Strategic Analysis: Chinese Business Activity in the Democratic Republic of Congo (Abstract)

In the relative calm following the devastation of the First and Second Congo Wars, the Democratic Republic of Congo (DRC) has experienced consistent economic growth from the 2000s through the present day, fueled by aggressive Chinese investment and Beijings interest in leveraging the DRCs mineral wealth to supply its growing economy back home. DRC exports to China have risen from $26.3 million in 2003 to $2.8 billion today, driven in large part by the dominant position that Chinese companies have established in the countrys metals and mining sector.

In peacetime, as in war, the DRCs economic potential and natural resource wealth has loomed large, with foreign powers maneuvering for control over the countrys mineral resources that have been valued as high as $24 trillion. Just as some have attributed persistent conflict in the region to the interest of neighboring countries in securing the DRCs resources for themselves, similar motivations can be attributed to China and its vast expenditure of time and money pursuing these same assets in the countrys post-war period.

Additionally, China has also demonstrated a willingness to invest significantly in the development of missing infrastructure (including roads, railway lines, airports and hospitals), and, in doing so, Beijing has exploited the fatigue across Africa with Western aid programs. As a result, China has carved out the following position of influence within the country:

  • Metals and mining exports comprise some 90% of the DRCs total exports and a staggering 40% are sent to China.
  • China comprises some 39.3% of the countrys overall exports (across all sectors) and is likewise the largest source of imports flowing into the DRC.
  • Chinese investment makes up 50% of total foreign investment in the country.
  • In addition to massive loans and natural resource contracts, China is also active in other industries of the DRC, including defense, electronics, transportation infrastructure, health care, consumer goods and other areas.
  • Chinese companies own about 80% of the processing plants in the mineral-rich Katanga Province, absorb over 90% of the regions mineral exports and some 50% of the countrys mineral exports overall. More than 60 out of Katangas 75 processing plants were Chinese-owned in 2008.

Although the DRC has experienced impressive growth during the past 15 years, the country still suffers from debilitating economic and political challenges and severe corruption and mismanagement sabotaging the countrys prospects. Non-transparency in major mining and resource deals and the repeated sale of major national assets to offshore companies at below market prices has been a regular occurrence. Chinese companies, too, are accused of using corrupt practices in order win access to the countrys most prized assets.

As in other sectors, the bilateral Sino-Congolese military relationship also generally lacks in transparency. It is known, however, that Congolese Armed Forces (FARDC) have received frequent donations of Chinese military equipment from the PLA. There are indications that the FARDC, potentially in return, been helpful to the Chinese in protecting companies against riots and securing project sites.


Excerpted Deals and Transactions:

  • Huawei began work in the DRC in December 2008 on a $32 million project to construct a fiber optic network in Kinshasa. The hope expressed at the time was for this undertaking eventually to build a network that extended to the capitals of all 10 DRC provinces (with a total project value of some $260 million).
  • The largest deal forged between the DRC and China is a $6 billion arrangement where the DRC formed a consortium, called Sicomines, involving several Chinese companies with the goal of bringing online a massive copper and cobalt mine in the mining hub of Kolwezi in Katanga Province (one of the largest mines in Africa). The deal is considered a leading example of Chinas resources for infrastructure approach to the continent. The project is supposed to involve the construction of 2,400 miles of roads, 2,000 miles of rail, 145 health clinics, 32 hospitals, 2 universities, 2 hydroelectric dams and an electricity distribution network. Some seven to nine years later, the deal is still not come on stream (in part due to power generation problems afflicting the region and the country more broadly).
  • In November 2012, China Great Wall Industry Corporation (CGWIC) another known PLA contractor was hired to launch what is purported to be a DRC communications satellite, CongoSat-01. The satellite was intended to cover southern and central Africa. It is currently scheduled for launch in 2018.[2] DRC will reportedly become the second African country to have this technology.
  • Hydropower projects under construction and/or discussion involving Chinese companies include: the Zongo II project on the Inkisi River; the Inga 3 hydropower dam; the massive Grand Inga hydropower project (valued at some $25 billion); and the Busanga hydropower plant near the Sicomines mining venture.
  • In May 2015, there were reports of CNHTC (Sinotruk) investing $133 million for truck assembly factories. The company is reportedly looking to improve its logistics network in Africa through the construction of service and spare parts storage centers across the continent.[3] Besides the DRC, there are plans for new facilities in South Africa and Nigeria.