[House Hearing, 112 Congress]
[From the U.S. Government Publishing Office]

ASSESSING CHINA'S ROLE AND INFLUENCE
IN AFRICA

=======================================================================

HEARING

BEFORE THE

SUBCOMMITTEE ON AFRICA, GLOBAL HEALTH,
AND HUMAN RIGHTS

OF THE

COMMITTEE ON FOREIGN AFFAIRS
HOUSE OF REPRESENTATIVES

ONE HUNDRED TWELFTH CONGRESS

SECOND SESSION

__________

MARCH 29, 2012

__________

Serial No. 112-138

__________

Printed for the use of the Committee on Foreign Affairs

Available via the World Wide Web: http://www.foreignaffairs.house.gov/
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COMMITTEE ON FOREIGN AFFAIRS

ILEANA ROS-LEHTINEN, Florida, Chairman
CHRISTOPHER H. SMITH, New Jersey HOWARD L. BERMAN, California
DAN BURTON, Indiana GARY L. ACKERMAN, New York
ELTON GALLEGLY, California ENI F.H. FALEOMAVAEGA, American
DANA ROHRABACHER, California Samoa
DONALD A. MANZULLO, Illinois DONALD M. PAYNE, New Jersey--
EDWARD R. ROYCE, California deceased 3/6/12 deg.
STEVE CHABOT, Ohio BRAD SHERMAN, California
RON PAUL, Texas ELIOT L. ENGEL, New York
MIKE PENCE, Indiana GREGORY W. MEEKS, New York
JOE WILSON, South Carolina RUSS CARNAHAN, Missouri
CONNIE MACK, Florida ALBIO SIRES, New Jersey
JEFF FORTENBERRY, Nebraska GERALD E. CONNOLLY, Virginia
MICHAEL T. McCAUL, Texas THEODORE E. DEUTCH, Florida
TED POE, Texas DENNIS CARDOZA, California
GUS M. BILIRAKIS, Florida BEN CHANDLER, Kentucky
JEAN SCHMIDT, Ohio BRIAN HIGGINS, New York
BILL JOHNSON, Ohio ALLYSON SCHWARTZ, Pennsylvania
DAVID RIVERA, Florida CHRISTOPHER S. MURPHY, Connecticut
MIKE KELLY, Pennsylvania FREDERICA WILSON, Florida
TIM GRIFFIN, Arkansas KAREN BASS, California
TOM MARINO, Pennsylvania WILLIAM KEATING, Massachusetts
JEFF DUNCAN, South Carolina DAVID CICILLINE, Rhode Island
ANN MARIE BUERKLE, New York
RENEE ELLMERS, North Carolina
ROBERT TURNER, New York
Yleem D.S. Poblete, Staff Director
Richard J. Kessler, Democratic Staff Director
------

Subcommittee on Africa, Global Health, and Human Rights

CHRISTOPHER H. SMITH, New Jersey, Chairman
JEFF FORTENBERRY, Nebraska KAREN BASS, California
TOM MARINO, Pennsylvania DONALD M. PAYNE, New Jersey--
ANN MARIE BUERKLE, New York deceased 3/6/12 deg.
ROBERT TURNER, New York RUSS CARNAHAN, Missouri

C O N T E N T S

----------
Page

WITNESSES

Mr. Donald Y. Yamamoto, Principal Deputy Assistant Secretary,
Bureau of African Affairs, U.S. Department of State............ 7
Ms. Carolyn Bartholomew, Commissioner, United States-China
Economic and Security Review Commission........................ 29
J. Peter Pham, Ph.D., director, Michael S. Ansari Africa Center,
Atlantic Council............................................... 49
Mr. Stephen Hayes, president and chief executive officer, The
Corporate Council on Africa.................................... 65
The Honorable David H. Shinn, adjunct professor, Elliott School
of International Affairs, George Washington University......... 72

LETTERS, STATEMENTS, ETC., SUBMITTED FOR THE HEARING

Mr. Donald Y. Yamamoto: Prepared statement....................... 9
Ms. Carolyn Bartholomew: Prepared statement...................... 33
J. Peter Pham, Ph.D.: Prepared statement......................... 53
Mr. Stephen Hayes: Prepared statement............................ 67
The Honorable David H. Shinn: Prepared statement................. 75

APPENDIX

Hearing notice................................................... 98
Hearing minutes.................................................. 99
The Honorable Russ Carnahan, a Representative in Congress from
the State of Missouri: Prepared statement...................... 100

ASSESSING CHINA'S ROLE AND INFLUENCE IN AFRICA

----------

THURSDAY, MARCH 29, 2012

House of Representatives,
Subcommittee on Africa, Global Health,
and Human Rights,
Committee on Foreign Affairs,
Washington, DC.
The subcommittee met, pursuant to notice, at 2:00 p.m., in
room 2172, Rayburn House Office Building, Hon. Christopher H.
Smith (chairman of the subcommittee) presiding.
Mr. Smith. The subcommittee will come to order. And good
afternoon to everyone.
Today's hearing focuses on U.S. policy regarding China's
evolving role in Africa. China has become America's premier
economic competitor in Africa, providing loans and making
investments far beyond what the United States is currently
prepared to provide.
China has been engaged with African governments since the
1950s and has always portrayed itself as a fellow developing
nation that was interested in solidarity with the prospective
development partners. In reality, the Chinese Government always
had plans to gain the support they hoped to create among the
newly independent African governments. The stadiums, other
buildings, and roads constructed by the Chinese were intended
to build support for China among the African bloc of developing
nations in its competition with the then-Soviet Union.
Later, the goal was building support for the People's
Republic of China, replacing Taiwan as the sole China in the
United Nations. Now they no longer have to compete with the
Soviet Union, and they have their seat on the U.N. Security
Council, from where they protect dictators such as Omar al-
Bashir and Robert Mugabe.
So what is their aim in their African policy now? Is China
a development partner for Africa?
In 2005, the China Development Bank created a $1 billion
Africa Trade and Investment Fund, but the trade and investment
initiatives funded cannot take place without the significant
involvement of Chinese suppliers. It is difficult to quantify
Chinese development aid to Africa because they refuse to
disclose how much aid and investment goes to specific
countries, although we do know that Chinese investment in
Africa is estimated to exceed $10 billion. Because the loan
details are not open to public scrutiny, it is feared that
these loans may pose a danger to the debt sustainability of
African governments.
Is China an economic competitor to African countries? Many
believe that China is engaged in a short-term resource grab
which takes little account of local needs and concerns, whether
developmental, environmental, or with respect to issues like
human rights. Coupled with Chinese manufacturing and trade
efficiency, this approach suggests that African development
gains are being challenged, if not undermined, by Chinese
competitiveness.
China, which has increasingly attempted to lock up much of
the supply of strategic minerals from African countries, is now
the leading producer of what are known as rare earth elements
or rare earth metals, which are used in various technological
devices, such as superconductors, electronic polishers,
refining catalysts, and hybrid car components. As time goes on,
these minerals will increase in importance in the 21st-century
economy.
South Africa used to be the world's leading source for
these minerals, but its production is dwarfed by what China
produces, which now represents 95 percent of rare earth
supplies. Chinese production often releases toxic waste into
the general water supply, and that would tend to discourage
increased South African production absent what could be
expensive environmental safeguards.
Is China the new colonizer of Africa? Some would say that
label is an exaggeration. However, China exports small
businesses and labor to Africa. There are an estimated 800
Chinese corporations doing business in Africa and 750,000
Chinese working or living for extended periods in African
countries. When their original assignments are completed, these
Chinese workers become entrepreneurs, selling subsidized
Chinese products to out-compete their African counterparts.
I would note parenthetically that Greg Simpkins and I, when
we were in the Democratic Republic of the Congo on one trip en
route to Goma to visit healthcare facilities there, as well as
the U.N. deployment, I was quite dismayed at a project where
there were large numbers of Chinese laborers who seemingly were
under a lock-and-key-type of situation. I actually asked a
number of questions whether or not those individuals might be
gulag labor, people brought from the laogai to this particular
heavily intensive--it was a building project, in order to do
the work. No one knew. No one could have contact with those
individuals. It was very, very strange and bizarre, and they
had no contact with the locals.
An increasing number of Africans are skeptical of Chinese
behavior in their countries. For example, the issue of Chinese
business practices became an issue in the 2011 elections in
Zambia. Some Zambians felt the Chinese were worse than the
British colonialists in their behavior toward workers.
Following the election there, incoming President Michael Sata
said to the Chinese investors, ``We welcome your investment,
but as we welcome your investment, your investment should
benefit Zambians, not the Chinese.''
One of the most prevalent charges against China's
involvement in Africa is that they don't support international
conditionality on aid to African countries. Therefore, Chinese
involvement is seen as undermining the concept of tied aid that
is intended to promote good governance models.
Chinese officials counter that they prefer not to interfere
in the internal affairs of African governments. And, of course,
who can blame them, with one of the most egregious human rights
policies within their own country to defend? They are in
perhaps no position to lecture African governments. But that
also, then sends an example that some, like in Sudan and
elsewhere, might want to follow, and that would be a further
disaster.
While much of the rest of the international community
regards Sudan as having committed genocide or at least crimes
against humanity in its Darfur region--we certainly do, my
distinguished ranking member and I, and most, if not all, of us
in Congress--China, a major economic partner with the
government in Khartoum, refused at first to join in sanctions
against Sudan. China abstained from the vote in September 2004
when the U.N. Security Council passed Resolution 1564
condemning the mass killing of civilians in the Darfur region,
even though the measure stopped short of imposing oil
sanctions. China even threatened to veto any further move to
impose sanctions. It took concerted international pressure
prior to the 2008 Beijing Olympics to force China to move
closer to the international position of pressing Sudan to end
its human rights abuses.
In a 2006 background report entitled, ``China's Influence
in Africa: Implications for the United States,'' The Heritage
Foundation stated that China has provided weapons that have
prolonged African conflicts or entrenched dictatorships. In
2003, several Hong Kong firms were accused of smuggling illegal
arms, including Chinese-made AK-47s, machine guns, and rocket-
propelled grenade launchers, into Liberia and neighboring
Sierra Leone and Cote d'Ivoire, where rebels and mercenaries
were involved in civil wars.
``In 2004,'' the report continued, ``China sold Zimbabwe
fighter aircraft and military vehicles for $200 million despite
the U.S. and EU arms embargo against Zimbabwe. China has also
provided a military-strength radio-jamming device, which the
Harare government used to block broadcasts of anti-government
reports from independent media outlets during the 2005
parliamentary election campaign.''
So what really are China's goals for its African
engagement? We hope to at least begin to understand this.
And I would point out to my colleagues, as I know so well,
that this is a hearing that is in a series of hearings over the
last several years looking at China's influence, bad or good,
in Africa.
I yield to my good friend and colleague, Ms. Bass, the
ranking member of the subcommittee.
Ms. Bass. Thank you, Chairman Smith, once again for calling
this important hearing to examine China's economic and
political impact in Africa.
In part of your opening statement, you described or raised
the question as to whether or not China should be viewed as a
new colonial power within the continent of Africa, and I am
very much concerned about that as well, especially with regard
to labor, given the need for employment on the continent. And
then you raised today even the question as to who those
laborers are who are Chinese. And so I think you raise very
critical questions.
I hope that our discussion today will shed light on areas
of common interest between the United States and China in
Africa that could provide the basis for enhanced bilateral and
multilateral cooperation, particularly on important conflict-
mediation priorities in Sudan and South Sudan, as well as
Somalia. And I am very interested to learn about China's
expanded economic reach in Africa and the impact on U.S. trade
and investment.
I have initiated dialogue with some African ambassadors
here in DC, and one of the key discussion points that are of
interest to myself as well as the ambassadors is getting
additional U.S. companies to do business in Africa, on the
continent, highlighting China's multi-million-dollar investment
projects as if to say to us that this is what American
businesses are missing out on. One ambassador told me he wanted
to attract the movie industry to his country, as well as the
green vehicle industry. And given that I represent Hollywood, I
naturally have that same kind of interest.
My goal for this hearing is also to examine meaningful
policy options to ensure the U.S. Government, our businesses,
particularly small- and medium-size enterprises, are not
missing out on valuable opportunities in Africa.
Chairman Smith, the legislation that you and Representative
Bobby Rush introduced last week is one such policy option that
I hope to join you on. I want to thank you, Representative
Rush, Senators Durbin and Coons for initiating this
legislation. The legislation is also an important vehicle for
promoting U.S. minority-owned enterprises, particularly
businesses that are owned by African Americans in the U.S.
We should remember that as we seek to promote U.S. trade
and direct investment in Africa, we are also creating
opportunities for African growth so that the African middle
class can help create societies that are no longer dependent on
foreign aid. I look forward to hearing from our distinguished
witnesses how the United States can achieve these objectives.
Thank you, and I yield back.
Mr. Smith. Thank you, Ranking Member Bass. Thank you very
much.
I yield to the vice chairman of our subcommittee, Mr.
Fortenberry.
Mr. Fortenberry. I thank you, Mr. Chairman, for convening
this hearing, which is a continuation of an important debate
that we held last year during the State Department
authorization.
To the United States, Africa is becoming a lost continent.
She is becoming lost to us diplomatically and economically to
other international players who do not have the same regard for
human rights as we do. This is clearly the case with China.
Over the last several years, China has become the world's
largest investor in Africa. Direct investment in Africa rose by
87 percent last year.One million Chinese nationals are now
doing business in Africa, and around 300,000 live in South
Africa. Bilateral trade deals have been signed between China
and 50 African countries, and direct Chinese investments in
Africa have been projected to rise by another 70 percent in the
coming months.
As has been noted, China even bankrolled and built the seat
of African diplomacy, the lavish new African Union headquarters
in Addis Ababa. This is ``China's gift to Africa,'' according
to Hu Jintao, though another nickname has stuck: Africa's Hall
of Shame.
China is aggressively dominating the most high-conflict
areas of Africa, exploiting natural-resource-rich regions for
its own mercantilistic agenda, even as African Union Commission
Chairman Jean Ping opined for the adoring Chinese press,
``African people will never forget China's important role in
promoting peace, stability, and development within Africa.''
All three of these claims are extremely suspect. In terms
of development, is the goal of China's natural-resource
exploitation Africa development? I ask this as the Associated
Press reports that PetroChina, the state-owned oil firm that
exists for the sole function of fueling China, has overtaken
Exxon as the world's largest publicly trade oil producer.
China's Minmetals Resources also announced today that it would
be rapidly expanding copper mining in central and southern
Africa this year. China's Guangdong Nuclear Power Corporation
has aggressively taken control of uranium mines across the
continent, and it is nearing a multi-billion-dollar deal on the
world's second-largest uranium mine in Namibia.
Opportunities are booming for China in Africa, clearly. But
will they benefit Africa?
And what about China's role in promoting peace and
stability? Recently, China's relationship with Northern Sudan
has given the international community particular concern. China
shares a deep and profound friendship, according to China's
foreign ministry spokesman, with Sudanese war criminal Omar al-
Bashir. What is this friendship?
China has been Sudan's biggest arms supplier. China
continues to be criticized by human rights observers for
supplying weapons in violation of a U.N. weapons embargo over
Sudan. China also imported nearly 70 percent of Sudan's oil and
was the largest shareholder of the two biggest oil corporations
in Sudan. Serious questions remain over Chinese complicity in
Darfur, in which many innocent people died at the hands of
Chinese weapons and planes.
With the prevalence of geopolitical conflict in this area
of the world, we must have a firm understanding of China's
rapid expansion in natural-resource-rich areas that are in high
conflict on the continent. I am pleased to note that the
Foreign Affairs Committee unanimously passed an amendment to
the State Department authorization last year to quantify and
help do just that.
But on a broader human rights scale, we need to have a very
honest discussion here about Chinese industrial virtues. In a
new interview with The Wall Street Journal, China's special
envoy for African affairs discussed how China deals with
``differences in corporate culture and the degree of openness
to the outside world,'' noting that, as it does business,
Chinese companies always take domestic business practices with
them.
Let's talk about those domestic business practices for a
moment: Fertility monitors on factory floors invasively
examining female employees for pregnancy and reporting pregnant
women to the Chinese family planning police, who drag offending
women away for violating this and for forced abortions. There
are tragically high suicide rates for workers in China who view
suicide as their only means of collective bargaining against
dire and oppressive labor violations that happen--you saw an
example of this earlier in China this years.
Are these the domestic business practices that China is
taking to Africa? This question is extremely pertinent, with
news reports that South Africa, a country that still has its
sea legs when it comes to human rights protections, has been
sending government officials to Chinese Communist Party
training schools to learn their business practices.
China has a choice: It can join the responsible community
of nations to aid and do business with Africa in an ethical
fashion or stand by its ``friendship'' with despots and tyrants
as countless more lives are lost across the continent.
Thank you, Mr. Chairman, for holding this important hearing
today, and I look forward to the testimony of our witnesses.
Mr. Smith. Thank you, Mr. Fortenberry, very much. Very
eloquent statement.
I yield to Congresswoman Jackson Lee and thank her for
joining us today.
Ms. Jackson Lee. Thank you, Mr. Chairman. I realize, I
think there is a vote on, and I will be judicious. And thank
you for your kindness.
And it is a delight to be here with our new ranking member
on the subcommittee, Congresswoman Karen Bass, who I count
already as one of my dear friends.
And I would say, since this is the first time,
Congresswoman and Congressman Smith, that I have been at this
table since the loss of our dear champion, I know that he is
looking well at these hearings that you are holding. The two of
you are two champions on human rights, and I join you in that
as a member of the Human Rights Caucus.
And I will simply say these points to the Secretary. This
is not about spoiled grapes. This is not about being selfish on
the part of the United States or this subcommittee, I know. It
is truly about friendship with the continent, with Africa, not
missing the opportunities for collaboration, and having a
country that is vested in the principles of democracy, like the
United States, to be able to befriend those who desire our
friendship. We have no burden of enslaving Africans in terms
of, when I say that, in colonization. We have a history of
slavery but not in colonization.
I say these points. I have seen firsthand the businesses of
China come to the continent and use Chinese workers and not the
indigenous workers, not training them, not making them
managers, not helping them enhance and build the economy on the
continent. I have seen the byproduct of these construction
projects that have deteriorated in a matter of years.
And, finally, I have firsthand knowledge on the issue of
Darfur, when we asked collectively for China to join us in
sanctioning the leadership in Khartoum, asked them to join us
in declaring genocide in Darfur, and they refused time after
time after time.
We cannot have this imbalance in the treatment of the
continent by any of our friends. And we certainly can't be
blocked from a nation that has the democratic principles that
we have of doing business, of building upon human rights, and
helping Africa build its economy.
I think this is an important hearing, and I yield back.
Mr. Smith. Thank you very much, the distinguished
gentlelady from Texas.
Ambassador Yamamoto, we do have a vote on the floor. We
will have a very brief recess. The members will return, and we
look forward to your testimony. And I apologize for the delay.
We stand in recess.
[Recess.]
Mr. Smith. The subcommittee will resume its sitting. And,
again, I apologize for the delay.
I would like to welcome to the witness table and thank him
for a return visit to our subcommittee, Ambassador Yamamoto,
Donald Yamamoto, who is no stranger to this committee and to
the full committee, having testified before us on several
occasions last year and once already this year. He has served
since 2009 as the Principal Deputy Assistant Secretary for the
Bureau of African Affairs at the Department of State. His prior
assignments include serving as U.S. Ambassador to Ethiopia from
November 2006 to July 2009 and as Deputy Assistant Secretary of
State in the Bureau of African Affairs from 2003 to 2006.
Ambassador Yamamoto, the floor is yours.

