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Africa: Chinese Investment

Volume 689: debated on Tuesday 6 February 2007

rose to ask Her Majesty’s Government what assessment they have made of the level of Chinese investment in Africa.

The noble Lord said: My Lords, the purpose of this Question for a short debate is to draw the attention of the Government and your Lordships’ House to the new Chinese scramble for Africa. In preparing for the debate, it occurred to me, perhaps rather impertinently, that although the People’s Republic of China and your Lordships’ House are very different in their scale and powers, they nevertheless have two characteristics in common. The first is an excessive respect for the political wisdom of elderly men in suits. However, no sooner had I formed this idea when I realised that while no doubt all participants in the debate are characterised by their great wisdom on Africa, the majority by no means conform to the stereotype of elderly men in suits. So that will have to remain dangling as a hypothesis. The other characteristic these two great institutions have in common is a lively respect for their own history, so I shall start with some history.

The Chinese did not arrive in Africa yesterday with President Hu Jintao’s tour. In fact they first arrived in 1414, half a century before the Portuguese and hundreds of years before the other European waves of traders, slavers and colonialists. In 1414, Zhang He, the Grand Eunuch of the Three Treasures, a title that makes British admirals look positively understated, took a fleet of 60 galleons and 100 auxiliary vessels as well as 30,000 soldiers along the length of the east African coast. He came in search of trade, prestige and wild animals for the emperor, who was of course the first of the newly arrived Ming dynasty. Unlike many of his European successors, Zhang He came and went in peace, apart from a skirmish with the people of Mogadishu who were noted in the ship’s log as being “quarrelsome”. Some things do not change.

Let me fast forward to the 1960s and the Cold War, when the Chinese returned in strength as missionaries of Mao and allies in various liberation struggles. They built roads, bridges and the TanZam railway swiftly and efficiently in order to reduce the reliance of front-line states on apartheid South Africa. They were always ready to train and arm the leaders of the struggle, competing at that time for dishonour with the USSR and the European members of the Warsaw Pact. There followed a period of relative disengagement until around 10 years ago, when a dramatic new chapter opened in Chinese-African relations. It is no exaggeration to say that the accelerating Chinese drive into Africa in recent years is one of the most significant geopolitical and economic events of our time, involving as it does a search for natural resources and a drive for new markets, accompanied by an orchestration of trade and investment with an underlying quest for global power and influence.

Today the Chinese are on the move the length and breadth of Africa. They are buying and selling, importing and doing deals with Governments—not least on votes against Taiwan. In some instances, they are selling arms as well as acquiring and then exporting back to China oil and gas, metals and minerals, and agricultural commodities. They are placing their footprint everywhere. The bazaars and markets of Africa are as full of cheap Chinese cotton garments as the British high street, plus everything else that can be imagined from watches to computers, flip-flops to blackboard chalk. No item is too small for the great Chinese economic machine. Chinese hotels and restaurants are opening, as are donated stadiums and radio stations. Chinese medicine is everywhere, and is a great deal cheaper than western pharmaceuticals. Indeed, at the Royal Society of Arts last week I heard a leading Ugandan businessman, Andrew Rugasira, say that it was his belief that within 10 years there would be a Chinese president in one of the African countries.

What, it may be asked, is the problem, apart of course from wounded western amour propre at seeing a whole sphere of economic and political influence removed so swiftly and expeditiously. First is the problem identified by Thabo Mbeki that the trade flow is too much like the old north/south colonial pattern. Yes, trade between China and Africa doubled from $20 billion to $40 billion between 2000 and 2005 and is expected to double again by 2010, at which point China will be Africa’s largest trading partner. But that trade is overwhelmingly in primary commodities. For instance, 25 per cent of China’s oil comes from Africa already, significantly most of it from Angola and Sudan. The trade relationship as it stands gives far too little scope for added value in Africa or encouragement of African companies, enterprises and products.

Secondly, there is a structural imbalance between a superpower like China, with a vast economic machine subject, it must be said, to party and state guidance and direction—what Will Hutton calls in his most recent book “Leninist Corporatism”—and an atomised Africa which is divided into preponderantly small states. At the China-Africa Forum in Beijing in November, this symbolism was apparent: 43 African leaders going up the red carpet to be greeted one by one, with a negligible role for pan-African institutions in the shape of NePAD and the African Union. The plethora of loans, credits and trade deals were strictly bilateral and often ad hominem. It seems this will be the case again on President Hu Jintao’s current tour of Cameroon, Sudan, Namibia, South Africa, Seychelles, Liberia, Zambia and Mozambique.

