African Economic Revival?

In the last decade of the twentieth century the African continent was torn apart by wars, with millions of refugees, and half the population living on less than $1 per day. The continent had become a net exporter of capital to the central capitalist countries and its share of world trade and foreign investment has declined relentlessly ⁽¹⁾. The Western capitalist powers who controlled the flow of capital to Africa had imposed Structural Adjustment Plans as conditions for loans. In most cases these plans had led to Western capital taking over the profitable sectors of the economies, and had only made the situation of poorer African states worse. The debt forgiveness programmes adopted by the G8 group of major capitalist powers ⁽²⁾ is an implicit recognition of this. In addition to debt relief, there has also been some attempts to bring an end to some of Africa’s wars, most of which are caused by the catastrophic economic situation. The last four years have seen a revival of economic growth, which nominally averaged 5.5%, and an increase in capital investment.

Much of this growth has been brought about by a rise in prices of raw materials, such as oil and minerals, and the countries which possess these resources have experienced the highest growth. ⁽³⁾ While the rise in demand for raw materials is itself a consequence of the rapid economic growth in China, India and other Asian countries, the growth in African economies has been spurred by massive Chinese investment in the continent. Chinese capitalism is desperate to get its hands on Africa’s raw materials and has mounted a massive campaign of investment which has resulted in total Chinese investment in Africa now being approximately $9bn. Although this amount is only approximately half that of the total US capital investment, the annual rate of Chinese investment of around $1.2bn is now greater than that of the US. In addition trade between Africa and China, which in 2007 amounted to $70bn, now exceeds that of the US with Africa. It is clear that China is emerging as an economic power challenging the dominance of the US and European powers in Africa. Such a challenge is, at root, part of the general struggle for the division of the surplus value produced by the world’s working class and will, in time, be translated into an imperialist struggle. Already regions of conflict are emerging where China is frustrating the US and Europe in order to protect its own interests. Sudan and Zimbabwe are cases in point...

China has developed the Sudanese oil industry, from the primary work of drilling and finding oil, to that of building pipelines and an oil refinery. Sudanese oil output is now over 500 000 barrels per day, two thirds of which goes to China. China supplies the regime with weapons and has deployed some of its own soldiers to protect the thousands of Chinese workers in the country. All this has outraged the US since US oil companies were previously the ones exploiting Sudanese oil fields. US attempts to isolate and overthrow the Sudanese regime, which materialise in demands for oil embargoes at the UN, never see the light of day because of the threat of Chinese veto. This is probably why the International Criminal Court of Justice has been persuaded to indict the President of Sudan, Omar Bashir on war crimes charges over Darfur. ⁽⁴⁾

In a similar way, the Chinese are exploiting the US and Europe’s quarrel with Zimbabwe and providing the Mugabe with fuel and foreign exchange in return for minerals ⁽⁵⁾. Recently, China and Russia vetoed a US resolution at the UN calling for an arms embargo and sanctions on the leadership of the regime. The suffering that this conflict of interests is producing in terms of economic collapse is now unimaginable. Inflation has reached 16 000 000% as illustrated by the photograph of a Zimbabwean cheque which we publish below.

Although the forces driving Chinese imperialism in Africa are fundamentally similar to those impelling the older imperialist powers, the form which Chinese imperialism takes is slightly different from that of US and European imperialism both past and present. This gives the Chinese an advantage over their rivals. To understand how this has come about it is necessary to briefly consider the economic rise of China and what lies behind this.

