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S. HRG. 112–203

CHINA’S ROLE IN AFRICA:

IMPLICATIONS FOR U.S. POLICY

HEARING

BEFORE THE

SUBCOMMITTEE ON AFRICAN AFFAIRS

OF THE

COMMITTEE ON FOREIGN RELATIONS 

UNITED STATES SENATE

ONE HUNDRED TWELFTH CONGRESS

FIRST SESSION

NOVEMBER 1, 2011

Printed for the use of the Committee on Foreign Relations

(

Available via the World Wide Web: http://www.gpo.gov/fdsys/

COMMITTEE ON FOREIGN RELATIONS

JOHN F. KERRY, Massachusetts, Chairman

BARBARA BOXER, California 

ROBERT MENENDEZ, New Jersey 

BENJAMIN L. CARDIN, Maryland 

ROBERT P. CASEY, JR., Pennsylvania 

JIM WEBB, Virginia 

JEANNE SHAHEEN, New Hampshire 

CHRISTOPHER A. COONS, Delaware 

RICHARD J. DURBIN, Illinois 

TOM UDALL, New Mexico 

RICHARD G. LUGAR, Indiana 

BOB CORKER, Tennessee 

JAMES E. RISCH, Idaho 

MARCO RUBIO, Florida 

JAMES M. INHOFE, Oklahoma 

JIM DEMINT, South Carolina 

JOHNNY ISAKSON, Georgia 

JOHN BARRASSO, Wyoming 

MIKE LEE, Utah 

WILLIAM C. DANVERS, Staff Director

KENNETH A. MYERS, JR., Republican Staff Director

——————

SUBCOMMITTEE ON AFRICAN AFFAIRS

CHRISTOPHER A. COONS, Delaware, Chairman

BENJAMIN L. CARDIN, Maryland 

JIM WEBB, Virginia 

RICHARD J. DURBIN, Illinois 

TOM UDALL, New Mexico 

JOHNNY ISAKSON, Georgia 

JAMES M. INHOFE, Oklahoma 

MIKE LEE, Utah 

BOB CORKER, Tennessee 

(II)

C O N T E N T S 

Page

Brautigam, Deborah, Ph.D., professor, American University and senior research fellow, International Food Policy Research Institute, Washington, 

DC .......................................................................................................................... 13

Prepared statement .......................................................................................... 15

Coons, Hon. Christopher A., U.S. Senator from Delaware, opening statement . 1

Durbin, Hon. Richard J., U.S. Senator from Illinois, opening statement ........... 5

Hayes, Stephen, president and CEO, The Corporate Council on Africa, Washington, DC ............................................................................................................. 24

Prepared statement .......................................................................................... 26

Isakson, Hon. Johnny, U.S. Senator from Georgia, opening statement .............. 3

Shinn, Hon. David, adjunct professor, George Washington University, Washington, DC ............................................................................................................. 5

Prepared statement .......................................................................................... 7

(III)

(1)

CHINA’S ROLE IN AFRICA: IMPLICATIONS 

FOR U.S. POLICY 

TUESDAY, NOVEMBER 1, 2011

U.S. SENATE, 

SUBCOMMITTEE ON AFRICAN AFFAIRS, 

COMMITTEE ON FOREIGN RELATIONS, 

Washington, DC. 

The subcommittee met, pursuant to notice, at 2:17 p.m., in room 

SD–419, Dirksen Senate Office Building, Hon. Christopher A. 

Coons, chairman of the subcommittee, presiding. 

Present: Senators Coons, Cardin, Durbin, Udall, Lugar, and 

Isakson. 

OPENING STATEMENT OF HON. CHRISTOPHER A. COONS,

U.S. SENATOR FROM DELAWARE 

Senator COONS. I am pleased to convene today’s hearing of the 

African Affairs Subcommittee, and I am honored to be joined with 

my friend and partner, the ranking minority member of the subcommittee, Senator Isakson, and the ranking minority member of 

the full committee, Senator Lugar. 

I thank them both for joining me today. I would also like to 

thank our distinguished witnesses, Ambassador David Shinn, adjunct professor at George Washington University and former U.S. 

Ambassador to both Ethiopia and Burkina Faso; Professor Deborah 

Brautigam, professor at American University and senior fellow at 

the International Food Policy Research Institute; and Mr. Stephen 

Hayes, president and CEO of the Corporate Council on Africa. 

Today’s hearing will take a hard look at China’s rapidly expanding role on the African Continent and consider how it is affecting 

American interests. In my view, the United States isn’t just ceding 

its potential economic leadership in Africa to China, it may be 

ceding its political and moral leadership there as well. 

We will discuss today whether China’s expanded reach should 

serve as a wakeup call for enhanced United States trade and investment, and we will take a close look at whether China’s growing 

influence in Africa may counter or even possibly undermine United 

States development, diplomacy, and other values-driven goals in 

the region. 

Finally, we will also consider areas of common interest between 

the United States and China in Africa that could provide the basis 

for enhanced bilateral and multilateral cooperation. 

China’s reach in Africa has grown dramatically in the past decade, and the rate of increased Chinese trade and investment in 

2

Africa is truly staggering. Between 2000 and 2010, trade between 

China and African nations grew by more than 1,000 percent. 

As you can see in our first chart here today, U.S. trade with 

Africa grew during this period as well, partly due to the passage 

of the Africa Growth and Opportunity Act, or AGOA. But the average rate of growth in China’s trade with Africa outpaced that of the 

United States by 100 percent. 

China clearly sees Africa for what it is, a continent of immense 

opportunity. Africa is home to 6 of the world’s 10 fastest-growing 

economies over the past decade. Increased rates of return on foreign investment, vast natural resources, and a rapidly growing 

middle class have all made Africa an increasingly important player 

in the global economy. 

But as the continent has grown economically, it has continued to 

also have significant development needs. The United States and 

China are both investing in that development, but doing so in very 

different ways. While we share some common interests in Africa 

that are at times complementary we should be clear-eyed about the 

very different nature of our engagement. 

First, our structures of government spending are different. The 

United States clearly distinguishes between Government assistance 

and private investment, while the line between public and private 

sectors in China is often blurred and involves many state-owned 

enterprises. 

The Chinese Government can offer financing and concessionary 

loans to African governments to build large infrastructure projects, 

in some cases with no interest required for up to 20 years and, at 

the same time, negotiate contracts with those same governments 

for mineral and oil extraction. 

While the United States invests diplomatic capital in the promotion of democracy, freedom of expression, and human rights, our 

leverage on African officials and governments is significantly weakened when those regimes can simply turn to China for support 

with essentially no value strings attached. 

If there is one message I wish to convey in this hearing, it is that 

the long-term American objective of promoting open societies in 

Africa—countries that embrace transparency and democracy, respect the environment, and protect human rights—is being challenged in some ways by China’s approach to Africa. By offering an 

alternative source of investment and development, China offers 

African regimes economic opportunity at times at the expense of 

government reform and in a manner that may not directly benefit 

the average African. 

This highlights a second key distinction. In my view, the U.S. 

Government has been investing in the people of Africa, while the 

Chinese Government has been investing in the infrastructure of 

Africa. It is tough to say precisely, given a real lack of transparency, but experts estimate roughly 70 percent of Chinese assistance to Africa comes in the form of financing for roads, stadiums, 

and government buildings, often built with Chinese materials and 

often by Chinese laborers. 

China is rarely transferring significant technology to Africa, nor 

employing many Africans. In contrast, more than 70 percent, as 

this chart shows, of U.S. Government spending is directed toward 

3

investment in the African people, primarily through health programs to combat HIV/AIDS, malaria, tuberculosis, and other diseases. These programs build upon the strong legacy of U.S. investment in global health established by former Presidents Clinton and 

Bush. 

America’s extensive public sector investments in Africa are often 

not as visible as those of China. Many Africans can point proudly 

to Chinese-built roads, buildings, or hospitals in their capital without realizing that many of the doctors or nurses there have been 

trained by Americans, medical supplies were provided by the U.S. 

Government, and that many rural health clinics that are lowering 

maternal mortality rates, vaccinating children, and donating mosquito nets across Africa are, in fact, often United States funded. We 

may be, in sum, winning the war on disease while losing the battle 

for hearts and minds. 

As we think about next steps for United States public and private sectors, we must gain, I believe, a better understanding of 

China’s role and motives and take steps to ensure the United 

States is not missing out on critical opportunities in Africa. 

Senator Durbin, who I am pleased has joined us here today, is 

proposing legislation to do just that. It aims to create jobs in America by increasing United States exports to Africa by at least 200 

percent in the next 10 years. This is absolutely critical because 

China has outpaced the United States in growth of exports over the 

last decade by nearly 3-to-1, as shown by our last chart. 

I want to thank Senator Durbin for initiating this legislation. I 

believe we need a comprehensive United States trade strategy for 

Africa, and we must work with existing resources—with the Ex-Im 

Bank, with OPIC, and USTR—to find ways to expand bilateral, regional, and multilateral trade opportunities. More United States 

companies selling their goods in Africa translates to more American jobs. 

There are many tools by which we can and should take a more 

assertive approach to expanding the scope of United States investment in Africa, and in my view, the U.S. Government must pursue 

an assertive strategy that aims to capitalize on the vast array of 

opportunities in Africa. We cannot simply afford to lose out to 

China in the private sector, while in the public sector we must ensure our values are not undermined by an expansive political and 

economic agenda by China. 

I look forward to hearing from our distinguished witnesses how 

the United States can achieve these objectives, but first, I would 

like to turn to Senator Isakson for his opening statement. 

Senator Isakson. 

OPENING STATEMENT OF HON. JOHNNY ISAKSON,

U.S. SENATOR FROM GEORGIA 

Senator ISAKSON. Well, thanks, Chairman Coons, for calling this 

hearing, particularly with regard to the role of China in Africa. 

I had the pleasure of traveling with Senator Coons to West Africa earlier this year, where we went to Ghana, Benin, and Nigeria 

and saw firsthand the benefits of United States investment and the 

Millennium Challenge Compact in particular in Ghana, where we 

actually saw the execution of that compact. 

4

They will be coming back for a second compact. And as President 

Mills told us in his office that the focus on lack of corruption, the 

focus on better governance, the focus on democracy, which was a 

quid pro quo for the Millennium Challenge investment, has, in fact, 

made Ghana a better country. 

And I commend President Mills on his movement toward democracy. I hope Goodluck Jonathan in Nigeria, who is the first successfully democratically elected Nigerian President with somewhat 

minimal violence taking place, will follow the role of President 

Mills and President Yayi in Cotonou. Benin is also moving forward. 

Their port project, which is also an MCC compact, is in its final 

year, and it has been an excellent example of the MCC challenge 

investment in Africa. 

But there is no question that the Chinese have a significant role 

in Africa, and I think the chairman has done a good job of outlining 

the role that they are taking, which is more in their own self-interest than in the interest of the African people. 

And while their investment level may be higher in dollars, I 

think our investment level in the rights, the health, and the safety 

and security of the African people is greater. And it is my hope 

that over time that will win the hearts of the African Continent 

because I do think Africa is the continent of the 21st century for 

the United States of America. 

They could be a great energy partner, a great consumer of our 

goods and services, and we could have a great partnership to grow 

and prosper together. Hopefully, what was started out in the Bush 

administration in terms of PEPFAR and MCC compacts will continue, and I certainly intend to support both of them, as I have in 

the past. 

As well as I want to acknowledge what the chairman referred to 

obliquely, and that is the private sector investment by Americans 

compassionately in the continent of Africa. Malaria now doesn’t 

exist on Zanzibar. And even though it is an island, it is a little 

easier to control, thanks to the Rotary Clubs International and the 

investment they are making in bed nets throughout that continent, 

it is amazing the effect we are having on that. 

The same thing is true with measles and polio. The same thing 

is also true in many other areas. Kiwanis International has 

adopted as its No. 1 national project the eradication of tetanus in 

Africa, which is also critically important. 

And the Coca-Cola Company—that is a hometown company of 

mine, so I will brag about the home front for a second—is investing 

$30 million a year in clean water projects. And Senator Coons and 

I drank clean water out of a Coca-Cola-provided treatment facility 

in a village that had never had clean water before. 

And the great thing they are doing is they are charging them 7 

cents a day for 5 gallons of water to teach them that it takes 

money to keep the plant running. They are going to turn the plant 

over for nothing to the African people, but they will pay for its continued maintenance and upkeep by their paying for the water they 

get every day. 

So a lot of the basic principles of our competitive free enterprise 

system and the compassion of the American people are paying 

great benefits. But it should not go unnoted that some African 

5

leaders prefer no-strings-attached investment, and they like China 

for that reason. 

There is no question that China is abusing some of its interests. 

And this week, Human Rights Watch will issue a report that 

alleges the Chinese routinely bribe or threaten miners to keep 

them from reporting accidents and problems in Zambian-operated 

mines, which is just one example of how they are looking the other 

way on the best interests of the human rights of those people. 

I think, in the end, our investment in the health, safety, and welfare of folks is important and can win the hearts of the Africans 

over, but we cannot allow China to buy away that friendship from 

the United States. 

Thank you, Mr. Chairman. 

Senator COONS. Thank you, Senator Isakson. 

Senator Lugar, did you want to make an opening statement? 

Senator LUGAR. No. 

Senator COONS. Senator Durbin. 

OPENING STATEMENT OF HON. RICHARD J. DURBIN,

U.S. SENATOR FROM ILLINOIS 

Senator DURBIN. Thank you for this hearing. 

And I want to thank the witnesses who are here, and many of 

them have worked with our office on this issue. And I think that 

we are finally identifying in the Foreign Relations Committee an 

issue which could have grave consequences in the future. 

I believe Africa is an emerging continent with an emerging middle class and holds great economic significance in the 21st century. 

China obviously discovered that quite a few years ago. And the 

question now is what we will do as a nation to compete on the continent of Africa, and I know that there will be some discussion here 

about particulars. 

And I thank you, Mr. Chairman, for bringing us together. 

Senator COONS. Thank you. 

We will now turn to our witnesses, starting with Ambassador 

Shinn, followed by Dr. Brautigam, and finally by Mr. Hayes. 

I would appreciate it if you could condense your remarks to no 

more than 5 minutes. Your full testimony will be placed in the 

record where it will be available to other members of the committee, and in the record. 

So, if you would, please, Ambassador Shinn. 

STATEMENT OF HON. DAVID SHINN, ADJUNCT PROFESSOR, 

GEORGE WASHINGTON UNIVERSITY, WASHINGTON, DC 

Ambassador SHINN. Thank you very much, Chairman Coons, for 

inviting me, and I also thank the committee. 

China has essentially four hard interests in Africa. First is maintaining or increasing access to energy, minerals, timber, and agricultural products; second, developing good relations with all African countries so that China can count on their support in regional 

and international forums; third, increasing significantly China’s 

exports to Africa; and last, ending Taiwan’s official diplomatic presence in Africa and replacing it with recognition of Beijing. 

The magnitude of China’s involvement in Africa since the mid 

1990s has grown exponentially. China has diplomatic relations 

6

with 50 of the 54 African countries today. Beijing has an Embassy 

in every one of those countries except one, Somalia. 

China has particularly developed an effective state-to-state relationship with African leaders. Hu Jintao has made six trips to multiple African countries—two as Vice President, four as President. 

Each year since 1991, China’s Foreign Minister has made his 

first visit abroad anywhere in the world, usually in January, to an 

African country. China has a layer of high-level contact, the Communist Party of China, that frequently interacts with African officials. This is a layer, of course, the United States doesn’t have a 

counterpart for. 

China has no military bases in Africa but has some security 

interaction with all 50 countries on the continent with which it has 

diplomatic relations. China has passed the United States and has 

become Africa’s most important trade partner since 2009. China 

imports about one-third of all of its oil imports from Africa. China 

also imports huge quantities of cobalt, manganese, tantalum, copper, iron ore, and other minerals. 

There is a lot of confusion surrounding China’s investment in 

Africa in terms of the numbers and in terms of the definition. Suffice it to say that it is probably somewhere in the vicinity of almost 

$40 billion. It is possible that today China is investing more in 

Africa than any other single country. 

Large Chinese loans, often with concessionary terms, are grabbing a lot of the headlines about China-Africa interaction. In the 

case of Angola, China has signed about 14.5 billion dollars’ worth 

of these concessionary loans. With Ghana, recently $13 billion. 

China has also stepped up its efforts on soft power in Africa. 

Now what are the implications for the United States? I think the 

heightened engagement in Africa by China since the mid-1990s has 

very important implications for the United States. 

Certainly, if you look at relationships with countries like 

Zimbabwe and Sudan, it provides a real option for China that did 

not previously exist. But even countries that have good relations 

with the United States find themselves in a position where they 

can be a lot more selective in terms of the advice that they accept 

from the United States because they might be able to obtain support from China. 

On the commercial side, a company like Boeing continues to do 

well in Africa. It also has no Chinese competition. On the other 

hand, electronic giants like Hewlett-Packard, Motorola, Siemens, 

and Ericsson are increasingly losing business to Chinese companies 

such as Huawei and ZTE. 

The easy financing offered by Chinese state banks, lower bids on 

projects by Chinese state-controlled construction companies, and 

the fact that these companies have a ubiquitous presence on the 

African Continent make it difficult for American and Western companies to compete. 

China’s growing interest in African raw materials should not 

pose a problem for the United States, except to the extent that Chinese demand pushes up global commodity prices. 

China’s growing use of soft power in Africa should prod the 

United States to do better. For the time being, China poses no 

7

security threat to the United States in Africa and probably will not 

do so for at least the next 5 years. 

Other emerging powers are also playing a great role in Africa, 

and attention needs to be given to them. There has been the return 

of Russia. India is becoming a significant competitor of China on 

the continent. But Brazil, Iran, Turkey, Saudi Arabia, United Arab 

Emirates, Vietnam, Thailand, Indonesia, Malaysia, Singapore, and 

Cuba are all returning or engaging for the first time in a major 

way. 

Areas for cooperation with China include the health sector, particularly, antimalarial programs, also neglected tropical diseases 

like hookworm and schistosomiasis; the agricultural sector; and 

U.N. peacekeeping operations. 

In terms of coordinated diplomatic engagement, I think there are 

areas where the two countries can collaborate and in even controversial places like South Sudan and Sudan, where there today 

are some mutual interests. While the United States and China will 

continue to have important differences in their approach to Africa, 

it is in the interest of both governments to seek out those areas 

where they can cooperate. 

