China's African Misadventures

The town of Catumbela, in Central Angola, sits on a sprawling, fertile plateau planted with plantains and mangos. At the far end of town is a defunct paper mill. There, for several months earlier this year, a group of Chinese railway engineers and laborers camped out in the shadow of two idle smokestacks. The team was one of several sent to this isolated stretch of Angola's interior to build a railroad that will one day connect the African hinterlands to the Atlantic port city of Lobito, several hundred miles to the west. It's a $2 billion project and a colossal dream—a way to bypass Angola's sparse, decrepit roads, which like so many in Africa are strewn with land mines and liable to be washed out by flash floods.

There's only one problem: work has stalled. Along the railroad line at least 16 camps that once bustled with Chinese workers and equipment have been abandoned or shut down completely. In those that remain, row upon row of front-loading bulldozers, steamrollers and forklifts sit unused under the sleepy eyes of Angolan soldiers. And the Chinese? "They're gone," says a scrawny guard at the entrance to Catumbela's paper mill, as he stares disconsolately at the tracks. "I don't know when they're coming back—they ate their dogs and left."

Africa has rarely been kind to the grand visions of others—whether Dr. Livingstone or Bono. The Chinese are finding, to their surprise, that they're no exception. The Lobito railroad has fallen victim to a high-level dispute between the Angolan and Chinese governments. So have dozens of other deals, including another $2 billion contract, to build an oil refinery in Lobito. The American Embassy says that project will now most likely be awarded to Bechtel. "The Chinese thought they'd come in here and make a killing," says a Western diplomat in the capital, Luanda, who was not authorized to speak on the record. "Now they're facing the reality—it's hard to do things here."

Overall, China's push into Africa has been remarkably successful. Chinese companies are sucking up oil from Sudan, cutting down timber in Guinea and mining copper and zinc from the Congo. Beijing recently bought a major stake in South Africa's Standard Bank to fund infrastructure projects throughout the continent. And the Chinese are far outpacing their Western rivals. China has opened more embassies in Africa than the United States has, and is even investing heavily in countries, like Rwanda, where the immediate returns are murky at best. Last year trade between Africa and China topped $50 billion. By 2010 it's projected to reach $100 billion.

But all that money—China has extended $11 billion in loans to Angola, more than the World Bank—doesn't mean the Chinese working in Africa are insulated from the continent's troubles. Kidnappings, killings and death threats have plagued Chinese workers from the Niger Delta to the eastern reaches of Ethiopia, where rebels ambushed and slaughtered 17 Chinese oil workers last year. Angola is now China's biggest supplier of crude oil, and Chinese money helped propel the local economy to a 24 percent growth rate last year. But it's also a chaotic, corrupt country that has only recently emerged from a vicious civil war. For Chinese businessmen and workers, it's turning out to be a sobering, even dangerous place.

Chinese laborers are venturing deep into the lush Angolan countryside, not just the capital and larger cities. Tens of thousands of Chinese-made PMN-2 mines are still buried there, remnants of the Angolan civil war, which killed more than a million people. De-mining crews are digging the explosives out of the ground, but nowhere near fast enough for the Chinese. So the foreigners improvise. "With a front loader we push the dirt and if there's a mine there it explodes," says Zhou Zhenhong, manager of Kaituo Construction and Enterprises. "It's faster that way, and less expensive than being late."

The costs, however, can be more than monetary: on Oct. 24 a Chinese laborer for the Chinese telecom giant Huawei was digging a trench for fiber-optic cable near the southern town of Benguela when a mine exploded, killing him. Two co-workers were also injured. "We've tried to tell them to be careful and they just shrug their shoulders," says Rebecca Thompson, who directs a Norwegian de-mining NGO in Luanda.

Western executives—hidden behind the walls of their villas—have bred a certain kind of resentment in Africa. In Angola the much more numerous and adventurous Chinese are suffering from another. Perhaps as many as 100,000 Chinese workers have spread out across the country, many breaking rock on highways or pouring concrete at construction sites. Most live in isolated camps. Few speak English; fewer still speak Portuguese.

