View metadata, citation and similar papers at core.ac.uk brought to you by CORE provided by Hal-Diderot China’s economic presence in Algeria Thierry Pairault To cite this version: Thierry Pairault. China’s economic presence in Algeria. https://halshs.archives- ouvertes.fr/UMR-CCJ. 2015. <halshs-01116295> HAL Id: halshs-01116295 https://halshs.archives-ouvertes.fr/halshs-01116295 Submitted on 13 Feb 2015 HAL is a multi-disciplinary open access L’archive ouverte pluridisciplinaire HAL, est archive for the deposit and dissemination of sci- destin´ee au d´epˆot et `a la diffusion de documents entific research documents, whether they are pub- scientifiques de niveau recherche, publi´es ou non, lished or not. The documents may come from ´emanant des ´etablissements d’enseignement et de teaching and research institutions in France or recherche fran¸cais ou ´etrangers, des laboratoires abroad, or from public or private research centers. publics ou priv´es. C.C.J. Occasional Papers n°1 ABSTRACT This paper examines the sudden acceleration of January 2015 Sino-Algerian economic relations and the resulting changes in the relationship between Algeria and the world. China’s presence in Algeria combines many interrelated features, which are not only distinctive, but contain their own logic and temporality: these encompass political, diplomatic, cultural, migratory, human and economic relations. This paper will mainly focus on the last category of relations; it will draw on statistical data, as recorded by international agencies, as well as data collected by national statistical agencies in Algeria and China. It will thus seek to improve our understanding of what is meant by “China’s economic presence in Algeria”. China’s economic presence in Algeria Thierry Pairault (CNRS/EHESS) C ’ A HINA S ECONOMIC PRESENCE IN LGERIA Thierry Pairault N°1 | January 2015 THE AUTHOR Thierry Pairault, a social economist and sinologist, is Emeritus Director of Research at the French National Centre for Scientifi c Research (Centre national de la recherche scientifi que - CNRS) and a member of the Centre d’études sur la Chine moderne et contemporaine at the École des Hautes Études en Sciences Sociales, where he teaches a seminar on Sino-African relations. ABSTRACT This paper examines the sudden acceleration of Sino-Algerian economic relations and the resulting changes in the relationship between Algeria and the world. China’s presence in Algeria combines many interrelated features, which are not only distinctive, but contain their own logic and temporality: these encompass political, diplomatic, cultural, migratory, human and economic relations. This paper will mainly focus on the last category of relations; it will draw on statistical data, as recorded by international agencies, as well as data collected by national statistical agencies in Algeria and China. It will thus seek to improve our understanding of what is meant by “China’s economic presence in Algeria”. KEYWORDS China, Algeria, FDI, Investment, Trade, Economic Relations 2 AUTHOR’S RECENT PUBLICATIONS ABOUT SINO-AFRICAN RELATIONS • « Les chiffres de l’investissement direct chinois en Afrique », Dounia, n°3, 2010, p. 15-34. • « La Chine et l’Afrique : un compte de faits », in Julien Bokilo, La Chine en Afrique : La Chine en concurrence avec les anciens partenaires de l’Afrique et les pays BRICS, Paris, L’Harmattan, 2011, p. 9-16. • « Once upon a time, Africa and China... », in Julien Bokilo, China in Africa: Competition between China, traditional trade partners of Africa et BRIC countries, Paris, L’Harmattan, 2011, p. 9-16. • « L’investissement direct chinois en Afrique », Revue Outre-Terre, n°30, 2012, p. 89-114. • « Chiffres du commerce et de l’investissement sino-africain », Revue Outre-Terre, n°30, 2012, p. 115-128. • « L’affairisme : hypostase des relations sino-malgaches ?», Revue Outre-Terre, n°30, 2012, p. 367-376 (written under the pseudonym Simon Yen). • « Les Chinois et la recherche chinoise sur l’Afrique », Revue Outre-Terre, n°30, 2012, p. 393-396 (written under the pseudonym Pearl-Rita Hurity). • « Les entreprises chinoises sous la tutelle directe du gouvernement illustrées par leur investissement en Afrique », Revue de la Régulation, n° 13, 2013, regulation.revues.org/10195. • « Les relations économiques entre la Chine et les pays du Maghreb », Maghreb-Machrek, Hiver 2012, n° 214 (2013), p. 101-144. • « Chinese direct investment in Africa: a state strategy? », Région et développement, n° 37, 2013, p. 259-283. • « Booming Sino-Maghreb Economic Relations: Incentives for a New European Partnership », in Mulugeta Gebrehiwot Berhe and Liu Hongwu (eds.), China-Africa Relations: Governance, Peace and Security, Addis Ababa, IPSS, 2013, p. 96-113. • « Les relations économiques entre la Chine et l’Algérie » in Th. Pairault et F. Talahite dir.), Chine-Algérie : une relation singulière en Afrique, Paris, Riveneuve éditions, 2014, p. 35-62. • « Entreprises chinoises en Algérie » in Th. Pairault et F. Talahite (dir.), Chine-Algérie : une relation singulière en Afrique, Paris, Riveneuve éditions, 2014, p. 105-118. • « L’Algérie et la ‘diplomatie pétrolière’ de la Chine » in Th. Pairault et F. Talahite (dir.), Chine-Algérie : une relation singulière en Afrique, Paris, Riveneuve éditions, 2014, p. 63-82 [en collaboration avec Karima Fachqoul]. • « Commerçants et travailleurs chinois en Algérie » in Th. Pairault et F. Talahite (dir.), Chine-Algérie : une relation singulière en Afrique, Paris, Riveneuve éditions, 2014, p. 159-168 [en collaboration avec Samia Hammou]. • « Economic relations between China and Maghreb countries », in Burnay, M., Defraigne, J.