China’s economic involvement in Mozambique and prospects for development An analysis of the processes and impacts of major recent investments

Please enjoy in the next 8 Posts at Politics in Motion the chapters of the final thesis of my 2-year master at PRIO and South Africa's Stellenbosch University. What an adventure!


Abstract

The great intensification of China’s engagement with Africa in the beginning of the 21st century has brought about an equally vast body of literature concerning the general motives and features of the engagement. The broad nature of such literature begs for more focused and localised analysis that are able to complement and inform the ongoing debate. This thesis aims to better understand how China’s policy towards Mozambique affects the latter’s economic development. With this objective in mind each of the four empirical chapters provides a fresh view over some of the most salient dimensions and recent processes related to China’s involvement with Mozambique. The following is analysed: China’s trade and investment with Mozambique; the Asian power’s economic involvement in Mozambique’ agriculture sector; the participation of the China-Exim Bank in the Mphanda Nkuwa dam negotiation process; and finally the participation of Mozambique in the China sponsored multilateral organisation of the Macau Forum. The methodology used is primarily reliant on the analysis of secondary material supplemented by a small number of informal interviews. The core secondary material includes government investment agencies statistics, analysis of official documents, policies and analysis of material such as NGO reports, studies and media reports. The analysis corroborates the view that it mostly depends upon Mozambique’s governance actors to make China’s engagement work towards its economic development and that there is not a static set of monolithic neo-colonial tendencies overriding China’s commitments towards the African country.

Opsomming
Die versterking van bande tussen Sjina en Afrika aan die begin van die een-en-twintigste eeu gaan gepaard met ’n oplewing in die akademiese literatuur oor die motiewe en kenmerke van daardie bande. Oor die algemeen is daardie akademiese literatuur baie breed. Dit noodsaak ontleding wat baie sterker gerig is op die plaaslike toestande waaronder Sjina bande met die Afrika-vasteland smee. Hierdie studie poog om beter begrip te kry van hoe Sjina se beleid jeens Mosambiek laasgenoemde se ekonomiese ontwikkeling beïnvloed. Met hierdie doelwit in sig, fokus elk van die vier empiriese hoofstukke op die belangrikste komponente en die jongste prosesse rondom Sjina se betrokkenheid by Mosambiek. Dit behels ’n ontleding van die volgende: Sjina se handel met en beleggings in Mosambiek; die Asiese land se betrokkenheid in Mosambiek se landbousektor; die deelname van Sjina se Exim-bank in die onderhandelinge rondom die ontwikkeling van die Mphanda Nkuwadam; en Mosambiek se betrokkenheid in die deur Sjina geborgde Macau-Forum. Die metodologie wat in die studie gebruik word steun veral op die ontleding van sekondêre stof, wat aangevul word deur ’n aantal onderhoude. Sekondêre materiaal wat ontleed word, sluit in beleggingstatistiek vanuit die owerheidsektor, amptelike dokumentasie, beleide, verslae en studies deur nie-regeringsorganisasies, en persberigte. Die ontleding toon dat Mosambiek se ontwikkelingsvooruitsigte veral beïnvloed sal word deur die optrede van die land se eie amptenare, en dat Sjina se beleid jeens Mosambiek nie gemotiveer word deur ’n stel onbuigsame of neo-koloniale doelwitte nie.



Acknowledgement

This work would never have been completed without the comprehensive and unrelenting help of Professor Scarlett Cornelissen, Christopher Burke’s pinpoint advice and Antonio’s precise corrections. Of course the genesis of this thesis was my inspiring experience at the Centre for Chinese Studies at Stellenbosch University. To those who shared that “kitsch” red office with me I owe the triggering of a great passion and interest for the impact of China in Africa and the world.

Also thanks to all those who were interviewed and patient enough to attend to my curiosity in various conferences and meetings in South Africa and Portugal.

Special mention has to go to the entire PRIO crowd and the excitingly surreal journey from Norway to South Africa we shared in the last two years. They, together with my friends at Stellenbosch University Pol. Sci. understand, better than anyone, what this work means.

Huge thanks to my Mum, Jorge, family and childhood friends who were always there for me to get back to whenever I needed it, and particularly to “Grumpy” Willy, who helped me with organising the bibliography, and Carine, with whom I listened to ridiculously long sessions of Radio Mozambique.

Oyvind, Bryce and Graeme, thanks for making me laugh hysterically.



Content


List of Tables and Figures viii
Chapter 1 – Introduction 1
1.1. Background 1
1.2. Problem Statement and Rationale 3
1.3. Aims of the study 4
1.4. Secondary Research Questions 5
1.5. Theoretical Framework 6
1.6. Methodology 7
1.7. Limitations and Delimitations 9
1.8. Thesis Structure/Layout 10
Chapter 2 –Literature Review and Theoretical Framework 11
2.1. Introduction 11
2.2. Historical Reviews of China-Africa relations 11
2.2. The economics of China’s engagement 112
2.3. China and Mozambique 16
2.4 Ways of approaching China-Mozambique relations - the International Politics of China’s engagement 17
2.4.1. China-Africa through the lenses of Neo-Realism 18
2.4.2. Through the lenses of Coxian IPE 19
2.4.3. Susan Strange’s structural power 20
2.4.4 Through the lenses of Constructivism 21
2.4.5. Insights from Neo-Liberal elements of International Relations 22
2.5. Conclusion 25
Chapter 3 – Background Chapter 27
3.1. Introduction 27
3.2. Historical snapshot of China in Africa 27
3.3. The role of the changing political economy 27
3.4. More dynamic South-South Cooperation 28
3.5. A new era in Africa’s renaissance 29
3.6. General analysis of China and Africa relations 30
3.7. Knowing China to know China abroad 32
3.8. The importance of China’s political layers 34
3.9. China and international civil society 35
3.10. China’s engagement and the importance of symbolism 35
3.11. Brief Institutional Profiles 36
3.12. Profile of Mozambique – The governance of development economics 36
3.13. China-Mozambique: the story so far 38
3.14. Conclusion 42
Chapter 4 - China’s Trade and investment with Mozambique 44
4.1. Introduction 44
4.2. General China-Africa FDI 44
4.3. General China-Africa Trade 46
4.3. Mozambique General FDI 50
4.4. China-Mozambique FDI figures 51
4.5. China-Mozambique FDI Analysis 56
4.6. China-Mozambique Trade 58
4.7. Conclusion 62
Chapter 5 - China´s impact on agriculture and agro-forestry in Mozambique 63
5.1. Introduction 63
5.2. China and Agriculture in Africa – general lessons for Mozambique 63
5.3. China and Agriculture in Mozambique 65
5.4. China and Mozambique’s agro-forestry sector 68
5.5. Fishing and Aquaculture 72
5.6. Conclusion 73
Chapter 6 - Mphanda Nkuwa Dam - How Mozambique can tap into changes in China’s engagement 75
6.1. Introduction 75
6.2. The story of the dam – Geneology of Mphanda Nkuwa 75
6.3. Signs of Pragmatism from China’s actors 78
6.4. The regional dimension of China’s strategic approach 79
6.5. How will the Dam affect Mozambique’s development? 81
6.6 Conclusion 84
Chapter 7 - China’s Engagement of Mozambique through the Macau-Forum 86
7.1. Introduction 86
7.2. Profile of the Forum 86
7.3. Theoretical discussion regarding Economic Diplomacy and how the Macau Forum fits within new trends 89
7.4. The Macau Forum and Mozambique's development - Initiatives of the Macau Forum that concern Mozambique 91
7.5. Conclusion 94
Chapter 8 – Conclusion 96
8.1. Introduction 96
8.2. Can China develop Mozambique? 96
8.3. How China-Mozambique relations inform the more general China-Africa debate 98
8.4. Suggestions for Future Research 100
8.5. Conclusion 101
References……………………………………………………………………………………………………………………………103

Acronyms and abbreviations

ADB – African Development Bank
ADF – African Development Fund
AFRODAD – African Forum & Network on Debt and Development
AGOA – African Growth and Opportunity Act
APRM – African Peer Review Mechanism
AU – African Union
CNPC – China National Petroleum Corporation
CPLP – Comunidade dos Países de Língua Portuguesa (Community of Portuguese Language Countries)
EITI – Extractive Industries Transparency Initiative
FAO – Food and Agriculture Organisation
FDI – Foreign Direct Investment
FOCAC – Forum on China-Africa Cooperation
FRELIMO – Liberation Front of Mozambique
GDP – Gross Domestic Product
HCB – Hydroelectric of Cahora Bassa
ICBC – Industrial and Commercial Bank of China
IMF – International Monetary Fund
IRN – International Rivers Network
MDC – Maputo Development Corridor
MEND – Movement for the Emancipation of the Niger Delta
MNC – Multinational Corporation
MOFCOM – Minister of Commerce of the People’s Republic of China
MoU – Memorandum of Understanding
NEPAD – New Partnership for Africa’s Development
NGO – Non-Governmental Organization
OECD – Organisation for Economic Co-operation and Development
PARPA – Plano de Acção para a Redução de Pobreza (Plan of Action for Poverty Reduction)
PRC – People’s Republic of China
PSCs – Portuguese Speaking Countries
RENAMO – Mozambican National Resistance
SADC – Southern Africa Development Community
SAP – Structural Adjustment Programme
SAPP – Southern Africa Power Pool
SEZ – Special Economic Zone
SINOPEC – China Petroleum and Chemical Corporation
SMEs – Small and Medium Enterprises
SOE – State Owned Enterprise
SPFFBZ – Serviços Provinciais de Florestas e Fauna Bravias (Provincial Services for Wild Forest and Fauna)
TRALAC – Trade Law Centre of South Africa
UNCTAD – United Nations Conference on Trade and Development
UN – United Nations
UNDP – United Nations Development Programme
US - United States
WB – World Bank
WTO – World Trade Organisation


List of Tables and Figures

Table 1 – Interviews carried out 8
Table 2 – Evolution of total FDI to Mozambique 50
Table 3 - Chinese loans to Mozambique by project 52
Table 4 - Estimated Chinese Projects and Investments in Mozambique by 2008 53
Table 5 - China Imports from Mozambique 60
Table 6 - China exports to Mozambique 61

Figure 1 - Map of Mozambique ix
Figure 2 - Real Growth Rate in Mozambique by Sector 40
Figure 3 - China Imports from Africa 2007 47
Figure 4 - China exports to Africa 2007 48
Figure 5 - China trade with Africa 48
Figure 6 - Evolution of China-Mozambique Imports and Exports 59
Figure 7 - Illegal imports and exports of wood-based products to and from China 71
Figure 8 - SADC energy sector snapshot 80














Figure 1 – Map of Mozambique

Source (CCAfrica)

