China's Bid for African Oil: Double-edged Oil Relations between China and African Petrostates


Oil Platforms off the coast of Cameroon © jbdodane / CC BY-NC 2.0 / Flickr

The world is facing a revolution. The quest for alternative sources of energy to sustain many developing economies is marked by the proliferation of solar and wind farms, but also by that of perforation towers, a symbol of 20th century industrialization. Many of these changes are taking place in African soil, from where 8.8% of the world’s oil production comes (BP, 2020). It may seem little, but its concentration and the high amount of undiscovered reserves makes it the object of global desire. These resources are concentrated in just 7 countries and, in the future, the Gulf of Guinea will produce one of every five new barrels (Edoho, 2011).


On the other side of the table, there is China, whose oil consumption has risen exponentially since the 1990s, and has become unable to satisfy it despite being the seventh largest oil-producer worldwide (Grimoux, 2018). It used to import most of its oil from the South-East Pacific and the Middle East, but they are too insecure. As 80% of the oil that it consumes is imported, the Asian power turned towards non-OPEC African oil producers (Zhao, 2007).


By the time China made its triumphal entrance in Africa, the West was backing off, as shown by its investment and trade statistics as well as by the reduced aid and assistance that it provided to African countries. In sum, China–Africa relations must be understood as the result of the marginalization of Africa in the age of globalization. Africa recognized China as another developing country and a more equal partner and embraced its arrival.

Most scholars assess the interest of the Asian power in the region on a resource base, but we want to highlight the role of oil. Previous literature has dealt extensively with the nature of petrostates, as well as their relationship with the United States. Instead, we focus on the role played by China in the recent development of these African petrostates. Sino-African relations embody opportunities and threats. Many wonder whether China's investment is good for Africa. Is it a partner or a predator? To answer this question, we review the existing work on the impact of Sino-African relations in the areas of governance, economic relations and human rights.


Oil Governance

Oil trade in Africa was for many years conceived as a mere exchange between two unequal actors with opposing, yet complementary, interests. Western firms obtained concessions for oil exploration in states offering low operational costs and quality products. However, at the beginning of the 21st century new players knocked at Africa’s doors wanting to get their share. The most successful one was China, especially since its takeover of a French concession in Angola in 2005 (Frynas and Paulo, 2006).


China’s approach to oil trade shook up the status quo. According to Ross and Voeten (2015), risky, unattractive countries that have oil can attract investors without making costly commitments to trade, particularly when they are not risk averse. Bader and Daxecker (2015) described how Chinese producers often set up in “pariah states” that the West had abandoned due to political or economic concerns. Here, Sudan’s case is paradigmatic: during the 2000s insurgency, it was repeatedly sanctioned by the UN. But in the same period, it tripled its oil production thanks to investment by Asian state-owned companies (mainly China’s CNPC).


In many cases, Chinese companies did so through joint ventures with local firms to minimize risks. Chinese oil companies now cooperate with well-known Sudapet (Sudan), Sonatrach (Algeria), Sonangol (Angola) and the Nigerian National Petroleum Corporation (Nigeria). As Edoho (2011) explains, this cooperation between petro-governments and Chinese capitals was expected to foster the development of a local corporate class able to boost the economies of their countries. However, since the early 2000s some authors have warned that the result is so far the opposite and that China has promoted bad governance and many of the evils that the OECD and the New Partnership for African Development (NEPAD) tried to eradicate, like dictatorships, rent-seeking, and corruption (Taylor, 2006; Bader & Daxecker, 2015).


There is wide consensus that one of the main differences between the Chinese and the West in this field is the permissive character of the former. Unlike Washington’s democracy hawks, China’s approach has been recognized for its ‘no-strings-attached’ policy. In exchange for its investments, it asks for nothing but for one thing: recognition of Beijing’s government instead of Taipei’s. This seems to encourage state-led development at the expense of democracy and good governance. Ramo named this model the ‘Beijing consensus’, in opposition to the Washington one (Ngomba, 2007). Ross (2008) studied how some petrostates have seen this positively and sought the arrival of Chinese firms.


Some authors answer to this critique by arguing that there is no change from the Western hegemony in the continent: the US protected a tyrant in Libya while he was useful for their purposes and kept relations with Angola despite ideological differences. On the other hand, China prevented Sudan’s petro-dictator from being held accountable for the Darfur genocide (Thompson, 2007). Post-civil war Angola avoided an IMF SAP and transparency reforms thanks to Chinese oil-backed loans that eventually saved it from collapse (Harvey, 2019). Chad and Equatorial Guinea similarly resisted Washington 's interventions (Carmody & Owusu, 2007). For these authors, oil-for-infrastructure deals and their subsequent investments help compensate for the negative implications of the resource curse that these petrostates witness by alleviating poverty or untapping resources. They entail further positive consequences for governance, infrastructure rather than cash payments curbs corruption (Bader and Daxecker, 2015).