The Rise of Chinese Economic Power

In the modern era China has always been a capitalist country, it is only the form of capitalism which has been subject to change. After the victory of Mao Zedong’s so-called “communist” forces in the civil war in 1949, the majority of the capital and the land became the property of the state and the peasantry were collectivised in rural communes. These were reforms which left the fundamental relationship of the working class to the means of production as one of alienation, and the labour of the working class as that of “wage labour”. What was produced was a form of state capitalism and the model for the Chinese leadership under Mao was Stalinism in Russia. Chinese attempts at autarkic development after the break with Russia were a complete disaster. The so-called “Great Leap Forward” was a failure and the “Cultural Revolution” of the period after 1966 produced massive dislocation and economic chaos. After Mao’s death in 1976, the liberals in the Chinese Communist Party gained control and in 1978 a series of reforms were instituted under the leadership of Deng Xiaoping. These reforms, which were known as the “Four Modernisations”, liberalised the economy gradually. The labour-intensive rural communes were slowly phased out and greater mechanisation introduced. Farmers were allowed to lease land from the state and to retain profits on their rented lands. The increased capitalisation of agriculture, reforms to tenure and profit retention produced a sharp rise in productivity. However, at the same time, the less labour-intensive farming produced massive rural unemployment and the surplus population had no alternative but to move to the towns. This has resulted in a massive migrations of people directly comparable to those in Europe during the 18th and 19th centuries. Approximately 200 million people have moved from agricultural work in the interior to the coastal regions to try and find work as industrial wage labourers. The process is still far from complete and even today 43% of the workforce6 is still agricultural and it is estimated there are still 130 million excess workers in agriculture ⁽⁷⁾. These workers will also be forced off the land in the coming period. At the same time there has been a savage rationalisation of state enterprises, productivity has been increased and tens of millions of jobs have been axed ⁽⁸⁾. The economy has been decentralised with provinces and municipalities becoming independent profit centres with freedom to invest these profits in whatever activity is the most profitable. Sections of the state owned enterprises have been partly privatised, for example banking, and a private sector established. A stock market has been established for raising capital and enterprise zones established for the operation of foreign capital. These zones are attracting massive amounts of capital to China and, in 2007 alone, $75bn of foreign direct investment poured into Chinese enterprise zones. Foreign trading of Chinese enterprises has been allowed and by 2007, 5000 Chinese enterprises were trading in 172 foreign countries ⁽⁹⁾. Some Chinese commentators see these reforms as modelled on the New Economic Policy, which the Bolsheviks implemented in 1921. However, one does not have to look so far back in history to find the parallel to these policies. The measures adopted by the central capitalist countries in the late 70s and 80s in the face of the collapse of the post-war reconstruction period are strikingly similar. These policies served to increase the exploitation of the working class and increase profits by economic liberalisation, privatisation of the state sector, restructuring and rationalisation of industry and the export of capital. The reforms of the period since 1978 have made Chinese capitalism virtually indistinguishable from Western capitalism in most important respects and, since they are simply reforms, they give the lie to any claim that China was ever anything other than a capitalist economy. As a major capitalist country, it is no surprise that China has emerged as an independent imperialist power challenging the status quo in key parts of the globe.

The reforms have, however, had a dramatic effect. The size of the Chinese economy has grown by a factor of ten in the three decades since 1978. China has become the third largest trading country in the world and, after Germany, the second largest exporter. In 2007 China’s commodity exports were valued at $1141bn. This has made China the country with the world’s largest trade surplus. At present China holds 25% of the world’s foreign currency reserves. This in turn has made China the largest exporter of capital in the world. ⁽¹⁰⁾ Half of the Chinese GDP, which in 2007 was $6.99 trillion, comes from industrial production. This massive growth requires an ever increasing stream of raw materials and energy to be sucked into China. In 2006, for example, China consumed 25% of the world’s aluminium production, 23% of its copper, 30% of its zinc, 18% of its nickel ⁽¹¹⁾ and its energy consumption is second only to the US. If the present growth rates are maintained, we can expect the amounts of raw materials and energy the economy demands to grow exponentially.

It is primarily the quest for raw materials and energy which is causing Chinese enterprises to scour Africa and other areas for these resources. However, before examining the forms of Chinese imperialism in Africa, it is worth considering how such enormous growth and accumulation of capital has been achieved.

