THE NEW LOOK IN CHINESE COMMUNIST AID TO SUB-SAHARAN AFRICA

Created: 9/1/1968

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Intelligence Memorandum

The New Look in Chinese Communist Aid to Sub-Sakaran Africa

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CENTRAL INTELLIGENCE AGENCY Directorate of Intelligence8

INTELLIGENCE MEMORANDUM

The New Look in Chinese Communist Aid to Sub-Saharan Africa

Summary

Communist China's agreements within the past year to help construct the Tamania-Zambia and Guinea-Mali railroads represent substantial new efforts to enhance its influence in Sub-Saharan Africa." The Tan-Zao railroad will involve the largest single foreign assistance outlay in Sub-Saharan Africa. These agreements have already won Peking some propaganda gains and may have Influenced both Tanzania and Zambia to vote against the Nuclear Non-Proliferation Treaty in the UN recently; the only other votes against the treaty were by Albania and Cuba.

Especially since Chou En-lai's extensive visit to Africa inhina has used economic aid programs to extend its Influence in Africa. Although initially successful, the programto some extentecause of Peking's neavyhanded treatment of some countries andmilitary coups in several other countriesupture in diplomatic relations with China, esult, China has concentrated its economic assistance in tho Socialist-leaning states of Guinea, Mali, Tanzania, and Congohe signing of the railroad agreements now brings

For the purposes of thi* memorandum, the term Sub-Saharan Africa include* all countries on the continent of Africa except Algeria, Libya, Horocoo, Tunisia, and the United Arab Pepublia.

HOte: Thie memorandum uaa produced solely by CIA.

and was coordinated with the Office of Current Intellicence.

total Chinese aid in Sub-Saharan Africa to5 million, nearly one-half of Peking's total aid extensions to all non-Communist countries. About four-fifths of the African aidan estimatedillion has already been committed to specific end uses.

For the most part, Communist China's economic assistance has been well received by the Africans. The terms of China's aid compare favorably with Western and Soviet practices. Most Chinese-sponsored projects ace operating satisfactorily and appear toet gain to the recipients. However, actual aid expenditures to0 million throughave been too small to have substantial economic impact. Despite the largeneeded for the Tan-Zam and Guinea-Mali railroad projects, their construction will contribute relatively little to overall economic development for many years. Resources and population along the proposed routes are sparse, and there are few profitable investment opportunities in these regions, even with lower transport costs.

rgtreduction

Communist China's recent announcements that it will help build the Tanzania-Zambia and Guinea-Mali railroads greatly expand the extent of Peking's economic aid activities in Sub-Saharan Africa (see the map. With these projects, Sub-Saharan Africa will be receiving nearly one-half of Peking's total aid extensions to non-Communist countries. By undertaking the railroad projects. Communist China apparently hopes to firmlyeif in Africa, as well as to improve its image on the continent. In any event, this new emphasis on Sub-Saharan Africa apparently has already won Peking some gains. Peking's willingness to build the Tan-Zam railroad may have influenced Tanzania and Zambia to vote against the Nuclear Non-Proliferation Treaty in the UN recently. Tho only other UN members to vote against the treaty were Albania and Cuba.

This is not the first time Communist China has attempted to increase its presence in Sub-Saharan Africa by sharply expanding its economic aid program. Peking's aid program was initially designed to support the overall aid efforts of the Communist countries ln Africa, as well as to achieve political recognition for Communist China. owever, economic aid was being employed by the Chinese as an Instrument of competition to counter Soviet as wall as Western policies in Africa. As part of this effort, and to develop relations with African countries on the official levol. Premier Chou En-lai made an extensive tour of Africa from latentil early His goal during the trip was to convey an image of Chinaarge and powerful country which had more in coaaon with Africa than did the USSR or the Wes t.