I thank you very much for your time, Mr. Chairman. 

[The prepared statement of Ambassador Shinn follows:]

PREPARED STATEMENT OF HON. DAVID H. SHINN

I thank Chairman Kerry of the Senate Foreign Relations Committee and Chairman Coons of the Subcommittee on African Affairs for inviting me to participate in 

this hearing. I have been researching China-Africa relations intensively over the 

past 5 years in connection with a book scheduled for publication next spring. Unless 

noted otherwise, the statistics and analysis contained in this testimony refer to all 

54 countries in Africa. China tends not to make a distinction between sub-Saharan 

Africa and North Africa as the U.S. Government often does. 

CHINA’S INTERESTS IN AFRICA

China generally does not discuss its ‘‘hard’’ interests in Africa. Rather, it emphasizes several general themes such as respect for African countries’ sovereignty and 

development policies, support for African development, cooperation with Africa in 

the United Nations and multilateral forums, and learning from each other. China 

also urges African countries to accept the ‘‘one China’’ principle by recognizing 

Beijing. 

Based on my analysis, China has four ‘‘hard’’ interests in Africa:

• Maintaining or increasing access to energy, minerals, timber, and agricultural 

products. 

• Developing good relations with all African countries so that China can count on 

their support in regional and international forums. 

• Increasing significantly China’s exports to Africa, especially as the economies of 

African states become more robust and Africans increase their disposable income. 

• Ending Taiwan’s official diplomatic presence in Africa and replacing it with recognition of Beijing.

I should point out that you can substitute the United States for China in each 

of the first three interests; they apply as much to the United States as they do to 

China. I would argue that the United States has several additional interests that 

do not yet apply in a meaningful way to China. First, the United States has an interest in military aircraft over flight and landing in African countries and access 

to their ports by U.S. naval vessels. Second, the United States puts a high priority 

on countering a series of issues—terrorism, piracy, drug trafficking, money laundering, etc.—that pose a threat to American interests. While these issues may eventually become important Chinese interests, they have not yet reached that level. 

8

CURRENT DIMENSIONS OF CHINESE ENGAGEMENT IN AFRICA

While China is not new to Africa, the magnitude of its engagement with the continent has grown exponentially since the mid-1990s. This period has coincided with 

enormous industrial growth in China, the need to import increasing quantities of 

raw materials to support China’s manufacturing sector, and China’s ability to export 

significantly more competitively priced products to Africa. China’s interest in access 

to raw materials reinforced its longstanding policy of developing strong political relations with as many countries as possible in Africa. 

China has diplomatic relations with 50 of the 54 African countries. Four—Burkina 

Faso, Swaziland, Gambia, and Sa ̃o Tome ́ and Principe—recognize Taipei. Beijing 

has an embassy in all but one of the 50 countries. The exception is Somalia where 

the security situation in Mogadishu precludes a physical presence. All 50 African 

countries that recognize China except the Comoro Islands and recently independent 

South Sudan have embassies in Beijing. Although the United States has diplomatic 

relations with all 54 African countries, it too has embassies in only 50. It closed embassies in the Seychelles and Comoro Islands to save money and never opened in 

Sa ̃o Tome ́ and Principe. Like China, it is not in Somalia for security reasons. China 

has more consulates in Africa than does the United States. 

China is especially effective at state-to-state relations and attaches particular importance to high-level personal contact. Hu Jintao has made six trips to multiple 

African countries—two as Vice President and four as President. China’s Premier is 

a frequent visitor to Africa. Each year since 1991, China’s Foreign Minister has 

made his first visit abroad, usually in January, to an African country. China has 

a layer of high-level contact—senior Communist Party of China officials—that frequently visits Africa to expand relations with African party and executive branch 

officials. The United States has no similar counterpart nor does it rely as heavily 

on Presidential and Vice Presidential visits to Africa. If you exclude annual visits 

to the United Nations’ headquarters in New York by African leaders, where some 

do have meetings with the American President, Chinese leaders extend more invitations to African leaders to visit China than the United States extends to visit Washington. The Communist Party of China frequently invites leaders of African political 

parties to visit China. 

China has no military bases in Africa but has some security interaction, however 

modest, with all 50 countries that recognize Beijing. China’s share of the conventional arms market in sub-Saharan Africa is about 15 percent. The percentage is 

higher for small arms and light weapons. High-level military visits are an important 

part of the security relationship. Twenty-eight African countries have defense 

attache ́s in Beijing while 16 Chinese defense attache ́ offices in Africa are accredited 

to some 30 African countries. China has about 1,600 military/police personnel serving in six of the United Nation’s peacekeeping operations in Africa. Most of the personnel are in Darfur, South Sudan, Liberia, and the Democratic Republic of the 

Congo. It has small numbers in Coˆte d’Ivoire and the Western Sahara. Since 2008, 

China has positioned two frigates and a tender in the Gulf of Aden to combat 

Somali piracy. Following a lapse in naval visits to African ports since 2002, this 

engagement in the Gulf of Aden has led to a recent increase in Chinese visits to 

African ports. 

By contrast, the United States has a designated military command—AFRICOM—

for Africa located in Germany, a base with about 3,000 military and civilian personnel in Djibouti for countering terrorism, a new facility in Ethiopia for operating 

drones and significantly more defense attache ́ offices than does China. While the 

United States pays a higher proportion of U.N. peacekeeping costs in Africa than 

does China, it has less than 30 personnel assigned to the six operations in Africa. 

The United States has played a leading role in the antipiracy operation in the Gulf 

of Aden and western Indian Ocean. U.S. military ships and airplanes regularly visit 

African cities and ports. The United States also engages in far more training of African military forces than does China. 

China passed the United States and became Africa’s most important trade partner in 2009. It continues to hold that position. China-Africa trade (exports and imports) totaled $127 billion in 2010 compared to $113 billion for United States-Africa 

trade. While China’s trade with Africa has been growing at a rapid pace since the 

turn of the century, it constitutes only about 4 percent of China’s global trade. China’s trade is, however, proportionally more important for Africa and makes up about 

13 percent of the continent’s total trade. Except for 2009, when Africa collectively 

had a large trade deficit with China, its trade has been roughly in balance. This 

is in sharp contrast with U.S.-Africa trade, which has witnessed a large U.S. trade 

deficit over the past decade, primarily due to large oil imports from Africa. In 2010, 

the United States imported 85 billion dollars’ worth of goods from Africa and exVerDate 0ct 09 2002 17:57 Jan 20, 2012 Jkt 000000 PO 00000 Frm 00012 Fmt 6633 Sfmt 6621 S:\HEARIN~1\112THC~1\2011IS~1\110111~1.TXT BETTY
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ported $28 billion to Africa. There are huge differences in China’s trade balance 

with individual African countries. Some 11 African oil and mineral exporters have 

major surpluses with China, while the remainder, which includes the poorer countries, has significant trade deficits with China or the trade is roughly in balance. 

China imports about one-third of its total oil imports from Africa. Of China’s 10 

most important trading partners in Africa, 6 (Angola, Sudan, Nigeria, Algeria, 

Libya, and the Republic of Congo) export large quantities of oil to China. In 2009, 

oil and gas accounted for 64 percent of all African exports to China. While that constitutes a lot of oil, it is only about 13 percent of total African oil exports. The 

United States and EEC countries each import almost one-third of Africa’s total oil 

exports, significantly more than China imports. On the other hand, the United 

States imports relatively modest quantities of African mineral products while China 

imports huge quantities of cobalt, manganese, tantalum, copper, iron ore, and other 

minerals. In 2009, iron ore and metals accounted for 24 percent of all African exports to China. It also imports timber and may look increasingly to Africa for agricultural products. Without these raw materials from Africa and other parts of the 

world, China would be unable to sustain its manufacturing capacity and maintain 

its high GDP growth rate. A sharp decrease in China’s economic growth would be 

a direct threat to the current leadership of the Communist Party of China. Access 

to African raw materials is a long-term strategic interest. 

While China continues to increase significantly its imports from Africa, it is also 

increasing its total exports and the value added component to Africa. In 2000, China’s exports to Africa consisted largely of textiles and clothing (28 percent), machinery and transportation equipment (27 percent), and other manufactured goods (26 

percent). By 2009, Chinese exports to Africa shifted to high-end capital goods, especially communications equipment (20 percent), road transport vehicles (19 percent), 

and electronic machinery (18 percent). 

China’s State Council issued a white paper in December 2010 that stated China’s 

direct investment in Africa reached $9.33 billion by the end of 2009. There is considerable confusion surrounding this figure and on China’s definition of direct investment. For reasons that are not clear, I believe most official Chinese figures for 

investment totals in Africa significantly understate the real amount. Even Chinese 

sources cannot agree on the amount of FDI that has gone into Africa. The official 

Xinhua News Agency reported last month that by the end of 2010, China had invested about $40 billion in more than 2,000 enterprises in 50 African countries. This 

figure included investments of $2.1 billion in 2010 alone. While the correct total FDI 

figure is probably much closer to $40 billion than to $9.33 billion, Western countries 

collectively have invested much more in Africa, primarily because they started earlier. By the end of 2008, for example, the United States had invested a cumulative 

total of $37 billion in sub-Saharan Africa alone. 

It is possible that today China is investing more in Africa than any other single 

country. The primary recipients of Chinese FDI have been South Africa, Nigeria, 

Zambia, Sudan, Algeria, and Egypt, all major oil or mineral exporters except for 

Egypt. Interestingly, the State Council’s December 2010 white paper reported that 

by the end of 2009, African countries had invested $9.93 billion in China; i.e., more 

than the paper reported China had invested in Africa! It is difficult to document 

where this much African money has been invested. 

One of the other persons testifying today is far more knowledgeable than I on China’s aid to Africa. I will describe this component of China’s engagement. 

The headline grabbing stories of Chinese engagement in Africa rarely involve investment or aid. More often, they concern large Chinese loans, often with concessionary financing, used by African countries to finance infrastructure projects. In 

recent years, China has signed loan agreements, for example, with Angola for about 

$14.5 billion, Ghana for $13 billion, and the Democratic Republic of the Congo for 

$6.5 billion. Most of this money will be used to finance roads, dams, refineries, 

buildings, railways, etc., by Chinese construction companies and be repaid in oil or 

minerals. China has become the major builder in Africa. 

China has also stepped up its soft power efforts in Africa. The Xinhua news service has more than 20 bureaus in Africa and regional offices in Cairo and Nairobi. 

Xinhua competes directly with Reuters, AP, and Bloomberg for reporting on events 

in Africa. There are at last 22 Confucius Institutes in Africa that focus on teaching 

Chinese language, culture, and history and the number continues to grow. China 

is increasing its radio transmission to Africa in various languages, has a transmitting facility in Kenya, and has rebroadcast arrangements with countries around the 

continent. It trains a variety of Africans, including diplomats and journalists, and 

in 2009 increased to 4,000 the number of full scholarships it offers to African students each year. 

10

IMPLICATIONS FOR U.S. POLICY AND INTERESTS

This heightened engagement in Africa by China since the mid-1990s has important implications for the United States. China now offers African countries another 

political and especially economic alternative to the United States and the West generally. Countries such as Zimbabwe and Sudan, which have poor relations with the 

United States and the West, have taken maximum advantage of this situation. 

China does not engage in conditionality, except for the ‘‘one China’’ principle and 

tying its aid and loans to Chinese companies and materials. As a result, China (and 

a number of other countries) ignores Western sanctions against Zimbabwe and 

Sudan and continues to be one of the most important suppliers of military equipment to both countries. As a major supplier of small arms and light weapons across 

the continent, Chinese weapons are increasingly showing up in conflict zones. There 

is no evidence China is selling weapons to rebel groups, but as more weapons appear in Africa, the greater is the chance they find their way into conflicts. In fairness, weapons from all major arms manufacturing countries, including the United 

States, are making their way into these conflicts. 

Even countries that have good relations with the United States, such as Ethiopia, 

Kenya, Angola, Ghana, and South Africa, find themselves in a position where they 

can be much more selective in taking advice from the United States. African states 

under pressure from the United States and the West to improve their human rights 

and governance practices are less likely to do so when they know they can rely on 

China for support. China holds a veto power in the U.N. Security Council and Africa 

has three nonpermanent seats on the Council. Africa is well represented in organizations of interest to China such as the U.N. Human Rights Council and the World 

Trade Organization. China makes every effort to cultivate the maximum number of 

African countries on all issues of interest to Beijing that arise in international 

forums. In some cases, like-minded African governments use the Chinese just as the 

Chinese use them, for example when contentious issues affecting China or a particular African nation arise in the Human Rights Council. When Tibet became an 

issue in 2008, China leaned on the Africans to remain silent or even make supportive statements. They did. African countries can depend on China to avoid raising controversial African human rights issues in the U.N. Human Rights Council 

and perhaps even to support them when they are criticized by Western countries. 

China does not have a good record in Africa for worker safety and labor practices. 

It also receives criticism for allowing harmful and counterfeit products manufactured by private Chinese companies into African countries. The same is true for engaging in corruption although there are a few indications that China is beginning 

to see corruption as a negative factor for doing business in Africa. The United States 

generally has a good record in these areas and would prefer to see improvements 

in Africa. Sensitive to all of these criticisms, China is seeking ways to deal with 

these problems but is slow to find solutions. China’s relations with strong, independent African labor unions are not cordial and labor standards in China are 

sometimes less stringent than in some African countries. African nations do not 

have the institutions to keep harmful and counterfeit products from entering and 

China has either not figured out or is not interested in preventing these problems 

at the source. 

The United States and the West had a major headstart over China on investment 

and commercial engagement with Africa. This is especially true in the energy and 

mineral sector where so much Western investment has gone over the years. As a 

result, there has not yet been much head-to-head competition except in the case of 

winning large commercial contracts where China is pulling ahead in many sectors. 

A company like Boeing continues to do well in Africa and has no Chinese competition. On the other hand, electronic giants such as Hewlett-Packard, Motorola, Siemens, and Ericsson are increasingly losing business to Chinese companies such as 

Huawei and ZTE. The Chinese companies offer much lower prices for products that 

many Africans believe are of adequate, if somewhat lower, quality compared to their 

Western alternatives. In addition, Huawei and ZTE are creating large sales and 

marketing offices in Africa. 

The easy financing offered by Chinese state banks, lower bids on projects by Chinese state-controlled construction companies and the fact that the companies now 

have a ubiquitous presence on the ground throughout much of Africa, make it difficult for American and Western companies to compete. Private Western companies 

generally function independently of their governments and often find it hard to compete with the package proposals presented by the Chinese Government and their 

state-owned or controlled companies. This is, however, a structural issue that the 

United States and the West will have to work around or simply become more 

competitive. 

11

China’s growing interest in African raw materials should not pose a problem for 

the United States except to the extent that Chinese demand pushes up global commodity prices. This could lead to higher prices paid by the United States and the 

rest of the world. So long as American companies and consumers have the money 

to pay for the product, African countries will continue to sell to the U.S. market. 

The problem is on the U.S. export side. It is not competing well against China in 

Africa. This is a problem that American companies will have to solve, although 

agencies like the Export-Import Bank can help. In some cases, American companies 

just have to take more interest in African markets and accept more risk. 

China’s growing use of soft power in Africa should prod the United States to respond. Security concerns and fortress embassies in many African countries make 

outreach difficult. Numerous American libraries have been shut down. The Voice of 

America and government-sponsored programs for sending future African leaders to 

the United States are under budgetary pressure. All of these trends are in the 

wrong direction. This is the time to reach out on all fronts and be more accessible 

to African publics. These programs are not expensive and they have the potential 

to achieve an enormous amount of good will. 

For the time being, China poses no security threat to the United States in Africa 

and probably will not do so over the next 5 years or so. China is, however, expanding its naval capacity. This year it held sea trials for its first aircraft carrier. It has 

significantly expanded its submarine fleet and clearly intends to build a carrier 

force. One reason for building this capacity is to make China less reliant on the U.S. 

Navy for protection of Chinese vessels in the Indian Ocean. Some 80 percent of China’s imported oil comes from Africa and the Middle East and passes through the 

Strait of Malacca. Once China has a major naval presence in the Indian Ocean, it 

will bump up against the U.S. Navy and, more importantly, the Indian Navy. 

OTHER EMERGING POWERS IN AFRICA

China is only one, albeit the most important, of the emerging powers to assert 

itself in Africa. The European countries, Japan, South Korea, Canada, and Australia 

continue their longstanding engagement in Africa, but together with the United 

States have been somewhat more reserved since the end of the cold war. Russia has 

recently returned to Africa in a major way following its retreat from the continent 

after the breakup of the Soviet Union. China and other emerging powers have been 

the big story in Africa over the past decade. 

Only India approaches the ability of China to compete in Africa and it is probably 

a decade behind China. China’s trade with Africa is 21⁄2 times that of India. China 

has almost twice as many embassies in Africa as India. Its investment and aid are 

much higher. On the other hand, India is physically closer, has a language advantage, and has stronger cultural links. India also has 7,000 U.N. military and police 

peacekeepers in Africa compared to China’s 1,600. India’s naval presence in the 

western Indian Ocean is much stronger than China’s and India has been developing 

security agreements with countries in the Indian Ocean and along the East African 

coast. 

Although well behind China and India, Brazil has made its presence felt throughout much of Africa, not just the Lusophone countries. Iran has focused its attention 

on northeastern Africa but is expanding its relations throughout the continent in 

an effort to escape isolation. Turkey stepped up its engagement in Africa beginning 

in 2005 and is an important player in North Africa and the Horn of Africa. Its engagement is heavily business-based but also has a strong cultural, religious, and 

educational component. Other emerging countries that are either reengaging in 

Africa or arriving for the first time include Saudi Arabia, United Arab Emirates, 

Vietnam, Thailand, Indonesia, Malaysia, Singapore, and Cuba. 

This situation is resulting in a much more crowded diplomatic playing field. While 

it provides more opportunities for African countries to obtain aid, investment, and 

trade, it complicates American diplomacy. It argues for greater understanding about 

the meaning of these developments and, in some cases, a reassessment of U.S. policies toward Africa and the coalitions needed for diplomatic successes. 