Chapter 1 – Introduction

1.1. Background

The peculiarities in China’s engagement of Mozambique mirror the complexity of the China-Africa debate. It is precisely into the essence of this complexity that this study aims to zoom in when looking at Mozambique. Hopefully obtaining a better grasp of what the nature of the relationship between China and Mozambique is and how it informs the ongoing conversation in the International Relations and “China in Africa” bodies of literature. While old and emerging powers grapple with present and future uncertainties it has gradually become clear that, in the case of China, its economic development and diplomacy are set to pass through the African continent and countries such as the one being analysed - Mozambique.
Diversity in Africa’s political dynamics, systems and economies is vast and China’s engagement with such diversity will invariably be varied and nuanced. Given this, there is extensive room for an improvement in systematizing the deeper theoretical debates on China in Africa. To the effect, this thesis will review the literature on China in Mozambique by reverting to Chris Alden’s typologies characterizing such literature as that which sees China as: a development partner; a colonizer; an economic competitor. This typology will also help inform and frame each empirical case from Chapters 4 to 7. China’s involvement has stood out recently in its form and pace when compared to the engagement of traditional major powers with Africa. According to some authors, China has significantly displaced and shaken comfortably installed interests of Western economic and diplomatic engagement (Goldstein et. al. 2006; Guttal 2008). Others argue in alternative that China’s arrival constitutes an opportunity for new possible synergies, not only for Africa, but also for different international partners interested in the economic development of the continent (Tjonneland et. al. 2006; Chidaushe 2007). The significance of understanding the competitive and/or stimulating nature of China’s engagements is therefore central for informing effective policymaking and action.
Most importantly, there is a glaring need to move way from a bad-China vs. good-China debate which fosters distorted and unproductive written work and debate. In fact, the greatest gaps in the literature are currently located in: the availability of more in-depth empirical data on the impacts and prospective impacts of China’s engagement in specific sectors, countries and regions; comprehensive compilation of the theoretical approaches to China-Africa/China-Mozambique and how these relate to each other, exposing the key uncertainties left to particular stakeholders ; and more comprehensive exchanges between the theoretical premises of different China-Africa schools and particular case-studies, inter-sector analysis and empirical data.
This study will be directly addressing this gap by mapping out the current trends from the perspective of Mozambique. By so doing it will attempt to contribute to the theoretical debates concerning China’s engagement, illustrating the overall argument with four of the most significant examples of the engagement: the breakdown of China Mozambique trade and investment; China’s cooperation in the agro-forestry sector; the Mphanda Nkuwa Dam project; and Mozambique’s place within the China sponsored Macau Forum. In the context of present-day China Mozambique ties, these four examples constitute respectively: in the case of trade and investment, the most visible and quantifiable phenomena; arguably the sector with the greatest significance and potential development-impact in Mozambique (agriculture sector); the largest and most potentially innovative investment (Mphanda Nkuwa Dam); and evidence of how Mozambique’s development through China also encompasses initiatives at the level of international institutions (the Macau-Forum). Overall analysis will be located within the body of literature concerning International Political Economy, International Relations theory and writings on China in Africa.
As China’s involvement in the African continent flourishes, actors in the private and public sector affected by this engagement, including traditional western partners already with a stake in Africa and other emerging partners , are invariably taking great interest in what this engagement means for the economic development of Africa. Another motive why China-Mozambique relations were chosen as a case study is because they have been relatively under-researched as a whole. At the same time they represent one of the relationships which have been deemed most strategic and privileged by China and an African partner.
Mozambique has received much attention, resources and programmes spearheaded by western donors and their development policies. There is therefore a considerable amount of raw data and information in the form of statistics, government briefs and media reports to be explored and contextualized within an academic discourse. It is also particularly important to think about the practical options of the actors involved so that an optimization of this engagement towards development becomes possible.
In the current process of global rebalancing, China’s engagement is challenging the traditional moulds of Africa’s international relations, eroding the institutions and the development-models of the Washington Consensus (Barma & Ratner, 2006) and bringing more complexity and diversity to the diplomatic and economic options of African governments. Hu Jintao’s 2007 visit to Mozambique, part of his Africa tour, represented a landmark in the recent importance of the engagement of China with Mozambique. Now that all signs point to a greater strengthening of the ties between the countries it becomes imperative that a constructive and informed academic debate takes place so that the engagement is understood and well-managed. It is for these reasons that mapping and breaking down China’s engagement of Africa, in this case looking at Mozambique as a country-study, becomes significant. In effect, it is now widely perceived that the effects of China’s trade and investment in Africa are context-specific. By adopting an analysis adapted to this reality this study will attempt at reaching more nuanced insights of the engagement.
For the purposes of limiting the research focus, the evolution of China-Africa relations and of Mozambique’s political economy will be analysed within the 2000-2008 timeframe as a guide, with periodic references to past period of relevance. This particular epoch was chosen because it matches the time of the re-engagement of China with Africa in general and with Mozambique in particular. It is also the time for which there is most information and data available and when literature on China in Africa has generally started re-emerging.

1.2. Problem Statement and Rationale

The guiding question in this research is: “What are the dimensions of China’s economic involvement in Mozambique as reflected in major recent processes and what conclusions could be drawn on their possible effects on Mozambique’s development prospects?” This is a key question that has not yet been fully answered in the existing scholarship nor satisfactorily contextualized in the current debate regarding China and Mozambique.
Emmy Bosten (2007); Bila (2007); AFRODAD (2007); Horta (2008); Morrissey (2006); Morrissey (2006); and Mackenzie (2006) are those who have contributed a useful starting platform for this project. There are however some significant limits to their work, not least because their writings have pretty much just introduced the current debate regarding China’s relations with Mozambique. The problem statement above matches some of the problems guiding the work of these authors, particularly those tackled in an AFRODAD report which also directly pertains to China’s impact on Mozambique’s development. There remain however, as mentioned, some gaps and limitations to be addressed as well as important issues raised in the body of literature pertaining to China-Mozambique relations worthy of further exploration. For instance, according to an AFRODAD report on China-Mozambique relations “recent studies available are a kind of impact prognostic at sub-regional or regional level” (2007:22). Without wanting to disregard the importance of such exercises, these reports can be further complemented at three levels:
• at the level of their theoretical contextualization and of their theoretical self-awareness and place within the ongoing China-Africa debate;
• in terms of the depth and the thoroughness of their analysis, which usually consists of descriptive analysis describing problems and issues which still have room to be more deeply explored; and
• by presenting important analytical interrelations between the issues they tackle and a more holistic approach bringing agriculture, infrastructure and economic diplomatic channels into the same country-focused analysis.
For example, Bila’s paper is essentially descriptive and limited to using a uni dimensional understanding of what China’s engagement is, extrapolating all his analysis from there. Emmy Bosten’s work in turn is heavily focused on the construction sector and not particularly thorough while AFRODAD’s final report has an overly technical approach to assessing China’s impact on Mozambique’s development. Its assessment analyses, above all, how China’s engagement fits Mozambique’s development path programmed in PARPA I and PARPA II. Loro Horta in turn has carried out some significant journalistic work, contextualising insightful views of the China-Africa diplomatic corridors with some of the general literature. Catherine Mackenzie’s report shows evidence of comprehensive field-work and privileges the practical problems of the agro-forestry sector in Mozambique, effectively opting for, as does Loro Horta, to leave out the wider theoretical debates.
There are therefore still questions and key aspects related to China-Mozambique relations that can be more and thoroughly answered and, most importantly, contextualized with the ongoing theoretical debate both in the China-Africa and International Relations discourses. The interaction between the four empirical examples and the theoretical discussion comprises an attempt at a more comprehensive overview of China-Mozambique relations.
1.3. Aims of the study

The central challenge of the problem statement is to bring together three spheres of analysis comprising: trends in China’s international relations and more specifically its engagement with Africa and Mozambique; the course of Mozambique’s economic development; and lastly, the internal, regional and international context of Mozambique’s economic development. This thesis aims to better understand the relations between these factors and how China’s policy towards Mozambique affects its economic development.
With this objective in mind each empirical chapter will provide a fresh view over some of the most salient dimensions of China’s involvement in Mozambique. Chapter 4 focuses on trade and investment and will try and provide as accurate and broad a picture as possible of the evolution of China’s FDI and trade with Mozambique from 2000 onwards by also contextualizing it within overall figures for China’s engagement with the continent in general. The objective of Chapter 5 is to discuss the opportunities Mozambique can explore with China regarding its agriculture sector and also to assess what has been China’s involvement in the forestry sub-sector. The engagement dimension presented in Chapter 6 is that of the infrastructure sector, more specifically the Mphanda Nkuwa Dam project. The aim of this chapter is to look at the story of the negotiation process and understand to what extent the investment model it embodies presents new signs of Chinese pragmatism that Mozambique can explore for its development. Lastly, by observing the evolution of the Macau Forum as an institution and Mozambique’s presence within its structures, this study aims to understand what potential opportunities this China-sponsored multilateral institution presents to Mozambique’s economic development.

1.4. Secondary Research Questions

A group of sub-questions detailing the main problem will be important to consider as the research progresses. These secondary questions are not new, but expand on the problem statement. An attempt to answer these will be made before broader conclusions about the effect of China on Mozambique’s development can be drawn. These questions are:
1. What has been the nature and the evolution of the: a) economic; b) socio political relations between China and Mozambique for the period between 2000 and 2008?
2. What has been the evolution in volume and breakdown of China’s trade and investments with Mozambique as reflected in import and export statistics, foreign direct investments, and sectoral patterns?
3. What motivations underlie China’s economic engagement with Mozambique and what are the implications of these?
The list of motivations will also be differentiated according to the type of actors referred to within China’s engagement. Ranging from private entrepreneurs, government officials, officials from state-owned enterprises, bureaucrats from multilateral organisations as well as small and medium level private entrepreneurs, the engagement of all these Chinese actors is being instigated for reasons that are unique to them. There is however another set of motives common to them all, of which for example the limited availability of resources at home and will expand to the international level are some of them.
4. Does China’s engagement constitute a hindrance or an asset in the economic development of Mozambique?
5. What particular evidence and signals can be drawn when it comes to informing how China’s engagement can impact on Mozambique’s development path?
All the chapters will serve to enrich the descriptive answer provided to sub-question one and interact to draw the evidence for sub-questions three, four and five. The more general chapter on trade and investment will provide a broader understanding of the main sectors being affected by China’s investment. It also shows how this trade and investment fits the full picture of Mozambique’s investment and trade, addressing sub question two. The agro-forestry sector will provide important insights for two reasons. First an analysis of China’s engagement in agriculture can shed light on how its engagement can most directly affect the issues of grassroots development, which in Mozambique remain traditionally tied to this sector. Second, the logging sector has been particularly problematic and is where China has drawn most considerable criticism in Mozambique. In this regard, the evolution of China’s involvement in the sector will prove to be particularly decisive in the future. Lastly, the Macau Forum case study will provide insight into how Mozambique and China project themselves in an international setting, something that has very tangible consequences in defining the dynamics of their relationship with each other and consequently in understanding how Mozambique can or cannot tap into China’s engagement for its economic development.

1.5. Theoretical Framework

The central theoretical framework used is the wider literature of International Political Economy and International Relations in which topical literature of China in Africa can be generally included. In chapter two this literature is reviewed and analysed in greater detail. The literature on China’s engagement with Africa has been organised not chronologically, but according to the typology of each author’s writings, into how they fit within Chris Alden’s framework dividing China-Africa writings between those understanding China as: a colonizer; a development partner; and an economic competitor. Such “boxing” is however not absolute and represents a particular informed reading of each authors’ work. It is used for practical and organizational reasons, to allow for a simplification of the debate and more clearly identify the different broader strands of the debate. A stance has been carved which seeks to make use but also go beyond these typologies since some aspects of the examples explored below do not always fit into these “boxes”.

Literature on Mozambique will encompass an extensive collection of factual information on China-Mozambique relations regarding trade, investment and other commercial deals, originating from international and local media sources, namely Reuters, Jornal de Notícias de Moçambique, Xinhua and Macauhub. Such data is extremely important for the empirical case chapters and will be analysed against more academic work on the set of relations, including several reports by NGOs and government institutions that assess specific sectors or projects.

There is also a comprehensive section presenting China in Africa through the perspective of some of the major International Relations schools in Chapter 2. This is a particularly useful exercise which provides insights into the deeper philosophical foundations of IR and their explanations for the nature of China’s engagement. The analysis will thus encompass a better understanding of the theoretical and philosophical processes underpinning the engagement and subsequent debates. In doing so, this thesis is not aiming at simply selecting a framework but instead to expose the particular strengths and weaknesses of each “lens” and “why” and “how” some of the frameworks seem to be particularly appropriate to explain China’s engagement in Africa.

This theoretical framework, exercised in two steps, will be useful for the analysis in that it will allow a better interrelation and contextualization of the material on China Mozambique relations. It will also pinpoint the most obvious points of dissent in the debate and also present an overview that is as balanced and all-encompassing as possible. Contributing to the theoretical debate, providing a more comprehensive picture of China-Mozambique relations and discussing practical improvements and opportunities for policy-making are the main objective of this study. The details and the particular insights and interpretations present in the case studies and theoretical formulations will hopefully enrich the China-Africa narrative and constructively feed into the ongoing debate.

1.6. Methodology

The methodology to be used will be focused in time (in the period between 2000 and 2008), exploratory in nature, qualitative and reliant on the analysis of secondary material such as government statistics, analysis of official documents, policies and analysis of material such as NGO reports, studies and media reports. This method of research will also be used for the empirical examples adopted. Chapter 4 on trade and investment in Mozambique is based both on official data from the government and investment agencies of China and Mozambique as well as on reports released in the media concerning relevant trade and foreign investment figures, both public and private. The data will be divided into data pertaining to China and Africa in general and then to China and Mozambique in particular, so that a contextualization is possible. Such data will then be analysed comparatively against evidence of China’s greater investment strategy in the continent which starts to rely on various Special Economic Zones (SEZ) as privileged hubs for its engagement. Chapter 5 on the agro-forestry sector will bring together two sets of data, first a collection from local media and Chinese sources compiling the characteristics of different specific instances of China’s engagement in Mozambique’s agriculture sector. Such data will be contextualized within the general state of the agriculture sector in the country and how its strategy can be made to adapt to latest new engagements as well as with literature covering the potential lessons China’s agriculture development experience holds for Mozambique. The analysis of Mphanda Nkuwa will rely on official government reports and other previous academic work and reports on the dam and the energy sector of Mozambique. Such evidence will be compared with evidence from previous similar projects involving China and China Exim-Bank in the continent such as in the Merowe Dam in Sudan. Finally, Chapter 8 concerning the Macau Forum will be built upon literature on the onset of hybrid actors in international relations of which Macau is an example. The opportunities offered and characteristics Macau as a hybrid actor that is also influencing China’s economic engagement can be tapped into by Mozambique for its benefit. In addition, this framework will allow the study to better analyse and contextualize the particular instances where China-Mozambique cooperation has already been exercised through the channels of this multilateral institution created in 2003.
Supplementary informal and unstructured elite interviews of some of those involved in the study and practice of relevant policy processes have been conducted in Lisbon as seen on Table 1 below. An email exchange was carried out with an interviewee based in Beijing and participant in the Macau Forum, who however expressed wish to remain anonymous (Interview A). Another academic who has observed the Macau-Forum from the inside has also expressed the same wish to remain anonymous (Interview B). The interviews were informal and unstructured in nature. The interview with Dr. Moisés da Silva occurred in the context of a public lecture at the Portuguese Ministry of Foreign Affairs. Finally, the other three occurred in international conferences such as CPLP’s “Dias do Desenvolvimento” (Victor Bernardo, June 2008) and Instituto Oriente’s China in the Development World (Loro Horta, June 2008).
They consisted of short conversations on issues such as the internal affairs of the Macau Forum, the agro-forestry sector or the construction of the Mphanda Nkuwa Dam. The purpose was, in the case of the Macau Forum, to provide greater insight into the processes occurring within the organization and for the case of Mphanda Nkuwa to enquire and confirm both the status and due importance attached to the construction of the dam by government officials. These interviews proved to be particularly useful for Chapter 7 on the Macau Forum where proceedings remain somewhat under analysed given that it is a very recent creation and little work has been done about the topic.

