[Marxism] BRICS -- R.I.P.
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
By NORIMITSU ONISHI
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
“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
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
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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