This Dragon Runs on African Oil:

The Questionable Neocolonization of African States by China.

By

Matthew J. Pearson

19007288

INR2002H

6 November 2015

Executive Summary:

There has been a growing concern about the influence The People’s Republic of China has over the continent of Africa. China’s economic power has grown exponentially in the past 30 years and requires a large quantity of resources like oil to increase its status as an economic power. Africa’s Oil-rich states have historically been uniquely susceptible to exploitation from foreign powers who are interested in the resources these states possess. China is one of the latest power to extend their influence onto the African continent. This paper has been written with the intention to persuade the London based non-government watchdog organization Platform to investigate further the curious investments of The People’s Republic of China in Africa.

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The Chinese economy has grown exponentially in the past thirty years, averaging an

annual growth rate of 10 percent a year,the expansion of which has resulted in the stretch of the

Dragon’s reach beyond the borders of China.1 As of March 2014, The People’s Republic of

China became the world’s largest net importer of petroleum and other liquid fuels as according

to the U.S. Energy Information Administration (EIA).2 China is in great need of resources to

continue growing into the economic power it has become and China’s eyes in recent years have

turned to the continent of Africa to help supply the resources it demands. The history of China’s

record with humanitarian interests, and economic ones, is something the international

community should watch with a concerned and careful eye. China is starting to rely more and

more on African oil as the global economy shifts. The amount of African oil China imported was

predicted to rise between June and July of 2015 by 41 percent. The majority of that increase was

exported out of China’s top oil supplier in Africa: The Republic of Angola, which shipped a

predicted 3.4 million tons in July, an increase from 2.88 in June of 2015.3 China’s strong appetite

for oil has only grown, and will only grow as long it has the ability to allow it, the EIA predicts

that China will import over 66 percent of its total oil by 2020, and 72 percent by 2040, becoming

the world’s largest oil consumer sometime in the 2030s.4 So China’s resource quest will continue

on by any means necessary to supply the Dragon, but as the demand rises, can we trust that

China will not exploit its trading partners in underdeveloped nations in its fight to rise above?

1 Alessi, Christopher, and Beina Xu. "China in Africa." Council on Foreign Relations. April 27, 2015. Accessed November 7, 2015. http://www.cfr.org/china/china-africa/p9557.2 U.S. Energy Information Administration - EIA - Independent Statistics and Analysis." China Is Now the World's Largest Net Importer of Petroleum and Other Liquid Fuels. March 24, 2014. Accessed November 7, 2015. http://www.eia.gov/todayinenergy/detail.cfm?id=15531.3 Russel, Clyde. "China Switching to African Oil May Lead to Saudi Price Cut: Russell." Reuters. July 28, 2015. Accessed November 7, 2015.4 Ibid

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China is the second largest consumer of oil in the world and a quarter of Chinese oil is

imported from a collection of 13 African states.5 The complex history between these regions play

an important role on how this resource quest will play out and explain the reason for concerns on

the growing investment of the People’s Republic of China in the African continent as both

influence the policy that has developed in each respective region. Africa has been a continent

ravaged by colonial intervention and foreign powers for well over five centuries. The post-

colonial continent has suffered from insecurity as a result of the many years of foreign

intervention and then sudden political abandonment, all the while foreign economic powers

remained in play on the continent in a bizarre reincarnation of colonialism that became to be

known as neocolonialism. Foreign economic players influenced the shaping of former colonies

into “independent” states as much as possible in hopes of developing a relationship with local

governments that would allow them to create thriving businesses and continual economic

dependence on the states of their former colonial masters. Corruption has run rampant in the

young states of Africa, and none of it has benefitted the continent. Because of this, some African

states have started to explore economic opportunities outside the traditional western states that

once held exclusive influence over the continent. Many African states found Chinese investment

attractive because of the contrasting policy of political interest. While former colonial powers

meddled in local politics, the Chinese could care not less as long as their interests are secure and

they can guarantee a chance at investing in the resources China needs to support its economy.

