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China's Stadium Diplomacy

(Subscribe to World Policy Journal through SAGE)

From the Summer 2012 Games People Play issue

By Rachel Will

Ten minutes drive from the coastal Angolan city of Benguela, on the edge of what was once an abandoned banana plantation, a massive white steel structure emerges from the surrounding shanties and barren fields. Only a single paved road runs alongside it. Benguela’s stadium is one of four built for the 2010 African Cup of Nations, an event designed to showcase Angola’s charge toward modernity.

The event resembles, on a somewhat reduced scale, the World Cup. But with the barriers Angola needed to hurdle to prepare for its hosting duties, the event may as well have been the Olympics. Only 10 years after a 27-year civil war, much of Angola’s national infrastructure remained shattered, with land mines marking conflict zones across its landscape.

In the 18 months leading up to the African Cup, more than 900 workers toiled to build the stadium on undeveloped lands on the outskirts of the city. From the upper levels of the stands, there is a view of the Atlantic ocean. Centuries ago the glittering blue waters brought Portuguese colonists to the shores of Angola. More recently, the coastal waters greeted another arriving force—shipping vessels carrying the supplies of Chinese construction companies. When it was filled, the 35,000 seats shook with soccer fans living and breathing for each pass as they watched the nation’s most prized pastime. But now on most weekends, the stadium sits empty, save for a few local celebrations and matches.

Some 700 overseers, engineers, and laborers were brought from the Chinese mainland to assist on the project. Alongside the expert Chinese workers were 250 local Angolan laborers. A growing diaspora of as many as 70,000 Chinese migrants populate Angola, which, along with a growing list of other developing countries, has found the generous pocketbooks of China’s foreign aid policy in the form of infrastructure projects. By most projections, the four Angolan stadiums alone cost $600 million. Turn-key stadium projects funded and built by Chinese aid dollars have cropped up across the continent, and the Chinese are not quick to let these African recipients forget.

On the eastern coast of Africa, a similarly funded stadium project now stands in Maputo, Mozambique. A white sign marks the front of the structure with emblematic red Chinese characters and Portuguese, displaying the words, “The friendship between China and Mozambique will last forever like heaven and earth.”

AID WITH CHINESE TRAITS

In a sterile boardroom in Cairo, the Confederation of African Football (CAF) begins its deliberations regarding future hosts of the African Cup of Nations. Prospective nations submit formal proposals to CAF headquarters, making their cases to host the biennial event. Nations pour countless hours of preparation into the bid that could bring an influx of athletes, fans, and media to their soil, providing a short-term economic boost and incalculable national pride. The costs, however, could linger for decades. At least until the Chinese came along.

Though China is not present at the deliberations, its influence is palpable. The last three hosts of the African Cup—Angola, Equatorial Guinea, and Gabon—all received stadium projects along with their nominations as host. For the 2012 edition of the tournament, co-hosts Equatorial Guinea and Gabon received new soccer stadiums, most notably the Stade d’Angondj, a 20-month project ending with a 40,000 capacity stadium built by the Shanghai Construction Group. Nicknamed the Stade de l’Amitié (Friendship Stadium), its cornerstone brick was laid by Gabonese Sports Minister Rene Ndemezo’Obiang and Chinese Vice Minister Fu Ziying. The job was entirely funded by China. 

“From an official perspective we’re delighted to see the opportunity for African nations to be granted the opportunity to have such infrastructure and a long term map of their use,” says CAF General Secretary Hicham El Amrani, whose group administers the African Cup. “From a fan perspective, I cannot answer for them, but whether it is Chinese, Americans, French, or whoever built the stadium, what [African nations] need is a stadium that has easy access and is user friendly.” Whether it needs the strings attached, of course, is another question.

