[Marxism] BRICS -- R.I.P.

Louis Proyect lnp3 at panix.com
Thu Dec 3 07:10:10 MST 2015

NY Times, Dec. 3 2015
China’s Slowdown Tarnishes Economic Boom in Copper-Rich Zambia

NDOLA, Zambia — Pulling up in his white Mercedes S.U.V., Liu Youbin 
shouted over the din of the construction site where Chinese supervisors 
in red uniforms and helmets watched over a couple of dozen Zambian 
workers. He vaunted the speed of Chinese construction crews, later 
handing out a pamphlet that read, “Dollar Hill Shopping Mall, Wholesale 
City & Amusement Park. Coming Soon!!!”

But for all the frenetic activity, Mr. Liu could not hide his pessimism. 
Plans for the mall here were drafted five years ago, he said, when 
Zambia’s economy was roaring.

“Before, everything was great,” he said. “Now, we lose money every day.”

For more than a decade, this mineral-rich nation in Southern Africa 
offered prime evidence of the continent’s rise, its soaring economy 
propelled by China’s seemingly insatiable appetite for its copper. 
Deepening ties brought new roads, hospitals, stadiums, all built by the 
Chinese, most completed ahead of schedule.

China’s Slowdown Raises Questions About Long-Term GrowthNOV. 4, 2015
But China’s economic slowdown has caused Zambia’s economy to tumble. 
Thousands of jobs have been lost, and the outlook is now so grim that 
Zambia recently held a national day of prayer to revive its currency, 
one of the world’s worst performers this year.

The emergence of a new consumer class across Africa in the past decade, 
as well as growth and investment in the service sector, fueled hopes of 
sustained economic expansion on the continent. But the quick downturn in 
recent months in many of Africa’s fastest-growing economies suggests how 
much of the impressive growth in the past decade and a half was still 
driven by a boom in commodities — one supercharged by China.

Now, China’s demand for raw materials has cooled, as it tries to shift 
its economy away from construction, investment and exports to one driven 
by consumption and services. That transformation is already jolting 
countries in Africa, from those with diversified economies, like South 
Africa, to those dependent on a single export, like Zambia or Angola, 
even as the Chinese government and businesses express long-term 
commitment to the continent.

The Chinese president, Xi Jinping, arrived in South Africa on Wednesday 
for a visit that will include a two-day diplomatic summit meeting, the 
China-Africa forum, the sixth such event since 2000.

In a sign that China is moving beyond its focus on Africa’s raw 
materials — and perhaps in response to critics who say that the benefits 
to Africa from that focus have been limited — Mr. Xi is expected to 
announce plans to help bolster industrialization and manufacturing.

Chinese businesses are still investing in Zambia and elsewhere. South 
Africa recently said that China had pledged $50 billion to help it 
industrialize, including the deployment of 200,000 Chinese industrial 
managers to train locals.

“It’s going to be interesting to see how much capacity, strength or will 
China has toward Africa during this period,” said Ross Anthony, the 
acting director of the Center for Chinese Studies at Stellenbosch 
University in South Africa. “If they play it right and show commitment 
irrespective of their own domestic issues, that could really cement 
relations between China and Africa, because there are many people in 
Africa that are still sitting on the fence.”

Here in the Copperbelt of Zambia, two mines have closed in recent weeks, 
after their owners blamed the low price of copper and Zambia’s worsening 
electricity shortages for rendering their businesses unprofitable. Six 
thousand workers have lost their jobs. But the shock was compounded by 
the fact that one of the mines had a Chinese owner, the China Nonferrous 
Metals Company.

“People expected China, or Chinese companies, to be the last to retrench 
workers,” said Godfrey Hampwaye, an economic geographer at the 
University of Zambia and an expert on relations between China and 
African countries. “People thought China was Africa’s best friend.”

Zambia’s president, Edgar Lungu, who faces an election next year, 
recently spent five days touring the Copperbelt in an attempt to assuage 
rising anger, but he was often met with jeers.

