Chinese Investments in Angola: The Power of Recent Changes

How have Chinese investments impacted Angola’s socioeconomic transformations in recent decades? This is one of the central issues discussed at the International Webinar Conference “Angola: Southern Africa and the Future of the Global South,” hosted by the Orfalea Center for Global & International Studies on December 11, 2023. This event is part of the Ford Foundation-funded Orfalea Center project which collaborates with Angolan and Brazilian experts in Portuguese-speaking Africa to explore the changing fabric of urban geography, sexual rights and ecological justice, and the changing influences of Chinese investors, Brazilian evangelicals and translational social movements in this emerging African superpower.

In this article we will present the main reflections brought by Garcia Neves Quitari, assistant professor at the Department of Sociology at Agostinho Neto University in Luanda, during his presentation entitled “Notes on changes in Chinese investments in Angola.” He spoke about how diplomatic relations between Angola and China can be reconfigured based on two important factors. The first factor involves recent paradigm shifts of the Angolan government, which are increasingly focused on economic diplomacy based on the diversification of cooperation (more focused on the West and in private investment, in addition to increasing competition between Chinese companies and companies from Western and emerging countries, such as Turkey and the United Arab Emirates). Secondly, the diversification of China’s economic interests leads to a greater presence of Chinese private companies in Angola.

China-Angola Relations during the “National Reconstruction” Period

Garcia Neves Quitari’s presentation focused on relations between Angola and China from the point of view of the Angolan government’s interests. He highlighted that the commercial relations between the two countries became closer in the early 2000s, after the end of the Angolan Civil War in 2002. These relations are best known today for Chinese investments – especially between 2004 and 2007 – in the “national reconstruction” of Angola. “With difficulties in finding international financing [after the end of the war] and with a blatant socioeconomic need, Angola did not accept the conditions imposed by the IMF and China then appeared as a great strategic partner at that time,” commented Quitari. China facilitated the Angolan government's access to credit without the same demands made by Western funds. Today, sources linked to the IMF and the World Bank estimate Angola’s debt at around 20 to 24 billion dollars.

What are the characteristics of these agreements made between Angola and China during the “national reconstruction” period? Garcia Neves Quitari emphasized that most of the agreements in the 2000s were based on Chinese investments in Angola in exchange for Angolan oil. Dozens of Chinese companies have created branch offices in Angola and made investments in various sectors, such as fishing, naval, agriculture, telecommunications, energy, water, and civil construction (with emphasis on the construction of dams, electrical networks, airports and ports, railways, housing developments, and water supply). The last line of credit was made in 2017 – at the end of the term of President José Eduardo dos Santos (who was in power for 38 years) – and concluded during the government of João Lourenço, who assumed the presidency in 2017. A member of the same party as José Eduardo dos Santos, the Popular Movement for the Liberation of Angola (MPLA), João Lourenço promised during his electoral campaign to “fix what is bad and maintain what is good in Angola.” Since combating corruption was one of his main campaign promises, there were high expectations that the country would take a different direction.

New Angolan Government, New Dynamics between Angola and China

How have relations between Angola and China changed since João Lourenço arrived as president? What are the characteristics of the current Angolan government that has given a different direction to Chinese investments in Angola? To answer these questions, Garcia Neves Quitari stated that it is first necessary to understand that the Angolan market economy, since it was adopted in 1992, has tended to be more conservative – in favor of the State – than liberal. The government of José Eduardo dos Santos was not open to international capital: characterized as “state capitalism,” that focused on creating a strong national business community before allowing foreign capital to enter. Chinese investments in the 2000s, especially for national reconstruction, were directed towards creating and strengthening an Angolan business elite. This hierarchy is reflected in the legislation of the time, examples of which are the national enterprise development law of 2003 and the enterprise development fund supported by oil and diamond revenues created in 2008. China’s credit lines were managed directly from a special office of the Presidency of the Republic of Angola, which was called the Office of National Reconstruction (currently the Office of Special Works): an example of the proximity between the Angolan and Chinese governments at the beginning of the century.

