The Democratic Republic of Congo (DRC) languishes near the bottom of the United Nations’ (UN's) Human Development Index, fluctuating between last and second last position in recent years. The country remains blighted by conflict, particularly in its eastern regions, and endemic corruption is at the heart of government and public institutions, the latter fact leading the country to be ascribed the status of a “kleptocratic dictatorship” despite the introduction of democratic elections in 2006. However, buried deep beneath the surface of this violent and poor country, it is estimated there lies a staggering $24-trillion worth of wealth, primarily in the form of copper, cobalt and coltan – elements at the heart of technological manufacturing in the twenty-first century.

Enter China. Armed with the knowledge that the DRC contains approximately half of the world’s cobalt reserves and a significant portion (10%) of its high grade copper ore whose worth on the global market has increased enormously over the last decade, Chinese investors have flooded the country, notably since Joseph Kabila’s landmark election win in 2006. With a democratic government in place, a more favourable environment for the managing of resources and upholding of trade deals helped entice the Chinese to a much greater extent. This CAI paper explores the positive and negative effects of China’s influence on the DRC economy and its people. China is now the DRC’s largest investor. Optimists purport that increased Chinese involvement will drive the nation to recovery and prosperity, while pessimists believe that the country will be stripped of its vast resource wealth, which may enrich Congolese officials but keep the majority of the population trapped in poverty.

CHINA'S DRC “MARSHALL PLAN” – THE SICOMINES DEAL

Since the signing of the minerals-for-infrastructure Sino-Congolese trade deal in 2007, referred to as Sicomines, heavy debate as to its impact on the DRC’s strategic development has endured. This is unremarkable and quite expected as it is the single biggest economic venture the country has ever engaged in, with billions of dollars of investment coming into the country and billions of dollars’ worth of resources being extracted. The deal has undergone an evolutionary process since 2007 and mining has yet to officially begin, with latest reports indicating a start date of late 2015. A number of grey areas existed with the onset of the agreement and throughout its negotiations. It was clear that the terms of the deal were not rigidly defined; media sources at the time reported approximate figures of ten-million tonnes of copper and anywhere between 400 000 t to 620 000 t of cobalt to be extracted by the Chinese in return for the construction of some roads, railways, hospitals, health centres and universities. Furthermore, such construction was dependant on profits determinable after extraction and supply to the marketplace. One can see why some Congolese politicians called the agreement “incoherent.”

The instability and precariousness of the DRC government has been observable, with decisions often reversed as quickly as they are made, and the likelihood of conflict interfering with operations has been a worrying factor vis-à-vis the Congolese end of the bargain. Surprisingly though, the deal has received blows from the Chinese side, with one of its chief parties, Exim bank, pulling out as a financier in 2012 before resuming its involvement the following year.

Of course, the Chinese are deeply involved in the economy of the DRC already. They have been mining for some decades now with a huge number of private artisanal miners living and working in the country. It is evident that a perception exists that all Chinese involvement comes vis-à-vis industrial mining contracts through state bodies. It is certainly true that the Congolese state-owned mining company Gecamines – which signed the Sicomines deal on behalf of the state – has dealt primarily with big Chinese businesses that are often state owned, however the idea of a homogenous Chinese-style state sponsored involvement in the DRC mining industry is an inaccurate portrayal of the reality.

PROMISES AND FEARS – CHINESE INFLUENCE

China’s Congo plan, implemented largely through the Sicomines deal, has the potential to make or break the country. The promise of a revolution of industrialisation through investment in infrastructure, public utilities and services is appealing. The Congolese, like many Africans, will no doubt be aware of China’s own economic development in recent decades – their moving of 600 million people out of poverty in their own country in the last 35 years illustrates great potential to a country where the majority of its 76-million people are stuck in a cycle of desperate poverty, with only 4% of people having access to electricity.

Moreover, the Congolese have already borne witness to some improvements the Chinese have made to their nation, not only through entrepreneurial practices such as the thousands of immigrants that have opened hardware shops, restaurants and doctors’ surgeries; but through the physical infrastructure they see and use every day, such as the main road from Kinshasa to its airport or landmarks such as the Parliament and national soccer stadium, all of which are Chinese constructs.

In contrast to such optimistic views, many Congolese fear the potential plundering of the country’s natural wealth by their Asian counterparts. Many see the $6-billion Sicomines deal (which was revised from $9-billion after the West – under the guise of the International Monetary Fund – claimed that the Congo would be over-exposed to debt) as no different to other deals the Congolese government has engaged in that have failed to trickle down to tangible improvements to their livelihoods. The only difference this time might be that the figures are larger and the potential stakes bigger. The Congolese have seen revenues sifted away through bribes, tax avoidance and undervaluation of resources in the past and have come to expect, almost to the point of being unaware of an alternative way of operating, that their government conducts its dealings with impunity and an almost complete lack of transparency. The loss of $1.36-billion in revenue due to mining concessions being sold off in secret between 2010 and 2012 and the absence of any public consultation on the first ever law governing the country’s expanding oil sector in early 2014 are clear examples of why the Congolese people should treat trade deals signed by their elite with caution and suspicion.