STATEMENT OF MR. DONALD Y. YAMAMOTO, PRINCIPAL DEPUTY ASSISTANT
SECRETARY, BUREAU OF AFRICAN AFFAIRS, U.S. DEPARTMENT OF STATE

Ambassador Yamamoto. Thank you very much. Chairman Smith
and Ranking Member Bass, and the honorable members of this
committee, it is a distinct honor to appear before you once
again on this very important issue.
And on behalf of my colleagues, Congresswoman Karen Bass,
as the ranking member, we welcome you and we congratulate you
on your new appointment. And your commitment and dedication
will surely inspire us as we focus on our work.
I also want to take this time to really express my deep
personal sorrow to you, Mr. Chairman, and to the members on the
loss of Donald Payne, who was a defender of truth, an advocate
of just and honorable causes, and, above all, a man of great
courage, wisdom, and dedication. And it is really with
appreciation and gratitude that I was able to know and to learn
from Representative Payne--indeed, a true friend for all of us.
Mr. Chairman, is China a competitor or a partner? A
positive influence or a detractor to development in Africa? Or,
more important, can China work with us on shared objectives?
China is an important part of Africa's future. And like
Africa's other major partners--and that is the European Union,
India, Japan, Korea, Brazil, Turkey, the United States, and
other countries--the United States seeks to shape a more
cooperative and productive relationship while eliminating that
which undercuts Africa's development and our interests.
China's interest in Africa reflects its needs for access to
resources and markets, its desire to promote cohesive South-
South relations, and a desire to demonstrate leadership in the
developing world. China has emerged as a leader in trade and
investment in Africa, and its activities in Africa offer
important opportunities for the continent, though there are
major interests where our interests do not align, as you and
others noted, Chairman Smith.
Secretary Clinton, in a major speech in March, stated that,
``We are a country that welcomes others' success, because we
believe that it is good for everyone when people anywhere are
able to work their way to better lives. If China's rise means
that we have an increasingly capable and engaged partner, that
would be good news for us.''
We hold regional dialogues on Africa with China, as well as
with other countries and organizations. Assistant Secretary
Johnnie Carson led our talks in Beijing in November 2011,
focusing on political and security issues, highlighting
challenges, noting successes, and underscoring future
cooperation.
In 2010, China-Africa trade stood at about $127 billion and
provided $2 billion in foreign assistance to Africa in 2009.
Yet China also provided concessionary funding for
infrastructure projects. While important, it poses challenges
for Africa on repayment of loans. China's foreign direct
investment flows to Africa have quadrupled, from about $2
billion in 2000 to now almost $9 billion in 2009.
On the downside, China undermines international efforts to
promote good governance, revenue transparency, and responsible
natural resource management. Corrupt activities by Chinese
firms result in poor-quality goods and services. We are pushing
China to accede to the OECD Anti-Bribery Convention. Chinese
foreign assistance is a trade tool favoring Chinese
businesspeople in project bidding and undercutting transparency
and fairness. Chinese labor practices and lack of technology
transfer and advance training also does not help Africa.
On the positive side, its infrastructure development has
helped stimulate progress in health, agriculture, and water
sectors. Politically, China shares common views on Sudan,
worked with us in supporting AMISOM with $4 million of needed
equipment, and expanded the peacekeeping footprint to 1,500
troops. We are working cooperatively with China on eradicating
malaria, polio, and other endemic diseases. In Gabon and
elsewhere, we work with China on improving health care and
training healthcare workers and providing medical equipment.
We will continue to dialogue with China and seek areas of
cooperation that will lead to greater prosperity, political
openness, and hope for Africa's people and future generations.
Mr. Chairman, I welcome your questions.
Mr. Smith. Thank you very much, Mr. Ambassador.
[The prepared statement of Mr. Yamamoto follows:]

