Angola's Management of Relations with China

Corkin, Lucy (2011) Uncovering Agency: Angola's Management of Relations with China. PhD Thesis, SOAS (School of Oriental and African Studies) http://eprints.soas.ac.uk/13596 Copyright © and Moral Rights for this thesis are retained by the author and/or other copyright owners. A copy can be downloaded for personal non‐commercial research or study, without prior permission or charge. This thesis cannot be reproduced or quoted extensively from without first obtaining permission in writing from the copyright holder/s. The content must not be changed in any way or sold commercially in any format or medium without the formal permission of the copyright holders. When referring to this thesis, full bibliographic details including the author, title, awarding institution and date of the thesis must be given e.g. AUTHOR (year of submission) "Full thesis title", name of the School or Department, PhD Thesis, pagination. UNCOVERING AGENCY: ANGOLA’S MANAGEMENT OF RELATIONS WITH CHINA Lucy Corkin Thesis submitted for the degree of PhD in Politics 2011 Department of Politics and International Studies School of Oriental and African Studies University of London 2 Declaration for PhD thesis I have read and understood regulation 17.9 of the Regulations for students of the School of Oriental and African Studies concerning plagiarism. I undertake that all the material presented for examination is my own work and has not been written for me, in whole or in part, by any other person. I also undertake that any quotation or paraphrase from the published or unpublished work of another person has been duly acknowledged in the work which I present for examination. Signed: Date: 16 June 2011 3 Abstract The prevailing view of China’s engagement in Africa is that African countries are being exploited for their mineral wealth by a country whose political and economic power is much greater than their own. These largely government – to – government contracts are criticized by the international community, ostensibly due to their lack of transparency and accountability but also because China is perceived to be gaining preferential access to natural resources. One of the more prominent cases cited is that of state-owned China Export-Import Bank making available loans for Angolan post-war infrastructure rehabilitation. This work sets out to analyse the mechanism of these contracts and the infrastructure construction that they are intended to facilitate. It is consequently an interrogation of the nature of the relationship between the Chinese and Angolan governments. I will argue that previous analyses of the relationship between China and Angola, while noting the role of African agency in such a mechanism, have not fully explored its implications and explanatory powers for China-Angola relations. The Angolan government plays an important role in the outcome of this bilateral co-operation. The strength of the rhetoric surrounding China’s relations with Africa, from Chinese, Western and African sources is of central importance to this study. This, ultimately, I argue here, shapes the context in which the relationship is viewed. China’s approach to development in Africa is interpreted as a threat by the West and is broached as such. The Angolan elite are in a position to exploit such tensions between China and the West to leverage their own political agenda. I argue that while the political relationship has not been without its problems, both the Angolan and the Chinese government view the relationship as necessary, as much for the economic gains it brings as for its importance in trying to define and establish both states’ positions in the eyes of the international community. 4 For Rolf My rock and my pillar of strength. We made it. 5 Acknowledgements My doctoral research would not have been possible without the generous funding from the First Rand Laurie Dippenaar Scholarship for International Postgraduate Study which funded the first two years of my degree. Supplementary funding from the Oppenheimer Memorial Trust allowed me to complete the third and final year of my research. My thanks go especially to Laurie Dippenaar and Adrian Arnott from First Rand, who were so extremely encouraging from the beginning and all the way through to the end. Since first beginning my research on the nature of China’s relations with African countries in 2006, I have been privileged to cross paths and compare notes with a great number of scholars who share my passion. Thanks in particular must go to Raphael Kaplinsky, Mike Morris, Dan Large, Sanusha Naidu, Deborah Brautigam and Liu Haifang. A PhD student’s journey can sometimes be a lonely one, but the generosity of spirit from Sabrina Snell, Tom Orr, Sabeen Sheikh, Sylvia Croese and Louise Redvers kept me sane and smiling throughout, as well as the Goodenough College community, without whom London would not have been the same. Boundless thanks and love to my parents, Richard and Lynn, who put up