Exploitation of the Chinese Working Class

The reforms of the last three decades have massively increased the size of the Chinese working class. As mentioned above, approximately 200 million ⁽¹²⁾ agricultural workers have been pushed off the land to the cities. In addition, the rationalisations and restructuring of the state enterprises made about 59 million workers redundant in the ten years between 1995 and 2005 ⁽¹³⁾. The expansion of the economy, particularly the private and service sectors have created millions of new jobs, but nowhere near fast enough to absorb the millions leaving the countryside and those sacked from the state sector. In the period between 1995 and 2005 only 16 million new jobs were created ⁽¹⁴⁾ but this was less than a third of the number of jobs lost in the state enterprises. The International Confederation of Free Trade Unions (ICFTU) calculates that China will need to create 300 million new jobs by 2015 if it is to absorb those expelled from the land and the job losses from the state enterprises. This is an impossible task. Chinese capitalists, together with international capitalists in the enterprise zones, have at their disposal an enormous number of workers prepared to work for very low wages. It is estimated that in the cities there are about 30 million unemployed. These workers not only keep Chinese wage rates down but are willing to work abroad either for Chinese state enterprises, or on contracts or simply as legal or illegal emigrants - 18 million Chinese have moved abroad legally since the reforms of 1978 and have settled in 150 different countries. Workers are finding ways to go to Africa, Europe and the Americas to work as unskilled or semi-skilled workers. ⁽¹⁵⁾

The conditions of the Chinese working class today are as bad as those of the British working class in the 1840s. 250 million workers and their families live on less than $1 per day and 700 million, 47% of the population, live on less that $2 per day. Workers often work 60 to 70 hours per week ⁽¹⁶⁾ and the safety of work in Chinese factories and mines is notoriously bad. It is this vicious exploitation of the Chinese working class which is producing this massive accumulation of capital which we are today witnessing.

Chinese Imperialism in Africa

Lenin, in his book Imperialism the Highest Stage of Capitalism, views imperialism as the final stage in the development of capitalism. He saw monopolies as having distorted the capitalist market and undermined free competition which in turn ushered in the imperialist phase. This phase was, he argued, producing a socialisation of the means of production and the world economy itself, and thus preparing the ground for a higher system of production, namely socialism. The key characteristic of the imperialist stage, he maintained, was the export of capital. ⁽¹⁷⁾ Although Lenin wrote his pamphlet in 1916, and it is not a complete description of today’s world, the phase which the global economy entered after the collapse of the post war reconstruction period in the early 70’s bears a close resemblance to Lenin’s description of imperialism. This period has been driven by the export of capital rather than the export of commodities, and, in general, the strongest imperialist powers have exported the largest amounts of capital. The objective of this export was clearly to drain surplus value from workers in other regions of the world to the capital exporter countries. Between 1966 and 1978, for example, US multinationals exported $50bn of capital worldwide, which, in the same period, produced a repatriated sum of $132bn in dividends, interests and royalties. ⁽¹⁸⁾ Since the 1980s the flow of capital exported has increased astronomically, as has the flow of profits to the central capitalist countries ⁽¹⁹⁾. As has been said above, China has now emerged as the world’s largest exporter of capital and thus must be considered as a major imperialist power in its own right. Much of the capital exported by China is to the US and it is an indication of the decline of the US as an imperialist power, that it is now a net importer of capital. This does not, of course, prevent the US remaining the world’s major imperialist power, despite the export of capital being, in Lenin’s analysis, the hallmark of imperialism. The main reason for this is that the US, through its control of the dollar, is able to extort surplus value on a global scale in a way which would have seemed impossible when Lenin was writing his pamphlet in 1916. This will remain the case as long as the dollar remains the currency of commodity trading, and the global reserve currency, and is backed by nothing more than US decree and US military force.

China’s export of capital to the older capitalist centres is, however, an indication of a gradual change taking place in the world’s imperialist order. China, through its sovereign wealth funds, is lending capital directly to governments, to banks, to investment houses as well as advancing capital for industry. This is illustrated by the fact that China today owns 20% of all US treasury bonds, and has bought a $3bn stake in Blackstone, one of the largest US private equity firms. It has also taken a $3bn stake in UK’s Barclays Bank, and a $14bn stake in Rio Tinto mining, and has bought and reopened the UK’s car manufacturer Rover. Many other examples of Chinese investments could be listed but these are sufficient to indicate that China is now becoming a significant exporter of capital to the central capitalist countries.

Export of Labour Power

In Africa, a continent where traditionally the US and European powers have been the major exporters of capital, China is starting to mount a challenge. Chinese companies have invested approximately $5bn in the Sudanese oil industry, $2bn has been lent to Angola, $300 million has been invested in Zambian copper mines, etc. However, a novel feature of Chinese imperialism in Africa is that it is also exporting Chinese labour power.

