Introduction
Moving from the discussion of Madagascar’s politics of development to China’s engagements in the country, this chapter examines Sino-Malagasy official development cooperation and provides an overview of Chinese aid, trade, and investments in Madagascar. China and Madagascar established diplomatic ties in 1972, when China was keen to solidify its links with the country (and other developing countries) in order to alienate Taiwan. Today, China is less concerned about the Taiwan issue (although it is still an issue) and more interested in presenting itself as a favourable development partner in order to secure vital raw materials. The first Sino-Malagasy technical cooperation agreement was signed in 1974, and China began sending medical missions to the island in 1975. Infrastructure cooperation commenced under the first presidency of Ratsiraka in the 1980s, when a Chinese SOE constructed a highway connecting Antananarivo with Toamasina. Sino-Malagasy relations deepened significantly in the 1990s, with increasing numbers of private Chinese entrepreneurs and SOEs investing in Madagascar. Relations at the state level were marked by several bilateral visits, the signing of an immigration agreement, and the construction of the sports stadium in downtown Antananarivo in 1996. Since 2002, the relationship has become more multifaceted, and it has intensified across all sectors.
Twelve low-to-high level bilateral visits to Beijing by Malagasy officials occurred during Ravalomanana’s presidency. Ravalomanana negotiated new investment and trade agreements, which resulted in a multitude of Chinese private companies and SOEs making significant investments in a variety of economic sectors, notably in transport, energy, and communications infrastructures. Large- scale infrastructure projects completed between 2002 and 2009 comprise the construction of a cement factory, the ICC, a five-star hotel, a housing complex, and a new turbine on the country’s biggest hydroelectric dam. The Sino-Malagasy trade relationship grew concurrently. Raw materials and especially chrome, mica, quartz and gemstones account for the majority of Malagasy exports to China. Since 2009, the Sino-Malagasy diplomatic relationship has become more restrained as China has sought to balance its interests in Madagascar while not overtly appearing to placate an internationally-unrecognised government, but economic relations have continued relatively unencumbered. While Chinese
development aid for Madagascar has decreased, in 2012, it was Madagascar’s primary source of imports and its fifth-largest destination of exports.362 The contemporary Sino-Malagasy development relationship exhibits a confluence between aid, trade, and investments, and it reflects the economic complementarity between Madagascar’s infrastructure needs and China’s demand for natural resources.
Criticisms of Sino-Malagasy relations at the state level target the role of China in perpetuating an uneven trade balance, and accuse it of exploiting Madagascar’s resource richness in exchange for low quality and “useless” infrastructure projects.363 Since China’s ability to dispense funds through its state- owned financing agencies exceeds that of the Western IFIs and donors, Chinese SOEs are thought to win construction projects that otherwise might have better been better built by Western companies. Moreover, the “Chinese money” invested in Madagascar is not viewed as benefitting the Malagasy people because it is ultimately returned to the Chinese companies who are contracted to construct the projects, and by extension to the Chinese state who owns the companies.364 However, Chinese SOEs in Madagascar employ between 30,000 - 50,000 Malagasy, and often operate with financing from Western and other development agencies. 365 The fact that Chinese SOEs are often financed by some of the same Western agencies, such as the World Bank, whose employees in Madagascar voiced considerable criticism of Chinese-built infrastructure projects in the country, suggests that reproaches about a lack of quality or sustainability mask a wider unease that the new emergence of China as an important development partner in Madagascar may marginalise the ability of the traditional donors to influence economic and political processes on the island.366
In this chapter, I place the Sino-Malagasy diplomatic relationship in historical focus and provide an overview of the relationship under each of Madagascar’s presidents. I begin with an exploration of the Taiwan issue after 1960 during Tsiranana’s presidency, move on to Ratsiraka’s first regime, and then examine significant developments in the relationship under Zafy. I explore Sino- Malagasy links during Ravalomanana’s regime before discussing how the relationship has changed since the advent of the current political crisis. I then examine the available data on Chinese development aid to Madagascar. Based on
362 Madagascar, “Chine-Premier Pays Importateur”.
363 Interview with the IMF representative to Madagascar from 2008-2010, October 27, 2010. 364 Interview with the World Bank country director for Madagascar, September 16, 2009.
365 Interview with the commercial and economic counsellor at the Chinese embassy, September
21, 2010.
information gathered during fieldwork, I provide an overview of loans and projects financed by the Chinese state in Madagascar between 1992 and 2010. I scrutinise China’s hybrid rice project in Madagascar to demonstrate the potentials and pitfalls associated with China’s development projects. I also consider trade and investment figures and show that both of these have grown substantially over the past few years. Finally, I examine the activities of Chinese SOEs in Madagascar and demonstrate that many of the infrastructure projects being constructed by them are financed by multilateral and Western development agencies.