Thus, the ‘no-strings-attached’ policy can be understood as providing the breeding ground for corruption that may foster a race to the bottom in the institutional working of petrostates. Nonetheless, Chinese investments, mainly channelled through joint ventures, offer the opportunity for locals to gain expertise in the oil sector, which they hope to develop thanks to oil-for-infrastructure deals.


Economic Relations

While there are some who praise this controversial South-South cooperation, most doubt that China will approach Africa in a radically different way to its predecessors, as its policy is driven by economic and strategic interests. So, we should deal with the economic consequences of China’s investment in Africa.


China’s main concern is its reliance on foreign oil and on international oil prices. Therefore, Chinese SOEs mostly acquire equity crude oil, which allows China to influence world oil prices (Meidan, 2006). However, Chinese companies are not on an equal footing with their African counterparts. Because they have more leverage, they have been able to impose prices below market prices. This is not the only non-competitive practice of Chinese firms operating in Africa, since it is suspected that their market practices breach OECD rules (Thrall, 2015).


Moreover, there is widespread concern about the increasing dependency of African countries on China’s economy, as raw materials account for as much as 94% of African exports to China, with fuel as the main good exported. This excessive dependency is even more pronounced in the cases of Sudan, Angola, and the Democratic Republic of Congo. During the early 2000s, this association was extremely beneficial for African countries, as the boost of Chinese oil demand and the consequent increase in prices worldwide prompted a windfall of state revenue (Zafar, 2007). Although prices nowadays are not as high as during that period, these countries still have a part of their revenue guaranteed thanks to China’s increasing demand. Besides, these countries also import a significant quantity of manufactured goods from China, produced with the raw materials exported from Africa. As a result, oil-producing African countries are in real danger of suffering the Dutch disease, the de-industrialization process that Karl (2007) predicted (Grimoux, 2018).


Nonetheless, a feeling of discontent is starting to arise. China’s role in Africa has been linked with policies which have had detrimental effects for the respect of human rights as well as the economic growth of these countries. Additionally, many feel that Chinese firms are treated with favouritism, as too many public contracts are given to Chinese firms even though they do not create much employment for Africans. These tensions have led to different sources of open opposition to the Chinese presence in Africa. For instance, during the 2006 elections in Zambia, candidate Michael Sata focused its campaign on the need to expel China, whose behaviour was qualified as “neo-colonialist” (Thompson, 2007). Another even more extreme source of opposition was the 2006 car-bomb attack in a Nigerian oil-refinery, whose perpetrator, the Movement for the Emancipation of the Niger Delta, “wish[ed] to warn the Chinese government and its oil companies to steer well clear of the Niger Delta. The Chinese government by investing in stolen crude places its citizens in line of fire” (Taylor, 2006).


Human Rights and Democracy

In addition, the World Bank’s President stated once that China’s investment in Africa’s infrastructure represented a partnership in the still failed intent to alleviate poverty there (Edoho, 2011). This is what Chinese officials stand for. Yet, many in the West mistrust the energy-hungry power, capable of turning its Human Rights advances into a dead letter. The literature on the implications for Africans’ Human Rights of oil export dependence on China also deserves some lines. Are Human Rights detriments caused by Chinese investments or are they the purest expression of the scholarship on the resource curse?


Authors like Bader and Daxecker (2015) say that China’s late entry into African oil markets in the early 1990s generates benign effects for human rights compared to importers with decades-long involvement in oil extraction. When the Chinese arrived in Africa, the vast majority of reserves were in the hands of Western and national companies. Market access thus required the provision of investments in infrastructure projects such as roads, railways, or hydropower stations, which in the end contributed to compensate for the detrimental effects that resource dependence has on Human Rights, and to the feeling that China was alleviating poverty in Africa.


Examples of China’s role in the devastated Angola have already been cited. The generous 17-year, 1.5% interest loan for infrastructure projects in 2004 that included hospitals, schools, transportations, telecommunication, agribusinesses, and housing, triggered gains in economic Human Rights (Edoho, 2011). In 2016, China provided preferential loans for a 11-km-perimeter highway project around the capital of Gabon, where it supports the development of industries such as tourism, finance, and telecommunications (Taylor, 2006).


That the Chinese presence in Africa is merely due to oil security concerns and that, therefore, economic human rights improvements are merely the inevitable result of such a strategic objective in China’s foreign policy is understood by some scholars as the evident outcome of the Chinese dogma of non-interference in the internal affairs of developing countries. According to Taylor, Beijing’s attitude, regarding its supply of weapons to the Sudanese regime, is to perceive it as an internal matter for that sovereign state to whom the Chinese offer strength and stability in exchange for oil concessions and a stable political environment (win-win outcome) (Taylor, 2006). Still, many hold that China is paving the way towards more Human Rights violations, as such transfers are done to oppressive regimes (Henry, 2014).