China’s stadium diplomacy has been evolving since it began giving aid to African countries in 1956. Today, Chinese aid focuses on themes of “equality, mutual benefit, and no-strings attached,” according to China’s Information Office of the State Council. This apparently straightforward and economically focused approach to foreign aid and subsidized loans has made the Chinese model attractive to many policymakers and populations around the world. Still, there are some deeply fraught and often carefully concealed agendas here.

“It’s all about money for [China],” says Henry Musey, a soccer coach in Ghana. “Giving loans to these countries generates money for China so it’s got its positives and its negatives. China is in it for its own benefit.” 

Although only a sliver of China’s 256.29 billion yuan, or $38.54 billion, in foreign assistance doled out between 1950 and 2009 went to the building of stadiums, the structures serve as permanent reminders of China’s aid efforts in each location.

Beijing has been creating infrastructure projects for decades throughout Africa including railroads in Zambia, bridges in Mali, and schools in Angola—all nations with vast mineral resources that China covets dearly. Indeed, the diversity of China’s aid projects contrasts with more traditionally Western forms of aid such as loans that specify the proper usage of funds or require certain democratic reforms. Moreover, disaster relief, while certainly humanitarian in its goals, leaves a more anonymous and transient impression with the target population than a permanent stadium.

This contrast also draws a sharp distinction between the United States’ highly prescriptive and market-oriented “Washington Consensus” development model and China’s more malleable investment-with-aid engagement. The American-supported policy package for promoting growth in developing countries has frequently been charged with widening income inequalities.

While diplomatic recognition of China is imperative, currying favor with resource-rich nations that can help bolster the manufacturing-heavy Chinese economy is central to the decision-making process. The selection of recipients for Chinese aid in the form of stadiums in Africa and Latin America is far from random. While stadiums are only a small component of China’s greater foreign aid policy, the
massive, modern structures stand, even to the most marginal members of society, as a tangible reminder of Chinese assistance.

TEAM TAIWAN VS TEAM CHINA

Five years ago, Costa Rica severed diplomatic ties with Taiwan and officially recognized the People’s Republic of China. Following the diplomatic switch, Beijing negotiated a free trade agreement with the small Central American nation, bought $300 million in Costa Rican bonds and set up a Confucius Institute in San José. But the most obvious result of the new relationship—Costa Rica National Stadium—opened in March 2011 in the capital, built at an estimated cost of $100 million. Displays of cultural pride from both nations marked the opening ceremonies. The three-tiered, 35,000-seat stadium has two giant television screens, medical facilities, office buildings, a small sports museum, a banquet hall, and an extravagant staircase serving as the southern portal. More recently, the creation of a Chinatown in the center of the nation’s capital has captured the country’s attention. The 45,000 Chinese residents in Costa Rica have become an important political and cultural force and are the second largest Chinese population in Central America.

Instead of creating the initiative with the local community, San José Mayor Johnny Araya solicited funding for the project directly from the mayor of Beijing, Guo Jinlong, appealing to Chinese pocketbooks and national interests in an effort to promote engagement between the two nations in the United States’ backyard. The mutually beneficial agreement will bring tourism dollars to the site and continue to spread the cultural influence of China throughout the city. The efficiency and tireless attitudes of Chinese workers also drew admiration from the local population during the building of the stadium.

“It’s a beautiful stadium, really top notch, and nothing had been built before like that,” says Chema Volio, a nearby resident. “Costa Rica has been known for being really underdeveloped in terms of infrastructure, so the efficiency with which it has been built is really impressive.”

The story of Costa Rica is not unusual in Latin America. Of the 23 nations that still recognize Taiwan, 11 are found in Latin America. That number continues to dwindle as China makes economic inroads through infrastructure projects and deepening trade relations. Many are catching on to the rewards that come with Chinese friendship. A cascade of Caribbean islands have switched their alliances, recognizing Beijing. With the change, many have successfully secured their own stadiums.

One such flip-flop occurred in Grenada, and with it a near-disaster filled with irony.  At the christening of the new $40 million stadium in 2007, built with Beijing’s aid, the band played Taiwan’s national anthem. The PRC officials, who’d arrived for the opening, squirmed with discomfort.