Sino-Malagasy relations in historical focus
Official relations between China and Madagascar were established on November 6th, 1972 when Ratsiraka’s regime recognised the sovereignty of the PRC over the nationalist Chinese government in the Republic of China (ROC). The ROC had opened its first consulate in Toamasina in 1946. In 1949, the consulate was closed following the communist victory in China, but it was allowed to re-open as a Taiwanese consulate in 1958. The Taiwanese consulate was elevated to embassy status upon Madagascar’s independence in 1960. President Tsiranana, who was wary of communism as a threat to the new Malagasy Republic, preferred to maintain links with the ROC instead of with the PRC. The ROC, on the other hand, was eager to maintain contact with foreign countries and overseas Chinese populations. It was not until Ratsiraka visited China in 1972 in his capacity as foreign minister that Madagascar recognised the PRC as exerting sovereignty over the island of Taiwan. However, the latter was allowed to maintain an official presence in Antananarivo through a small delegation, which enabled the Malagasy government to receive development aid from both China and the ROC. China ended this ambiguity in 2000 by using its growing economic importance to put pressure on Antananarivo to close down the Taiwanese representation.367
A significant shift in Madagascar’s foreign policy occurred after the fall of Tsiranana when Ratsiraka’s political philosophy of Malagasy socialism and his emphasis on non-alignment during the Cold War resulted in growing ties with non-Western countries, and especially with the Soviet Union and China. Madagascar established diplomatic ties with the Soviet Union in 1972 one month before establishing ties with China. As the Sino-Soviet split intensified in the
1970s, Ratsiraka sought to balance Madagascar’s relations with the two communist powers. However, Madagascar’s relations with China were secondary to its relations with the Soviet Union.
Sino-Malagasy cooperation during this time focused primarily on infrastructure. A Sino-Malagasy economic and technical cooperation accord was signed in 1974 when China extended a credit line to Madagascar worth approximately US $8 million and a cultural agreement followed in 1980.368 In 1975, China dispatched its first medical team consisting of 30 doctors to Madagascar.369 The mission to Madagascar originated from Gansu province, and has been renewed every two years since its inception.370 In 2012, the program was in its 18th rotation and had sent 530 doctors to Madagascar.371 Chinese doctors, who specialise in general surgery, orthopaedic surgery, and gynaecology, work alongside their local colleagues. During the most recently completed rotation, Chinese doctors undertook 8,000 surgeries and 100,000 external consultations with Malagasy patients.372 Today, the Chinese mission runs one of four Chinese- built hospitals in Mahitsy, Ambovombe, Vatomandry, and Sambava.
Infrastructure cooperation also commenced under Ratsiraka. A Chinese state-owned construction company, the National Chinese Bridge and Road Company (SNCTP), built the highway connecting Toamasina with Antananarivo, located roughly 375 km inland through mountainous terrain. The highway was constructed between 1980 and 1985 and financed with a Chinese credit line worth US $24 million.373 The road, called the RN2 (an abbreviation of route nationale, which translates as National Road), is still one of the country’s most important transportation links today. There is a large Chinese pagoda in the town of Moramanga, about a quarter of the way to Toamasina, commemorating this achievement.374 The SNCTP, which was established in Madagascar in 1970, became a joint venture between the Malagasy and Chinese states and renamed the
368 Madagascar, Fiche Technique Chine-Madagascar.
369 China has a long history of conducting active “heath diplomacy” programmes with African
countries. China’s early relations with many African nations included significant aid in the form of health infrastructure, scholarships for African doctors to study at Chinese universities, and the deployment of teams of doctors to Africa. See Thompson, “China’s Soft Power in Africa”, 1-5. Brautigam, The Dragon’s Gift, shows that the first Chinese medical team sent to Africa arrived in Algeria in 1963.
370 Thompson, “China’s Soft Power in Africa”, 1-5.
371 Interview with the economic and commercial counsellor at the Chinese embassy, August 31,
2011.
372 “Une Nouvelle Mission Chinois”, La Gazette de la Grande Île, November 19, 2011. 373 Government of Madagascar, Ministry of Foreign Affairs, 2010.
Sino-Malagasy Public Works Company (SMATP) in 1984. Photograph 2 depicts the sign outside of the SMATP headquarters in Antananarivo in 2011.
Photograph 2: The sign outside of the SMATP headquarters in Antananarivo.