China’s policy of noninterference in domestic affairs of countries it has economic interests in has

been a source of controversy in the international community. But this exact policy has become a

check against Western powers and is what is so appealing to controversial African States with

5 Yates, Douglas A. "Foreign States and Trade Relations." In The Scramble for African Oil Oppression, Corruption and War for Control of Africa's Natural Resources, 17. London: Pluto Press; 2012.

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resources. The Chinese alternative is exactly what these States, that most of the international

community has been reluctant to engage in because of the domestic political atmosphere of the

state, are looking for.

Starting back in 1988, China made its first oil investment in the African state of Angola, a

former Portuguese colony.6 Portugal was too economically weak to perform any of the actions of

resource exploitation, so instead they outsourced to other nations that would be interested in the

resources Angola had to offer. One of these resources is oil. Most of Chinese and Angolan

relations from 1983 until the end of the Angolan conflict in 2002 were related to defense

cooperation and purchase of Chinese arms. Because of this relationship China had a strong

foundation to build economic investments into a stabilizing Angola. It is no surprise that China’s

focus was on reconstruction and development in relation to Angola’s oil and because of this

Angola is China’s largest trading partner and one of China’s largest sources of oil at 15.7

percent.7 China’s low interest loans were a convenient quick fix to the economy of Angola and

because of this trade remains steady, but in the past 5 years China’s investment in Angolan oil

has slowed and this can be explained by Angola’s government desiring more diverse investments

from China, and the oil concessions that China already possesses peaking and slowly running

dry.8

But not all has been ideal for Chinese investments in oil-rich African states. The Chinese

have found resistance from in a number of states over the years including Chad, Niger and

Gabon. Oil production in Niger began in 2011, and just two years later Niger began hiring

6 Ibid.7 Corkin, Lucy. "China and Angola: Strategic Partnership or Marriage of Convenience?" Chr. Michelson Institute. 2011. Accessed November 8, 2015. http://www.cmi.no/publications/file/3938-china-and-angola-strategic-partnership-or-marriage.pdf.8 "Angola President Seeks More Non-Oil Deals in His Visit to China." Bloomberg.com. June 12, 2015. Accessed November 9, 2015.

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private auditors to fully understand the deal they had made with the Chinese and to insure that

Niger was being paid fairly for their precious resource. 9 The China-Niger deal had received

scrutiny since its original announcement in 2008, being denounced by unions and civil rights

groups in Niger questioning how the $5bn would be spent.10 The joint-venture SORAZ refinery

founded by Niger and the China National Petroleum Corp (CNPC) has recently begun to

struggle, in July of 2015, Niger agreed to a 15 percent cut in the price of oil sold by CNPC to the

refinery.11 The Soraz refinery has been struggling with financial difficulties and several

shutdowns, another has been hinted as the refinery owes CNPC about $144 million.

Niger is not alone in their resistance to the oil deals Chinese corporations have offered

African States, across the border in Chad has taken an even harder stance with the CNPC. Chad’s

business with the CNPC first began with a signed agreement back in 2003, and since then China

National Petroleum Corporation has invested significantly in the infrastructure and oil industry

of Chad.12 For ten years the oil revenues brought in by the CNPC allowed Chad to modernize its

road and public infrastructure, until Mid-August of 2013 when Chad discovered that the oil

company was dumping excess crude oil south of the capital, N’Djamena, into ditches and

instructing Chadian workers to remove it without the proper protection.13 Chad went on to pull 5

explorations permits from the Chinese oil company and issues a $1.2 billion fine for

environmental violations and “unacceptable practices” that led to “noxious spills” around the

9 Nossiter, Adam. "China Finds Resistance to Oil Deals in Africa." The New York Times. September 17, 2013. Accessed November 8, 2015.10 Ross, Will. "Outcry over China-Niger Oil Deal." BBC News. July 30, 2008. Accessed November 8, 2015.11 "Niger Cuts Oil Price for Chinese Joint-venture Refinery." | News by Country | Reuters. July 28, 2015. Accessed November 8, 2015. http://af.reuters.com/article/nigerNews/idAFL5N10843N20150728.12 "Chad." China National Petroleum Corporation. Accessed November 8, 2015. http://www.cnpc.com.cn/en/Chad/country_index.shtml.13 Nossiter, Adam. "China Finds Resistance to Oil Deals in Africa." The New York Times. September 17, 2013. Accessed November 8, 2015.

