China’s economic statistics for 2006 have been published. Its growth hit 10.7% in 2006, the fourth successive year of double digit growth. Its GDP reached $2.690 trillion last year and it is expected it will overtake Germany’s $3 trillion output some time this year. Its exports were up 27% in 2006. According to Tom Stevenson writing in the Daily Telegraph of 26 January 2007 (‘China and India lay foundations for domination’), “The country is awash with cash … Its trade surplus of $177.5 billion has flooded the banking system with money, making it difficult for the government to control lending and investment. … Surplus cash is finding its way into the country’s over-heated stock exchanges. Shares in Shanghai rose by more than 100% last year. …”
Its foreign reserves stand at $1.07 trillion, no less.
All this growth – and China’s economy has grown at an average of 10% a year since 1978 – has reflected itself in a better standard of life for Chinese people, with average per capital income standing at double that of India’s – and with wealth far better distributed. China has reduced the percentage of its population living below the poverty line to 12%, compared to India’s 25% and has a far better record as far as literacy and health provision are concerned. India has 23 billionaires to China’s 8 (see The Business, 2 December 2006, ‘The Pacific ring of wealth is leaving Europe far behind’).
For growth to continue at this pace, China needs oil, as well as other minerals essential to modern industry such as copper, aluminium, iron ore, bauxite, manganese, uranium and platinum, all in short supply, for which it is competing in the world against US and European imperialism – and it is winning. It is also building up a stake in arable land around the world, to ensure a supply of food for its rapidly urbanising population, whom its depleted countryside can no longer support. For this reason, the various imperialist powers are far from happy and are busy, for instance, denouncing ‘Chinese imperialism’, especially in Africa, and its sabotage of imperialist official or unofficial sanctions against countries, such as Iran and Sudan with whom China has cordial relations. The US is filing a complaint with the WTO against China accusing it of unfairly subsidising industries such as steel, wood and paper.
China in Africa
Africa, maintained for so long in a state of incurable backwardness by western imperialism, is critical to China’s continued expansion. For the oil it needs – and finding itself largely frozen out of the Middle East thanks to western imperialism’s economic stranglehold over that region – it has turned to Angola, Nigeria and Sudan. It has also secured a contract for exploration off shore in Kenya. Meanwhile it has turned to Zimbabwe and South Africa for the supply of iron ore and platinum. In return for these vital commodities, China offers cheap and unconditional loans, as well as undertaking massive infrastructure projects at bargain prices. For instance, in Kenya it is fixing the main Nairobi/Mombasa road which somehow was left totally neglected for decades notwithstanding Kenya’s receipt of hundreds of millions of pounds in so-called western ‘aid’. In Sudan the Chinese have financed and helped build a pipeline to transport Sudanese oil to the sea at a cost of £4.2 billion – and similar massive projects have been undertaken in several other African countries:
“Last year China spent more than $10 billion in infrastructure projects in Africa, including motorways in Nigeria, a telephone network in Ghana and an aluminium smelter in Egypt” (David Robertson, ‘Miners in talks to stop China excluding them in Africa’, The Times, 29 January 2007).
At the same time trade between China and Africa, which was valued at $2 billion in 1999, has soared to $50 billion and is expected to reach $100 billion by 2010.
Howls from western imperialism
The imperialists are seeing their monopoly hold over the world’s commodities totally undermined. On the strength of that monopoly, western imperialist multinationals have been able to continue to make profits despite being in economic terms relative inefficient. Now that they can no longer hope to be able to force the oppressed countries to sell their oil and minerals at well below their value, the very survival of many western multinationals cannot but be under threat. For instance, despite paying more for their raw materials than western imperialism has been paying, both China and India are racing to produce a car that will retail at £3,000. When this is achieved, it will sound the death knell for what remains of car production in the United States and Europe. And it is not only in the car industry, but in almost everything else, where China is infinitely more ‘efficient’ than the old imperialist powers.