AREAS FOR COOPERATION WITH CHINA

There are several inherent challenges for U.S.-China cooperation in Africa. It is 

necessary to overcome longstanding suspicions between the two countries, fostered 

in part by different philosophies toward governance. Perhaps more important, it is 

necessary to convince the African countries that the United States and China are 

not trying to gang up on them. There is a tendency in many African countries to 

want to play China off against the United States in order to obtain an advantage. 

12

They often fail to distinguish that there are areas where China and the United 

States can cooperate and, at the same time, benefit the African country in question. 

If these two concerns can be overcome, and they have been in several cases, there 

are areas when China and the United States can work together for the mutual benefit of African countries. This occurred in Liberia, for example, where China and the 

United States collaborated in construction of the military barracks at Bonga for a 

U.N. peacekeeping operation and the two countries agreed to join forces to combat 

malaria. Successful cooperation depends heavily on the active engagement of the 

American and Chinese Ambassadors and key Embassy staff on the ground. If they 

do not support the proposed collaboration, it probably will not happen. At the same 

time, there must be signals from Washington and Beijing that both governments are 

fully behind the cooperative endeavor. 

The United States and China have particular strengths in the health sector that 

can collaboratively improve the situation in Africa. This is especially true in antimalarial programs where China is constructing 30 malaria treatment centers in 

Africa and providing antimalarial drugs such as artemisinin. USAID supports a holistic program that includes insecticide-treated bed nets and the President’s Malaria 

Initiative has a goal of reducing mortality by half in target countries. Other areas 

for cooperation are neglected tropical diseases, especially hookworm and schistosomiasis, where each country has important expertise to reduce the threat. Improvement in nutrition and pandemic preparedness are other possible problems for collaboration. Both China and the United States have considerable experience with 

African agriculture, another area where they could combine their experience and 

lessons learned. 

While the United States and China want to export more to Africa, they could also 

work to build the export capacity of African countries by building their competitiveness in global markets. Both countries could provide technical assistance for this 

purpose. China has shown a growing interest in improved corporate social responsibility in China and in the context of Chinese companies operating in Africa. This 

is also a priority goal for the United States and one where American companies 

have considerable experience. Both countries have demonstrated their concern in recent years over the negative impact of climate change and environmental degradation. African countries are deeply concerned about climate change’s impact on the 

continent and might welcome a joint approach from China and the United States. 

The United States provides the single largest amount of funding for U.N. and 

African Union peacekeeping operations. Washington welcomes the assignment of 

Chinese soldiers, mostly engineering, transportation, and medical personnel, to U.N. 

peacekeeping operations in Africa. U.S. and China’s interests generally overlap 

when it comes to African peacekeeping operations; specific projects for collaboration 

should be identified. Similarly, the two countries generally have common interests 

in helping African coastal states to reduce piracy, smuggling, illegal fishing, drug 

trafficking, and threats to offshore oil facilities. Although Chinese ships operate 

independently in the Gulf of Aden antipiracy operation, the United States Navy and 

China’s Navy have a good working relationship. The U.S. Coast Guard has been 

particularly successful in cooperating with Chinese counterpart organizations. There 

may be an opportunity for extending this cooperation to Africa. Countering drug 

smuggling across Africa and improving disaster relief are additional areas that lend 

themselves to U.S.-China cooperation for the mutual benefit of Africans. 

COORDINATED DIPLOMATIC ENGAGEMENT IN AFRICA

There are a number of conflicts and crises where the interests of the United 

States and China are similar. Both countries usually seek stability in Africa. China 

normally supports whatever government is in power irrespective of its pedigree or 

ideology. While China is quick to shift its allegiance to a new regime as occurred 

in recent years in Niger and Guinea, it does not want to be seen as behind regime 

change. As a result, China has no inclination to encourage governmental change in 

places such as Harare or Khartoum. If it suspects the United States is seeking regime change in any particular country, China will keep its distance. Coordinated 

diplomatic engagement also tends to raise suspicions among some African parties 

that the United States and China are ganging up against them. China is especially 

sensitive to this charge and will be reluctant to work with the United States on any 

issue where this is the perception by one or more of the African parties involved 

in the conflict. 

On the other hand, here has been little difference in the U.S. and China’s policies 

toward Somalia. Both countries support the Transitional Federal Government and 

want to counter terrorism, although China is probably not prepared to accept some 

of Washington’s tactics. Nevertheless, Somalia is a conflict that lends itself to conVerDate 0ct 09 2002 17:57 Jan 20, 2012 Jkt 000000 PO 00000 Frm 00016 Fmt 6633 Sfmt 6621 S:\HEARIN~1\112THC~1\2011IS~1\110111~1.TXT BETTY
13

tinuing quiet collaboration. The United States encouraged China to play a more active role in resolving the conflict in Darfur. Eventually it did but only after some 

difficult episodes in U.S.-China interaction. Today, China has an interest in maintaining close ties to the Bashir government in Khartoum and the new government 

in South Sudan. It owns much of the oil infrastructure in the Republic of Sudan 

while 75 percent of the oil now originates in South Sudan. China has been surprisingly successful in building a good relationship with Salva Kiir’s government in 

Juba. There may well be ways for China and the United States to coordinate diplomacy as they help to resolve the enormous challenges facing both countries. China 

will consider such collaboration, however, only if it is convinced that the United 

States is not seeking regime change in Khartoum. 

Other troubled parts of Africa where there are no obvious differences in U.S. or 

China’s policy include Coˆte d’Ivoire, Madagascar, and Guinea. They are candidates 

for coordinated diplomatic engagement. More complicated conflicts that might lend 

themselves to coordinated diplomatic engagement include the Democratic Republic 

of the Congo and Libya. China has or is developing significant interests in both 

countries and may be reluctant to team up with the United States and other Western countries, but it is worth exploring. 

While the United States and China will continue to have important differences 

in their approach to Africa, it is in the interest of both governments to seek out 

those areas where they can cooperate.

Senator COONS. Thank you, Ambassador Shinn. 

Dr. Brautigam. 

STATEMENT OF DEBORAH BRAUTIGAM, PH.D., PROFESSOR, 

AMERICAN UNIVERSITY AND SENIOR RESEARCH FELLOW, 

INTERNATIONAL FOOD POLICY RESEARCH INSTITUTE, 

WASHINGTON, DC 

Dr. BRAUTIGAM. Thank you very much for this opportunity to 

speak with you today. I appreciate it very much, and I am going 

to start by telling you a story. 

Once upon a time, there was a very large, poor, resource-rich 

country, just emerging from a period of intense conflict. And that 

country decided to focus on development. ‘‘We need to modernize 

our infrastructure,’’ they said. ‘‘We need to develop our ports.’’ And 

soon, they had a visit from a wealthy Asian country that had 

already become a major consumer of their oil. 

And that country said to them, ‘‘We will make you a bargain. We 

will give you a line of credit worth $10 billion, and you can use that 

credit to develop your ports. Our companies can help you develop 

your power plants and modernize your mines. And you can repay 

us with your oil.’’

Now, many in this poor country were very suspicious of this 

Asian power. But nonetheless, they agreed to this bargain, and the 

work began. Now, as you are listening to this story, you are probably thinking which two countries—China and Angola, ChinaSudan, China and the DRC? 

Well, actually, China was one of these countries. It was the 

large, poor country with oil. And the line of credit to be repaid with 

oil was offered by Japan in the late 1970s. 

Now why am I telling you this story today? I am telling you this 

story for several different reasons. One is this arrangement was 

not based on aid. It was a market-rate line of credit that Japan 

offered to China. And the second is that China saw this as something that could be used for its benefit, for its development. 

This was something that benefited Japan. They could sell goods 

and services to China, and it also benefited China because they 

14

could finance imports even though they didn’t have an international credit rating. 

Now China is operating in Africa using the frameworks that it 

has learned by being an Asian power, and some of those come from 

its relationship with Japan. And it is a very different model of engagement. And much of this does not actually involve official development aid. It is much closer to Japan’s pattern of engagement in 

Asian countries. 

So what does this involve? There are a lot of different tools and 

instruments that the Chinese have to engage in Africa that we 

don’t have or that we have at a much smaller level. So, for example, they have resource-backed infrastructure loans. 

I would argue that these are not concessional loans because the 

very large ones are all based on London Interbank Offered Rate. 

They are LIBOR plus margin-rate loans. These allow countries 

with poor credit ratings to borrow today and pay with tomorrow’s 

exports. 

They are setting up overseas economic zones that are attracting 

Chinese companies to come and set up manufacturing in Africa as 

costs become expensive in China. They have a $5 billion equity 

fund to encourage Chinese investment and joint ventures in Africa, 

and they have a $1 billion fund for small and medium enterprises. 

They are setting up agricultural demonstration centers that are 

trying to get Chinese agribusinesses involved in Africa. 

So most of these are not about official aid, but they are about 

development. And more importantly, they are responding to the 

request by African leaders over and over again with assistance for 

help in building infrastructure and creating jobs in Africa. 

Let me give you two quick stories. In Liberia, when Liberia 

emerged from war, Ellen Johnson Sirleaf said her main priority 

was roads and infrastructure. But the international donors were 

not providing roads and infrastructure. Then the Chinese stepped 

up and said, ‘‘We will build roads.’’ And suddenly, the other donors 

became interested in roads. 

When we look at what the Millennium Challenge Account is 

funding in Africa for African governments that are doing well and 

want to make their own decisions about how to spend their money, 

they are investing in infrastructure. So this is an important sector 

for Africans. 

Now, China is not a new actor in Africa. Their presence is growing, as Ambassador Shinn has told us. Many of the things they are 

doing in Africa are nontransparent. We do not have information 

about them. That is a legacy of many things, partly because it is 

mainly business. We don’t know a lot about how our own companies operate in Africa, even though we do have better data on that. 

But the figures—I can talk about more in the question-and-answer period about what we know about the actual dimensions of 

engagement. But I want to make three final points. One is about 

realism versus alarmism. 

China’s rise in Africa should be seen in context. China is still a 

developing country. It has the norms and standards of a developing 

country and has much more in common with other developing 

countries than it has with us. 

15

That means that it presents a lot of challenges. India, Brazil, and 

the other countries that Ambassador Shinn has just mentioned 

present the same kinds of challenges. They have the same levels 

of corruption. They operate in very similar kinds of ways. So this 

is a broader challenge, and it shouldn’t be seen out of context. 

The second is that we need much better information to make 

good policy. Our information about China in Africa is not good, and 

we are not doing a very good job of collecting better information. 

And finally, we need to engage China multilaterally. We have a 

problem in that the arena for engagement that sets the rules and 

norms for how to engage internationally is the OECD, and China 

is not a member. We have to figure out a way to deal with this. 

Thank you. 

[The prepared statement of Dr. Brautigam follows:]

PREPARED STATEMENT DR. DEBORAH BRAUTIGAM1

China is not a new actor in Africa. Yet over the past decade, China’s presence 

in Africa has grown remarkably, a reflection of China’s rapid transformation as a 

global actor. This presents opportunities and challenges for Africa and its traditional 

development partners, including the United States. China’s motives in Africa are 

twofold: diplomacy and business. There are more countries in Africa than in any 

other continent. Each has a vote in the United Nations, and many are also members 

of the World Trade Organization. Warm diplomatic ties are important for Chinese 

foreign policy goals, including competition with Taiwan, the effort to obtain market 

economy status at the United Nations, and Chinese efforts to emphasize sovereignty 

as a core foreign policy principle. On the other hand, Africa is an important source 

of raw materials and business opportunities for China’s companies as they become 

global corporations. 

CURRENT DIMENSIONS OF CHINESE ENGAGEMENT IN AFRICA

Current dimensions of Chinese engagement in Africa include trade, foreign direct 

investment, engineering contracts, development finance, development and humanitarian assistance, and military cooperation. I will focus here on the economic aspects. China’s total trade with Africa in 2010 was $120.9 billion, about 4 percent 

of China’s total trade with the world ($2972.7 billion). Chinese official figures for 

FDI in Africa 2007–2010 show an average of about $1.5 billion per year if one discounts the exceptional year 2008 when Industrial and Commercial Bank of China 

purchased 20 percent of South Africa’s Standard Bank for around $5 billion. FDI 

in 2010 was reported to be $2.1 billion, with a stock of FDI at $13 billion. 

Engineering contracts are enormous. In 2008, Chinese companies had nearly 3000 

engineering contracts in Africa, valued at close to $40 billion (in 2008, Chinese companies had 180 separate engineering contracts in Libya, for example, valued at $10 

billion, while earlier this year, the total in Libya had risen to $18 billion).2 Some 

187,396 Chinese were officially working in Africa in 2009, most on the large engineering contracts in Algeria, Libya, and Angola. Although there are exceptions, such 

as Angola, most of China’s engineering business in Africa is not financed by the Chinese, but by African governments, development banks, bilateral banks, and private 

companies contracting with Chinese firms. 

Some believe that the China is a bigger donor than the United States or the 

World Bank. This is far from the case. The United States disbursed a total of $29.7 

billion (gross) in official development assistance in 2009, with $8 billion going to 

Africa, about 27 percent.3 In 2010, the United States again budgeted $8 billion in 

aid for sub-Saharan Africa; global health and child survival came to $4.7 billion (57 

percent).4 The top five recipients of U.S. bilateral health assistance in sub-Saharan 

Africa in fiscal year 2012 were projected to be Kenya ($545 million), South Africa 

($510 million), Nigeria ($471 million), Tanzania ($346 million), and Uganda ($323 

million).5 In the equivalent categories, China probably disbursed aid of about $3.1 

billion (gross), with Africa receiving 45.7 percent, about $1.4 billion.6 In 2010 alone, 

according to its annual report, the World Bank committed US$14.5 billion to 66 

countries in IDA grants and soft loans, with cumulative commitments of US$222 

billion since 1960. These differences are also reflected in staffing levels. USAID has 

a global staff of more than 8,000, of which almost 5,000 are host-country nationals; 

overseas projects employ considerable local personnel.7 MOFCOM’s Department of 

16

Foreign Aid has about 100 staff, and the Export-Import Bank of China’s 

Concessional Loan Department has another 100. The economic sections of Chinese 

embassies will also assign one or two people to manage the aid program locally (no 

host-country nationals appear to be employed). 

In April 2011 the Chinese provided some of the first official figures on China’s 

aid program: cumulative commitments of close to US$38 billion since the early 

1950s and the end of 2009, broken down as follows (for all regions): 8

• MOFCOM: cumulative US$16 bn in grants (not including debt relief), and 

US$11 bn in interest-free loans, some of which have been cancelled; 

• China Eximbank: cumulative US$11 bn in concessional foreign aid loans

Africa has traditionally received between 40 and 50 percent of China’s total aid 

annually. My estimates of Chinese aid disbursements suggest that on an annual 

basis, (Figure 1) China disbursed about US$1.3 billion in 2008, making it a midsized donor in Africa. (Chinese aid to Africa is growing rapidly; annual commitments could be more than 30 percent higher than disbursements.)

Source: Brautigam, The Dragon’s Gift, 2011 (2009).

In figuring out how to react to the rise of China in Africa, the United States first 

needs to understand how Chinese engagement works. For too long we have been 

trying to force the square pegs of Chinese engagement into the round holes of familiar Western patterns. Because we think of official development assistance (ODA) as 

the main currency for relations between Africa and the more developed world, we 

think this is what China is doing, instead of seeing their aid as a relatively small 

part of a far broader and more strategic engagement. 

One of the major misconceptions of Chinese engagement in Africa is that it is 

largely financed by ‘‘concessional’’ loans, implying that it is a type of ODA (official 

development assistance). A 2010 background paper written for the OECD, for example, used the adjective ‘‘concessional’’ at least 27 times while writing in often general 

terms about the Chinese financing model in Africa.9 Yet loose terminology like this 

is unhelpful for our understanding of how China operates overseas. 

Most Chinese finance in Africa is not concessional. Indeed, Chinese banks reserve 

the term ‘‘concessional loan’’ only for the foreign aid loans issued by China 

Eximbank, with, as noted, a cumulative total of US$11 billion committed between 

1995 and 2009. The term ‘‘concessional financing’’ should be reserved for ‘‘loans 

made by a government at an interest rate below the market rate as an indirect 

method of providing a subsidy.’’ 10

How much finance has China provided through other, nonconcessional instruments? The figures here are very approximate: 

China Development Bank. In September 2010, China Development Bank said that 

it had made commitments of over US$10 billion to projects in Africa, and already 

disbursed US$5.6 billion to 35 projects in more than 30 African countries (People’s 

Daily, 2010). This can be compared with an earlier announcement in March 2007, 

when CDB reported that it had financed 30 projects in Africa, for a total of about 

US$1 billion (Xinhua 2007). 

China Eximbank. At the end of 2010, China Eximbank’s outstanding loans in support of China’s ‘‘Going Global’’ program totaled some US$41 bn worldwide.11 In the 

year 2010, China Eximbank disbursed about US$7.6 bn in export sellers’ credits for 

Chinese overseas investment and about US$1.3 bn to finance construction projects 

being implemented by Chinese firms. It is not clear how much of this was directed 

to Africa. China Eximbank president Li Ruogu said that his bank had committed 

over US$13 bn to Africa as of June 2007, and planned to extend up to US$20 bn 

in loans to Africa over the next 3 years.12


deb.eps
17

GOING OUT: INSTITUTIONS AND INSTRUMENTS IN CHINA’S

OVERSEAS DEVELOPMENT FINANCE

China’s long history in Africa stretches over the Maoist period, (1949–1976), and 

the reform period, (1978-present). In the early 1980s, Chinese leaders reevaluated 

their aid program in view of its poor results, their limited funds and the need to 

focus more on their own development.13 They announced to their African partners 

that China would need to ‘‘do more with less,’’ focusing more on ‘‘mutually beneficial’’ cooperation rather than ‘‘one-way’’ aid. 

At home, economist Chen Yun advised China to move toward the market cautiously, experimentally: ‘‘feeling for stones while crossing the stream.’’ For the next 

decade, the Chinese experimented with ways to combine aid, trade, and investment 

in Africa. By the mid-1990s, the instruments were largely in place, although new 

experiments continue to be launched. 

One of the changes was institutional. From the 1960s until 1995, Beijing financed 

its projects in Africa solely through an evolving set of departments and ministries 

that all focused on foreign economic cooperation (including aid) and trade. In 1994, 

as China continued to reform its economy in a market direction, Beijing established 

three policy banks.14 Today, in the state-directed finance model that is common in 

East Asia’s ‘‘developmental states’’ (Japan, Korea, Taiwan), China’s Ministry of 

Commerce directly controls most of the instruments that provide actual government 

subsidies abroad. 