Following Chou's visit, Peking offered aid to several Sub-Saharan countries. 4 the number of states receiving Chinese assistance rose from four to eight, and the total amount of aid extensions to these countries increased byercent. Despite these efforts, Pekingumber of political reversals5

n part because of its heavy-handed approach, which was evident in Chou En-lai's repeated references to the "excellent revolutionary prospects'" in Africa and in Chinese support for antigovernment activities in some countries. Some Chinese representatives were expelled from Kenya6 for providing funds to leftwing elements there. Furthermore, military coupsumber of countries, such as Ghana and the Central African Republic, brought to power conservative regimes that subsequently broke diplomatic relations with Peking.

these diplomatic setbacksinfluence in parts of Africa, Pekinga strong position among thecountries. The Chinese are wellGuinea and Mali andonsiderableCongo (Brazzaville). Poking's position inTanzania has steadily improved over theyears, and the Chinese continue to wieldinfluence on the nearby island ofhas recently added Mauritania and Zambialist of aid recipients. Even before theprojects were announced, about one-third

of Communist China's aid to the Free World was committed to Sub-Saharan countries, and7 two-thirds of its economic technicians serving in non-Communist countries were in this area.

governments have acceptedaidariety of reasons. Mostit is seenay to help reduceand economic dependence on theirrulers and to help roplace decliningnon-Communist sources. Some Africanas Guinea's President Toure and to aTanzania's President Nyerere, feelakin to the Chinese and are well disposedPeking's economic assistance. SomeUganda and Kenya, initiallyeans of expressing their policy ofthe world powers.

Scope and Nature of Chinese Economic Aid

hen Communist China beganprogram in Sub-Saharan Africa, Peking hasor agreed to extend aid amounting to an

5 million to this area. About four-fifths of this totalan0 millionhas already been committed to specific end uses. This compares with US comci extents in this area of more thanillion9 (see the chart. China's aid, however, iselatively few countries. More thanercent of total commitments, including aid for the railroads, is to five countriesuinea, Mali, Tanzania, Zambia, and Congo (Brazzaville). Although Ghanaajor recipient of Chinese aid, all Chinese projects there were suspended following Nkrumah's ouster in Peking's small aid program in the Central African Republic was also ended following their break in relations. The balance of Chinese assistance is spread among Kenya, Uganda, Somalia, and Mauritania, but commitments to these countries amount to onlyull ion.

* Excluding the coat of rolling stock for the railroad and expanding the port at Dar es Salaam.

7. More than one-half of the aid promised by Peking is for the two regional railroad projects.ile Tan-zam railroad, estimated to cost0ill be the largest single foreign assistance outlay in Sub-Saharan Africa and China's largest undertaking in the Free World. ile railroad connecting Guinea and Mali may cost moreillion and will be the largest foreign aid scheme in these countries. Peking's other aid projects have consisted ofype readily absorbed by an underdeveloped economy. Most project aid has been used for small-scale plants producing light consumer goods or processing crops grown on related agricultural schemes. The largest plantsew textile mills costing aboutillion orillion each. Chinese project assistance has also been used for improving economic infrastructure, such as electric power facilities and roads.

8. Peking usually provides commodity credits to defray local costs of its projects, including local materials and labor, and aboutercent of its country-to-country aid commitments* have been for this purpose. Host of the technical assistance provided by Poking is used in constructing or operating Chinese-sponsored projects. elatively few of thehinese economic technicians employed in Sub-Saharan countries7 were used to support social services such as medical and educational activities. In addition, Peking has agreed to provideillion in cash and commodity assistance to relieve trade deficits and reduce budget deficits (see the table).

Total Chinese Communist Aid Commitments, by Type

as of

Million US 5

Project

budgetary

9. By and large, African nations have been pleased with the aid they have received from Communist China. Almost all of the industrial

13 Country- to-eoun fry assistance does not include the railroad projects, since these involve more than one country.

ESTIMATED FOREIGN AID COMMITMENTS TO SUB-SAHARAN AFRICA, BY MAJOR DONOR Totals for Fiscal

million us s

INTERNATIONAL ORGANIZATIONS '

UNITED STATES

UNITED KINGDOM

WEST GERMANY

COMMUNIST CHINA* *

SOVIET UNION

M .isnuiri Utt milt* te* Iw-LiwU

projects involve labor-intensive operations and therefore employ large numbers of unskilled workers who otherwise would be unemployed. Agricultural schemes have stressed production of needed food crops, especially rice and sugar. Africans have also been favorably impressed with China's technical aid. Peking uses large numbers of its own technicians whenroject,reducing the burden on the limited skilledresources of recipient countries. Moreover, the willingness of Chinese technicians to live without the luxuries usually expected by other foreign technicians hasavorable image of the Chinese among Africans.

have also been impressed withterms of Peking's aid. Its creditsinterest free,yearand permit repayments to extend at least Unlike Western aid provisions, repayments

can be made in the commodities of recipient countries. In contrast to usual Western and Soviet procedures, the Chinese generallyarge part of the local costs of their projects. These liberal terms place little strain on the limited financialof the African countries.

