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Chinese contracts and the reconstruction in RDC

Chinese contracts and the reconstruction in RDC. “Hence to fight and conquer in all your battles is not supreme excellence; supreme excellence consists in breaking the enemy's resistance without fighting.” Sun Tzu, 544-496 BCE. S.Marysse.

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Chinese contracts and the reconstruction in RDC

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  1. Chinese contracts and the reconstruction in RDC • “Hence to fight and conquer in all your battles is not supreme excellence; supreme excellence consists in breaking the enemy's resistance without fighting.” • Sun Tzu, 544-496 BCE S.Marysse

  2. ‘Chinese contracts and the reconstruction in RDC’ • Post-colonial de-and reconstruction of Zaïre/DRC: a reminder • China’s new geo-political ‘weight’ • The chinese foreign policy towards Africa:the new agenda • The DRC-China: recent tendencies • An analysis of the chinese contracts in the DRC • Conclusion: Red imperialism or reconstruction boost?

  3. 1.Post-colonial de-and reconstruction of Zaïre/DRC: a reminder • The unprecedented regress by 30 years neo patrimonialism and 5 years of international war • A relative succesful post conflict reconstruction (the first steps) • But , too little too slow productive investments

  4. Accumulation 1975 Wild Capitalism Formal sector Bad governance Good governance Survival activities SMME reproduction

  5. Accumulation 2003 Wild Capitalism Formal sector Bad governance Good governance Survival activities SMME reproduction

  6. 1.Post-colonial de-and reconstruction of Zaïre/DRC: a reminder • Zaire/DRCongo, the implosion of the formal economy and the decline of the state

  7. 1.Post-colonial de-and reconstruction of Zaïre/DRC: a reminder(ctd) • Some background to the copper and cobalt sector • 1967: nationalisation of UMHK: the promise and the demise-Belgian and Congolese actions/reactions • Gécamines ‘the father and the mother of the congolese’ :rise and fall • Property –production –management: the problem of political economy • Some technical points

  8. 1.Post-colonial de-and reconstruction of Zaïre/DRC: a reminder Contribution of Gécamines to the state budget (in %): 1980-2006

  9. 1.Post-colonial de-and reconstruction of Zaïre/DRC: a reminder(ctd) • Some background to the diamond sector: evolution of artisanal/informal exports as % of total diamond exports

  10. 1.Post-colonial de-and reconstruction of Zaïre/DRC: a reminder(ctd) • Some background to the diamond sector: evolution of artisanal/informal exports as % of total diamond exports

  11. 1.Post-colonial de-and reconstruction of Zaïre/DRC: a reminder • Inflation and growth in the post conflict period • Elections 2005: the nation has saved the state and now it is the state who has to save the nation

  12. But governance is still a serious problem

  13. 2.China’s new geo-political ‘weight’

  14. 3. The chinese foreign policy towards Africa: the new agenda (1) • From Bandung (1955) to Focac (2006)/continuity and discontinuity • China’s stance for an independant South South Cooperation, ‘Non Aligned countries (1954 Zhou en Lai) Five principles • Forum for Chinese Cooperation with Africa convened 46 african countries in Beijing (2006) Non interference-respect for national sovereignty- no strings attached- mutual respect –mutual benefit (Win–Win relation)

  15. 3. The chinese foreign policy towards Africa: the new agenda (2) The evolution of African trading partners (1)

  16. 3. The chinese foreign policy towards Africa: the new agenda (3) The evolution of Chinese oil imports

  17. Infrastructural works in exchange for mineral resources :barter reinvented? First national entreprises followed by market penetration Cheap, relative good quality Few linkages for the local economy (imported skilled & non-skilled workers, low salaries) Easy marketpenetration, low level of international competition for chinese companies. 3. The chinese foreign policy towards Africa: the new agenda (4) Chinese infrastructural investments in Africa

  18. 3. The chinese foreign policy towards Africa: the new agenda (4) Chinese FDI in Africa: characteristics and importance • A modest but increasing part: accumulated I during the last 3 years (1,5 billion $ whereas total FDI equals 47, 5 billion $ in Africa) • Special characteristics • Chinese investment is state led (longer time horizon , less transaction- and coordination costs-unity of command) • Chinese FDI is also linked to aid and geo-strategic choices – access to mineral resources • Access gate to mineral resources is aid for infrastructural (re)construction where China has a competitive edge (low cost-reliable execution…)and ample financial resources

  19. 4.The DRC-China: recent tendencies(4)

  20. 5.An analysis of the chinese contracts in the DRC(1) • 2008 Sino congolese contracts - 8.5 billion$ infrastructural investments (rehabilitate 3500 km of tarred roads and 3200 km of railways. What is more, 32 hospitals, 145 health centres, two universities and 5000 houses will be constructed 8.05 million metric tons of copper, 202,290 metric tons of cobalt and 372 metric tons of gold. Aggregate production has been valued at $3 billion dollars

  21. 5.An analysis of the chinese contracts in the DRC(2) Characterisitics • It is a unique document which includes commercial relations and investments, development cooperation and financing for a period of 30 years. • barterprinciple as a new form of honest cooperation • ‘win-win’ principle • Chinese will have two thirds of the votes, while the Congolese government has one third. • 30 years and the absence of coordination costs. • the extremely liberal exemption conditions. Article 6 of the Protocol specifies that the companies will also be exempted from all possible taxes

  22. 5.An analysis of the chinese contracts in the DRC(3) • The impact of the agreement on geopolitics: intensification and restructuration of international rivalries • Quote from G.Forrest, the most important investor and employer of private formal employment in Le Monde “If we let them [the Chinese] go ahead, they are going to shut us out of Africa. The West talks about good governance and attaches some impossible conditions to its development aid. The Chinese niggle less and they are taking the best parts”

  23. 5.An analysis of the chinese contracts in the DRC(4) • The impact of the agreement on internal development • Trade: unequal exchange • Tied aid-weak employment linkages-maintenance of infrastructure-no tax revenue-new debttrap-resource curse effects on governance

  24. Conclusion • Opportunities and challenges (unequal bargaining power in face of reconstruction needs) • Red imperialism? • New geo political era

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