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drilling sites.14 Chad sought to press charges in court at the country’s capital of N’Djamena, and

abroad in France which has a commercial court has a chamber which hears international

disputes. CNPC settled outside of court for the sum total of $400 million in compensation, just a

fraction of the original $1.2 billion that the government of Chad has sought.15

China’s demand for oil has brought Chinese oil companies into countries of Africa that

most others choose to opt out of because of instability and weak local governments. One of the

most controversial of these is Sudan. Sudan as long been ravaged by civil war and unrest after a

military coup in 1989 by Islamic forces, and because of the violations of human rights and acts

of war by the Sudanese junta, Sudan was condemned by the international community and the

traditional lenders made available for developing nations. The Chinese foreign investment policy

of non-interference with domestic affairs was ideal for the interest of Sudan’s government which

was left alienated by the international community, and with Chinese need for oil, Sudan was an

ideal partner for China to invest heavily in. China has invested in infrastructure of nearly every

kind for Sudan and has built the country up extensively despite the reputation of the ruling

government.16 Most of Sudan’s oil is produced in the Upper Nile area of the country, to secure

this profitable area the Chinese government stood by while the Sudanese Army and partners

practiced a scorch-earth policy, the practice of burning buildings, crops and resources to

depopulate the local Dinka and Nuer people and other smaller tribes in the region.17

More recently, China’s policy in the Sudan region has shifted from noninterference to

one of more influence. Seeing the unrest in the South Sudan, China actually sent troops for the

14 "Chad Withdraws Chinese Exploration Permits." Al Jazeera English. August 14, 2014. Accessed November 8, 2015.15 "UPDATE 1-China's CNPC Agrees to Pay $400 Mln to Settle Chad Dispute -Chad Minister." Reuters. October 27, 2014. Accessed November 8, 2015.16 Manji, Firoze Madatally. "China's Investment in Sudan." In African Perspectives on China in Africa, 71-82. Oxford: Fahamu, 2007.17 Ibid.

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very first time to aid United Nations peacekeeping missions in order to protect their oil

infrastructure in the area.18 China has seen huge losses in regions that are such unstable, and

there was concern that the most profitable region, which was already decreasing in production

would soon be vacated like the oil infrastructure China had invested in Libya before in 2011

because of the Arab Spring.19 The China National Petroleum Company controls a stake of 40%

of the 12.2 million acres of concession land in the Greater Nile Sudan Region.20 Sudan is

estimated to possess 1% of the world’s oil reserve, such a plentiful amount of oil is explained by

some to be the cause of the continuous unrest within the Sudan region.21 Such a stake that would

encourage China to shift its policy and exert the Dragon’s influence, working alongside the UN

peacekeeping troops to protect China’s interests.

China’s strategy to obtain the resources it desires and to invest in nations of interests is

something that is new to the People’s Republic of China; it has only started in the last 30 years.

China’s strategy for resources is a game of integration of foreign aid and resource deals,

combined resources and infrastructure deals and loans for resources.22 Grants and interest-free

loans are allocated from the People’s Republic of China’s Ministry of Commerce (MOFCOM),

while EXIM Bank provides concessional loans in coordination with MOFCOM.23 Concessional

loans are sometimes catered to the needs of the country either directives drafted by Chinese state

owned companies desiring to invest, or by MOFCOM which will assist in the decision making