Economic Impact of Chinese Aid

China's economic assistanceis useful, but the level of aid receivedAfricans has been too small to have aimpact thus far. Of5 millionaid promised throughthe two regional railroads, abouthas actually been drawn, and more thanthe expenditures have consisted of cash Onlyillion has beenon development projects, many of which

are still under construction.

several countries, longstandinghave gone almost completelyewubstantial share of the aidbeen drawn. In Uganda, for example, plans

to implementillion credit extended in5 are only now getting under way, while in Kenya no

projects have yet been initiatedillion credit extended4 and probably none will be started before the credit lapses next year. Small cash credits to Uganda and Kenya, however, have, been largely used. By contrast, Guinea, Mali, and Tanzania (including Zanzibar) havearge share of the aid promised to them. Together these three countries account for more thanercent of the total Chinese expenditures in Sub-Saharan Africa to date and are the only countries where significant projects are under way or have been completed (see the chart. Figure

Those Chinese-sponsored projects that have been completed are performing reasonably well. However, some industrial plants are encountering shortages of raw materials, which can be made up only through imports. Equipment failures have also occurred, and some Chinese-built plants probably require government subsidies not unusual in Africa. In any case, the difficulties that Chinese projects have encountered are no greater than those of most other foreign aid programs in Sub-Saharan Africa or elsewhere. Moreover, the Chinese have been workingifficult atmosphere. The countries where they are most actively involved suffer from inadequate economic infrastructure, undeveloped domestic markets, and lack of trained personnel needed to carry out development projects. This situation is further aggravated in Mali, Guinea, and Zanzibar by government efforts to exert greater control over the economy which have led to general economic deterioration.

Mali has probably gained the most from Peking's aid. All ofillion in country-to-country assistance extended by China has been obligated to specific purposes, andhas been disbursed. Several Chinese-built plants are now operating,atchigarette factory,ugar refinery. The cigarette factory (see the photograph. Figurepparently is operating profitably, but the sugar refinery has had difficulties in obtaining adequate supplies of raw materials.' The largest Chinese project in8 million textile complex that came into productionhould allow

a

chinese communist economic aid, extensions and drawings" totals8

RAILROAD PROJECTS

million us s

CENTRAL AFRICAN REPUBLIC

CONGO IB'ouovllk)

5"

se

the country eventually to. reduce its textile imports by at least SI millionsea the photograph. Figure 5) Chinese efforts in the "agricultural sector, particularly rice cultivation, appear to be relatively successful, primarily" because of the large number of Chinese technicians employed. Rice production increased from anons0 to0 tonsut declined6 because of adverse weather conditions. Peking has also provided Sll million in foreign exchange to Mali to help pay for imports.

F-cguieali:uilt Cigaizttl ra-ctoig,6

. Hall:ommuniit-Built Textile. Hill,6

IS. More than three-fourths of theillion Communist China has disbursed in Guinea has consisted of cash and commodities. The onlyprojects that have been completed are the

REGRET"

S2 million Kinkon hydroelectric daml million match and cigarette factory complex near Conakry that employs moreersons (see the photographs., The performance of the cigarette plant, which operated above its rated capacitys remarkably good compared with other industrial plants in Guinea. The match factory is operating at aboutercent of capacityabout the average for many Guinean plants. Other significant Chinese projects in Guineaea-processing plant, which was completedextile mill now under construction. the Chineseumber of small projects, mostly in the agricultural sector, underillion credit extended inew minor ones have been started.

16. Exceptillion provided by Peking in tbe form of cash and commodities, Tanzania has so far received few economic benefits from Chinese aid. About SIS million has been drawn for projects, of which4 million wasarge textile mill that cane into production this year (see the photographs,. umber of other projects are either under way or have been completed, but none are of economic significance. Nearly one-fourth of theillion spent by Peking in Tanzania has gone to Zanzibar, where China is the major aid donor.* Although Chinese aid to Zanzibar is higherer capita basis than in any African state, it has been of little help in reversing the trend of economic deterioration on the island.