As has been discussed above, China has a massive reserve army of labour and Chinese enterprises are exporting their cheap labour to Africa to work on industrial and infrastructure projects. China’s exploitation of Sudanese oil, for example, has resulted in between 10,000 and 20,000 Chinese imported into the country to carry out construction work and build plants and operate them when they are completed. In Angola there are, according to the BBC ⁽²⁰⁾, tens of thousands of Chinese workers employed in construction work rebuilding roads and railways. Angola is paying for this work by exporting oil to China and is now the country’s largest supplier of oil. There are thousands of Chinese in Zambia where the Chinese actually own copper mines and smelters. Similarly in the Democratic Republic of Congo, Chinese companies own mines and smelters and are bringing in thousands of workers. In many other countries in Africa the story is much the same. In these cases the Chinese enterprises, generally state enterprises, are using cheap Chinese labour power to get their hands on oil, minerals, timber or other raw materials. This is an apparent inversion of the export of capital, which Lenin saw as the hallmark of imperialism; however, the essentials of the relationship of capital to labour are absolutely unchanged. Capital needs labour to produce surplus value and to accumulate capital. It is simply the case that the most productive and cheapest labour power that Chinese capitalists can get hold of is Chinese. There is plenty of it and it is dirt cheap. This is what Lui Ping, a Chinese manager of China National Overseas Engineering Corporation, working in Zambia, had to say about employing Chinese workers there,

Chinese people can stand very hard work. This is a cultural difference. Chinese people work until they finish and then rest. Here they are like the British; they work according to a plan. They have tea breaks and a lot of days off. For our construction company that means it costs a lot more. ⁽²¹⁾

Capitalists have always looked for the most productive and cheapest labour power. This is not, in fact, the first time that Chinese workers have been imported into Africa by capitalists for the very reasons which Liu Ping so eloquently gives. After the Boer War in 1904 the British bourgeoisie imported 60,000 Chinese workers to work in the gold mines. Whereas African workers would only work in the mines for £2.58 per month, Chinese miners could be employed for only £1.87 per month (1905 prices) which produced a saving on labour of about 30% ⁽²²⁾. This served to increase productivity on the mines and allow capital investment to occur in the period following the disruption caused by the war.

Today, a century after the British capitalists repatriated the Chinese workers they brought to Africa for the South African gold mines, Chinese workers have been brought back in similar numbers, but by Chinese capitalists. All that is different is the nationality of the capitalists who are today bringing them back, but the reasons are the same. A further interesting parallel between 1904 and the present is that when the Chinese workers were brought to the South African mines they were kept in compounds away from other workers and this is precisely what the Chinese employers are doing today. Chinese workers live in gated camps and are kept separate from local workers even though they often have to work with them during working hours. This is clearly to prevent workers discussing their conditions and, who knows, uniting against their exploitation.

Relationship between Capital and Labour Remain the Same

However, despite importing thousands of Chinese workers, Chinese capitalists also have to employ African workers in ever greater numbers and familiar patterns associated with Western imperialism are emerging. Even Lui Ping, whom we quoted above, despite his eulogy of Chinese workers’ hard work, admitted that he employed 15 Zambians for every Chinese worker. The Zambians, needless to say, resent the brutal conditions, low pay and lack of safety at work. In March this year there was a riot at a Chinese owned copper mine by Zambian workers in which the mine manager was beaten up.

In addition other sections of the Chinese bourgeoisie are making their way to Africa. In the wake of the state companies significant numbers of Chinese traders are arriving to open stores to sell Chinese commodities. Africa is thus forming a market for Chinese manufactures as well as providing its industry with cheap energy and raw materials.

A further development which closely mirrors the Western capitalists’ export of capital to Asia is the development of enterprise zones in various African countries. Chinese capital can operate in these zones using local labour and gain tax advantages. Chinese textile and leather factories have been set up zones in Zambia, Sierra Leone and Liberia. A further advantage of this arrangement for the Chinese is that the exports from these zones are not classed as Chinese and thus evade the US and European quotas. Workers are subjected to Chinese conditions of exploitation with very low pay. When the Chinese premier Hu Jintao visited Zambia in 2007 he was greeted by thousands of protesting Zambian textile workers and copper miners.