After Madagascar liberalised its economy in the 1990s, a growing number of Chinese SOEs, and to a lesser extent private Chinese enterprises, began investing in Madagascar. This dovetailed with China’s own economic liberalisation that had begun in the 1970s and culminated with the formulation of the “Go Out” policy, which encouraged Chinese companies to develop a global strategy and exploit opportunities in the expanding local and international markets, in 1999. China and Madagascar signed an immigration agreement in 1996, which facilitated Chinese immigration to the island. That same year, Zafy negotiated a deal for the Chinese to construct a sports stadium in the district of Mahamasina, in central Antananarivo. The stadium was built by Sogecoa Madagascar Limited (SOGECOA), which was founded in Madagascar in 1994 as a subsidiary of the Anhui Foreign Economic Construction Group (AFECC).375 SOGECOA is well known in Madagascar today and has expanded away from construction to various other sectors of Madagascar’s economy, including retail, infrastructure, and mining. It is headquartered in Ivato, where it owns two restaurants and business centres, a hotel, and a large supermarket called “Horizon”, which sells manufactured products and foodstuff imported from
375 AFECC is a Chinese state-owned construction and mining company that has an explicitly
international focus. It has 14 overseas subsidiaries in Asia, Europe, Africa, the Caribbean, and the Pacific Islands.
China. To service its operations in Ivato, the company recently rehabilitated the three-km road between Ivato and the international airport.376 Photograph 3 shows the commemorative plaque at the entrance to the sports stadium declaring that the project was inaugurated as a sign of Sino-Malagasy cooperation under Ratsiraka in 1997.
Photograph 3: The plaque in front of the sports stadium in Mahamasina.
Sino-Malagasy relations since 2002
Sino-Malagasy relations have increased considerably since 2002. China’s growing engagements in Madagascar over the past decade are partly rooted in Ravalomanana’s determination to cultivate Sino-Malagasy trade, aid, investments, and cultural ties. The Sino-Malagasy relationship was a crucial component of Ravalomanana’s plan to attract foreign investment and diversify Madagascar’s economic partners. He visited China four times during his six years as president, which helped inform his vision for development. He first flew to China in 2004 to discuss economic cooperation and negotiate plans for China to construct the ICC, the cement factory, and to exploit mineral resources. In 2006, he met with President Hu Jintao, toured the Shenzhen SEZ, and attended the FOCAC forum in Beijing. At the invitation of the Hong Kong General Association of International Investment, he also journeyed to Hong Kong for a three-day visit with a business
promotion delegation consisting of several Chinese ministerial officials.377 In May 2007, he returned to China to attend the annual meeting of ADB, and in August 2008 he attended the Olympic games opening ceremony in Beijing. During the last visit, he was awarded an honorary title from Peking University, China’s most prestigious academic institution.
While Ravalomanana encouraged and harnessed the Sino-Malagasy relationship, a “big push also came on behalf of the Chinese themselves to secure resources and move their big public works companies into new markets”.378 China was among the first countries to recognise Ravalomanana’s presidency in 2002, with a delegation led by the Chinese assistant foreign minister arriving in Madagascar in the wake of the victory. The group arrived in Madagascar on July 19th, 2002 to congratulate the new president, seek affirmation of the One China policy, and discuss bilateral cooperation. In 2005, Chinese Foreign Minister Li Zhaoxing flew to Madagascar to meet with Ravalomanana and his prime minister to further discuss the implementation of cooperation agreements.379 Chinese Vice- Premier Huang Ju also visited Madagascar in 2005, and Wu Guanzheng, member of the Standing Committee of the Political Bureau of the Central Committee of the Communist Party of China, came in 2006. In 2007, Chinese Assistant Foreign Minister Zhai Jun attended Ravalomanana’s second inauguration ceremony. Zhai reviewed bilateral ties and stated that China was ready to implement the consensus reached at the Beijing FOCAC summit in 2006 to strengthen cooperation with Madagascar in the areas of infrastructure, minerals, agriculture, and human resources development.380 Tables 3 and 4 show the official state visits effectuated by high-ranking officials from China to Madagascar and vice versa between 1990 and 2012.
Table 3: Chinese state visits to Madagascar, 1990 - 2012. Chinese official
1990 Chen Muhua, vice president of China’s national popular assembly 1994 Qjan Quchen, vice prime minister and minister of foreign affairs 1997 Jiang Chunyun, vice prime minster
377 “Madagascan President Visits South China’s Special Economic Zones”, People Daily, April
21, 2006.