Table 1 – Interviews
Interview A Interview B Dr. Moisés Fernandes
Date March 2008 May 2008 May 2008
Institution Investment Agency of a Macau Forum member Social Sciences Research Institution Lisbon Confucius Institute/ Macau Specialist
Position Director /
Macau Forum delegate Researcher and
Macau Forum observer Director
Duration n.a. 1 hour 2 hours
Format E-mail Informal/face-to-face Informal/face-to-face
Topic Macau-Forum Macau-Forum Macau-Forum
Place Beijing Lisbon Lisbon

Dr. Loro Horta Victor Bernardo
Date June 2008 June 2008
Institution Nanyang Technological University, Singapore Government of Mozambique
Position Analyst Deputy Minister of Planning and Development
Duration 2 hours 15 minutes
Format Informal/face-to-face Informal/face-to-face
Topic China and Mozambique's agro-forestry sector Mozambique Infrastructure and Mphanda Nkuwa
Place Lisbon Lisbon

More broadly, the research concerns macro-organizations (states and groups of states) and respective institutions. Although this thesis also explores issues of trade and diplomatic relations at the macro-level, however, it is important to remember that any generalization is no substitute for a detailed analysis of the impact of trade regimes and sets of bilateral relations of particular countries, communities or sectors. This is one of the main reasons why this study has adopted a method which extrapolates from different illustrative examples of China’s engagement with Mozambique to complement the theoretical analysis. In effect, using empirical examples allows for theory to be better integrated and contextualized as they illustrate particular phenomenon that remain under-analyzed and allow for greater attention to be assigned to specific effects of China’s engagement.

1.7. Limitations and Delimitations

The study will be looking at a selection of cases from China’s engagement with Mozambique. Such selection will further focus the initial choice of Mozambique as a particular geographical area and political unit. It has been the case that so far, “only specific Government sectors have contact with Chinese capital issues” (AFRODAD 2007:22). This statement puts into evidence how the availability and dissemination of information and data on China in Africa and China in Mozambique is not yet optimal. Also, to keep the study focused, some engagement dimensions which would also have been interesting to look at with greater depth were put aside not because they were irrelevant but in fact because the four specific dimensions that were chosen (trade and investment, infrastructure, agriculture and China’s new diplomatic channels) present a more compelling and accessible array of evidence for answering the research questions.

1.8. Thesis Structure/Layout

This first chapter has introduced the methodology, motivation and limitations of this research, presenting the key subjects studied. The second chapter will outline the theoretical framework and survey the literature on International Relations, Political Economy and Development. This chapter will also review the relevant literature on China. The third chapter will be the background chapter; it will provide the setting of China’s engagement in Mozambique as well as explore the evolution of China’s foreign policy and the story of Mozambique’s development challenges. The fourth, fifth, sixth and seventh chapters will solidify the analysis and argument by including an analysis of the China-Mozambique trade and investment profile plus other three cases. Chapter 5 and 6 will look at the Agriculture sector of Mozambique and at China’s recent involvement in the Mphanda Nkuwa Dam respectively. Finally, Chapter 6 analyses Mozambique’s participation in the China sponsored Macau-Forum, a multilateral institution which brings together China and Lusophone countries.

Chapter 2 – Literature Review and Theoretical Framework

2.1. Introduction

This chapter contains a more extended review of China-Africa relations in the context of the predominant theories of International Relations and International Political Economy. The framework will underpin the analysis of the examples in the following chapters and clarify the theoretical premises of the sets of answers to the research questions. This will enable the study to incorporate the specific set of Mozambique-China relations into a theory so that one can understand and explain its place within a larger structure of events. In the process, it will be possible to put forward a set of useful concepts of development and the assumptions being made for the purposes of the argument. It is usually a desirable premise that “there are no innocent definitions or starting points (Brown 2001: 17)”. Given this, a set of the major theoretical frameworks will now be put forward in order to better understand the research focus.
Literature on China-Mozambique will be divided into that understanding China as: a coloniser, a development partner or an economic competitor. Bringing the core arguments of International Relations to the China-Africa debate will offer an additional insightful set of perspectives. Neo-Realism tends to be suspicious of China’s political intentions in Africa. Cox’s (1996) and Susan Strange’s (2004) frameworks also provide warnings about China but for different reasons. Neo-Liberalism in turn, points to some important dangers of the engagement, but also hopes that potential economic benefits will push China to constantly adapt its behaviour.
2.2. Historical Reviews of China-Africa relations

Philip Snow (1988) was one of the first historians who tried to come to terms with China’s engagement with Africa. His work does not fit any of the specific contemporary understandings of China. Snow essentially narrates China’s engagement from its beginnings in 1955 and throughout the Cold War eras. In similar way, authors such as Gavin Menzies (2003) and Jackson (1999) have been working towards documenting the history of China’s engagement with Africa. It is to these historians that Garth le Pere and Garth Shelton (2007) turn, tracing back China’s current engagement and defending their perspective that there is a significant normative framework behind China’s engagement of Africa, thanks to which there is then a significant experience of shared history.

2.2. The economics of China’s engagement

Alden (2007:5) divided writings on China’s relations with Africa into three different ways of understanding China’s engagement:
• as a development partner – commitment to transmit its development experience to the continent;
• as an economic competitor – short-term “resource-grab” which takes little account of local needs and concerns;
• as a colonizer – part of long-term strategy aimed at displacing traditional western orientation of the continent.
These conceptions are all general ideal types, but remain useful. These typologies in particular will be used as the backbone for compartmentalizing the rest of the literature on China in Africa. The author goes on to differentiate China’s engagements with another group of ideal types, this time categorizing African governments (Alden 2007:60-72). Chris Alden divides China’s engagement into two different strands according to the characteristics of the African partner: engagement with states characterized by pariah and illiberal regimes and weak democracies, to which China is seen as a benign source of stability; engagement with democracies with diversified economies, to which China can be both a strategic partner and a threatening competitor.
Kaplinsky and Mike Morris’ work (2006; 2007) in turn has tried to show how China presents above all a challenge to Africa and is in essence, a direct economic competitor of Africa’s labour intensive industries such as textiles. Along this line, Cheru (2007:11) argues that African leadership and strategy is lacking to balance the clarity and pro-activeness of Beijing, but that “opportunities should outweigh the threats if managed correctly”. The author believes that the lack of collective African response towards China poses a number of risks: security risks; environmental risks; governance risks; and economic threats. NEPAD is then proposed as a mechanism through which Africa can have a more concerted, regionally-based response to China. Cheru is essentially asking for Africa to “become a proactive risk manager” through a reinvention of NEPAD. On the downside of China’s development model for Africa, its critics claim that its engagement can potentially undermine NEPAD as well as EITI (Rocha 2007: 25).
According to Ndubisi Obidurai, the most negative aspect of China’s paradigm is that it can “justify the adoption of state-led economic policies coupled with intensified political repression”. When it comes to its Multinational Corporations (MNC) and State-Owned Enterprises (SOE), “China’s lack of domestic political criticism” arguably frees its government and companies from some ‘reputational risks’ “(…) but as global branding becomes more important this might change” (Ndubisi 2007: 45, 49, 51). In support of this, John Rocha (2007:32) suggests that it is a distorted international system that is facilitating the export of raw materials but inhibiting the trade of processed goods. As Chris Alden (2007: 105) notes, “the attractiveness of the Chinese model of development, which enabled rapid development to occur without challenging single-party rule, is undeniable for these autocrats”. Goldstein et al (2006), claim that the trade patterns between China and Africa are actually very similar to those Africa experienced earlier with other partners, while Guerrero and Manji (2008:3) point to how China is simply making the most of the opening up of Africa’s market, the fruit of decades of Structural Adjustment Programmes (SAP).
The notion that China has been pushed to Africa by virtue of market competition, utilising the channels of international capital as well as international financial and political institutions is implicit in much of the literature and will be made more explicit in this study. Coincidently, Shalmali Guttal (2008) chronicles how China has been making the most of its World Bank and Asian Development Bank membership, how it has simply been playing a game previously set out and encouraged by Western traditional donors. This view is also shared by Ndubisi Obidurah when he claims that “China exports the capitalism it knows” as Western investment made the China of today in its image (in Alden 2007: 112). At the same time Chinese capitalism seems to be a “better fit” for Africa than Western liberalism has been.
When it comes to international financial institutions, Guttal (2008) goes on to claim that Chinese officials have tended to disregard inputs from civil society agents outside the channels of African government. The author constructs an argument that is more supportive of the view that China’s engagement tends to be increasingly underpinned by severe economic competition. It is understood that because Africa opened its doors to China’s competition that exploitation sometimes occurs, but in these views this exploitation is more of an economic than a political nature. Dot Keet (2008:84-85) in turn worries about the actual “softness” of soft loans and that these can potentially accumulate into a new wave of debt burden for African economies. African agency should also be supported by institutions such as the African Development Bank and the United Nations Economic Commission for Africa. Africa needs to be aware of such problems at the same time that the flows of investment keep growing. These are the central authors viewing China as a fierce economic competitor.
The work of Garth Shelton, Garth le Pere, Martyn Davies, Lucy Corkin, Christopher Burke and Sanusha Naidu tend to complement views that China is in some very specific sectors an economic competitor with other international actors in Africa while in other sectors it arrives as a dynamic stimulant. This is evident in a study of China’s presence in Africa’s infrastructure sector (Corkin et al. 2007) as well as in a study looking at how China delivers foreign aid to Africa (Davies et al. 2008). The argument is that China is first and foremost a development partner with great potential while its behaviour is framed within what the authors call “coalition engagements”– a collaborative state-business approach to foreign policy. Under this approach private resources from China’s MNCs and SOEs are put together with the political and diplomatic clout of China, resulting in an effective and innovative model of engagement which is flexible yet decisive in its nature and constitutes the central model of China’s strategic economic engagement with the continent.
According to these authors, China’s foreign aid forms an integral component of this paradigm. China’s approach has been one of mutual respect, also awarding small African countries with relatively little economic or political significance, with aid and investment support – Mozambique a case in hand. Meanwhile, debt relief is, along with low-interest loans and large-scale infrastructure projects, one of the incentives used by Beijing to develop and nurture close ties with African states (Davies et al 2008:12). To these authors one must add the work of Firoze Manji, who argues that “China has much to offer in areas such as rural development and intermediate technology” (Manji 2007:7) and of Tjonneland et. al. (2006) whose report argues that China is actually abiding to the United States’ domination and seeks, also in Africa, a peaceful rise through cooperation, playing by the rules of international political economy and riding the wave of globalisation.
In similar fashion, Obiorah Ndubisi (2006; 2007) demonstrates some alarm in regards to specific instances of China’s engagement but welcomes this engagement overall as being beneficial for Africa on economic and geopolitical terms. Ndubisi, however still points to the risk of China’s disregard for democratic values due to its economy-before-politics approach. China has had the “experience of linking new ideas of science and technology to a homegrown path of reconstruction” (Chidaushe 2007: 122). This Chinese model of development can hold, according to those who see China as a development partner, another important lesson. It can allow Africa to learn: how to organize trade policy; move from low to middle-income status; educate for quick pay off (Chan-Fishel 2007:139).
A look at China’s official discourse on development can be insightful. China claims that its model is non-prescriptive, presenting a language of no-strings-attached, equality and mutual benefit. It emphasizes the collective right to development over rights-based approaches based on individual rights, constantly stressing political stability and internally-driven development. Its economic diplomacy promotes a sovereignty-based order as it separates business from politics in its non-intervention approach. (Chan Fishel 2007:160). At the end of the day, as Ndubisi Obiorah (2007:38) puts it, “China represents that another world is possible in which bread comes before the freedom to vote”. Chinese firms have the potential of becoming catalysts and models that can offer incentives for some of the wealth to return to a capital-starved region (Brautigam in Alden 2007:129).
A conference report by the Swedish Institute for Security and development observed that the word “donor” is now consciously avoided by China (Marklund & Odqvist 2008:9). It also recognized that there is a need for more civil society involvement and that China can learn from the EU and US in terms of how to help regulate markets and on “how to regulate the shortcomings of market principles” (Marklund & Odqvist 2008: 20). While Sweden, and to some extent the EU have been focusing on soft issues, China is understood by some as having privileged hard issues (Marklund & Odqvist 2008: 11) as “China dislikes broadness and instead wants to concentrate on tangible actions plans”. At the same time there are very strong arguments to be made concerning China’s reliance on soft power, evidence comes from recent initiatives that comprise medical assistance, student exchanges, Confucius Institutes, film and cultural performances, radio stations and the presence of Xinhua news agency in Africa.
The authors conclude that China’s engagement has on the whole empowered Africa and given it more choices. The importance of corporate culture and improvement of corporate responsibility was put into evidence (Marklund & Odqvist 2008: 21).
Jian-Ye’s analysis is particularly interesting as the author goes beyond analyzing the impact of trade in strictly merchandise terms. The author acknowledges that, as the engagement becomes more complex, studying China needs to go beyond analyzing the role of central government (Wang 2007:1,12). He contributes to this by identifying four major reasons for China’s recent surge in Africa: government policies; markets for each other’s exports; Africa’s demand for infrastructure; and China’s differential approach to financing. Fu Tao (2008) in turn, stresses how civil society in China has also gone through a marked evolution and is much more pro-active and increasingly able to affect the behaviour of Chinese enterprises abroad. In similar lines, Peter Bosshard (2008) has also been arguing in favour of the importance of civil society having a prominent role so that the story of China’s engagement has a happy ending, but sees China’s engagement as more of an economic competitor than a development partner. Xu Weizhong (2008:73) in turn draws attention to a gap that there is in the exchange between China and Africa which is the one of cultural exchange and knowledge between the masses and the wider population of the two actors. As such the author contends that the so-called civilian diplomacy will be important, that which occurs informally through private sector exchanges. The author also asks for China to transform its current preference for bilateral relations into a more multilateral-based engagement. All these authors have tended to see China increasingly as a development partner.
Lastly, there are those who understand China as a new coloniser of Africa scrambling for political clout. This understanding is sometimes characterized by one-sided “China bashing” such as that witnessed sometimes in the media. An example of such instance was how in the 2007 EU-Africa summit, parts of the European media used expressions such as “China bulldozer policy towards Africa” (SIC Notícias 2007), followed by shadowy suggestions that China was practically taking hostage some African states by means of locking them into deals that stripped them out of their commodities. Also, in the academic world, China is sometimes portrayed as an imperial power that should be unwelcome in Africa. This is the case with the views of Stephen Marks (2007) and Margaret Lee (2006) who express great concern over China’s colonizing tendencies in Africa and blame them on aspects such as the arrival of neoliberal tendencies at home. A softened version of this understanding of China as a colonizer can be also notably found on an EU resolution proposed by European Parliament Minister of Parliament Ana Gomes (2007) and approved in 2008. In this report, Ana Gomes uses “scramble” vocabulary describing China’s impetus in Africa as being caused by the country’s “bulimia”. More gravely, it underestimates different degrees of autonomy and the unique characteristics of the wide range of actors that compose China’s presence in the continent.
Regarding these understandings, Moreblessings Chidaushe (2007: 117) claims he is “doubtful this criticism is a result of genuine concern for African welfare rather than the jealousy of a competitor”. This viewpoint is also reflected in John Karumbidza’s (Karumbidza 2007:89) observation of how “whereas British Prime Minister Tony Blair and Bono see Africa as a ‘scar on everyone’s conscience’, the Chinese see Africa as a business opportunity”. In fact, the views of two big critics of the understanding of China as a colonial power and of the new scramble for Africa, Sautman & Hairong (2007), support the argument that such unfounded affirmations should be avoided for the sake of constructive debate. They point to the double standards, and selective memory of Western countries which are leading the criticisms. The development lessons China holds for Mozambique do hold paradoxes.
China’s growth in the last decades has, at times, been at the expense of high labour flexibility, regional inequalities and poor labour standards and lenience regarding environmental norms. It has been the case that, within China’s development systems, only when businesses and companies develop into a higher-end productive apparatus do they tend to start tackling and overcoming these issues (Moran 2002). The element of competition in these perspectives is seen as a symptom of colonialism and political dominance. A more negative perspective towards China engagement is also presented by Ali Askouri (2008). He brings attention to the mass displacement of people caused by China’s involvement in big infrastructure projects as well as to how China’s scramble is at times destabilizing the political stability of certain African countries.
2.3. China and Mozambique