The African ruling class is delighted with the Chinese penetration of their continent because they carry out work cheaply and quickly and provide access to cheap loans. The US and European ruling class is, of course, far from delighted at seeing their position and their source of profits undermined. Although Chinese use of cheap and docile imported Chinese labour power gives Chinese capitalists an enormous advantage over their US and European rivals, the fundamentals of the relationship between labour and capital remains unchanged. Chinese capitalist are draining surplus value from Africa to China in ways which make the relationship an imperialist one. This is part of the global struggle of imperialist centres to divide up the surplus value produced by the world’s working class.

Workers, whether they are African or Chinese, are both confronted by capitalism in all its savagery. The nationality of the capitalists who own the capital which exploits workers does not matter. The fact that Chinese workers can be shipped around the world like cattle, punished or sent home if they complain, shows what the Chinese capitalists really think of them. They see them simply as wage labourers to be exploited until they drop. The reality is that the working class does not have a nationality. African and Chinese workers need to unite as workers and fight against their abominable treatment. This is a struggle which must put the abolition of the system of wage labour as its goal. This is the only path to a higher form of society.

CP

(1) See “Africa: Showcase of Capitalist Decline” in Revolutionary Perspectives 31.

(2) At the 2005 Gleneagles summit, the G8 agreed to cancel $55bn of debt to the following African countries Benin, Burkina Faso, Ethiopia, Ghana, Madagascar, Mali, Mauritania, Mozambique, Niger, Rwanda, Senegal, Tanzania, Uganda and Zambia and to four Central American and South American countries: Bolivia, Guyana, Honduras, Nicaragua.

(3) In the period 1996-2005 the fastest growing economies were Equatorial Guinea (30.8%), Sao Tome and Principe (7.1%), Angola (8.5%), Botswana (6.7%) and Sudan (6.3%). All these countries have oil resources, apart from Botswana, which has diamonds. The recently discovered oil wealth of Equatorial Guinea prompted a group of British mercenaries, funded by Mark Thatcher, son of ex-UK prime minister, to try and mount a coup in 2004

(4) For more on the Sudan see “Behind the Smell of Blood in Darfur Lie Imperialist Interests” in Revolutionary Perspectives 40.

(5) See Revolutionary Perspectives 46, “The Zimbabwe Crisis and Chinese Imperialism in Africa” and Revolutionary Perspectives 40, “As Economic Collapse Looms the Vultures Gather”. Available from the group address or on line.

(6) China’s workforce is estimated to be 800 million.

(7) See Revolutionary Perspectives 31, “Under the Banners of Imperialism - the anti-Globalisation Movement at Cancun”.

(8) In the decade 1995-2005, 59 million jobs were lost in the state enterprises. The Financial Times reported, with evident admiration for the Chinese bourgeoisie, that the state enterprises had been changed from basket cases into engines of profit. In 2007, the combined profit of 150 state companies was 90 billion euros (see Financial Times, 17th March 2008 “China’s Champions”).

(9) See cia.gov .

(10) See Financial Times 23rd January 2008, “China changes the whole world”.

(11) See Financial Times 23rd January 2008, “China changes the whole world”.

(12) See “Chinese Migration goes global” yaleglobal.yale.edu .

(13) See Financial Times 9th December 2005.

(14) See Financial Times 9th December 2005.

(15) This is producing a global lowering of wage rates. As an example, Chinese women textile workers now work in Romanian textile factories for $260 per month which is four times more than they could earn in China but this is a wage which Romanians cannot survive on.

(16) See Financial Times 9th December 2005.

(17) See Imperialism - the Highest Stage of Capitalism, section 4.

(18) See Deepening Crisis of US Capitalism, H Magdoff and Paul Sweezy p163.

(19) UNCTAD reports that in 1980 there was only about $50bn of capital invested as Foreign Direct Investment (FDI), whereas by 2005 the figure had risen to $916bn. An increase by a factor of over 18.

(20) See BBC news 4th December 2007.

(21) See Guardian .

(22) See T Davenport South Africa - A Modern History. Rates of pay are in 1905 currency.