----------

Mr. Smith. Let me just ask you, you know, I made reference
to it in my opening comments about the use of gulag labor or
the potential use of it on the continent of Africa. Have we,
from a human rights perspective, have our Embassies
investigated or looked into that as something that could be of
concern? Because, again, if they are bringing over Falun Gong
and underground and persecuted Christians and others,
Buddhists, I mean, that would raise serious red flags.
And if you could speak to the issue of importing Chinese
laborers to do work that otherwise could be done and
accomplished by indigenous Africans.
Ambassador Yamamoto. Thank you very much, Mr. Chairman.
I note that in your second panel you have experts,
Ambassador Shinn and Peter Pham and others, who have researched
this area quite extensively. And, actually, we refer to their
research, as well.
We have asked our Embassies to look at the whole context of
trade, not just with China but with all the countries that are
dealing in Africa, to see areas of cooperation and also areas
where we need to work with in order to moderate excesses or to
correct behaviors or problems. We looked at labor, and we have
talked to leaders throughout Africa on these issues.
You know, the issue that comes in is that we still need to
do more research. We need to still look at and examine the
issues more carefully.
I think in some countries, like Ethiopia, they have made
restrictions on labor. In some areas where they have had
Chinese labor, especially in the Congo where they are doing
predominantly a lot of the work, we are looking to see how that
impacts on local communities.
What we want to do, essentially, is to see how we can
elevate and raise the quality and technology and technical
level of African workers. And if you look at how the United
States handles it, how we do training programs, how we look at
areas where we can make a difference, those are the same things
that we have been discussing with the Chinese that they need to
do, not only at the basic, low-level technical factors, but
also much more advanced technology transfers.
And I think the record is still out. We are still
investigating. But those are areas that, you are absolutely
correct, we need to discuss much more with the Chinese, and we
are, in our dialogues.
Mr. Smith. Can I just ask you--I happen to be a pro-labor
Republican. I get endorsed by the AFL-CIO because I believe
passionately in the right to collective bargaining and other
core elements of unionized labor.
China is the quintessential example of an anti-labor
country. I am chairing a hearing in a few days on the
exploitation of labor as an unfair trading practice. I,
frankly, have been very disappointed that the administration,
under the USTR, has not initiated a complaint or at least an
investigation against China. We did so when Bush was President,
and I even was a signatory to the request. It was denied. But
it has not happened under the Obama administration either.
And it is a fact that laborers in China get 10 to 50 cents
per hour. There are no OSHA regulations at all. If there is any
kind of compliance with best practices when it comes to
occupational safety and health, it usually is something that is
being imported by a U.S. corporation. And some do it and do it
very well, but, by and large, it does not happen.
There are problems with arrearage. If you do engage in
collective bargaining in China, you are arrested, you are
incarcerated, you are tortured. And I have actually had, right
where you sit, Mr. Ambassador, Chinese political labor
activists who then, the lucky ones, in the sense that they are
out of prison and they have been expelled--not lucky from that
point of view--telling their story of how they are trying
desperately to form at least some kind of labor organization
that is compliant with ILO standards.
Now, the reason for raising all of this--and I will be
having that hearing shortly as chairman of the China
Commission--that practice, or that worst practice, is being
exported to Africa as part of their labor practices. You know,
we are all concerned about the bad governance model that China,
you know, then provides by way of example and other ways to
African countries. But now even on labor practices they are
egregious violators of ILO conventions.
And I am wondering what your take on that is, if you could,
and what can be done to combat that.
Ambassador Yamamoto. Thank you, Mr. Chairman.
You know, the conditions in China, even though I was a
human rights officer back in 1989 in China and really looked at
a lot of those issues that you have raised, I think I would
rather defer to my colleagues who are specialists in China to
say the conditions there.
In Africa, we----
Mr. Smith. But I am talking about the exporting of that
mindset that obviously follows with investment and with,
obviously, people who will now be doing business in China,
setting up shop in China, sans labor unions or anything that
even comes close to it.
Ambassador Yamamoto. Right. And we are looking into that.
You know, statistics and information is very hard to come
by, but we have looked at what China is doing in Africa, and we
have looked at projects. In other words, a couple years ago,
there were 30 major projects by China taking place in Africa.
That has risen to about 35 last year. And so we are looking at
how China looks at programs and projects, how they implement
projects, and are they abiding by standards.
One of the things that we have been pushing the Chinese on
in our discussions has been their accession to the anti-bribery
and better business practices of the OECD. But more important
is basic labor practices. Because, as you cited, Mr. Chairman,
in your opening statement, Michael Sata in Zambia, who had
complaints about Chinese labor, well, he is now the leader of
Zambia through a free, democratic, open election, and he is
addressing those issues.
Again, I have spoken personally to some of the leaders in
Africa, and they, too, are looking at Chinese labor very
carefully and making decisions on how to monitor, regulate
those issues. And so I think we would defer to those leaders
and to work with them. But on our own side, we are also looking
at how China does labor issues.
For us, too--I just want to do a sidenote--for us is that
we are trying to push the Chinese much more on transparency,
openness, looking at how they do the bidding process. As you
know, as I said in my opening statement, they have about $2
billion in investments. And, of course, that and their aid goes
to help Chinese businesses. Why can't they be much more
transparent and open? And those are things that we are working
on with the Chinese to address through our dialogues.
But you do raise a very good question, Mr. Chairman, and it
is an issue that we are focused on.
Mr. Smith. Could you get back to us as to----
Ambassador Yamamoto. Yes, I will.
Mr. Smith [continuing]. What exactly we are doing relative
to ILO standards as it relates to unions and collective
bargaining, the absolute absence of it in the PRC itself, and
whether or not that is having an influence on Chinese
businesses and their practices as they emerge and evolve.
Let me ask you just a couple of final questions and then go
to Ms. Bass.
With regards to infrastructure, China's investment is very
heavily tilted toward infrastructure projects. I remember on
one trip, again, to the Democratic Republic of the Congo, I
talked to a member of their Parliament who is a farmer. And I
remember he said, ``I can grow anything, but I can't get it to
market.'' But he also said the Chinese have come in, gotten
huge road and building projects, but always with the caveat
that anything on the right and on the left that happens to be a
mineral or something that can be exploited becomes theirs. And
he said, you know, we are giving away the minerals and the wood
and the other wealth of Africa to the PRC. He was very upset
with it.
And I am wondering, you know--the Millennium Challenge
Account has been an excellent way of trying to help
infrastructure. You know, we have good governance that goes
along with that, and other criteria. The Chinese say, ``We want
this, and we want that,'' and they take it. You know, could you
speak to that issue?
Secondly, the larger issue of the exploitation of minerals,
oil, and gas. We know that Bashir--and I have met with him. I
argued with that man. He ought to be at The Hague for crimes
against humanity and genocide. But, you know, all he was
concerned about was lifting the embargo, when I talked to him.
That was all he cared about, rather than the loss of life. But
he gives oil in exchange for weapons. That is a terrible,
terrible exchange between Beijing and Khartoum.
On the issue of child limitation--and Mr. Fortenberry, I
think, was alluding to it, in part. Part of the Chinese model
is to enforce the one-child-per-couple policy at the factory
level. They monitor women's menstrual cycles. Women are
forcibly aborted. They incentivize the catching of a woman who
might have a pregnancy that has not been agreed to by the
government. They are only allowed one; brothers and sisters are
illegal in China.
And why do I bring all this up? Because they have had that
since 1979, and China is on the precipice of imploding in the
near future because they are graying and because they are
missing girls. The estimates are approximately 100 million
missing girls. Forty million to fifty million men can't find
wives because they have been killed by sex-selection abortions.
That said, it is being exported, or at least that mindset,
to Africa. The Chinese State Family Planning Commission and the
UNFPA invited the health ministers of all sub-Saharan African
countries for a week in Beijing about 3 years ago to tell them,
if you want economic growth, you need child limitation. Paul
Kagame said, ``Oh, we need a three-child-per-couple policy, we
want to follow the Chinese model,'' which means that women are
forcibly aborted or at least coerced in some way not to have
children. So children, or the lack of children, are the
impediment to economic prosperity.
Many came back talking that; not all of them, thankfully,
have implemented that. But it goes back to a book that was
written by Margaret Sanger called ``Child Limitation.'' It is
actually called that. I read it. And it posits that, if you
want economic growth, get rid of the kids.
And, you know, in China, with a graying society--and we
have all the numbers; I actually had a hearing on it--they are
in trouble by 2020, 2030, as they have this huge bulge of
senior citizens and no workers. And they are all males because
the women have been executed through forced abortion.
That is coming along with the bad governance model and the
economic policies of China. Do you see that? Is anybody looking
at that, Mr. Ambassador? Because, again, there needs to be
warning bells about what that will do to the women of Africa as
well as their babies.
Ambassador Yamamoto. Thank you very much.
On trade and investment, you know, if we look at the
content of trade, you are absolutely correct. If you look at
it, 70 percent of China's trade or, actually, imports out of
Africa are in natural resources. And the issue comes in, are
those in conflict minerals? Are those in illegal logging? Is it
those issues that we are monitoring?
But the question that comes in, I think, for China is, can
they be a responsible trading partner with Africa? Can they in
their trade help elevate and develop Africa? And that is the
bottom line that has consumed and become the underlying
guidelines and goals in our discussions with the Chinese, that
is how do you make trade in Africa help promote prosperity,
help education, help health care, et cetera, in the continent.
Going to the child labor, I think the issue is that we are
looking at a whole wide range of human rights issues, from our
child soldier issues, trafficking in persons, looking at the
status of women, LGBT issues, et cetera. And one of the things
is, if child labor or the one-child policy is being exported to
Africa, that is an area that we probably would need to focus on
more.
But one thing that we have discussed with the Chinese in
our discussions is, how do you get development? Development is
not limiting children. Development is through the respect of
women. By raising the status of women, we have found that
development in Africa exponentially increases, far greater than
anything we can do. And look at the population growth rates in
Africa and other areas. I don't think that the one-child policy
has held or been influenced throughout Africa.
But the area for development and the one area that we have
discussed is that by raising the status of women, raising
educational and healthcare issues, mitigating conflict, we are
going to have better development. And those are areas that, in
many respects, the Chinese do agree with.
On health care, they have been cooperating with the United
States in funding healthcare programs. We have been doing it in
Liberia, in Ghana. We are doing it in Ethiopia, Gabon. We are
looking at also economic cooperation on how to do development
in Angola and Mozambique and other places.
So those are things that we are trying to work on. But on
your question, we will pay a lot more closer attention and look
at it, and we will give you a report back.
Mr. Smith. Ms. Bass?
Ms. Bass. Thank you, Ambassador. I actually have several
questions I want to ask you. And you have been deferring some
questions to later panels, so, you know, you should tell me in
terms of the category, are questions related to governance okay
and the other trade and business issues to the other panel?
That was a question for you.
Ambassador Yamamoto. On governance, well, on areas where we
have differences is on good governance and transparency. The
basic fundamental pillar of our policy has been articulated by
President Obama in Ghana 2 years ago, and that is good
governance and democratic values. Holding governments
accountable to the people is important because that underscores
that they will be stable, and in stability they will have
better economic development.
Ms. Bass. So my question was, because you made reference
to--and I just wanted to know if you could give me some
specific examples--you made reference to China undermining good
governance in Africa. And I was wondering if you could give me
specific examples and specific countries.
Ambassador Yamamoto. When we say ``undermine,'' the issue
that comes in is that they do not share a lot of the areas that
we have advocated.
For instance, in the vote on Sudan that the chairman
raised, one of the issues that he had raised was the sale of
arms, which was declared illegal under the U.N. investigation,
that the arms flows into Sudan had been illegal, and those are
areas that we have been discussing with the Chinese.
The other areas, too, that we have discussed in private
with the Chinese has been the issue of declaring countries that
are in coup status and working with those countries to say that
this is a detriment not only to the country but also to the
regional states. And I look at Libya as one example, where we
had worked with the Africans to pass legislation on Libyan
issues.
The other areas, too, that China has raised for us is
concerns that they have raised on whether or not imposing
sanctions on specific countries for specific human rights
violations is necessary or appropriate.
One of the differences that we have with the Chinese--and
let me give you one example. During our discussions, the
Chinese have told us, ``Well, you know, you, the United States,
looks at a specific regime. You need to look at a country over
a long-term basis, for 50 years or 100 years.'' Our response
has always been, we do. But in order to make----
Ms. Bass. Who says that, that we need to look at it over 50
years? The Chinese say that?
Ambassador Yamamoto. Our Chinese colleagues. They say, look
at the country----
Ms. Bass. Some of the countries are----
Ambassador Yamamoto [continuing]. Look at a country or,
let's say, Zimbabwe or Sudan over a 50- or 100-year process.
Our response is that we do, but that process starts now.
Because if we can't get countries to respect not only the human
rights issues but, more important, the rule of law, then what
is that going to mean 50 years or 100 years from now? And so
those are the questions and issues that we are discussing.
And in that context, let me just say that our discussions
with China on Africa have been very cooperative. And we have
made a lot of progress in looking for areas where we can work
together cooperatively to make a difference in the lives of the
people in Africa.
Ms. Bass. So let me give you an example that I heard, and
maybe you can tell me if there is any legitimacy to it. And
that is when a company goes in, when there is an initiative, an
infrastructure project or some other project like that when the
Chinese go in, where you might have a country that is trying to
deal with their governance issues, and the Chinese will go in
and just bribe everybody. And then, you know, the issues
related to the workforce or whatever then get bypassed. So when
the African nation tries to push back, if the Chinese are there
handing out, you know, currency, then they bypass even their
attempts for good governance.
So is that true, or is that just rumors?
Ambassador Yamamoto. You know, I mean, obviously, if we
look at specific issues--but, you know, to say that, let's say,
Chinese firms or whatever are singularly the only companies
that would engage in, let's say, nontransparent practices is
probably not completely accurate, because other countries----
Ms. Bass. I didn't say the only country. We were just
talking about China today.
Ambassador Yamamoto. And, sure, certainly, in some
instances, and I would look for examples, maybe telecom, energy
sectors, sure, that is possible.
Let me just tell you, Madam Representative, is that one of
the areas that we have asked our ambassadors to look at, to
really look at how to expand trade investment is, what is one
of the main problems in Africa today? And that is interstate
trade is at less than 10 percent. And why is that? Because not
only of internal problems within the countries of tariff and
non-tariff trade barriers, but also because of internal
problems.
We have asked and looked at opening the sectors in telecom,
energy, banking, financial services, and energy sectors. By
opening them up and being more transparent, you will not have--
or you have less likelihood of having--the issues of bribery or
nonproductive business practices. And holding all companies
which are engaged in those countries in bidding processes to
accede to the OECD anti-bribery practices, that is important.
The other area, too, is, between states, is that, were a
country to increase its wealth, if we can decrease these tariff
and non-tariff barriers, we can increase interstate trade and
therefore wealth. In that context, too, is that it becomes more
transparent in our processes. And so that also becomes a
barrier to bribery and becomes a check on it.
Ms. Bass. Thank you. And, actually, I need to say that a
vote has been called, so maybe we can--I have additional
questions, but they could wait until after.
Mr. Smith. I yield to Vice Chairman Fortenberry.
Mr. Fortenberry. Thank you, Mr. Chairman.
Mr. Ambassador, you are probably not going to like the
characterization of what I am interpreting as a good summary of
what you said, but basically the Chinese take the stuff and we
beg them to help the people in Africa.
When I was on a House Democracy--we used to call it--
Partnership Commission trip to Liberia, we flew into the
airport there, which was a staging base for our troops before
the invasion of North Africa in World War II. We were going
down the road in the beautiful, lush, tropical African scenes.
And on the outskirts of Monrovia rises this large, shiny,
brand-new soccer stadium, a gift of the Chinese Government to
the people of Liberia.
Now, here we are in Liberia with military assistance,
helping them rebuild their basic governing structures to
protect the President and provide some stability in the wake of
their horrific civil war. We provide U.S. tax dollars to help
integrate child soldiers back into normalcy in society. We have
microfinancing programs to help women entrepreneurs. And the
Chinese are building soccer stadiums for the explicit purpose,
not of humanitarian help or good governance structures, but to
have access to their mineral resources and then access to their
market for the sale of goods. I mean, that is the motive there.
And the way they get there is through connivance and other
practices that our companies hopefully never engage in.
The Chinese have lax labor standards, they have lax
environmental standards, they manipulate their currency. And,
consequently, we have a huge trade imbalance with them. In
fact, I asked a gentleman from Liberia one time, why do you do
so much trading with the Chinese? And he said, we are waiting
for you.
In other words, American companies are at a disadvantage
because we are not going to play by those same rules. We are at
a disadvantage because we ship so much manufacturing over
there, and the Chinese can produce things supposedly cheaper
without worrying about these essential externalities that we do
in our own country.
So there is the root of the problem, I believe. But I think
what we need to do is explore what the answer is. I mean, I
understand your position. You are trying to dialogue with them;
you are an important diplomatic figure in our Government, and
that is your job. But when we are investing in Africa, again,
for the benefits of cultural and economic exchange to America,
the purposes of humanitarian help and relief, and potentially
our own national security through developing good governance
structures for international stability, as you suggest, this is
being undermined by Chinese business practices.
Other than the dialogue--I am not discounting your role in
trying to develop the relationships to move them toward more
acceptable positions--what can American policy do to stop this
unfair overrun of the continent of Africa by people who aren't
invested in the wellbeing of Africans?
Ambassador Yamamoto. I think I can answer that probably in
two ways. The first is that, when we see wrong, we call it. If
there is an area that is against democracy or inhumane, we
raise it. And I think our positions, let's say, in five coups
in the last 2 years have kind of underscored our position on
dedication to good governance and democracy. Our position in
pointing to countries that have violated the arms embargoes to
Sudan have done that.
But second is, in the case of Liberia, I don't think a
soccer stadium would probably sway a Johnson Sirleaf at all or
to get her resources, a Harvard-educated person. And her
government has been doing the right thing on anti-drug
confiscations, working on governance and democracy issues,
working on development.
And in our discussions not only with her but also of other
countries--and there are over 20 countries in Africa that are
democratic-leaning--I think the fundamental objective of these
leaders is to look at how to improve accountability, democratic
values, commitment to human rights.
Yes, China is engaged in resources, but how do you limit or
eliminate the excesses? How do you guarantee that it be will be
transparent and in accordance with the values that you have
expressed, Mr. Congressman, that you are so passionate and
dedicated to? And we share those values. We believe, as you do,
that these are issues that we have to keep very close track of,
and when we do see problems, we highlight them.
I think in our dialogue with the Chinese, now entering our
sixth year, in some cases it has been very heated when we have
raised these issues. In other areas, we have looked at
potential for making the lives of Africans more----
Mr. Fortenberry. Let me follow up right quick before we
have to go. Are there some trade practices or business
constraints that we could re-examine that, again, would put us
on a better competing field for African commerce? Which should
carry with it the set of cultural mores and values that you
would think, and I believe, most African people do want. But
when you have proximity to leaders in China who are pursuing
mercantilistic ends only, it is easy to--well, it seems easier
to buy off the system and integrate without having the broader
humanitarian goals in mind that can come from the benefit of
sustainable production and appropriate environmental
stewardship of natural resources.
I think that that is a deeper policy question, and I think
it is important for us, if we can't do it in the next 30
seconds, that we have to think through, because that is a way
to reintegrate an American presence appropriately that would
benefit us as well as Africans and bring along with it a new
vision of the ideals that make us free and give us opportunity
that I think most Africans long for.
Ambassador Yamamoto. Uh-huh. Well, I think we can come back
after the vote, but----
Mr. Fortenberry. Yeah, I will just pause there. Thank you.
Ambassador Yamamoto. Okay.
Mr. Smith. We will stand in brief recess.
And I would ask you, when we come back, if you could, if
there is any policy that would be the equivalent to the Foreign
Corrupt Practices Act, which, not only do we take into
consideration the environmental degradation that our
investments might have and all the other important human rights
and humanitarian concerns, but--you know, it used to be that
businessmen from the United States bought off people. Well, now
if they do, they can be held to account and go to prison for
it.
We actually are crafting our Global Online Freedom Act to
some extent on the idea of accountability, and we just marked
it up in our subcommittee just a few days ago, on the idea that
American businesses should be shining lights overseas, at least
on some issues like foreign corrupt practices or whether or not
we are aiding and abetting dictatorships with our technological
capabilities that IT companies certainly have.
So we will--I again apologize to our distinguished
panelists. We do have another vote, and Ms. Bass said she had
some additional questions for Ambassador Yamamoto. So we stand
in recess for just a few minutes.
[Recess.]
Mr. Smith. While we are waiting for Ms. Bass to come back
and ask questions, I would ask you, if I could, Mr.
Ambassador--and say to our distinguished witnesses, that was
the last vote, so we won't be interrupted anymore by House
business.
The administration has, as we all know, Mr. Ambassador,
especially the State Department, expressed interest in
enhancing U.S.-African trade under AGOA. How do you see the
increasing Chinese investment in Africa affecting the U.S.
ability to expand trade?
And, as you know, mention was made earlier, I, along with
Bobby Rush, Congresswoman Bass, and Mr. Fortenberry, introduced
legislation called the ``Increasing American Jobs Through
Greater Exports to Africa Act of 2012.'' And it is a very
comprehensive bill. It seeks to significantly boost our
ability--American businesses' ability, particularly small- and
moderate-size, to actually sell their products in Africa,
believing that that creates that two-way street that we all
want to happen.
Have you been able to take a look at that legislation? It
has been introduced on the Senate side by Senator Durbin and a
bipartisan coalition. They are identical bills; they are
companion bills. Your thoughts on that legislation and on the
first part of the question about AGOA?
Ambassador Yamamoto. First, on AGOA, as you know, AGOA will
expire in 2015, and one of the major aspects that we are trying
to get extended would be the third-country fiber, for the
textile purpose, because it expires this August and we want to
extend it at least through 2015.
That will help as far as promoting exports by textile-
producing countries in Africa, but, more important, it
hopefully will help expand capacity and capability in those
countries where we are trying to focus. And the countries that
really benefit: Of course Mauritius and Lesotho, Rwanda, and
other countries. And so those are countries that I think the
Africans are pretty unified on trying to get us to extend the
third-country fiber legislation for support.
As far as the Chinese trade affecting AGOA, I think one of
the things that--we can answer in a couple of ways--is, number
one, their focus on infrastructure development, on roads and
other infrastructure projects helps, actually, on promoting
trade and development.
The other area, too--and I think this will go back to
Congressman Fortenberry's comments, and we can comment when he
returns--is that hopefully we can get more American companies
to operate and trade in Africa. I think that, in many ways, is
the best solution for putting all the trade in perspective,
expanding American values and openness and transparency and
also good practices.
One example is Boeing aircraft. Great company. They have
been able to expand sales of airplanes on the continent. For
instance, Ethiopia, a very poor country, just bought something
like $4 billion in Boeing aircraft. That means they just
preserved or created something like 30,000 American jobs, as
well as jobs in other countries, that help produce the 787 and
the 777 long-range.
And so those are very good, but it also extends not only a
quality of product, quality of service, but also good, open,
transparent, good business practices. And I think if we can
increase that--and I know, you, Mr. Chairman, have been so
dedicated to expanding American trade.
On the legislation itself, we have read it. We would
welcome--let me defer to our experts in the administration to
look at the legislation to see how we can respond and to
comment on it. But I agree with your premise that we need to
expand commercial trade relations. And your next panel has Mr.
Steve Hayes of CCA, who has a very good, objective view about
how to expand American business presence on the continent.
Mr. Smith. I appreciate that.
I know Ms. Bass had some additional questions, so I--no?
If you could get back to us on that earlier line of
questioning with regard to the child limitation initiatives and
China's, I would call it, complicity in that mindset which
renders children to be expendable.
Again, and I would reiterate because I think it bears
underscoring, it was the UNFPA and China that invited all of
the health ministers to Beijing to discuss the alleged
blessings of limiting children to one or two or three as a path
toward economic growth.
And, again, the evidence about China itself is that it is a
matter of when, and not if, that a sinkhole is established
because of too few workers caring for too many graying Chinese
families or people. And then, of course, the terrible missing
daughters that has occurred as a result of the one-child-per-
couple policy. It is very predictable. But if you can get back
to us on that one, as well.
I think I am going to have to move to our next panel out of
deference, so I apologize to Ms. Bass, but----
Ambassador Yamamoto. Can I just respond to one of the
questions that----
Mr. Smith. Yes. Please.
Ambassador Yamamoto [continuing]. And then I kind of will
close it. It is a response to the questions by Congressman
Fortenberry and, of course, you and Congresswoman Karen Bass.
The area is, as I think Representative Fortenberry said at
the end of his questioning, is how do you expand, you know,
good governance, but more important is U.S. practice. And I
think one of the answers has to be increasing the U.S. business
presence on the continent.
Right now it has been very difficult to attract American
businesses to come to Africa to trade. But I think the more we
get, the more that you will see the good business practices and
also expand American values and business practices. The area
that we are looking at, too, is how you do this. We have been
trying to expand American Chambers of Commerce. We are now up
to eight. That is an increase out of four when we first came 3
years ago. And we thank the American Chambers. We also thank
Steve Hayes at CCA for really helping to promote a lot of
innovative approaches to bring American practices to Africa.
The second thing, too, is to expand greater, you know,
dedication to good governance and democratic values. I think
Secretary Clinton, has made it a point in her speech recently
on increasing engagement, building trust, expanding
relationships, but also to work with China on areas where we
have differences to eliminate those practices.
And one of the things that Congresswoman Karen Bass has
said is, give examples where governance has been on trial. And
we don't have specifics, but anecdotal. And I will give you one
example is my frequent trips to the Congo, where we did see
Chinese businesses taking resources out of the Congo. Was that
through illegal means? Was that through legal means?
And the area comes in is that, where we have countries
which are democratically elected, have commitments to democracy
and human rights--and there are over 20 countries in Africa--
those countries are really the best guide to stop any illegal
practices by other countries or by companies or organizations.
And so I kind of think what Congresswoman Bass was trying to
get at is that those are things that we are trying to work on
and to try to expand.
And so where areas like the Congo, which has promising
capacity and capability, by building that capacity, by building
capability, by building democratic institutions, that becomes
the greatest deterrent toward those bad practices.
And, finally, it is to hold China and other are countries
to abide by international agreements and have them accede to
things like the OECD.
So thank you, Congressman.
Mr. Smith. Thank you very much, Mr. Ambassador. And we look
forward to the written submissions and answers, as you say, to
questions posed.
[The information referred to follows:]

----------

Mr. Smith. I would like to welcome our second panel--so
thank you again, Mr. Ambassador.
Ms. Carolyn Bartholomew, who is with the United States-
China Economic and Security Review Commission, long-serving
member on that commission. She has held numerous senior staff
positions in the United States Congress, working in leadership
offices and the intelligence committee in the House.
She has particular expertise on U.S.-China relations and
was a member of the first Presidential delegation to Africa to
investigate the impact of HIV/AIDS on children, as well as the
Council on Foreign Relations Congressional Staff Roundtable on
Asian Political and Security Issues. She also serves on the
board of directors for several non-profit organizations,
including the Polaris Project, a project that I know so well,
works on the issue of human trafficking.
She has testified before this committee before, in 2005 to
be exact. And we welcome her back.