State-owned Chinese companies prohibit any type of fraternization between their employees and Angolans. If a worker becomes romantically or sexually involved with a local, he's quickly hustled back to China. "Africans and Chinese think differently," says Xia Yi Hua, a regional director for China Jiang Su, a massive construction conglomerate with offices across Angola. Xia has been in the country for four years, and his company still sends him shrink-wrapped packets of Chinese food from back home, along with regular sets of chopsticks. Everything in his office comes from China. One coffee table is made of Angolan wood, he admits, but he flew in a Chinese carpenter to fashion the table.

Racist stereotypes are common: both sides accuse the other of looking or behaving like monkeys or pigs. The Angolans claim (without good evidence) that the Chinese eat their dogs. At most work sites Chinese supervisors oversee black laborers, which has created friction. "You Chinese come to Angola and order us around, but in your own country you are suffering," says an Angolan who works for a Chinese company. (He asked not to be named for fear of losing his job.) At one Chinese-run construction site NEWSWEEK visited, hungry workers begged for food, saying their Chinese bosses never fed them. (The bosses say that's not their responsibility.) Angolans laying fiber-optic cable for Huawei near Benguela say they must dig 16 feet a day, or else they won't be paid their $5 daily wage. They claim their Chinese bosses only use one Portuguese word, cavar, which is repeated again and again: dig, dig.

The tensions go all the way to the top of the food chain. The Chinese say Angolan government funding for the Lobito railroad has dried up mysteriously; the Angolans say the Chinese stopped working because of mines along the route. Western diplomats in Luanda, who customarily speak only on condition of anonymity, suspect that the dispute has to do with kickbacks but cannot prove anything. They say that the government's finances are incredibly murky, and its dealings with the Chinese murkier still. "Is it all getting stolen? I don't think so," one Western diplomat says of the billions in oil money flooding into Angola's treasury. "[But] it's not clear to me that there's anyone in the government who can actually tell you where all the money is. If there is, it's going to be somebody like Al Capone's bookkeeper."

Even China's success in Angola is creating headaches for its businessmen. The handful of business hotels in Luanda are booked months in advance. Good luck finding a cab—the city has only one official taxi service—or renting a car, which can go for as much as $12,000 a month. Rents for houses in Lobito are double that. The extremes of poverty and wealth are deep, and worrisome. Where there are roads in Luanda—much of the city remains a hive of rock-strewn dirt tracks—they are choked with bright yellow Hummers and souped-up Chevy Blazers. Chinese-built mansions for Angolan ministers loom grotesquely on Luanda's hillsides, just above shantytowns where millions of refugees took up residence during the worst years of war.

For Mr. Li, a local director for the Guang Xi construction company, the boom is a mixed blessing. Li, who asked that only his last name be used, lives in a cavernous supermarket warehouse in Lobito, with sheets hung on clotheslines to create sleeping areas for his 20 workers. He spends much of his time slogging around the city, begging for the cement his crew needs to build bases for cell- phone towers. On a recent day visiting potential suppliers, he returned long after dark with 12 small bags of cement, all bought at retail prices. "Everything is waiting, waiting," he says, worried about the pace of his project. A Brazilian company has promised to build two new cement factories in Luanda, but so far work hasn't begun.

Beijing takes the long view in Africa, figuring its investments now are building good will for the future. But every economy the Chinese help revive becomes that much more attractive to their rivals, too. Already American firms Bechtel and KBR are bidding for infrastructure projects in Angola. Oil giants ExxonMobil and Chevron are increasing their presence in the country. The Brazilian firm Odebrecht is building a highway to compete with the Chinese railroad to Lobito, South African companies are repairing the electrical grid near the oilfields in northern Angola, and the Portuguese are horning in on construction projects in and around Luanda. "In this country, you can get projects for $10 million and do $1 million in profit," says Zhou Zhenhong, the construction executive, over lunch at a seaside restaurant in Lobito. For that kind of money, a lot of people will be willing to put up with the same hassles as the Chinese.