Thirdly, there is the question of governance. Part of the global consensus, articulated in the Commission for Africa and institutionalised in NePAD, is the express link between economic success derived from foreign direct investment on the one hand and good domestic governance on the other. But the Chinese have shown little or no interest in issues such as the rule of law, free elections, respect for human rights and stamping out corruption. They dish out the loans, the gifts and the pet projects with no questions asked, sometimes supporting and even propping up very dubious regimes under the rubric, which is so important to them internationally, of mutual non-interference. So the infrastructure created and the new loans made may suit the African regimes concerned but may not be in the long-term interests of the host country concerned.

Fourthly, there is the constellation of issues gathered for progressive western companies, NGOs and Governments under the concept of sustainable development: local content, capacity creation, technology transfer, community consultation and environmental conservation. On none of these issues have the Chinese been particularly engaged. When I chaired a conference on behalf of the Royal African Society in Johannesburg just before the China-African Forum, there seemed to be considerable Africa complacency on these issues. Now the Chinese come bearing gifts and it is difficult to blame them. Although this does not yet appear to be a collective issue for Africans, it does not mean that the rest of the world should stand by mute.

What should be the response of Governments such as our own, who have taken an excellent lead on Africa, of the large companies involved in Africa and of the relevant NGOs? I believe there is no point whatever in adopting an adversarial approach, snarling at the vigorous newcomer like an old dog in the manger. Our own colonial history precludes too much self-righteousness on our part. The enlightened world community has, by and large, got the right approach at last to Africa and we should now seek to engage the Chinese, first of all as Government-to-Government. I shall be interested to hear the Government’s plans for the G8 and whether they intend to raise these matters this summer as a world issue.

I also say to the Minister that I hope we stop the rapid rundown of diplomatic representation in Africa. If ever there was a time when we need maximum diplomatic representation, it is now.

I hope major companies do not join a race to the bottom but persist with corporate responsibility and sustainable development and, if anything, raise their game. Companies involved in China and Africa should promote dialogue. I commend de Beers, which has helped to facilitate discussions on codes and standards involving the US as well as the Chinese and Africans. Standard Chartered Bank, which I advise, is active in a similar way in promoting dialogue.

I hope that developmental and environmental NGOs will be as assiduous in drawing attention to Chinese mistakes as they are in the case of multinationals. LEAD International, which trains people in sustainable development and which I chair, is this March instituting a dialogue between civil society and China and Africa. I think that is admirable.

The Chinese deserve our respect for their energy and recognition for their new role in the world, but it does neither them nor Africa a service if that respect and recognition is uncritical. Engagement is a two-way process.

My Lords, I congratulate the noble Lord, Lord Holme of Cheltenham, on securing such a timely debate and on his enlivening and penetrating tour d’horizon.

China has rebuilt much African infrastructure both as aid and as investment. As the noble Lord said, it manages the extraction of and buys large quantities of raw materials, which contributes hugely to national exchequers, helps producers or backs loans on easy terms. The style of negotiation of all this seems to be congenial, with few or no conditionalities and long credit lines, and I know of African leaders who admire China’s big leap out of poverty and would like to learn how to emulate it.

There are also some adverse consequences, as the noble Lord said; I think I agree with absolutely everything he said, so I hope not to repeat him in too boring a way. In some countries which already have massive unemployment, over 70 per cent of the workforce for this rebuilding is Chinese. Tensions have been reported in Zambia over this. I agree again with the noble Lord that there is a real risk of reinforcement of African economies as predominantly reliant on the production of raw materials, whose price they cannot control, with attendant commodity price shocks or damaging currency appreciation, at the expense of their fledgling manufacturing, processing, value-added export production and associated skills development, all of which could be, and in some cases are being, substituted by cheaper Chinese products in both domestic and potential export markets. Plentiful commerce in Chinese goods takes place in Africa, not only through the formal sector but also through the very significant informal sector with its large, vibrant markets.

The Beijing declaration of the Forum on China-Africa Co-operation of last September is, all the same, a hopeful and positive document, but there is one problematic sentence, which states that,

“the politicisation of human rights and the imposition of human rights conditionalities on economic assistance should be vigorously opposed as they constitute a violation of human rights”.

Whatever that means, the fact is that China’s immense achievement in rebuilding Africa’s infrastructure does have this disturbing facet. For instance, a large proportion of the 23 per cent of China’s oil that comes from Africa is from Angola, which I visited last September. Last year it seems that $14 billion accrued from oil revenues. But there is a mystery about this. The Government of Angola’s poverty reduction programme does not seem to be very developed. Forty-five per cent of its children are malnourished. Primary education is far from universal. Where does the $14 billion go?

One obvious way forward is for the oil companies to declare their payments so that people can ask the Government how the money is to be spent. The UK Government’s Extractive Industries Transparency Initiative was designed to achieve exactly this. Moves were afoot for Angola to take part, but very little has happened for a year or more, effectively since China—through its parastatal organisation—became the major customer. If there is insufficient transparency in the accrual and use of these very large revenues, the embryonic democratic institutions of Angola lose their best weapon in the struggle to halt poverty. Others may mention China’s role in Darfur.