STATEMENT OF MS. CAROLYN BARTHOLOMEW, COMMISSIONER, UNITED
STATES-CHINA ECONOMIC AND SECURITY REVIEW COMMISSION

Ms. Bartholomew. Thank you very much, Mr. Chairman. And it
is an honor to actually speak after Ambassador Yamamoto, who is
one of the unsung heroes of the U.S. Embassy during Tiananmen
Square. So thank you very much for inviting me today to speak.
Like others before me, I want to express my condolences on
the loss of Congressman Payne. Like you, Mr. Chairman, his
leadership has touched millions of lives, many of whom will
never know that he has improved their lives, but his loss is
deeply felt.
The U.S.-China Commission was established by the Congress
in 2000 to advise Congress on the national security
implications of the U.S.-China economic relationship. We
monitor, among other things, the implications for the United
States of China's increasing global presence. Over the years,
we have looked at various aspects of China's role in Africa,
including our research report on 88 Queensway.
While I will reference some of the Commission's work, the
views I express today are my own.
In 2005, as you noted, Mr. Chairman, I testified before
this subcommittee and expressed concern about the nature and
implications of China's approach to its economic and diplomatic
relations in Africa. In the ensuing years, as China's footprint
in Africa has grown, so, too, have my concerns.
We should expect that China, like many other countries,
would have a number of interests in engaging African countries.
What is troubling, however, is the way China does business in
Africa, the impact it is having, and the precedent it may be
setting.
China's no-strings-attached assistance undermines global
efforts to make foreign aid more effective and sustainable.
President Hu Jintao in 2004 explicitly stated, and I quote,
``Providing African countries with aid without any political
strings within our ability is an important part of China's
policy toward Africa.''
The Chinese Government does expect beneficiaries to meet
some of its own standards, such as diplomatic loyalty on issues
relating to Taiwan and Tibet. And as someone, like you, Mr.
Chairman, who has spent decades focused on human rights in
China and Tibet, I find it particularly chilling that China's
official paper, ``China's African Policy,'' published in 2006,
pledges to boost military aid and fight crime by assisting
judicial and police forces in Africa. Something for us to be
concerned about.
China actually does expect something in return for its
assistance: Primarily, access to the natural resources it
seeks.
OECD guidelines and the establishment of new foreign aid
mechanisms, like the Millennium Challenge Corporation, are
designed to promote transparency, accountability, and good
governance and to promote basic human rights. Much of China's
investment in Africa can only be accomplished in violation of
those principles. The dealmaking is often done between corrupt
government officials, where the public has no access to
information about those deals.
The Chinese Government's support for its state-owned and
state-connected enterprises, its deep pockets, and its
willingness to bring to the table a wide range of incentives
has created barriers for U.S. participation in countries across
the continent.
Mr. Chairman, I was pleased to hear you express support for
the Foreign Corrupt Practices Act. I know that is one of the
things that people like to point to as hindering U.S. business
practices or U.S. business participation, but I think it is an
important standard that we set, and I would be very
disappointed if we lowered the bar on those issues.
China's economic goals are clear. Through its series of 5-
year plans, now in its 12th iteration, the Chinese Government
lays out its plans, identifying national champions which are
the pillars of its economic growth and sectors in which it
intends to focus all of its efforts. Its foreign aligns with
these plans and is heavily focused on infrastructure
development.
Vast swathes of the Chinese economy and the businesses in
key sectors are either state-owned enterprises or state-
controlled companies, including defense, communications,
transportation and utilities, natural resources such as oil,
mineral, and metal, and construction trade, and other
industrial products.
The Chinese Government supports its companies by employing
its varied and deep resources--infrastructure development, arms
sales, telecommunications, among others--to land business deals
in Africa, which allow it to acquire natural resources.
Among the incentives China uses to sweeten the pot and
close a deal are arms sales. In my written testimony, I list a
number of the countries where China has sold arms. China is
also the largest provider of arms to both Sudan and Zimbabwe.
According to news reports, China provided 20,000 AK-47 assault
rifles and 21,000 handcuffs to Zimbabwe in the period leading
up to its election. So that information is also included in my
testimony.
One of the challenges is it is very difficult to know just
how much money China is providing to African countries and the
mechanisms through which that assistance is being provided--
aid, tied aid, concessionary loans, loans, foreign direct
investment. And it is also difficult to know who the players
are. The Chinese Government does consider its foreign aid
spending a state secret. And in terms of the players, there are
just lots of questions about who they are representing and
whose interests they are serving.
In 2009, three of our commission staff, of whom we are very
proud, embarked on a research project to investigate whether
investments in Africa by Chinese companies were state-directed
and made for strategic purposes or commercially oriented and
profit-driven. They focused on Angola, both because, at the
time, of its recent emergence from three decades of civil war
and because of its wealth of natural resources.
Our staff discovered a consortium of over 30 companies
controlled by a handful of Chinese investors nominally located
in Hong Kong. For simplicity's sake, we have labeled it the
``88 Queensway Group'' because that is their corporate address.
But the group's origins are imprecise, the source of its
startup capital is unknown, and its power structure and
relationship to the Chinese state remain unclear. The group's
companies are often classified as private, but there is
evidence that several of its key personnel have ties to Chinese
state-owned enterprises and government agencies, including
possibly China's intelligence apparatus.
The 88 Queensway Group companies conduct public-works-for-
resources deals in countries around the world, including
Angola, Guinea, Tanzania, Zimbabwe, also in Venezuela and
Indonesia. 88 Queensway may also be active in Cote d'Ivoire,
Mozambique, Nigeria, North Korea, and Russia. And just for the
record, closer to home, the consortium actually has bought
buildings in the United States, including the JPMorgan Chase
building on Wall Street.
The lack of transparency and public accountability
surrounding the 88 Queensway Group should be a major concern to
the U.S. The deals it makes in developing countries are
shrouded in secrecy and conducted at the highest level of
government.
One thing the 88 Queensway research demonstrated is the
increasingly complicated set of actors involved in China's
``going out'' strategy. In our 2011 reporting cycle, the
Commission examined the many actors in China's foreign policy.
In terms of China's policies toward Africa, there is a tangled
web of players. The Ministry of Foreign Affairs has the
official responsibility of overseeing policies, but the
Ministry of Commerce has the most influence. The Ministry of
Commerce guides investment, manages foreign aid projects, and
handles economic cooperation. MOFCOM is also responsible for
screening Chinese companies, most of whom are large state-owned
enterprises, bidding for concessional loans to finance
projects.
As China's state-owned enterprises stretch their wings on
the global stage, the tension between investing for profit and
investing for other purposes will only become more difficult
for the central government to manage. If you all have not seen
it, this past Saturday there was a fascinating article in The
Washington Post about Sudan and how China is trying to manage
its relationship both with Sudan and the new nation of South
Sudan. Certainly, the participation of CNPC, the Chinese
National Petroleum Company, is a part of that.
No discussion of China and Africa--and some of have you
made reference to this today--would be complete without
mentioning the new African Union headquarters in Addis. The
$200 million building was fully funded by the Chinese
Government, designed by Chinese architects, built of material
mostly imported from China, built primarily by Chinese
laborers, and will be maintained by Chinese workers. It is very
difficult not to think of all of the lost opportunities in the
way this project was carried out.
But there is hope. While many African leaders like China's
no-strings-attached investment policies, those policies may not
be as popular with African people. Public skepticism of China's
increasing presence has resulted in the growth of opposition
movements in some countries. There are regular reports of local
discontent with Chinese projects. Zambia has been mentioned.
The Commission, actually its staff, did a research paper on
Chinese foreign aid and documents some of the complaints about
Chinese laborers displacing local workers, lax safety
regulations, frequent workplace accidents--the list goes on and
on.
So I encourage the subcommittee to work with the
administration, the development community, and the U.S. private
sector to recommit the U.S. to a strong presence in Africa. If
we do not do so, we will continue to lose ground to the Chinese
economically and diplomatically, and we will be doing a
disservice to the vast majority of Africa's people, whose
natural resources are being exploited while their
entrepreneurial talent is still untapped, and whose aspirations
for good governance and basic human rights are still unmet.
Thank you very much for the opportunity to testify today.
Mr. Smith. Thank you very much, Ms. Bartholomew, for your
leadership over the years, working on all issues related to
human rights and democracy-building in Tibet as well as
mainland China. It has always been an honor to work with you.
[The prepared statement of Ms. Bartholomew follows:]