Ministry of Commerce (MOFCOM). China’s traditional aid instruments, zerointerest loans and grants, are financed directly out of China’s budget for external 

assistance and are overseen by MOFCOM’s Department of Aid to Foreign Countries, 

in cooperation with the respective regional departments of the Ministry of Foreign 

Affairs. 

MOFCOM also has a variety of other funds, including the Special Fund for Foreign Economic and Technical Cooperation that can be used to support Chinese businesses, as long as they are carrying out the needs of China’s economic diplomacy. 

One fund, for example, is used to support Chinese companies building six overseas 

special trade and economic cooperation zones in Africa.15 These funds can be used 

for the partial reimbursement of preinvestment costs (feasibility studies, documents 

and consulting services, etc.) and some interest rate subsidies for bank loans.16 They 

are not financed out of the external assistance budget. 

China’s Policy Banks. Two of China’s policy banks (China Development Bank and 

China Eximbank) also operate overseas. Loans from policy banks are, as a Chinese 

analyst put it ‘‘heavily influenced by government policies and are not to operate in 

full compliance with market rules.’’ 17 This does not mean that CDB and China 

Eximbank are allowed to be unprofitable or that they are directly subsidized by the 

government. Rather, as a recent study of CDB explains, with the Chinese Government standing behind them, policy banks have the same credit-rating as the Chinese Government, can raise funds by issuing bonds with that rating, and can take 

a longer term view with their loan investments.18

In 1995, China Eximbank was given sole responsibility for a new foreign aid instrument—concessional loans (you hui dai kuan). These are provided with a fixed 

interest rate, usually 2 or 3 percent, a grace period of 5 years, and a long repayment 

term (20 years). China’s budget for foreign assistance subsidized the difference between the Eximbank’s costs and the fixed interest rate. This allowed the Chinese 

Government to dramatically expand its resources for development assistance, but it 

also required more careful use of these resources, as the new loans were to be more 

carefully appraised for their financial feasibility. The Eximbank fully intended to be 

repaid. As the Eximbank’s chief economist told an audience at a World Bank retreat: ‘‘it’s the new lenders’ problem if countries can’t repay, not the Paris Club. We 

know we need a good, strong balance sheet.’’ Although some Eximbank concessional 

loans have been rescheduled, there are no reports of any being canceled. 

The majority of China Eximbank’s lending instruments do not qualify as foreign 

aid. In 1998, they began offering export sellers credits (usually short to medium 

term) to Chinese firms to boost their ability to invest overseas and finance construction contracts.19 In 2000, the bank launched export buyer’s credits, rolling them out 

in Africa in 2005. These are usually issued in dollars, at London Interbank Offered 

Rate (LIBOR) or the Commercial Interest Rate of Reference (CIRR) rates prevailing 

in global markets. Preferential export buyer’s credits (you hui mai fan xin dai) also 

exist. These are very similar to concessional loans, but are subsidized from a different budget. 

Commercial Banks. In the past decade, several Chinese commercial banks—China 

Construction Bank, Industrial and Commercial Bank of China (ICBC), and Bank of 

China—have also set up offices in Africa to support Chinese companies’ business. 

18

One, ICBC, purchased 20 percent of South Africa’s Standard Bank for around US$5 

billion, and has since embarked on a number of joint projects across the continent. 

China Africa Development Fund. The China Africa Development Fund (CAD 

Fund), overseen by CDB, provides equity capital. CDB provided the initial US$1 billion investment, and the CAD Fund was expected to raise finance for successive 

phases from other investors, with the goal of reaching US$5 billion. The fund’s managers have stressed that this equity finance is not aid, and not loans, but mediumterm investment that expects a return.20 A similar instrument, China Asia Fund, 

was set up by China Eximbank in Asia. 

IMPACT ON THE LIVES OF AFRICANS

China’s approach to development cooperation clearly offers opportunities, but also 

entails some risks. The benefits include greater ownership, and more equal partnerships, lower transaction costs, a new emphasis on infrastructure and productive activities, ‘‘agency of restraint,’’ and policy space. The risks include the potential for 

higher costs when contracts are signed without competitive tenders, as well as the 

lower labor, social, and environmental standards that come with a middle-income 

developing country partner, as opposed to one at a high level of development. 

Ownership. Countries across the developing world have been pressing for more 

ownership over their aid and development finance. The Chinese have neither the 

expertise, nor the inclination, nor the personnel to engage in development strategy 

planning or write country assistance strategies, for any of the countries where they 

engage. In fact, such an activity would probably never occur to them. 

For the Chinese, ownership starts (and sometimes ends) at the top. In cases 

where leaders do not coordinate with ministries, this can cause problems, as in Liberia where a President asked the Chinese to build a hospital upcountry, leaving the 

Liberian health ministry scrambling to figure out staffing for the remote location. 

But governments who do have well thought out development plans appreciate the 

Chinese willingness to follow their lead. They also appreciate that the Chinese principle of noninterference in internal affairs allows them to maintain sovereignty over 

their development strategy. 

Partnership. The language of ‘‘donor’’ and ‘‘recipient’’ remains widespread in the 

West, despite the efforts of the Paris Declaration to shift to partnership. As the 

West has found, it is difficult to have real partnerships when one partner is wealthy 

and autonomous and the other is poor and dependent. As a Chinese researcher once 

asked me, ‘‘how can you fight poverty and stay in a five star hotel?’’

Skilled Africans can’t help but wonder why foreign experts who work beside them 

are earning 10 or 20 times their salaries, all paid out of a foreign aid budget (or 

even worse, financed by a loan that will later be paid out of African Government 

workers’ taxes). The Chinese live far more simply in Africa, often in group housing 

or compounds, and share a frugal mentality. The managing director of the Bank of 

China branch in Lusaka is authorized to fly business class, his assistant told me, 

but he flies economy class instead ‘‘to save the bank money.’’ It is hard to imagine 

a similar gesture from a World Bank employee. 

Lower Transaction Costs. China’s tiny aid bureaucracy (70 professionals in 

MOFCOM’s Department of Aid to Foreign Countries, 100 in China Eximbank’s 

Concessional Loan Department) means that the Chinese rarely participate in the 

stream of donor missions that occupy the time of so many African ministries. China’s aid program offers a relatively limited menu of turnkey projects, mainly focused 

on infrastructure: roads and bridges, telecoms and power plants, sanitation and 

water systems. Once a project is initiated or requested, all important decisions are 

made in Beijing, not by the Chinese mission in the host country. Contrary to conventional wisdom, Chinese banks do require environmental impact assessments, but 

will often accept those prepared by their borrowers. In recent years Chinese banks 

have begun to require more elaborate environmental impact appraisals for loans. 

Increasingly, these are contracted out to European firms. 

New Emphasis on Infrastructure and Production. Chinese companies and banks 

appear to be far more open to financing and investing in infrastructure, resource 

processing activities and industrial projects than their peers coming from Western 

countries. ‘‘Donors have neglected power since the 1990s,’’ a recent study noted, 

pointing to an infrastructure financing gap of some US$93 billion in Africa.21 African countries themselves spend some US$45 billion a year on infrastructure; and 

Chinese companies have been building much of this, earning revenues of over 

US$20 billion annually from construction and engineering contracts on the continent. Worldwide, over 60 percent of China Eximbank’s concessional loans have 

been committed to infrastructure projects.22

19

After Liberia’s war ended, President Johnson Sirleaf repeatedly said that her 

number one priority was getting roads financed. According to adviser Steven 

Radelet, ‘‘No one was doing it. They all said ‘we don’t do roads. But the Chinese 

Ambassador said: ‘we’ll do roads.’ And things changed.’’ 23

In Ghana, the China Africa Development Fund is one of the equity investors in 

a joint venture with the Government of Ghana and Bosai Minerals Group in a 

Sekondi industrial estate that will be anchored by a proposed alumina refinery. 

Ghana has long been a producer of bauxite, mined by large western firms—Rio 

Tinto (now merged with Canada-based Alcan), and the U.S. company Alcoa—who 

refined the bauxite into aluminum ingots which were then shipped out. But none 

of these partners was willing to invest in building an aluminium industry. 

As Ghana’s Minister of Trade and Industry put it, the Chinese project ‘‘will allow 

our country to finally achieve our long-term objective of establishing an integrated 

aluminium industry and make the most of our resources.’’ 24 Business Monitor International predicted that the Sekondi Industrial Freezone would ‘‘create a major 

growth area in West Ghana.’’ 25

Another Chinese company is building Chad’s first petroleum refinery in a 60:40 

joint venture. The Chadian Government applied for a preferential export credit to 

help finance its share of the venture. Although the famous Chad-Cameroon pipeline 

project supported by the World Bank originally envisaged building a small refinery, 

this did not happen, and the pipeline instead transferred Chad’s crude oil outside, 

while Chad continued to import all its refined petroleum products. Ngata Ngoulou, 

Chadian Finance and Budget Minister, said: ‘‘If we had made this request to our 

traditional partners, they would have certainly told us to give up the idea.’’ 26

Likewise, in Niger, the Chinese approach contrasted with that of earlier Western 

companies. Some Africans believe that ‘‘China’s efforts offer opportunity for industrialization on a scale never countenanced by the colonizers of old.’’ 27 Ibrahim Ango, 

president of Niger’s Chamber of Commerce, told a reporter that French oil firm 

Total and the U.S. firm ExxonMobil both held oil concessions in Niger’s Agadem region, but refused to consider refining oil. ‘‘East time the government said, ‘build a 

refinery,’ they said: ‘it’s impossible.’ The Chinese came and said: ‘A refinery? What 

size?’ ’’ 28

Agency of Restraint. China’s system of resource-backed infrastructure loans is a 

way for countries with weak governance, unable to access global finance, and prone 

to the ‘‘resource curse,’’ to opt for an agency of restraint. With multiple competing 

demands for access to the revenue streams from their natural resources, leaders 

find it hard to say no. Commodity-backed loans are a precommitment technique. 

They allow a government to have public works expenditures today, paying for them 

with future exports. In weak governments, rather than trying directly to improve 

the host government’s accountability mechanisms, or forcing improvements through 

conditionality, the Chinese accept that institutional development is a long-term 

process. They manage their fiduciary responsibility by keeping control over the 

finances and almost never giving cash. As one African official told me: ‘‘with China 

you never see that money.’’

Debt Sustainability. China’s new ability to offer large-scale finance arrived just 

as African countries were finally successful in getting multilateral debt relief 

through the Highly Indebted Poor Countries (HIPC) program. Paris Club and multilateral creditors have worried about a new debt burden. In the DRC, for example, 

China’s initial offer of a credit line of US$6 billion for infrastructure and another 

US$3 billion or so to finance the copper mine appeared certain to sink the warravaged country beneath towering waves of debt just when the government was negotiating with the Paris Club for debt forgiveness on the cold war era loans racked 

up under Mobutu. 

Yet a different way of looking at this package suggests that while the Chinese 

financing model involves large sums of credit, it also frequently creates new cash 

flows to finance the investments. When asked about Western criticism of China’s 

African engagement during a press conference at the World Bank/IMF Spring Meetings in April 2011, Ngata Ngoulou, Chad’s Finance and Budget Minister, said, regarding debt: ‘‘it is more important that the debt burden of African countries is 

manageable. For us, this is a big difference. Even if the some of the Western critique of China makes sense, I still do not think it a bad thing for Africa. We borrow 

for our industrialization projects and the debt will be repaid from their profits.’’ 29

This also creates incentives for the Chinese companies and banks to do what they 

can to ensure that their investments are financially sustainable, an incentive that 

was often missing in past multilateral debt. 

Impact on Local Firms and Workers. Chinese imports, particularly of textiles, 

have been devastating competition for African firms using outdated technologies to 

produce for local markets. At the same time, some African entrepreneurs are 

20

partnering with Chinese companies or using new Chinese machinery and technical 

assistance, and competing successfully with Chinese imports into their regions.30

Indeed, World Bank data shows that between 2004 and 2009, although Chinese imports were rising dramatically, sub-Saharan African countries experienced average 

annual increases of 3 to 5 percent in manufacturing for every year except 2008, the 

first year of the global financial crisis.31 In Ethiopia, Senegal, Sudan, Tanzania, 

Uganda, Zambia, and Zimbabwe, all large importers of Chinese goods, manufacturing grew by an average of 9 percent in 2009. 

In the construction industry, Chinese companies clearly benefit from contracts 

tied to Chinese finance. When these contracts are delivered without competitive bidding, as in many export credit arrangements, countries may find themselves paying 

higher costs than would otherwise be the case. Yet even when they have no financial support, Chinese companies are winning a large share of the small and medium 

construction contracts that might have gone to local firms in the past. 

Chinese companies do have low costs but construction firms in Zambia and 

Namibia have documented unfair Chinese business practices: collusive bidding, low 

wages, and a tendency to hire contract workers in order to get around mandated 

labor benefits (paid holidays, sick leave, etc.) for permanent staff. A study by 

Namibian labor unions pointed out that the Chinese were following the same practices as local African firms. European-owned firms that adhered to local labor laws 

and regulations suffered most.32

Chinese companies do bring a larger proportion of their workforce from home than 

Western firms, but this is the case mainly for construction projects in oil-rich countries like Algeria, Libya, or Angola where local labor is expensive. In other places, 

with few exceptions, Chinese projects have a majority of Africans in their workforce. 

Those who do fieldwork regularly report this reality. For example, a researcher who 

recently visited Cameroon expecting to find large groups of Chinese workers found 

instead that every construction site she visited had Cameroonian workers under 

Chinese managers.33 It is the poor conditions of this employment, and not its 

absence, that is a constant complaint among African workers. 

Policy Space. Decades of advice and conditionality imposed by the West have 

pushed African governments to rely on the magic of the marketplace, develop by 

opening their markets and exporting according to their comparative advantage in 

raw commodities. While the Washington Consensus usefully stressed key macroeconomic fundamentals—low inflation and adequate foreign reserves—it was skeptical of the kind of industrial policy and targeted intervention practiced across East 

Asia, and it had little to say about strategic development policy. 

The achievements of the Chinese in moving millions out of poverty are recognized 

as a significant success. But like other East Asian countries, although China moved 

toward the market, they did it gradually, and in particular, they did not begin by 

liberalizing trade, as recommended by the Washington Consensus. Their model emphasizes fiscal stability and macroeconomic balance, but also learning and experimentation. The enormity of this example provides policy space for African governments to experiment with other approaches to fostering development. 

AFRICAN REACTIONS TO CHINA’S APPROACH

Africans have reacted to China’s approach in different ways. Government officials 

and leaders have largely been very positive, with some exceptions, such as Zambian 

opposition politician and, now, new President, Michael Sata. Civil society, trade 

unions, and some sectors of local business have been more wary. This is particularly 

the case with regard to Chinese labor practices, the influx of small-scale traders, 

the impact of Chinese goods on local manufacturing, and the fact that by engaging 

primarily with governments, Chinese aid and export credits reinforce incumbent 

leaders. Concerns have also been raised about the high levels of counterfeiting and 

substandard goods coming into Africa from China. 

Opposition politicians have sometimes found that Chinese engagement can provide ample fodder for political capital. Writing an op-ed about a large Chinese economic zone planned for Mauritius, Anil Gayan, an opposition member of Parliament, 

wrote: ‘‘It is a voluntary colonization . . . a danger for our security.’’ 34 Michael 

Sata, a perennial Presidential candidate in Zambia, famously dismissed the Chinese 

in his country as ‘‘infesters’’ not investors. 

Public opinion polls in Africa show that populations there are generally evenhanded about Chinese engagement. In Cameroon, for example:

. . . 70 percent of the respondents in one poll were ‘‘disturbed by the Chinese influx’’ while at the same time 92 percent in the same survey admitted 

that China is good for Cameroon’s economy. Also, 81 percent welcomed Chinese products, which benefited poorer parts of the population.35

21

A study analyzing Afrobarometer’s public opinion surveys in 20 countries found 

that while most Africans expressed positive views of China’s role, Africans who rank 

human rights as high in importance were more likely to have an unfavorable opinion. Views on the importance of democracy were not correlated with negative opinions of China, however.36

Government officials generally express positive views. Speaking at the World 

Bank/IMF Annual Meeting in April 2011, Dr. Situmbeko Musokotwane, the Zambian Minister of Finance, compared China’s business and aid model with that of the 

West. China used aid and other tools vigorously to encourage its companies to invest 

in Africa, he said, but that did not seem to be the case for Europe and America, 

whose aid programs were more paternalistic, and seemed to be designed as charity: 

‘‘at least help them not to suffer, we can’t do much more than that. They’re not 

ready for investment.’’ 37

Mthuli Ncube, chief economist at the Africa Development Bank, commented in 

Tunis that the Chinese model ‘‘is a fascinating and new model in terms of how aid 

is flowing into Africa and how infrastructure investment is being conducted and 

supported.’’ China, he said, is ‘‘posing a challenge and making us think about aid 

architecture, this kind of governance-neutral approach to aid engagement and investment in Africa.’’ China’s approach might even be more sustainable, he said. ‘‘We 

can talk forever about Millennium Development Goals but my view is you can only 

pay for MDGs targets and progress not through aid but through growth.’’ 38

A survey of African stakeholders carried out in 40 African countries by the OECD 

for the African Economic Outlook 2011 found that emerging partners such as China 

were ranked as having a comparative advantage for cooperation in infrastructure, 

innovation, and even health compared with Africa’s traditional bilateral and multilateral partners. Economist Helmut Reisen, head of research at the OECD’s Development Center commented: ‘‘these results are striking considering all the effort traditional donors have put into these sectors.’’ 39

STEPS THAT CAN BE TAKEN TO IMPROVE COOPERATION WITH CHINA

First, invest some effort in getting behind the headlines and seeing what China 

is actually doing. The Chinese have six decades of experience with aid in Africa. 

They’ve spent time analyzing their own past failed aid projects, and they’ve come 

up with a different model of engagement, much of which does not actually involve 

official development aid. It’s much closer to Japan’s pattern of engagement with 

other Asian countries. 