The protests from western imperialism do not of course identify the real source of their grief – i.e., that if they want raw materials, trade and financial links with the third world they are going to have to pay a fair price in future – instead we hear about how China is supporting oppressive regimes with poor records on human rights, and is undermining the western programme of conditionally writing off the continent’s debts. Given, however, that the worst affront to human rights is the absolute poverty which has been visited on Africa as a result of its oppression by western imperialism, to say nothing of endless civil wars and dictatorial regimes, while China is enabling African economies to grow, one has to be a total imbecile or a cretinous lackey of the western billionaire ruling class, to believe that this development is not a huge boon for the oppressed countries of the world.
Of course, the British political scene is something of a hothouse for the growing of such cretinous lackeys, who are especially rife in the Labour Party, from where they work hard to spread propaganda via the trade unions and the media throughout the working class in support of Britain and America’s hard-pressed ruling class. For example, “our” international development secretary, Hilary Benn, having first established his ‘left-wing’ credentials by criticising the World Bank for “tying financial support to African countries to ideologically driven economic policies such as privatisation”, goes on to say that Chinese money could do more harm than good:
“If countries are borrowing to the extent that their debt becomes unsustainable then that undermines all the work that has been done in trying to tackle unsustainable debt. The issue for debt is not debt per se, it’s can you afford it?…
“The other issue is governance … building accountability and responsiveness is in the end how these countries are going to develop”.
By implication the mealy-mouthed Mr Benn is clearly painting western imperialism as, on the whole, the good guys who are bringing about steady but sure improvement in people’s lives in Africa, by restricting corruption in government and insisting on democracy, while the wicked Chinese are enslaving them to debt and letting corruption run riot. This is a classic example of the way social-democracy always finds a way to side with “our” ruling class, with “our” imperialism. The Chinese are undermining the profitability of “our” imperialism, therefore the Chinese must be condemned.
Borrowing a lot of money, Mr Benn, does not per se lead to unsustainable debt. When western finance houses had a virtual monopoly of lending to Africa, they deliberately and systematically created unsustainable debt – a fact generally well known and now impossible to deny because of the revelations by John Perkins in his book Confessions of an economic hitman. John Perkins was employed by a US corporation to create economic projections for US financed projects which were deliberately inflated to forecast a level of profit far above what could reasonably be expected to materialise. Country after country in the third world were inveigled into undertaking these projects, which incidentally created a huge number of contracts benefiting US corporations. Puppet regimes who knew the figures didn’t add up were simply bribed, dissidents met untimely deaths. The policy was to bankrupt countries as a means of forcing them into dependence on the US – forcing them to vote at the UN in the way the US directed or forfeit the further loans which were the only way to ensure survival – and even that was only in the short term!
China is lending at much lower rates of interest, and on the basis of non-interference in any country’s internal affairs. Its national corporations are not motivated by profit at every turn, and quite a number of the projects are non-profit making, or even loss-making. Moreover, China is providing a guaranteed market for the commodities that are being produced and transported under its aegis. It is not perpetrating fraud or using bribery to foist disadvantageous contracts on any country. It is enabling African economies to grow at 6% per annum. It is smashing the pernicious clutch of the dead hand of western imperialism over Africa. For the vast majority of African people this presents real hope that the future is going to be a whole lot better than the past.
Local opposition to China
Of course, whenever there are big changes not everybody will be happy, and western imperialism has been combing through events with a fine tooth comb to find people who have been adversely affected by the Chinese dealings with Africa. They have found some. In Zambia, an opposition candidate, Michael Sata, in elections held recently, had tried to whip up racism against the Chinese presence in that country, taking advantage of the fact that there had been an accident leading to 18 deaths in a Chinese-owned copper mine, Chambishi, where in any event, wages, benefits and conditions of work are poor. One assumes that western imperialism will have lent a hand to support Michael Sata’s campaign, which brought demonstrators out on to the streets. Nevertheless, Michael Sata lost handsomely, showing that most Zambians, despite there being some problems, are happy with the Chinese presence. It has to be remembered that the Chambishi mine had lain abandoned for 10 years before the Chinese bought it and reopened it 8 years ago, creating employment in the area, even if conditions were not as good as when the Zambian government ran it. Even the Sunday Telegraph of 4 February 2007 (Colin Freeman, ‘Africa discovers the dark side of its new colonial master’) has to admit that “…it is easy to blame the Chinese for problems that have more to do with the former British colony’s longer-term economic woes. Unemployment, for example is 50 per cent, and 85 per cent of Zambians live below the poverty line, a point not lost on Mr Mwanawasa [the Zambian president], who insists Chinese investment offers a leg-up to prosperity after decades of post-independence mediocrity”.
