Transcript Chinese contracts and the reconstruction in RDC

Chinese contracts and
the reconstruction in RDC
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S.Marysse
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“Hence to fight and conquer in all your battles is not
supreme excellence; supreme excellence consists in
breaking the enemy's resistance without fighting.”
Sun Tzu, 544-496 BCE
‘Chinese contracts and
the reconstruction in RDC’
1. Post-colonial de-and reconstruction of Zaïre/DRC: a
reminder
2. China’s new geo-political ‘weight’
3. The chinese foreign policy towards Africa:the new
agenda
4. The DRC-China: recent tendencies
5. An analysis of the chinese contracts in the DRC
6. Conclusion: Red imperialism or reconstruction boost?
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1.Post-colonial de-and reconstruction of
Zaïre/DRC: a reminder
• The unprecedented regress by 30 years neo
patrimonialism and 5 years of international
war
• A relative succesful post conflict reconstruction
(the first steps)
• But , too little too slow productive investments
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Accumulation 1975
Wild
Capitalism
Bad
governan
ce
Formal sector
Good
governance
Survival
activities
SMME
reproduction
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Accumulation 2003
Wild
Capitalism
Bad
governan
ce
Formal sector
Good
governance
Survival
activities
SMME
reproduction
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1.Post-colonial de-and reconstruction of
Zaïre/DRC: a reminder
• Zaire/DRCongo, the implosion of the formal
economy and the decline of the state
Tableau1 Indicateurs économiques sélectionnés
unité
1980
Population
mln.
27
1999
55
GDP
GDP
14922
100
5200
35
2000
2507
1117
468 (in 1988)
485 (in 1988)
18163 (in 1988)
150
1050
540
35
149
26084
Revenu de l’état (G)
Exportations
Importations
Cuivre
Ciment
Diamant
mln. USD
% of 1980
GDP
Mln USD
mln. USD
mln. USD
1000 tonnes
1000 tonnes
1000 carat
Source: World Bank, World Development Indicators and Lukusa, CEDAF, 1999
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1.Post-colonial de-and reconstruction of
Zaïre/DRC: a reminder(ctd)
• Some background to the copper and cobalt
sector
- 1967: nationalisation of UMHK: the promise and
the demise-Belgian and Congolese
actions/reactions
- Gécamines ‘the father and the mother of the
congolese’ :rise and fall
- Property –production –management: the problem
of political economy
- Some technical points
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1.Post-colonial de-and reconstruction of
Zaïre/DRC:
a reminder
Contribution of Gécamines to the state budget (in %): 1980-2006
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1.Post-colonial de-and reconstruction of
Zaïre/DRC: a reminder(ctd)
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Some background to the diamond sector: evolution of artisanal/informal
exports as % of total diamond exports
1.Post-colonial de-and reconstruction of
Zaïre/DRC: a reminder(ctd)
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Some background to the diamond sector: evolution of artisanal/informal
exports as % of total diamond exports
Exportations officielles de diamant
Exportations de Diamant (valeur en $million)
1.400
1000
900
1.200
800
700
1.000
600
800
500
600
400
300
400
200
200
100
0
0
1997
1998
1999
Officielles
10
2000
2001
Frauduleuses
2002
2003
2003
2004
2005
Valeur (million US$)
2006
2007
1.Post-colonial de-and reconstruction of Zaïre/DRC:
a reminder
• Inflation and growth in the post conflict period
• Elections 2005: the nation has saved the state and now
it is the state who has to save the nation
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But governance is still a serious problem
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2.China’s new geo-political ‘weight’
Table 1. Future evolution of the economic weight of different states (2000-2040)
(Group of) countries
United States
% of global production % of global production
in 2000
in 2040
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14
EU (15)
21
5
India
5
12
China
11
40
Japan
8
2
South-East Asia (6)
6
12
Rest of the world
28
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Source: Adapted from R.W. Fogel, “Capitalism and democracy in 2040: forecasts and speculations”,
Working Paper, National Bureau of Economic Research, Cambridge MA, June 2007, p.2-4.
