Power Hungry? China, Africa, Oil and Influence.

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The fierce rivalry between the President Kiir and former Vice President Machar is being blamed for the current conflict in Southern Sudan with thousands of refugees currently fleeing the country, there are now dire warnings for the onset of civil war in the world’s youngest state. Many foreigners have also been forced to leave the country and for a group of Chinese oil workers by the Nile River events looked particularly dangerous as they were stranded and besieged by fighting in the region. Foreign workers are often a tempting target for militias intent on kidnap ransoms. However in this case some swiftly made phone calls from Beijing soon got them out of trouble.

This exertion of influence should not really be a surprise given China is the principal customer of South Sudan’s oil and the country is totally dependent (98% of exports) on supplying it. Chinese oil firms such as China National Petroleum Corporation have considerable assets in the country and the continuing uncertainty and instability could mean that South Sudan is where Chinese diplomacy finally makes the break from non-interference and a sharp focus on trade and business to a new era of creative involvement, intervention and direct political and perhaps even military activity.

It’s nearly eight years since the most significant watershed in modern Sino-African relations, namely the 2006 FOCAC Forum in Beijing. Although we now largely take the strength of Sino-African relations for granted, back then relationship was still crystallising, trade was rapidly expanding and while China had long standing relationships with countries like Egypt and Algeria, these ties had stagnated during the 1970s and 1980s, so the 2006 FOCAC acted as an affirmation of ties between Beijing and a multitude of African nations. The highlight of the forum was President Jiang Zemin making some amazing promises; the $US 5 billion CADfund, the construction of a new AU building in Addis Ababa, debt cancellations and the construction of Shenzhen inspired free trade zones (now operating in Nigeria, Egypt, Mauritius, Zambia and Ethiopia), no wonder Africa has the most positive perception of China anywhere in the world

Although at this time China wanted diplomatic support for Taiwan and new markets for its goods, Chinese policy makers must also have had African oil supplies firmly in their sights. Compared to the Middle East, Africa is a relatively undertapped market with Western majors often frightened off by dangerous conditions in the politically unstable Congos and Sudans of the continent. Oil by some estimates makes up 80% of Chinese imports from Africa. While Saudi is the single biggest supplier, Angola and Sudan are also major providers and crucially the underdevelopment of these and other African states means that Chinese companies (and by proxy the state), have a greater chance of controlling oil production facilities, giving them more leverage over the supply. Sudan is much more dependent on China for technical expertise, political goodwill and support, compared to Saudi Arabia or Kuwait.

Aspiring superpowers typically want just more than supply; they want control and this is one of the reasons why oil drives states into conflicts, coups and wars like no other commodity. While crude’s importance in the overall Sino-Africa trade portfolio may decline in relative terms as other products see faster growth, the importance of African oil may actually increase as China demands more ever more energy and the continent sees new acreage opening up in countries like Ghana and Uganda. Investment in clean energy is the best bet to offset this trend (and climate change), but the Chinese energy market is like a supertanker that will take years to turn around and into the direction of solar, nuclear and wind turbines, until then oil will remain a key part of Beijing’s energy strategy.



Categories: China - Africa, China Goes Global, Geo-Economics, Kula Ring Trade Blog

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