Beijing, China, was the venue of the Seventh Asia-Europe summit October 24-25. Here Chinese Premier Wen Jiabao (centre), prepares to make the opening address at the Great Hall of the People in Beijing, October 24.
It seems such a long time ago I started penning this note on China's quest for raw materials to keep its 10 per cent growth machine running.
It was during the Olympics that controversial reports of China concluding one-sided deals for minerals in Africa surfaced. I thought I would have a look at one of them; then the Wall Street or rather, 'World Street' bubble burst.
But as events unfold, today is as good a time as any. For even with Chinese growth projections of 8.0 per cent, its banking system a wee bit insulated from the derivative madness, the economy still needs raw materials: minerals, iron ore, copper, cobalt, oil, timber, everything required for industrial output.
Nineteenth century industrialising Britain and Europe were in a similar position of need. One major difference, however, is that Bismarck's 1884/85 Berlin Conference - an effort to organise the divvy up of African resources - could not possibly be convened in 2008/09.
Despite exponential growth in technologies that deliver abundant shipping capacity, global positioning systems, communications and computing power, tools of warfare - the list is unending - nothing like Europe's open, obscene scramble for Africa that propelled European development but also created unimaginable atrocities is possible today.
The world has changed
It's impossible not because naked power - guns, ships, tanks, etc - doesn't exist to do it. Rather it can't be done because, stating the obvious, the world has changed.
The same technological advance that creates naked power creates conditions for rapid public perception with which powerful nations have to contend. Notions of equality, freedom and self-determination are ubiquitous and almost nothing done anywhere in the world hides long from view.
Cold war bi-polarisation is over. Competition for minds and hearts of populations across the globe is not as openly ideological. Chances therefore for more equitable sharing of the fruits of resource exploitation are more possible.
China's state corporations engage in deals including barter. They call these deals 'win-win'. They make a contrast with conditional western aid to less developed countries. They claim it is purely business. No disguised return flows to China. Their notion is cooperation that benefits everyone.
Wilberne Persaud, Financial Gleaner Columnist
A deal between China and the Demo-cratic Republic of the Congo (formerly Belgian Congo, Zaire, among other names) gets natural resource feedstock for its humming industries, copper and cobalt. It is for the most part a barter deal.
Chinese officials describe such arrangements as 'win-win', not aid with invisible stringing, but in their view, pure business with each side's interests plainly in view.
Perhaps China's vision is easy to buy into given past naked exploitation by 'old' Europe, unbelievable brutal dictatorship and civil war DR Congo experienced.
Their infrastructure is hobbled when at all functional. So the deal brings assistance to correct this in roads, railways and hospitals.
"We've been mining for two centuries but people only see minerals going out - people talk about roads, schools, water - they hardly see anything from the huge assets," said the Congolese mining minister.
On the other side Chinese ambassador to DR Congo, Wu Zexian, tries to be open about his country's goals and actions. He admits they need much and therefore: "China cannot live closed off which is why we have adopted a politics of openness towards the outside world. We must come to a cooperation that benefits everyone."
Mine deal
DR Congo has a state-owned copper and cobalt mining company, Gecamines, which has brokered a deal for a mine in Katanga province with huge proven reserves; huge enough for the Chinese state-owned Ex-Im Bank to provide immediate funding to the tune of US$3 billion in a deal most western banks even in last month's heyday of risk would have thought dicey.
The deal works like this: three years will bring the disused mine back into production while the roads and other projects will be already on stream.
China anticipates payback of its investment in 10 years.
Some question the deal because details are secret and China is set to reap over US$42 billion from a deal in which it only upfronts such a relatively small amount.
The counter to this is that the mine would remain disused without the deal, that financing for development would normally be unavailable and if it were, costs would be prohibitive, copper prices are likely to rise in the future and, finally, DR Congo will retain ownership of one-third of the venture into the future.
We cannot comment further without details, but the arguments seem reasonable, of course subject to the usual caveats of accountability and environmental sustainability. Regardless of the take from the project, if corruption does not allow the population to truly benefit or the environment is destroyed, the deal takes on a totally different perspective.
Yet long run perspectives still depend on fixing the global financial infrastructure and economic recovery from today's undetermined recession.
China's model of development cooperation
wilbe65@yahoo.com