----------

Mr. Smith. I have just a few questions.
You know, we know that the Chinese Government, when it
provides any kind of aid, including economic aid or at least
cooperation, extracts a very serious price.
I remember working with the Human Rights Commission and
then the Human Rights Council, but especially the Commission,
on issues related to China. And many ambassadors, including
African ambassadors, would tell me that it put at risk their
foreign aid in the building of a new stadium, for example, and
things of that kind, to take a human rights position that is
principled against Beijing.
China has managed to turn all but four African countries
against the recognition of Taiwan.
You know, money buys a whole lot of influence. And I am
wondering if you could just elaborate, if you will, on how this
distorts the work of the Human Rights Council current-day,
other treaty bodies at the U.N., when money is flowing their
way, to go silent or take a walk when those crucial votes
occur.
Ms. Bartholomew. Yeah, Mr. Smith, that is a really
important thing that we are seeing. It is very tempting for us
to say China is only engaged in Africa because of the natural
resources that it is seeking. That it is a major priority. But
it is, as it is advancing on the global stage, working to
increase its you own power, particularly in multilateral
organizations.
And, you know, unfortunately, a lot of times, money talks.
What we are seeing in Africa, though, is it is sort of a layer
of the elite who are benefiting from these resources that are
done, but they are also the people who often either are in
power or have access to power. So the Chinese are building a
wellspring of support for their positions on issues relating,
certainly, to condemnation, potential condemnation, of their
own human rights abuses.
But you can watch them struggling now as they are trying to
balance some of the competing issues and also with more
attention. The more they are engaged, the more attention that
is being focused on them. So I think it was really public
pressure on them about Sudan that forced them to start
reconsidering their position in Sudan. And, obviously, right
now, with what is going on in Syria, the position that they
have taken with Russia on Syria, it does not play well on the
global stage.
So I think what we really have to do is, we are going to
have to count on transparency and access to information, both
for people in Africa and elsewhere around the world, so they
see what the Chinese Government is doing when these votes are
coming up. They can, I believe, be swayed, but they are also
struggling--Ambassador Shinn and I were talking just during the
break earlier. You know, they are really struggling with, kind
of, who is in charge of Chinese foreign policy and what does it
mean when a state-owned enterprise goes out there, allies
itself with unsavory characters in a country, and how does that
fold back.
So I think it is something--you know, again, the temptation
is always to say, well, you know, we really shouldn't be
pushing, or money matters more than anything else. But this
country, our country, has really been a beacon of freedom on
all of these issues, and I think it is important for us to work
together and figure out ways to counteract these diplomatic
initiatives.
Mr. Smith. You know, Dr. Peter Pham makes an important
point, pointing out the contrast of President Obama's less than
24 hours on the ground in sub-Saharan Africa since taking
office. He points out that, in general, American interests seem
to have pushed Africa to the margins of its foreign policy
interests, whether economic or political, except, you know,
when it comes to things like al-Qaeda and al-Shabaab, as well.
How do you respond to that? I mean, 24 hours on the
subcontinent seems to me precious little time for an American
President.
Ms. Bartholomew. Yes, well, I would hope that the
administration would be able to dedicate more time both to
issues in Africa and other places in the world. I think they
have been struggling, frankly, with an awful lot of issues that
have come up along the way that they have had to deal with.
But, you know, Africa has not received the attention that
it has needed from a number of administrations. I think when we
pay attention to it, we often pay attention to it for
humanitarian crises--which are important. I will commend
President Bush for the work that he did on global AIDS. I will
commend you, Mr. Chairman, for the work on global AIDS. But it
isn't just a continent of humanitarian crises. And, frankly, if
we ever want to get control of the humanitarian crises, we have
to deal with some of the underlying issues.
So I would hope that the Obama administration would be able
to dedicate more time to dealing with Africa, and would
encourage any administration to really learn about the
potential. There is a vast, untapped potential with the African
people that we all stand to benefit from, not only economically
but just--when I think of children who don't get access to
education, I think of that lost potential. It might be somebody
who could find a cure for cancer or another Shakespeare. So
this is something that everybody needs to be engaging more on.
Mr. Smith. If you could, and you might just want to take
this back or respond to it, but I would hope that the
Commission would take a look at the devastating and absolutely
corrosive impacts of the one-child-per-couple policy and its
possible extension, in a two- or three-child configuration, to
the Africa continent. We know that the Philippines is looking
and may even adopt an UNFPA-inspired two-child-per-couple
policy. Vietnam already has it.
Valerie Hudson testified at a hearing that I chaired on
September 22nd--and she wrote a book called ``Bare Branches:
The Security Implication of Asia's Surplus Male Population.''
She pointed out in her testimony that the projected 2.5 young
to elderly, 1.6 by 2050, and the missing girls I mentioned
earlier, approximately 100 million missing girls because of
sex-selection abortions. And she talks about these bare
branches, the fact that many of these men will never find
wives. And that model is being pushed by bad governance models
and perhaps by the economic equation or partnership in sub-
Saharan Africa.
And there are many African leaders who are ultimately
talking about a child-limitation policy, perhaps not realizing
that China is about to go off the cliff. And it is maybe a
decade or two away; it is going to happen----
Ms. Bartholomew. Yeah, they certainly----
Mr. Smith [continuing]. Based on a demographic problem that
they have crafted themselves, with the U.N. Population Fund.
Ms. Bartholomew. Yes. Mr. Chairman, I actually wasn't aware
of the potential application of this in Africa, but we will
certainly ask the Commission staff----
Mr. Smith. Please take a look at that.
Ms. Bartholomew [continuing]. To seek out more information
on that.
Mr. Smith. Because with those child limitations comes
coercion. It starts off with disincentives. That is what China
always does. It provides huge, draconian fines on women who
have children who have not been authorized, up to 10 times the
salary of the mother and father. And there are no children--no,
I should say, unwed mothers who give birth to children, it just
doesn't happen, it is illegal, unless they have the child on
the run.
Well, that kind of model is being sent to Africa. Remember,
they invited everyone to the health ministry in Beijing for a
week, and they crafted it as a way of promoting economic
growth. And, you know, there is a surface appeal to that that
fades and evaporates very quickly under scrutiny. So if you
could take a good look at that at your commission.
And let me ask finally, in regards to the issue of--and you
mentioned the Foreign Corrupt Practices Act. As Ambassador
Shinn points out, there are persistent reports, which are very
difficult to prove, that Chinese companies are prepared to pay
bribes. How good or not good are we at trying to look into that
issue, to raise that issue?
I know Ambassador Yamamoto talked about transparency. It
doesn't exist. But how hard are we pushing it to find out
whether or not those bribes are being paid? Because, you know,
when suitcases of money show up, it is a lot harder for our
businesses to compete. But he does point out, ``While this
probably ensures consummation of a deal in a few cases, the far
more important reason for the success of Chinese companies is
direct assistance provided by the government to finance
projects or sales.''
And as we were talking about that new place that has been
constructed in Addis, Ms. Bass leaned over and said, you know,
``How many listening devices are there?'' And that is a very,
very important point.
And I would add to that, since just 2 days ago we marked up
the Global Online Freedom Act, my bill that tries to combat the
misuse of IT companies and the Internet and would mean that
Baidu and others who list on the U.S. Stock Exchange have to
open up to the SEC their due diligence, or lack of it, with
regards to human rights.
I have been in those Internet cafes in Beijing. They censor
everything you say, everything, is monitored by the cyber
police. Now, if Africa is now picking up that same bad
governance model, which is also a company model, I think we are
in trouble. And I would suggest, as we are talking, that
anything that goes on in that building will be surveilled ad
nauseam by Beijing.
Ms. Bartholomew. I actually have thought about that,
myself, as I have read that. And, in fact, that building is
supposed to----
Mr. Smith. Like TOPHAT, remember----
Ms. Bartholomew [continuing]. Is supposed to be
maintained----
Mr. Smith [continuing]. The Embassy in Russia?
Ms. Bartholomew. Right. The building is supposed to be
being maintained by Chinese technicians. So if we have any
questions about that.
One of the things that I found interesting, associated with
the African Union headquarters, is there is a debate going on
even among African leaders. There are some, like President
Meles Zenawi, who, I am sorry to say, has gone so far as to
suggest that adoption of China's state-led economic model is
the preferable model, and that the AU chairman and the
President of Equatorial Guinea was quoted as saying that the
new headquarters was a reflection of the new Africa.
But, fortunately, there are other people, who have had to
stay anonymous--an anonymous delegate to the AU said, ``This
should be a symbol of Africans pulling themselves up, but
instead it looks like China is doing it for us.'' And there was
a Nigerian scholar who did a blog posting, who wrote, ``It is
an insult to the African Union and to every African that in
2012 a building as symbolic as the AU headquarters is designed,
built, and maintained by a foreign country.''
So there are diverging voices. I think it is really
important that the subcommittee work with the administration to
bolster support for the voices of people who want to see a
different future unfold.
Mr. Smith. Ms. Bass?
Ms. Bass. Yes. Thank you very much for your presentation.
And in the same vein in which the chairman was talking, I
did want to go right to those questions. So I wanted to know,
if you were aware, how extensive is the sale by China to
African countries of Internet filtering, cell phone
interception, radio jamming technologies.
Ms. Bartholomew. I think, Congresswoman Bass, I am going to
have to get back to you on the specifics on that.
But as you were mentioning the security issues on the
African Union headquarters, China's telecommunications
companies are really starting to consolidate their power over
the telecommunications system in Africa, including Huawei,
about which there are serious questions about at what level we
would allow them to be participating.
In terms of Chinese Internet filtering, we will get back to
you on that----
Ms. Bass. Okay. Alright.
Ms. Bartholomew [continuing]. The purchase of that
equipment.
Ms. Bass. I appreciate that.
And since I came in during your presentation, you might
have mentioned some of these other points. So if you have, you
know, sorry about that.
But I know that periodically there are exchanges with
African leaders and the Chinese Communist Party, going to
China. And I wanted to know if you might have some comment
about that, in terms of the effect of such exchanges on
political parties or political behavior in various African
countries, like you said, were going to adopt a Chinese
economic model, so----
Ms. Bartholomew. Right, right. Well, yes, I think that one
of the things that the Chinese Government has done is it has
really curried favor with some of the countries with which we
have had some pretty serious disagreements in Africa, Sudan and
Zimbabwe among them. When the Chinese Government welcomes these
leaders, some of whom are really international pariahs, and
welcomed them along with everybody else, it gives them some
international standing, which I think they then exploit to
their own advantage.
But there are any number of ways that the Chinese are
supporting these countries. Arms sales to Robert Mugabe, for
example, in violation of sanctions.
Ms. Bass. Right.
Ms. Bartholomew. I think that exchanges are a good thing.
What I would love to see would be for the United States to do
the kind of welcome of a bunch of African leaders coming here,
seeing the United States and having that same kind of exchange.
I don't think----
Ms. Bass. Maybe that is something the chairman and I can
work on.
Ms. Bartholomew. No, there you go. Maybe you guys could do
it. And I don't know if you have exchanges with
parliamentarians from Africa, but I think that that would be an
excellent thing to do.
The Chinese Government is very good at making people feel
welcome. And, in fact, it is very good at not raising the kinds
of issues that we know that we would raise if we were here. My
former boss, Ms. Pelosi, used to always say she was the skunk
at the garden party when she would meet with foreign leaders
because she would be raising concerns about human rights
abuses.
So I believe that we would continue to do that. I believe
that the Chinese Government is not doing that. But I think we
need to step up our game in terms of reaching out and hosting
delegations.
Ms. Bass. And let me just say that I sure appreciated some
of your beginning comments when you said that, you know, our
orientation toward the entire continent--I mean, aside from the
fact that some people view it as a country, but--is from the
humanitarian perspective and not looking at the assets that are
actually in the country.
And I remember the President's visit and actually when he
went to Ghana and all of that, and it was very exciting to see
that visit take place. And I certainly hope that he is able to
go back again.
But I really think we need to change our orientation in
terms of how we view the continent. So I just want to tell you
that I really appreciated your comments in that regard.
Ms. Bartholomew. Thank you.
Ms. Bass. But maybe you can comment about humanitarian aid
from another perspective, and that is, how does China weigh in
when there is a humanitarian crisis such as, you know, we are
experiencing right now? And how do they measure up compared to
the United States?
Ms. Bartholomew. I think if we use Somalia as the most
recent example, through, I would say, international pressure,
the Chinese have stepped up some, but not anywhere near as much
as they should step up or as they could step up.
I have a tendency to look at another piece of it, though,
which is, some of these crises they have been involved in
helping to fuel, directly or indirectly. They have, for
example, sold weapons both to Ethiopia and to Eritrea. They
will sell on both sides if there is a reason to sell on both
sides.
I think one of the real challenges that you are going to
see with China, if it is willing to be the proverbial
responsible stakeholder, is going to be in Sudan, which is, you
know, the dispute that is going on between Sudan and South
Sudan, with South Sudan holding the oil resources. China has
been a major investor in the oil sector in Sudan, and they bet
on Bashir coming out on top on that. So it will be very
interesting to see whether they step up to take responsibility
to try to get a peaceful and lasting resolution to the conflict
that is going on there.
So I think time will tell. I think they can contribute a
whole lot more. I think that they need to learn to contribute
to a humanitarian response as part of the global effort in any
humanitarian response, not separate from it. So although this
isn't humanitarian, anti-piracy, the counter-piracy, they are
doing part of what is going on in the waters off of Somalia,
but they are kind of doing their own thing as they are doing
it. So it would be good to see them working together to
contribute more on these humanitarian crises.
Ms. Bass. And when you say that where they have stepped up,
they stepped up because of international pressure, what type of
international pressure do they respond to?
Ms. Bartholomew. Well, that is a good question.
Ms. Bass. Is it the United Nations? Is it a Bono concert?
Is it a--what do they----
Ms. Bartholomew. You know, that is a good question.
Ms. Bass. A viral video?
Ms. Bartholomew. I think it is a combination of things.
You know, Sudan again is a good example. You know, there
was an international campaign, really, about Darfur. Our
chairman here was a part of it. I am sure out in California you
were a part of it. And it was multifaceted.
Ms. Bass. But that wasn't directed at China. That was
directed at the world.
Ms. Bartholomew. No, no, it wasn't directed to China, but
there was a point at which people did start directing things at
China because they were clearly selling arms, there were
reports of Chinese military on the ground.
Ms. Bass. That is right.
Ms. Bartholomew. There was a story about that. Mia Farrow
did a press conference, I think, right around----
Mr. Smith. Right here.
Ms. Bartholomew. Yeah, and she did a press conference.
So we happened to be in Beijing at that time. You know, you
are in hotels, and everybody says, well, it is not censored.
Ha. So we were in a hotel, and one of my colleagues, who was in
the Army and was stationed earlier in his career in Beijing,
happened to have the TV on first thing in the morning on CNN.
And, lo and behold, Mia Farrow is talking about Sudan and
China. And it got clicked off. And then, you know, the news
cycle comes up an hour later; story never shows up. So some
censor had fallen asleep.
But there are these examples of these international
campaigns that pull together--young people are a very important
part of it. The faith-based community is a very important part
of it. And, again, I think as China engages more elsewhere in
the world, it is going to have to learn how to deal with those
things and participate.
Ms. Bass. Okay. Thank you very much.
Ms. Bartholomew. Great. Thanks.
Ms. Bass. Thank you so much.
Mr. Smith. You actually called it. As you recall, Frank
Wolf and I went over right before the Olympics, and all of us
collectively were calling it the ``Genocide Olympics.''
Ms. Bartholomew. Yes.
Mr. Smith. Just one very quick question: What place does
Africa have in China's global military strategy?
Ms. Bartholomew. Global military strategy? I know that they
are doing some peacekeeping operations, I think. I might be
like Ambassador Yamamoto and defer to one of our colleagues on
the next panel to talk about the specifics of that. They are
engaging more in peacekeeping operations than they have in the
past.
A little bit of military-to-military exchanges. I think we
need to keep an eye on where they are doing those military-to-
military exchanges.
And then we heard the other day, not so much military-
specific, but as we are looking at other issues related to
China, China's interest in the sea lanes of communication. It
is also about keeping access, free access, to that coast of
Africa for them to get the oil and the other resources that
they are getting. So another issue I would say to keep an eye
on.
And we can get back to you with more information on that.
Mr. Smith. Thank you very much.
Ms. Bartholomew. Great. Thanks so much for asking me to
testify.
Mr. Smith. Thank you.
I would like to invite our third and final panel, beginning
with Dr. Peter Pham, who is the director of the Michael S.
Ansari Africa Center at the Atlantic Council in Washington. He
is the incumbent vice president of the Association for the
Study of the Middle East and Africa, an academic organization
which represents more than 1,000 scholars, and is editor-in-
chief of the organization's Journal of the Middle East and
Africa.
Dr. Pham was the winner of the 2008 Nelson Mandela
International Prize for African Security and Development. He
has authored half a dozen book chapters concerning Somali
piracy, terrorism, and stabilizing fragile states, as well as
more than 80 articles in various journals.
Finally, he testified before our committee on Somalia last
July, so we welcome him back.
We will then here from Mr. Stephen Hayes, who is the
president and the CEO of the Corporate Council of Africa, an
organization that has engaged in almost all of the political/
economic issues affecting commerce between Africa and the
United States. In his 12-year tenure at CCA, he has built it to
be a highly respected non-profit organization and has won
numerous awards for his work.
Mr. Hayes has spent most of his life working in the
international non-profit sector, volunteering in refugee camps,
working at the World Alliance of YMCAs, as well as the world's
largest student exchange organization, and helping to found the
Infant Formula Campaign.
Mr. Hayes testified before this committee on the African
Growth and Opportunity Act back in 2005, so we welcome him back
as well.
And then Dr. David Shinn, who has been a professor in the
Elliott School of International Affairs at George Washington
University since 2001. Prior to that, he served for 37 years in
the U.S. Foreign Service and held the following positions,
among others: Desk officer for Somalia and Djibouti, political
officer at the Embassy in Kenya, and deputy director of the
Somali Task Force. In addition, he served as the State
Department coordinator for Somalia during the international
intervention in the early 1990s, director of East African
Affairs, and then Ambassador to Ethiopia.
Dr. Shinn also testified before the committee on Somalia
last July, so we welcome him back as well.
Three very distinguished individuals.
We will begin with Dr. Pham.

STATEMENT OF J. PETER PHAM, PH.D., DIRECTOR, MICHAEL S. ANSARI
AFRICA CENTER, ATLANTIC COUNCIL

Mr. Pham. Thank you, Mr. Chairman. Thank you very much for
the opportunity to come before you today and speak on the
important topic of China's role and influence in Africa, their
impact on both Africans and Americans, and the resulting
implications for U.S. policy toward Africa.
With your permission, I will present a summary of my
analyses of these questions, and ask that my prepared statement
be entered into the record.
Mr. Smith. Without objection, Dr. Pham.
Mr. Pham. Let me begin by adding my voice to the countless
others, both here and in Africa, in regretting the passing of
Congressman Payne. Although we did not always see eye to eye,
there was no questioning the depth of his commitment to Africa
as well as his extraordinary humanity, which I had personal
opportunity to experience firsthand.
Mr. Chairman, notwithstanding the bad news of ongoing
conflicts, lingering authoritarian tendencies, and some very
regrettable backsliding, as evidenced by the coup d'etat in
Mali last week, there is a great deal of good news out of
Africa that perhaps doesn't receive the attention, including
the fact that Africa is home to six of the world's fastest-
growing economies over the past decade, the fact that the
continent as a whole has grown at a faster rate than East Asia,
including Japan, in 8 of the past 10 years. This trend persists
notwithstanding the fragile global economy. In fact, Africa is
expected to grow faster this year than any region or country in
the world, apart from China and India.
If the initial and, to a certain extent, at least for now,
main driver for Africa's growth is demand from abroad for its
primary commodities, there are four other factors which have
contributed to Africa's increasingly dynamic economic
prospects.
First, demographics mean that Africa is not only one of the
most populous regions on the planet but one of the youngest. By
2050, one in four workers on the planet will be an African.
Second, Africa's population is not only growing, it is also
rapidly urbanizing, thus adding further impetus to positive
economic growth, given the clear and mutually reinforcing
relationship between urbanization and economic growth.
Third, Africa has embraced recent technology innovations,
using them to leapfrog traditional stages of development.
Fourth, Africa's financial services sector has grown
rapidly in response to its changing economic landscape. And
while resources have been a big factor in Chinese engagement of
investments in Africa, there has been a noticeable shift, in
line with the changes in the continent's economic landscape. In
fact, of the $9.3 billion worth of Chinese foreign direct
investment in Africa in 2010--almost 14 times what it was just
10 years earlier--the largest chunk, 42.3 percent, went to
services, and another 22 went to manufacturing, and only 29.2
percent went to the extractive industries.
Trade is booming between African countries and China, with
some 12.5 percent of all African exports going to China--15
times what it was in 2001. According to a report published by
the State Council in China, despite the slump in 2009
attributed to the international financial crisis, the volume of
bilateral trade between China and Africa was such that China
surpassed the U.S. that year as the continent's biggest trading
partner.
The Government of China has encouraged and vigorously
supported Chinese firms in expanding their investments in
Africa. China has signed trade agreements with 45 African
countries, bilateral agreements regarding the promotion and
protection of investment with 33, and accords to avoid double
taxation with 11. The government has also set up the China-
Africa Development Fund, a stock equity fund that gives special
support to Chinese enterprises when they invest in Africa. And
recently they tripled the capitalization of that entity.
China has not failed to recognize the opportunities, both
diplomatic and commercial, in the significant infrastructure
being built out throughout Africa in transportation,
communications, power, water, health care, and other sectors.
So embedded have Chinese companies become in African
infrastructure development that, prior to the publication of
new guidelines prohibiting the awarding of U.S. contracts to
government-owned enterprises from the Millennium Challenge
Corporation, a Chinese state-owned engineering and construction
company, SINOHYDRO, was awarded two of the largest projects in
the MCC compact in Mali: $71 million for improvements to the
airport and $46 million for expansion of irrigation canals in
the Niger River.
It should be noted that increased trade with China is a
double-edged sword for African countries when it comes to
imports. On the one hand, it makes relatively affordable goods
available, which clearly benefits African consumers. On the
other hand, Chinese manufacturers tend not to establish many
links with local firms, preferring instead to turn to reliable,
cost-competitive, established suppliers back in China. This, in
turn, necessitates further imports.
This may be the most direct and deleterious impact of
China's trade and economic growth on many African countries,
the hollowing out, adversely affecting Africa's medium- and
long-term development prospects.
Paralleling China's emerging states in Africa are its
expanding political and security interests, which we can
discuss later. Beijing has a consistent policy of not imposing
explicit political conditionalities on its aid recipients. This
philosophy of noninterference in the internal affairs of other
nations fits well with the policy preferences of many African
heads of state or government. On the other hand, in addition to
the explicit requirement that its African partners break their
links with Taiwan, there may be implicit assumptions that aid
recipients support Chinese positions in various international
forums.
Overall, however, China makes few, if any, demands in terms
of democratic norms and is certainly less inquisitive about how
African leaders actually use agreed-upon credits--a stance
which conflicts with the pro-democracy, good governance ethos
that we and our traditional European partners promote.
A relatively new area of Chinese engagement in Africa has
been the security sector where China's involvement has hitherto
been limited to arms sales to various governments, some quite
questionable.
After having long taken a dim view of international
peacekeeping missions, China has embraced it. As of the end of
February of this year, the PRC has deployed 1,894 military and
civilian personnel on 11 U.N. missions. What is most
interesting is the majority of Chinese peacekeepers are
deployed in Africa, currently 1,505 PLA personnel. Three-
fourths of those assigned to peacekeeping are involved in seven
African missions, in the process, accruing for the PLA
significant tactical, operational, and strategic knowledge of
the continent.
Moreover, since January, 2009, vessels from the Chinese
People's Liberation Army-Navy have been operating almost
continuously in the Gulf of Aden and other waters off Somalia
as part of the international naval deployment to counter
Somalian piracy.
While by all accounts, the Navy deployment has cooperated
correctly with other coalition forces, a strategy paper
prepared by the central committee of the Chinese Communist
Party in December 2010 forthrightly acknowledged ``China can
make use of the situation to expand its military presence in
Africa.''
In discussing China's role in Africa, especially its
assertion of vital and strategic interests, it is worth bearing
in mind that while Chinese engagements have received the most
attention, it is clear that other rising or emerging powers,
above all, the other BRIC countries--India, Brazil and Russia--
are also busy renewing old ties and forging new links with
Africa, relations which will undoubtedly alter the strategic
context of the continent.
While the African Growth and Opportunity Act of 2000 and
its subsequent extensions, which together substantially lower
commercial barriers with the U.S. and allowed sub-Saharan
Africa countries to qualify for trade benefits, the foreign
direct investment flows from the U.S. to Africa remain
negligible, and most of it directed to the petroleum or other
extractive industries.
On the security front, even before the current fiscal
austerity, it was questionable whether the U.S.-Africa command
had the resources adequate to achieving its missions of
supporting U.S. Government objectives through the delivery and
sustainment of effective security cooperation programs that
assist African nations to build up their own security capacity
to enable them to better provide for their own defense.
In summary, what can be done in the U.S. is not simply to
cede Africa economically, diplomatically and strategically to
China and other countries.
First and foremost, we should not forget the Africans. An
all too pervasive temptation is to conduct business as if
Africans were merely passive spectators rather than the
principals in their own affairs. We need, in particular, to be
sensitive to what democratic states, their leaders, and people
are saying.
Secondly, the United States needs to develop a national
strategy for Africa.
Third, we need to establish a coordinating mechanism to
implement that strategy.
Fourth, and I am sure my friend, Mr. Hayes, will speak to
this, we need to engage and empower the private sector.
There is a great reason to be cautiously optimistic about
Africa's prospects. If the growing interest of China, India and
other countries signals anything, it is that the continent is
not only a place where aid and humanitarian sentiments drive
engagement, but where, increasingly, the emergence of business
opportunities and the potential therein for mutual benefit form
the basis of true partnerships.
In order to seize this golden movement, the United States
needs to develop a comprehensive, proactive strategy to promote
the development and prosperity of our African partners as well
as to advance long-term American interests--economic, political
and security. To say nothing of countering any baneful
influences from any other external actors.
Thank you for your attention. I look forward to your
questions.
Mr. Smith. Thank you very much for your testimony and you
excellent recommendations.
[The prepared statement of Mr. Pham follows:]