Through diplomatic processes like the Forum on China-Africa Cooperation 

(FOCAC), initiated in 2000, China has increasingly coordinated its development 

engagement with Africa on a ‘‘whole of government’’ basis, with involvement by the 

line ministries (agriculture, health, education, science and technology), universities 

and think-tanks, policy banks, as well as the ministries of commerce and foreign 

affairs. This synergy has led to practical experiments based on China’s own 

experience:

• Resource-backed infrastructure loans. Credits that allow countries with poor 

credit ratings to borrow today and pay with tomorrow’s exports. • Overseas economic zones that encourage Chinese companies to move their labor, 

energy, and resource-intensive manufacturing offshore. • A US$5 billion equity fund provides additional capital investment options for 

suitable Chinese companies in Africa who plan invest in public-private partnerships, joint ventures, and manufacturing. • A US$1 billion fund to provide loans to African small and medium enterprises, 

channeled through African countries’ national development banks. • Twenty agro-technology demonstration centers that ask Chinese institutes and 

agribusinesses to build sustainable business models that can cross-subsidize development outreach with profitable income opportunities.

These tools are for the most part not funded by China’s official aid, but they are 

about development. More importantly, they respond to the requests of Africans for 

assistance that will help in building infrastructure and creating new jobs. The Chinese approach to development finance in poorer countries demands that we reconsider our assumptions and our neat categories that separate ‘‘aid’’ from business 

support. 

THE EXAMPLE OF HEALTH

China has hosted two International Roundtables on China-Africa Health Collaboration, on December 4–5, 2009, and on February 11–12, 2011, respectively, organized by the Chinese Alliance for South-South Health Cooperation Research, the 

Peking University Institute for Global Health, and the China Institute of InterVerDate 0ct 09 2002 17:57 Jan 20, 2012 Jkt 000000 PO 00000 Frm 00025 Fmt 6633 Sfmt 6621 S:\HEARIN~1\112THC~1\2011IS~1\110111~1.TXT BETTY
22

national Studies, and cosponsored by the World Bank Institute, China’s MOH, 

WHO, and the Bill & Melinda Gates Foundation. Interest in collaboration appears 

to be growing. 

However, the lack of understanding and, sometimes, the misrepresentation of the 

nature of Chinese engagement overseas, have created a challenge for United StatesChina collaboration. For example, one analyst writes: ‘‘More than 2,000 Chinese 

medical personnel have been sent to Yemen during the past 40 years to assist with 

Yemen’s health and medical programs and responses to disasters. In exchange,

China has received access to Yemen’s markets and energy resources’’ (emphasis 

added).40 Another argues, without evidence, that ‘‘Health diplomacy helps pave the 

way for Chinese oil companies [sic] to win mining rights for oil, platinum, and other 

natural resources, . . . one part of the quid pro quo that encourages African states 

to make these concessions and provide Chinese companies access to these resources.’’ 41 It is more accurate and useful to see China’s health diplomacy as a 

broad-based strategy aimed at building goodwill across the continent, no more an 

‘‘exchange’’ or ’’quid pro quo’’ than U.S. health engagement. To encourage official collaboration between the United States and China in health, high-level support by political leaders on both sides will be necessary to build trust and overcome suspicions 

like those noted above. 

Operationally, the Chinese concern about not intervening in the internal affairs 

of their partners means that they operate with a great deal of regard for local ownership of their assistance efforts. Therefore, a key step in collaboration requires genuine buy-in by an interested African partner. The stars need to be aligned further: 

In the partner country, it will be essential to have constructive commitment by both 

the Chinese and American ambassadors. 

A parallel track should involve building relationships by working together in multilateral settings, particularly those endorsed by the U.N. or WHO, or in private or 

more decentralized settings, for example, foundations with health-related programs 

in China as well as Africa—the Rockefeller, Ford, or the Gates Foundations. With 

a ‘‘green light’’ from political officials, experiments in cooperation can be started between organizations such as the Centers for Disease Control in China and in the 

United States. 

Possible areas for collaboration could include not only malaria but also sanitation 

and rural and urban water supply efforts. The Chinese have extensive experience 

in building low-cost water supply systems in Africa, whereas the United States 

could focus on public health education (e.g., promoting hand washing). Some American officials have expressed interest in purchasing more Chinese antimalarial medicines for use in Africa, as long as they are certified by WHO. Assisting Chinese 

firms to gain WHO certification could be mutually beneficial. Building up the capacity of African governments to test and monitor imported medical products in order 

to fight substandard and counterfeit drugs would also be useful.42

FINAL POINTS

In conclusion let me stress three points: realism versus alarmism; good policy 

needs good information; engage China multilaterally. 

Realism versus Alarmism. China’s rise in Africa should be seen in context. China 

is still a far smaller player than the West. The Chinese Government has much in 

common with other rising economic powers: Brazil and India, for example. Brazil 

is also expanding on the continent. The Economist recently reported that Brazil has 

more embassies in Africa than the U.K., for example. Lack of transparency is also 

a common pattern for these emerging powers. Brazil, India, and China are alike in 

not being members of the OECD and in not reporting their aid and development 

finance flows to the OECD’s Development Assistance Committee, which tracks these 

things on behalf of its members and others. Brazil, India, and China also have similar levels of corruption, according to Transparency International. 

Good Policy Needs Good Information. Pushing China to be more transparent 

about aid and official finance may eventually yield results, and this would be helpful 

for us in reacting to China’s rise. But in the meantime, it is possible to gather better 

information and to publish that information. In the 1970s, the CIA gathered information on China’s aid program and published this information regularly. Today, it 

appears that no one in the U.S. Government is gathering and sifting through the 

volumes of information on Chinese engagement. The information that is sometimes 

made available to Congress, for example, a report on Chinese ‘‘aid’’ written by the 

Congressional Research Service that estimated annual aid flows from China of some 

$18 billion in 2007 alone, is not always as careful or accurate as it could be.43 As 

a Washington Post article said not long ago, ‘‘China is no enemy, but inflating the 

challenge from China could be just as dangerous as underestimating it.’’ 44

23

Engage China Multilaterally. China is a member of the United Nations, World 

Trade Organization, and the World Bank and International Monetary Fund, the 

World Health Organization. All of these have rules and norms on global engagement 

that China has pledged to uphold: rules on export credit subsidies, for example, or 

on debt sustainability and reporting of international credits. At the same time, 

China is not a member of the OECD, where many of our rules on trade, investment, 

export credits and official finance are made. The OECD sets the standard for being 

a responsible global player (even if the standard is not followed consistently by 

OECD members). The Chinese by and large are familiar with these rules. We need 

to think about ways in which we can make actually joining the club—as South 

Korea and Mexico have recently done—both feasible and attractive to the Chinese.

————————

End Notes 

1. This testimony draws on Deborah Brautigam, ‘‘The Dragon’s Gift: The Real Story of China 

in Africa,’’ Oxford: Oxford University Press, 2011 (2009) and Deborah Brautigam, ‘‘China in Africa: What Can Western Donors Learn?’’ Norfund, August 2011, http://norfund.no/images/stories/

publikasjoner/andrelpublikasjoner/NorfundlChinalinlAfrica.pdf. 

2. Ministry of Commerce, ‘‘China Commerce Yearbook,’’ Beijing, 2009. 

3. OECD, ‘‘Development Assistance Committee (DAC) Statistics,’’ http://stats.oecd.org/. 

4. USAID, ‘‘Congressional Budget Justifications, Foreign Operations, Annex on Regional Operations, Budget Year 2012,’’ http://www.usaid.gov/performance/cbj/158268.pdf. 

5. ‘‘Global Health Initiative,’’ http://foreignassistance.gov/InitiativelGHl2012.aspx?FY=2012. 

6. Brautigam, ‘‘Dragon’s Gift,’’ 317. The percentage of aid going to Africa is adjusted slightly 

(from my estimate of 43 percent to the actual figure of 45.7 percent, revealed in State Council, 

‘‘China’s Foreign Aid,’’ Beijing, April 2011. Rapid increases mean annual aid commitments are 

higher than disbursements. 

7. USAID, ‘‘USAID Primer: What We Do and How We Do It,’’ Washington, DC, revised January 2006, http://www.usaid.gov/aboutlusaid/PDACG100.pdf. A small number of additional personnel are seconded from other agencies or institutions. 

8. Information Office, ‘‘China’s Foreign Aid,’’ Beijing, People’s Republic of China, State Council, April 2011, 4. Currency conversions are on the basis of the exchange rate in 2009. These 

totals are not very meaningful, however, as the Chinese figures in RMB yuan were simply aggregated, without accounting for inflation. 

9. Martyn Davies, ‘‘How China is Influencing Africa’s Development,’’ background paper for the 

‘‘Perspectives on Global Development 2010: Shifting Wealth,’’ April 2010. 

10. ‘‘Concessional financing,’’ http://www.economics-dictionary.com/definition/concessionalfinancing.html [accessed June 15, 2011]. Although market rates vary strikingly around the 

world, this clear, standard definition suggests that the label ‘‘concessional’’ should be applied 

only for finance that is given below the benchmark rate for the currency in which the loan is 

issued. 

11. China Eximbank, ‘‘Annual Report 2010,’’ p. 22. The Chinese figures were RMB 278 billion. 

12. China Eximbank, ‘‘The Export-Import Bank of China Hosted a Symposium on Financing 

and Project Cooperation in Africa,’’ news release, July 25, 2007. 

13. Deborah Brautigam, ‘‘Chinese Aid and African Development,’’ New York: St. Martin’s 

Press, 1998. 

14. The United States has the government-owned Export-Import Bank. Germany has a publicly owned bank: KfW, or Kreditanstalt fu ̈ r Wiederaufbau to support exports. Brazil owns 

BNDES, Banco Nacional de Desenvolvimento Economico e Social (Brazil National Social and 

Economic Development Bank). China’s three policy banks are China Development Bank, China 

Export Import Bank, and the Agricultural Development Bank of China. 

15. Deborah Brautigam and Tang Xiaoyang, ‘‘African Shenzhen: China’s Special Economic 

Zones in Africa,’’ Journal of Modern African Studies, 49, 1 (2011): 27–54. 

16. For an excellent overview of the various types of financial support available to China’s 

enterprises under ‘‘Going Global’’ see Duncan Freeman, ‘‘China’s Outward Investments: Challenges and Opportunities for the EU,’’ Brussels Institute of Contemporary China Studies Policy 

Paper (no date). 

17. Institute of Economic and Resource Management, ‘‘A Report on the Development of China’s Market Economy,’’ Beijing: China Foreign Economic Relations and Trade Publishing House, 

2003, 129. 

18. Erica Downs, ‘‘Inside China, Inc: China Development Bank’s Cross-Border Energy Deals,’’ 

Washington, DC, Brookings, March 2011. 

19. People’s Daily, April 9, 2000. 

20. China-Africa Development Fund, ‘‘Online Q & A,’’ http://www.cadfund.com/en/queslon line.asp?Id=9 [accessed June 29, 2011]. 

21. Vivien Foster and Cecilia Briceno-Garmendia, eds. ‘‘Africa’s Infrastructure: A Time for 

Transformation,’’ Agence Francaise de Developpement and the World Bank, 2010, p. 8. 

22. Information Office of the State Council, ‘‘China’s Foreign Aid,’’ Beijing, China, April 2011, 

p. 6. 

23. Steve Radelet, Meeting at Center for Global Development, October 9, 2007. 

24. Hanna S. Tetteh, Statement Read on Behalf of Government at a Press Conference,’’ October 26, 2011. 

25. ‘‘Oil Exports to Propel Growth Boom,’’ Africa Monitor, v. 12, n. 8, August 2011, p. 7. 

26. ‘‘CNPC and Chadian government sign MOU on financing for N’Djamena Refinery,’’ Press 

Release China National Petroleum Company, August 25, 2009, http://www.cnpc.com.cn/en/press/

24

newsreleases/CNPCandChadiangovernmentsignMOUonfinancingforNDjamenaRefineryl.htm 

[accessed July 15, 2011]. 

27. Burgis, ‘‘A Richer Seam.’’

28. Burgis, ‘‘A Richer Seam.’’

29. IMF, Video of Press Briefing, African Ministers, World Bank/IMF Spring Meetings, April 

16, 2011, http://www.imf.org/external/mmedia/view.aspx?vid=907396692001 [accessed July 30, 

2011]. 

30. See Brautigam, ‘‘The Dragon’s Gift,’’ for the success stories of several African entrepreneurs. 

31. World Bank, World Development Indicators. Analysis covers all sub-Saharan African countries with data between 2004–2009. 

32. J. Anthony Yaw Baah and Herbert Jauch (ed.), ‘‘Chinese Investments in Africa: A Labour 

Perspective,’’ African Labour Research Network, Windhoek, Namibia, May 2009. 

33. Lisa Sodalo, ‘‘China in Cameroon’s Construction Sector: Towards Enforcement of Higher 

Labour Standards Than Local Regulation?,’’ China Monitor, May 2011, http://www.ccs.org.za/wpcontent/uploads/2011/06/ChinalMonitorlMAYl2011SG1.pdf [accessed June 28, 2011]. 

34. Brautigam, ‘‘The Dragon’s Gift.’’

35. Max Rebol, ‘‘Alternatives: Turkish Journal of International Relations,’’ Vol. 9, No. 4, Winter 2010. 

36. Aleksandra Gadzala and Marek Hanusch, ‘‘African Perspectives on China in Africa: Gauging Popular Perceptions and Their Economic and Political Determinants,’’ Afrobarometer Working Paper No. 117, January 2010. 

37. Comments at a panel, Washington, DC, April 15, 2011. 

38. Ndamu Sandu, ‘‘Chinese Aid to Africa in the Spotlight,’’ The Standard, November 29, 

2010. 

39. Helmut Reisen, ‘‘Emerging Partners Create Policy Space for Africa,’’ Shifting Wealth Blog, 

June 6, 2011. The traditional partners were thought to have a comparative advantage for exports and for governance. 

40. Denise Zheng, ‘‘China’s Use of Self Power,’’ in Chinese Soft Power, ed. McGiffert, 4. 

41. Jeremy Youde, ‘‘China’s Health Diplomacy in Africa,’’ China: An International Journal 9, 

no. 1 (2011): 159, 160. 

42. See the discussion by Liu Youfa, ‘‘Responsibilities of China and the United States in Promoting Global Health Programs in Africa,’’ paper presented at CSIS-China Institute of International Studies Conference Conference, Beijing, May 24, 2011. 

43. See, for example, http://www.fas.org/sgp/crs/row/R40361.pdf and my comments on it on my 

blog: http://www.chinaafricarealstory.com/2010/02/billions-in-aid.html. 

44. http://www.washingtonpost.com/wp-dyn/content/article/2010/02/26/AR2010022602601.html

?sub=AR.

Senator COONS. Thank you very much, Dr. Brautigam. 

Mr. Hayes, if you would. 

STATEMENT OF STEPHEN HAYES, PRESIDENT AND CEO, THE 

CORPORATE COUNCIL ON AFRICA, WASHINGTON, DC 

Mr. HAYES. Thank you. 

It is very good to see all four of you. 

Senator COONS. Turn your mike on. 

Mr. HAYES. Sorry. Good to see all four of you. And certainly, Senator Lugar, it is great to see you again as well. 

I would like to speak really more from the private sector point 

of view, of course, and as I noted in my written testimony, I am 

honored to be invited to provide testimony. 

Much of my life has been built around both China and Africa relations with the United States, and certainly, currently, the status 

as president of the Corporate Council on Africa has brought together my interest in both regions of the world. 

For the Corporate Council on Africa, this issue is of high 

urgency. It is nearly 200 companies represent about 85 percent of 

all United States foreign direct investment in Africa. As we 

attempt to expand United States trade with and investment in 

Africa, the relationship with China becomes increasingly important 

to the American economy. 

China’s interests in Africa do go beyond economic and include 

wider political influence on a global scale, as does ours. In the 

global marketplace, China is and will continue to be an aggressive 

25

competitor to the United States and other nations, including those 

in Africa. 

They have every right to be such. No one should challenge 

China’s right to be engaged in Africa. Both China and the nations 

of Africa are free to seek any and all trading partners. 

Neither is China alone in increasing its investment in Africa. 

The emerging economies of Brazil, Russia, India, South Africa as 

a group are outpacing United States investment in Africa. 

However, China does enjoy certain advantages over the United 

States and other nations, particularly following rules and practices 

of the OECD. Those rules forbid bribery of public officials in any 

form, as well as eliminating predatory practices on export credit 

financing. 

Chinese counterfeit goods have flooded African markets, not only 

undercutting United States companies who have created the products—some of the products—driving them out of the market, but 

also creating health risk with counterfeit medicines. International 

patent rights are ignored, and this has implications for supporting 

development of new products and manufacturing in Africa, as well 

as exporting nations. 

Chinese populations are also increasing throughout Africa, with 

major socioeconomic implications for the continent. While this is 

the business of African host nations and China, it does bring up 

questions of future stability of nations, as well as create questions 

around the use of local versus imported labor. 

The United States strategy toward China should be twofold. The 

U.S. Government should do more to help American companies compete in Africa. Far greater United States private sector engagement 

in Africa will not only help African development but will also help 

rebuild the manufacturing base in America. 

Our aid program should be shifted toward building a vibrant private sector throughout Africa, and USAID should recognize the 

United States private sector as a partner in African development. 

I think our competitive advantage in this regard will be if we can 

compete and work with a vibrant private sector in Africa, then private sector to private sector is more in our line, and we can develop 

that. I think that is one of the emphasis that we should be placing. 

In this regard, many of our members’ experiences and insights 

are reflected in legislation being developed by Senator Durbin that 

may make it possible for U.S. companies to compete on a more 

even playing field. We should recognize, however, that China will 

be a long-term player in Africa and that China offers an opportunity also for America in terms of economic partnerships. 

Cooperation will require time and the establishment of trust, but 

there are some business partnerships already between the United 

States and China in Africa. But there are also areas that Professor 

Shinn rightly noted that we can now cooperate in, such as South 

Sudan and the Horn of Africa. 

Much of this cooperation, though, will be built through joint ventures in the United States. If the United States and China can find 

common ground in Africa, not only will the United States-China relationship strengthen but so, too, will the benefit to Africa. In this 

regard, the Corporate Council on Africa will be leading a delegation 

26

of businesses to China in February to meet on possible cooperation 

in Africa. 

Thank you. 

[The prepared statement of Mr. Hayes follows:]

PREPARED STATEMENT OF STEPHEN HAYES

Senator Kerry and other members of the Foreign Relations Subcommittee on African Affairs, I am honored to be asked to testify before you on China’s role in Africa. 