In recent years, however, dynamics have shifted. According to Quitari, “it seems that President João Lourenço is taking a position contrary to this orientation,” he stated; adding: “The fight against corruption [which he vehemently defended in his electoral campaign] meant taking away from the national economic elite assets that would have been acquired with financing from China in processes considered corrupt.” For him, there is still no clarity regarding João Lourenço’s political position, that is, whether he adopted more left-wing or right-wing policies. However, it is factual that the Angolan president has defended the reduction of public investments, the attraction of international capital and the non-continuity of partnerships based on the exchange of natural resources such as oil, which increase Angola’s debt. Garcia Neves Quitari highlights that current relations between Angola and China continue to be strategic relations but are no longer privileged relations. “The appeal to foreign investment has encouraged the arrival of financial capital mainly from emerging countries such as Turkey, Eritrea, the United Arab Emirates and Brazil,” comments Quitari. He also argues: “In addition, recently there has been an effort by the Angolan government to attract foreign financial capital from Central Europe, namely Germany, and also the United States.”

As an example of this “reduction in the promotion of agreements with China in favor of Western multinationals in recent times,” the professor cites the construction of the Luanda light rail system. The expectation was that this would be done by China, but it will be carried out by the German company Siemens, which will make an investment of around 3 billion dollars. Another paradigmatic case mentioned by Quitari is that of the Benguela Railway. Although it was rebuilt with Chinese investment as part of their support for Angolan reconstruction, a few months ago an US company won the tender to manage the Lobito Corridor, an extremely important part of Benguela Railway that connects the Atlantic Ocean to the Democratic Republic of Congo and Zambia.

How shaky are relations between China and Angola in this new context? There is still no answer to this question, but it is certainly one of the most discussed topics in the Angolan media at the moment. Recent events fuel this debate, such as the fact that China has been without appointing a new Chinese Ambassador to Angola for more than three months, as well as President João Lourenço’s meeting with Joe Biden at the White House to talk about the UC Lobito Corridor project, climate change and energy issues. The scenario splits opinions in Angola: should the country give preference to investments from China, the US, or other Western countries?

A Quick Chinese Response to a New Context

If in the 2000s most of China’s investments in Angola were made through state-owned companies, we have seen a quick Chinese response to the new context in recent years: the growth of Chinese private capital investment in Angola. At the end of his presentation, Garcia Neves Quitari pointed out that “at the same time that the Angolan government seems to move a little further away from China as a privileged partner for economic cooperation and closer to Western countries, there is also a rapid growth in Chinese private investment.” This Chinese response is “faster and more competitive than that given by many other companies from different countries.” According to Quitari, 400 Chinese companies were created in Angola between 2002 and 2023, generating around 24 billion dollars in that period.

Garcia Neves Quitari concluded by arguing that Chinese private investment has benefited from the expertise and capillarity that they have gained since the Angolan reconstruction project. For this reason, many Chinese remain in sectors in which the Chinese State has always had some kind of importance. The private real estate sector, for example, which in the early 1990s was dominated by Brazilian and Portuguese companies, is now practically dominated by private Chinese companies. They are building new condominiums and housing developments, new shopping malls and large markets, such as Cidade da China retail complex, the largest Angolan commercial area located in the capital, Luanda.

Since 2017, when João Lourenço signaled to stop negotiating Angola’s debt based on oil exchange, China has replaced oil agreements with land agreements, especially with investments in agricultural projects and housing developments. “What we have seen in Angola in recent years opens up space for new possibilities for Chinese investment models. This is no longer an oil-based model, nor are we talking about a single model if we really want to characterize the dynamism of this cooperation over the last decades,” in Quitari’s words. From his perspective, new cooperation models have been emerging from this new context; paying attention to them will be decisive for Angola’s strategic positioning in the near future, with consequences not only at a regional level, but for many relations between the Global South and the Global North.

➔ To view Garcia Neves Quitari’s presentation, click the video below:

➔ To view the complete webinar: