Environment & the World

Saturday, December 2, 2006

China’s “development aid” to Africa

Filed under: China, Development, Environmental Justice — Cathy @ 5:26 pm

I want to follow up on my earlier post discussing China’s increasing involvement in Africa’s extractive industries.  At November’s China-Africa summit, Chinese Prime Minister Hu Jinbao made a number of promises for increasing aid to Africa, including doubling China’s aid money to Africa by 2009, giving debt relief to impoverished nations with diplomatic relations with China, and setting up a US$5 billion fund to encourage Chinese companies to invest in Africa (http://english.people.com.cn/200611/04/eng20061104_318372.html).

However, this does not guarantee that any of the problems I discussed in my previous post regarding the environmental and human rights violations from extractive industries will be resolved.  Many African newspapers are less than enthusiastic about China’s increasing role in their continent, citing concerns over human rights abuses and a lack of commitment on the part of Chinese companies to sustainable development.  A recent article discussing China’s business dealings in Zambia is a case in point.  As part of the new aid package for China, Zambia would receive debt relief and would be the site of a new economic zone for China.  However,

“locals have become less enthusiastic about China’s embrace, largely because of poor labor practices … Ministry of Labour and Social Security permanent secretary, Ngosa Chisupa, said ‘about 80 percent of foreign investors in Zambia do not remit anything to the pensions board for employees, they don’t give employees any benefits upon termination, and the employees are made to work without any signed contracts on the conditions of service.’” 

Last year, 51 Zambian miners were killed in an explosion at China’s biggest mine in Zambia.  Foreign investors can get away with ignoring Zambia’s labor laws thanks to corruption on the part of Zambian government officials. 

So, despite the promises of increased aid money to Africa, there is no guarantee that Chinese corporations will start acting more responsibly.  And, given China’s own lax labor standards, it seems unlikely that the Chinese government will exert any serious influence on its companies’ business dealings in Africa.  It seems clear that the only way around this impasse is the development of international laws government multinational corporations; a report by the UK charity Christian Aid (http://www.christian-aid.org.uk/indepth/0401csr/index.htm) argues quite powerfully for such international laws requiring corporate social and environmental responsibility.  As the report says “when a company’s primary legal obligation is to make profit for its shareholders, its human rights and environmental responsibilities must also be legally binding.”  Because so many multinational corporations have separate branches operating in different countries to limit their liabilities, it is difficult for national laws to be applied.  The report argues that the EU and international financial institutions like the World Bank should play a large role in developing and implementing such regulations; certainly, a commitment by the World Bank to only finance projects run by companies satisfying social responsibility criteria would go a long way towards solving this problem.  Of course, given the Bank’s historical lack of interest in environmental concerns, this would basically be a revolution in the Bank’s lending practices.  It seems to me that the pressure to develop and enforce such international laws would have to come from outside.   In short, it is likely going to be up to concerned citizens and NGOs in the developed world to make sure that the investments that China and other countries make in African development will truly contribute to improved living conditions in the region.

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