There are also small businesses which have been adversely affected by cheap Chinese imports, and some resentment that the Chinese import skilled labour from China. Chinese skills are needed, however, to ensure projects are completed effectively and quickly – there are still many times more Africans employed on them than Chinese. And if some small businesses have been adversely affected, the standard of living of thousands of people has been raised by the availability of very cheap goods. Where goods produced by western imperialism dominate local markets, it is certainly the case that local industries and employment are decimated, so from that point of view the Zambians are not worse off than if western imperialism alone dominated their markets. However, the Chinese, not being driven by the profit motive to the same extent as western imperialist corporations, is better able to pay attention to local job creation, and no doubt they will do so in order better to secure their good relations with the countries in question.
What China offers Africa
China has already pledged more than $8 billion in loans to Africa this year.
“Almost every country is getting its share. Ghana said … it was close to finalising a $600m deal for a 400-megawatt hydroelectric dam. Gabon recently signed a $3bn iron ore deal with a Chinese consortium, which will help construct a railway and container port. … Zambia was promised investment of $200m for a smelter to produce 150,000 tonnes of copper. Mozambique has $2.6bn for a hydroelectric dam. Since the start of the year Egypt has seen its trade with China surge by 476% to reach nearly $2bn. Chinese investor and state agencies have spent billions on road-building in Kenya, a hydroelectric dam in Kenya and a mobile phone network in Ethiopia. …
“China is not just buying resource, it is selling a model of development. While the west focuses on political freedoms and universal rights, Beijing says the priority should be on improving living standards and national independence. The superiority of this approach, it argues, has been proved by success in lifting hundreds of millions of people out of poverty” (Jonathan Watts, ‘The savannah comes to Beijing as China hosts its new empire’, The Guardian, 4 November 2006).
An article in the first issue of Monocle (March 2007 – Steve Bloomfield, ‘China in Africa) says “Angola was torn apart by three decades of civil war which came to an end only five years ago. Railways were bombed to pieces, roads, schools and hospitals fell into disrepair. In return to access to Angola’s oil, China has embarked on a massive programme including new roads, three new major railway lines and a massive new airport large enough to cater for 30 longhaul jets a day.” And further: “With its new-found wealth, Angola has been able to almost double its national budget in the space of a year from $13 bn to $25 bn.”
And further: “It is very different from any type of aid that western countries, the World Bank or the International Monetary Fund have ever given Africa. China is not just donating money. It is donating labour. Vast armies of Chinese workmen have moved to Africa to work on construction projects managed by Chinese firms”.
Moreover China can deliver on the political front, not only in economic terms: “It is not only that Chinese state-funded companies can outbid Western competitors for projects; Beijing can also hold out a tempting political carrot. The mainlands veto in the United Nations Security Council is a powerful card to offer a regime like that in energy-rich Sudan as it faces condemnation over Darfur. China was able to prevent cohesion at the UN over Mugabe’s moves against his own people …” (Jonathan Femby, ‘China’s new silk roads’, The Business, 1 November 2006). Needless to say, imperialism’s condemnation of Sudan and Zimbabwe is entirely hypocritical on the human rights front. Its real quarrel with these countries is that they will not bow to the will of western imperialism, and China is doing them and the progressive people of the world a great service in assisting these countries in standing up for themselves.