-C. and Wouters, J., EU-China and the World : Analyzing the relations with Developing and Emerging countries, Cheltenham (UK)/ Northampton (USA), Edward Elgar Publishing, 2014 (in print). CHINE, CORÉE, JAPON UMR8173 — 190-198 avenue de France — 75013 Paris — France http://umr-ccj.ehess.fr China’s economic presence in Algeria S ocialist Algeria has always maintained F C ’ ACTS AND FIGURES ABOUT HINA S friendly relations with Maoist China, but A INVESTMENT IN LGERIA paradoxically, it was only during the 1990s and the 2000s, when Algeria abandoned To assess the economic role that China plays in its offi cial ties to socialism, that the two Algeria, we must examine the importance of both countries began experiencing an unprecedented countries’ commercial exchanges, as well as the expansion in their economic, commercial and weight of Chinese direct investment in the Algerian human relations. Twelve years ago, China’s share economy. In this paper we will fi rst deal with the in Algeria’s foreign trade was insignifi cant. In 2013, investment approach, as “foreign direct investment” China became Algeria’s number one supplier with (FDI) strongly implies an entrepreneurial 6.82 thousand million dollars worth of imports, thus commitment to the medium and/or long term in the overtaking France (6.25 thousand million dollars), economy of a country. According to the defi nition which had long held fi rst position. The European proffered by international authorities such as the Union, however, still ranks as top trading partner OECD, FDI “…is an activity in which an investor for both imports and exports (Douanes, 2013:17). resident in one country obtains a lasting interest in, Excitement surrounded the Algerian media’s and a signifi cant infl uence on the management of, an announcement of this event, which was portrayed entity resident in another country. This may involve as a competition between the former colonial power either creating an entirely new enterprise (a so-called and the new global economic giant. France, whose «greenfi eld» investment) or, more typically, changing dominant position in Algerian imports had been the ownership of existing enterprises (via mergers steadily reinforced ever since the opening of trade and acquisitions).” (OECD, 2003:157, box VI-I). in the early 1990s, was now superseded by China. This breakthrough in imports might well be the most obvious expression of China’s increasing In 2012, the Chinese FDI fl ow in (Northern and presence. However, it is rather diffi cult to assess the sub-Saharan) African countries amounted to exact importance of this presence as there is much about 2.9 per cent of the total Chinese outward fantasising about it. From the moment the country FDI fl ow and 0.18 per cent of the world- became more visible, Western observers began to wide global outward FDI fl ow1. Looking at study China’s strategy in Algeria with increasing Algeria alone, these fi gures are less than 0.3 attention, as it introduced a renewed questioning per cent and 0.02 per cent, respectively. The going beyond the nagging issue of a rentier country’s low level of the last two global fi gures 3 failure to industrialise, diversify and create jobs. should be viewed in terms of a long- term African perspective: China’s FDI stock in Algeria accounted for 6.0 per cent of the total Chinese FDI stock in Africa in 2012. Among those African countries which have benefi ted from the Chinese FDI, Algeria ranks fourth, behind South Africa (fi rst), Zambia (second) and Nigeria (third). These four countries cumulate about half of China’s FDI stock in Africa. This fact highlights Algeria’s economic interest for China and may indicate a Chinese entrepreneurial and fi nancial long-term strategy. Nevertheless, it cannot be assumed that Chinese FDI is actually impacting on the Algerian economy. To gage a possible infl uence, Chinese FDI fl ows must be measured using the yardstick of the Algerian gross fi xed capital formation (GFCF), which is an indicator of net investment in a This contribution will examine the sudden given country2. As FDI infl ows can fl uctuate greatly acceleration of Sino-Algerian economic relations and the resulting changes in the relationship between 1 Unless otherwise stated, all statistical fi gures displayed in this paper Algeria and the world. China’s presence in Algeria are based on the author’s calculations from the United Nations combines many interrelated features, which are not Conference on trade and development (UNCTAD) on-line database only distinctive, but contain their own logic and (UNCTADStat at