TWN Info Service on Finance and Development (Nov06/01)

8 November 2006

CHINA: DOUBLES AID AND INVESTMENT TO AFRICA

The two-day Beijing Summit of the Forum on China-Africa Cooperation concluded on Sunday afternoon, putting in place a new and higher level of China-Africa cooperation where development aid to Africa will be doubled and $5 billion in loans and investment credits provided over the next 3 years. Together with a pledge of US$5 billion to set up a China-Africa development fund, and previous pledges made to a number of African countries, China will overtake the World Bank as the continent's main financial provider.

The Declaration of the Beijing Summit of the Forum on China-Africa Cooperation (FOCAC) established a "new type of strategic partnership between China and Africa featuring political equality and mutual trust, economic win-win co-operation and cultural exchanges". Chinese and African leaders reviewed the achievements of China-Africa cooperation over the past 50 years and adopted a declaration for a "new type of strategic partnership" as well as an action plan for 2007-2009. Four areas of cooperation in the action plan are political relations, economic cooperation, international affairs and social development.

Below is a report on the outcome of the Beijing Summit and the main points of the Beijing Declaration.

It was published in SUNS #6135 Tuesday 7 November  2006

With best wishes
Martin Khor

China: Doubles aid and investment to Africa

By Chee Yoke Ling, 5 November 2006

The two-day Beijing Summit of the Forum on China-Africa Cooperation concluded on Sunday afternoon, putting in place a new and higher level of China-Africa cooperation where development aid to Africa will be doubled and $5 billion in loans and investment credits provided over the next 3 years.

Together with a pledge of $5 billion to set up a China-Africa development fund, and previous pledges made to a number of African countries, China will overtake the World Bank as the continent's main financial provider.

China's President Hu Jintao, 41 heads of state or government and senior officials of 48 African countries that have diplomatic ties with China, as well as representatives from regional and international organizations, attended the 2-day gathering (4-5 November) - the largest event between Chinese and African leaders since the founding of the People's Republic of China in 1949. The theme of the Summit was "friendship, peace, cooperation and development".

Chinese and African leaders reviewed the achievements of China-Africa cooperation over the past 50 years and adopted a declaration for a "new type of strategic partnership" as well as an action plan for 2007-2009. Four areas of cooperation in the action plan are political relations, economic cooperation, international affairs and social development.

At the opening speech on Saturday, Hu said that a key principle guiding China's foreign policy is to strengthen unity and cooperation with Africa. He said that "China will continue to support Africa in implementing the New Partnership for Africa's Development and in its effort to strengthen itself through unity, achieve peace and stability and economic revitalisation in the region and raise its international standing."

Hu announced the following package from China:

* Double its 2006 assistance to Africa by 2009.

* Provide $3 billion of preferential loans and $2 billion of preferential buyer's credits to Africa over the next three years.

* Set up a China-Africa development fund which will reach $5 billion to encourage Chinese companies to invest in Africa and provide support to them.

* Build a conference centre for the African Union to support African countries in their efforts to strengthen themselves through unity and support the process of African integration.

* Cancel debt in the form of all the interest-free government loans that matured at the end of 2005 owed by the heavily indebted poor countries and the least developed countries in Africa that have diplomatic relations with China.

* Further open up China's market to Africa by increasing from 190 to over 440 the number of export items to China receiving zero-tariff treatment from the least developed countries in Africa having diplomatic ties with China.

* Establish three to five trade and economic cooperation zones in Africa over the next three years.

* Over the next three years, train 15,000 African professionals; send 100 senior agricultural experts to Africa; set up 10 special agricultural technology demonstration centres in Africa; build 30 hospitals in Africa and provide RMB 300 million of grant for providing artemisinin (an anti-malaria drug) and building 30 malaria prevention and treatment centres to fight malaria in Africa; dispatch 300 youth volunteers to Africa; build 100 rural schools in Africa; and increase the number of Chinese government scholarships to African students from the current 2,000 per year to 4,000 per year by 2009.

China-Africa economic ties have grown rapidly in recent years. Statistics from the Chinese Ministry of Commerce show that the two-way trade volume has rocketed from $4 billion in 1995 to about $40 billion in 2005. On Saturday, Chinese premier Wen Jiabao proposed that this trade volume should increase to $100 billion by 2010.

