[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


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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:]

    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
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    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:]

    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
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    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:]

    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
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    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:]

    
    
    
    
    
    
    
    
    
    
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    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:]

    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
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    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.]
                                     

                                     

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