| The aim of this research in general is to evaluate and analyze the investment and the achievements of China’s engagement with Congo-Brazzaville, with the view of identifying the advantages and disadvantages for the Congolese economy. On February 22,1964, a joint statement issued by the government of the People’s Republic of China and the Government of the Republic of Congo marks the official establishment of diplomatic relations at ambassadorial level between the two countries. Now, both China and Congo brave winds and storm in the same boat as component finest chapters in the history of friendship and Sino-Congolese cooperation relations. During the first half the century, the political ties between the two countries are constantly growing; high-level visits in both directions follow one to another; attendance among parties actively engaged in economic and commercial cooperation bear abundant fruit; cultural and educational exchanges flourish lively, associative contacts and popular year by year joint programs are on the increase. During the visit of Prime Minister Wen Jiabao in the Republic of Congo in 2006, China and Congo signed the agreement of cooperation-part of the economic and commercial strategic partnership that brings the bilateral economic and trade relations to another level. The state visit by President Xi Jinping in the Republic of Congo in March 2013 pushes the existing friendly partnership so happily in the long term to a new level①.This research aims to address the following questions:What are the achievements of Chinese investment in Congo-Brazzaville? What are the advantages and disadvantages of such cooperation with China, and lastly, what is the best strategy to implement and maximize benefits?The focus in this research work is the impacts of China’s investment on the economic growth of Congo Brazzaville. Today, Foreign Direct Investment (FDI) is considered to be a vector of economic growth. Bearing this in mind, the preferred methodology is based on estimating the share of investment, capital flows and trade in sector and aggregated values of the different aspects of the Congolese economy.The cooperation between China and Congo reached new heights in the 2000s, with Congolese authorities seeking to encourage investment, through the Economic Diversification Support Program (EDSP) supported by the World Bank and the Agency for Investment Promotion (API).China has become the second largest power nowadays. Through its rapid economic takeoff, China has undergone development, modernization and has also become stronger-acquiring unprecedented economic, diplomatic and military power.Indeed, we see the arrival of Chinese companies from private sectors in many sectors of the Congolese economy. This trend corresponds to changes characterized by the massive entry of foreign capital and the development of mixed companies of public and private investors with the contribution of large multinational firms. This development is also marked by the diversification of Chinese investment.China is involved in the infrastructural development of buildings, roads and telecommunications, and has dealings in key industries such as the petroleum, oil, and wood trade. In order to better capture and direct the FDI, the government decided in 2005 to create four Special Economic Zones (SEZs) combining fiscal incentives and infrastructural construction. The main objectives are to modernize the Congolese society, industrialize the economy, generate increased and shared prosperity, and begin the gradual emergence of Congo in the global economy.The research undertaking has been structured into five chapters.Chapter OneThe first chapter elaborates the historical context of the subject matter. Chapter 1 also contains the literature review, showing that China has had an impact on Africa’s economy (including Congo) on at least three levels:trade, FDI and the consequences on African’s economic diversification.Chapter TwoThe second chapter talks about the achievements of investment of China in Congo-Brazzaville. China is involved in the development of infrastructure, buildings, roads and telecommunications. A strategic partnership agreement was signed between the two countries in July,2006 providing inter alia, one billion USD worth of investment for the realization of various projects (roads, dams, power plants hydropower, development or upgrading of infrastructure such as airports, housing, hospitals, etc.). According to statistics from the Chinese Ministry of Commerce published in 2011, Chinese companies represent half of the market capitalization of the public engineering and construction sites.In addition, most current infrastructure spending in Congo is financed and provided by Chinese companies.Chapter ThreeThe third chapter sets out the existing problems amidst the achievements of investment of China in Congo. Relations between China and the Congo in matters of investment cooperation will continue to fuel the debates among researchers, policy makers and the Congolese partners in development. The negative aspects of these relationships will always be highlighted, especially by Westerners. From their side, the Congolese leaders and intellectuals still see Western criticisms only as the proof that their former colonizers fear losing their grip on the Republic of Congo. The problems include non-respect of social and environmental standards and poor working conditions of China’s companies, and poor governance and corruption in Congo Brazzaville. Many critics accuse the Chinese companies of doing business with illegal forestry enterprises engaged in unsustainable practices. Chinese companies sometimes ignore the rules of the country where they operate. Less attention is given to the security of local employees; contracts are precariously worked with very low wages and mediocre and ill-fated working conditions. Beyond the challenges adduced by the Western development model, the Congo-China partnership also causes rivalries between the powers of Congo and/or the traditional partners. Indeed, the oil companies such as Total and Elf are almost becoming competitors with their Chinese counterparts in Congo. In March 2005, Congo-Brazzaville ended an operating agreement for two offshore blocks with the Chinese company Sinopec. Amid economic rivalries, it is possible that competition between Chinese and French companies will end with a challenge to the stability of the country.Finally, another problem is technology transfer. Lack of efficient technology transfer is a serious setback to Congo’s development. Congo often could not appropriate these achievements, though, delivered turnkey. Usually, after the warranty period they are discontinued resulting in failures related to lack of maintenance and recurrence of mismanagement which have gradually led to their total liquidation. Thus, the absence of technology creates technological dependence of Congo vis-a-vis China as in the asymmetric cooperation of Congo with the North.Chapter fourChapter four explores recommendations to improve China’s investment in Congo-Brazzaville. After having studied the relationship between China and Congo Brazzaville in all its forms, and evaluated the effects of investment (Chinese foreign direct investment) on the rate of growth of the Congolese economy, I recommend ideas on how Congolese leaders can take full advantage of the Sino-Congolese relationship in order to improve the living conditions of the Congolese population. A decade after its founding, the FOCAC has greatly facilitated the strengthening of interactions between China and Africa. This trend appears to confirm China’s intentions to engage in the long term and not exclusively on energy development and other activities. Since the launch of FOCAC, many projects have been completed and countless promises have made. Since the last summit in Beijing, it was observed that the volume of Sino-African trade has crossed the 100 billion dollar mark, six economic cooperation zones are being built in Africa nearly and 1,600 Chinese companies have located in Africa, and Chinese direct investment has reached $7.8 billion. To take full advantage of the cooperation with China, Congolese policy makers should consider:establishing a direct relationship between agriculture and industry, improving productivity through technology transfer, improving technical means by developing human capital, giving priority to activities with strong value-adding capabilities, processing of natural resources potentials on site, in order to benefit fully from expanding of this market, improve the quality of infrastructure to allow companies to minimize their costs of production. China has become an economic success model for many developing countries. While foreign direct investment is considered today as a source of job establishment, technology transfer vector and growth engine, China seems to succeed where many countries have aground.Chapter fiveLastly, a conclusion is provided which responses to my research questions. The cooperation between the two countries has positive and negative aspects. But it is up to public authorities to guide such cooperation in the direction most beneficial to the Congolese economy. China has been developing very fast since the beginning of the 21st century and this has led to a high increase in the demand for considerable raw materials by the Chinese economy. What is certain is that Congo-a less-developed country, confronting a huge problem to ensure its growth and development of infrastructure-needs cooperation with China. The development of infrastructures in the sectors of water, transport, and technologies of information and communication is vitally important to create opportunities for reducing poverty.It is the responsibility of the Congo Government to promote economic cooperation which contributes to improving economic performance, as well as to maintaining the partnership between the Chinese and Congolese companies in developing and subcontracting technology transfers. It is also important that Chinese investors comply with the legal system. This requires that the controls of investment structures are operational, thus, establishing Sino-Congolese win/win cooperation. |
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