18 "Chinese Peacekeepers Start Deployment in South Sudan." Reuters. January 16, 2015. Accessed November 9, 2015.19 Wu, Yuwen. "China's Oil Fears over South Sudan Fighting - BBC News." BBC News. January 8, 2014. Accessed November 8, 2015.20 Lado, Cleophas. 2002. “Political Economy of the Oil Industry in the Sudan Problem or Resource in Development (politische Ökonomie Der Erdölwirtschaft Im Sudan)”. Erdkunde 56 (2). Erdkunde: 157–69. http://www.jstor.org/stable/25647450.21 Ibid.22 Economy, Elizabeth, and Michael A. Levi. "China Goes Out." In By All Means Necessary: How China's Resource Quest Is Changing the World, 54-57. 1st ed. Oxford, 2015.23 Ibid.

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process of how the investments should best be made. It has been explicitly stated by Chinese

officials that foreign aid provided strategically to provide a platform for Chinese companies to

expand globally.24 As we can infer from the brief case studies provided earlier, there is no

argument to provide otherwise: China is investing into their own interests. This does not mean it

cannot be beneficial to the African States that have developed economic relationships with

China. Most of China’s financing will go to invest in infrastructure development which is needed

all around the continent. The Chinese central government and China’s state own banks say they

will provide a total of $1 trillion in financing to the continent by 2025.25 Experts have begun to

refer to China’s financing strategy as the “Angola Model”, the use of low-interest loans on

nations who rely on resources as collateral.26 This model has consistently encouraged regional

economic growth with the International Monetary Fund’s October 2011 on the region estimating

growth of 5.3 in 2011, and 5.8 in 2012.27 Though this gain may be true, there is evidence of

frustration and pushback as provided by the case studies above that this strategy of self-interest is

not in the best interest to the African Continent and as resistance from Africans grows and

China’s investment grows, will we see a policy shift for the better?

Here at Platform, our current campaign focus is on the social, economic and

environmental impacts of the global oil industry. We do this in a variety of ways, combining

education and the arts to raise awareness of the abuses of some oil companies. Currently, our

campaign only focuses on oil companies that have had their origin here from the United

Kingdom. There is reason to believe that the countries of Africa that we already are concerned

24 Ibid.25 Alessi, Christopher, and Beina Xu. "China in Africa." Council on Foreign Relations. April 27, 2015. Accessed November 7, 2015. http://www.cfr.org/china/china-africa/p9557.26 Sun, Yun. "China's Aid to Africa: Monster or Messiah?" The Brookings Institution. February 7, 2014. Accessed November 9, 2015.27 Ibid.

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with may already face exploitation from another front. The People’s Republic of China growing

economy has outgrown its own resources, and because of this China looks abroad to Africa.

With China’s strong influence on the global market, and its state-owned oil industries imposing

upon the sovereignty of underdeveloped nations we here at Platform cannot look away. Our local

influence and staff of artists and academics can shed a light onto the situation developing in oil-

rich African nations before it is too late. The disturbing lack of transparency, the suspicious aid

packages, and development programs that China has offered African states leave much to be

wanted. A movement to encourage clarity and to truly foster the interests of both the Chinese

government, African nations and the precious environment of the African continent must be led

by Platform.

To begin, Platform can foster an environment that encourages creative ways to increase

awareness of China’s economic involvement on the African continent by hosting artists from

regions most affected by the People’s Republic of China’s influence in their home country. Here

at Platform we can showcase the work of regional artists that choose to use their talent to express

their disdain and distrust of Chinese involvement within their nation. Creating an environment

that strengthens the voice of the local African population should be of upmost importance when

it comes to this endeavor. This art should also be shown only in galleries that have no affiliation

with Chinese resource corporations. We must do the same as we did with British Petroleum and

Shell and alienate big oil corporations from the art world; their money should have no place of

influence in the expression and showing of these artists. It is our hope that such sponsorships will

be deemed inappropriate by the international art community.

