This document is a subsection of Platforms

China and ICT Investment in Africa

The People’s Republic of China has been strengthening its development and trade relations in Africa since the mid-1990s. Chinese telecom investment in Africa is only one of many "mutual-benefit" areas. As China seeks to secure natural resources, new markets for commercial expansion, and allies in the UN, its African partners hope to build ICT infrastructure and increase new media access. The exchange between China and African nations is growing increasingly asymmetric, and African nations are torn between the tremendous acceleration spurred by Chinese investment, and their disapproval of certain Chinese business practices and China's undisguised economic aggressiveness.

China has reacted to criticism by pursuing soft-power appeasements, while continuing to buy in on large-scale infrastructural projects. China's policy of non-interference and its tolerance for corruption and political risk remain attractive to many African governments.

Contents

Current State of Chinese Telecom Industry

Over the last decade, China’s telecommunications industry has undergone large-scale reshuffling that has affected both domestic and international operations. China Telecom remains state-owned, but it has been split into fixed-line, mobile, and satellite divisions, in addition to a geographical North/South divide. The current oligopolistic structure is regulated by the Ministry of Information Industry (MII), which supervises competition, grants licenses, allocates resources, and promotes R&D. Concurrently, many private Chinese companies have developed under government protection, competing with foreign companies not only in the Chinese market, but also in emerging markets in Africa.

The Chinese telecommunications sector has experienced dramatic growth since the '90s. Today there are approximately 830 million phone users, with more than 1.25 million cellular subscribers signing up every week. The number of Internet users has reached 172 million as of September 2007, representing 14% of all Internet users in the world. This growth has been simultaneously accompanied by advancements in media censorship technologies and policy.

Yet, as the largest developing country in the world, China experiences a significant digital divide across urban and rural areas, income level, and education level. There is only 12.3% broadband penetration as of 2006, mostly in urban areas. Most rural areas have yet to be networked. Additionally, the cost of Internet is relatively high, and the lack of competition among the state-owned service providers provides little incentive to decrease costs. Additionally, the MII and the Ministry of Culture have issued notices forbidding the opening of new cyber-cafes in 2007, thus limiting community access for those without a computer or Internet service. Finally, illiteracy still remains a major obstacle in both urban and rural areas, making potential broadband access inconsequential to as much as 20% of the population in certain districts and towns.

China's telecom industry has quickly caught up with the Western world, servicing the largest number of Internet users second only to America. Yet simultaneously, China's uneven ICT penetration and failure to address wider educational conditions testify to the limits of a developing nation's rapid technological development. Will these problems be replicated in Africa, with China's support?

Chinese ICT Investment in Africa

At the same time it undergoes rapid domestic development, China has emerged as a key player in the investment and development of African infrastructure projects. These include electric power, water conservancy, transportation, agriculture, manufacturing, and telecommunication. The Chinese Commerce Ministry reported that direct investment between China and Africa reached US $6.64 billion in 2006, making China Africa's third-largest trading partner. China's strategic relationship with Africa has ensured a steady supply of natural resources required to fuel China's rapidly-growing economy. For example, nearly a third of China's oil imports come from Angola, Sudan, Nigeria, Equitorial Guinea, Gabon, and Nigeria. Vigorous economic diplomacy has also positioned China as the primary supplier of many manufactured goods in Africa, including arms and hardware. In recent years, Chinese leaders have frequently toured Africa. The Chinese government billed 2006 as "The Year of Africa."

China has aggressively encouraged Chinese companies to invest in Africa. In 2007 China launched the China-Africa Development Fund, which allocates investment funds for Chinese companies that plan to set up new operations in Africa. At the 2006 "Forum On China-Africa Cooperation" (FOCAC), the Chinese government pledged to "vigorously encourage Chinese enterprises to participate in the building of infrastructure in African countries, scale up their contracts, and gradually establish multilateral and bilateral mechanisms on contractual projects. Efforts will be made to strengthen technology and management cooperation, focusing on the capacity-building of African nations."

NigComSat-1 launch in May, 2007.

Relations between China and Nigeria have been particularly active. China's willingness to do business with Nigeria, including the selling of arms, has led to a slow eclipse of Nigeria's relations with the United States, replacing it as Nigeria's leading import partner, with 11% of the trade. (The United States holds over 8%). Nigeria is a key oil supplier to China.

In 2005, China Great Wall Industry Corporation, a state-owned hardware manufacturer, won a $311 million contract from the Nigerian government to manufacture and launch the NigComSat-1 communications satellite. Under the management of the Nigerian National Space Research Development Agency (NNSRDA), NigComSat-1 will harvest contracts from Nigeria-based telecom operators, who will no longer need to solicit service through foreign satellite operators. The satellite was launched in May 2007, setting off an immediate public/private tug-of-war between NigComSat (the government regulatory agency for NigComSat-1) and Nigerian Communications Commission (NCC), a private operator granted license by exiting president Olusegun Obasanjo. The NCC has come under scrutiny over poor quality of service. NigComSat believes it is in a better place to not only offer last-mile mobile services, but to also support rural telephony, which the existing operators promised but do not yet offer. China has played no part in the licensing and operation of NigComSat-1, but is currently supporting the Nigerian government's purchase with a $200 million credit facility from EXIM Bank of China.