Railroad Projects

17. Chinese Communist aid for the Tan-Zam and Guinea-Mali railroads is unique in its scale and complexity. Both of these projects will be costly and difficult to carry out, although well within Communist China's technical and financial capability. Their construction will require large numbers of Chinese technicians, even if most of the labor force is derived locally. In the case of the Tan-Zam railroad, completion will probably take at least

* hough, inanzibar joined with tanganyika to form tha united republic of tanzania, the ielanda carry out part of their foreign aid negotiations directly with foreign powers.

Unlike their performance with respect to other aid agreements, the Chinese have moved with considerable speed to implement the7 agreement under which Peking undertook to build the Tan-Zam line. Within four months of signing thereliminary survey teas, was in the field, byore than half ofechnicians to be used on the design and engineering survey had arrived, and survey work is well under way.

18. Although the proposed railroad projects have attracted considerable attention, they will provide little benefit to the local economies. Both railroads are substitutes for existing railroads and will probably not reduce transport costs. The chief economic gain to Tanzania from the Tan-Zam railroad will be revenues derived from handling Zambian foreign trade shipments. Although the government hopes to develop the relatively fertile Kilonbero Valley in the southwest, through which the railroad will pass, large investments and numerous skilled personnel will be required and both are in critically short supply in Tanzania. There are also some relatively large mineral deposits in the southwest, but because of their low quality they are economically unfeasible to exploit even with lower transport costs. In any case, the Great North Road, which is being improved, would be adequate for foreseeable Tanzanian transport needs in the interior. Zambia's gains will be mostly political, since the new railroad willransport route for its foreign trade that does not pass through white-ruled Rhodesia, Mozambique, or Angola. Zambia's northeastern region, through which the line will pass, has little development potential and is sparsely populated. For the most part, the land is infertile and can support little more than subsistence agriculture, while doposits of manganese, coal, copper,ew other minerals located along the proposed right of way are small.

19. The Guinea-Mali railroad offers no promise of stimulating significant economic development. There are no potential industries or resources that could be developed along the right of way in either country, and trade between Mali and Guinea is too small to warrant the investment. The total volume of Mali's foreign trade6 was lessons, of which Guinea accounted for only

Figuit g. Guinea: Intttiox.a

ommuniit-Built

Ciga.Ke.ttt FactoAif,

in Optiation Sincz Latz

ons. Moreover, considerablewill be needed to upgrade the existingin Guinea between the port at Conakry and Kouroussa, where the new railroad would connect. Nevertheless, both countries consider theolitical imperative. Mali's prime reason for wanting the railroad is to have en alternative to its present major access route to the sea through Senegal. This route was closed to Malian traffic from0 touring which time most of the country's foreign trade was diverted by road through the Ivory Coast. Also, Mali hopes tho new route will reduce freight costs to the sea. Guinea's President Toure, for his part, wants the new railroadeans to tie Guinea and Mali closer together politically and economically.

Outlook

20. Communist China's aid disbursements in Sub-Snharan Africa will remain relatively small at least untilhen actual construction on the Tanzania-Zambia railroad is expected to start. Meanwhile, the bulk of aid expenditures will continue to be heavily concentrated in Guinea, Mali, andnd it is likely that Peking will extend additional aid to these three countries as existing credits are utilized. Although the Chinese will try to extend aid to additional countries to take advantage of changing political developments, actual drawings probably will remain small for many

y

Communist China's aid will provide only marginal economic benefits for the African recipients even after those projects now under way are completed. Although Peking's assistance will be generallyit will do little to overcome the scarcity of natural and human resources that hampers significant economic growth. Moreover, tho detrimental economic effects of domestic policies in Guinea, Mali, and Zanzibar will tend to dilute the gains that might otherwise result from Communist China's economic assistance.

Peking should continue to obtain substantial propaganda benefits from its aid efforts. The period of years needed to complete the railroads and their political significance may serve to enhance China's position in the recipient African countries. Poking may also be able to exert a

greater influence ovor sone aspects of foreign policy in "those countries where it haseading aid donor. Many African governments, whether receiving Chinese aid or not, will use Peking's aid overturesever to encourage Free World donors to help finance projects they consider to be politically important. Congoor example, has already requested several countries, including the United States and the Soviet Union, to finance constructioniile railroad, which would reduce its dependence on transport routes through Portuguese Africa.

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