378 Interview with the IMF representative to Madagascar from 2008-2010, October 27, 2010. 379 Government of China, “Chinese, Madagascar FMs Meet”.
380 China (Ministry of Foreign Affairs), “Assistant Foreign Minister Zhai Jun Meets with
1999 Hu Jintao, vice president
2000 Wu Yi, foreign affairs counsellor
2001 Wang Zhongyu, general secretary of the foreign affairs counsel 2001 Xu Jialu, vice president of China’s National Popular Assembly 2005 Li Zhaoxing, foreign minister
2005 Huang Ju, vice premier
2006 Wu Guanzheng, member of the standing committee 2007 Zhai Jun, assistant foreign minister
Sources: Pellerin, 2011 and Madagascar, Ministry of Foreign Affairs, Fiche Technique Chine-
Madagascar, 1972-2010, and author compilations from Chinese and Malagasy media.
Table 4: Malagasy state visits to China, 1990 - 2012 Malagasy official 1992 Francisque Ravony, vice prime minister
1993 Richard Andriamanjato, president of the national assembly 1994 Albert Zafy, president
1996 Richard Andriamanjato, president of the national assembly
1997 Erizo Razafimahaleo, vice prime minister and minister of foreign affairs
2000 Pierrot Rajaonarivelo, vice prime minister 2005 Marc Ravalomanana, president
2005 Jean Lahinitiko, president of the national assembly 2006 Marc Ravalomanana, president
2007 Marc Ravalomanana, president 2008 Marc Ravalomanana, president
2012 Olga Ramalason, minister of trade
Sources: Pellerin, 2011 and Madagascar, Ministry of Foreign Affairs, Fiche Technique Chine
Madagascar, 1972-2010, and author compilations from Chinese and Malagasy media.
Increases in accords and agreements signed during Ravalomanana’s regime also point to an intensification of Sino-Malagasy relations during this time. Whereas 15 accords were signed between 1990 and 1999, 52 bilateral agreements were approved between 2002 and 2009.381 Important treaties include the Accord on the Reciprocal Promotion and Protection of Investments (Investment Accord) and the Trade Agreement, which were both concluded in 2005. The Investment Accord streamlined investment regulations and procedures for Chinese entrepreneurs in Madagascar and remains the formal legal framework governing the security of transactions and Chinese FDI to Madagascar. The Trade Agreement allowed for tariff-free trade for select Malagasy goods exported to China and has been amended several times. The number of eligible goods was raised from 462 to almost 5,000 in 2010, and is supposed to reach 8,000 by the end of 2013.382
Chinese companies also fuelled Ravalomanana’s plan to improve the country’s infrastructures. The most visible and large-scale of these include the five-star hotel, the ICC, and the high-end gated housing complex. Ravalomanana contracted SOGECOA to build these projects in 2007 and 2008 as the locales for an AU summit that Madagascar had been scheduled to host in 2009. Since Madagascar was suspended from the AU following the political crisis, the summit was cancelled, and two of the three structures have become relatively redundant. The ICC is utilised for conferences, trade fairs, and cultural performances, but the five-star hotel was empty in 2012, and the housing complex is also not commercially viable. The housing complex, which is known as the “presidential villas”, and which is composed of close to 50 mansions located near the airport in Ivato, was meant to accommodate the African heads of state travelling to Madagascar for the AU meeting. When the presidential villas lost their original purpose, they were transformed into a luxury resort with a conference centre, a business centre, and a large Chinese restaurant.383 These types of projects vindicate arguments made by critics of China in Madagscar that the Chinese construct useless infrastructures in Madagascar, but insisting on their redundancy obscures an appreciation of the other, less ostentatious and more obviously
381 Madagascar, Ministry of Foreign Affairs, Fiche Technique Chine-Madagascar, 1972-2010. 382 Interview with the director of the Directory for the Promotion of Partnership and
Entrepreneurship at the Malagasy Ministry of Commerce, August 29, 2011.
valuable infrastructure projects that the Chinese initiated under Ravalomanana, which have been far more numerous.384
The China Complete Plant Import and Export Corporation (COMPLANT) and the Madagascar Long Cement Factory (MALOCI) have invigorated Madagascar’s sugar and cement industries.385 COMPLANT, which has had operations in Madagascar since 1997, is the largest Chinese investor in Madagascar’s agricultural and agro-processing sectors. COMPLANT concentrates on sugar production and processing in Madagascar through its wholly owned Malagasy subsidiary, Sucrerie de Complant de Madagascar, which manages three factories. Under Chinese management, yearly sugar output at the factory in Morondava, the first to be privately leased to COMPLANT, increased