So how should we approach all this? First, African Governments themselves have opportunities which we can support. As an interesting new booklet from the IPPR, The New Sinosphere, points out, in China the accelerating movement of people from the countryside to the cities may mean that less food will be produced. Many African Governments have the sound intention of developing their agriculture, both for food security and for economic growth. If African agriculture can advance and become more highly skilled—more angled to producing the final processed food—this could supply future Asian needs, as well of course as enhancing trade in general. The IPPR also mentions the African potential for developing tourism.

Secondly, we should realise that China gives every intention of being in it for the long haul, and of wishing to be a world player within international institutions such as the WTO, and within alliances. So there is more than one forum where shared concepts such as environmental protection and transparency can be developed. The Beijing declaration shows sensitivity to such concerns. There is also a commitment to NePAD and to the peer review system. It seems that China may be interested in supporting the principles of the EITI.

How do our Government engage with China? Is there an integrated strategic aim of supporting stability, governance and growth in Africa? Do we talk to business and to the banks about this? Do we set up joint ventures, especially in agriculture, which the Beijing declaration recognises as a need? Can these support good governance, skills and technology transfer and capacity-building, and poverty reduction essentials such as adding sanitation and piped water systems to the physical infrastructure and assistance on primary healthcare delivery?

Could the Africa Partnership Forum, a body charged with implementing the Gleneagles commitments, be persuaded to invite China to join? I know DfID wants to encourage China to join one of the Africa Commission’s other children, the Infrastructure Consortium for Africa, but is DfID also offering assistance to Governments on how to negotiate the best deal?

Finally, in the area that perhaps most holds up African economic and social development—conflict reduction—I am sure we welcome the Chinese contribution to UN peacekeeping and their explicit commitment to small-arms reductions. How can our Government build on this to help reduce conflict?

My Lords, I am grateful to the noble Lord for securing this debate. Let it not be said that the debate is taking place because a former colonial power is worried that it is going to lose trade. The issues he raises—

My Lords, with respect, perhaps I could just guide the most reverend Primate. He may like to make his remarks in the gap before the Front-Bench spokespersons. I am sure we will be delighted to hear from him then.

My Lords, I too thank the noble Lord, Lord Holme of Cheltenham, for introducing this short and very topical debate this evening. I have a particular interest in this debate, not just because of my long-standing interests in Africa, but because I studied Chinese law at London University, and spent some time living in China.

There is no doubt, as China seeks energy, steel and mineral resources to feed its insatiable appetite for growth, that Africa faces great opportunities for both development and investment, but also a potential threat of exploitation reminiscent of the colonial era. I noted that the noble Lord, Lord Holme, made mention of President Thabo Mbeki’s speech in Cape Town in which he said that it was up to Africa to ensure that it had a major say in deciding the terms of China’s trade and investment with Africa. It would serve little purpose if the only return for Africa’s valued energy and mineral resources was a limitless supply of cheap manufactured goods. That particularly affects the textile industry.

In President Mbeki’s word, the African continent could be condemned to “underdevelopment”. It is vital that with Chinese trade and investment comes training, beneficiation of minerals in the country of origin and a whole range of value-added activities. While President Hu Jintao undertook to train 15,000 African professionals and set up a development fund to help build schools and hospitals, the proof will be in the delivery.

Far from being marginalised by an increasingly globalised economy, as was the fear a few years ago, there is a lot for the African continent to be positive about. It is now emerging as an increasingly important global player with its energy, minerals and hydro-electric potential. Sub-Saharan Africa is now showing sustained growth of just over 5 per cent, while Angola, where China accounts for 35 per cent of its exports, has a growth rate in excess of 20 per cent. Sadly, though, that has not passed down in terms of poverty reduction in that country.

The substantial increase in trade and investment from China and India in Africa has certainly played a major part in reducing the blight of unemployment, but a major grievance of many Africans working for Chinese companies has been their poor record on safety standards, their lack of social benefits and low wages, and their tendency to import Chinese labour to work on many of the major infrastructure projects. In Zambia riots broke out in July last year following a dispute over alleged late payment of wages, and trade unions in the dispute claimed that miners at the Chinese firm earned the lowest wages in the industry.

While many African leaders and commentators have welcomed President Hu Jintao’s pledge to double both aid and trade with African nations following the China/Africa summit in November last year, the question on many people’s lips is, of course: at what cost?

