South Sudan: Chinese Economic Engagement Continues Amid Conflict

analysis

China’s economic engagement with South Sudan, the world’s youngest country, is growing rapidly since the latter’s independence in 2011. According to the Chinese and South Sudanese official statistics, around 100 to 140 Chinese enterprises currently operate in South Sudan.

Since 2008, they have concluded agreements worth about 10 billion USD with the South Sudanese government, and the latter through official channels has expressed willingness to have Beijing’s support for projects worth 8 billion USD. The outbreak of violent conflict in December 2013 poses challenges to China’s burgeoning economic engagement with South Sudan and the normal operations of Chinese companies there.

Prior to the on-going conflict, oil evidently featured as the most significant component of the bilateral economic relations. With China National Petroleum Corporation’s (CNPC) large investment stake in the oil industry, South Sudan, at its full capacity, accounts for approximately 5 % of China’s imported oil.

The traces of Chinese companies’ involvement in non-oil sectors are also increasingly visible. They are particularly active in road construction, such as Shandong Hi-speed Group’s 1,043 km-long Juba-Rumbek-Bentiu road project and Sinohydro’s project of upgrading poor roads in Malakal, to name but a few. Although both sides often identify agriculture as an important area for further cooperation, concrete results seem to be unimpressive.

Some small-scale farms in which the Chinese have invested are reported to be located around the White Nile River region. Ningxia province also signed a MOU with the South Sudanese Ministry of Agriculture in 2012 on agricultural cooperation and rice planting.

In fact, bilateral economic cooperation was moving at full speed until December 2013. Five days before the conflict erupted, the Export-Import Bank of China (Exim Bank) and the South Sudanese Ministry of Finance co-sponsored the South Sudan-China Development Cooperation Forum in Juba, attended by some 200 industrial and commercial representatives.

Also, the Exim Bank was reportedly preparing to to develop South Sudan’s fragile economic and social infrastructure; and China’s Ambassador to South Sudan Ma Qiang was planning to sign the Juba airport renovation deal with the South Sudanese counterpart after the SPLM’s party conference on that weekend of 15 December.

However, the realization of these plans appeared to lose momentum after the eruption of conflict, as Ambassador Ma conceded in February 2014, ‘[u]nfortuantely, everything has changed … So everything is on hold.’

Beijing’s focus is shifting to the protection of Chinese investments and nationals in South Sudan. Chinese leaders endeavour in every possible encounter to seek assurances from their South Sudanese counterparts.

Furthermore Juba makes strong promises to China too. For instance, in July and August the South Sudanese Vice President and Foreign Minister both promised to ensure the security of oil workers and equipment during their meetings in Beijing with the Chairman of CNPC and the Chinese Foreign Minister.

CNPC had decided to evacuate personnel on non-key and non-productive positions on 20 December. Its operations in Blocks 1, 2 and 4 have completely shut down, while those in Blocks 3 and 7 operate with a minimum level of staff presence. South Sudan’s oil production has already dropped by over 30 %, from 245,000 barrels per day to 160,000 barrels per day.

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