I have worked for some years with Chinese emerging leaders before I became President of the Corporate Council on Africa more than 12 years ago. Much of my life 

has been engaged in China and African affairs. 

The Corporate Council on Africa, whom I proudly serve, is a membership organization of more than 180 companies. Collectively the members represent more than 

85 percent of all U.S. private sector direct investment in Africa. Probably no organization in America is more engaged in the economic and political landscape of Africa. 

As such we are a nonprofit, nonlobbying organization committed to increasing U.S.-

Africa trade and investment. We are engaged in different ways in most issues affecting the economic relationship. Certainly, the Chinese engagement with Africa is one 

of those key issues. 

A great deal has been said about China’s perceived domination of the African 

market. Clearly China has long-term aims, both economic and political, through its 

heightened involvement in Africa. Given their needs for the development of their 

own nation coupled with the fact that so much of the world’s strategic resources are 

to be found in Africa this should not be surprising. I think it wise to presume that 

their interests go beyond just economic, however, and they seek wider political influence than they have had in the past. They are, after all, one of the principal bankers 

for the world right now, and their planning, unlike most countries today, is cohesive, coherent, and long-term, both in economics and politics. 

In global business, contracts are completed when three basic dynamics are realized: capacity to deliver, decisionmaking and execution of the contract itself. In capacity to deliver and in execution of the contract, that is the completion of the product, the United States can evenly compete with China or any other nation in the 

world. However, the decisionmaking process, which affects the time that a contract 

can be completed, is far less cumbersome in China than it is in the USA. Nearly 

every U.S. deal relies on private investors, and on this matter China has a distinct 

advantage. 

The decisionmaking process in China is far more efficient than it is in the United 

States. Decisions and recommendations for investment are often directed by the government, or at the very least, and they are able to meet requests from African governments far more quickly than we can in this country. There are far more checks 

and balances that most business deals must meet in our own system. We also operate our economic models on business-to-business contracts, while many African 

countries, especially those with weak private sectors, operate on Government-tobusiness model, more similar to the Chinese model than to the American model. The 

competitive advantage clearly goes to China under these circumstances. 

It is not necessarily China’s capacity, or even its ability to execute/complete contracts quickly that defines its competitive advantage in Africa. The West still holds 

key advantages in both technological and scientific capacity, as well as in management skills and probably quality of workmanship. Rather it is the Chinese ability 

to forge consensus and mobilize resources quickly that gives them a distinct advantage in the African marketplace. 

No one should challenge China’s right to be engaged in Africa. Their involvement 

has helped Africa perhaps more than any nation has helped Africa in any 10-year 

period directly and indirectly. Certainly, the China engagement with Africa has 

brought about heightened interest in Africa. Infrastructure has expanded in many 

countries thanks to Chinese investment and political interests. More productive agriculture has been developed in some countries where China is active, and certainly 

the increased competition for strategic minerals has driven up the price of commodities and raised national incomes for many African countries. 

It is not China alone, however, that is increasing its investment in Africa. While 

it can be debated whether the increased interest of China in Africa has spurred on 

other nations to become more engaged economically in Africa, the combined investment of the so-called BRICS (Brazil, Russia, India, China, and South Africa) has 

surpassed all U.S. investment in Africa. As a result, the economies of these countries have also shown greater strength and stability in these times than most developed nations. There are growing investment flows into Africa from the Middle East, 

27

ranging from Turkey to the nations of Arabian Peninsula and to Iran. We also see 

growing interest in Africa from Japan, particularly since its recent nuclear disaster, 

but also because of the growing influence of China. China’s interest and growing involvement in Africa is perhaps one of the most important political and economic 

phenomena in the world right now, and in my view, the United States has been very 

slow to either understand its meaning and ramifications for our own country and 

its own economic and political future. 

It is difficult to know exactly how much China is investing in Africa, and it is 

just as difficult to pin down exactly how they are winning the competition. Their 

currency is artificially pegged so exact values are almost impossible to determine. 

Certainly, their government and their private sector are working closely together, 

and the Chinese Government appears to help its private sector investing in Africa 

as no other government helps its own private sector. Some of this is due to the history of China, particularly over the last 30 years, and some is simply due to the 

fact that China can underbid most projects through lower labor costs and through 

government-subsidized assistance to Chinese companies. While Chinese companies 

win infrastructure contracts with low bids and subsidized financing, they also have 

developed a reputation for limited employment for Africans, limited technological 

transfer, and in some cases, uneven workmanship. If Chinese companies do not 

correct these practices, it presents an opportunity for American companies to win 

contracts and train Africans during project implementation, which is in Africa’s 

long-term benefit. One American company, Symbion Power, has done exactly that 

in winning an MCC-funded contract for power transmission in Tanzania. It also 

partnered with CCA to develop an HIV/AIDS prevention campaign for its employees 

in Tanzania. 

What is also obvious is that the Chinese population on the African Continent is 

increasing in nearly every nation. Chinese businesses are sprouting up in not only 

the major cities of Africa but in smaller urban areas as well. Chinese laborers are 

brought in with Chinese construction projects, and it is difficult to determine if the 

laborers return to China after the projects are completed. In many areas, the Chinese appear to be permanent immigrants. Again, exact figures are difficult to obtain, but I have traveled to no African country where some citizens of the country 

did not express concern about the growing Chinese domination of the local markets 

and their influence in displacing African workers on construction projects and in 

new businesses. In the recent Presidential elections in Zambia, the growing Chinese 

influence over the economy was the key political issue. One should not be surprised 

if similar issues develop in other countries on the continent. 

Clearly, the Chinese have no interest in following OECD rules. They are not 

members of OECD and therefore are not constrained by the rules in their negotiations with the governments and businesses of Africa. They are, in many ways, at 

a distinct competitive advantage over its Western counterparts, as are other countries not bound by OECD rules and regulations. However, again, exactly how the 

Chinese compete for contracts is not easily verified. There is no requirement for 

transparency in negotiations and the terms of the contracts are often held privately 

by the governments and companies involved in the negotiations. I do not think this 

likely to change in the near future. What is clear, however, is that such tactics have 

slowed the pace of reform in Africa and strengthened the intransigence of those resisting democratic reform for the benefit of the people. 

For U.S. companies, as well as those of other nations, counterfeit goods have 

flooded the African markets, not only undercutting those who have created the original products, and driving them out of the market, but also creating health risks 

with counterfeit medicines and false products, with the Africans once again the victims of this exploitation. International patent rights are ignored. 

The question before this body is whether China will become so dominant in its 

control of the African market that this dominance will significantly impair our own 

policies toward Africa, and whether, in fact, our own need for strategic resources, 

including fuel, will be threatened. After all, countries will necessarily gravitate toward those countries who are most heavily and directly invested in them. If the 

United States continues to fail to develop private sector-led growth, can we realistically expect to maintain the same respect and relationships with the African people 

and the nations of Africa? 

Perhaps an even more salient question is what opportunities for jobs in America 

are never created because American business may be more a spectator than an actor 

in the African marketplace. It is not a matter of how many jobs are lost, but how 

many are never created because we have failed to engage in Africa to the same extent others have, particularly as China makes Africa in its highest strategic interests? China’s engagement in Africa puts them at the planning tables for nearly all 

28

new projects and opportunities. How many jobs are we not creating by not being 

engaged in Africa? 

There are some in this country, (and I hear this from some of our member companies involved in Africa), who believe that it is almost impossible to compete with 

the Chinese. I do not accept this and think that if we do not compete more effectively in Africa our long-term interests and hopes, as well as our national economy, 

will suffer sufficiently as to render us a mid-level economy over this century. I 

believe that our political and economic engagement with Africa is in our highest 

national interests. 

Our strategy as it regards China in Africa should be twofold: we need to find ways 

to compete, certainly, and I also believe it is in the interests of China, the United 

States, and the nations of Africa that we find ways to more effectively cooperate. 

First, in terms of competition, we should not isolate China as the primary competitor. It is certainly the largest, but as I noted earlier, many other nations are now 

becoming far more engaged in China, and the economic environment is becoming 

increasingly competitive. We need to look at our own economic stance toward Africa, 

regardless of whom we perceive as primary competition. The fact is that we have 

not shown the same competitive strengths as others, and we need to ask ourselves 

what needs to be done. 

We need to expand and strengthen the ability of American companies to make investment decisions. We need to engage our university systems in more economic research in Africa. Our business schools need to focus more on developing markets 

globally, just as American companies need to conduct more on-the-ground research 

in Africa. A company will not invest in Africa if they doubt their ability to recover 

their investment. Therefore, making investment decisions rests with the quality and 

the research that provides confidence in long-term sustainability and profitability of 

investment. 

We should recognize that the development goals of Africa do not simply benefit 

Africa, but are essential to our own national economic security. Private sector-led 

development throughout Africa will bring about a growing middle class, create 

greater stability throughout the continent, and provide for U.S. businesses stronger 

and more reliable business partners. Our traditional approach to development needs 

to be reexamined and altered to make private sector economic development among 

our highest priorities. 

Second, we need to examine specific barriers to U.S. companies ability to compete 

more effectively in Africa. There are several serious barriers, largely self-imposed, 

that hamper our ability to compete. 

One such barrier is access to financial markets. Few U.S. banks will finance U.S. 

companies seeking to do business in Africa, and our own agencies designed to mitigate such risks, such as the Ex-Im Bank have fallen woefully short in addressing 

the problem. We can provide one example after another of good U.S. projects in 

Africa failing to get necessary government support. While I think Ex-Im is attempting to address the problem, as is OPIC, the support provided U.S. companies is far 

below the level of support that the Chinese counterparts provide for their private 

sector companies seeking to do business in Africa. 

A second impediment for U.S. companies doing business in Africa is the necessity 

to find partnerships. One simply cannot do business easily in Africa without having 

a reliable partner on the ground. There is no mechanism set up that allows us to 

easily find a partner. We have a limited number of U.S. Commercial offices in Africa 

and under budget constraints those that we do have are being closed. These closures 

are coming at exactly the wrong time. They come when China and others are increasing their commercial government presence throughout the continent. Among 

the highest priorities of Chinese Embassies is to support its business development 

in Africa. 

At the Corporate Council on Africa we have developed through the support of the 

U.S. Agency for International Development a U.S.-Africa Business Center whose primary purpose is to identify business partners in Africa for U.S. companies, especially small and medium-sized businesses wishing to do business. It is the only such 

organization in America and it can only meet a small proportion of the need. This 

operation needs to be significantly expanded and duplicated in other parts of the 

country. China provides support for its small businesses investing in Africa. We do 

very little of this, and as a result hurt our own economy as well as fail to help develop the private sector in Africa. 

Diplomatically, I believe that our current Assistant Secretary of State, Johnnie 

Carson, deserves a great deal of praise for insisting that many of our new ambassadors selected for African posts have significant economic experience. The challenges in Africa are now as much economic as they are political, and traditional 

diplomacy is no longer applicable to this rapidly changing economic environment. 

29

To his credit, he is also working with U.S. companies to see that they win contracts in Africa. The Department of State and the Corporate Council on Africa are 

jointly working together now to take a delegation of U.S. power companies to Africa 

in the first quarter of 2012. The delegation may be lead by Assistant Secretary Carson. The purpose of the mission will be to significantly increase the involvement of 

U.S. power companies in the development of the power sector in Africa. Few projects 

could be more important to Africa, as there is not a country on the continent that 

is meeting its current power needs, and until they do we cannot expect rapid economic development in Africa. This is but one example of how U.S. companies can 

make a difference to Africa as well as buttress the economy of the United States 

of America. 

At the same time as we increase our competiveness for a share of the African 

market, I also strongly believe that we must find ways to cooperate with China in 

Africa. The stakes for humanity are too high for us not to cooperate. While we must 

recognize that we must compete internationally with China and others if we are to 

heal our own economic wounds, we must also recognize that partnerships globally 

must be developed. 

In a world facing growing food shortages, water scarcity, climate change, and the 

social instabilities they cause, any responsible path forward must rely on international cooperation. Yet today we find the United States and China, competitors 

at the best of times, struggling to resolve how to address their common interests 

in Africa, a continent that has suffered more than any other in recent centuries 

from disasters both natural and man-made. 

If the United States and China can find common ground in Africa, both Africa 

and U.S-China relations can make dramatic strides forward. But the challenge is 

to convince all the actors to put the health and wealth of the global community 

above national interests, a difficult and rare endeavor. 

It is ironic that as we face new global crises, the competition for economic and 

political advantage is occurring, as it has throughout human history, in Africa, 

where mankind’s struggle for survival first began. Africa offers the arable land 

needed to provide food for a hungry world; it offers the water to feed the world and 

quench the thirst of billions, and it offers the remaining minerals necessary to maintain a modern global society. And the primary players competing over African 

hearts, minds, and resources today are the Americans and the Chinese, with China 

having the early advantage of money for investment and a plentiful worker supply 

for export to the continent. 

But it is not just the United States and China with an interest in Africa. The Gulf 

States, Russia, India, and Europe are all looking to Africa as well to feed their people, with the African peoples themselves struggling to control their own destinies 

and put food on their tables. Africa matters, and the United States and China are 

going to play an outsized role in Africa’s future. But they need to find common 

ground and lead together. Partnerships of all kinds are needed for Africa’s development, and our own economic self-interests. 

There can be better days ahead for Africa. Infrastructure development is moving 

at a rate unseen before, but the needs are still great. No African country has a sufficient power supply to meet current needs, let alone the projected needs of the 

future. Famine has returned, if it ever really left, to the Horn of Africa, and water 

is scarce for a large percentage of the continent’s population. 

Together, the United States and China can lead the world into a more cooperative 

arrangement, beginning in Africa. They cannot do so without the support of Africans, but they remain, at this moment in history, the two nations most able to develop a stronger Africa, and a more harmonious world. It is not a case for bipolarity. 

It is simply recognition of history at this particular moment. Someone must lead 

and right now, the United States cannot lead alone. 

Cooperation comes a step at a time. There must be some confidence and trustbuilding. A project or projects will need to be agreed upon and the host country 

must be a party to all agreements. 

There are several opportunities for the United States and China to cooperate economically in support of both mutual and continental benefit. For example, economic 

cooperation in South Sudan is to the advantage of both the United States and 

China. A peaceful and developed South Sudan clearly benefits the interests of 

China, which has made enormous investments into the oil sector, and would build 

up a pocket of political stability in an otherwise very tough neighborhood for the 

United States. The United States and China both have interests in promoting stability in the Horn of Africa. Consistent supply lines and agriculture development is 

important to both nations, and the Horn of Africa could be one of several future 

global breadbaskets providing Africa with increased economic power and a better 

quality-of-life. 

30

Closer cooperation between China and the United States is not something to be 

feared, but welcomed, by Africa. Such cooperation would bring about greater stability in reality and perception, and would lead to the opening of new markets and 

a faster influx of new investment into Africa. The sign of two great nations cooperating in and with Africa would be a very positive and welcoming sign of stability 

and promise for new investors. 

Competition is inevitable, but competition does not preclude cooperation. Instead, 

a cooperative effort to build Africa through amicable competition and cooperation 

can lead to improved development across the continent, and can lead to far greater 

understanding for all parties. If the United States and China choose to cooperate 

in their efforts in Africa, and always include African leaders and the African peoples 

in the process, they will set the tone for every other nation, and point Africa toward 

a brighter future. 

What we need now is for the leaders in the United States and China to find the 

courage necessary to seek common ground and elevate international development 

among its highest priorities.

Senator COONS. I would like to thank all three of our witnesses. 

And I will begin a first round of 7-minute questions, if I might. 

First, Mr. Hayes, let me just follow up on your concluding point. 

Given the trends shown in the charts and in your testimony, all 

three of you, what specific policy recommendations would you make 

for U.S. Government action that would make American business 

more competitive with regard to China, and what are the areas 

that you see we might really have some potential for cooperation? 

Mr. HAYES. I think there are several areas. One is the ExportImport Bank. I think it has played a less than stellar role in 

supporting United States business in Africa. I think there are 

attempts to change that, but certainly, legislation as well as a 

cultural change within Ex-Im Bank, I think, is required. 

The amount that the Chinese Ex-Im Bank supports its own businesses—and China does have a private sector—is phenomenally 

higher by many times than the United States support of its businesses. It can make decisions quickly. 

Ex-Im Bank, as is well documented, takes a long time to make 

decisions. It hurts American business. We can give you one horror 

story after another. I won’t go into that unless pressed. 

I think USAID should shift its development toward the private 

sector and, again, toward developing the private sector in Africa. 

Most of its work is in other areas. I think that it could help a great 

deal in developing the private sector. 

If we can develop a middle class, these countries are going to be 

far more stable. We are going to have more reliable business partners. I also think that we ought to be linking more with business 

organizations in Africa. 

In terms of cooperation, certainly China and the United States 

has common interest in seeing South Sudan as a stable area. So, 

certainly, that is one area. 

The second area is those areas where our companies can cooperate, where China may be lacking certain areas—we have seen General Electric cooperate with Chinese companies in Africa. So there 

are those areas of cooperation, particularly on infrastructure. 

The reality is that it is to our advantage to work with Chinese 

companies, as well as others, because they have an advantage already, and it is a way of getting more active in China and Africa. 

Senator COONS. Thank you. 

Ambassador Shinn, you mentioned in your testimony that African states under pressure from the United States and from the 

31

West to improve their governance practices or their human rights 

record are less likely to do so when they know they can rely on 

China for support, and you cited, I think, Zimbabwe and Sudan, 

among others. 

Has China’s economically driven aid policy undermined United 

States policy goals in terms of promoting democracy and human 

rights and good governance? And is there any evidence that China’s increased investment in political engagement may empower or 

entrench undemocratic or repressive regimes, first? 

And then, second, what do you see as the long-term benefit 

broadly for the average African of the increased Chinese investment engagement in Africa? Has it succeeded in fighting poverty? 

What is its impact on the ground? 

And then, Dr. Brautigam, if you would address those same two 

questions, please? 

Ambassador SHINN. I think the short answer to your question, 

Senator, is that, yes, Chinese involvement in Africa has, to some 

degree, undermined Western goals generally of trying to improve 

democratization, good governance, and human rights. 

I don’t think that was the intention of Chinese policy. It is just 

that they have a different philosophical approach to dealing with 

countries around the world than does the United States. 