There is growing alarm that China is prepared to support repressive African regimes, such as Sudan and Zimbabwe. China’s long-standing mutual non-interference policy, where Chinese aid and investment deals come on a no-strings basis free of conditions, goes totally against the precedent set by most western countries on the maintenance of democracy, respect for human rights and social and environmental standards. In both Sudan and Zimbabwe, China has been accused of supporting human rights abuses by providing military support to the regimes. One of the concerns I have, following the ever increasing tide of Chinese investment in Africa, is that western nations will increasingly lose influence on the continent, in terms both of access to future raw materials and of political influence.

In conclusion, while I have severe reservations on the modus operandi of Chinese investment in Africa, it is clear that many African countries have benefited from Chinese economic growth. I hope, however, that when the Minister closes this debate, she can enlighten us on whether these concerns will be raised by our Government at the forthcoming G8 meeting, and on what ongoing negotiations there are to address some of the concerns raised this evening.

My Lords, I too congratulate my noble friend Lord Holme of Cheltenham on securing this important debate and on the lucid and comprehensive way in which he covered the difficulties associated with China’s current activities in Africa. This is, I believe, the first time that two Lords with the words “of Cheltenham” in their titles have spoken in the same debate. I cannot match the fluency of my noble friend, but I should perhaps explain that Cheltenham has twinning links with both China and Africa, with the town of Weihai in China and Kisumu in Kenya.

China, as we have heard, has been active for a long time in Africa, particularly since the 1960s in the struggle against colonial rule and then the apartheid regimes in South Africa and Rhodesia. I am currently reading a fascinating biography of one of the great early presidents in newly independent Africa, Seretse Khama, the first president of Botswana. Perhaps at this stage I should draw attention to my registered interests in Botswana.

In their book, Seretse Khama, 1921-80, Neil Parsons, Willie Henderson and Thomas Tlou devote a section to China’s involvement in Africa including the building of a railway line in Zambia and Tanzania in the 1970s. During that period, many African leaders were invited to visit China. Seretse led a Botswana delegation to Beijing in 1976. Apart from seeing developments in China and attending and speaking at events, the team obviously had an informative, enjoyable and sometimes exciting time. On page 333 of the book, it is recorded that the Botswana delegation was the first in a long time which was not presented to Chairman Mao, who was ill and died 40 days later. The authors then write:

“That night, after feasting and drinking, the Botswana delegation went to bed tired and tipsy. At 3.45 in the morning a series of earth tremors, of two minutes’ duration each, hit Beijing. Then there was a massive earthquake which reached 8.2 on the Richter scale, rocking a wide area of north-east China. Its epicentre was 150 kilometres to the south-east of Beijing—in the area that the Botswana delegation was due to visit next. Several buildings collapsed in the city of Beijing and thousands of people fled into the streets. Seretse and Ruth (the President’s English wife) were kept awake by the earth movements, as were all other members of their party, save one. Festus Mogae, Botswana’s chief economic planner, woke up to experience his room’s dizzy movement. He concluded that he had consumed too much Chinese wine, and turned over to slumber on until dawn”.

Festus Mogae is now, of course, President of Botswana, and a more sober person it is difficult to imagine.

China has been involved in Africa for a long time. In the 1970s, it was to support the struggle for liberation; now the advantages for Africa are not quite so obvious, although China’s priority is clear: to create a diplomatic environment that facilitates secure and stable access to commodities. Energy assets rank highest on Beijing’s wish list, but metals and minerals, precious stones, timber, farm products and seafood are not far behind. On the website of the Forum on China-Africa Co-operation—FOCAC—there is a statement of China’s African policy. I have read it and there is little in it which is objectionable.

There are still high level visits in both directions. FOCAC claims that in the latest aid package, China offers,

“preferential loans, debt exemptions, favourable tariff policies as well as training of personnel”.

This is having some effect on hearts and minds. For example, according to Business Day of 2 February 2007, in a recent statement President Mogae said:

“I find the Chinese treat us as equals. The west treats us as former subjects”.

Artwell Karuru, a reporter working for the Zimbabwean presidential office, says that China’s assistance to Africa is,

“sincere, selfless and without conditions”,

and that it has brought about “concrete benefits” to African countries and people. I am sure that part of this is true. One example is a new 1,400 kilometre railway in Nigeria, which China will help to build with an investment of $8.3 billion. But China is particularly active in countries where there is conflict or where the regime is violating human rights—something of which China has been guilty for some time. Zimbabwe and Sudan are two areas of high Chinese activity. And there are conditions; for example, that countries must not recognise Taiwan.