This is not in the least exacerbated by the Sicomines deal which does not have a specific timeframe to operate on or an exhaustive or definitive list of projects articulated – another example of the opaqueness of the Congolese government, which, concurrently, likely suits Chinese requirements.

CHALLENGES, CULTURAL NORMS AD HUMAN RIGHTS ABUSES

The DRC’s chief mining province Katanga and its “copper capital” Lubumbashi are the epicentre of Chinese mining investment in the country. The region is a notably challenging environment to live and work in with resurgent fighting between local militias and the army commonplace and a sense of lawlessness pervasive. Reflecting the depth of these problems, the UN declared an “acute humanitarian crisis” in the region in 2013. The Chinese have nevertheless largely persisted in working in the region. In the instances where they have left, it seems to have been due to economic reasons, such as commodity price changes during the 2008 global downturn for example, rather than political or social reasons. Problematic, it seems, is the so-called Chinese aversion to abiding by local laws and regulations. Due to the opaque nature of the DRC’s mining industry this is largely facilitated by Congolese officials with whom mutually beneficial arrangements are often forged. Of course, it is obvious that Chinese actors are not deliberately breaking laws – at least not without good reason (in the economically rational rather than the moral sense).Yet it is often their complicity that perpetuates the cycle of underhand dealing. The real losers of this tacit (or otherwise) “collusion” are the Congolese as they see very little tangible benefits from such practices, other than fleeting employment opportunities.

The dangerous and exploitative working conditions faced by miners also remain a serious issue. Despite the common image of massive conglomerates arriving in the DRC on large scale mining missions – undoubtedly reinforced by the Sicomines deal – the majority of resource extraction in the country continues to be conducted by small scale artisanal miners often operating with hand held tools and inadequate protective clothing. They are also subject to dangerous working conditions and fatal accidents that could largely be prevented if proper security and health checks were implemented.

Poor treatment of workers and violations of human rights can be attributed in part to Chinese companies’ lack of corporate social responsibility: in essence they are operating by similar normative standards to those in their home country where the hardship of migrant workers in cities is prevalent and expected. The DRC government’s perpetuation of bribery, corruption and disregard for worker rights combined with their passivity in bringing about much needed changes in the form of industry standards or regulation, only adds to the misery experienced by mine workers, regardless of nationality. The government’s reticence to conduct a single study to evaluate the potential worth of its minerals before signing multimillion (or in the case of Sicomines, multi-billion dollar) deals with foreign businesses allowing them long term access to resources, signifies such passivity, which unsurprisingly fails to allay Congolese fears that their national heritage is being exploited and they will remain trapped in poverty ruts for some time yet.

CONCLUDING REMARKS

As China owns or controls a vast portion of the DRC’s mining resources (90% of processing plants in Katanga are now Chinese owned) and they have heavily invested in the country, they have been criticised as being neo-colonialist plunderers by some observers and hailed as engaging in a new paradigm of “win-win” development by others. It is clear that the importance of minerals, particularly copper and cobalt, to China’s economy has been the catalyst for investment in the resource-rich DRC, and one may conjecture that the development of political and economic ties between the two countries is driven by China’s self-interest. However, what sovereign state engages in trade agreements outside of their own self-interest? It is safe to say that China is there for commerce, not charity.

Whether China will emerge as the DRC’s saviour or its plunderer in the long run remains to be seen. Certainly the Sicomines deal, whose operation is due to officially begin in 2015 (although by all accounts the early groundwork has begun) and whose success from either country’s perspective is contingent upon a number of factors, such as the actual tangible wealth that can be extracted, future demand and commodity prices and numerous other domestic factors, will somewhat determine which label can be applied to the role of China in the country. What is clear is that throughout the West, criticism of China’s “sweetheart deals” pervades through institutions such as the IMF; however this may very well be self-serving as fears of China’s expansion endure. Many Congolese who have witnessed or are aware of the licensed plundering of resources from the time of Leopold through to Mobuto Sese Seko and beyond, laud China’s involvement as more favourable than all of the above – the West’s interference included.

The DRC does not have time, when the majority of its own populace does not have access to water or electricity, to worry or care about whether China wants to become the global superpower. The benefits of the $24-trillion worth of resources ensconced beneath the country’s surface may or may not be seen by its citizens; it is too early to tell. For the moment, though, what seems tangible is the promise of new and upgraded roads, universities, hospitals and the creation of some jobs. Whether one views minerals-for-infrastructure agreements such as Sicomines as allowing one country to plunder another’s resources can often depend on a country’s own governments’ ability to invest in, exploit and utilise its own resources – something the DRC elite has largely failed to do for its citizens thus far.

Written by Greg Ryan, a research associate with the CAI with an interest in international relations