And having said that, there are sometimes inconsistencies with 

U.S. policies. I could identify a couple of African countries that are 

very autocratic, while the United States has not done much in 

order to try to improve the human rights situation. 

But in terms of Chinese policy, it is across the board. It is a policy of aid without political conditions, investment without political 

conditions, other than the One China Principle, and that is just not 

the way the United States approaches the situation. 

The two major examples are those that I cited earlier, Zimbabwe 

and Sudan. There are others that don’t stand out quite as much 

as those two countries. But even a country like Ethiopia, for example, where the United States has very good relations, on the one 

hand would like at the same time to see better human rights 

practices. 

And because Ethiopia has a very strong relationship with China, 

it is fairly easy for Ethiopia to say, wait a minute, we know where 

we can get additional help if we need it. Of course, the United 

States also has other concerns in Ethiopia in terms of its policy. 

But it does certainly complicate the ability of the United States to 

pursue an improvement in human rights policies and practices and 

good governance. 

In terms of China’s investment in the continent and its impact 

on the long term, I think I would have to basically give them a 

positive response to that. They have, indeed, gone heavily into infrastructure, but they have done that because that is precisely 

what the Africans have requested. 

The Africans were requesting an improvement in infrastructure 

at a time when the West had basically opted out. Angola is a classic example. Following the civil war in Angola at the beginning of 

this century, when it came to an end, the Angolans wanted the 

West to come in, invest a lot of money, rebuild their infrastructure. 

And the West essentially said, no, we are really not that interested. 

32

They went to China, and China said it would be more than 

happy to do it. Of course, China expected Angola to pay back these 

loans by sending oil to China. And by the way, China said it has 

some really good Chinese companies that will build all of these 

projects for you, and it even has a component of Chinese labor that 

will come and help to construct the projects. 

So it was certainly a good deal for China, but China was the only 

country that was offering to do this sort of thing. And in the final 

analysis, if the African countries don’t have much improved infrastructure, they are never going to improve their economies. They 

cannot continue at the level that they were at, say, 10 years ago 

in terms of infrastructure. 

In that sense, China has done them a favor. I think across the 

board, the effort that China has done to invest on the continent, 

with some exceptions, has generally been a plus. 

Senator COONS. Dr. Brautigam. 

And I am about out of time for my first round. So what impact 

has it had on the United States sort of values agenda to have an 

expansive Chinese presence on the continent? 

Dr. BRAUTIGAM. Thank you. 

I just did a paper on this recently, and I actually looked empirically at this. And there is no evidence across the continent that political rights and freedoms have declined in general between 2000 

and the present. And in countries where Chinese engagement is 

larger, there is also no evidence that there has been any systematic 

impact on human rights or political liberties and freedoms. 

So we have an impression that there has been a negative impact, 

and I think it largely comes from the case of Sudan and Zimbabwe, 

where the impact has been negative. But by and large, I don’t 

think we see that it has been negative across the continent. 

And we can see this with examples that are quite recent. In 

Sudan, when the countries negotiated a breakup and they had a 

referendum to enshrine that in law, the Chinese sent referendum 

monitors rather than trying to fight to keep the two parts of Sudan 

together. 

We can see this in Guinea, where there was a coup and people 

thought that the Chinese presence there was going to make it so 

that they wouldn’t have a new election to bring in a new government. And that didn’t happen. So they had an election, the most 

free election they have had in their history—although it wasn’t 

perfect. 

So we can see this in Zambia, where the leader that was quite 

heavily favored by the Chinese did not win the election, and they 

have moved smoothly into a relationship with someone that was 

quite opposed to their presence. So I think, by and large, they are 

moving in a less negative direction than we usually think. 

In terms of impact, I would add to what Professor Shinn said 

that I see a lot of interest in manufacturing investment and a lot 

of people being employed by Chinese companies. This is, again, 

counter to the conventional wisdom that they don’t hire Africans. 

The longer a Chinese company is present in Africa, the more the 

proportion of labor they hire tends to be African, and this makes 

economic sense for them. And so, what we can find is that the problem is not that they do not hire local people, but treating them 

33

well. And they do not generally treat them at the level an American company would. Labor standards, protection and safety standards, all of these are generally abysmal by our standards, and they 

are roughly at the level that they are in China. 

Senator COONS. Thank you very much, Doctor. 

Senator Isakson. 

Senator ISAKSON. Thank you, Mr. Chairman. 

I think Ambassador Shinn’s last comments regarding China 

making the investment and infrastructure and the West backing 

away from a lot of that points me to what Stephen Hayes said, 

which I have observed. We need to do a better job as a government 

of facilitating United States competitive business investing in 

Africa. 

China and business—the line between business with China and 

China’s businesses are kind of blurred, but they are quite clear in 

the United States. And I know I have been to Equatorial Guinea, 

where Marathon built the gas liquification facility, which really has 

transformed economic development in that country. 

What kind of things do we need to do, from your perspective, Mr. 

Hayes, to more facilitate United States business investment from 

our government’s standpoint in Africa? 

Mr. HAYES. In addition to what I already said in response to Senator Coons is I also think that we need a far stronger commercial 

presence among our embassies and our government on Africa. We 

are cutting back our commercial offices now, at exactly the wrong 

time. We are actually diminishing our presence on Africa and our 

commercial offices. 

Second, as I mentioned in my paper, the written testimony, I 

think at least Johnnie Carson should be praised by putting more 

emphasis on economic knowledge by ambassadors because we are 

beyond traditional diplomacy. If we are going to be able to compete 

and strengthen our own political interest in Africa, our embassies 

here are going to have to be far more attuned to economic realities. 

So I think that there needs to be far greater emphasis on that. 

Those are two things that I think could be done right away. 

Senator ISAKSON. In other words, do a better job through our embassies and our ambassadors of promoting U.S. investment by private sector companies. 

Mr. HAYES. Certainly that and certainly a greater support of the 

private sector nationally. We need national leadership to tell the 

American people why Africa is important. I don’t think that has 

been explained. 

Senator ISAKSON. Very good. 

Dr. Brautigam, I want you to—you were talking so quickly. I 

can’t write as fast as you were talking, and you made a great statement about realism versus alarmism with regard to China and 

America’s perspective. And I think what I heard you say is we 

should be realistic to understand China is a lot like Africa. It is 

still a developing country. Did I hear that right? 

Dr. BRAUTIGAM. Yes. 

Senator ISAKSON. And so, we should not be alarmed by what they 

are trying to do. Tell me what the alarmism part was. 

Dr. BRAUTIGAM. Thank you for your question. 

34

The alarmism—the realism is that China’s rise in Africa needs 

to be seen in context, that it is a far smaller player than the West. 

Although some dimensions of engagement, such as investment or 

trade, can be quite large compared to any one Western country,

by and large, China’s engagement is far smaller than the West 

combined. 

And they have a lot in common with other rising economic powers. So I think it is unhelpful sometimes to single them out as ‘‘the 

Chinese have low labor standards’’ or ‘‘the Chinese have a lot of 

corruption.’’ This is true in general of India, Brazil, and the other 

emerging market players that are also operating in Africa and also 

a challenge to us. 

So this is a common set of problems, and I think it is helpful to 

address them in common. I think this would be helpful for our 

diplomacy as well. 

Senator ISAKSON. Both you and Ambassador Shinn referred to 

China vis-a-vis the Sudan, and I don’t know which one of you said 

it. One of you said that Sudan is a real option for China. Whoever 

said that, would you amplify on that? 

Ambassador SHINN. Sure, I would be happy to, Senator. 

I think that you have a situation in Sudan today, both North 

Sudan, the Khartoum Government, and South Sudan, or the Juba 

Government, where both of these regimes, if they don’t make a lot 

of changes for the positive soon, are on track for becoming failed 

states. That is often said about North Sudan, which is the case. It 

is not often said about South Sudan. 

Neither country wants that to happen, and neither China nor the 

United States wants that to happen. There is a mutual interest in 

both China and the United States to see the comprehensive peace 

agreement achieve success, to ensure that there is a good relationship between the north and the south. 

All of the oil infrastructure for exporting and refining oil is 

located in the north. Seventy-five percent of the oil is now in the 

south, and probably most new finds of oil are in the south. 

For the time being, the south has no option other than sending 

that oil out through the north and using northern refineries. Therefore, they are still basically joined at the hip, and they cannot 

allow—and China and the United States cannot allow them to let 

this situation break down into some sort of conflict again. 

I think it is an ideal situation for the two countries and others, 

not just China and the United States, to try to work with both 

Juba and Khartoum to ensure that the CPA works. In a sense, you 

could argue that China has even greater interest here than the 

United States does because China built and owns much of the oil 

infrastructure in the northern part of Sudan. 

Senator ISAKSON. Well, you have made a critical point. The CPA 

is critical in the short-term interest of the United States, and I am 

glad to hear your observation about China as well, making sure the 

comprehensive peace agreement works and these countries don’t 

separate. 

Not only is it critical on the oil infrastructure, but they border 

close to proximity to Kenya and Somalia. And you just have an 

expansion of what is already a bad situation in Somalia and in 

35

Northern Kenya, and it could blow up like a powder keg if you got 

back in a civil war situation again. 

Do you know if our Embassy and our State Department are 

doing enough to reach out to the Chinese to try and partner in 

ways to keep the CPA together? 

Ambassador SHINN. I don’t know, Senator. I am not in Government now. So I am not privy to that kind of information. 

I have no doubt that there are contacts. I have visited Khartoum 

in the last 5 years, met with both the Chinese and the American 

Embassies. At that time, there was some contact. It was not as 

great as I would have liked to have seen, but that was a number 

of years ago. 

Mr. HAYES. Just to add to that because it is germane. Princeton 

Lyman, our emissary, has been to China to discuss Sudan, recently. In fact, I talked to him while he was in China on South 

Sudan. 

Senator ISAKSON. This is one of the great points to come from 

this hearing. I think it would be incumbent on Senator Coons and 

myself to engage Princeton or the State Department at a meeting 

to make sure we are following up on this because I think it is a 

very cogent point. 

Thank you all for your testimony. 

Senator COONS. Thank you, Senator Isakson. 

Senator Cardin. 

Senator CARDIN. Well, first, Mr. Chairman, thank you very much 

for holding this hearing. 

I think this is an extremely important area for us to explore. 

Obviously, we need to do a better job ourselves in our relationships 

with Africa on trade. I am proud of my own State of Maryland,

that we have established an African trade office with the help, by

the way, of the Federal Government and the Small Business 

Administration. 

We have natural ties between many of the countries in Africa 

and the business community, particularly in the Washington suburban areas. And we have built on that and have built relationships that I think will be very beneficial for business growth here 

in America but also will help develop the African economy, which 

is so critically important for stability and for a market for United 

States goods. 

I think that is the most important thing we can do is enhance 

our own relationship with the continent of Africa. 

I want to ask a question, though, of concern to me about China 

and Africa. China is interested in their own goals and has very little concern about the governance issues in the countries that they 

deal with, at least that is the impressions that I have. 

When we deal with particularly foreign assistance, we deal with 

issues such as conditionality, making sure that women’s rights are 

protected, dealing with transparency. And with Senator Lugar, we 

worked on the extractive industries transparency, which is a big 

issue with dealing with the resource not being a curse, but an advantage to a country. And Africa certainly is a continent that is 

very much involved in those issues. We deal with anticorruption 

issues. 

36

And I guess my question to you is, Is there an indication that 

China’s participation in Africa has been a negative influence on 

those issues, such as advancement of women’s rights, transparency, 

anticorruption, those types of issues? Have we seen any indication 

that China’s involvement offers an avenue for some of the repressive regimes to get the type of commerce they need without having 

to deal with the conditionality of Western powers? 

Ambassador SHINN. Senator, I would be happy to respond to 

that. I addressed—it might have been just before you arrived—the 

connection between human rights and democratization and the 

Chinese impact. My take on it is that although not intentionally, 

it does have a negative influence on the American desire to see better human rights practices on the continent. 

If you take specifically, however, women’s rights and corruption—in fact, if you break this down into various topics—it becomes 

a more nuanced situation. I don’t see any negative impact in Africa 

of China’s activities on women’s rights, for example. If it is there, 

I just haven’t observed it. 

Corruption traditionally has been a problem. I also see some 

changes in how China deals with corruption. I think, increasingly, 

China is finding that that is not the best way to do business 

around the world and that it is costing them, too. And I see a willingness to rethink the whole concept of engaging in corruption. 

So China is not there yet, but at least I think the trend is in the 

right direction. I think you have to break these all down into their 

individual issues, and there will be some areas where Chinese influence is not helpful. There will be others where it is essentially 

neutral and even a couple where it might be helpful. 

Corporate social responsibility is one where China is beginning 

to show an interest in improving its policies in Africa and around 

the world, as it is doing in China. I think that is a potential cooperative area with the United States, where we have a much better 

record on corporate social responsibility. I think China is willing to 

be more helpful on that issue. 

Senator CARDIN. Do you see any indication that China is importing technology into Africa that could be used to repress human 

rights advances, such as cell phone jamming or Internet access or 

that type of technology, which China certainly has used in its own 

country? Is that being exported to Africa by repressive regimes? 

Ambassador SHINN. There is some indication of that. It definitely 

occurred in Zimbabwe a number of years ago. Even in Ethiopia, 

where China has been deeply involved in the communications sector, Ethiopia has a very restrictive policy on the handling of the 

Internet. It is a government-controlled Internet. 

At least until very recently, in fact, when I was in Addis Ababa 

in July of last year, I tried to access my own blog at the Hilton 

Hotel, and I couldn’t access it. I asked some of my Ethiopian 

friends, ‘‘What’s going on here? I can’t even get to my own blog.’’ 

They just laughed, and said, ‘‘Oh, you didn’t know that anything 

on blogspot is blocked in Ethiopia?’’ That is thanks to the technical 

assistance of the Chinese. 

In the last several months, the counts on my blog suggest

that Ethiopians are now accessing it. Something apparently has 

37

changed. But there has been some evidence of Chinese assisting 

certain governments in restricting information flow. 

Senator CARDIN. Do you have any suggestions how the international community could try to counter those types of activities? 

Ambassador SHINN. There probably are some technical ways to 

do it. I am just not knowledgeable about it. The only other way to 

approach it is simply continuing to raise these issues with China 

and with the African governments. 

In the first instance, this is a problem for the African Governments because they are the ones that are authorizing these restrictive practices. I am sure we do have these talks with the Africans. 

I don’t know whether we are having the discussions with the 

Chinese. 

Senator CARDIN. And of course, it also says that we should be 

more aggressive in Africa. If we had more ties and there were more 

avenues for us to be able to exercise our influence, then we could 

have a better way of dealing with the type of relationships with 

China that are counterproductive with good governance. 

Ambassador SHINN. I would certainly agree that we should be 

more aggressive in Africa, but not to the point where we are pushy. 

I think there is a fine line that one has to draw between being 

aggressive on policy and overstepping those bounds and looking 

like we are trying to boss everyone around. 

Senator CARDIN. I agree with that, but we have had many hearings on this. But the United States, particularly in the AID programs, has to have a very strong position on anticorruption, women’s rights, those issues. Because if not, then what do we stand for? 

Ambassador SHINN. I would agree. 

Senator CARDIN. Thank you. 

Thank you, Mr. Chairman. 

Senator COONS. Thank you, Senator Cardin. 

Senator Lugar. 

Senator LUGAR. Well, thank you very much, Mr. Chairman. 

I thank you and Senator Isakson again for bringing about this 

hearing with three great witnesses. I think it is so important in 

terms of what you have pointed out subtly to all of us, which is 

that the degree of knowledge on the part of the Congress and our 

constituents about Africa certainly needs great improvement. 

And the extent to which we have improvement with investment 

in Africa on the part of American businesses will largely come 

about because of support among the American business community 

for making the investments and taking the prudent risks, in addition to informed support from their stockholders and their constituencies. Transparency is important because people will say, ‘‘Why 

Africa? Why that market?’’

And the fact is that we perhaps, as a nation, have not been as 

attentive or as competitive as we might be because we don’t know 

a great deal about Africa. The basic facts of life about the 54 countries and much of the information you have given us today will be 

news to many people and, hopefully, will be conveyed by the media. 

What I am hearing, however, and this oversimplifies, but we do 

have, as Senator Cardin was pointing out, very strong ideas, and 

they are good ones, about human rights and that we tend to 

approach foreign policy with these ideas in mind, and we should. 

38

Now contrast that with the Chinese, who have a very businesslike attitude. That their priority and continuity across the region 

hinges upon having energy resources in particular at this stage for 

their growth and the continued improvement of their material 

conditions. 

Likewise, increasingly, we have reports about the amount of 

farming, agriculture and food literally coming out of Africa to feed 

the people of China. In other words, there are existential problems 

in China with regard to the continuity of their nation state. So, as 

a result, the Chinese may or may not care for any of the governments there, but these are the people with whom they do business. 

Now we look at many of Africa’s governments and we find corruption, lack of democracy, and what have you. Our tendency is to 

want to fix it, to try to move people and other resources around in 

response to the governance challenges, and remain much less attentive maybe to the business aspects of our bilateral relationships 

in Africa. I am not suggesting we follow the Chinese model, but 

currently the United States and China are carrying out two different policies on the same continent. And we should not be surprised, I think, at the testimony that you are giving. 

What I am curious about down the trail, however, is, are there 

reasonable estimates as to how much oil and natural gas are in reserve in Africa? This is a great problem always asked around the 

world. And again and again, the time of reckoning is pushed back 

to a later date because more is found. 

But I am curious literally as to what happens at the end of the 

trail when these resources diminish and become more dear, they 

are more expensive to whoever is going after them. Or as a matter 

of fact, in some African countries where they—if they are sufficiently developed—might have used some of these resources themselves, and this is no longer an option given inadequate technology 

or the premium on export. 

Likewise, with agriculture, it would appear that we have been inhibited—that is, the United States—by European ideas on genetically modified seed, and therefore African countries still have very 

low production rates. Whatever the Chinese are taking out and 

whatever method they use notwithstanding, the fact is that Africans are going to find it increasingly difficult to feed themselves, 

quite apart from exporting to China. 

Just from the standpoint of Africa, what are the mineral resources in reserve? Are they boundless? Does it depend upon the 

degree of development by a country, or how would you predict the 

future of these markets, however the United States or China 

approach them? 