Noble Lords will have seen the article in yesterday’s Guardian by Chris McGreal in Lusaka, headlined “Thanks China, now go home: buy-up of Zambia revives old colonial fears”. In the article there are complaints that Chinese companies are competing aggressively for business in Zambia. There is nothing wrong with healthy competition on a level playing field, but the article says:

“China put up the money to build Zambia China Mulungushi Textiles and provided the expertise to run it. It grew to become the biggest textile mill in the country… employed more than 1,000 people, propped up the economy of Kabwe in northern Zambia and kept thousands of cotton growers in business. But last month the factory shut down production, strangled by a new wave of Chinese interest across Africa that some critics say amounts to little more than another round of foreign plunder as Beijing extracts minerals and other natural resources at knock-down prices while battering the continent’s economies with a flood of subsidised goods and surplus labour. Also in Zambia, two years ago 49 miners were blown up in an explosives factory at the Chinese-owned Chambishi mine in an accident blamed on lax safety. Last year police shot five miners at Chambishi in a riot over working conditions”.

I have heard similar complaints in Botswana. In the construction industry the story is that Chinese companies are hoovering up nearly all the business, threatening the survival of existing local companies and their employees—companies built up over many years. The view has also been put to me that, rather than employing local labour, the Chinese are bringing in their own labour and materials, much of it sub-standard, to undercut local companies. There is no doubt that there are strains caused by China’s activities in Africa.

The Institute for Public Policy Research, in its document The New Sinosphere—China in Africa, suggests that western policy must change, for example to lower or abolish tariffs to open our markets to products from Africa. The IPPR also has something to say about the OECD Convention on Combating Bribery of Foreign Public Officials which it says “contains serious loopholes”. I recommend that noble Lords find this document on the internet.

I will be interested to hear from the Minister what our Government intend to do to adapt UK policies to meet the challenge of China’s growing influence in Africa.

My Lords, I apologise for jumping the gun. I did not mind the gap because I did not have the speakers list.

I am grateful to the noble Lord for raising the question. It must not be perceived outside this House that the old colonial power begrudges the trade that is taking place. It is something far more serious; as President Mbeki has said, trade is a two-way system. For a long time Her Majesty’s Government have been working towards trade justice and all that work could easily be lost overnight if such things are not observed. Suddenly China is affecting the textile industry in Zambia, and all the work that DfID has done there to help could be overrun.

Governance in Africa is still a concern; the rule of law needs to be obeyed and observed and the question has to be whether the Governments of Africa will simply take whatever China offers because it looks good for the time being. What about the wonderful work in cancelling world debt? Again, Her Majesty’s Government have been in the forefront of that; will they watch that the new Governments of Africa do not create fresh indebtedness, so that in a few years’ time we find that the campaign has to start all over again.

I happen to believe that poverty in Africa affects a lot of children particularly. As Africans say, it is better to teach a person to fish than to give them a fish, because the chances are likely that they will get their economy going properly. Her Majesty’s Government have assisted countries in Africa, teaching them how to fish without necessarily just giving the fish. The Chinese are arriving, giving a lot of fish but they need to teach the business that is required.

What about child soldiers in Africa? Arms could easily be shipped from China and a lot of unscrupulous Governments could still turn their African children into child soldiers. Participation and representative democracy are crucial. All the work that has been done by Her Majesty’s Government in Africa should not overnight be thrown over.

Her Majesty the Queen is to visit Uganda in May to open the Commonwealth leaders’ conference. Will Her Majesty’s Government ensure that the assessment they have made of the level of Chinese investment is discussed at the Commonwealth leaders’ conference in Uganda?

My Lords, I too thank my noble friend Lord Holme of Cheltenham for securing this debate. As we have heard, it is an area with massive significance to which far too little attention has yet been paid. As ever, he is very prescient in identifying it and very perceptive in his analysis of it.

China’s presence and investment in Africa continue to grow. That is, of course, not necessarily a bad thing, as we have heard. After all, decades back, it was China that was in dire poverty and now we see it powering forward through trade and industrial growth, beginning to take at least some of its people out of poverty, and many more if its expansion continues at its current rate. India is following suit. People used to despair of poverty and over-population in Asia. Now we talk of the Asian tiger economies.

We all know that aid and debt relief will not in the end bring African countries out of poverty and that it is only by increasing trade and expanding their economies that they too will flourish. China could greatly assist with this process. It is welcome that China has increased its contributions to peace-keeping forces in Africa and support for the developing African Union, but people are very apprehensive of its rapid expansion in Africa. Part of our fear may well be that after a long period of being able to influence what happens in Africa, this is slipping from our grasp. Yet there are real reasons to be deeply apprehensive about what is happening, as all noble Lords have made extremely clear.

There are several levels to this: economic, political and diplomatic. At the end of 2005, China was Africa’s third largest trading partner after the US and France. Its trade volume has increased tenfold in seven years. About a third of China’s oil now comes from Africa. Not surprisingly, given that nations act out of self-interest, China has focused particularly on resource-rich nations. Its involvement is not necessarily bringing benefits to the wider economies of these African countries. Does that sound familiar? We should think of the railway lines in Africa—not serving the continent but there to bring resources to the coast for transport to Europe. It is very worrying if the same thing is happening again.

