Chinese firms making contribution to Africa

By Li Xiaoyun Source:Global Times Published: 2017/6/11 21:53:40

Illustration: Luo Xuan/GT


Zambia's detention of 31 Chinese nationals for illegal mining in the country's copper belt quickly made headlines recently. While the incident has been handled appropriately, with the Zambian government agreeing to release the 31 Chinese nationals after China's diplomatic efforts, some foreign media outlets used the case as a way to criticize China's investment in Africa.

In fact, this was just an isolated incident. The reason why it raised so much attention is because the local police arrested and detained the Chinese workers, which stirred public discussion. It may also reflect the poor performance of some small-scale Chinese private companies in aspects like taxation and employment.

Meanwhile, some Western companies operating in Africa have experienced similar situations. For instance, Tanzania's media recently disclosed that Acacia Mining Plc had been accused of under-reporting the amount of gold-copper concentrate ore in its shipments out of Tanzania and evading taxes amounting to about $5 billion to the government over the past 16 years. But compared to the Chinese incident, there was less coverage of this in the Western media.

Whether from China or the West, one company's malpractice obviously does not mean the problem extends to all companies from the same country. We cannot say that Western aid and investment are detrimental to Africa's general development, and it is also well recognized in the international community that China has been playing an active role in promoting Africa's development.

At the end of May, Kenya opened the Nairobi-Mombasa railway line, which was financed and built by China. Kenyan President Uhuru Kenyatta said at the opening ceremony that it was a historic moment. In the 1970s, China helped build a 1,860-kilometer railway line connecting Zambia and Tanzania, which played a big role in the independence and development of Southeast African countries. Today, with Africa's development increasingly restrained by its limited infrastructure, the Nairobi-Mombasa railway line, together with the Addis Ababa-Djibouti Railway completed in 2016, will offer important support for the development of eastern Africa. As such, the cooperation between China and Africa focuses on long-term development.

In 2016, bilateral trade between China and African countries reached $149.2 billion, marking the eighth consecutive year in which China was Africa's largest trading partner. In the first quarter of this year alone, the trade value between China and African countries grew by 16.8 percent year-on-year. At present, Chinese investment in Africa has exceeded $100 billion, with more than 3,100 Chinese companies either operating or having invested in the continent. With more and more Chinese companies, including many small-scale private companies, joining the development of Africa, a few of them, due to their lack of knowledge about local laws and the social and cultural environment, may encounter problems.

In recent years, China's direct investment in Africa has gradually shifted from the resource-intensive sector to a more diversified range of sectors. Finance, new-energy, agriculture, manufacturing, infrastructure, telecommunications and other sectors have become new hot spots for investment. For example, a Chinese shoe-making group invested in Ethiopia, creating 6,000 jobs for the local community. These companies have not only abided by the local laws on taxation and labor rights, providing considerable taxation revenue and employment for the local population, but have also actively fulfilled their corporate social responsibility.

In fact, over the past three decades, Chinese companies have continuously learned from their experience when going global, following the international environment and employment standards. During the process, taxation, wage and environmental protection problems may occur at some small companies, which is hard to avoid.

Some Chinese private companies do not fully realize that although some African economies are underdeveloped, they still have relatively complete taxation systems as well as labor rights and environmental protection laws. Therefore, before entering Africa, they should strengthen their communication with local Chinese embassies and business representatives so as to learn these important things. When it comes to cooperation problems with local companies due to language and other factors, or when it comes to failure to comply with the local laws, Chinese companies must face the problems and improve their work. Only in this way can Sino-African cooperation be deepened under the principle of mutual benefits.

The author is president of the China International Development Research Network and former dean of the College of Humanities and Development Studies at China Agricultural University.


blog comments powered by Disqus