Ambrose Evans-Pritchard in the Daily Telegraph of 5 February (‘The West must handle with care China’s growing interest in Africa’) further develops this theme:
“In Angola, the Marxist government escaped the irksome constraints of an IMF loan – with its demands on transparency and fraud – when China’s Eximbank offered 43bn at 1.5% interest rates over 17 years and promises of more to come. It came with a ‘non-intervention’ clause, a despot’s dream. [And a dream of an oppressed country seeking to escape oppression!].
“This paved the way for China’s state oil company Sinopec to bid for oil Blocks 17 and 18, together containing reserves of 4.5bn barrels of crude Angola now provides 7% of China’s oil.
“Pity poor Shell, which had its own plans for Block 18… Shell’s chief, Jeroen van der Veer, griped about the cut-throat competition last week …
“China is playing the same game in Gabon, Equatorial Guinea, and above all Nigeria, where Beijing has agreed to spend $4bn revamping the Kaduna oil refinery and building a string of factories, shopping malls and roads. For this it won the right of first refusal to four oil-exploration blocks”
How will western imperialism respond to its prey being snatched from its jaws?
It seems obvious that western imperialism will seek to put whatever pressure it can on China to moderate its activity, but actually China is well placed to resist such pressure. The obvious thing would be to try to erect or strengthen trade barriers making it difficult for China to sell its products in the USA or Europe. However, China holds one or two aces up its sleeve:
Seventy per cent of its foreign exchange reserves are held in US dollars. Its “huge purchases of US government bonds help to underwrite [the US’s] economy by holding down interest rates for homebuyers and businessmen alike. A flight by China from the dollar could send global markets into a tailspin” (Jane Macartney, op.cit.).
Both China and the US, however, are well aware that those who are losing the trade war are likely to turn to military means to try to exterminate their trade rivals – and given that the US has greater military expenditure than all the rest of the world put together, it might feel that the resort to arms is the obvious way of its difficulties. It is not for nothing that the US refuses to sign up to a no first strike policy, or that it has revived its Star Wars programme designed to make it immune from counter-attack. Moreover, remarked Ambrose Evans-Pritchard on 5 February 2007 (op cit):
“Last week the US defence department quietly launched its first military command dedicated to black Africa and the Sahara… Known as AFRICOM, it is ostensibly designed to fight Al-Qa’eda and cope with natural disasters. It is equally aimed at Beijing, a warning that the Communist regime will meet resistance if it tries to bottle up a large chunk of the world’s oil, gas, and mineral reserves – not to mention its arable land, the strategic prize a decade hence as food runs short”.
And, as if to justify aggression aimed at China, he points out that “Over 10% of America’s oil imports now come from Africa, a figure expected to rise to 25% in short order. Much of the world’s scarce uranium, platinum, chromium, cobalt and copper are to be found there.” Although he does admit: “Yet China needs the stuff too”.
He has also noticed that China is not likely to take aggression on the part of the western imperialist powers lying down, but that it is “fast building an offensive navy spearheaded by 50 attack submarines – unsettling Japan – and that has just smashed a satellite into space with a kinetic missile – unsettling America.” He might have added that China has increased its military expenditure by 14.7% and has at least 80 nuclear warheads (some people estimate 2,000). Mr Evans-Pritchard continues:
“Those wise old birds Bismarck and Disraeli prevented the last scramble for Africa escalating into conflict, soothing tempers at the Berlin Conference in 1884.
“It did not last. Europe came to the brink of war over Fashoda in 1898, and again when Kaiser Wilhelm sought to test British naval power by sending a warship into Agadir in 1911.”And of course Britain, the fading power, and Germany the upcoming one, did in the end come to blows in the First and Second World Wars.
Ambrose Evans-Pritchard, writing as he does for the Daily Telegraph, naturally has to side with “our” imperialism and concludes that “Rising powers [i.e., China] become dangerous …”, implying that it is China who would be the aggressor in any war that broke out between herself and the US. The facts show, however, that it is in no way in China’s interests to resort to war – circumstances have changed since the first and second world wars, when it was the old imperialist powers who favoured peace as it was they who benefited from the status quo.
Today, however, the status quo rather favours the “rising power”, and it is for the moment at least the decadent old imperialist powers who will be tempted to resort to force to try to change things.