unctadstat.unctad.org) and MOFCOM (i.e. the temporality: these encompass political, diplomatic, Chinese Ministry of Commerce) annual communiqués, Duiwai cultural, migratory, human and economic relations. zhijie touzi tongji gongbao 对外直接投资统计公报 [Statistical This paper will mainly focus on the last category; it Communiqué of China’s Outward Foreign Direct Investment] (Pairault will draw on statistical data recorded by international Th., 2013:261-265). A more minute statistical account appears in our agencies, as well as data collected by national study of Sino-Algerian relations (Pairault Th., 2014:33-62).. statistical agencies in Algeria and China. It will thus 2 The gross fi xed capital formation, during a given period, measures seek to improve our understanding of what is meant the value of net additions to fi xed assets (less disposals) but without deducting the depreciation of fi xed assets. It is not a measure but a by “China’s economic presence in Algeria”. statistical “indicator” of (net) investment. CHINE, CORÉE, JAPON UMR8173 — 190-198 avenue de France — 75013 Paris — France http://umr-ccj.ehess.fr Thierry Pairault from one year to another, it is necessary to consider sector (Fachqoul K. and Th. Pairault, 2014:79-81). its average value over a given period in order to better ascertain its actual proportion. On average, from China’s presence in the oil and gas sector clearly 2003 to 2011, Algeria relied little on FDI to fi nance refl ects the Algerian government’s will to open up its GFCF (10.2 per cent as compared to the world to an old and faithful ally, whose growing economy average, 21.9 per cent), with a Chinese contribution offered great hopes of an expanding market for what (0.6 per cent) identical to the Chinese average for was expected to be exceptional oil production, but the world, but half the Chinese average for African which in fact proved to be disappointing. China was countries (1.2 per cent). Hence, Chinese investment also undoubtedly a partner whose technical skills indicates China’s interest in Algeria, but is of needed to be tested; this is probably why China was marginal economic relevance for the latter and must not put in charge of the most technically complex be seen as part of a more general Chinese concern in projects or the most expensive ones. investing abroad: oil supplies (cf. fi gure 1). F S -A ACTSANDFIGURESABOUT INO LGERIAN The recent period has been marked by a clear commitment to reviving the oil sector by relying TRADE heavily on the expertise of foreign companies. In the process, China has received a certain degree of The total value (imports plus exports) of Sino-Algerian attention, which should, however, be considered in trade increased fourteen fold between 2003 and 2012 (rising from 0.6 to 8.6 thousand million dollars). Negligible in the early 2000s, this trade has therefore progressively gained in quantitative importance: in 2012 it accounted for 7.2 per cent of total Algerian foreign trade4. It is noteworthy that China’s rapid progress was due to two main factors. First, it was based on the originally low level of trade. Second, it was a result of the dynamics of Algeria’s economic opening, which benefi ted all Algeria’s partners. The balance of trade between both countries shows a growing defi cit for Algeria. This fact alone suggests that Algeria may well 4 need China more than China needs it – at least from a strictly commercial point of view. There is little to say about Algeria’s exports, context3. Adding up areas prospected by foreign oil for they consist mainly of crude oil and petroleum companies in association with the national oil products. On average, from 2003 to 2012, they company Sonatrach, the two Chinese companies accounted for 98.3 per cent of the value of Algeria’s (CNPC and SINOPEC) respectively rank fourth and total exports and 99.2 per cent of the value of its sixth; it does not appear that they are particularly exports to China. Seen From this perspective, it advantaged nor disadvantaged relatively to others is obvious that exports are not Chinese specifi c. major oil companies selected by Algeria. Areas The structure of Algerian imports of Chinese conceded to U. S. companies account for one third of merchandise does not differ very signifi cantly from the total whilst those granted to Chinese ones account that of all African countries: during the period 2003- for less than a quarter. In other words, there has been 2012, on average, about 91 per cent of these imports a preference for China without it does call into were machinery and transportation equipment5 question the pre-eminence of Western companies that (51 per cent) and miscellaneous manufactured goods6 handle more than three quarters of the prospected (40 per cent). Once chemicals products7 areas. Preference for China is also played down by (5 per cent) were added, the proportion of all direct investment fl ows as recorded by Algerian manufactured goods came to a total of 96 per cent. statistical services. Between 2000 and 2008, China For Africa as a whole, these fi gures were 88 per accounted for 4 per cent of FDI entering Algeria and cent, (44 per cent and 44 per cent) and 7 per cent invested in the energy and mining sector. Thus, China respectively, making a total of 95 per cent. certainly maintained an active presence, but much less so than Algeria’s main partners, such as the Different patterns may appear if Algeria’s imports United Kingdom, the United States and Spain, which 4 All statistical fi gures displayed in this section are based on author’s represent more than half (57 per cent) of FDI in this calculations from UNCTAD on-line database. 