There has not been a lot written exclusively on China-Mozambique affairs. In its four country profiling of China-Africa relations, which included Mozambique, AFRODAD researchers asked a question which is close to the objectives of this study: to what extent China’s development agenda for Mozambique suits the one Mozambique has designed for itself?
AFRODAD’s report provides, so far, the most comprehensive view on China-Mozambique relations. It starts by claiming that the drivers of China’s engagement of Africa are: the need for new markets and investment opportunities; resource security; the need for symbolic diplomacy, development assistance and co operation; and forging strategic partnerships (AFRODAD 2007:1). The report portrays the several dimensions of China’s engagement with Mozambique, through loans, technical agreements and direct investments, describing how most of these tend to be designed and executed. The conclusions arrived at are basically that China has focused its engagement with Mozambique in the manufacturing sector and that its investments although not exactly matching the suggestions of PARPA I and PARPA II (Action Plan for the Reduction of Absolute Poverty) for development-friendly investment, can have an overall helpful impact on Mozambique’s development (AFRODAD 2007:25). There is also a stress upon the temporary and uncertain nature of China’s investment, as it is an engagement that is characterized by a very recent boom and stakeholders on both sides are still feeling the ground and getting to know each other. At the same time the financial linkages and deals being brokered between China and Mozambique are said to have the potential to accelerate growth and the development of economic sectors which have been either stagnant or underdeveloped until now.
Emmy Bosten’s (2006) overview, although providing a broad picture of China’s engagement with Mozambique, has a particular focus on the impact on South African contractors of the arrival of Chinese businesses to the construction sector in Mozambique. In her piece, she sees China as a development partner with great potential but one that is at the same time increasingly taking up contracts that previously used to go to South African and European construction firms. China is thus an economic competitor, not of Mozambique directly, but of installed business interests from other foreign powers. China’s engagement, although not without its downsides, is a welcomed arrival, at least in the construction sector since: it lowers the prices of the projects for the government; its city planning know-how used for its urban experience can be usefully transferred to other parts of the developing world like Mozambique; Chinese contractors are presenting cheaper building techniques and introducing Mozambique to new global value chains (Bosten 2006:10).

Alberto Bila (2007) also sees China as a new and valuable development partner for Mozambique. Bila brings up the issue of little conditionality in loans, investment and other forms of aid as a positive feature and claims that China assists in areas in which other donors and partners are not interested. Lastly, after going through some discrepancies between China’s proposals and Mozambique’s very own development agenda, the author calls for an organized vision from the government of Mozambique. He concludes that “Chinese assistance is still not a problem”, but that attention needs to be given to some particular issues such as the loan conditions from China Exim Bank and the lack of allocation efficiency from government (Bila 2007:27).
2.4 Ways of approaching China-Mozambique relations - the International Politics of China’s engagement

China’s engagement with Mozambique can be understood as being underpinned by elements from at least four different traditions of International Relations: Neo-Realism, Constructivism, Coxian perspective on International Political Economy and Neo-Liberalism. A brief summary of the insights that each tradition can provide to understanding China-Africa relations will now be presented. This section will not extensively map every school of IR but will in fact present a selection of the elements from each tradition deemed as most relevant and useful for this specific analysis.
2.4.1. China-Africa through the lenses of Neo-Realism

The philosophical foundations of Neo-Realism and its predecessor, realism, go back to Thucydides, Machiavelli and Thomas Hobbes. These classical political theorists described the workings of political affairs as primarily tackling the fact that the nature of human beings is dominated by a survival-of-the-fittest ethos. The spin-off realist school of IR also has anarchy as a central tenet. It insists that relations between states are invariably competitive by transporting the idea of the state of nature (a condition without government) to international relations. The third image, the plane of international relations is a place where, just like in the domain envisioned in the state of nature there is no overarching “Leviathan”. Therefore states seek, above all, to safeguard themselves. Another important tenet is assuming the main actors of a political system, in this case states, as inherently rational actors that consistently make calculations towards maximizing their benefits vis-à-vis other actors in the system. This precept is known as the utilitarian dimension of Neo-Realism.
Under Neo-Realism politics and economics are seen as organically tied with economics being in the end subordinated to politics and state security. As the main proponent of Neo-Realism, Kenneth Waltz introduced a paradigm of International Relations that distinguished the ‘high politics’ of power and security from the dispensable economic and moral calculations of other approaches. States are the key and sole unit of analysis if one aims at systematizing the working of the international system. This particular understanding, also shared with Neo-Liberalism though in a softer tone, is in reality suitable for analysing China-Africa relations as these at a first glance remain a remarkably state-to-state affair. Indeed, “the state-directed nature of Chinese engagement in Africa is all about ‘coalition engagements’ across various sectors, which aligns to the long-term view of Beijing’s global aspirations and business expansion into the continent” (Davies et al. 2008:52).
In effect, China’s engagement can be considered a case in hand of how it is possible for rational egoists to cooperate even in an anarchical system (Brown 2001:49). These egoists are liable to cooperate whenever they perceive they can earn relative power gains. The greater intensity of the engagement is being driven by actors such as Chinese transnational corporations, small and medium enterprises and elements of civil society that play an increasingly important part. Neo-Realism however would understand the Chinese state and African governments as being the dominant actors in shaping and steering the relationship. In this perspective, China’s insistence in mutual recognition of each others’ sovereignty and non-intervention supports the idea that China plays by the “realist” rules that states rely solely on themselves to achieve security. Systematizing China’s engagement of Africa as part of a self-help system of international relations can lead to a claim that China is just carrying out short-term coalition building and power balancing. Because Neo-Realism is state-centric, it also puts on the international system the central responsibility for the inherent anarchical tendency of states and it does so in an approach that it deems as being rational and as complying with the scientific method (Chernoff 2002). In opposition, what Neo-Realism is seen as usually struggling to account for, is progress and change as well as with recognizing that power is multi-dimensional and has therefore various sources and manifestations.
Under Neo-Realism, the main function of states is to provide for their own security and this is exactly what China may arguably be doing, fulfilling its newly found abilities and power in its engagement with Mozambique and Africa. Hence, China’s presence in Mozambique can be understood as an episode in China’s attempt at expanding and protecting its markets, empowering its own state and gaining power-share in the international game of zero-sum politics. The actions of China, Mozambique and other African states are bound, under a Neo-Realist rationale, to follow the indications of the international system and are subject to its inherently competitive nature. They are victims of a close juxtaposition of states which “promotes their sameness through the disadvantages that arise from failure to conform to successful practices’ (Waltz 1979: 128).
Lastly, two different strands of Neo-Realism provide a final insight into how, even within a specific set of theoretical lenses, there is room for different readings. Under the first strand, offensive Neo-Realism, states will aggressively seek to maximize power to pre-empt challenges arising from peer competitors (Mearsheimer, 2003:22) which has led Ikenberry (2008:2) to claim that “Mearsheimer suspects China’s economic growth will lead to conflict”. In the second strand, defensive Neo-Realism, states will only pursue power as a means to achieve security, meaning that security is seen as “relatively plentiful among states and focused on the probability rather than the mere possibility of conflict” (Brooks 1997:447). Under this perspective there is room for a more relaxed and long-term cooperation between China and Mozambique. It fits within a more contained, yet still carefully planned, foreign policy. The main issue underlying cooperation remains power but security is the major engine of China’s dealings with Africa. Chin, in a defensive Neo-Realist perspective, would not actually be pursuing an all-out approach to achieving maximum subjugation from other states in the system, only its own security.
2.4.2. Through the lenses of Coxian IPE

International Political Economy understandings in general and critical political economy in particular believe that “economic relations between states are as important, if not more so, than political and military relations” (Berry 2007:3). Critical Internatioanl Political Economy for one had its genesis in radical social science.
Robert Cox (1996) draws from historical materialism in general and Wallerstein’s writing in particular, by presenting a perspective of International Relations that rearranges world systems theory. He asks the question of what is going on inside society. Marxist influence is present as Cox also looks at production as being the one that matters the most in determining who benefits. He is also adamant in defending the importance of looking at the intersections between how states are organised, how production is organised and the way international organisations are organised. According to Robert Cox, ideas are at a latter stage spread through hegemony in a subtle way and also produced through consent. He criticises the Neo-Realist split between politics and economics, claiming that this is not a real split as the state supplies the basic conditions to allow for capital accumulation. The realist balance of power is in this sense very superficial as sovereignty is in fact believed to carry out internal and external actions whereby economic issues become politicized and interstate relations allow for ways to explore labour internationally.
The author divides theory between problem-solving, that which tries to ascertain the best practice while accepting the basic premises of the tacit rules of international relations, and critical theory, that which focuses on the origins of power. Robert Cox understands the state as being an intermediate between the world order and social forces. His analysis is primarily materialistic but he also brings attention to how ideas have dialectical relationships with material conditions and institutions, meaning that these ideas also have an autonomy and agency of their own. This is important as it must be taken into account when those adopting Robert Cox’s tools carry out his suggested historical approach for understanding the succession of arrangements of ideas, institutions and material capabilities (Berry 2007:13).
An analysis of China in Africa through a Coxian approach would look at the historical roots of how China is asserting its hegemony through consent and would make a claim for critical theory to be involved instead of that restricted to problem-solving. Robert Cox’s dichotomy also helps inform the policy options that Mozambique’s governance actors have when it comes to their engagement with China. The content of these options (transmission belt vs. facilitator for development) are further explored in the Chapters below, particularly Chapter 6.
2.4.3. Susan Strange’s structural power

Susan Strange’s structural power framework also fits the Critical theory school. Quite different from a direct and visible form of power-exercise, structural power works through shaping the framework within which states interact with each other. Structural power is hence not about the explicit use of force, but rather about the ability to set the agenda. The state, or group of states, who posses structural power, have control of the political agenda, and thereby substantial control of what issues will be objects of political debates and decision making (Strange 2004). Robert Cox also adopted Strange’s notion of structural change. He argued that this change tended to take place whenever there was a mismatch between two types of ideas or ideational phenomena, that of intersubjective understanding and that of agent-specific ideas, i.e. between individual perceptions of “self” vs. “other” and collective, ideological perceptions of “self” vs. “other”. A shift in structural power on a global scale can now be identified, as the developing countries have grown stronger and become more visible on the international arena since the 1990s. The developing world was not meaningfully involved in multilateral trade negotiations before the launch of the Uruguay Round and the creation of the World Trade Organization (WTO). At this point the markets of the larger developing countries had gained enough significance for the developed world, and they were therefore brought into the negotiations (Mattoo & Subramanian 2004; Drapner & Sally 2005).
Under this approach China can be seen as now attempting to enforce a hierarchical structure in the capitalist world economy and leaving poorer African states dependent on it. Now the central question remains if there is indeed a relationship underpinned by a vicious circle dominated by declining terms of trade between China and Africa. If so, is it right to consider that China, as a new core, is extracting profits from Africa which is chronically in the periphery? In this perspective, China’s embrace of the capitalist apparatus causes it to replicate the constant demand for the extraction of value from labour - a common feature of the dominant classes since the industrial revolution and a tendency which was re interpreted by Wallerstein at the level of interstate relations.
2.4.4 Through the lenses of Constructivism

Constructivism presents a clear epistemological break with other more mainstream IR schools. Social facts, the object of study of international relations, can only be understood through the textuality of contextualization. This means that systemic theorizations, underpinned by the rationality of actors are flawed since this rationality is relative and socially constructed. So, from the moment that identity is considered as being at the core of every action, IR theory, and how you actually “think” the world becomes the all-defining exercise.
Adopting a Constructivist approach to the engagement would lead us to take note of the importance of identity and how this identity has supplied China and Africa with a bridge supporting cooperation (Ruggie 1998; Wendt 1999). Wendt accepts some premises of realist thought including the claim that states should be the adopted political unit of analysis but, contrary to the realist prejudice that states are inherently aggressive. Wendt believe states are actually bound to create social relationships between them and therefore can potentially create a set of specific rules and benign modus operandi between them. State identity and interests cannot be taken for granted. The idea of the state is a social construction itself and the power of ideas, culture and identity cannot therefore be discarded.
As an emerging superpower, China now has clear institutional and economic ambitions. In its rise, China sees its African engagement as strategic as it arranges and pushes for its political space in global politics. As a player active in international organizations it now craves for support for its actions as an agent of the global polity. Thus, one important dimension of its attempt at accumulating more power is that of the social and cultural. As Joshua Kurlantzich (2007) chronicles in his book on China’s charm offensive, evidence of the potential of China as a socio-cultural magnet is already evident, particularly around Southeast Asia. China acknowledges that the way it represents itself to others ends up having real and important consequences and is therefore stimulating varied forms of horizontal linkages that are transnational in nature. This fascination and attraction towards Chinese culture and China’s model is now also being actively stimulated in the African continent.
2.4.5. Insights from Neo-Liberal elements of International Relations

“Realism is better at telling us why we are in trouble than telling us how to get out of it” (Keohane 1986: 198)
The classical origins of Neo-Liberalism and liberalism rest with authors such as Immanuel Kant, John Locke, Stuart Mill and Adam Smith. What the classic texts all have in common is basically the defence of reason as the only way to ensure survival, and that solving the necessities of individuals is the starting point to creating successful forms of cooperation and stable political systems.
It is now important to distinguish Neo-Liberalism as is commonly used in a detrimental fashion to characterize the failures of the economic model of the Washington Consensus and Neo-Liberalism as an IR school. Neo-Liberalism can hardly be understood as a stand alone school given its wide number of strands and uses as a term. In this study, its conceptualization refers to a specific theoretical revision and re-interpretation of the tenets of IR first advanced by Neo-Realism. These first tenets consisted in a view which regarded the international system as anarchic, originating a version of the state of nature at the international level, and of states as individually rational actors. Neo-Liberalism emerged as fundamentally disagreeing with Neo-Realism when it comes to the room there is for cooperation in the context of relations between states of “selfish” rationality. Above all, this school of thought believes that absolute gains will tend to take primacy over relative ones.
Neo-Liberalism’s central argument is that actors in the international system should actually be understood as having the potential to discuss and interact in a forum rather than invariably competing against each other in a “chess-board”. While in this forum, actors constantly recreate themselves, adapt and alter the rules of the game in contrast to the strict relative-gains rules of the realist game of chess. How you understand the reasons for states to behave in a cooperative way also has an important role in defining what your understanding of the nature of international relations is. A structural explanation of cooperation will be markedly different from a functional one. In a structural explanation, moves towards absolute gains will be seen as the independent variable while a functional analysis suggests cooperation is the result of rational-actor behaviour that minimizes information costs and curbs inefficiency.
These two different starting points are the different starting points that divide the neo-liberal spectrum between those closest to Neo-Realism and those rejecting the systemic attribution of anarchy and are closer to the more economics-based and functionalist version of Neo-Liberalism. The misconception over the notion of Neo-Realism as remaining the most powerful theory to explain and understand how the international system operates is also one of the reasons why authors such as Carporaso (1993) came to realize that notions like multilateralism, that realism struggles to come to terms with, have been underrepresented in the academic world of IR. In the current conditions of the global political economy, interdependence is the central phenomenon that brings about a diffusion of power in international relations (Simmons & Elkins 2004). In this view, the global political economy might create a more suitable environment for multilateralism, the emergence of international institutions and cooperation by means of a socialization process of states through evolving norms, rules and communication.
Concerning China’s engagement with Africa, given the recent nature of this wave of engagement, both actors are now starting to define what these norms, rules and forms of communication are. A small repertoire of what these specifically are will be advanced below and noted throughout the empirical examples. The neo-liberal paradigm improves upon the neo-realist one in that it privileges issues of time and trust as relevant factors in determining the success of norms and socialization at the international level and cooperation. Under this rationale, actors are less likely to free-ride or defect if they know they will lose out in the long run. It is in this context that the role of ideas and discourse comes about. One may agree with the notion that Neo-Realism “tells us a small number of big important things” (Waltz 1979:329) but that the things Neo-Realism tells us are indeed too small and need to be revised even if its parsimony and scope are to be praised. Given this, if Neo-Liberalism does accept “states” as the most basic and dominant unit of analysis for international relations, it also acknowledges the importance of non-state actors. This school accepts the pressures of the anarchical system in propelling states to rationally compete with each other in terms of power. This acceptance, however does not deny the possibility for mitigating this competition and of actually channelling it into new forms of institutional innovation and cooperation that goes beyond instinctive self-help.
Keohane (1984; 1989; 1994) basically fuses politics and economics in order to go beyond the limiting security obsession of neo-realists. Such proves to be particularly important for understanding the behaviour of important sub-state actors in our analysis of China-Africa relations. Because this study will be assessing development in a broad sense, the division that Neo-Realism makes between high and low politics will be rejected since the economy is seen as having a fundamental role in international relations. Also, Neo-Liberalism connects the domestic with the international sphere much more successfully, saying that it is not possible to speak of national interest and international politics without mentioning domestic politics. The case is that interdependence can mitigate attrition between states as long as there is the likelihood for stable trade benefits in the future (Copeland 1996:7). This leaves out only two options for states: either they close down on themselves totally or they internationalise themselves through international institutions.
Interdependence represents in this case a form of mutual dependence which is not accounted for in neo realist premises and one that becomes very obvious in China’s international relations with Africa. This is the case because the impact of interdependence in the international system is one that opens up for the possibility of harmony and cooperation between states. Such is somewhat of a necessity as the political units (in this case the state) will not be able to produce everything they need by themselves. Interdependence brings about benefits and costs which are however not symmetrically distributed among the participants, meaning that more powerful countries tend to try and transfer the undesirable costs to the weakest states. This asymmetric interdependence sustains the neo-realist notion of sovereignty as states still impose themselves on one another and remain the supreme authority within their territories but does challenge the notion of states as autonomous units which invariably act towards one another in a rationale of self-help (Katzenstein 1976:8).
Also, this asymmetry is rather prominent in China Africa relations in general and China-Mozambique relations in particular. China constantly insists in labelling its relationship with Mozambique and that with the whole of Africa as one of equals. The characteristics of their economic interdependence however tell a different story as the trade balance favours China and other aspects of the engagement make for an uneven relationship which is in turn not necessarily of an exploitative nature. Even though there is a state structure behind them, Chris Brown (2001:38) praises Neo-Liberalism for acknowledging that “the decisions and actions of non-state actors can affect our lives as much as the decisions and actions of states, if not actually more”. Support for this can be found both in the two levels of China’s economic engagement of Africa: the level of big business and state-led enterprises and that of more autonomous small and medium enterprises. Just look at the importance of institutions such as ICBC, China Exim-Bank and SINOPEC in this same engagement. These entities driving the high profile engagement, although not wholly detached from the PRC state apparatus, have progressively gained more autonomy and will tend to continue to do so in the future. Under Neo-Liberalism China’s accession to the WTO is seen as proof of how international institutions and the will to join international institutions can affect and alter the behaviour of states, in this case China. These international institutions have brought about reputation costs, allowed for issue decomposition and issue linkages, reduced transaction costs and information costs and brought some forms of enforcement measures.
China is growing while making active use of international institutions to promote the country’s development of global power status, as Michael Komesaroff (2008) shows in his paper looking at how China is now relying on the International Chamber of Commerce in Paris to safeguard its massive investments in the Democratic Republic of Congo. China also wants the protections that the systems’ rules and institutions provide (Ikenberry 2008). According to neo-liberals there are many cases in which institutions do matter. They can: provide information; reduce transaction costs; make commitments credible; establish focal points for coordination, and in general facilitate the operation of reciprocity (Keohane & Martin 1994). What Keohane & Martin defend is that states can functionally make use of the existence and good function of institutions to improve the quality of information and optimize potential gains from cooperation. They also make more than, as Mersheimer criticizes, simply preventing cheating. Institutions have the ability to work as moderators and control to a certain extent “fears of unequal gains from cooperation” (Keohane & Martin 1994).
The idea of complex interdependence is particularly useful since there are multiple channels of access between the societies and actors under analysis, something that will become particularly evident in chapter 7 exploring the Macau-Forum. In addition, and except perhaps for the issues of arms trade and peacekeeping, force has been of low salience in defining China-Africa relations. At least when it comes to conventional military power-play, force has played a small role in defining the relations. Lastly, there has been a clear fluidity and variance when it comes to the matters of a hierarchy of issues in the relationship. Although Taiwan and the one-China policy have usually been number one in the diplomatic agenda, this issue starts to lose importance as other issues of economic interest, trade, resource security or other international diplomacy affairs become more salient and any “issue-area” might be at the top of the international agenda at any particular time (Keohane & Nye 1989:24). In this sense, Keohane’s Neo-Liberalism adopts what Carporaso (1993) terms a socio-communicative approach in that it updates the systemic “stiffness” of Waltz and focuses on the previously mentioned consequences of the practical rules and norms that multilateral institutions have brought, attributing some significance to aspects of communication, language and persuasion.
2.5. Conclusion

The previous theoretical discussion allows only framing the discussion and analysis but also to provide the tools with which to break down and analyse the examples below and with which to enter the ongoing academic discussion on China-Africa. Chris Alden’s ideal types were used as ways in which to understand the role of China in Africa to review and organize the literature. The literature analysing China in Africa has been boxed as: a development partner, economic competitor and colonizer but still these categories are not final. It is important to keep in mind that each author frequently reflects views from all three understandings.
The previous discussion of IR theories’ contribution to the debate started by describing the philosophical foundations of each school and what insights and tools each can provide to analyze China in Mozambique. All the schools described will provide different useful, often alternative, dimensions of the engagement.
Neo-Realism tends to see China as a competitor, striving towards colonialism and wanting to gain as much relative power vis-à-vis Africa and other international stakeholders in the continent. Susan Strange’s framework can be used to observe how China is now making use of its influence in affecting structural power. Coxian IPE can in turn be used to underpin the views of those who claim China is wishing to build and consolidate its power structures of economic dominance and submission. Constructivism will in turn see China’s relation with Africa as open-ended, defined by the evolution in nature of discourse between the stakeholders of the relationship. The tools of Neo-Liberalism show that there is theoretical room to understand China’s engagement as either going down a path of harmful competition or of a development partner.
These frameworks are not always compatible but in the occasions where this happens, it will often be the case that a lack of consensus will put into evidence a specific uncertainty regarding China-Africa relations that is worth pinpointing and exploring.
China-Africa-Mozambique relations will be analysed not so much within the current discourse of the scramble perspective, seeing China as a new colonial power but rather will try to frame it within what we interpret as the nature of the contemporary global political economy and how this is influencing the China-Mozambique-Africa relationship. This does not mean however we discard all insights from the scramble colonialism arguments. Rather a discourse that is more reactive to Africa's interaction with China is opted for. Adopting somewhat of a constructivist argument, while there may be certain inherent characteristics similar to the previous colonial scrambles, the discourse remains limited. The scramble argument is situated within a Western-centric framework which is in itself flawed since it takes as its main reference point the behaviour of Western powers vis-à-vis Africa. It would be easy for African political and economic elites to fall into the same trap of becoming overly dependent on China and India as alternate partners to the West. Instead it is cautioned that China plays by the logic of constituency-economics like all other sovereign states, which are seeking permanent interests and not permanent friends.

Chapter 3 – Background Chapter

3.1. Introduction

This chapter will look at the broad setting of the analysis. It will start by summarizing what the conditions in international political economy which are drawing China closer to Africa. Then, an exploration of the dynamics of China’s rise is carried out in order to understand its actions in Africa. It will recount the story of the economic and political evolution of Mozambique with a particular focus on the period of 2000-2008 and describe the unfolding relations between China and Mozambique. Lastly, it will finish by investigating in more detail a few key actors in the engagement, namely China Exim Bank, the African Development Bank (ADB) and FOCAC. The description of these unfolding relations and actors will provide an historical and institutional framework to inform the analysis.
3.2. Historical snapshot of China in Africa

In many cases China’s ties with African countries date back to its support for African anti-colonial struggles in the 1960s. Following the establishment of the People’s Republic of China (PRC) in 1949, relations were founded with post-colonial Africa through “moral and material support for different generations of national liberation and independence movements” (Le Pere & Shelton 2007:18). China’s first official ties with an Africa country began with Egypt in 1956. Since then, the intensity of China’s engagement has been intermittent, coinciding with more or less favourable economic and political conditions at home, the trends in international political economy and the very political situation of Africa. This meant that there was a period of particular interest from China in Africa during the 1960s and early 1970s that coincided with China’s venture into the power struggle of the Cold War occurring after the Sino-Soviet split. This period contrasted with the quieter decade of the 1980s when China was focusing on its internal affairs and organizing its recovery for a post-Mao era under Deng Xiao Ping (Alden 2007:9).
3.3. The role of the changing political economy

The international architecture of power is at a crossroads. United States power, if not waning, is at least visibly being challenged as downturns in the traditional power’s economy are set to push China to look further into other alternative markets and economic partners. The growth of the BRIC countries, which include China, as well as the affirmation of the European Union as causing them to assume prominence. Simultaneously, the United States and China maintain an informal system of chain gang economics through which China’s economy has been closely interconnected to that of the United States and vice-versa, by means of China’s purchase of American treasury titles and also simple trade (Bello 2008). Meanwhile, the systems of international finance and trade endure sturdy, save for the challenges of crisis, market corrections and the ambiguities of speculative capital. In a curious and very significant development, previously liberalization-friendly developed countries now tend to be protectionist, losing their traditional role of liberalizing leadership in the key organization that seeks to expand and uphold common rules for international trade – the World Trade Organization (WTO) and its trade rounds. American-led liberalisation of multilateral trade, witnessed particularly in the Uruguay round and during the 1980s and 1990s, has now come to a standstill. Lobby groups from uncompetitive sectors such as steel, textile and farming, important for the constituencies of those negotiating the deal, pushed the Americans and Europeans to put the “brakes on” liberalization and become more protectionist. Indeed, as Brazilian foreign minister Celso Amorim observed, “the proposals set forth by the G20+ , which Washington holds responsible for the meeting’s failure to reach an agreement are 70 to 80 percent in line with the positions held by the United States at the start of the Doha Round” (IHT 2007). The European Union has gone through a very similar transformation, with the added detail that it is far more concerned with its own integration process with the East. Emerging powers like Brazil and China are in this context now part of a group of shifting alliances in the developing world who are pushing the most for liberalization in certain sectors in ways that developed countries are not.
3.4. More dynamic South-South Cooperation

Improvement of transportation and financial systems, supply chains as well as in information and communication technologies are other important vectors allowing for the scale of current engagement. In this context, the G20+example comes about as an important example of South-South cooperation and of remarkable stance coordination for a variety of reasons. It was the first time that China assumed a more proactive and leading role. It also brought together very diverse regional powers, something that is notable not just in harnessing synergy in economic trade bargaining, but also in the symbolic underpinnings of the coalition and in the moral weight it carries, representing over half of the world population (Narlikar & Tussie 2004: 953). This picture gives the G20+ a window of opportunity to simultaneously lead international negotiation in trade and economic relations and invert the traditional bargaining stances. This switch has now put developing nations as leading promoters of broad trade liberalization with small adaptations, and rich countries resisting it. We are witnessing, in the words of Mario Marconini, former Brazilian Secretary of Foreign Trade, a “shift in paradigm” (IHT 2007). The telling story of how the G20+ maintained cohesion at Cancun despite many believing in the impossibility of it happening (Tussie & Narlikar:2004) is a rather encouraging example of how slowly developing countries are taking their development into their own hands.
On a different level, the Macau-Forum can also be understood as a tool designed in part to stimulate such cooperation, and is a telling instance of collaboration of such nature, one that will be analysed in more detail in Chapter 7. The organism was created to foment economic and political relations between China and Portuguese-speaking countries and although it has Portugal, a developed country from the North, as one of its members, it consists for most part in a group of countries from the developing world coming together and discussing issues that they are directly interested in. China has been using it as a multilateral platform for conveying political and economic exchanges that complement the more traditional bilateral channels. An important additional dimension as to why China has turned towards Africa at this particular point in time is that the African continent is experiencing increasing political stability and growth. These relatively more peaceful times have coincided with China’s economic boom and an adjustment of the international economy from being pushed by the economies of mature developed countries to having developing countries’ emerging markets (like China) as the major motors of growth. As this trend goes full circle, China’s extensive and sometimes disorganized economic boom has witnessed a transformation of China’s interaction with the international economy from reactive to proactive. Strategies are no longer devised in an ad-hoc manner, following pushes from international actors and investors wishing to take a piece of the pie of China’s great economic potential but in fact, China now assumes the driving seat, becoming innovative and strategic trend-setters at the international level. China’s presence in Africa is, in this context, one of several components of this pro-activeness in China’s international relations strategy. This global trend shows how different aspects in the architecture of the global political economy have acted as “incubators” for China’s engagement with Africa. The subsequent economic boom of these emerging powers has raised a strong demand to source resources and to find new markets for products.
3.5. A new era in Africa’s renaissance

In contrast, the concept of constituency-economics can also be usefully put to use when looking at China-Africa relations. The inevitability of what can be understood as “constituency-economics”, originally reflected in Putnam’s two-level game theory (Putnam 1988), becomes evident when traders and investors allude to their home constituencies as having insurmountable interests they need to uphold and defend on the international stage. The term “constituency-economics” alludes to the persistence of a “zero-sum” game in the politics of international trade, something that Krugman (1997) also acknowledges. This is important on two levels. Firstly, it shows how crucial it is for developing countries, like China and Mozambique, to come together and coordinate their economic and political stances by forming coalitions and bandwagoning. Secondly, it explains why, China has also occasionally been “shying away” from multilateralism and, in parallel to its South-South multilateral initiatives, been paradoxically pushing for bilateral and Preferential Trade Agreement Agenda when it suits its goals. The same can be said for the rule-setting of trade negotiations that underpin Mozambique’s stance and bargaining vis-à-vis China. In order for the negotiation dynamics and outcomes between the two states to effectively work towards the development of Mozambique, the GoM’s stance and economic diplomacy will have to be, to some degree, at par with the needs of the constituencies affecting this very development the most, namely trade unions, organizations in charge of the strategies of the leading sectors in the economy, farmer’s unions among others. Achieving a situation of optimal compatibility of the different constituencies, whose interests are projected in the international dimension of economic diplomacy, is not an easy, straightforward task but one that should first acknowledged and second sought after.
3.6. General analysis of China and Africa relations

Issues of trade and investment between China and Africa will be analysed in more detail in Chapter 4 but a brief overview of continent-wide data is useful at this stage. Traditionally, private money has been sceptical about investing long enough in Africa to build infrastructure because of the risks and in spite of the high returns associated with such endeavours (Hughes & Brewster, 2003). This has meant that most investment in Africa’s infrastructure has come, in the last three decades, from aid/development funds and from institutions such as the IMF and the World Bank. Apart from the TAZARA railway linking Zambia and Tanzania, China’s flagship infrastructure project embodying China’s aid to Africa in the 1970s, no new railways have been built in Africa since colonial times. Although apparently not directly affecting Africa, purchases such as that which saw China buying a considerable stake in Blackstone (BBC 2007) can have important developments for the continent in the medium-term. First of all, a considerable part of the funds that Blackstone is set to invest are to be 'put aside' for more risky and development orientated goals. Second of all, and most importantly, Blackstone is not likely to be investing in China since a figure of around US$1.4 trillion reserves would invariably appreciate the yuan, something the PRC government has been clearly avoiding at all costs. As long as China Central Bank maintains the peg to the dollar and continues to run trade surpluses, getting excess FDI, that reserve amount will grow and will be destined to remain outside China. This leaves Africa with great potential as a destination for capital looking for higher risk and return investments. As Chidaushe (2007:123) notes, “Chinese planners foresee an era where African minerals and genetic resources will be more worthwhile than US treasury bills”.

China has then recently turned to engage with Africa, and trade volumes with the continent have witnessed exponential increase over the latest decade with the value of trade between China and Africa increasing by an average 24 percent between 1995 and 2007 and total trade standing at approximately US$ 74 billion in 2007 (TRALAC 2008). Oil exports dominate exports from Africa to China while the breakdown of China’s exports to Africa, although having an important component of textiles and manufacturing, are more multifaceted and varied.

According to an April 2007 IMF report (2007), developing countries in general and Africa in particular are expected to keep growing strongly thanks to benign global financial conditions and high commodity prices. The purchasing power of Mozambique and that of the rest of Africa, except for South Africa, still remains minimal but the situation is slowly changing as is evident from recent economic reports about the continent (UNDP 2007). Nevertheless, given a parallel global recession, Africa’s growth rate is still predicted to slow down over the coming years, albeit not significantly. With a growing population and rising consumer incomes, Africa can progressively offer the markets that China needs to vend its products, and its resources can also be explored more efficiently during peaceful circumstances.
The politics of China in Africa are of a great complexity. Migration has been an important dimension and gauge of the different intensities in successive historical periods of the engagement. Chinese migrants have been entering Africa in waves for decades that roughly vary with the intensity in economic and political exchanges between China and Africa. Corkin (2008:5) noted that “many Chinese communities were established in African countries before the latter’s independence. Having settled for several generations, some of these migrants have naturalised and are a recognised minority group in many countries”. Interestingly, the Chinese Diaspora in Africa is generally neither as deeply rooted as for example the Indian although there are a few exceptions such as in Gabon and South Africa where Chinese migrants are rooted since early 20th century (Corkin 2008).
In its engagement with Africa, China is in some instances challenging the sovereignty and the traditional moulds of inter-state relations, and in other instances cementing it. On the one hand, the challenge to sovereignty occurs for example when China focuses its engagement with private companies or particular stakeholders within particular regions within sovereign states. This is the case for example with the Niger Delta areas and the private oil companies operating in Nigeria as well as the example of the oil-rich area of Southern Sudan. In such cases, although China is on the side of the sovereign governments as it deals directly with the capitals (Abuja and Khartoum) its concrete interests sometimes reside in areas which have been in conflict with their central governments (Southern Sudan and the Ogaden region). China’s expressed interests, involvement and investments make these areas ever more appetizing for central governments to hold on to, but at the same time it exacerbates the will of these groups that have been economically and socially oppressed by central governments and who engage in conflict to retake what they perceive to be rightfully theirs. The case of the Niger Delta region in Nigeria illustrates this point. The Movement for the Emancipation of the Niger Delta (MEND) sees no socio-economic dividends from the oil revenue that is paid by MNC’s to the central government be reinvested in improving social and economic conditions in the area.
In some of Africa’s most politically fragile states, neo patrimonialism, whereby leaders use the realist state template of the international order as a platform for sustenance by corrupt behaviour, is widespread (Herbst 2004). In such cases, China’s strategies have adapted well to the workings of neo-patrimonialism. In a handful of African countries there are successive stories of political instability or of chronic autocracy that show how regime-seeker factions tap into a template of sovereignty that is discursive but also institutional. In patrimonial networks, resources flow from a top-down patriarchal-pyramid of hierarchy, on whom the rest of the networks are dependent. If these persons lose their resource bases or positions of power, large numbers of people are negatively and dramatically affected at once. The result is a situation of persisting structural insecurity and unpredictability (Vigh and Whyte 2003:148) that China now has to deal with. So far China has shown good skills at navigating these political waters, doing so with pragmatism but also an obvious willingness to take risks and that has given her an edge over other actors that are engaging with Africa such as India, Japan and Brazil. It is not clear to what extent the added importance that China’s engagement brings to these sub-state actors. It does however give “food for thought” on how to understand the unit of the state, international relations and most importantly the meaning for Africa of today’s acceleration in economic exchanges.
On the other hand, China generally prefers high level diplomacy to set up its aid, trade and investment. As a rule of thumb, the public and the “corporate” private sector are at times one and the same in the African state given the tendency for the appropriation of the state by patrimonial networks of patronage (Chabal & Daloz 1999). Indeed, because the use of the state as an instrument for the accumulation of wealth is particularly prominent in some African states, top private sector companies of those countries sometimes lack the efficiency and the will to seek markets and expand. China’s engagement therefore tends in some cases to reify the sovereignty and the political leverage of patrons in the state apparatus. This connection between African elites and external actors via the international global economy puts into evidence what is a drastically different interaction of regions and states with the current accelerated processes of economic exchanges.
3.7. Knowing China to know China abroad