with my alternate ranting and rejoicing as they worriedly tracked my traipsing across the world and in the case of my mum, proofread this behemoth before submission. I owe an enormous debt of gratitude to the nearly two hundred people, who will remain nameless, scattered across China and Angola, who willingly gave of their time to be interviewed and whose insights form the backbone of this piece of research. Lastly, and most importantly, to Rolf, for putting up with what few would, so I could follow my dreams to where they beckoned. All my love. I am coming home. 6 Contents CHAPTER ONE: Introduction to the Study 16 1.1 Introduction 16 1.2 Contextualising China-Angola Relations 23 1.3 Angola’s Political Elite: the Rise of the MPLA 27 1.3.1 The Assimilados and the question of legitimacy 27 1.3.2 The Decolonisation Struggle 29 1.3.3 Fair-weather Marxists? 30 1.3.4 Internal Party Rivalry 31 1.4 Conceptualising African Agency 33 1.4.1 Sovereignty and Statehood 34 1.4.2 Extraversion 35 1.4.3 African Agency in China-Africa Relations 39 1.5 Conceptualising Angola as a ‘weak state’ 42 1.5.1 Legitimacy and Internal Weakness 43 1.5.2 Re-emergence of Cultural Identity as a Vehicle for Political Opposition 45 1.5.3 Atrophying bureaucracy 47 1.6 Central Research Question 48 1.7 Methodology 53 1.8 Literature Review and Chapter Outline 63 CHAPTER TWO: The role of rhetoric in constructing China-Africa relations 66 2.1 From the ‘West’: Emerging Concerns regarding China’s Role in Africa 67 2.1.1 Western Perceptions of China as a ‘Status quo’ or ‘Revisionist Power’ 68 2.1.2 The ‘China threat’ – ‘Responsible Stake-holder Dichotomy 71 2.1.3 Changing development paradigm: China as the donor ‘outsider’ 71 2.1.4 China’s Outlier Perspective on Development and Aid 72 7 2.2 Playing to the Gallery: Rhetoric’s intended audience 79 2.2.1 Message from the East: China’s Rhetorical Priorities in Africa 81 2.2.2 China’s Soft Power in Africa 82 2.2.3 Distinguishing China from Western donors 84 2.2.4 Chinese Model, Beijing Consensus 86 2.2.5 Third world solidarity, when appropriate 89 2.3 The View from Angola 92 2.3.1 Narrative on Corruption 97 2.3.2 Good relations between Friends 99 2.4 Conclusions 102 CHAPTER THREE: The Development of China’s Africa Foreign Policy 104 3.1 A Brief History 104 3.2 China’s Prioritization of Foreign Policy Principles 108 3.3 China’s Foreign Policy in a ‘Great Power’ Context 111 3.4 China’s foreign policy actors and institutions 113 3.5 Chinese Concessional Loans as a Foreign Policy Tool 117 3.6 Competing Ministry Agendas 125 3.7 Separating Politics from Economics 128 3.8 Conclusions 130 CHAPTER FOUR: Angola’s China Exim Bank Loan Negotiation 133 4.1 China Exim Bank’s Entry into Angola 133 4.2 Angola’s China Exim Bank Loan Agreement Mechanism 135 4.2.1 Basic Framework 136 4.2.2 Loan Terms 138 4.2.3 Debt Servicing through Oil 141 8 4.3 Financing infrastructure projects in Angola 144 4.3.1 China Exim Bank-funded infrastructure contracts 145 4.3.2 Local Procurement Component 148 4.4 Discrediting Assumptions surrounding the China Exim Bank Credit Line 149 4.4.1 The ‘Angola Model’ 149 4.4.2 Negotiating Risk 149 4.5 Categorising China Exim Bank Loans to Angola – Aid, Trade or Investment? 156 4.5.1 The Case for China Exim Bank loans as ‘Aid’ 159 4.5.2 The Case for China Exim Bank loans as ‘Investment’ 162 4.5.3 The Case for China Exim Bank loans as Trade facilitation 164 4.6 Conclusions 166 CHAPTER FIVE: Angola’s National Reconstruction Implementation 169 5.1 Angola’s Local Construction Industry and Capacity 169 5.2 Chinese contractors in Angola 171 5.3 Varied Chinese Actors in Angola 173 5.4 China Exim Bank’s Role as Financier vis-à-vis Local Participation 178 5.5 Chinese Companies’ Procurement Practices in Angola 182 5.6 A Chinese supply chain 183 5.7 Local Employment Challenges 186 5.7.1 Transplanting of Domestic Modus Operandi to Overseas Markets 189 5.7.2 Lack of adequately skilled local labour 190 5.7.3 Communication problems 190 5.7.4 Misalignment of Chinese employers’ expectations 191 5.7.5 The Cost-benefit of wages 193 5.8 Barriers to Local Content Law Effectiveness 194 5.8.1 Removal of Import Duties on Construction Materials 194 5.8.2 Maintenance of the Hard Kwanza Policy 195 9 5.8.3 Labour Law Rigidity 196 5.8.4 Lack of Implementation 196 5.8.5 Vested Interests and Lack of Political Will 198 5.8.6 Institutional Reshuffling around Chinese credit lines 199 5.9 Conclusions 201 CHAPTER SIX: Restoring Angolan Agency 208 6.1 Angola’s Political Elite 212 6.2 ‘Angolanisation’ of the China Exim Bank loan 219 6.2.1 The Rise and Fall of the GRN 220 6.2.2 Parallel Structures of Chinese Financing in CIF 224 6.2.3 The Oil Intermediary 231 6.2.4 Elite Subversion of the China Exim Bank credit line 233 6.3 Further Debunking the ‘Angola Model’ 236 6.3.1 Angola’s policy of finance diversification 236 6.3.2 More Chinese State Financing 238 6.3.3 An Angolan chimera: China’s access to oil equity 239 6.3.4.

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