Of absolutely key importance is the fact that cheap Chinese manufactures are flooding African markets, pushing out African producers. We heard about the effect of that in Botswana from my noble friend Lord Jones. But we are still dumping cheap products from the EU in developing countries and we have to take action there.

China has opposed American special treatment for Africa. According to WTO rules, China would have to agree a waiver for these preferences to continue, which are of vital importance to many African countries. Then there are the human rights and governance issues that we have heard about, where China’s record is hardly the best. Trying to lever good governance in Africa in the way that we have begun to do is simply not on its agenda. World Bank President, Paul Wolfowitz, complains that China ignores human rights and environmental standards when lending to Africa. Chinese firms have ignored international initiatives to make the mining industries cleaner. There is also the concern that with the level of natural resource extraction not only will Africa be exploited, as it always has been, but that it will be left with a great deal of environmental damage.

Chinese arms transfers to conflict zones, support for repressive regimes, and its blocking of UN resolutions on Darfur are all extremely worrying. The international community needs to encourage China to support efforts to promote stability and reduce the risk of conflict in Africa, for its own long-term interest as well as those of the African peoples whom it may be damaging.

On the political and diplomatic front, we are familiar with US aid being tied to support for US foreign policy or use of US companies and with the Americans calling in those countries to support them in the UN; for example, on Iraq. China is learning to play the same game. China stresses that it has never colonised any part of the African continent and states that it has supported a number of African independence movements against their western colonial masters. China’s “engagement agenda” in Africa consists of a long list of foreign policy interests, including that African states adhere to the “one China” policy—that is, to sever diplomatic ties with Taiwan—and to improve co-operation, in particular in the United Nations. Thus China calls in African support for the positions that it takes in the UN. It is unpredictable where that will take us all.

Most importantly, all of China’s interest in African countries is accompanied by guarantees that national sovereignty will not be questioned. This “no strings” approach enables Chinese companies to operate easily in countries such as Sudan and Zimbabwe, with terrible effects. The sale of arms to those countries is deeply alarming. Clearly, the relationship between Africa and China is unequal, just as was Africa’s relationship with Europe and the US, and still is. Clearly, Africa may be trading its present for its future.

As the IPPR report, to which the noble Baroness, Lady Whitaker, referred, concluded:

“China represents opportunities and risks for Africa. Managed well, China could bring real development benefits to Africans … Managed badly, however, China’s role in Africa may lead to worsening standards of governance, more corruption and less respect for human rights”.

We will have to be extra vigilant that our engagement with Africa follows the laudable lines that we wish on the Chinese. What we see developing there now is deeply concerning, and the West will need to do its best to convey to African nations the limits of the benefits that they think they are gathering. We will need to impress on the Chinese the need for stability, good governance and development in the long term interests of all. I therefore look forward to hearing what proposals the noble Baroness has to address these problems.

My Lords, I, too, add my congratulations to the noble Lord, Lord Holme of Cheltenham, on securing this interesting and important debate on what he called the new scramble for Africa. As your Lordships have highlighted, it could not be more timely, considering the Chinese President’s—Mr Hu Jintao’s—current eight-nation tour of Africa; a continent which he already knows well from two previous visits.

We all recognise that trade and investment are crucial for Africa and African economies, and there can be no doubt that commodity-hungry China is winning friends, but the question is to what extent is—or, indeed, should—China be influencing people? China’s drive to buy African oil and other commodities has resulted in a big increase in two-way trade, worth $42 billion in 2005. As those of us who were awake early enough heard on the BBC this morning, China now imports more oil from Angola—38 million tonnes—than it does from Saudi Arabia, and its share of sub-Saharan trade is expected to double by 2010. In return, the People’s Republic has pledged to double its aid to the continent and to provide $5 billion in loans and credits over the next three years. Mr Hu Jintao has unveiled $1.2 billion of immediate trade and investment deals, money which, China’s Ministry of Commerce reiterated last week, comes free from any political conditions.

At the Beijing summit at the end of last year, the Chinese President told the assembled African Heads of State and Ministers:

“China will forever be a good friend, good partner and good brother of Africa”.

The list of “friends” to whom many of your Lordships have referred would not look out of place in a rogues’ gallery. The Foreign Affairs Select Committee report on East Asia points out:

“China is a close ally of Zimbabwe, despite the terrible abuses committed by … Robert Mugabe”.

Indeed it is all too easy to argue that investing in chromium production and continuing to sell products such as the technology that enables the monitoring of electrical communications, despite expressed and growing concerns, is support of the Mugabe regime and all that it does, albeit by proxy.