As Karl (2007) and Ross (2008) contend, oil importing states support violations of physical integrity rights in repressive supplier states. Unearned revenue flows from oil wealth reduce the cost of repression for already authoritarian governments because fuel rents protect them from having to rely on compliant taxpayers (Englehart, 2009). In the case of China, because its foreign policy strategy consists of the pursuit of energy security in already oppressive regimes but on a non-interference basis, the negative effects of the resource curse for Human Rights are magnified.


In Sudan, CNPC’s airstrips were used by the Sudanese government to conduct bombing raids on villages and hospitals (Enuka, 2011). In addition, China backed Zimbabwe’s Prime Minister’s crackdown on its citizens in the 2000s. He later declared to have accepted Chinese sales of arms worth over US$200 million, the use of which caused 600,000 people to lose their dwellings and sources of livelihood (Conteh-Morgan, 2018). In general, Chinese unconditional loans are attributed to China’s non-interference policy in its oil diplomacy (Osondu-Oti, 2016).


In sum, in pursuit of energy security on autocracies, China’s principle of non-interference in the domestic affairs of the oil-export-dependent country undermines civil and political rights. However, the simple delegitimation of Chinese operations in African petrostates based on the still poor human rights situation there often clouds the window of opportunities in the form of economic human rights advances (infrastructure and services) gained from China’s presence (Sayne & Hruby, 2016).


Conclusions

China is neither a tiger nor a mouse in Africa. We started this article questioning the magnitude of its role but, as we have tried to convey, reality is much more complex. On the one hand, African petrostates draw sweeping benefits from Chinese investment. Optimists like Edoho see it rather like a developmental partner and argue that, thanks to China and to the acquisition of knowledge and expertise through joint ventures, African countries are richer, more developed, and better prepared to foster growth and to lift thousands of deprived citizens out of poverty.


On the other hand, many scholars have pointed out reasons to be sceptical about these benefits, as they may come accompanied by substantial threats to institutional governance, human rights protection and the very own industrialization of these countries. The Chinese might have initiated a race to the bottom in all the three aspects discussed in the literature gathered here. Petrostates authoritarian leaders now seem stronger than some years ago, Taylor emphasizes, and the influx of Chinese investments has prevented local economies from developing. The arguments of their rebuttal lead them to consider China as a predator.


However, even if exclusively intrigued by the oil dream, Chinese incursion into African oil has resulted in certain progress in the socioeconomic sphere of Human Rights. No matter whether or not China’s investments in Africa are driven by an altruistic narrative, the existence of some gains experienced by the African peoples from such an incursion are irrefutable.

Finally, it is worth mentioning that, as Bader and Daxecker (2015) stress, the period under study is very short and that, in the last few years, Africa has experienced far-reaching changes. China even more so. As China’s economic and developmental model changes, which is forecasted to happen in the near future, we can expect to see shifting attitudes towards Africa. Although current Chinese investment triggers Africa’s deindustrialization, it might be the case that in ten years China imports low-end manufactured products from Africa instead of producing them itself. Because African Petrostates have closer ties with China than other African States, they would probably be the main recipients of Chinese capital.


Therefore, China's true role regarding resources in Africa remains unsolved and only time will tell what the true yields of this relation are.




Laura Bravo Cabanes is a University Degree student enrolled in the Dual Bachelor of International Studies and Law at the Universidad Carlos III in Madrid. She studies Arabic language in Casa Árabe in Madrid, and actively participates in courses and seminars at the Institute of Conflicts and Humanitarian Action Studies related to regional security and relations between the Asian world and Europe. Full of energy, and eager to learn and discover new ideas and thoughts, her passion for International Law will take her to Paris to continue her academic development at Université Paris II Panthéon-Assas next academic year. You can find her on Twitter and on LinkedIn.


Inés Dezcallar Miranda is also an undergraduate student from the University Carlos III (Madrid), currently in her third year of Law and International Studies. After being enrolled in the Summer Program Experiencing China - International Relations in Tsinghua University (Beijing), she is eager to learn more about the Chinese perspective of world affairs. You can find her on LinkedIn.


Daniel Hernández Benito is an undergraduate student enrolled in the Dual Bachelor’s Degree in International Studies and Law at Universidad Carlos III de Madrid as well. Always passionate about history and languages, he started to learn Chinese a few years ago and now plans to go on an academic stay to the University of Nottingham Ningbo China. Furthermore, he is particularly interested in Public and Comparative Law. You can find him on Twitter and on LinkedIn.



The opinions expressed here are those of the writers and do not represent the views of European Guanxi.

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