Dr. BRAUTIGAM. I will address part of that. I don’t have data on 

the depth of resources in Africa, and I am not sure anyone does. 

What we do see is that as prices go up, more resources are found. 

And that has been the case for a long, long time. 

And so, now we are finding all over West Africa and along the 

coast there, countries that never thought they had oil resources 

have suddenly found them. And of course, our companies are very 

active in that, and Chinese companies are trying to break into that 

without so far very much success. 

39

I want to say something about agriculture. There is an idea that 

the Chinese are out there leading the land grab in Africa. It is one 

of the areas that I have been looking at at the International Food 

Policy Research Institute, where I am now. 

And what we are finding is that there is actually no evidence of 

very large Chinese engagement in Africa to grow food to ship back 

to China at all. It doesn’t exist, with the small exception of sesame 

seeds, which is not a vital resource. 

There is some Chinese investment in agriculture for local consumption. In Zambia, there are some 25 Chinese farms that all 

produce for the Zambian market, but they are not yet doing speculative land investments. What we see is American and European 

firms that are active in land speculation. 

And for investment in agriculture for feeding people at home, it 

is the Gulf States in the Arab world that are doing that and India, 

but not so far China. 

So one other point about our different concerns about governance, and that is I think, as has come up in this hearing earlier, 

we both care about stability. That is very important. China’s principles here are more consistent than ours are. And what China and 

many of its friends in Africa see is that the United States and 

Europe are engaging with China, and China is stable, but does not 

have a very good human rights record. And yet we are all there, 

investing and trading quite actively. 

And China seems to be—the Chinese people seem to be doing 

better. They are becoming more prosperous. And so, that is something that is important for framing this conversation as well. 

A small anecdote about Chinese engagement and governance. In 

Sierra Leone after the war, there was an election, and the presiding government lost. But they didn’t want to give up power, for 

various reasons. 

And a group of ambassadors went to talk to them, to the President, to say you have got to step down and let your opponent come 

in. And amongst that group of ambassadors was the Chinese 

Ambassador. 

So I think this kind of engagement at the ambassadorial level is 

something we need to do a lot more of, and we are not doing 

enough of this in most of the countries that I am familiar with. 

Thank you. 

Mr. HAYES. I think, Senator, you are absolutely right in terms 

of the GMO issue. I think that is one of the really important issues 

that needs to be addressed, and the United States needs to press 

that more. 

I also think that China is open to that. So there may be another 

area where China-United States could cooperate in breaking what 

I think is essentially a European blockade of American agriculture. 

I don’t think there are many United States ag companies in Africa. 

I think that is a major problem. I also think it is a major opportunity for U.S. business. 

I think there is enormous opportunity for agriculture and the 

United States, especially. We are still the leaders in the world in 

that area. 

Senator LUGAR. And it will be an opportunity for Africans to 

have more food, likewise——

40

Mr. HAYES. Absolutely right. 

Senator LUGAR. I thank you very much. 

Ambassador SHINN. Senator, if I could just speak to the oil question? Ten percent of the world’s oil reserves, known oil reserves, 

are in Africa. The experts think that as we look to the future, the 

continent that is going to come up with the largest percentage of 

new finds will be Africa because it has been relatively underexplored so far. 

The experts also say that China’s percent of oil imports is going 

to continue to grow at a significant rate. Now that may be because 

of increased demand. It may also be due to declining domestic production or a combination of both. 

But those two trends suggest that the China-Africa oil link is 

going to become increasingly important in the years ahead. 

Mr. HAYES. We are counting on 25 percent of our oil needs to be 

met by Africa by 2020. I think there is going to be an increasing 

and competitive environment, although, yes, there is more oil being 

discovered. 

Senator COONS. Thank you, Senator Lugar. 

Senator Durbin. 

Senator DURBIN. Thank you, Mr. Chairman. 

Last year I went to Ethiopia with Senator Sherrod Brown and 

met with Prime Minister Meles. We had a 30-minute meeting. And 

25 minutes into the meeting, I asked Prime Minister Meles, ‘‘Oh, 

incidentally, what is the story about the presence of China in Ethiopia?’’ The meeting went on for 35 more minutes. 

And basically, his message was pretty straightforward. ‘‘We 

think the United States has given up on Africa. China hasn’t. 

China is investing in Africa in a way that nobody has ever seen before, and we have noticed it,’’ he says, ‘‘in terms of the Chinese and 

their interest in our energy, our raw materials, our cheap labor, an 

opportunity for a growing middle class to buy their products.’’

And he said they come in with concessional loans many times, saying we will give you $100 million, just pay back $70 million for 

whatever the project is, so long as there are Chinese engineers, 

Chinese contractors, and half the workers are Chinese. And so, 

there is a pretty substantial presence of Chinese in Ethiopia and 

many other African countries. So they clearly have a plan, and they 

are executing it. 

One European Foreign Minister told me, as I described this to 

him, he says, and there is one other factor you have missed. They 

will do business with anybody. The rules are very relaxed, as long 

as it meets their economic needs. 

So what I put together here is a bill that Senator Coons has 

joined me on to talk about how we can improve our exports to 

Africa and our business in Africa and investments in Africa and try 

to coordinate this melange of agencies that we have that don’t seem 

to work as well together as they should. 

But as I listen to this hearing, I think the most significant thing 

that has come out of the hearing goes beyond what I have just said. 

And it started with Senator Coons’s presentation with this chart 

behind me, which really tells a big story here about the fact that 

we are spending a significant amount of money in Africa for different things than the Chinese. 

41

They are investing in infrastructure and building potential for 

economic growth. We are investing in people and health care. 

So I asked my staff to take a look at the Global Fund. Most of 

us know the Global Fund. That is a group of nations around the 

world trying to find ways to alleviate human suffering from AIDS 

and malaria and tuberculosis all around the world. 

In recent years, the United States has given $1 billion annually 

to the Global Fund. We are one of the largest donors. China, between 2003 and 2011, received $550 million from the Global Fund 

in grants. Another $200 million is pending. China’s Global Fund 

contributions over recent years equaled $16 million, our contribution $5.5 billion. 

So we are clearly putting money into Africa, and we have decided 

that we want to focus at least part of our commitment to Africa 

into alleviating human suffering and death. Zambia has been 

talked about a lot here. There is an interesting article in my notes 

given me about the recent election. And it became a backlash 

against the Chinese economic presence in Zambia. 

And the Chinese Ambassador to Zambia ridiculed the writer, 

saying, ‘‘You send election judges. We build hospitals and roads in 

Zambia.’’

It turns out we spend $400 million a year in Zambia keeping 

300,000 Zambians alive with antiretroviral drugs. So we are spending money there in different ways, and I guess virtue is going to 

have to be its own reward. 

The last point I want to make before opening it up to your 

thoughts on this, every time you say ‘‘OECD,’’ I kind of do the 

shorthand, which says no bribery. I think what you are suggesting 

is that if we could get China to play by some rules that we think 

we are playing by, we might have a better competitive situation 

with them. And if they are not going to play by those rules, we may 

not have as good a chance. 

So how do you overcome this? We are not just strictly mercantile 

here. We are trying to alleviate human suffering and play by some 

rules on corruption and human rights. Do we have our hands tied 

behind our back, Ambassador Shinn? 

Ambassador SHINN. Senator, you mentioned your meeting with 

Prime Minister Meles—I have had similar conversations with him 

as recently as several years ago. 

Ethiopia is one of the major recipients of the Global Fund. It is 

also one of the major recipients of bilateral HIV/AIDS support from 

the U.S. Government. The problem is that HIV/AIDS money and 

emergency food aid probably accounts for two-thirds of all American assistance to Africa today. It is taken for granted by the Africans. We just don’t get the credit for it that we deserve, quite 

frankly. 

The Chinese go in with a loan that has to be paid back, albeit 

it is concessionary financing, build a road or a dam or a bridge. All 

of a sudden, it becomes the Chinese road or the Chinese dam or 

the Chinese bridge, and everyone in the vicinity knows about it. So 

China gets all sorts of credit for that. It is very smart on China’s 

part to do that. 

It puts us in a very difficult position because we are simply not 

getting the credit that we rightly deserve, even from someone as 

42

sophisticated as Prime Minister Meles. He knows the numbers. He 

knows them better than anyone in this room. 

But I don’t know how you deal with that issue. It may just be 

the nature of the beast. 

I would like to make a pitch for one organization, though, that 

hasn’t yet been mentioned in terms of what the U.S. Government 

can do, and that is support for the Overseas Private Investment 

Corporation. It is very small organization. I used to deal with it 

when I was Ambassador, and I found it to be an effective organization in what it did. But it is very small. 

Senator DURBIN. Mr. Hayes, you said we should be shifting 

USAID toward the private sector. That seems to say to me spend 

less on health care, spend less on educating young women, more on 

establishing mercantile, business relationships. 

Mr. HAYES. Well, I think that we have got to look at a greater 

balance certainly in aid and how we use that, and also there are 

other ways beyond simply money, in terms of training, capacitybuilding, and so forth. So I think, yes, I do say that we need to put 

more emphasis on building a middle class because then I think

it makes the other money that we are spending less needed 

ultimately. 

Senator DURBIN. These are Faustian choices, 300,000 people living——

Mr. HAYES. Indeed, they are. 

Senator DURBIN [continuing]. With HIV retroviral drugs who 

would be, some of them, cut off in the name of establishing a better 

business relationship. 

Mr. HAYES. I am not convinced that it is an either/or choice. I 

think that——

Senator DURBIN. With this budget, it is. 

Mr. HAYES. I think the issues of commercial offices, stronger 

commercial presence. For God’s sake, send the Secretary of Commerce to Africa once every 10 years. 

Senator DURBIN. We now have one. 

Mr. HAYES. It has been 10 years since the last Secretary of Commerce visited. There are other ways to develop those ties. I——

Senator DURBIN. I am sorry. 

Mr. HAYES. Go ahead. 

Senator DURBIN. Dr. Brautigam, I want to give you one last 

word, if you would like? 

Dr. BRAUTIGAM. I think, ultimately, Africans are going to have 

to pay for their own health care in the long term. And how are they 

going to have the foundation to do that? They are going to have to 

build up their business sectors. They are going to have to be able 

to tax, and they are going to have to be able to get the revenues. 

And I think the Chinese approach—looking at the infrastructure, 

looking at business engagement—is moving toward that kind of 

future. Whereas our approach, which is laudable in many ways, the 

amount of money that we are putting into health care in Africa, we 

are keeping a lot more people alive, but we aren’t doing much 

about providing jobs for them. 

Senator COONS. Thank you, Senator Durbin. 

Our last questions today will come from Senator Udall. 

43

Senator UDALL. Thank you, Chairman Coons, and thank you 

both for holding this important hearing. 

I wanted to focus a little bit on—and I think it was very important we got into the human rights issues and corruption and all the 

issues that Senator Durbin just raised. I wanted to focus a little 

bit on environmental issues. 

You mentioned, Profession Shinn, in your testimony that China 

has four hard interests in Africa. And you mentioned as one of 

those—on one of the four—energy, minerals, timber, and agriculture products. And obviously, if you are talking about—we 

would like to see, I would assume our policy is sustainable economic development. 

That we do these things—you can develop energy and minerals 

and timber and agriculture in such a way that you do it 

sustainably. That you do it where you don’t harm the environment, 

where—you mentioned dams, you build dams in such a way that 

you don’t dislocate local people. 

I know there is a dam that has been mentioned here recently in 

the news that the Chinese are funding, where 300,000 Kenyans 

would be deprived of their water needed for agriculture, cattle 

herding, and fishing. 

And so, the real—my question is looking at how Western countries, and mainly the Western developed countries, participate in 

Africa and how their practices compare with the Chinese and what 

you see there. What are the things that we can do about if there 

is a disparity and they are not practicing sustainable practices, 

then what can we do to try to encourage them to do so? 

And the other witnesses also may have comments on this. So, 

please, why don’t you lead off? 

Ambassador SHINN. Thank you, Senator. That is an interesting 

question, and it is also a very timely one. 

If you were to go back 5 or 6 years and look at Chinese projects 

in Africa and the environmental consequences of those projects, you 

would have a fair amount to criticize. There was, for example, a 

plan to develop iron ore in Gabon. The problem was that in order 

to do so, China would have to rip up a local game park in order 

to implement that project. 

There was so much opposition from both local environmental 

groups and international environmental groups that the whole 

thing was scrubbed, and it is being revisited in terms of how the 

project moves forward. 

China does not have a great record, obviously, on environmental 

issues. Western projects, I think, across the board must have environmental impact assessments. It is certainly true in the case of 

American projects and, I think, most Western governments. That 

has traditionally not been the case with many of the Chinese 

projects. 

But, and this is a good news story. I think you are starting to 

see a change in the Chinese approach to how they deal environmentally not only with their projects overseas, but what is happening in China. I think the Three Gorges Dam has been a real 

wakeup call for them. They are now seeing some very negative environmental impacts from the construction of that project, and it is 

causing them to rethink how they deal with the environment in 

44

China. That is impacting how they deal with projects outside of 

China. 

You are hearing more and more about Chinese actually employing outside Western companies to do environmental impact statements for their projects, and that, I think, would have been 

unheard of 5 or 6 years ago. 

Senator UDALL. You see that as a real improvement for them, 

weighing in on these issues of how you balance sustainability and 

still get what you need for your country? 

Ambassador SHINN. I do see it as an improvement, but China is 

still well behind Western countries and getting to the point where 

it needs to be. But the trend is in the right direction. 

Senator UDALL. And is there more that we can do to encourage 

them to do this kind of thing? 

Ambassador SHINN. I don’t have any ideas other than having 

these conversations at senior levels with appropriate Chinese officials and also with the African officials who are signing these 

agreements with China. They need to understand that there has to 

be an environmental impact statement and assessment before you 

go ahead with a project. 

And I think that is what is happening with this Gibe III Dam 

project in Ethiopia that impacts Lake Turkana in Kenya. I think 

that is the project you were referring to. 

Senator UDALL. That is the one I was referring to. 

Ambassador SHINN. Gibe III has raised a firestorm of difficulties 

among the Kenyans and even among some Ethiopians who would 

be displaced as a result of construction of the dam. 

On the other hand, the region desperately needs more hydropower. So there have to be some offsets there. But better environmental studies are clearly needed by the African countries and in 

terms of the Chinese who are doing a lot of these projects. 

Senator UDALL. Dr. Brautigam. 

Dr. BRAUTIGAM. I would agree with Ambassador Shinn’s assessment of the changes that we have seen happening with Chinese 

financiers. They are very interested in corporate social responsibility as a concept. Adopting these kinds of practices is still going 

to take quite a while, though. It took us a while to get there. 

I was young when the World Bank was the big problem actor in 

this regard, funding these kinds of projects overseas. And eventually, they changed. And the Chinese will probably change in the 

future, and we can see signs of that already. 

But the way this change happens is in part through pressure 

from outside, and it comes from a lot of different players—from the 

U.S. Treasury Department, from civil society, and from informed 

analysis. But I think the pressure is not coming from African 

governments. 

And the Chinese standards, surprisingly, for environmental 

assessment are higher in China than they are in most parts of 

Africa. And so, that is part of the challenge now that we have a 

new actor here. Whose standards will prevail? 

But we can see this change amongst the Chinese in other areas 

as well. Few people realize this, but the Chinese have actually 

made overseas bribery into a crime in China. So that was never the 

case before. This just happened very recently. It is part of their 

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responsibilities under their signing of the U.N. convention against 

corruption. 

They don’t yet have good enforcement for that, and it is very 

new. And we know a lot of our partners in Europe aren’t enforcing 

this very well, either. But this is a change, and these are the kinds 

of things that we can see signs of. And it is up to us to know about 

those and then to encourage them. 

Senator UDALL. Great. Mr. Hayes, do you have any thoughts on 

this or——

Mr. HAYES. Well, I have thoughts, but it is not too different from 

what you have already heard from the two witnesses. I think our 

diplomacy, particularly with the African Governments in this case, 

needs to be strengthened. 

Senator UDALL. The one thing I would note and then turn my 

time back here is that apparently—and Dr. Shinn, correct me if I 

am wrong. But I think China ignored the EIS from the World Bank 

in the Gibe III case, having to do with the dam? Is that correct that 

there was an EIS? It was done by the World Bank and that they 

just went ahead. I don’t know if they have made adjustments. 

Ambassador SHINN. I don’t know the answer to that, whether 

they did or not. 

Senator UDALL. OK. 

Ambassador SHINN. It would be better not to comment on, as I 

just don’t know. 

Senator UDALL. OK. OK. Well, as you noted, I mean, this is a—

I have a report here that says, you know, this Omo River is responsible for 90 percent of the water heading into Lake Turkana. A 

major dam blocking the river would drain most of the lake, depriving 300,000 Kenyans of the water needed for agriculture, cattle 

herding, fishing, and this Omo River could affect—the changes in 

it that we are talking about, and I think that you mentioned, could 

affect 70 percent or more of an important species around the lake. 

So, you know, that is major damage being done by a major part of 

their effort in terms of their loan that they put out there. 

So, thank you, Mr. Chairman. Really appreciate you holding this 

hearing. 

Senator COONS. Thank you, Senator Udall. 

Unfortunately, we have reached 3:30 p.m., and as I shared with 

the panel before we began, we have a briefing to which all Senators 

need to turn now. 

I just want to thank you very much for sharing your insights and 

your expertise on these critically important subjects that have significant implications for the economic and political future of the 

United States, of China, and of the people of Africa. 

There are so many remaining interesting questions I would like 

to have gotten into about intellectual property protection, the role 

of the other BRIC nations, multilateral means for more effectively 

engaging with China, and ways to develop shared standards for 

everything from labor protections to environmental protections, to 

advancing human rights, and then ways to diversify the economic 

opportunities of Africans going forward. But we will have to wait 

for some future opportunity. 

With that, I will conclude today’s meeting. I thank the witnesses, 

and we will keep the record open for any Senators to submit stateVerDate 0ct 09 2002 17:57 Jan 20, 2012 Jkt 000000 PO 00000 Frm 00049 Fmt 6633 Sfmt 6602 S:\HEARIN~1\112THC~1\2011IS~1\110111~1.TXT BETTY
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ments for the record until the close of business Thursday, November 3. 

Senator COONS. Thank you very much. 

This hearing is hereby concluded. 

[Whereupon, at 3:30 p.m., the hearing was adjourned.]

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