Huawei Technologies, one of China's leading networking and telecommunications equipment suppliers, has been notably active. In 2006, Huawei won a $100 million contract to become the leading CDMA network provider for Nigeria's Multi-Links, a Nigerian private telephone operator. The same year, Huawei announced that Starcomms Nigeria Limited, Nigeria's largest telecom operator, would deploy Nigeria's first 1xEV-DO-based mobile broadband network. The network will enable subscribers to watch streaming video, movies and short broadcasts over their 3G mobile handsets. Huawei opened its new Technology Support Centre and the expanded its Training Centre for Western Africa in Abuja, the capital city of Nigeria, constituting a $10 million investment. Huawei also announced a US$ 200 million memorandum of understanding towards the Phase II rural telephone network.

Also in 2006, China drafted a deal with the Ugandan government to loan $120 million for national ICT backbone infrastructure. The completion of the national ICT backbone would compete with the current link provided by the two national operators, MTN (256/512Kbps) and UTL (1.024 Mbps/2 Mbps). The State Minister for ICT, John Alintuma Nsambu, said the Chinese government agreed to takeover a five-year project which would help to overhaul the ICT sector.

In 2007, three Chinese companies -- Sagem, ZTE, and Huawei -- were awarded contracts to lay down fiber optic cable in Kenya, creating a terrestrial network that will be connected to the planned undersea East Africa Marine Sytem cable due for completion in 2009. This new national network will alleviate Kenya's current reliance on expensive satellite service to route international and local traffic. Chinese companies won a similar infrastructural contract with the Ethiopian Telecommunications Corporation for $2.4 billion. ZTE, Huawei, and China International Telecommunication Construction Corporation will extend the fiber cable in Ethiopia from the current 4000 kilometers to 10000 kilometers before 2010.

In October 2007, Huawei donated Chinese telecom equipment worth US $130,000 to the Rwandan government. At the donation ceremony, Lou Qinjian, Deputy Minister of Information Industry, stressed China's mutual benefits and interests with African countries.

Benefits for Africa

China's concentrated investment in African telecommunication infrastructure has accelerated development to a degree that would be otherwise impossible. Western nations have displayed particular hesitance to assist Africa's telecom growth. In the case of the NigComSat-1 contract, China was the only nation to make a bid on time, on budget, and up to the Nigerian government's desired standards.

China's emphasis on cooperation and its non-interventionist policy have generated very favorable conditions for many African nations to take advantage of Chinese government loans, infrastructure projects, and trade in natural resources. Many African governments identify their own development as parallel to that of China. Some African officials even cite the "Chinese model" of economic and political development as a successful instance of rapid economic growth under a non-representative political system.

Additionally, the scale of Chinese investment in Africa has brought increased international attention to African development. Many Western nations have criticized China's seemingly indiscriminate investment behavior, and express increased interest in Africa's expanding ICT infrastructure. The G8's promise of $50 billion in aid to Africa in 2005 has been regarded as indicative of, and responsive to, China's strong presence in Africa.

China's Expectations

Given the scale of Chinese investment in Africa and the Chinese government's cooperative, non-interventionist policy toward trade, it is clear that China hopes to work with as many African countries as are willing. China stands to gain:

Secured sources of natural resources required for its own rapidly growing economy.
Large new markets for Chinese manufactured goods and services.
Large-scale projects for Chinese businesses.
New jobs for Chinese citizens; nearly 750,000 Chinese currently work in Africa.
Cheap local labor to supplement Chinese labor on infrastructural projects.
Favorable backing from Africa's 53 nations at the United Nations.
Increased solidarity with the One China Principle.

Control of infrastructure and end-usage

Nearly all Chinese infrastructural projects are drafted, planned and executed in cooperation with the African governments and agencies within those governments. Once an infrastructural project is completed, its licensing, regulation, and maintenance may be then opened up to private operators.

It is not yet clear whether or how China might directly exert influence on the telecommunication infrastructure in Africa and the end-user experience of new media services. Currently, China's goals and expectations in Africa are more congruent with business strategies and economic diplomacy, not explicit control, exploitation, or colonial practices. Additionally, there have been no reports suggesting that the acknowledgement of the One China Principle has been enforced at the level of African Internet censorship regarding Taiwan, Tibet, or Falun Gong.

Cultural/Ideological Exports

African Summit poster struggles against poor Photoshop job

In January 2006, China released its African Policy, outlining its economic and diplomatic goals with African nations. In addition, the policy stipulated China's position in regards to cultural and ideological export.