Along with providing an environment that caters to African artist using their art to speak

out against Chinese oil exploitation, Platform should also host and search out Chinese artist who

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feel the same about the issue. This is an international issue that must be addressed from multiple

fronts, and Platform can assist by offering a venue for bold Chinese activist to speak out. The

PRC is notorious for NGO censorship, and the Human Rights Watch has been observing closely

the oppression of activist in the People’s Republic.28 As an organization Platform goal should be

to allow a place for artist of all nationalities to express their view in ways that words fall short.

This should include the voice of the Chinese and African activist that has been actively

oppressed by their governments and Chinese Oil.

Platform can also foster an environment for our academics to research further what the

impacts of Chinese investment in African resources have occurred. Our research staff is well

equipped to address the issue of the expansion of the Chinese Oil industry on African soil and

our research may prove influential in advising policy on the ever shifting position of China and

its African investments. These publications can contribute greatly to the academic discussion that

is already taking place on an international issue that effects all in one way or another. Academic

discussion is just the start to solving the solution to an issue that stretches beyond the relations

between Africa and China. Research that would focus on the humanitarian portion of the story is

something Platform can contribute to, as this is something that is of our concern. China’s

continuous ignorance to the rights of the local African people is an issue that must be published

to the world.

Along with research, Platform’s focus on education and training must be expanded to

provide training and assistance to local organizers in African states that are harmed most by

Chinese oil investments. Training those local populations and equipping them with the power to

address the issue themselves will strengthen the African people and can help prevent this issue

28 "China and Tibet." Human Rights Watch. 2015. Accessed November 24, 2015. https://www.hrw.org/asia/china-and-tibet.

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from expanding or continuing on. There is already a growing resistance in the nations mentioned

above in the policy brief, just imagine the improvements they can continue to make to their

countries if we can contribute the resources we have to strengthen the voice of local organizers

and protesters and help provide an audience on the international stage. Our Nigerian campaign,

Action Saro-Wiwa can be an excellent model to base other African campaigns off of as African

nations like Chad have fallen victim to similar human rights violations and environmental

violations by Chinese companies as Nigeria with Shell.29

Continuing the awareness should be the main focus of Platform and lobbying and urging

the international community to join us in investigating and holding accountable the Chinese

resource quest. It is our hope that China will grow to be more responsible with the investments

that they are making because the practices they continue to make now are dangerous to the

people and environment of the African continent. It is in the both China and Africa’s best interest

for China to evolve and take on more responsibility with the invested interests the Chinese

corporations and government have made on the African continent. Platform should spearhead a

movement to pressure this to be so by equipping the people affected nations with the ability to

speak out for what is best for them and their state. Unfortunately, without pressure from the

international community, and continual accountability Africa is at risk of become exploited once

again by a foreign power. With our support, we can encourage African citizens to take action

against Chinese economic influence and claim African resources for their own, and with

guidance Africa can practice responsible uses and harbor economic growth to become a

prosperous and fair continent.

29 "Action Saro-Wiwa." Platform London. Accessed November 9, 2015. http://platformlondon.org/oil-the-arts/asw/.

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Alessi, Christopher, and Beina Xu. "China in Africa." Council on Foreign Relations. April 27, 2015. Accessed November 7, 2015. http://www.cfr.org/china/china-africa/p9557.

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"Angola President Seeks More Non-Oil Deals in His Visit to China." Bloomberg.com. June 12, 2015. Accessed November 9, 2015.

"Chad." China National Petroleum Corporation. Accessed November 8, 2015. http://www.cnpc.com.cn/en/Chad/country_index.shtml.

"Chad Withdraws Chinese Exploration Permits." Al Jazeera English. August 14, 2014. Accessed November 8, 2015.

"China and Tibet." Human Rights Watch. 2015. Accessed November 24, 2015. https://www.hrw.org/asia/china-and-tibet.

"Chinese Peacekeepers Start Deployment in South Sudan." Reuters. January 16, 2015. Accessed November 9, 2015.

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Sun, Yun. "China's Aid to Africa: Monster or Messiah?" The Brookings Institution. February 7, 2014. Accessed November 9, 2015.

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