Chinese direct investment in Africa has amounted to $1.18 billion, with more than 800 Chinese enterprises on the continent. On the sidelines on Sunday, the Second Conference of Chinese and African Entrepreneurs concluded with 14 agreements signed between 11 Chinese enterprises and African governments and firms, totalling nearly $1.9 billion.

The Declaration of the Beijing Summit of the Forum on China-Africa Cooperation (FOCAC) established a "new type of strategic partnership between China and Africa featuring political equality and mutual trust, economic win-win co-operation and cultural exchanges".

The Declaration was read out by Hu, Ethiopian Prime Minister Meles Zenawi (Ethiopia was co-Chair of the Summit as it had hosted the last FOCAC Ministerial Conference in 2002) and Egyptian President Mohammed Hosni Mubarak on Sunday afternoon.

The leaders stated in the Declaration that "the world today is undergoing complex and profound changes, and that the pursuit of peace, development and co-operation has become the trend of the times".

Multilateralism and democracy in international relations with the United Nations playing an important role was a key element of the Declaration. China and Africa agreed to work together to support strengthening UN authority and efficiency through reform, and such reform should be based on democratic negotiations and conducive to maintaining unity among UN member states, says the plan, adding that the concerns of developing countries should be fully considered.

They called for "the development of friendly relations and co-operation among countries in accordance with the UN Charter, the Five Principles of Peaceful Co-existence and other generally recognized norms governing international relations".

They proposed "o enhance South-South co-operation and North-South dialogue to promote balanced, co-ordinated and sustainable development of the global economy to enable all countries to share its benefits and realize common development and prosperity".

The Declaration stressed that "the United Nations should strengthen its role through reforms, pay greater attention to the issue of development and give priority to increasing the representation and say of African countries in UN agencies".

China reaffirmed in the Declaration its support for African countries in their efforts to strengthen themselves through unity and independently resolve African problems, its support for African regional and sub-regional organizations in their efforts to promote economic integration and its support for African countries in implementing the "New Partnership for Africa's Development" programmes.

The Declaration called on the international community to encourage and support Africa's efforts to pursue peace and development. "In particular, we urge developed countries to increase official development assistance and honour their commitment to opening markets and debt relief to enhance Africa's capacity in poverty and disaster reduction and prevention and control of desertification, and help Africa realize the UN Millennium Development Goals".

"The adherence of China, the world's largest developing country, to peaceful development and the commitment of Africa, a continent with the largest number of developing countries, to stability, development and renaissance, are in themselves significant contributions to world peace and development," said the Declaration.

In summarizing the 2 days of discussions, Hu said that the world should not ignore Africa's voice, and China will continue to support African countries to safeguard their legitimate interests and push the international society to pay more attention to and invest more in Africa.

The leaders pledged in the Declaration to:

* Increase high-level visits, conduct strategic dialogue and enhance mutual political trust.

* Deepen and broaden mutually beneficial co-operation and give top priority to co-operation in agriculture, infrastructure, industry, fishing, IT [information technology], public health and personnel training to draw on each other's strengths.

* Increase exchange of views on governance and development to learn from each other.

* Increase dialogue between different cultures and promote people-to-people exchanges, particularly those between the young people.

* Enhance international co-operation.

* Enhance the Forum on China-Africa Cooperation.

Details were fleshed out in the Summit's action plan for the period 2007 to

2009 that covers political relations, economic cooperation, international affairs and social development.

On political relations, Chinese and African leaders agreed "to continue high-level visits and set up a mechanism of regular political dialogue between foreign ministers to promote political co-operation. They resolved to expand co-operation in the United Nations, the World Trade Organisation and other international and regional organizations, and actively explore ways of pragmatic co-operation with third parties on the basis of equality, mutual benefit and win-win results".

The two sides agreed in the action plan "to promote exchanges and consultation between judiciaries, police and other law enforcement authorities, improve their capability to jointly prevent, investigate and combat crimes, enhance co-operation in legal assistance, extradition and repatriation of criminal suspects and management of emigrants, and work to resolve the issue of illegal migration through consultation".

The Chinese Government will continue "to strengthen its co-operation with the African Union (AU) and sub-regional organizations and institutions in Africa, support the AU's leading role in resolving African issues, and take an active part in UN peace-keeping operations in Africa".

