Resource-for-infrastructure deals are an important means of investment for Chinese companies overseas and represent a significant new development model for the world. Global Witness research has shown that improved transparency surrounding such deals could be “win-win” for Chinese investors and host populations alike.
Democratic Republic of Congo
In March 2011, Global Witness published the findings of extensive on-the-ground research of a US$6-billion resources-for-infrastructure agreement between Chinese state-owned enterprises China Railway and Sinohydro and the state copper company of the Democratic Republic of Congo.
The agreement offered enormous potential commercial and development benefit to the Congolese and Chinese parties involved. However, Global Witness highlighted outstanding financial, reputational, environmental and social risks for the parties. In a Global Witness interview the Chinese Ambassador to Congo spoke out strongly against corruption saying that China’s struggle against corruption was “total”. In particular, he called for certain payments to be transparent. Such commitments are very welcome and we encourage the Chinese authorities to take strong action in this regard.
Global Witness has investigated the deals of a Hong Kong-based syndicate of private companies, China Sonangol. As covered in the Economist magazine and Caixin, the syndicate has been able to gain control over significant portions of Africa’s current and future natural resource wealth in resource-for-infrastructure deals. However, these deals were struck behind closed doors and very few of the promised benefits have materialised in the countries concerned. Instead, it appears that the tiny elite behind the syndicate are making billions of dollars in profits and causing problems, as we understand it, for Chinese diplomacy, as elements of these deals were misunderstood by the media as Chinese government-backed when they were not. A subsequent report in April 2012 by the Financial Times regarding related front companies in Angola further raised questions regarding conflict of interest of members of the country’s elite around the oil sector and is now subject to regulatory intervention by the US Department of Justice. Such cases highlight the reputational and commercial risk for Chinese government-backed enterprises overseas.