5 Classifi cation: STIC 7. 3 The statistical data given here are extracted from balance sheets published by the Algerian Ministry of Energy and Mines, http://www. 6 Classifi cation: STIC 6 + 8 less 667 and 68. mem-algeria.org/francais/index.php?page=bilan-des-realisations-2 7 Classifi cation: STIC 5. CHINE, CORÉE, JAPON UMR8173 — 190-198 avenue de France — 75013 Paris — France http://umr-ccj.ehess.fr China’s economic presence in Algeria are examined in terms of the contributions footwear), Telecommunication equipment11and Road of different categories of countries: this Vehicles12. In 2012, clothing import statistics showed provides a comparison between China and the opposite situation to that recorded in 2003, when other developing - and developed - countries the “developed countries” had 42 per cent of market (cf. fi gure 2). The forty- seven countries with a shares and China had 30 per cent: in 2012 the fi gures “very high human development” index according were 29 and 43 per cent respectively. On the to the UNDP (2013:144) are considered to be other hand, “other developing countries” did “developed countries”, while the other countries not undergo any changes. This underlying are categorised as “developing countries” – this trend should not conceal two facts: 5 last category being divided into “China” and “other fi rst, the clothing industry in China is developing countries“. In 2012, Algerian imports partly the result of the delocalisation of from “developed countries” accounted for two-thirds Western enterprises, and, second, the clothing (65 per cent) of the total imports of goods, whereas industry’s share in the total value of Algerian it was three-quarters (73 per cent) of the total in imports is extremely low (2.1 per cent). Hence, 2003. Even if exports from “developed countries” China’s share accounts for 0.9 per cent of the total to Algeria are still increasing, the proportional loss value of Algerian imports. Throughout the 1980s in in market shares is China’s gain (12 per cent), and Algeria, well before the liberalisation of foreign trade China’s gain alone, as “other developing countries” and while local consumer goods were in short supply, have not experienced any increase. The three groups of poor quality and limited variety, “suitcase traders” of countries play very different roles, because started ferrying contraband, fi rst from Europe, then the main goods they supply are not of the same from Asia, to meet the needs generated by rising kind. Imports from “other developing countries” incomes and the emergence of a middle class. In are made up of 51 per cent primary commodities8 2009, Ben Simpfendorfer described the liveliness (food items: 40.5 per cent; fuel: 10.5 per of the “New Silk Road” stretching from Chinese cent). Imports from China are almost market towns to Cairo, Damascus, Riyadh and exclusively made up of manufactured goods9 Dubai. Because of the policy of economic openness, products including chemical products (96.2 per the impact of indirect imports going through such cent). Imports from “developed countries” show a commercial hubs may now be more limited (textile comparatively more even distribution, as they are imports from Egypt, Syria, Saudi Arabia and the made up of 26.2 per cent primary products and 70.2 United Arab Emirates amounted to 10.3 per cent of per cent manufactured goods. textile imports from China in 2012). There are three groups of goods that deserve a The entry of smuggled goods is not recordable, but more detailed analysis, as they are economically their impact a fortiori can only be diminishing. and socially sensitive: Clothing10 (including Importation of telecommunication equipment is an 8 Classifi cation: STIC 0 + 1 + 2 + 3 + 4 + 68. 11 Classifi cation: STIC 764. 9 Classifi cation: STIC 5 to 8 less 667 and 68. 12 Classifi cation: STIC 78 (including motor vehicles for the transport of 10 Classifi cation: STIC 26 + 65 + 84 + 851. persons and goods, motorcycles and cycles…). CHINE, CORÉE, JAPON UMR8173 — 190-198 avenue de France — 75013 Paris — France http://umr-ccj.ehess.fr Thierry Pairault equally sensitive issue, particularly as the Chinese to the Chinese Ministry of Commerce (MOFCOM, telecom giant Huawei has recently been at the centre 2011). Despite its present success and impressive of legal proceedings in Algeria (Mira R. and F. progress, China has not yet dethroned the automakers Talahite, 2014:138-139). Obviously, the “developed from “developed countries”. In 2012, China won countries” have lost their monopoly in supplying about 16 per cent of the market share of