African labour and the Chinese dragon

Róisín Hinds reports from the Zambian Copperbelt, a site of intense labour conflict linked to Chinese investment
July 2012

A maintenance crew at work in a Zambian mine. Photos: mm-j/Flickr

In the 2006 Zambian election, Michael Sata, leader of the opposition Patriotic Front, embarked on an election campaign that raised eyebrows across the continent. Taking to the stage at rallies in the capital, Lusaka, and the mineral rich Copperbelt province, Sata tapped into what had become the populist mood by berating foreign, in particular Chinese, investors. ‘Zambia has been mortgaged to China,’ he said. ‘These Chinese are infesters, not investors’.

With significant mineral wealth, the central African state has long been a destination for foreign direct investment (FDI). First, the British and South Africans arrived to set up copper mines, which were nationalised soon after independence but then privatised in the mid-1990s as a result of ‘structural adjustment’ programmes. Chinese firms have subsequently become the major players in Zambia’s mining industry, providing massive inward investment and re-opening once defunct mines to feed China’s industrial boom.

Sata threatened to expel ‘bogus’ Chinese investors, and, after he met with Taiwanese representatives in Malawi, the Chinese ambassador threatened to pull all investments should he win. But Sata’s message struck a chord with the urban poor, who had seen little of the benefits of the post-2000 commodities boom, and blamed the Chinese for worsening labour conditions and political corruption. In September 2011 Sata was elected president of Zambia.

Reshaping the landscape

Events in Zambia, the third largest recipient of Chinese foreign direct investment in Africa, provide one of the more pertinent examples of how China is reshaping the political and economic landscape of Africa. Sino-African engagement is one of the most significant developments on the continent since the end of the cold war, and has prompted a flurry of alarmist media reports and a growing body of academic literature. It is not only the scale of engagement that is attracting attention but the speed with which it has grown. In 1990 Chinese FDI into Africa stood at £30 million; by 2005 it had increased to £1 billion. In the decade to 2008, China-Africa trade increased from £5 billion to £53 billion, averaging an annual growth rate of 35 per cent.

For many African leaders, China’s approach represents an opportunity to be exploited for the good of all, providing much needed employment and investment. The former Zambian commerce and trade minister, Felix Mutati, says: ‘The Chinese have the technology, the speed and they are cost-effective. The UK finds it cost-effective to use the Chinese for [construction], so why should we be left behind? We better fly with the rest of the world.’ There is, however, a substantial body of opinion arguing that, as former South African president Thabo Mbeki warns, China’s interest in Africa’s natural resources has become a ‘new form of neo-colonialist adventure’ that is undermining strides toward democracy, environmental standards and labour protection.

Historically, China’s relationship with Africa has been shaped predominantly by diplomatic imperatives. Emerging isolated from the Korean war, China looked to Africa as a source of political support on the international stage – its 1971 application for a United Nations seat was successful due to African support. China’s approach to Africa is now more economically minded and informed by two principal goals. First, opening and entering new markets abroad, and second, acquiring natural resources to fuel its growing economy – many of the largest recipients of Chinese FDI are countries of notable mineral wealth, such as South Africa, Sudan, Zambia, Nigeria and the Democratic Republic of Congo.

In 2006 China produced an Africa-specific policy, in which it sought to distinguish Chinese investors from other companies operating on African soil on the basis of ‘mutual benefit’. The policy emphasises a common historical experience between the Chinese and African peoples as victims of colonial oppression, and highlights the need for ‘south-south’ solidarity in a shared quest for development. A key component of this is the principle of ‘non‑interference’. China’s economic cooperation comes, so it is said, without conditions attached. When compared to western nations who frequently tie aid and investment to explicit demands for reform, the appeal of doing business with China becomes clear. The economist Jeffrey Sachs describes China’s strategy as ‘pragmatic’, saying ‘it gives fewer lectures and more practical help’.

Blind eye to abuses

Yet this has led to criticism from human rights organisations that China is willing to turn a blind eye to abuses of power. There are accusations that China fuels conflict and corruption, most notably in Sudan where it invests heavily in the oil sector and sells arms to the Al-Bashir regime. In the UN, China has also used its veto power to block sanctions against Sudan and Zimbabwe.

Beijing’s claims to political impartiality are very much open to question. Many of the Chinese companies operating in Africa, particularly those in the geo-strategically significant extractive industries, are state-owned enterprises (SOE). As such they can, and often do, utilise the political capital associated with state support. Non-SOEs can also access assistance from the Chinese government. In 2005 alone the state-owned Exim Bank distributed in excess of $15 billion to Chinese investors abroad. In combination with a domestic political environment in which freedom of expression is tightly controlled, this enables Chinese investors to bypass some of the corporate social responsibility requirements, accounting stipulations, and the risk of press exposure and brand damage that affect other multinational investors.

Despite this, the union between state and corporate interests has not always been harmonious. Faced with competition from other firms and squeezed profits, many Chinese industrial managers in Africa have responded by reducing wages, worsening working conditions and reducing safety and environmental standards. The political disquiet to which this invariably leads stands at odds with the long term diplomatic interests of the Chinese state.

China in Zambia

Perhaps nowhere on the continent have such tensions been played out more clearly than in Zambia. With significant mineral deposits, the central African nation is an obvious focus for Chinese interest. As elsewhere, the growth in investment has been startling. In 2000 Chinese FDI into Zambia was £60 million. In the space of ten years it has increased to an estimated £560 million. The Lusaka branch of the Bank of China has even begun offering banking services in Chinese currency, a first for the continent.

While Chinese investment in Zambia targets various sectors, from infrastructure to retail, the epicentre is the Chambishi region of the Zambian Copperbelt. Once a defunct mining town, Chambishi is now home to one of five official special economic zones that the Chinese government is in the process of setting up in Africa – the others being in Mauritius, Nigeria, Egypt and Ethiopia.

Some of the Chinese bosses visit the site

Here, as elsewhere, Chinese capital has created a great deal of new employment. While other mining investors have downscaled their operations during the global economic downturn, the Chinese presence has expanded. Gerry Finnegan, former International Labour Organisation director for Zambia, contends that this consistency has fostered some positive sentiment toward Chinese investors: ‘Whereas other investors sought copper for international sale and were thus subject to fluctuations in demand, Chinese investors primarily sold to China, where there is a constant demand to sustain the growing domestic economy. The jobs stayed and people were happy.’

Mining for China

Not everyone was happy though. Workers in Chinese-owned mines have gone on strike numerous times, protesting against poor wages and working conditions. Goodwell Kaluba, secretary general of the National Union of Miners and Allied Workers, a union prominent in the Chinese-owned mines, is critical of Chinese companies: ‘Our colleagues the Chinese, they have some flaws when it comes to safety. Some of the conditions are also horrible and the remuneration is nothing to talk about.’

Older miners in Chambishi reminisce about the era of nationalisation. Until the early 2000s ZCCM, the state mining company, provided schools, hospitals and even sports clubs for workers. Chinese investors show little comparable interest. Once-popular sporting facilities are decrepit, the roads are deteriorating and access to healthcare is diminished. In the words of a worker in the Chinese-owned Chambishi copper smelter: ‘Things were good before – the mines were government owned and they cared about their workers and treated us well.’ But all this has now changed: ‘Things are different, they’re much worse. Now these people that come, these investors, they don’t care. It’s like a worker who treats his tools badly, if he continues eventually the tools will break – if these investors, these Chinese, if they treat us workers badly, one day we will break too.’

In 2005 Chambishi experienced one of the worst industrial accidents in Zambian history when an explosion at the mines’ explosives factory killed 49 workers. It was largely attributed to declining safety standards. The following year striking miners in the same location were shot at by Chinese managers when they marched on the Chinese workers’ compound. Six were seriously injured. A similar incident occurred in 2010, when Chinese managers shot and injured 11 protesting miners in Zambia’s Southern Province. In both cases prosecutions were not followed through, despite the assailants being identified. Most recently, miners in Chambishi downed tools on 7 October 2011, demanding a 100 per cent wage increase, highlighting the growing impatience for better conditions following Sata’s election.

Will Sata tame the dragon?

It remains to be seen whether their expectations will be fulfilled. Since the 2006 election the Patriotic Front’s approach to Chinese investors has been more moderate, and in the party’s successful 2011 election campaign the focus was more on corruption than Chinese investment specifically. Speaking of foreign investors, Sata’s approach was cautious yet welcoming: ‘We need foreign investors because they provide jobs for our people. But they must respect Zambian workers.’ Tellingly, his first official appointment at State House was with China’s ambassador Zhou Yuxiao. At the end of September the Chambishi mine announced employees would receive an unprecedented 85 per cent pay increase, although workers remain cautious as to whether this will be realised.

The rise of China has fostered a growing belief that African countries should tie their fortunes to a Chinese future rather than a western past, hoping that this future offers partnership rather than subjugation. The early signs are mixed. From South Africa to Namibia, Tanzania to Zambia, Chinese investment has led to strikes, protests and denunciation from trade unionists. And it is here, in the agency of labour, that the future of Sino-African relations will be played out.


 

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Ben 15 September 2012, 20.42

Good article. Sunderland’s main sponser ‘Invest in Africa: Africa is open for business’ should recieve scrutiny too. The project’s backers, Tullow Oil, according to ActionAid’s FSTE 100 tax tracker, is a company that is in tax havens 58%.

Have you seen this been debated anywhere? Possible follow up blog for RP



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