----------

Mr. Smith. Mr. Hayes, you may proceed.

STATEMENT OF MR. STEPHEN HAYES, PRESIDENT AND CHIEF EXECUTIVE
OFFICER, THE CORPORATE COUNCIL ON AFRICA

Mr. Hayes. Mr. Chairman, as you know also, I would like to
express condolences on the loss of Don Payne. He and I were
friends since 1968, so it was a particularly painful loss. I
hope you and others will continue the tradition of being the
spokespersons for Africa, as well as the U.S.-Africa
relationship.
My experience with China is based on leadership exchanges
before CCA as well as a recent program with China, which
included Dr. Shinn. What I would like to address particularly
is the trade business situation of course.
I think the situation as it regards China and Africa is
more complex than commonly portrayed in the press. While there
is an overall game plan directed by the Chinese Government,
primarily through use of its state-owned enterprises, there is
also a large and growing private sector separate from the
government that has also been encouraged to invest abroad.
The major projects in infrastructure, energy, and mine
extraction which dominate China's investment in Africa are
financed through Chinese Government institutions, such as the
ex-im bank of China. And in this way, China is able to mobilize
financing, a workforce, and a coherent plan for projects in
Africa in a much faster way than our system can allow. It will
be very difficult to compete with China at this level.
The effect of China's engagement in Africa has been largely
positive in that China has developed essential infrastructure
in some nations, provided jobs in its textile plants in Africa,
and has stirred global interest in Africa more than any other
time in history. So at the same time, there are also the
deleterious effects to its investments, environmental controls
are often lacking, and the Chinese private sector engagement at
the small scale has displaced African marketplaces. Counterfeit
goods flood Africa and it is difficult for African companies to
compete with such entities. There may be a growing backlash
against this.
While it may be incorrect to say that the investment in
Africa by Chinese private sector companies is totally unrelated
to the overall plan for Africa by the Chinese Government, the
private sector companies do have some of the same challenges as
U.S. private sector companies. They do not have the same access
to financing that state-owned enterprises have. They are not
always to able to muster their own homegrown workforces, as can
the Chinese Government and its enterprises, and they are often
negotiating with African governments from a bottom-up
arrangement while the state-owned enterprises is direct
entities of the Chinese Government, negotiate directly with the
African Government leadership. Ironically, the smaller, private
sector companies often find themselves losing in competition to
the Chinese state-owned enterprises.
I think that the collective approach by the Chinese
Government also allows them to provide a far more diverse
package in their deals made with African governments. For
instance, a deal for oil may also include the construction of
government buildings for the host government as well as other
infrastructure projects. For U.S. companies to do this would
require many companies coming together and putting such a bid
together. The Chinese Government simply has to make the deal
necessary with some of the state-owned enterprises to implement
the contract. Construction can be done in a faster rate than
could be done by U.S. companies, even if they were able to
match the deal.
Furthermore, Chinese companies are unencumbered by
regulations of their own government in dealing with the
individual countries, such as the policy of noninterference in
internal affairs that allows companies to avoid issues of
sanctions and other laws to which U.S. companies are bound.
I think we can compete with China, however. But I think we
have to do it through links with the private sector. I think we
link with the African private sector, the key to democratic
growth, to developing a middle class, to development in Africa,
going back, is to develop the middle class. To do that, the
private sector has to flourish.
Where we can compete is linking our private sectors with
the African private sectors. And in some cases, I will also say
where it is to our advantage, and I also think it helps us in
China, we can link to the Chinese private sector interested in
investing in Africa.
I think you will hear from Dr. Shinn and others, too, that
some in the private sector in China are interested in working
with the United States. So I don't put China in a total
monolith. I think there is far more diversity there, and we
need to recognize that in terms of the economic systems.
So I think our linkages and our advantages can, in fact, be
by linking with the private sector, building the private
sector, and that is the strength of the United States in terms
of economic development. And in the long term, the private
sector and a growing middle class will lead to stronger
democratic traditions as well.
So our strategy would be, let's start working with the
building the middle class and the private sector in Africa.
I think there are also threats to Africa that we also need
to address, although the purview is China today. I think the
European partnership agreements that are being thrust upon the
Africans go back to colonialism at its worse, and also will
have the effect of keeping U.S. businesses out of Africa. So I
think we need to also look at that.
Thank you.
Mr. Smith. Thank you, Mr. Hayes.
[The prepared statement of Mr. Hayes follows:]

----------

Mr. Smith. Ambassador Shinn.

STATEMENT OF THE HONORABLE DAVID H. SHINN, ADJUNCT PROFESSOR,
ELLIOTT SCHOOL OF INTERNATIONAL AFFAIRS, GEORGE WASHINGTON
UNIVERSITY

Ambassador Shinn. Thank you, Mr. Chairman, and Ms. Bass for
inviting me here today. I also pay my respects to Congressman
Payne.
I would like to begin by talking about U.S. China economic
competition in Africa.
I think the most important difference between the United
States and China is the very structure of the American and the
Chinese Governments and the way their respective systems engage
in Africa. American commercial activity, trade, investment, and
bidding on contracts in Africa are conducted by private
companies with limited involvement by the U.S. Government.
The situation concerning the relationship between the
Chinese companies and the Government of China is significantly
different. While most Chinese companies operating in Africa are
private, they tend to be small- and medium-sized and account
for a relatively small percentage of the dollar value of trade,
investments and the winning of contracts in Africa. Most of the
large Chinese companies operating in Africa are state-owned
enterprises, or SOEs. All of the SOEs receive extensive support
from the Government of China in the form of financing and
establishing contacts with African governments. The links
between the Government of China and private companies are less
clear. For example, Mindray is a smaller publicly owned medical
and technology company that is listed on the New York Stock
Exchange. It has no government ownership. Several of its
leaders told the CCA delegation in China in February that it
receives no financing and very little support from the
government.
On the other hand, you have a company like Bosai Mineral
Groups Company Limited which has a single mining project in
Ghana. Bosai is a wholly private company. Bosai officials told
us in February that the company relies heavily on government
support, especially financing. The very nature of the different
U.S. Governmental and economic systems gives a huge advantage
to Chinese SOEs. While private Chinese companies may not have a
significant advantage over American companies, even some of
them seem to have easier access to government financing than is
usually possible for American counterparts. It is also
important to acknowledge that since the mid 1990s, Chinese
companies have been more aggressive in Africa than have their
Western competitors. In addition, they are usually willing to
accept a lower profit margin, and, in some cases, to bid below
cost in order to break into the market.
In the past 5 years, Chinese banks have also significantly
increased their engagement in Africa where there has been a
real lapse by American counterparts.
The price of American products and services is almost
always higher, sometimes significantly so. In much of Africa,
lower price tends to win out over higher quality.
I want to turn to the natural resources question. While
China has a number of interests in Africa, maintaining access
to raw materials is, in my view, at the top of the list. China
imports just under one-third of its oil from Africa. China also
imports significant quantities of cobalt, copper, manganese,
bauxite, iron ore, et cetera, from Africa. We are often quick,
however, to criticize China for a trade relationship with
Africa that relies overwhelmingly on the imports of raw
materials. We need to be careful in making this argument. In
2010, the United States imported from the 54 African countries
more oil than did China by a rather considerable margin.
We were asked to look at the question of land grabs, or as
I really prefer to call it, land leasing. There has been a
considerable amount of inaccurate and exaggerated reporting on
so-called land grabs in Africa. These deals are, in fact, long-
term leases, albeit sometimes up to 50 years. China is often
cited as being at the center of these deals. The most thorough
research on this topic has been done by the Oakland Institute,
an independent policy think tank in Oakland, California. My
written testimony summarizes the conclusions, and I won't take
the time to go over them here, but I urge that the committee
take a look at what we know so far, at least in the seven
countries where the Oakland Institute has done a study. And
they have effectively found that China is a minor player in all
of this.
In fact, in 2008, China's National Development and Reform
Commission announced a 20-year food security strategy that
explicitly stated foreign land acquisitions would not be part
of China's strategy, and I give in my written testimony some of
the reasons why there is this misperception out there that
China is deeply involved in it.
Let me turn to the promotion of democracy and human rights.
U.S. support for democratization and the amelioration of human
rights abuses in Africa are the topics of sharpest American and
Chinese policy disagreements without any real competitors.
The approaches of China and the United States are
philosophically different, and they are not likely to be
bridged in the foreseeable future. China accepts whatever
government is in power irrespective of the manner in which it
obtained power or how it rules once it is in power. China is
not prepared to pressure African governments to democratize.
Because of its own system of government, which is not along the
lines of Western liberal democracy, it sees no point in urging
African governments to follow such a course.
At the same time, China does not hold itself out to African
countries as a model to follow, contrary to common belief and
media accounts. Nor will China support U.S. and Western efforts
to encourage better human rights practices in Africa. African
countries can depend on China to avoid raising controversial
human rights issues in the U.N. Human Rights Council, and on
occasion, to even support them when they are criticized by
Western countries. And this practice works in reverse.
And finally, a couple of issues on which I think there is
actually room for China and the United States to collaborate to
our mutual advantage. These are sensitive political issues, but
both the United States and China have an interest in political
stability in Africa. Both countries support all six U.N.
peacekeeping operations in Africa, as Dr. Pham discussed. U.N.
peacekeeping operations in Africa are strong candidates, in my
view, for expanded cooperation between the United States and
China. Both the United States and China have been supportive of
the transitional Federal Government in Somalia and in combating
al-Shabaab, and both countries want to see the establishment of
a national government that has widespread support of the Somali
people and control of the entire country.
Finally, both the United States and China have an interest
in ensuring peace in Sudan and South Sudan and the full
implementation of the comprehensive peace agreement that led to
the creation of South Sudan. China has an added interest, a
multi-billion dollar investment in oil infrastructure and the
fact that it obtains about 6 percent of its imported oil from
Sudan and South Sudan. The disputes between Sudan and South
Sudan are complex and involve far more than oil. They have the
potential to cause a major new conflict between the two
countries. This is not in the interest of either the United
States or China. The United States has considerable influence
in South Sudan but little influence in the north; whereas China
has significant influence in the north and less in the south.
In my view, this is an area where there could be greater
collaboration than there already has been.
Thank you, Mr. Chairman.
Mr. Smith. Thank you.
[The prepared statement of Mr. Shinn follows:]