imported telecom equipment, but still remain the leading cars, but the “developed countries” still held almost two-thirds (65 per cent). Here again, France is the biggest loser in market shares, even if it is still able to keep pace with the Chinese, who are in fi rst position. In the near future, competition between car makers will not be restricted to imported vehicles, so may shift to locally manufactured cars. In this situation, the French automakers may have somewhat of an advantage (see infra). C ’ HINA S ECONOMIC PRESENCE Sino-Algerian economic relations refl ect the overall dynamics of the Chinese economic expansion in Africa. China has entered the African market thanks to its ability to meet the urgent needs of these countries and, to some extent, because of its capacity to contribute to GDP growth. Meanwhile, China is looking for suppliers of raw materials (crude oil, suppliers. As the fl ow of imports by country varies mining products…). In Algeria, consumer goods considerably from year to year, depending on the imported from China have become an indispensable signing of contracts and the completion of projects, part of everyday life and have led to consumer the average fi gures for the period 2003-2012 provide patterns which would not otherwise have the best illustration of the respective position of the developed. These goods are not actually in competitors: imports from China account for 28 per competition with local production, which cent, whereas those from “developed countries” is virtually non-existent, since private 6 stand at 70 per cent on average. If looking at capital is still essentially invested individual countries, France is certainly the biggest in merchant activities and fl ourishes loser: it ranked fi rst in 2003, with a quarter of all especially in the wholesale consumer goods Algerian imports of telecom equipment; in 2012 not trade. Therefore, Chinese small businessmen do only did its market share fall to less than two per not really threaten the retail industry in Algeria, cent, but the value of its sales dropped to one-tenth of no more than Syrian, Tunisian, Egyptian, Moroccan, its 2003 value. Conversely, the United States, which Turkish and other foreign petty traders do (Hammou sold less than China in the early 2000s, gained an S. and Th. Pairault, 2014:163). Even if the available identical market share of about one third in 2012. capital is invested in the manufacturing sector, low- Actually, the real competition may be between the end necessities imported from China are the key “developed countries” themselves, not between these to keeping the cost of labour relatively low. Trade countries and China. The lists of telecommunication relations between Algeria and China are not really equipment approved by the Algerian Post and in competition with those involving the traditional Telecommunications Regulatory Authority13 do not partners either (Pairault Th., 2014:55-56). Generally show a marked preference for Chinese brands, but speaking, developed economies and China are rather for Chinese-made products such as those sold not in direct competition in their trade relations under brand names like Alcatel, Ericsson and Nokia, with Algeria: according to the merchandise trade for example. The Value-Added Export Ratio (i.e. the correlation index, as calculated by UNCTAD15, the total domestic value added to the share of gross Euro area countries should have better opportunities exports) in this sector reached only 57.4 per cent for in Algeria than other developed countries and even China, whereas it stands at 87.9 per cent for the better ones than China (the indexes are, respectively, United States, 87.5 per cent for Japan and 70.4 per cent for France14. 15 “Trade correlation index is a simple correlation coeffi cient between economy A and economy B’s trade specialization index. The resulting Algeria granted China a large share of its imports of coeffi cient can take a value from -1 to +1. A positive value indicates road vehicles, to the extent that, in 2009, it became the that the economies are competitors in global market since both fi rst market abroad for Chinese vehicles, according countries are net exporters of the same set of products. Consequently, a negative value suggests that the economies do not specialize in 13 See www.arpt.dz/fr/downloads. the production/consumption of the same goods, and are therefore 14 Trade in Value Added (TiVA) indicators by industry are calculated by natural trading partners”. See the statistical data provided online by OECD and WTO (stats.oecd.org). UNCTADStat at unctadstat.unctad.org. CHINE, CORÉE, JAPON UMR8173 — 190-198 avenue de France — 75013 Paris — France http://umr-ccj.ehess.fr China’s economic presence in Algeria the following: -0.358, -0.249 and -0.180). There is 2012, the proposal to create a new production unit often speculation that China is making the most of at Oued Tlélat near Oran (Chaal M., 2012). In that the withdrawal of Western companies from Africa in particular case, the Algerian government voiced a order to promote projects that they have abandoned political choice (rappro¬chement between Algiers because of low returns (inter alia Hugon Ph., and Paris) as well as an obvious industrial preference 2009:164-165). For instance, according to Mathieu Pellerin, this may have been the case in the oil sector in Niger (Pellerin M., 2012). The facts may prove to be more complicated. A recent audit by Ernst and Young found the China National Petroleum Corporation (CNPC) guilty of bloated costs and undue charges. In 2008, CNPC concluded an agreement with the former president, Mamadou Tandja, to lend money to Niger in order to launch operations at an oil fi eld near Diffa and to build a refi nery at Zinder. The audit revealed that the Chinese fi nancial package was infl ated by hundreds of millions of dollars, interest rates were set very high (market rates over ten years) and, fi nally, (veteran carmaker versus newcomers).The revealed there was a kickback scheme involving 300 million comparative advantage (RCA) index, based on gross dollars. The new Niger government renegotiated the exports of motor vehicles and transport equipment, contract, but did not obtain complete satisfaction. shows that France has a clear comparative advantage In neighbouring Chad, the government has been whereas China has a signifi cant comparative more cursory, shutting down the Chinese operation disadvantage in that sector: this index is 1.7 for and accusing the CNPC of “blatant disregard of France, but 0.3 for China (1.6 and 1.9 respectively environmental legal standards”.In Gabon, the for Germany and Japan)18. Nevertheless, a year later, Obangue oil fi eld, operated by SINOPEC since 2009, in December 2013, the Chinese automaker FAW was was seized and handed over to Gabon’s state company. fi nally able to sign an agreement for a partnership (Boisbouvier C., 2013a et 2013b; Nossiter A., 2013). with Arcofi na, a private Algerian group that is Thus, things are not as simple as they seem at fi rst already marketing its vehicles (Kerri N., sight. 2013). Sometimes, the announcement of investment projects involving Chinese 7 companies acts as a signal to Western Another example may be useful in evaluating companies and vice-versa all the speculation about the withdrawal of Western companies. Ever since 2006, FAW (First Automotive Works – one of the main Chinese On the 8th of October 2011, in Algiers, the central enterprises – has been soliciting the Algerian Minister of Health, Djamel Ould Algerian government for an agreement to install an Abbès, organised a lavish ceremony to entertain assembly line, but high tariff16 and land policies17 la crème de la crème of Western pharmaceutical make direct imports of fi nished products no more industries and announced a “mega-project” for the expensive than local assembly. So it comes as no manufacture of drugs at the technopole located in the surprise that the presence of Chinese automakers is new city of Sidi Abdellah, near Algiers (Merabet H., linked mainly to imports of Chinese vehicles and that 2011). A few days later, Djamel Ould Abbès reported their investments are limited to the opening of sales that foreign direct investment in the pharmaceutical representative offi ces. That is also true of the Shaanxi sector amounted to 420 million dollars in 2011 – Automobile Group (a publicly funded enterprise of which 320 million from European companies under the supervision of the Shaanxi province and 100 million from Indian, Egyptian, Jordanian, government), which had planned to set up an assembly Turkish and Saudi companies (Ould Abbès D., 2011). unit in Sétif, scheduled to be operative in 2010, but A few days after that, Algeria and China agreed to set in the end only opened a sales representative offi ce up a joint committee for the technical study of this in 2011. Similarly Higer and JMC, too, only opened “mega-project”, the purpose of which was to enable offi ces (Pairault Th., 2014:50-52). On the other hand, Algeria to eventually become «a hub for the Middle the French car maker Renault, which was said to be East and North Africa» in medicine, according to a reluctant to invest in Algeria, fi nally accepted, in statement by the Algerian Minister of Health, Djamel Ould Abbès (Haider K., 2011). Subsequently, the press never again mentioned any such prospective 16 Custom duties on imported auto parts to be assembled are very Sino-Algerian partnership. high. An exemption of such duties could be why Renault recently (December 2012) accepted to invest in Algeria. 