Just three years earlier, Grenada had faced Taiwan’s anger. The island’s prime minister, Dr. Keith Mitchell, paid a surprise visit to Beijing, upsetting the then prevailing relationship with Taiwan. While Taiwan had previously pledged $40 million to rebuild the hurricane-ravaged nation, Mitchell played hard ball in Beijing and secured a more lucrative deal for Grenada. Taiwan’s Ministry of Foreign Affairs condemned the move. “The government of the Republic of China regrets Prime Minister Mitchell’s lack of foresight,” the statement said. “We have stated sincerely our intention of not participating in a meaningless game of ‘dollar diplomacy’ with China, and will never let Grenada waver between the two sides of the [Formosa] Strait in order to seek profits. The government of the Republic of China expresses its serious protest against, and condemns, the People’s Republic of China for its use of ‘dollar diplomacy’ to drive us out of the international community.”

While China’s aid projects have been criticized as merely avenues to access the natural resources of developing countries, these stadiums act equally as catalysts for diplomatic recognition. The One-China Policy of the PRC has been an important factor in encouraging the switch, preventing the diplomatic recognition of both Beijing and Taipei simultaneously. The policy is evident in the spread of China’s foreign aid. Every country in Africa has benefited from Chinese aid with only one exception—Swaziland, one of only four Taiwan holdouts in Africa.

OIL AND MORE OIL

While Western aid dollars have dwindled, China’s engagement in Latin America has only grown. Trade between Latin America and China has risen to $142 billion according to state-run news agency Xinhua, a third higher than Africa’s $106 billion. In 2011, China gave $4 billion in loans to Venezuela and $2 billion to Ecuador, with one swipe becoming the largest creditor to both nations, and on terms that many international lending institutions would frown upon. China has been criticized for offering low-ball lending rates throughout Latin America and Africa, sometimes at several points lower than OECD’s country risk premiums. The Export-Import Bank of China generally offers lower interest rates than the U.S. Ex-Im Bank, prompting nations that are too high risk for more conventional lenders to leap at offerings far below market rates, and which may often be paid back in oil or other natural resources. Ecuador is a notoriously poor loan recipient. It defaulted back in 2008 on an International Monetary Fund loan, destroying its credit rating and investors’ confidence. China’s generosity looks beyond this misstep and perhaps wisely secures its repayment through the flow of petroleum products.

In Venezuela, Chinese lending practices have reached a fever pitch. With election season rapidly approaching, the vociferously anti-American incumbent, Hugo Chávez, faces criticism from opponents regarding his openly close relationship with Chinese benefactors. State-owned oil company PDVSA’s relationship with China has drawn criticism for deals made at the state level rather than through private mechanisms, thereby weakening PDVSA’s operations and its ability to function independently in the world oil and financial communities.

China’s continued economic and political engagement with countries with a history of humanitarian conflict has often raised eyebrows in the international community—most recently over its dealings with Syria. China, as well as Russia, has vetoed two UN resolutions denouncing the violence in Damascus, citing its doctrine of non-interference. Throughout the Syrian conflict, the flow of crude oil to China has remained uninterrupted. Eventually, China was persuaded to cave on its unequivocal support for Syria, which suggests it is susceptible to unyielding pressure by the international community. However, such pressure has rarely proven successful.

Across Africa, China’s relationships with resource-rich countries vary little from its ones in Latin America. Angola is now the second largest crude oil provider to China after Saudi Arabia—a relationship vital to Angola’s economic foundations. Angola has enjoyed one of the world’s largest GDP expansions in the last decade—an annualized rate of some 11.1 percent, according to the CIA Factbook. Angolan President José Eduardo dos Santos summed up the China-Angola relationship bluntly in 2006: “China needs natural resources, and Angola needs development.”

ON THE SIDELINES

Following 20 months of construction on the Stade de l’Amitié in Gabon, darkness greeted diehard soccer fans gathered at the stadium’s inaugural game. Flickering floodlights and a sudden power outage meant more than 20 minutes delay for Gabon’s friendly match with Brazil. Moreover, players trudged off the field with soggy cleats after a downpour left the field full of hazardous puddles. Leading up to the 2012 African Cup of Nations, Gabon and Equatorial Guinea faced stringent deadlines for the completion of the stadium projects. But when Gabon faced drainage issues and repeated delays in completion of the stadium, the Confederation of African Football threatened to strip the country of its hosting privileges.

Coming to the rescue, the state-owned Shanghai Construction Group—by now a seasoned player in the building of stadiums around the world—kicked its efforts into overtime. It managed to deliver the Stade de l’Amitié half a year sooner than the original projected date, but with issues that lingered to the very start of the tournament. To build the stadium, the group imported Chinese engineers, managers, and laborers. While the project did create some local employment opportunities for Gabonese workers, China’s infrastructure projects have been widely criticized for displacing resident labor.

Labor usage varies widely according to the nation involved, but in virtually every case, Chinese workers are embedded in the projects. Loan deals in Angola have controversial stipulations mandating the employment of Chinese laborers in infrastructure projects. Reports of physical conflict between Chinese and African workers have developed across the continent, including armed robbery of Chinese immigrants and discrimination against them.

However, in some countries the composition of the workforce, even on Chinese-financed projects, has as much to do with the nation’s history as with the contracts dictating its future. In places such as Angola, Libya, and Algeria, high rates of illiteracy and a limited pool of skilled workers limit Chinese construction firms from hiring locally on many infrastructure jobs.

China is admired for its engineering expertise and efficient building practices, but when its projects come at the expense of local employment and it fails to train local workers, the relationship with the host country often sours. Typically, Chinese companies prefer the cheaper and less time-consuming route of simply importing skilled labor from their own country.

When President Hu Jintao visited Zambia in 2007, his local reception was less than enthusiastic. Some 250 miles north of the nation’s capital lies a Chinese-run copper field where explosions killed 46 Zambian workers in 2005. Reports of 12-hour workdays spent inhaling noxious fumes were leaked to Human Rights Watch. In 2006, violent conflicts over work conditions ended in the shooting of at least five Zambian miners. Though Chinese mines are not the only places with poor labor conditions, workers didn’t have much of a choice when it came to working in the abysmal conditions. The Chinese company threatened them with immediate termination should they refuse work assignments. President Hu’s advance team shrewdly steered him clear of the site. 

Still, with the Chinese contingent in town, the main opposition party in Zambia took the opportunity to voice its concerns. “There are a lot of people who are not happy with China,” said Guy Scott, general affairs secretary of the Patriotic Front. “The president of China should be aware that there is more than one view of China in Zambia.”

HOMETOWN ADVANTAGE

Though stadium building is a less visible component of China’s foreign aid engagements in Southeast Asia than in Africa or Latin America, an openhanded China hasn’t forgotten its neighbors.

When Laos hosted the 25th Southeast Asia games in 2009, China stepped in with its signature infrastructure project—offering to build the 20,000-seat New Laos stadium, for an unusual fee.

China wasn’t interested in receiving its usual loan repayment in oil, diplomatic favors, or trade access. Instead, it requested development rights to a 4,000-acre parcel in the That Luang marshes. The land borders the northeastern edges of the capital, Vientiane. Its development would draw heavily on mainland Chinese labor to build shops, hotels, and housing. The ecological diversity of the site, not to mention the cultural significance of a nearby Buddhist national monument, would take a backseat to the urban project and would provide a shocking contrast to the nation’s sleepy fishing villages and tranquil rural lifestyle. Moreover, the project would require the removal of many individuals living in the marsh and the replacement of bustling open-air markets with congested urban development. Ultimately, amid intense public outcry and media speculation, the development plan was scaled back, leaving in its place Laotian ill will toward the growing power of its northern neighbor.