Cultural Exchange: "China will implement agreements of cultural cooperation and relevant implementation plans reached with African countries, maintain regular contacts with their cultural departments and increase exchanges of artists and athletes. It will guide and promote cultural exchanges in diverse forms between people's organizations and institutions in line with bilateral cultural exchange programs and market demand."

Media Exchange: "China wishes to encourage multi-tiered and multi-formed exchange and cooperation between the media on both sides, so as to enhance mutual understanding and enable objective and balanced media coverage of each other. It will facilitate the communication and contacts between relevant government departments for the purpose of sharing experiences on ways to handle the relations with media both domestic and foreign, and guiding and facilitating media exchanges."

Anti-Taiwan Secession: "The one China principle is the political foundation for the establishment and development of China's relations with African countries and regional organizations. The Chinese Government appreciates the fact that the overwhelming majority of African countries abide by the one China principle, refuse to have official relations and contacts with Taiwan and support China's great cause of reunification. China stands ready to establish and develop state-to-state relations with countries that have not yet established diplomatic ties with China on the basis of the one China principle."

Backlash and Threats

China's increased presence in Africa has provoked a growing backlash from both the international community and from within African countries themselves. While the reported backlash has not been directed at Chinese telecommunication projects in particular, grievances expressed in other sectors of Chinese involvement suggest a lowered opinion of China's economic pursuits and a sense of cultural friction in business management and practice.

The international community's strongest criticism arises from China's protection of the Sudanese government. Up until November 2006, China actively worked to block U.S. initiatives at the U.N. Security Council aimed at forcing Khartoum to allow a more robust peacekeeping mission to its Darfur region. China has traditionally been careful not to endorse U.N. involvement in domestic affairs without consent of the host government, out of fear that someday such a standard could be used against it or its interests. While China has tried to maintain its established policy of non-interference and simultaneously protect its investments, Chinese President Hu Jintao has recently urged Sudan to resolve its problems after other African states have become more vocal in their disapproval of Khartoum's scorched-earth tactics in Darfur. At the same time, Hu also provided 100 million yuan for the construction of the presidential palace in Sudan and wrote off 70 million yuan in debt. This parallel diplomacy of using soft-power and economic incentive on African governments is emerging as a successful policy for China's persistent African investment. See this report for more.

In the New York Times, Kenneth Roth, executive director of Human Rights Watch, characterized China's "no-strings-attached" development approach in Africa as a mechanism for "underwriting repression."

China has received criticism from African countries over its business practices. South African President Thabo Mbeki warned against an "unequal relationship" developing between China and South Africa, stating that "China can not only just come here and dig for raw materials and then go away and sell us manufactured goods." In Zambia, miners at the Chambishi copper mine rioted over pay and working conditions set by their Chinese employers. President Hu has attempted to decompress both situations by increasing aid and lowering tariffs in those countries. China signed an accord for an economic cooperation zone aimed at attracting $800 million in new investments to Zambia's Copperbelt mining province. Indeed, China has remained confident in the face of increasing, if dispersed, opposition; Lui Ping, general manager in Lusaka for China's largest construction company in Zambia, the state-owned China National Overseas Engineering Corporation, summed it up: "Some politicians for political reasons say they want to chase some Chinese out of the country. But it's only political. They won't do it."

Additionally, a feature on TMC Net in May 2006 listed the economic benefits Chinese companies were reaping at Nigerians' expense, including the assymetric privileging of Chinese citizens working in Nigeria compared to Nigerians working in China.

China continues to perceive any competitive dealing with Taiwan on the part of African nations as a great threat to the solidarity of the One-China Principle. According to The Guardian, presidential candidate Michael Sata's opposition campaign in Zambia received strong backing after he attacked Chinese investments and threatened to renew ties with Taiwan. Sata did not win the election after China threatened retaliatory measures if he were elected.

Meanwhile, Taiwan has been actively soliciting support from African countries, with intentions to hold a "Taiwan-Africa Summit" in Taipei on September 9, 2007. This meeting would be followed by a "Taiwan-Africa Progress Partnership Forum" and a summit of African industrial and business leaders. It remains to be seen how far China will apply economic threats in order to maintain One-China solidarity among trading African nations.

With increased ICT investment and telecommunication infrastructure being built in Africa, many African governments now fear the development of the Internet as a platform for contrary views. China has shown its willingness to do business in nearly every major sector, and censorship technology and tactics should be no exception. In 2006, Zimbabwe drafted the Interception of Communications Bill 2006, which seeks to empower the authorities to intercept telephone, e-mail and cell phone messages. The bill will compel operators to install software and hardware to enable them to intercept and store information as directed by the state. The service providers will also be asked to link their message-monitoring equipment to the government agency. Failure to comply will result in a fine or imprisonment. Zimbabwe has received extensive Chinese financial and technical support in recent years. With China's expertise in new media censorship, it is speculated that China is also engaging in the selling of technologies to facilitate filtering and surveilance. More instances of emerging censorship action in Africa are described here.

--IC