China surpassed the United States in 2009 as Africa’s biggest trading 
partner. But as its demand for commodities has diminished — helping to 
bring down the worldwide prices of everything from copper, iron ore and 
oil to coal, diamonds and gold — many other African governments are 
confronting yawning holes in their budgets.

Some previously high-flying, commodity-dependent countries, like Zambia, 
Angola and Ghana, have borrowed heavily from international creditors in 
recent months to raise badly needed cash. With creditors now demanding 
higher interest rates, the debt load of some African nations has started 
to increase, a decade after the debts of many African countries were 
written off.

The continent’s two biggest economies, Nigeria and South Africa, are 
slowing down, contributing to what the International Monetary Fund said 
would be 3.75 percent growth in sub-Saharan Africa in 2015, the slowest 
rate since 2009.

In some nations that sell commodities to China — including Angola, the 
Democratic Republic of Congo and the Republic of Congo — authoritarian 
governments with shrinking resources to quiet political challengers are 
responding with increasing force.

Here in Zambia, as well as in many other African nations, there are few 
signs that governments used the profits from the commodities boom to 
diversify their economies and to make them less dependent on foreign 
investors and less subject to cycles of boom and bust. Copper, which 
makes up more than 70 percent of Zambia’s exports, is now worth less 
than half of its peak price just a few years ago.

“The time for reckoning has come because we have been putting all our 
eggs in one basket,” said Nkole Chishimba, the president of the Zambia 
Congress of Trade Unions, the country’s largest labor umbrella 
organization. “Zambia, since independence in 1964, has talked about the 
need to diversify beyond copper, and we have just missed another great 
opportunity to do that.”

Zambia could have used revenues from the copper boom to develop other 
areas, like agriculture and tourism, Mr. Chishimba and others said.

Some Chinese here say they will keep doing business as Zambia rides out 
its current slump.

“Long-term, this place is still a good investment,” said Mr. Liu, 35, 
the businessman behind the new shopping center here, near the Levy 
Mwanawasa Stadium, one of two stadiums that China has built in Zambia.

His family, which is from Fujian Province, founded Mei-Mei Zambia 
Limited about eight years ago as a manufacturer of concrete blocks, and 
is expanding its business by building the shopping center.

Many Chinese noted that China’s engagement with Zambia dated back to Mao 
Zedong, under whom China built a railway linking Zambia and Tanzania in 
the mid-1970s, a huge project that still earns China good will on the 

That history, and the business opportunities here, still draw Chinese 
like Yu Qi, 26, a physician from Jiangxi Province. After completing his 
residency, Mr. Yu said, he joined his large family in Zambia, where he 
helps manage a copper mine in Chingola, about 100 miles northwest of here.

“Zambia’s full of opportunity,” he said.

An uncle, he explained, had stayed in Zambia after completing a 
government project two decades ago. He founded a company that now has 
several divisions and employs 10 family members, including Mr. Yu, who 
runs China Copper Mines in Chingola.

One of the mine’s owners, Richard Zhang, 54, began working in the copper 
industry in Jiangxi Province in 1982, just a few years after China 
embraced market policies.

“Twenty or 30 years ago, China was also very poor, even poorer than this 
stage of Africa,” Mr. Zhang said. “After we bring these new ideas and 
technology to Africa, maybe after 20 or 30 years, Africa can maybe 
surpass China. I would be happy to see that.”

 From the early stages of China’s economic modernization, the government 
ensured that Western and Japanese companies seeking to do business in 
China, including in the copper industry in Jiangxi, transferred skills 
and technology.

But Zambia and other African nations appear to have failed to benefit 
broadly from the commodities boom, whether by not negotiating better 
terms with Chinese companies, not insisting on technology transfers or 
not using the revenues from raw materials to diversify their economies.

“We have to look inwards as sub-Saharan Africa,” said Kryticous 
Nshindano, the executive director of the Civil Society for Poverty 
Reduction Zambia, a good-government organization. “Is it an issue of 
leadership, institutions, corruption? We know what we’re supposed to do, 
but why are we not doing what we’re supposed to do?”

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