On economic co-operation, the two sides agreed "to enhance co-operation in areas ranging from agriculture, investment, trade, finance, infrastructure construction, energy, natural resources, science and technology and information"

Under the action plan, China and African countries "will bolster their companies' joint energy exploration and exploitation under the principle of reciprocity [and]... give encouragement and support to their enterprises in conducting joint exploration and rational exploitation of energy and other resources based on the principle of mutual benefit and common development".

China agreed that it "will give high priority to African concerns of environmental protection and sustainable development, and help African countries turn their advantages in energy and resources into development strengths".

There are growing concerns over the environmental and social impacts on natural resources extraction, especially oil and timber, in Africa to fuel China's economic growth. Similarly, China is facing increasing environmental and social impacts from its rapid growth and liberalization of its economy. Some observers note that this commitment is an important element of the action plan.

On international affairs, the action plan called for international involvement in poverty relief efforts in Africa. The leaders welcomed the establishment of the UN Human Rights Council. China agreed to support the efforts by African countries that seek WTO membership, and pledged to step up co-ordination for the early resumption of the Doha Round of negotiations.

China and Africa "condemn and oppose terrorism in whatever form and will explore methods of counter-terrorism co-operation".

The action plan also said that both sides "are opposed to double standards", while recognizing a leading role of the United Nations and UN Security Council in the international campaign against terrorism.

They agreed to set up a mechanism of regular political dialogue between foreign ministers of both sides within the framework of the Forum on China-Africa Cooperation, with political consultations taking place in New York on the sideline of the UN General Assembly to exchange views on major issues of common interest.

The action plan called for increased international co-operation in promoting nuclear disarmament and non-proliferation of nuclear weapons. China supports Africa's efforts in realizing the objective of a nuclear-weapon-free zone in Africa on a voluntary basis. China will also continue to support humanitarian de-mining operations in Africa, and its campaign against illicit trade in small arms and light weapons, with financial and material assistance and related training.

The two sides also agreed to strengthen co-operation to face up to non-traditional security issues, including natural disasters, refugees and displaced persons, illegal migration, transnational crime, drug smuggling and communicable diseases, which challenge world peace and security.

On social development, the Chinese Government will continue to provide assistance and join in debt-reduction efforts. It will expand joint-programmes in human resources development as well as in the fields of culture, education, health care, environment, tourism, media and exchanges among the peoples.

In medicine and health care, China and Africa will intensify co-operation in the prevention and treatment of HIV/AIDS, malaria, tuberculosis, Ebola, Chikungunya, avian influenza and other communicable diseases. China will also help African countries establish quarantine and public health emergency response mechanism, in addition to building new hospitals and prevention centres, providing free anti-malaria drugs and sending medical teams.

In tourism, China has granted tourist destination status to 26 African countries. The nine new countries on the list are Algeria, Cape Verde, Cameroon, Gabon, Rwanda, Mali, Mozambique, Benin and Nigeria. The Chinese Government will extend ADS (approved destination status) to more qualified African countries at their request.

Collaboration in the fields of education will include building more Confucius Institutes in African countries to meet the locals' needs in Chinese language teaching. Meanwhile, Chinese universities will be encouraged to teach African languages.

China and African countries recognize the need to collaborate on environment protection, share experiences and boost sustainable development on both sides, and "resolved" to promote dialogue and exchanges in environmental protection and co-operation in human resources development.

China will train more environmental protection administrators and experts for African countries in the coming three years and the number of trainees will increase year on year.

Meanwhile, the two sides will step up co-operation in capacity building, prevention and control of water pollution and desertification, maintenance of bio-diversity and the development of environmental protection industry and demonstration projects.

They will also work with the United Nations Environment Programme for multilateral co-operation in the environment sector.

The Summit also agreed to enhance the Forum on China-Africa Cooperation (FOCAC). This is the South-South cooperation platform that has facilitated the strengthening of ties with Africa. It was established in 2000 by China and African countries with diplomatic relations with China, for collective consultation and dialogue and for setting up a cooperation mechanism.

The FOCAC seeks to establish "Pragmatic Cooperation" to strengthen consultation and expand cooperation, on the basis of "Equality and Mutual Benefit" to promote both political dialogue and economic cooperation and trade.

Two other ministerial conferences have been held. The first was in Beijing in October 2000, and the second in Addis Ababa, Ethiopia in December 2003. In April 2002, the "Procedures of the Follow-up Mechanism of the FOCAC" formally took effect, which helped standardize the forum.