17 Access to industrial land is a major impediment to investment in 18 The revealed comparative advantage (RCA for short) is measured by Algeria. There is no shortage of land but there are poor land policies and OECD (stats.oecd.org). When the RCA exceeds one, the country is ineffi cient institutions together with frenzied rent seeking competition. said to have a revealed comparative advantage in that sector; when the As a consequence, investors are discouraged by land price, opaque RCA is below one, the country is said to have a revealed comparative transactions, time-consuming procedures and extra-legal payments. disadvantage in that sector. CHINE, CORÉE, JAPON UMR8173 — 190-198 avenue de France — 75013 Paris — France http://umr-ccj.ehess.fr Thierry Pairault On the other hand, in December 2013, the French plan in Algeria, now that one of its shareholders is pharmaceutical leader Sanofi , whose Algerian Dongfeng Motor (DFM) – one of the “Big Three” market has long accounted for about 25 per cent of Chinese public automakers? It is worth pointing out its turnover in Africa, undertook the construction of a that DFM has entered into joint ventures in China plant in Sidi Abdellah which is to become the largest with Citroën, Honda, Kia, Nissan, Peugeot and Sanofi unit in Africa (Smati S., 2013). Therefore, Renault. This automaker may consider Algeria to be speculation about the supposed withdrawal of a bridgehead for securing its commercial expansion Western companies and their alleged unwillingness in Africa (Zhu G., 2014). to invest should be weighed alongside the capacities, as well as the (alleged or proven) behaviour, of H UMAN ECONOMIC PRESENCE Chinese fi rms and, last but not least, the industrial and political choices of the African partner countries The fi rst wave of Chinese migrants reached Algiers in – in our case, Algeria. the late 1990s. Some arrived as migrant workers, hired in China by Chinese enterprises engaged in the In the 2000s, Algeria frequently appealed to construction market in Algeria. Their contract once Chinese contractors to implement the Programme of completed, some of them stayed in Algeria, where Support for Economic Revival (2001-2004) and the they opened small businesses. At the end of 2011, the follow-up Economic Growth Support Programme total number of Chinese nationals on Algerian soil (2005-2009) which were fi nanced by soaring oil may have reached about 40 to 45,000 individuals, revenues. The goal was to make up for the time lost including migrant workers (the manual workforce during the 1990s, i.e. during the “black decade” recruited for a specifi c job), “expatriates” (managerial marked by the Structural Adjustment Programme staff sent out on temporary assignments by their (1994-1998) that Algeria had to endure when oil prices companies), petty entrepreneurs, shopkeepers and were low and when the “struggle against terrorism” their families. Between 2005 and 2011, Algeria was was dictating expenditure priorities and budget the African country with the largest number of allocations. Once the legislation on foreign investment Chinese migrant workers, peaking at 49,631 in 2009, was liberalised, under the constraint of structural then falling to 36,562 in 2011, a decrease of 8,646 adjustment programs, Chinese contractors became between 2010 and 2011, mainly due to the very competitive, won numerous public tenders easily migrant workers’ massive return home after and took away the best part of the loot. Thus, China the completion of the projects (cf. fi gure may have secured 80 per cent of recent infrastructure 4). The construction of the West and 8 contracts in Algeria (Castel V. et al., 2011:5). Algerian Centre sections of the East-West contractors, mainly small and medium enterprises, Motorway, which is now completed, may cannot compete de facto with the large Chinese alone have mobilised about twenty-two public groups (Souiah F., 2011:8). Thus, Chinese thousand Chinese workers (Michel S., 2007). contractors have managed to get a step ahead by The decrease in the number of Chinese workers is positioning themselves on the Algerian construction expected to continue with the completion of major market at a time when Western contractors were contracts (Hammou S. and Th. Pairault, 2014:166- fl eeing the insecurity and the poor business climate. 168; Pina-Guerassimoff C., 2014:237-241). It was The current Minister of Housing, Abdelmadjid relatively easy for foreigners to settle down in the Tebboune, seems to somehow regret past choices and early 2000s, but later, administrative constraints now urges French contractors to respond to tenders. He adds that “the timeliness and quality required in the completion of our housing projects require us to explore new solutions.” (Lamriben H., 2014). The entry of Chinese expertise and investment into Algeria does not automatically fall within the authorities’ sphere of decision. It may also occur via Western fi rms, without being checked by the Algerian decision-makers and sometimes even against their will, as in the case of Terramin Australia and Desertec (Talahite F., 2014:20-21). Formally, the disagreement between Terramin and Algerian authorities is said to have focused on technical issues, but in fact, it is the involvement of a Chinese partner that has been the bone of contention. The arrival of the State Grid Corporation of China as a shareholder of Desertec was not Algiers’ choice for its energy policy; however, the Algerian authorities had no alternative (visas, work permits) become tighter – even for the but to accept it. And what about Peugeot’s investment Chinese, who fully felt their effects (Dridi D., 2011). CHINE, CORÉE, JAPON UMR8173 — 190-198 avenue de France — 75013 Paris — France http://umr-ccj.ehess.fr China’s economic