----------

Mr. Smith. Dr. Pham, in your testimony, you talk about
China's outreach to Africa, including government to government
level. And in the last academic year, some 5,700 African
students received scholarships from the PRC Government to
pursue university level training. Can you elaborate very
briefly, because we have had that for years. It is not enough,
we all agree. What language do they teach these university
students in? And how does that selection occur and what
countries frankly are most likely to see students going from
Africa to China?
Mr. Pham. The students are from, the last time I looked,
from 50 countries. So they are really from all over. Many of
them are picked, they are officially nominated by educational
authorities in some cases in their countries. Others are picked
by a nominally competitive processes through either the
Embassies or the Confucius centers China has put up around
Africa.
What I have discovered over the years anecdotally, and I
don't have the data to quantify this, but anecdotally, the
perhaps disproportionate number of children, grandchildren,
nieces, nephews of people of a certain influence in government
who receive these scholarships, so there is a little bit of
that to it.
Mr. Smith. A little or a lot? Do you have any breakout?
Mr. Pham. There is no data because they are not very
transparent. It is more anecdotal, conversational. I will talk
to a minister and he will have a daughter in school in London,
a son in school here, and the nephew is in Beijing studying
something.
But as to the education they receive, it fully varies, just
as Chinese universities vary. Some get first-rate education at
some of the leading institutions in Beijing and Shanghai. Some
have received pieces of paper that I am not sure will do them
much good coming home with. The number is high, but one has to
really break that down into the quality of the education they
do receive.
Mr. Smith. Is there any evidence of indoctrination into the
Chinese model of governance? I mean, Moscow University was the
place people were sent, from Cuba or anywhere else, to receive
that political training. Is that a component of this, in whole
or in part?
Mr. Pham. Not formally. But there are some who attend, for
example, training institutes for the governing elites. To cite
one clear example, actually an infamous one, Joseph Kabila, the
presumptively re-elected president of the ironically named
Democratic Republic of the Congo, is an alumnus of the National
Defense University in Beijing, and the curriculum there very
clearly includes indoctrination. So at that level, certainly it
exists. Others come home as admirers of the Chinese system. And
others, quite frankly, I have met some who have turned against
it. But some become admirers. And then there is the follow-up.
I think that is important. Chinese Embassies, many of them do
carry on follow-up.
We have many people pass through our schools, and we rely
more on the soft power, the affection they may develop for our
culture, our people, et cetera. We don't keep tabs and files on
them at the Embassies and follow up on them perhaps as
meticulously.
Mr. Smith. What language?
Mr. Pham. Primarily in Chinese. In a few cases they provide
initial training in other languages until they get up to speed.
In fact, I met one alumnus of a Chinese university who probably
would have trouble reading a menu. I am not sure what she did
for 3 years in China. She came back with very limited--they
didn't really give her enough language instruction. So she
spent her 3 years there, came home and had a piece of paper,
but not much else. In fact, when I met her, she was actually
enrolled in another course back at home to continue her
education. She had been sent off to a provincial boondock
somewhere.
Mr. Smith. You mentioned the last academic year. Is this
something that is ratcheting up as a way to influence the next
generation of leadership in Africa?
Mr. Pham. I think they are. The premise seems to be that
they are ratcheting up. They promised at the last forum on
China Afro-Cooperation that they would train during the period
between the two 5,000, but they had 5,000 awarded last year, so
they are well ahead of what they promised. So it seems to be.
Now, there is going to be another ministerial-level meeting of
that forum this year, so that will be interesting. That is
usually when they parade out the numbers. It will be
interesting to garner some of that.
Mr. Smith. If any of you would like to touch on any of
these issues, but you mentioned the targeting of U.N.
peacekeeping missions as a way, and it may be for good reasons,
but it also may have a more sinister motive. 1,550 PLA
personnel, I am wondering how well-integrated they are to the
other African Union peacekeepers. We all know that they are
predominantly Africans. That has been the new and very positive
trend. Do they keep to themselves? Are they part of the command
structure that suggests that they are integrating?
And the targeting of the AU itself, if any of you who would
like to touch on this, as a central place to have significant
influence for less amount of exertion, the building of the
building and all of the other things that they are doing seems
to get an enormous amount of positive impact at the U.N. and
everywhere else where the Chinese are trying to exercise their
clout and muscle.
Mr. Pham. On the peacekeeping, on the one hand, the U.N.
peacekeeping as you know, Mr. Chairman, is always an exercise
in trying to get bodies and units out. So the Chinese have
adapted, I think, a very interesting strategy in that regard.
They provide units, unlike some other countries, India,
Pakistan, Bangladesh, that provide large numbers of troops,
units to man everything from guard posts to roadblocks, the
Chinese provide very specific units.
In Liberia, for example, the first peacekeeping operation,
they sent an engineering battalion. The same in Darfur, an
engineering battalion. Other places, Liberia also, a small cell
that managed the port of Buchanan. So they send very specially
trained units that are hard to come by; so force commanders
usually welcome them. But that also permits them to maintain
unit coherence. There are a few Chinese officers that are
billeted out in other commands that they maintain, but they
usually are consistent units.
I will give you an example. Up country Liberia in Zwedru
where the engineering battalion built the so-called Friendship
Road which the United States paid 20 percent of the bill for,
but there is no indication on the sign other than it was built
by Chinese peacekeepers, I would observe. The engineering
battalion kept itself billeted separate from the rest of the
African peacekeeping force, the Ethiopians, et cetera. The
Chinese had their own facilities and their own mess hall, and
all of that. So there is a logic to it.
Interestingly, 2 years ago, the Ministry of Defense created
for the first time a separate distinct office to handle
peacekeeping. It is not exclusively African in focus, but it
manages all of their peacekeeping. What we seem to have
concluded is roughly half a dozen units in China provide all of
the peacekeeping personnel. So what happens over time, because
the Chinese military career is a little different than our
track where people move from unit to unit, you tend to stay
with the same unit unless you are promoted upwards. So over
time, you have certain officers who have had two, three, even
four tours in Africa. So they acquire a knowledge that is quite
formidable.
Ambassador Shinn. Mr. Chairman, if I may add to that, in
terms of the peacekeeping side of your question, there have
been a number of reports, rather thorough reports on Chinese
peacekeeping in Africa, and all of those that I have seen have
given the Chinese quite high remarks, particularly on the
professionalism of their activities.
There was one fascinating report that was actually done by
an American colonel who was working alongside the Chinese in a
very small operation in the Western Sahara. He made the
argument, rather persuasively, I thought, that the Chinese are
also learning an enormous amount about Africa by having these
folks engaged there. He suggested that it will not be very many
years before the Chinese will have a better understanding of
sort of the strategic situation in Africa than the Americans
have because they will have had so much engagement on the
continent. An interesting argument by an American colonel, an
active duty colonel.
If I could just make a quick reference to your question
about targeting the African Union, although I might use a
different word than ``targeting,'' it is certainly clear that
China is working very hard to develop very good relations with
the African Union, and it is not just the question of spending
$200 million in order to build the conference center there.
They have been providing some budgetary support and they have
been helping with some of the African Union missions around the
continent financially. But it has gone beyond that. They are
also working very closely with ECOWAS in west Africa and with
SADC in southern Africa and with NEPAD, which is the cross-
continent economic organization. They are getting involved
everywhere, and it is really quite astounding to see how
engaged they have been across the continent on virtually every
issue. Sometimes, quite frankly, filling a bit of a void left
by the West.
Mr. Smith. When you say you don't want to use the word
``targeting,'' is there something other than self-interest? Is
there a sense of selflessness on the part of the Chinese?
Ambassador Shinn. There certainly is self-interest
involved.
Mr. Smith. Is it a nefarious one?
Ambassador Shinn. That is where I wasn't quite sure where
you were using the word ``targeting.'' I am not sure it is
necessarily nefarious. It is self-interest, yes. Absolutely.
Nefarious, not necessarily. Unless you consider nefarious to
mean increasing their economic links to the continent, their
economic involvement on the continent. But China wouldn't be
the only country doing that.
Mr. Smith. But again, in terms of governance, what is it
that you think that they convey to emerging democracies? And
when we talk about they don't take a position on human rights
and the like with regards to Zimbabwe or Sudan, it is an open
secret that they breached the arms embargo, and did it with
impunity, which meant that Africans in the Blue Nile region and
elsewhere were being slaughtered with AK-47s, that the Chinese
Government made available in exchange for oil? And the same
would go with Zimbabwe. As a matter of fact, we all applauded
robustly when the South Africans and others refused to allow
transshipment of munitions en route to Zimbabwe that could have
caused huge amounts of death.
I don't mind if the evidence suggests it, suggesting a more
nefarious--I mean, it is a dictatorship with gulags galore on
its own soil, that being China I am talking about.
Ambassador Shinn. My reference is very narrow, though.
Targeting the African Union, I think that is a little bit
different than these other issues that you just raised. And I
would argue that the United States, in that sense, tries to
target the African Union.
Mr. Smith. But it is all about whether or not it is for
enlightened self-interest and for the benefit of those in those
countries. PEPFAR, our malaria programs, as you know so well,
as you all know so well, what was the purpose? To help people.
Simple, and end of sentence.
What is the Chinese game plan here? I see it when I talk to
African ambassadors, like I said earlier, who take a walk. I am
not going to embarrass them by naming them, but who take a walk
on human rights issues vis-a-vis Sudan and elsewhere, and
especially with regards to China itself because of money that
flowed to their country. That is outrageous, in my opinion.
Ambassador Shinn. I think that the Chinese goals are very
mixed on some of these things. Some would fall in the nefarious
category, like providing arms to Sudan when Sudan is under
sanctions. That clearly is nefarious. But some of the other
activity I would not describe as nefarious.
Mr. Pham. Mr. Chairman, before coming to this hearing, I
hosted an luncheon for an African head of state who you brought
up earlier, and I actually posed to him the question of what
would he say if he were in my seat here. If you permit me, this
is a quote from him: ``Why can't we find a formula where
America makes investments with Africa without complicated
packaging? We are tired of people asking questions which no
answers will ever satisfy them.''
That, I think, encapsulates what you are driving at. That
China may be doing it for self-interested commercial reasons,
but it does give an out for certain people who prefer not to
have questions raised.
Mr. Smith. Mr. Hayes.
Mr. Hayes. I think, Mr. Chairman, yes, of course there are
the nefarious reasons. But I think there is also a certain
pragmatism to them. The Chinese take seriously regional
institutions. They take seriously AU, ECOWAS. They take
seriously, not only for their own self-interest, and you can
argue economic self-interest as well, that they see that the
regional institutions provide larger markets, they provide
infrastructure that has to be linked, if they are to be
successful for whatever reasons. So they do take seriously what
I think we should have been doing. There is no reason the
United States couldn't have been doing some of this.
I have also suggested to the administration that given the
burning down of the COMESA building recently, that the United
States ought to build, with the private sector, ought to
rebuild the COMESA building as a model building with all of the
green technologies you want as a model for the country rather
than leaving it to the Chinese to do that as well. There is no
reason we couldn't do that with leadership.
Mr. Smith. I would ask any of you who would like to answer,
since China itself has among the worst records ever on labor
rights, are they having any impact on labor rights in Africa?
ILO standards which are universally recognized?
Ambassador Shinn. If you are asking it from a negative
point of view?
Mr. Smith. Or positive. Probably nothing, but----
Ambassador Shinn. I would be a little hard-pressed to
identify the positive side of that, I am afraid.
There have clearly been cases, and Zambia is the one that
is most often cited in the copper mines, where the impact has
been negative. That is very well documented and I don't even
think Chinese officials would argue with you on that one.
There are other cases where they have been very lax in
abiding by local African labor regulations. Either the minimum
wage or amount of hours you work per week or whatever the case
may be. And they haven't been good at that.
I think China has slowly been learning that it has to pay
closer attention to what the African regulations are when they
hire Africans and when they therefore impact their labor
situation. And they learn it the hard way, by having protests
appear or having people complain in the media. But they are
slowly learning that they can't do business necessarily like
they did it back home and get away with it all the time. So
maybe that is slightly positive, I am not sure. But there is
not a lot of positive on that one.
Mr. Hayes. I would agree that the general effects have been
negative. It is hard, because it is not a transparent system
and the governments themselves in Africa often are not
transparent with all of the information, it is very hard to get
facts. But clearly, there is a growing resentment among the
working force in Africa. That clearly swayed the election in
Zambia as a backlash on labor practices. There is a growing
feeling, how much of it is anecdotal, how much of it is real,
but clearly the labor forces, I mean, you are displacing labor
forces by bringing in Chinese workers. You are keeping the
indigenous workforce from jobs. So that clearly is.
Again, I think the governments themselves in Africa also
have to share blame for allowing that to happen as part of the
negotiating for those contracts.
Mr. Smith. Do any of you know or have any sense as to
whether or not any of those workers that are being brought in
are from the laogai, from the gulag system?
And, finally, before we go to Ms. Bass, on the spying
issue, how robust do you think the PLA is in spying on the
African nations, starting with the AU?
Mr. Pham. On bringing in workers from laogai, certainly
that was the case during the 1960s and 1970s in some of the
construction, the TanZam Railroad and other areas. More
recently, I have not encountered any verifiable instances.
But what we do have, we have discussed the abuse of African
works, the abuse of Chinese workers, many of whom in some parts
of Africa are coming from very poor, backward, if you will, or
less developed provinces who this is their mechanism to escape
to get somewhere. So they are willing to work at standards that
even back in China would be questionable in order to get out.
And then afterwards after their contracts have been met, then
they start out small and become traders.
Mr. Smith. Would any of them rise to the level of labor
trafficking?
Mr. Pham. I think it is something that----
Mr. Smith. Can they leave on their own volition? Is their
passport taken away from them once they are in country?
Mr. Pham. I think it is of their own volition getting
there. Once they are there, you see some of the conditions, you
really wonder. And, you know, as a scholar, I don't have the
ability to conduct the type of interview I think that someone
in authority, whether in Africa or internationally, might be
able to--it is certainly something I think that should be
researched. Exit interviews of people who have left.
Mr. Smith. Thank you.
Ambassador Shinn. I would just add, Mr. Chairman, that in
2007, my colleague and I who have finished this book on China-
Africa relations that is coming out in June, traveled to seven
countries in Africa. And we specifically set out to try to put
to bed two rumors or two common reports. One was that China was
using prison labor in its--a lot of its labor force on its
construction projects. And the other was there were sort of
undercover PLA personnel who were guarding some of these
facilities. My colleague speaks fluent Mandarin, so he was able
to interact with a lot of Chinese that we encountered, too, in
their own language. We tried as hard as we could to get to the
bottom of that.
Inevitably, the response that we got, particularly from our
African sources, was that of course there is prison labor being
used out there. Then our next question was, what proof of that
do you have? Every single time that is where it stopped. They
said, well, we don't have any proof. We just know it is true.
We couldn't get a shred of proof on it. Frankly, we concluded
that there probably was, prior to 2007 in Sudan, some
indication not necessarily of prison labor, but of some
undercover military personnel who were guarding facilities when
China was building oil infrastructure. But beyond that, we
couldn't get any solid evidence at all on it. That doesn't mean
it didn't happen. It just means we couldn't get it.
Mr. Smith. The Chinese workers with whom you interviewed,
did you get any indication of how many and whether or not they
were at liberty to discuss details?
Ambassador Shinn. My colleague--I couldn't speak with them
because I don't speak Mandarin, but my colleague did, and he
made a special point of chatting them up whenever he ran into
them. He certainly never ran into any of them that came from
this background. They were just basically unskilled or semi-
skilled laborers who were trying to make a few more dollars
than they would make if they were working back in China. And
they were all going home after the end of their contracts. But
these were just very, very ordinary Chinese folks. We obviously
didn't see everyone.
Mr. Smith. Okay. About how many? Just for the record?
Ambassador Shinn. That he talked with?
Mr. Smith. Yeah.
Ambassador Shinn. Oh, probably a couple dozen scattered
around Africa.
Mr. Smith. Okay. Thank you. Ms. Bass.
Ms. Bass. Thank you. I just have a few questions. I
appreciated your questions. And you covered many of the areas
that I was interested in. But I want to kind of follow up on a
few of the areas that you were talking about. I want to talk
about the quality of the work that is done in Africa. And this
is general, but maybe you can cite a few examples. You know, as
I sit and I listen and read about how the Chinese don't follow
any standards or regulations, so then what does that say about
the quality of the work that is done? And have there been--I
mean, because you know, work has been done for many years, you
mentioned the Tan-Zam, but, you know, over the last couple of
decades are the various African countries running into problems
with some of the work, some of the infrastructure projects? And
I am asking my questions generally, I am sorry, not directed to
anyone.
Mr. Hayes. I would like to take that on two counts. When we
were in China about, you know, last month, some very good
private enterprise companies, Mindray, for instance, and one of
the companies that made the appliances, they admitted, they
said our quality is not the same quality as Western quality
yet. We are working to get to that level. And so we market our
products at a lower level. We don't market the richer consumer.
We market the middle and lower levels.
So, you know, by their own admission, the quality is not as
good. Again, anecdotal, because I haven't bought Chinese
products in Africa, but again, what we are told time after time
is the quality is far less. One of the African ambassadors
said, you know, we can repair--the Chinese can build a road and
we can repair it eight times for what it would cost a U.S.
company--cost us to pay a U.S. company to do it. My answer is,
do you really want to repair it eight times?