The reform and opening up of the Chinese economy started in 1978. In the 1990s China’s option of reaching out to opportunities for foreign investment and resource security in the international arena became clear. After considerable growth rates in the 1980s, the Chinese economy began a truly thunderous and unprecedented expansion in the 1990s averaging around 11 percent GDP growth per annum. Any analysis of Chinese dealings abroad must be understood against China’s internal background and refer back to it as a prime engine motivating Chinese international relations. The economic boom provides China not only with indispensable capacity and leverage (for example in the ability to provide loans) but most importantly with the determination to seek out new or renewed markets, suppliers and allies.
The year of 1992 is a landmark in China’s economic history. This was the year in which China went from being a self sufficient energy producer to a country that is dependent upon external sources to meet its energy requirements. The fact that the country possesses so few natural resources relatively to its needs has put China in a position where the natural resources of other countries have become crucial to its continued economic development (Pamlin & Baijin 2007:24). So, while there seems to be no visible end to China’s growth, its demand for energy is also going off the charts. China is now the world’s second largest energy consumer with its consumption almost trebling since 1978 (RICS 2008). China’s strategy now consists of diversifying its energy interests in different baskets. In the internal market, it recognizes the problems of dominant energy production through coal and will seek to have its Research and Development departments to, in the medium-term, find “greener” and more efficient options for coal production and alternative renewable energies. According to the “China Sustainable Energy Program” (2008), China has “established the world's most aggressive energy efficiency target, calling for a 20 percent reduction in energy intensity (which is a nation's energy consumption per unit of GDP) between 2005 and 2010”. Externally it has no choice but to try and keep up with demand by securing deals in the Middle East, Central Asia, South America and Africa as its limited reserves domestically deplete. China’s demand for raw materials has been rising over the last ten years. At the same time, demand for primary commodities is likely to remain volatile, as has been observed by the OECD (Goldstein et al 2006). This reality might engender strategies that over-rely on mono-commodity export and cash crops as an enduring threat for the future of African economies.
In effect, the success in the accumulation of capital by China in the last couple of decades has been tremendous. As Callinicos (2005:362) puts it: “where would the world economy be today without the prodigious accumulation process under way in China, a process that is made possible by a very tight set of linkages between the state, the banking system, and both publicly and privately owned firms?”. In the early days of its growth China used to be in competition with Africa in much more direct way, as Chris Alden notes, “before it became a leading FDI exporter to the continent, China could be said to be a serious competitor for foreign investment in Africa” (Alden 2007: 127). In order to explain such ascension, Hussain et. al. (2006:56) identified three salient institutional features for the Chinese development: decentralisation, reforms of the rural economy and moving from old to new enterprises.
When the economic reform of China started, around 80 percent of Chinese labourers were active in rural areas. When privatisation of Chinese agriculture was introduced, its output was raised dramatically. As rural income was raised, the market for rural enterprises expanded and rural industrialisation came about to an extent unseen in any other developing country – village and township enterprises were important elements of growth in the 1980s and in the early 1990s (Hussain et al 2006:65 and Chow 2000). Chow notes that “the secret of success of China’s economic reform is to allow the non-state actors to develop in the setting of a market economy” (2000:427). In 2001, the Chinese government initiated its ‘Going Out’ strategy whereby the corporate sector was encouraged to invest abroad (Kaplinsky et al 2006: 15). It has also been argued that one of the conditions that stimulate growth generally is the “experience of linking new ideas of science and technology to a home-grown path of reconstruction” (Chidaushe 2007: 122). The argument holds that this constitutes a model of development that holds a seemingly important lesson for Africa, and that China’s engagement provides an opportunity for Africa to learn how to organize trade policy, move from low to middle-income status and educate for quick pay off (Chan-Fishell 2007:139). Such a lesson can however be markedly double-sided; China’s growth in the last decades has at times been characterized by high labour flexibility, regional inequalities, initial low labour standards and lenient environmental norms. In the case of China’s development of businesses and companies, the Chinese State has begun to address and overcome these issues only when they developed into a higher-end productive apparatus (Moran 2002). Africa needs to be aware of such problems as the flows of investment keep growing.
3.8. The importance of China’s political layers

When it comes to China’s political dimension, it is important to remember that China as a state is not a closed, uni-dimensional entity and is in fact extremely multi-layered particularly when it comes to its economic dimension. It has been notable for example how its different provinces holding considerable autonomy courtesy of a central government which actively fosters economic competition between regions for better economic performance. At the time when the government “releases” its “Chinese champions” (The Economist, 2005) in the international arena, equipping them with all sorts of economic incentives and government back-up, these companies have already gone through a careful process of creative destruction that selected the most competitive and profitable companies that have previously proven themselves in China’s internal and inter regional economies (Zeng & Williamson, 2007).
The difference in diplomatic behaviour towards Africa can also partially be explained by looking at its dynamics as an extension of its understanding of the workings of its internal politics. In China political reform has been carried out primarily through inner party democracy (dangnei minzhu) while China’s political structures of “soft and modern authoritarianism” (Shelton 2005:87) puts into evidence how the regime gives precedence to economic growth over political reform. This modus operandi reflects itself in China’s engagement of Africa showing China as less demanding when it comes to governance and as offering a viable and friendly alternative development model. It has notoriously led African states to re-evaluate and question the premises of traditional western-style diplomatic engagement.
3.9. China and international civil society

As was witnessed in the literature review, accounts of the Chinese engagement with the African continent are rife and contradictory. Notions of benign engagement with mutual benefits often put forward by African leaders are contrasted with fears of a new era of colonialism and scramble for resources by the “Yellow Peril of the East”. In 2008 Beijing faced serious criticisms over the Tibet issue and its engagement with the Khartoum regime over Darfur. These tensions are being played out in the global public space by international civil society groups calling for a boycott of the Olympics, which China hosted in August 2008. Such global domestic opinion has seen China face a serious public relations backlash that impacted on the Olympic torch relay which was marked by controversy and had very bumpy ride around the globe (Taylor 2008). It also brought into focus some of the issues that China has to deal with regarding investments in domestically unstable environments in Africa where there is intra-state conflict. Conversely, China is, for example, not the only country that is economically active in Sudan. In 2003, India’s Oil and Natural Gas Corporation, Videsh Limited, acquired a 25 percent stake in Greater Nile Petroleum Company, a conglomerate also including CNPC (Beri 2005:13). Biswas (2007: 8) notes that ”the Government of India went for the deal and helped the Government of Sudan develop its oil industry in spite of threats from Sudanese rebel groups, on the one hand, and United States sanctions against Khartoum over the crisis in Darfur, on the other”. In effect, not much is reported on India’s investments in Sudan nor is there any criticisms levelled at Delhi for doing business with Khartoum. Perhaps it is China’s permanent Security Council status that puts it in the firing line because it has to be responsible. But this is not a good indicator of global responsibility as demonstrated by the United States invasion of Iraq or Washington’s own strategic interests in Sudan, or Russia in Georgia.
Furthermore, Sudan is an important producer of gum Arabic, supplying more than half of world output of this commodity used to make food stuffs, pharmaceuticals and sodas, of which the most well-known is the soft drink Coca-Cola (Cecil 2005). The United States currently imports gum Arabic from Sudan worth several billion dollars each year. Moreover, more than half of the oil that China extracts in Sudan is sold on the international market (Downs 2007). Hence, the Sudanese oil is sold to many of the countries that criticise China’s presence in Sudan. The above examples seek to contextualise the critique against China. The aim is not to excuse the behaviour of any superpower, but to understand the current debate and ‘call a spade a spade’ (Alvarenga, Jansson, & Naidu, 2008 incoming).
3.10. China’s engagement and the importance of symbolism

For China’s diplomats, symbolism is absolutely central to any concrete or material set of diplomatic moves (Alden 2005:140). In fact, China’s engagement with Africa has been described early on as a “charm offensive” (Kurlantzick 2007) and noted as a constructivist-friendly way of analyzing China’s engagement. Getting Africa on its side through gestures, history, ideas and symbolism goes a long way. Such symbolism does in fact hold an important historical dimension, as it is history that “imbues the language and approach of China-Africa relations use of an interpreted shared past, seen in ritualistic symbolic and instrumental forms” (Large 2007:156). The benefits of China’s warm relations with Africa will be evident at the formal stage of international institutions (such as the UN and the WTO) but also in the informal affairs of international relations realpolitik, particularly when it comes to the Taiwan affair. These wider intents are materialized in the form of well orchestrated donations such as those that comprised the widely publicized gestures by China of offerings or partial (financed) offerings to Mozambique: the parliament buildings in 1999 (US$ 5 million); the Ministry of Foreign Affairs in 2004 (US$12 million); and the Chissano Conference Centre in 2003 (US$3.9 million). It is in the context of symbolism and of a diplomatic charm offensive that for example the supply by China of material to Mozambique’s newly integrated army (Alden 2005:141) must be understood.
3.11. Brief Institutional Profiles

This section on China Exim Bank, FOCAC and Africa Development Bank serves to introduce a few actors which are particularly important for this analysis of China and Mozambique’s development. China Exim-Bank is a major channel through which China has presented Mozambique with investment and concessionary loans. FOCAC is the flagship institution through which China and Africa define the general lines of their political and economic relations. African Development Bank is a major development partner and influential policy-maker when it comes to Mozambique’s strategies and visions to achieve sustained development
3.11.1. Review of China’s Export and Import Bank (Exim Bank)

Exim Bank was created in 1994 and was by 2007 the world’s third credit agency (Ellis 2007). On the receiving ends there have been projects such as dams, railways, power plants, mines and oil facilities. China Exim Bank traditionally works with loans, guarantees, bonds as well as miscellaneous credit. Together with China Development Bank, the two are the sole administrating bodies of concessional loan financing. Exim Bank is in turn divided in two divisions overseeing financial outflow, a commercial and a concessional arm. Lastly, it carries out three major functions: 1) it is the official export agency looking after trade and investment guarantees, 2) it provides aid administration (i.e. evaluating projects) and 3) it acts as the policy bank that deals with foreign aid that comes to China (Davies 2008: 20 - 21). The policies of China Exim Bank are seen as being close to China’s foreign policy. The bank is the most important broker through which both China’s government and great quantities of quasi-private money flowing into Africa. This has meant that, in its way of operating, one has witnessed a tendency for loans to have conditionality that tie countries down to medium/long term obligations in the provision of resources and raw materials. Literature from IRN by Peter Bosshard (2007) has looked at the bank as having a negative impact on governance, environment and the social fabric of African countries. On the other hand the project has been welcomed by government and drawn compliments by some private investors and Mozambique economic agents.
In their partnership with Justiça Ambiental, IRN dissected the particular case of Mphanda Nkuwa and the foreseeable impact of the dam. Exim Bank’s financing and government dealings are in their report on the dam regarded as lacking enough transparency. In addition, the bank is understood as potentially becoming one of the main drivers of a new wave of debt in Africa. To this regard, the chairman of the African Development Bank provided a comment which is worthy of note and must be cautiously analysed. He argued that “Yes, debt sustainability is important but development sustainability is what we are after" (Kaberuka 2007). Improvement in Exim Bank´s environmental, social and developmental standards are therefore likely to evolve slowly and take some time to reach the standards of most developed countries and its lending agencies. The interesting dilemma here is that although Exim Bank is of considerable size and no smaller than its other financing counterparts such as OECD, IMF and the European Investment Bank, its way of operating in the developing world is said to have yet to even comply with the environmental standards applied in China itself. This means that there still needs to be an adjustment process of Exim Bank with the very standards applied in China before it is taken to an optimal level. Domestically, China’s environmental regulations are changing quickly as well but still lag behind some of the stricter processes and environmental protection measures put in place in developed countries.
In 2007 CNPC started claiming, at least in the rhetoric of Cheng Siwei (vice-chairman of the standing committee of the CNPC), that Chinese companies misbehaving in their environmental and social responsibilities abroad would face sanction at home (China View 2007) and Li Ruogo, president of the China Exim Bank, said he wanted “to put his institution on a sounder commercially oriented basis and, in so doing, reduce its reliance on state subsidies” (Alden 2007: 131). Exim Bank, a newcomer International Financial Institution, has been seeking to quickly gain experience in its practice by sending observers to agencies such as USAID, DFID and Millennium Challenge (Carriço 2008), at the same time it has not limited itself to replicating other lending models. It has presented an alternative channel to financing that is more flexible, less risk adverse and more responsive to African governing-elite needs (Alden 2007: 25). Finally, on 21 May 2007 a Memorandum of Understanding (MOU) was signed by senior managers of the Export-Import Bank of China and the World Bank with a particular focus on Africa. It was aimed at improving coordination and cooperation between the two organizations on matters of development (Davies 2008: 22). The involvement of Exim Bank in the Mphanda Nkuwa Dam and other big projects in Africa can be understood within the greater objective of Chinese push towards consolidating itself as a major power through economic development but most importantly enhanced political influence.
3. 11.2. FOCAC