presence in Algeria According to Tayeb Louh, then Minister of Labour, “[for major national projects], we resorted to foreign workers with work visas not exceeding three months and temporary work permits issued by the employment bureaux knowing that foreign workers must return to their home country upon the expiration of his work visa.» (Bouklia-Hassane R. and F. Talahite, 2010:127-129). Thus, in the 2000s, tens of thousands of Chinese workers arrived in Algeria, but only a few hundred of them could have permanently settled in the country – at least legally. This infl ux of Chinese migrants in Algeria could therefore only have been an interlude and not a groundswell, as some have supposed. This idea was widely publicised in Algeria and abroad, sometimes to the point of The Algerian government did impose a quota of 20 feeding the fear of a Chinese “invasion”. However per cent Algerian workers in Chinese construction the only outstanding feature of this infl ux was its projects. It is not clear whether this measure applied to novelty in a country where there were very few all construction sites and, when it did, to what extent it foreigners, including Westerners, as a result of a long was actually implemented (Dzaka-Kikouta Th. et al., period of insecurity in the wake of the 1992 coup 2014:208; Kpetigo D., 2014:147-148; Provenzano L., d’état. China’s presence here thus remains marginal 2009). It is diffi cult to fi ght unemployment and at the when compared to Lubumbashi (DRC), which is same time to engage in the construction of housing. “overwhelmed by […] an exhibition of Chinese This should be kept in mind when interpreting the symbols” (Tshibambe G., 2013:257) or to South contract signed with Beijing Liujian Construction Africa, where the Chinese “community” has been Corp (BLCC), a Chinese public company under the formed by numerous waves of Chinese migrants, the direction of Beijing municipality. BLCC was founded fi rst one dating back to the 18th century (Pina- in 1958 and was authorised to recruit manual labour, Guerassimoff C., 2014:238). skilled workers and executives to supply various construction sites abroad. BLCC was chosen In the 2000s, the Algerian government had to face to build 4,000 dwellings in Saïda. The two pressing issues: housing and unemployment – agreement signed with the employment 9 both causes of endemic social unrest. To tackle them, services provided that BLCC must it adopted two distinct approaches: on the one hand, recruit 3,724 local workers; in return it it relied on foreign companies to speed up housing was allowed to hire 1,197 Chinese workers construction; on the other, it promoted what in to ensure proper supervision. The agreement France is called “a social response to unemployment” also stipulated that BLCC was required to (Bouklia-Hassane R. and F. Talahite, 2008:423-430). promote training operations for young recruits This policy nourished criticism against Chinese in the various specialised sectors of building and enterprises, which were accused of increasing construction. When the agreement was signed, work unemployment by importing their own workforce. had already been in progress for almost one year. One Bound by their tender specifi cations, Chinese year after its signature by both parties, BLCC was companies had no choice but to import their own labour employing just 300 local workers, i.e. about 8 per force in order to meet a commitment to maintain such cent of the fi gure originally put forward (Ahmed S., low costs and short deadlines. The presence of large 2013 & 2014). Chinese labour forces on construction sites was not at fi rst contested. Later, however, this was often seen Even if it is possible that there might be a refl ux, as a refusal to provide employment for Algerians – the presence of Chinese migrants and expatriates in although few Algerians would have agreed to work Algeria is probably not a cyclical phenomenon, but at wages and under working conditions such as those rather fi ts into a basic trend in Africa that should gain offered by Chinese enterprises to their own workers. momentum with ever closer Sino-African economic The African Development Bank noted the Chinese relations. enterprises’ low propensity for providing work that could absorb youth unemployment, especially that of A N OUTSTANDING RELATIONSHIP graduates (Alden C. and F. Aggad-Clerx, 2012:14). This social discontent might explain why the brawls When compared to other Sino-African relationships, that broke out between Algerians and Chinese Sino-Algerian relations show certain distinctive during the summer of 2009 in Algiers’ suburbs were features. Two of them are particularly noteworthy: interpreted as the anger and hostility of the young fi rst, the fact that infrastructure investment is self- unemployed towards Chinese workers (Hammou S. fi nanced and second, the purchase of military hi-tech and Th. Pairault, 2014:165) equipment. Algeria does not seek package deals (i.e. an agreement including loans, aid and services) in CHINE, CORÉE, JAPON UMR8173 — 190-198 avenue de France — 75013 Paris — France http://umr-ccj.ehess.fr