Omar al-Bashir, Sudan’s President, is another “friend”. As the debate has highlighted, China not only buys around 80 per cent of Sudan’s oil exports, making the favoured few very rich, but has effectively been shielding Sudan from being held to account in the UN Security Council, to the distress of all aid agencies. As your Lordships are fully aware, Sudan is responsible for one of the largest—and escalating—atrocities of recent times. I need not remind the House that conflict in Darfur has to date left an estimated 300,000 people dead and 2 million displaced. Can one really argue that trade and investment is free from political conditions if a country uses its veto?

Last week’s Economist put the situation starkly, stating that,

“as Khartoum booms, Darfur bleeds”.

It argues that the liberal Chinese stance has in this case been exploited as a “licence to kill”, an example of profit without honour.

On the one hand you could argue that the People’s Republic’s growing interest and involvement is good and something to be encouraged. It is helping to fuel the economic rise of African nations and building up the continent’s neglected infrastructure. However, in supporting its “friends”, China’s policies have not only helped to prop up some of the continent’s worst human rights abusers but weakened and undermined the leverage of the international community and the UK in trying to promote good governance and human rights.

The East-West Center think tank tries to argue that,

“as a late entrant to the international oil game, China has little choice but to strike deals with the so-called rogue states”.

Perhaps Her Majesty’s Government could urge the Chinese to put some pressure on Sudan. Mr Hu has a rare opportunity to combine self-interest with statesmanship.

There is a fine balance to be struck. As China’s economic interests and dependencies spread, as no doubt they will, China will need to remember the importance of investing in peace as well as pipelines. Free markets, good governance and promotion of sound and stable human rights are the most direct route to a development that enables prosperity and a stable society.

My Lords, this has been an excellent and timely short debate. I thank the noble Lord, Lord Holme of Cheltenham, for enabling us to discuss these important issues. I am grateful to him also for providing a historical perspective. Napoleon Bonaparte said:

“Let China sleep, for when she wakes, she will shake the world”.

China’s re-emergence as a great world power is having a profound global impact, not least in Africa. As this impact deepens, our interest in the kind of international actor that China is becoming grows ever greater.

As we have heard, China’s overall influence on Africa has been increasing dramatically. Its footprint is everywhere. We welcome the growing engagement and believe that China’s role in Africa is extremely important. However, we want to help to ensure that China’s impact becomes even more beneficial for sustainable development and poverty reduction in Africa. As the noble Lord, Lord St John of Bletso, said, Africa needs development, not under-development. We want to help to ensure that engagement in supporting the new African agenda is led by Africans—the NePAD agenda of democracy, transparency, peace and market. We can do that only by constructive and strategic dialogue with China.

The most striking aspect of China in Africa is how quickly its role is evolving. Trade and investment are the driving forces of Chinese engagement. In 2006, China/Africa two-way trade reached $55.5 billion—up 40 per cent on the previous year. The balance of trade was $2.1 billion in favour of Africa. Two-way trade is projected to reach $100 billion by 2010. Since 2004, China’s investment in African infrastructure has been greater than that of the total for OECD countries. China’s emergence as a donor to Africa has widened the choices available to African countries. We welcome that development.

Political relationships are moving apace. In 2006, China published its first White Paper on Africa; President Hu and Prime Minister Wen both visited Africa; and in November there was the China/Africa summit in Beijing. A number of key Chinese commitments were announced at the summit. They included the doubling of aid by 2009, providing concessional credits of $5 billion, establishing a $5 billion fund to support Chinese investment in Africa, cancelling debt due in 2005 for low-income countries, and tariff reductions. I can certainly assure the most reverend Primate the Archbishop of York that we will carefully monitor the debt situation.

In respect of the Commonwealth Heads of Government Meeting in Uganda, I shall feed the views of the most reverend Primate to my noble friend Lord Triesman. So far as I am aware, the agenda has not yet been set. However, I am confident that China/Africa will be a subject of discussion in this as in many other multilateral fora.

The overall theme of the Beijing summit was “Amazing Africa: a continent of opportunity”. China very much accentuated the positives. That was very different from the tone of the Gleneagles summit, where we emphasised the approaches that the international community and Africa need to take to achieve poverty reduction. However, we do not believe that those emphases are contradictory. Africa is, and should increasingly be, a continent of opportunities for Africans and foreign partners. But long-term economic opportunities depend on peace and security, sound economic and political governance and a focus on sustainable development and poverty reduction. I rather liked the analogy of the noble Baroness, Lady Rawlings: we want peace as well as pipelines.

China’s economic engagement has many positive features. It has boosted growth rates, improved trade balances, increased government revenues and provided cheap goods for African consumers. But with opportunities come important challenges. Chinese exports compete with African products in African and overseas markets. There have been concerns about Chinese loans neutralising debt-relief efforts by the UK and other OECD countries. There are also issues of environmental impact, transparency and the appropriateness of some Chinese infrastructure projects. China’s approach is built on her stated policy of non-interference in internal affairs, and that must worry many of us.