The FOCAC (Forum for China-Africa Cooperation) meeting in November 2006 and attended by 48 African heads of State in Beijing was a grand milestone in China’s strategy towards Africa. The inaugural ministerial conference that took place in Beijing in October 2000 was attended by Chinese and African ministers and representatives from international and regional organisations. During the meeting the Beijing Declaration of the Forum on China-Africa Cooperation was established, and since, two Ministerial Conferences have been held – in December 2003 and in November 2006. The next meeting is scheduled to be held in Cairo in November 2009. During the 2006 FOCAC meeting a substantial number of cooperation agreements were signed. China promised among other things to double its assistance to Africa by 2009, provide preferential loans to a value of US$ 3 million, establish a China-Africa Development Fund of US$ 5 billion for the support of Chinese companies operating in Africa and cancel extensive amounts of debt owed by HIPCs (highly indebted poor countries) maturing at the end of 2005 (Marks 2007:2). FOCAC represents an important platform for China in its interactions with African leaders.
3.11.3. African Development Bank

The ADB meeting in Shanghai (2007) also constituted a landmark in China-Africa relations. The event was charged with symbolism and meaning, illustrating the growing ties between China and Africa but also the strategic importance attributed by both to their economic ties. ADB is an African financial institution concerned with state building, inter-state economic integration and region-encompassing economic development. It primarily finances big infrastructure projects which have region-wide impact. In 2007 it financed up to US$4.7 billion in projects and is now set to continue expanding in the modalities and range of its loans as Donald Kaberuka, the head of ADB, seeks to merge its institution with the African Development Fund. It is of particular importance to understand and follow the activities of the ADB in this analysis as the bank has considerable clout in influencing the development policies of Mozambique. The ADB is an active participant in the design of the PARPA guidelines of the country – the strategic policy lines set out by the government of Mozambique to achieve development.
3.12. Profile of Mozambique – The governance of development economics

Mozambique’s recent history is best known for its destructive anti-colonial confrontations and post-colonial civil wars. After a Maoist-sponsored anti-colonial war waged by FRELIMO, a socialist government with a centralized planning economy was set up. After the civil wars there was no abrupt shift of this centralized economy into a liberal, market-led one but in fact this reform has been occurring in a progressive way. The country went from a state-party regime arguably into a multiparty democratic system. It has a two-party system formed by the organizations which fought against each other during the civil war, RENAMO and FRELIMO. Despite the bloody history of relations between the two organizations, the country is stable and political exchanges have been relatively constructive. Other general traits of the country are also worth mentioning, Mozambique has a population of around 19 million in 2008, of which a great part is very young, with 45 percent of the population younger than 15 and the median age at 17.5 years (ADB & ADF, 2006). Its economy is growing but regional economic ambitions and coordination are still somewhat limited and restricted to the sectors of transport, energy and water resources. As noted by a report by the ADB and ADF (2007:9), the economy still remains considerably inward-looking.

In geographical terms, Mozambique is in a strategic location. Its long 2.700 km coast gives it great potential for it to become a regional trade hub and have its neighbours conduct through its ports their trade outside and inside of Africa. Forty five percent of its land is arable and agriculture, though not the most productive sector, it remains the most dominant one, employing the most people (FAO/WFP, 2005).

Relevant literature on Mozambique can be sub-divided between that which looks at: the evolution of the country’s economic structure; Mozambique’s political system, government and governance (Carbone 2005; Galli 2003; Harrison 1999); and the country’s regional and international diplomacy. When it comes to the economy, as can be noted in Figure 1 below Mozambique has averaged a growth of eight percent a year between 1992 (cessation of the 16 year conflict) and 2007. Paradoxically, Mozambique has found itself included on the UNDP list of least developed countries in the world, indicating that it is extremely susceptible to political instability and economic downturns which will result in visible decreases in economic growth. In addition, low inflation rates, stable monetary policies, slight improvements in agricultural productivity and the considerable economic impact of mega projects all contribute to a positive overall outlook of the country’s economic performance (Bila 2007: 3).







Figure 2- Real Growth Rate in Mozambique by Sector

Source (ADB and ADF 2006:3)
However, if one looks more attentively to the poverty indicators of the country, despite once again marked recent improvements with the incidence of absolute poverty going from 69 percent to 54 percent in 6 years, the situation remains bleak, with the country staying low down in the UNDP (2007) Human Development Index at the 172nd place. A closer look at the Gini coefficient also suggests that the country’s economic growth has occurred simultaneously with widening inequalities. To be more precise, Mozambique’s Gini coefficient went from 0.40 in 1996 to 0.42 in 2002 (World Bank 2008).
In effect, the growth rate can be misleading as: exports are very dependent on the existence of mega projects (such as Mozal smelter and Cahora Bassa Dam); the formal sector remains weak; and agricultural productivity remains considerably low. For Mozambique the path ahead is challenging and uncertain both economically and politically. With its political system stabilizing and the prospects of sweeping changes in its economic structure, Mozambique's policy-makers will be at hands with a great deal of important decisions to make and options to take. According to the Ministry of Planning and Development the trend is for Mozambique's economy to become more and more natural resource dependent. In addition, there is a great likelihood that Mozambique holds oil reserves set to add up to the already prominent electricity, gas and the aluminium economic sectors. This means that Mozambique's institutions and policy-makers in charge of crafting the governance of its political economy are set to be put to the test by the challenges presented by the so-called “resource curse” (Bucuane & Mulder 2007).
According to Mozambique’s Ministry of Planning and Development, the economy is currently running the risk of becoming excessively natural resource-dependent. These claims are based on studies concerned with the governance implications of an eventual finding of viable oil reserves in the Northern Rovuma basin ” (Bucuane & Mulder 2007). They also allude to the patent prominence of the gas, aluminium and forestry sectors in the economy. At the end of the day, Mozambique's policy-makers are now charged with formulating pre-emptive measures to counter the so-called “resource curse” (Auty 1993; Collier 2003; Le Billon 2006).
As already mentioned, in its interactions with African countries and Mozambique, China has presented itself as a collaborative partner with “no strings attached”. As such, it is supposedly challenging the traditional moulds of Western development cooperation. In the longer run however, as China’s engagement increases and matures, its investment preferences will gradually become more decisive in determining which sectors of Mozambique’s economy are consolidated. Traditional donors will also have to accommodate such changes. Two possible scenarios arise for the role that China’s investments might play. They can either exacerbate the “curse”, or alternatively, innovative investments in services, manufacturing and agriculture might help pioneer an alternative development path. In this regard, an example of a concrete issue that Mozambique must promptly address is the illegal logging occurring in the Northern Zambezia province by a handful of Chinese private companies. The agro-forestry sector will constitute one of the particular case studies assessed in Chapter 5. There is a group of actors and stakeholders on the Mozambique side whose actions will be of particular importance. Sub-government departments will become increasingly decisive and key as they become more autonomous from central government and tasks that used to be carried out by foreign donors become their responsibility. This is the case for example with the Ministry of Foreign Affairs and Cooperation (in charge of coordinating foreign aid, including China’s) and with the Ministry for Planning and Development (responsible for managing PARPA).
Mozambique also needs to improve in virtually every category in terms of providing a business friendly setting. The bureaucratic process for setting up a business is lengthy and inefficient, labour markets are restrictive and corporate judicial capability is unsatisfactory, not to mention enduring difficulties in accessing capital, energy and value-adding infrastructure. An important distinction to be made when it comes to Mozambique's employment structure is between formal and informal employment. The latter has witnessed a far greater expansion than the former with the number of informal employment in urban areas witnessing an increase of around seven to eight percent (ADB & ADF 2007:11).

3.13. China-Mozambique: the story so far

Contemporary China-Mozambique relations contain many of the recurrent trends, strategic options and unique nuances that China faces in its engagement with Africa. It also contains many of the common dilemmas that African countries face when trying to make this new engagement work towards their economic development. A brief initial snapshot of relations between the countries will now be provided. Relations between the two date back to the early 1960s, when the Chinese Communist Party politically and militarily supported FRELIMO in its independence struggle. Right after independence, on the 28th of June 1975, President Samora Machel proceeded with the formalization of diplomatic relation between the countries with the accreditation of the first Chinese ambassador in the country (Bila 2007:5). From then onwards links intensified. In the last few years, Mozambique-China economic and political relations have experienced a tremendous acceleration. Bilateral agreements for technical cooperation in agriculture, education, health, and light industry were signed. Mozambique was one of the selected stops in Hu Jintao’s 2007 FOCAC follow-up African tour as two-way trade tripled in only two years, making it one of the fastest growth rates experienced by any nation's trade with China. Among the “good diplomacy” events they took part in there were: the inauguration of a pilot project in the agricultural technology cooperation (Xinhua 2007). Together with aid, debt cancellation and lower trade tariffs, China has been investing greatly in Mozambican infrastructure. This investment in infrastructure fits China’s wider strategy in the continent by enhancing the attractiveness of Chinese ventures to African governments and linking investments to tie-in projects. Such investments also improve the export efficiency of enterprises (Alden 2007:13), including agriculture and manufacturing.
Investments have included a stadium as well as several bridges and roads. Trade volume between the two countries has increased substantially. It almost doubled in two years from US$119 million in 2004 to US$210 million in 2006 (Mofcom 2007; Market Access Map 2008). China imported mostly agricultural and fishery products from Mozambique and it exported varied manufactured goods and machinery. A more detailed analysis in the evolution of FDI and trade exchanges between China and Mozambique is carried out in Chapter 4 below. In Mozambique, like elsewhere in Africa, China´s use of symbolism in the form of well-orchestrated donations has been a routine trait in its diplomatic engagement. To this effect there has been a steady provision of gifts or partially financed gifts by China to the government such as the parliament buildings and the Ministry of Foreign Affairs. With the implementation of the first phase of the SADC Agreement on the 1st of January 2008, 85 percent of goods produced in Southern Africa can enter Mozambique tariff free, meaning that overall inter-regional trade is expected to pick up considerably. China’s investment can play a key part in accelerating this process, boosting the pace and volume of trade, both through its role in infrastructure development and FDI. It has been reported that China is now Mozambique’s sixth largest investor, having created as many as 11.000 jobs since 1990 (Macau Hub 2008) with figures for investment totalling US$ 148 million, of which US$ 69 million arrived between 2003 and 2008.
Lastly, Mozambique is part of the list of 77 countries that comprise the SINO, a group of countries in Asia, Africa and the Middle East that China has assigned as being of particular long-term strategic importance.
3.14. Conclusion

Besides providing important background information for the rest of this study, it has been noted in this chapter how, for Mozambique to tap into China for its development, it should make the most of China’s overture. Mozambique should push its agenda in the context of a surge in South-South economic and political cooperation. Mozambique needs to be aware of what is pushing China to engage with the country and China should in turn be aware of Mozambique’s specific history of economic development and the current challenges it faces. These needs should be met in order for an actual win-win engagement to be established as much as possible, for Mozambique to effectively negotiate with China and channel its engagement in a coordinated and effective way and for China to make the most of its investments, loans and its diplomatic relations with Mozambique. Mozambique and China need to be aware of the economic and political tensions that underpin their engagement and the nature of the forces within their own constituencies pushing towards greater protectionism in opposition to those pushing towards greater openness and economic competitiveness.
The narrative of China-Africa relations tells a story of accentuated acceleration in the last decade and one that seems destined to keep expanding. It is at the early learning stage of this expansion and surge in engagement that policy-making and the guiding strategic decisions both from Mozambique’s and China’s side will have the greatest impact. It is in this sense important to carry out the dissemination and assessment of the first impacts of China’s engagement in Mozambique’s development.
In order to understand the specific nuances of China’s impact on Mozambique’s development it is also helpful to look at it in comparison with the engagement of other emerging powers such as India. Finally it is important to look at the background of a group of institutions such as Exim-Bank, FOCAC and the ADB which are of a particular importance in defining the nature and the strategic lines of the engagement as well as in how they can influence Mozambique’s development.