Ms. Bass. Right.
Mr. Hayes. But nevertheless, yeah, there is a general
admission, at least my experience from China as well as
throughout Africa, the quality is less. But let's keep in mind
in the 1960s that we had the same view of Japanese products.
Ms. Bass. Oh, okay. I didn't know that.
Mr. Hayes. I am an older guy. But, you know, we made fun of
Japanese products as cheap, inferior. They were. But it didn't
take too long to move up the ladder. And I think the Chinese,
you can expect some of that too. We visited a car factory in
China. It is clear that the product is cheaper, it is not the
same quality, but it is going to be affordable to some that
couldn't afford it otherwise.
Ms. Bass. You know, there is quality and there is quality
because, you know, you can buy a Mercedes and you know, you can
buy a Hyundai. And we have different levels of quality here
too. I wasn't so much--I mean, I would assume, I guess it might
not be the same quality as the U.S., but that doesn't mean it
is not safe. And in specific regard to the safety of buildings
or the safety of roads. That is kind of what I was referring
to, you know what I mean. And maybe what you were saying about
repairing the roads might be an example.
Mr. Hayes. I think the roads are not as safe, as well-
built. Again, unfortunately, you know, I am not a road tester.
I can only go anecdotal and what I am told. But even by some
leaders of countries that the roads wash out too easily. We
have to go back. But again, we are also told that they are
beginning to improve the quality in certain countries as well.
There was high praise for the Chinese roads built in Ethiopia.
There was far less praise for the Chinese roads built in the
Republic of Congo.
Ms. Bass. You know, it is like when you hear there is an
earthquake in Central or South America and it is--well, I come
from Los Angeles, so I am used to earthquakes. You know, there
might be a 6.0 earthquake and there is devastation, and there
certainly isn't devastation in California from that. So that is
kind of what I meant in terms of the building, you know,
quality. It doesn't have to be our quality, but it can
certainly be safe.
I wanted to also talk to you about the workforce and what
you were describing, Ambassador Shinn, that you weren't able to
document that folks were prisoners. And then Dr. Pham described
them as being people perhaps from the countryside and less
skilled, but they weren't necessarily prisoners. So the
chairman mentioned did they have to surrender their passport? I
mean, are they kind of like indentured servants? I heard the
contracts, you know, are they easily able to go home once their
contract is finished? Are they paid throughout? Or do they have
to work many months and then they get a paycheck? What are some
of the conditions that they face?
Mr. Pham. Obviously, Congresswoman, it varies considerably
from the enterprise, whether it is a state-owned enterprise, a
private contractor, what scale of enterprise. But a few general
traits, the contracts generally pay for--usually they run 2 to
3 years. These workers, overwhelmingly male, will go over for 3
years. That will include their passage over and their passage
home. If they were to leave--now, having no evidence of
passport confiscations or anything else, however, what I do
know is if they were to leave before then they would be liable,
they would have to pay their own way home. But then if you look
at what they are being paid and what they are trying to save
up, it is not coercion, but it is of a different kind. It is
the same with the--so they would lose everything they would
have earned if one looks at what it costs to travel to and from
Africa. They are not necessarily--I don't think--no evidence
whatsoever that they are locked in at night. But on the other
hand, many of these people are in countries where they do not
speak the language and they really don't speak English.
I once ran across several of them in Swaziland, who
amusingly enough, they spoke their dialect, they even didn't
speak standard Mandarin, didn't speak any English, and we
couldn't really communicate. They spoke a smattering of Swazi
phrases. So if you are one of those poor gentlemen, you are not
going to be able to get very far. So there is no coercion, but
where are you going to go with a smattering of Swazi? And that
is not coercion, but you are not quite free.
Ms. Bass. So on another note, thinking of those African
students that are in China, and wanting to know how they are
treated, I remember years ago back when Yugoslavia existed
visiting Yugoslavia and encountering African students there who
were essentially segregated. I mean, they were locked down.
They weren't able to do anything. They couldn't socialize in
the general community. And so what happens to African students
when they are in China? You told me they weren't taught very
much.
Mr. Hayes. You know, I have pretty high ties, as Dr. Shinn
can tell you, in China. And the people that I talk to say, yes,
the African students are fairly isolated. There is a strong
prejudice. And it is a problem that they haven't resolved. As I
said, I feel like I am going through puberty with this voice.
The more liberal and open in China will tell you that there are
major problems, that there is distrust. It is like in my work
in and out of the Soviet Union in the 1980s at Patrice Lumumba
University, there was a strong anti-black feeling by the
Russians.
In fact, I had one African diplomat tell me he insisted his
son go to Patrice Lumumba University so he would come back and
hate Communism. There is a very strong bias. I mean, you are
looking at a Chinese society that is 95 percent Han.
Ms. Bass. 95 percent----
Mr. Hayes. 95 percent Han cultural. So it is an
extraordinarily homogenous society given the size of the
country.
Ambassador Shinn. Congresswoman Bass, if I could just
address quickly both the quality safety question and the
workforce question, these are issues that we spent a lot of
time trying to get to the bottom of. On the quality issue, it
is interesting. There is an element of you get what you pay
for. In other words, if you want a road built by a Chinese
company, it is the African Government that will set out the
specs for the road. Sometimes the African Government wants a
cheap road. The Chinese are perfectly happy to accommodate. You
want a cheap road, you get a cheap road.
In one case, it was pointed out in Angola they wanted a
cheap road because they wanted it really fast because elections
were coming up and they wanted to show the public that they
were doing something for them. So we don't care about the
quality, but just get the road done so we will get the votes of
that part of the country. That may sound familiar sometimes in
our own country.
Ms. Bass. I thought it did.
Ambassador Shinn. Now, on the other hand, you can get a
good road from the Chinese. If the specs are high enough, and
you are willing to pay for it, they will build you a good road.
It is probably almost as good as what the Germans and the
Americans would do. On the question of safety, this has been a
troublesome area, and one that the Chinese themselves are aware
of and they would like to stop. Because they don't want bad
publicity on unsafe products, like we have had in the United
States, like they have had in China. I mean it has been an
embarrassment in China. And when it comes to pharmaceuticals,
for example, and it is not just China or Chinese products that
have done this, it is Indian and probably Pakistani and
Indonesian and others, where you get adulterated pharmaceutical
products that don't do what they are supposed to do. They are
manufactured by private companies and they cause a lot of
problem when they are not doing the right thing.
Finally, on the quality issue, there have been some
environmental issues that have been caused by Chinese projects
in Africa, normally on the negative side. China, again, has
learned, or is learning its lesson on these. They have run into
civil society blowbacks of we don't like this project because
you are tearing up a national park, or you are polluting water,
or something or other. And they have learned that this is not
good, smart politics. So they are trying to improve their
record on the environmental side. They are not there yet. But
at least they understand that this doesn't make for good
relations.
On the workforce question and the nature of contracts, et
cetera, I would agree with what Peter said. Some of the
contracts are as little as 1 year, not 2 years, or 1 year
renewable. What happens with most of these workers is that they
are hired en masse and brought in a large group to wherever the
project is in Africa. They are housed on a compound, so they
are living with their Chinese counterparts in part because that
is where they get food that they like and are satisfied with,
and because they can speak the same language to someone.
Because they speak nothing but some dialect of Chinese.
They can't interact with anyone out in the general public.
There also have been some issues of on-the-job cultural
tension, shall I say, between the Chinese workers and the
African workers where you can almost tell through hand motions
and whatnot that they really don't like each other that much.
But I have never encountered anything like withholding
passports or that sort of thing. On the other hand----
Mr. Smith. Would you yield on that point?
Mr. Shinn. I am sorry?
Mr. Smith. When you say you haven't encountered it, if you
don't mind yielding----
Ambassador Shinn. Sure.
Mr. Smith. What kind of hard questions, what kind of human
rights reporting has been done to ensure that? I have asked
that question of our TIP office, I have asked it of various
desk officers. Who is actually investigating to ensure that
when you talk about labor trafficking? I mean who has that
access? Where is the reporting? I mean, anecdotally, I am very
slow, as we all ought to be, to make a decision, and I wrote
the Trafficking Victims Protection Act. I took 2 years to get
that passed against a great deal of opposition. Finally, it
passed, and then it was overwhelming once we got to a critical
mass in the House and the Senate.
I mention all of that because without good reporting on the
ground and methodical, you know, I am afraid--I mean, I asked
our people in the Democratic Republic of the Congo, have you
had any access to those individuals who are working on that
huge building being constructed by a Chinese company? They said
no.
Ambassador Shinn. Mr. Chairman, you have looked into this
more than I have. I don't have the answer to the question. And
it may be that no one has looked at it. My only comment is that
I am just personally not aware of cases where they have
withheld passports. But I was going to add that there have been
cases where there have been difficulties with significant
numbers of Chinese laborers on the ground, either a result of a
local protest over some local problem that has arisen. One
recent occasion was at a cement plant in Ethiopia. There was
another occasion a couple of years ago in Equatorial Guinea
when the Chinese actually protested against the Government of
Equatorial Guinea. The way the Chinese Government dealt with
both of those was simply immediately to send all of those
people home. They were on the next plane out of there, and that
was the end of their involvement.
So that would indicate certainly a considerable amount of
control over the workforce. But I just haven't run into any
case of on the passport issue. I don't know.
Ms. Bass. So switching subjects here, I wanted to
especially speak with Mr. Hayes about this. I have a major
interest in our private sector getting involved with the
private sector in Africa. And I wanted you to speak more to
that, and perhaps be specific where there are certain
countries. And I didn't mean that to the exclusion of the other
two panelists, but you had made reference to that in your
comments. And you know, which countries do you think? Which
industries? Which areas of the economy? Looking for some
guidance.
Mr. Hayes. Thank you. I would like to take that. Basically,
the private sector is poorly developed throughout Africa.
Historically, you know, most of them operate under a socialist
system which the private sector was pretty well repressed.
However, there is a growing private sector in Nigeria, Kenya,
South Africa, Ghana for sure, interestingly Ethiopia. I think
those are your--and in Zambia. There are several countries, as
a matter of fact. And there also are companies now that did not
exist 20 years ago that could buy out U.S. companies.
Ms. Bass. Really? Give me an example of that.
Mr. Hayes. Dangote in Nigeria. There are billion-dollar
companies who have made their earnings legitimately.
Ms. Bass. What do they do?
Mr. Hayes. Concrete, all kinds of other things. And South
African companies as well. There are major CEOs emerging, and
they have a strong private sector. But there is also middle
class starting to grow. These are the partners that we need to
be linking with and linking our private sectors. It is going to
be very hard in the long term to do business in Africa without
having private sector partners.
Ms. Bass. African private sector partners?
Mr. Hayes. African private sector partners. Countries are
demanding that more and more, partly as social responsibility
and all that, but also, you know, they are saying, look, if you
recall going to help us develop and you are going to come in
here and do contracts, then help our private sector develop as
well.
Now, in some countries they are naming the partners, which
doesn't work very well. But in other countries we have the
freedom to find the right partners. And those countries I
mentioned are I think the right countries. We ought to be
linking with those, helping the middle class develop. And
really our development work ought to be largely, I think,
building a viable private sector. The stronger the private
sector, the stronger the middle class, and the stronger push
for democracy and related issues. Without a strong middle
class, you have a very rich element and a lot of poor. And it
is going to be very hard for any type of stability. So we ought
to--in fact, our strategy at the Corporate Council, and we just
finished our board meeting today----
Ms. Bass. I was going to ask you about that.
Mr. Hayes [continuing]. Is one, let's find those companies
and bring them onto the board of the Corporate Council on
Africa. Let's start making those links. Now, we do have staff
people in those countries. They are diasporan who came over
here, worked with CCA, wanted to go back, so in Ethiopia,
Ghana, Nigeria, South Africa, and Kenya, we have staff on the
ground that can help us locate who are the legitimate private
sector starting to develop. It is not done by the Embassies, it
is done by indigenous people who have worked with us and know
that. I think it is a step. You know, we are a small
organization, but, you know, we are also fairly influential
within the scope of things.
Ms. Bass. Small organization with 200 companies?
Mr. Hayes. Well, we have got 25 staff. We have 25 staff.
And let me put a plug in, 13 nationalities represented on that
staff. I think we are one of the most integrated small
organizations in town. I am very proud of that. In fact, two of
my interns from two countries are behind me. But in any case, I
think that is where we ought to put our efforts. We can't
compete with the state-owned enterprises. It is a stacked
competition. They are working with the people at the top. If we
are serious about the changes in Africa that need to happen we
need to work with the people that are building the middle.
Ms. Bass. So you did the infant formula campaign, huh?
Mr. Hayes. Yeah, I was of the four principal founders. And
that can be documented. We started in 1976. Dick Fernandez, who
was the chaplain at Yale University at the time was also one of
the founders, Leo Marguiles. And anyway, we got the--when the
victory celebration was in 1983, the person we hired, Doug
Johnson out of Minnesota got front page in The New York Times
signing the peace agreement with Nestle. And then at the
celebration, I was given a little plaque, which I still have
and I am very proud of, that said you started the whole thing.
I didn't realize that I had raised all the budget for--that was
sort of a gift; it wasn't much money--but raised the budget for
the first 2 years entirely. And I never knew that until that
day.
Ms. Bass. I remember that campaign very well.
Mr. Hayes. It is the only successful worldwide citizens
campaign still.
Ms. Bass. I remember it well.
Mr. Pham. Ms. Bass, if I could just add just two points to
what Mr. Hayes has just said. I am in complete agreement that
there are two parts that the U.S. could help with Africa. We
talked a lot about infrastructure development. Infrastructure
development isn't just roads. We don't have many American
construction companies pushing it out there. But infrastructure
telecoms, which this week we are concluding--actually, it
concluded already today--in Addis Ababa was a telecoms
conference about the future of Ethiopian telecommunications. I
haven't seen the up-to-date registration list, but I saw the
one that was updated as of Monday morning, there wasn't a U.S.
company attending. So at the big level. But also we need to get
U.S. companies out there at the low level. The African middle
class is defined by the African Development Bank is $4 to $20 a
day.
Ms. Bass. The middle class?
Mr. Pham. That is the middle class. That is the growing
middle class. At $4 to $20, many American companies simply--and
this is why they turn to Chinese goods of varying quality--
don't have products that they can easily access at $4 to $20 a
day.
Mr. Hayes. On that, I was going to say I am glad he said, I
would have been shocked if we had telecom companies there. The
U.S. telecom industry has given up on Africa. Motorola
withdrew. We do not----
Ms. Bass. Why?
Mr. Hayes. They were undercut on pricing. The Chinese
goods, ZTE, it is not only ZTE, the South African companies,
MTN and others. We have withdrawn from that area. There are
areas of the power sector that we can compete. There isn't a
country, including South Africa, in Africa that is meeting its
current power needs.
Ms. Bass. What about solar? I mean if you think of the
continent----
Mr. Hayes. We have that, but interestingly, China is also
starting to sell solar. But we do have, Brazzaville, the
streets of Brazzaville are lit by solar lighting from a Florida
company. So there are areas to compete. But the problem on
that, and Dr. Shinn, David referred to that earlier, is that
financing is very hard to get in the United States. Financing
is a lot easier for not just China, almost anybody else. Our
banks will not step up to finance on Africa.
We have had a contentious relationship with Ex-Im. I am far
more sympathetic to EX-IM than I was. As a result of that back
and forth, we have had some very good dialogues. Ex-Im can't
guarantee loans if no American bank is going to step up. And
they are not stepping up. And that is really putting us to a
significant disadvantage. To echo I think what Peter said, we
need a national policy, we need national leadership that says
Africa is in our highest interests. And I believe it is. I
think it is--right now I think it is the most important
continent to our future. And yet we are not engaged to the
extent that we need to be engaged in Africa. The private sector
needs to be far more engaged. Yes, that is a lot of 200
companies, but it should be far more.
Ms. Bass. Thank you. Did you have any comment, Ambassador?
Ambassador Shinn. The only item that I would add on the
banking question, and I alluded to it in my opening remarks,
and it is in more detail in my written testimony, but just to
underscore the point, American banking is doing less today in
Africa than it was doing 30, 40 years ago. It has basically
abdicated. And who has been stepping in in the last 6, 7 years?
China. China is all over the banking sector now. It had almost
nothing there 6 years ago. It bought 20 percent of Standard
Bank of South Africa for $5.5 billion. It has bought various
smaller percentages of European banks like Barclays that have
wide exposure in Africa. It is setting up its own banking
offices in a select number of African countries, particularly
in southern Africa, where you have more wealth. China has
figured this out. We haven't gotten our heads around it.
Ms. Bass. It is kind of amazing to me, too, because for all
the complaining we do about China, for us just to hand over the
continent to them is really kind of, you know, the
responsibility is on us. And you were talking a few minutes ago
about the environment. You know, we have a lot to be proud of,
but some of our environmental track record in Africa is not too
glorious. But anyway, I appreciate your comments. I really
would like to continue to follow up with the three of you on
these different issues, and especially around U.S. investment.
And maybe how we in our country here in DC on a bipartisan
level, I mean, in thinking about the private sector
involvement, I mean I know that is a concern of my colleague on
the other side of the aisle and how do we get more of our
companies to have a direct business relationship in Africa. So
thank you very much for your time and your testimony.
Mr. Smith. And I think our bill is a start. I hope that all
of you will take a look at it and hopefully endorse it. Thank
you. I hope you will come back. I know we kept you late. But
thank you for your outstanding recommendations and very
incisive commentary. It really does help this committee do a
better job, and hopefully, by extension, the Congress. The
hearing is adjourned.
[Whereupon, at 5:28 p.m., the subcommittee was adjourned.]

A P P E N D I X

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