Then there is Darfur and Zimbabwe—subjects that were raised by many noble Lords, including the noble Baroness, Lady Rawlings. As my noble friend Lord Triesman said last week in your Lordships’ House, China is now a great world power and with that comes a responsibility which goes further than commercial interests. This week, President Hu held private talks with President Bashir about the critical situation in Darfur. I am confident that he delivered strong messages about the urgent need to resolve the crisis. I hope that the messages will be heard and heeded.

Clearly, there are some differences in our approaches towards Africa, but it is crucial that all African partners support Africa’s own commitments to sustainable development, including good governance and sound economic management. That is in the long-term interests of Africa and its partners, including China. Stable, well governed and prosperous countries make the best trade and investment partners. Zimbabwe, where Mugabe and his regime are destroying the economic base and destroying lives, where infant mortality is accelerating and where the average life expectancy is 37 years for men and 34 years for women, is perhaps the starkest example of where we hope that China can be more supportive of international efforts to encourage reform. As in Sudan, this is the right thing to do, but it is also in China’s self-interest to play by the international rules.

The most effective way to address our concerns is to work closely with China so that all our efforts support our common aspirations for development in Africa. The Government have undertaken a range of activities to do that. In 2005, the Prime Minister invited a Chinese representative to sit on the Commission for Africa. China’s engagement in Africa regularly features in ministerial contacts with the Chinese. In 2006, DfID hosted a delegation from China that reviewed how the UK manages its overseas development assistance. We invited the Chinese to observe the Development Assistance Committee peer review of DfID last year.

My noble friend Lady Whitaker and the noble Baroness, Lady Northover, rightly spoke of the need to engage with China to better support stability, governance and growth in Africa. The UK and China have recently agreed to meet at a senior level every six months to discuss international development issues and Africa. We have extended an open invitation to the Chinese to learn from our experience of providing ODA, and the EU and China have agreed to a structural dialogue on Africa.

China knows that the international community has a legitimate interest in the development of Africa and that this has a wider resonance in China’s own aspirations to play a responsible role in the global economy. The German G8 presidency has a focus on Africa and development, and as part of the G8 outreach programme China will be fully engaged on the Africa agenda by all G8 members.

We have used the high-level dialogue that we have established so far to stress the importance of good governance and sound economic management; to encourage the Chinese, who are strong supporters of the MDGs, to support more directly the poverty reduction programmes developed by African Governments; to take a more multilateral approach; and to join with the international community in tackling poverty.

We are encouraging the Chinese to endorse the principles of the Extractive Industries Transparency Initiative and to join the Infrastructure Consortium for Africa. At a meeting of the consortium last month in Berlin, held under the auspices of the G8, China participated for the first time as an observer. We very much hope that it will join soon. That is a very good example of the way in which we believe China is moving. At a meeting of the consortium last July, held in Addis Ababa, China sent a third secretary who played no role, but now its engagement is increasing and it really is participating.

Many noble Lords have spoken of the vast Chinese investment in physical infrastructure. Just this morning, at a meeting in your Lordships’ House, the extraordinary Wangari Maathai spoke of the Chinese-financed and built roads in Kenya. The roads are welcome, but cheap labour from China is not. That was graphically described by the noble Lord, Lord Jones of Cheltenham, when he spoke about Zambia and Botswana.

Transport infrastructure is particularly important for land-locked countries and investment in roads and bridges will help to stimulate further growth between African countries. Although that is an area that is still undeveloped for many economies on the continent, we want to ensure that the kind of infrastructure being provided is the kind that Africa needs, not just the Chinese. We are encouraging both the Chinese and African sides to pay more attention to the monitoring and evaluation of the commitments that the Chinese have made to Africa. We have approached a number of Chinese embassies in Africa and invited them to join established donor co-ordination groups. We are encouraging other OECD countries to have similar discussions.

China is already having a huge impact in Africa, and it will be increasingly important for development in Africa. That view is shared by African leaders, who understandably have strongly welcomed Chinese trade, investment and aid. However, if we are to achieve our shared objective of making Africa a driving force in the world economy and thus helping millions out of poverty, it is in our mutual interest and to our mutual benefit that we work together locally and globally to that end. The Government will therefore continue to build relationships with China so that the opportunities created by China’s rise have the maximum impact on sustainable development and poverty reduction in Africa.

My Lords, I beg to move that the House do adjourn during pleasure for five minutes.

Moved accordingly, and, on Question, Motion agreed to.

[The Sitting was suspended from 8.33 to 8.38 pm.]