Today, the intersection of Rue Chao Anou and Rue Samsenthai marks the center of what has become Vientiane’s bustling Chinatown. The Lao-Chinese Friendship Market and several other Chinese retailers have brought thousands of small-scale Chinese traders across the border. The markets buzz with the entrepreneurial spirit of migrant traders, a trait that differs from the unhurried nature of locals. While Laos may be seen as relaxed and languid, the buying up of housing and storefronts by Chinese migrants has accelerated development. China’s manufacturing expertise has led to the dumping of cheap goods around the region, contributing to continued distrust of the nation as well as competitive market conditions that locals may not be prepared to handle.

Tensions in Laos have not slowed China’s engagement in infrastructure projects elsewhere in the region. Last year, Premier Wen Jiabao predicted trade with Southeast Asia would reach $400 billion, dwarfing trade with other developing regions and surpassing Japan as China’s third largest trading partner. Ahead of the projected massive growth, China and ASEAN signed a free trade agreement—encompassing the most populous trading block on the planet.

FAIR WEATHER FANS

Beyond the publicity blitzkrieg that so often accompanies laying foundations and unveiling stadiums, much of the anticipated fanfare surrounding Chinese largesse often falls flat. While China is deeply and overtly involved in its own sports initiatives, it kept what appeared to be a deliberately low profile at the 2012 African Cup of Nations, a tournament made possible largely through China’s involvement.

The stadium projects function largely as means of cultivating soft power in China’s dealings with developing nations, but the muted attendance and sluggish engagement of the Chinese following the construction of stadium projects has led some to question the intentions behind these buildings. As long as the appropriate quid pro quo is met—resources or diplomatic recognition—what these nations do with their stadiums matters little to the Chinese.

In Angola, the four once shiny, new stadiums of the African Cup of Nations have slid into a permanent decline. Weeds have overgrown Luanda National Stadium and a wire security fence keeps out soccer hooligans. Though empty lots in Angola have long served as makeshift soccer pitches, the symbol of the nation’s moment in the international sports limelight drifts toward disrepair.

In the United States, foreign aid represents barely 1 percent of the federal budget—or $52.7 billion in 2010—and is being threatened with additional cuts. Still, American spending historically dwarfed China’s $38.54 billion average annual foreign assistance from 1950 to 2009. While these estimates of Chinese current aid vary widely depending on definitions of aid, its largesse continues to grow.

In the short term, developing nations enhance their trade opportunities, win infrastructure projects that are either free or heavily subsidized, and receive transparent and favorable loan conditions. The immediate future suggests no measurable slowdown in the pace of China’s economic and aid engagement in the developing world. But at the end of the day, these stadiums may simply remain objects of detached monumentality rather than vibrant symbols of soft power. If the Chinese are seen to be carting off vast quantities of these nations’ patrimony in the form of irreplaceable raw materials while leaving behind a nation of people still lacking training and education—then China itself may prove to be the big loser.

The vacuum of aid assistance left by the West has allowed China easy access to the developing world. Western countries have long considered Africa a disaster of modern development—not a place of economic opportunity and investment. The same applies to Latin America. In contrast, when facing a future fraught with geopolitical conflict, China has chosen its allies wisely.

If the West wants to make headway against the Chinese push into these nations, it needs to prove a worthy contrast to Beijing’s self-absorbed offensive. While most OECD countries approach aid as largesse tied to an inflexible, bureaucratic set of stipulations, the West should take a page out China’s playbook. Investment from both private and state interests can satisfy demands for what China has already proved the developing world desperately desires—infrastructure. And when the last fan exits the stadium, it will be the team that puts in overtime ensuring sustainable development that will emerge the true winner in this diplomatic game.

*****

*****

Rachel Will, a member of the Reuters bureau in Kuala Lumpur, has reported from Hong Kong and Jakarta.

[Photo: Sitzman]

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