rural workers to change their status to urban workers.

The number of labour disputes in China has risen significantly in recent years as workers resorted to work stoppages, sabotage, go-slows and court action to defend their rights. The global economic crisis has affected Chinese workers directly as more than 10 million migrant workers had to return to their hometowns with little hope of finding jobs.

The All China Federation of Trade Unions (ACFTU) is the world’s biggest union and played a crucial role in the struggle against imperialism. Today it is closely linked to the Chinese Communist Party and plays the role of linking the party with workers. The ACFTU is widely regarded as an extension and 'relief agency' of government as it does not support militant workers’ action. Most industrial action in China is spontaneous and not supported by the ACFTU. Attempts to form independent trade unions in China have not succeeded thus far.

Although working conditions at Chinese companies in Africa differ across countries and sectors, there are some common trends such as tense labour relations, hostile attitudes by Chinese employers towards trade unions, violations of workers' rights, poor working conditions and unfair labour practices. There is a virtual absence of employment contracts and the Chinese employers unilaterally determine wages and benefits. African workers are often employed as 'casual workers', depriving them of benefits that they are legally entitled to.

Chinese employers tend to be amongst the lowest paying in Africa when compared with other companies in the same sector. In Zambia, for example, the Chinese copper mine paid its workers 30 per cent less than other copper mines in the country. In general, Chinese companies do not grant African workers any meaningful benefits and in some instances ignore even those that are prescribed by law. Wages above the national average were only found at those Chinese companies with a strong trade union presence. Chinese staff members enjoy significantly higher wages and more benefits than their African counterparts.

Collective bargaining hardly takes place in Chinese companies. They resort to union bashing strategies to discourage their workers from joining a trade union. In many instances, Chinese businesses were supported by host governments who defended Chinese investments against the demands of labour. Trade unions see the practices of Chinese companies as a threat to the limited social protection that unions have achieved over the years through collective bargaining.

Chinese employers violate several of the core ILO (International Labour Organization) conventions. These include the right to join trade unions, to bargain collectively, to receive equal remuneration and to be protected against discrimination. Basic rights such as paid leave are often ignored and workers are forced to work overtime – at times without any additional remuneration. Workers often fear that refusal to do so would result in their dismissal. A particularly grave case of workers’ rights violations is the 'locking-in' of workers during working hours, which led to deaths during fires in Nigeria and Kenya.

Health and safety issues receive very little attention at Chinese companies as precautionary measures are ignored and no training on health and safety issues is provided. In some countries, Chinese employers terminate the employment of female workers once they fall pregnant. Chinese companies tend to employ African workers for basic tasks at very low pay while importing Chinese managers and supervisors for higher-paid positions.

Following the Structural Adjustment Programmes (SAPs) with privatisation policies and the resulting mass retrenchments of the 1980s and 1990s, Africa’s trade unions are relatively weak and face a host of challenges today. Union membership has declined as labour struggles to recruit and represent non-permanent workers and those in the informal economy. Employers, including the Chinese, take advantage of flexible labour markets and undermine collective bargaining. Trade unions expect government support for the enforcement of local labour laws and international labour standards but in many countries, host governments are reluctant to intervene for fear of losing foreign investments.

Organising workers and improving their working conditions through direct action and collective bargaining is undoubtedly the most effective way to redress the current problems at Chinese companies. The aggressive union-organising strategy in Zambia, for example, has had some success. In many cases, however, this proves to be very difficult and thus supplementary strategies could be used. These include national minimum wages and basic conditions of employment that are enforced by trade unions and labour inspectors alike. Building alliances aimed at promoting Africa-wide and sub-regional framework agreements may also help to improve working conditions. Furthermore, African trade union bodies as well as the global union federations can take up labour rights violations at the continental level and also bring it to the attention of the All China Federation of Trade Union (ACFTU) in an effort to exert pressure on Chinese companies in Africa. Likewise, unions could use political linkages to call on the Chinese government to pressurise companies through Chinese embassies in Africa.

Other steps that might strengthen trade unions’ ability to deal with Chinese companies include courses in the Chinese language (Mandarin) for African union organisers, improving the capacity for organising and negotiations amongst trade unions, translation of documents outlining labour laws and regulations for Chinese companies into Mandarin, broadening the decent work agenda through social dialogue at a national and international level and ongoing campaigns for minimum wages and their enforcement.

There is a need to develop meaningful exchanges between African and Chinese workers beyond the high-level visits of trade union leaders. Exchange programmes must target workers at a grassroots level and must be driven by a will to develop joint strategies in the fight against exploitation. Understanding each other’s environments and struggles may not only counter racism and divisions but may also pave the way for coordinated action at an international level in future.

The common trends found in most African countries point to the urgent need to develop coherent continental approaches to Chinese companies and foreign investment in general. The current practices of attracting investments 'at all costs' has led to a downward spiral in terms of labour and environmental standards. Continental and sub-regional trade union bodies need to spearhead a campaign for a common approach towards foreign investment that is more selective and strategic than the current 'open door policy'. A government policy of sacrificing labour issues for the sake of attracting foreign investment cannot lead to sustainable development.

The relationship between African states and China is currently not equal and requires significant changes to become mutually beneficial. African governments must strengthen their bargaining position and ensure local processing. They must also improve monitoring to ensure that investors do not divert their focus away from manufacturing and that skills and technology transfer actually takes place. Instruments like tender requirements, work permits, labour laws and investment conditions can be used to achieve desired outcomes.

A new economic relationship will have to be built around Africa’s own strategic development agenda. The Chinese cannot be blamed for pursuing their particular development objectives, including access to the raw materials and energy resources needed to sustain China’s industrialisation programmes. African governments will have to set their own agenda and then negotiate the best possible deals with potential investors, including those from China. In the absence of a strategic approach by African governments, Chinese investments in Africa will remain of limited benefit for Africa’s development.

The many problems associated with Chinese companies in Africa should not be seen in isolation from the broader challenge of dealing with the consequences of neoliberal globalisation, which places economic growth above all social considerations. The trade patterns that characterised Africa’s relations with Europe and the USA are replicated to a significant extent in Sino-African relations. Thus the quality of economic relations needs to be altered substantially if Africa is to benefit in future. The global economic crisis provides trade unions with an opportunity to intensify advocacy campaigns for alternative policies to the neoliberal agenda with a view to placing redistribution and Africa’s development priorities at the centre of all external relations.

* This article comprises the Executive Summary of the May 2009 'Chinese investments in Africa: A labour perspective' report by the African Labour Research Network (ALRN) (edited by Anthony Yaw Baah and Herbert Jauch). It is reproduced here with ALRN's kind permission.
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