Even before China's ruling party announced its "Go Out" policy in 1999 to encourage Chinese businesses to invest overseas, Chinese entrepreneurs were doing just that. Thousands immigrated to Africa. In developing countries such as the Congo, Chinese families opened import businesses, electronic shops, medicine distribution networks, restaurants. When the value of copper, cobalt and other minerals increased along with a worldwide demand for electronics in the early 2000s, dozens of small Chinese companies opened shop in Congo's Katanga province to purchase and process minerals dug by artisanal miners.
Chinese annual trade with Africa has blossomed to $166 billion, making it Africa's largest bilateral trading partner. The Chinese see Africa as both a place to obtain the raw materials needed to fuel its manufacturing-driven economy, and as an important emerging market in which to sell its products.
Congo is home to nearly half of the world's cobalt reserves. And its substantial supply of copper ore tends to be high-grade. Some speculate Congo's troubled ground may be infused with $24 trillion worth of raw minerals. Their worth is rising all the time: A decade ago, a ton of copper could fetch $1,700 on the world market. Today it's $8,000. These lucrative minerals are what led two Chinese companies to make the largest deal in Congo's history: Sicomines. They will partner with Congo's government mining company to extract 6.8 million tons of copper and 427,000 tons of cobalt over the next 25 years. At current prices, the copper alone would be worth about $54 billion––three times Congo's entire GDP.
Sicomines might seem like just an ordinary mining deal by a couple big Chinese companies. But it isn't. Because in exchange for the minerals, Chinese companies are spending $3 billion to build roads, hospitals and universities in Kinshasa and throughout the Congo. The barter is part of a new philosophy that combines development aid and mineral concessions in a package deal. It's a business model the Chinese are replicating across the African continent, which happens to be the most rapidly growing market in the world. And it's something that Western countries like the United States, which strictly separate government and private enterprise, can't quite duplicate.
In this project, journalist Jacob Kushner looks at this new style of investing that is helping Chinese companies take an economic edge over Africa: During the past three years, China surpassed the United States as Africa's largest trading partner.
Americans tend to be wary of China's rise in the world. We see our manufacturing jobs moving to China, its economy growing, ours struggling. We look for explanations of Chinese success––we accuse the Chinese of 'cheating' by subsidizing their auto industry or by 'manipulating' their currency, of profiting from labor abuses and the absence of democracy. We conjure images of corruption.
But what if China's success in Africa is not fundamentally all that different from the way Europe, the United States, and other Western countries have prospered there before? What does it mean for America's future as a world power if the Chinese have learned to profit by doing business the same way it has always been done––only they're doing it, better?
In Congo, the stakes are high. Depending upon who you believe, China's Congo strategy will either revolutionize the world's poorest nation, helping it leap forward into modernity and create a new development model for all of Africa—or strip Congo of its natural wealth as did the Belgians in colonial times while Congo's masses remain in poverty.
×PART OF: China's Congo Plan: What the Next World Power Sees in the World's Poorest NationJanuary 11, 2014