China in Mauritius, who will benefit?

SATURDAY: SINO-AFRICAN RELATIONS

China is now establishing six new special economic zones (SEZs) in Africa, characterized by liberal tax policies encouraging even more Chinese investments. Among those six, a SEZ to be established in Mauritius is attracting major attention, the project is named the Jinfei Economic and Trade Cooperation Zone.

The main reason why this SEZ is attracting so much curiosity is due to Mauritius believed to be such a peculiar “pray” the the “oil-thirsty” Chinese. Mauritius in fact is lacking natural resources to extract, lacking cheap, readily exploitable labour force and lacking a numerous population providing a significant domestic market. Nevertheless, China has decided to spend around $1 billion to set up this SEZ. Why?

China’s relation with Africa is often generalized through the nouns “oil”, “natural resources”, “extraction”, “exploitation” and even “neo-colonialism”, however the case of the Jinfei Economic and Trade Cooperation Zone in Mauritius does not tick the box of any of those nouns.

On the contrary, China is looking towards Mauritius not for oil or mineral extraction, rather it sees Mauritius as a business hub, a gateway between Asia and Africa due to its long-standing democracy, its stability and it temperate business climate. Mauritius is moreover member of the Southern African Development Community and the Common Market for Eastern and Southern Africa, hence giving the island preferential access to a numerous African markets as well as guaranteeing its economic stability.

Deborah Brautigam has long been developing in depth research on this issue and explained it in her book The Dragon’s Gift: The Real Story of China in Africa. Contrary to what many critics state by accusing China of relating only with dictatorships within Africa, Brautigam explains that the democratic governance in Mauritius was one of the primary reasons making the island so interesting for China since it guaranteed a financial stability.

Unlike other SEZs China has established in Africa, the Jinfei zone is aimed at housing the headquarters for the Chinese investments in Africa, by establishing a logistics center, international conference centers, informatics towers, medical centers, wholesale and retail shopping centers and even bilingual Chinese-English boarding school for the children of executives stationed in other parts of Africa.

At first, new employment, direct and indirect, a surplus of expertise and technological knowledge are the first advantages associated with what’s in it for Mauritius, however out of the estimated 40,000 jobs only 10-15% would actually go to Mauritians. The infrastructural phase of construction in the SEZ would also be conducted predominantly by Chinese expatriate workers, using materials imported from China and managed by Chinese contractors. The initial benefits estimated to bring incredible benefits to Mauritius have been questioned and the relationship with China put to debate.

While first-hand information on what actually happens within those SEZs is scarce and often generalized, it is now an established fact that Chinese State-owned enterprises (SOEs) require that half of its employees are local, transferring to their homelands the technical skills from the Chinese specialized workers. Private Chinese companies instead are independent from the Chinese government regulations and rule according to local regulations, just like any foreign company would do in a country where it is investing. The argument which then comes into play is the need for the African governments to promulgate regulations to defend themselves in face of foreign investments. Just like China established a series of strict rules regulating foreign direct investment (FDI) from foreign countries during it’s open-door policy and liberalization of the economy, so should African governments guarantee that their local populations can benefit the maximum possible from Chinese investments. James Wan from Think Africa Press calls this pressing need the “race to negotiate” stressing that Mauritius is still in time to improve its chances of benefiting from the project and transforming the SEZ into a true mutual-beneficial relationship.

Chinese President Hu Jintao (R Front), accompanied by Mauritian Prime Minister Navinchandra Ramgoolam (L), inpsects the honor guard upon his arrival in Port Louis for a state visit Feb. 16, 2009. (Xinhua/Rao Aimin)

Advertisements

2 thoughts on “China in Mauritius, who will benefit?

Leave a Reply

Fill in your details below or click an icon to log in:

WordPress.com Logo

You are commenting using your WordPress.com account. Log Out / Change )

Twitter picture

You are commenting using your Twitter account. Log Out / Change )

Facebook photo

You are commenting using your Facebook account. Log Out / Change )

Google+ photo

You are commenting using your Google+ account. Log Out / Change )

Connecting to %s