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Angola - China Relations

China's engagement with Angola starts with oil but does not end there. Publicly funded Chinese construction projects and a growing private Chinese corporate presence ensure a continuing commercial relationship. Chinese projects support Angola's central economic policy of rebuilding transportation links to catalyze the non-petroleum economy. In 2011, Angola exported approximately 1.53 million bbl/d, with the largest shares going to China (38 percent) and the United States (14 percent). In 2011, Angola was the second-largest supplier of oil to China (behind only Saudi Arabia) and the 10th largest supplier to the United States.

China's relations with Angola were initially complicated by Beijing's opposition to both Soviet and United States policies toward Africa. China supported the FNLA and UNITA after the MPLA seized power in Angola, and China provided military support to Zaire when Zairian troops clashed with Angolan forces along their common border in the late 1970s. China nonetheless took the initiative in improving relations with the MPLA-PT during the 1980s. The two states established diplomatic ties in 1983.

Now China's interest in Angola starts with oil: in 2006, Sonangol-Sinopec International (SSI) offered two USD 1 billion signing bonuses to invest in two petroleum exploration blocks. SSI is the Angolan joint venture of two state-owned oil companies: China's Sinopec and Angola's Sonangol. SSI was an investor here, not an operator. China's Sinopec and the China National Offshore Oil Corporation (CNOOC) are also involved in Angola, and are providing development assistance as well as oil-backed loans and trade. Sinopec was originally to build a refinery for Angola in Lobito, but Angola cancelled the deal when Sinopec demanded that most of the output go to China. China's Ex-Im Bank has opened oil-backed lines of credit worth USD 4.5 billion and the Government of Angola secured a reported additional USD 6 billion through the private Hong Kong-based China International Fund. Angola continues to request funding increases and China continues to oblige. In July China's Ex-Im Bank increased its line by 127 million dollars, according to Angola media sources.

Throughout the country, Chinese financing builds and restores roads, railroads, hospitals, schools and other public buildings. Unpublished bilateral agreements give 70 percent of this work to Chinese firms, the rest to Angolan firms. The opportunity to employ excess capacity attracts Chinese State- and provincially-owned construction companies. Angolan President Jose Eduardo dos Santos publicly criticized the quality of Chinese-built public works, but Deputy Prime Minister Aguinaldo Jaime concedes that the Government of Angola itself bore much of the blame for failing to conduct adequate project supervision.

Chinese construction crews are prominent in the countryside and in the cities. The Chinese hire few Angolan workers, although some Angolans are seen running heavy equipment on Chinese projects. To avoid friction between their employees and Angolans, companies keep their Chinese employees either at work or out of sight in company housing. However, there is friction among Chinese. On 23 May 2008, for example, a group of Chinese workers standing in the back of a large truck came to Luanda looking for their embassy to complain that their Chinese employer had not paid or fed them.

The Ministry of Finance claims construction projects financed through China Ex-Im Bank proceeded smoothly through 2006 and 2007. However, something went wrong during 2007 with projects financed through the China International Fund (CIF) and managed by Angola's National Reconstruction Office (GRN). Construction on several projects slowed; work on all three railroad projects came to a halt; and the international airport project stalled in the design stage. New domestic and Chinese financing announced in late 2007 appears to be alternative financing for those projects. By early 2008, work on all railroad projects resumed, but now with completion dates years later than previously promised. Not surprisingly, CIF's failure to deliver financing has eroded its status as confidante of Angola's powerful. Difficulties in execution were not all on the Chinese side. Chinese managers express surprise at the rapacity of Angolan officials, who demand their cut from contractors. Also, lengthy import delays have deprived Chinese projects of equipment and supplies, putting them behind schedule.

Private Chinese businessmen had already reached Angola by the late 1980s and established restaurants, and, subsequently construction companies; others import consumer goods, heavy equipment, and most of Angola's imported cement. Chinese traders now are part of the commercial landscape. As the economy (slowly) diversifies, Chinese entrepreneurs seek new business activities throughout the country. Small builders with a dozen tradesmen restore older houses in Luanda. One large private Chinese firm built a tract of two-million dollar homes on Luanda's upscale south side. The Chinese business community supports two chambers of commerce, one for private businesses, the other for publicly-owned companies which compete among themselves for contracts funded through Chinese lines of credit. Well-established private firms have learned how to survive Angola's difficult business climate and profit from the nation's oil wealth. The public firms can learn from them.

China's long history of cooperation in Africa is short and complicated in Angola. Like the U.S., China had once supported Savimbi and UNITA. By moving swiftly to provide financing at the end of the civil war, China helped put its bilateral relationship on solid footing. The new relationship has hit some rough patches: the spat over the refinery, Angolans criticism of 1poor-quality Chinese construction, Chinese companies' employing few Angolans, the Chinese failure to impart skills to Angolans, and delays in GRN projects caused by funding problems. For perspective, Angola's relationships with Portugal, the United States, France and South Africa also mix warm friendship and sharp criticism from the Angolan side. Despite problems with Chinese-built projects, Angolan officials defend China's role in rebuilding the country as timely and critical, especially given the perceived failure of the West to step up to the plate to finance Angola's reconstruction.

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Page last modified: 22-08-2013 18:26:37 ZULU