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3. The chinese foreign policy towards Africa:
the new agenda (1)
• From Bandung (1955) to Focac (2006)/continuity and
discontinuity
- China’s stance for an independant South South
Cooperation, ‘Non Aligned countries (1954 Zhou en
Lai) Five principles
- Forum for Chinese Cooperation with Africa convened
46 african countries in Beijing (2006) Non interferencerespect for national sovereignty- no strings attachedmutual respect –mutual benefit (Win–Win relation)
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3. The chinese foreign policy towards Africa:
the new agenda (2)
The evolution of African trading partners (1)
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3. The chinese foreign policy towards Africa:
the new agenda (3)
The evolution of Chinese oil imports
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3. The chinese foreign policy towards Africa:
the new agenda (4)
Chinese infrastructural investments in Africa
• Infrastructural works in
exchange for mineral
resources :barter
reinvented?
• First national entreprises
followed by market
penetration
• Cheap, relative good quality
• Few linkages for the local
economy (imported skilled &
non-skilled workers, low
salaries)
• Easy marketpenetration, low
level of international
competition for chinese
companies.
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3. The chinese foreign policy towards Africa:
the new agenda (4)
Chinese FDI in Africa: characteristics and importance
• A modest but increasing part: accumulated I during the
last 3 years (1,5 billion $ whereas total FDI equals 47, 5
billion $ in Africa)
• Special characteristics
- Chinese investment is state led (longer time horizon , less
transaction- and coordination costs-unity of command)
- Chinese FDI is also linked to aid and geo-strategic choices –
access to mineral resources
- Access gate to mineral resources is aid for infrastructural
(re)construction where China has a competitive edge (low
cost-reliable execution…)and ample financial resources
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4.The DRC-China: recent
tendencies(4)
mio de US $
Evolution du commerce Sino-Congolais
Composition des exportations de la RDC en
Chine
400
350
300
250
200
150
100
50
0
100%
80%
60%
40%
20%
0%
Pér tot
Minerais de cuivre
Matières raffinées
2006
2005
2004
2003
2002
2001
Minerais de cobalt
Autres matières premières
2000
1999
1998
1997
1996
1995
2006
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2005
2004
2003
2002
2001
2000
1999
1998
1997
1996
1995
Exportations de RDC en Chine
Importations de Chine en RDC
5.An analysis of the chinese contracts in
the DRC(1)
• 2008 Sino congolese contracts - 8.5 billion$
infrastructural investments (rehabilitate 3500
km of tarred roads and 3200 km of railways.
What is more, 32 hospitals, 145 health centres,
two universities and 5000 houses will be
constructed
8.05 million metric tons
of copper, 202,290 metric tons of cobalt and
372 metric tons of gold. Aggregate production
has been valued at $3 billion dollars
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5.An analysis of the chinese contracts in the
DRC(2)
Characterisitics
• It is a unique document which includes commercial
relations and investments, development cooperation
and financing for a period of 30 years.
• barter principle as a new form of honest cooperation
• ‘win-win’ principle
• Chinese will have two thirds of the votes, while the
Congolese government has one third.
• 30 years and the absence of coordination costs.
• the extremely liberal exemption conditions. Article 6 of
the Protocol specifies that the companies will also be
exempted from all possible taxes
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5.An analysis of the chinese contracts in the DRC(3)
• The impact of the agreement on geopolitics:
intensification and restructuration of international
rivalries
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Quote from G.Forrest, the most important investor and
employer of private formal employment in Le Monde “If
we let them [the Chinese] go ahead, they are going to
shut us out of Africa. The West talks about good
governance and attaches some impossible conditions to
its development aid. The Chinese niggle less and they are
taking the best parts”
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5.An analysis of the chinese contracts in the DRC(4)
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The impact of the agreement on internal development
Trade: unequal exchange
Table 2. Monetary evaluation of the counter value ($ million)
Resources
Quantity (in metal tons)
Copper
8,050,661
Cobalt
202,290
Gold
372
Total
Value (in million dollars)
56.4
6.1
8.9
71.4
Source: Annex 1 of the agreement and http://www.metalprices.com/FreeSite/metals/cu/cu.asp.
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Tied aid-weak employment linkages-maintenance of infrastructure-no tax
revenue-new debttrap-resource curse effects on governance
Conclusion
• Opportunities and challenges (unequal
bargaining power in face of reconstruction
needs)
• Red imperialism?
• New geo political era
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