It wasn’t supposed to be like this. South Sudan and Sudan had agreed to share oil revenue, oil was flowing again and, despite considerable problems, relations appeared headed in a slightly better direction. Both governments were drawn to China as a key provider and practical enabler of economic assistance, a political partner and international ally. In early December 2013, South Sudan and China had made progress on negotiations about a package of support to expand a serious non-oil Chinese role. Then, on December 15, the irruption of violence in Juba and its rapid spread to other parts of South Sudan changed everything.
Since that time, China’s relations with South Sudan and, by inseparable extension, Sudan, are once again prominently in the news. Incidents of Chinese nationals being kidnapped offer fairly frequent reminders of the vulnerabilities inherent in operating in Sudan, beset by connected conflicts in Darfur, South Kordofan and Blue Nile. For a brief period, many again looked to Beijing as peacemaker, but the laws of conflict gravity have predictably confounded this unrealistic hope. Instead, recent developments confirm that the trajectory of Chinese relations with the two Sudans has changed and, more than ever, is determined by the politics of both war-torn countries.
China’s relations with Sudan and South Sudan remain interconnected in multiple, overlapping ways. The sets of relations have evolved considerably in a short few years, a process that continues as Chinese engagement further adapts to persistent civil wars in Sudan and the deepening of conflict in South Sudan. This process is producing a striking coexistence of actual political and aspirational economic relations. On the one hand, in the face of economic ties severely disrupted by insecurity, Beijing has been seeking conflict resolution. On the other hand, the governments in both Khartoum and Juba seek to attract more Chinese investment despite — and in many ways because of — the ongoing fighting. The result is a jarring combination of talking up the prospects of peace and marketing Sudan and South Sudan as business opportunities set against the realities of apparently intractable conflicts that have not, as before, been conducive to Chinese corporate economic gain. The upshot is the displacement of China’s former economic drivers of relations with Sudan by a combination of political and security-related factors that do most to influence ties with the two Sudans.
Background
A triangular framework of relations linking Beijing, Khartoum and Juba together emerged after the 2005 Comprehensive Peace Agreement (CPA) that provided for the possibility of South Sudanese secession. China had to cultivate new relations with Juba alongside its more established relations with Khartoum, and Juba recognized the strategic political value of using China in its struggle with Khartoum and pursuit of independence, which duly happened in July 2011.
China had full-spectrum relations with Khartoum developed over nearly 25 years, especially from 1995 when the Chinese-Sudanese petro-partnership began. Until July 2011, Sudan was the third largest oil producer in sub-Saharan Africa at nearly 500,000 barrels per day (bpd). It was a key site for the China National Petroleum Corporation (CNPC) and other Chinese oil companies. Chinese economic engagement became more diverse, however, as relations evolved from a period of entry and expansion to a position of being more established and, for the oil sector at least, highly profitable. As well as being a market for a range of Chinese companies, Sudan became notable for the efforts of the ruling National Congress Party (NCP) to advance a self-styled “Sino-Sudanese model of development,” which was substantially enabled by oil money and fed into the NCP’s own petro-politics. The epitome of this cooperation was the controversial Merowe dam, even if that was never solely a Chinese project. First conflict in Darfur and then the course of the CPA rendered the economic climate increasingly uncertain, and the fallout of South Sudan’s secession raised many questions about the economic prospects of a country at war, in debt and divested of a huge slice of its dominant source of state revenue.
If China was Sudan’s preeminent economic partner, then division of the country and its oil assets rendered China by default South Sudan’s preeminent economic partner. Some 74 percent of Sudan’s oil production went to South Sudan, but the Khartoum government retained the key oil infrastructure, including export pipelines. Oil revenues underpinned the new state, fueling its patronage system and accounting for at least 60 percent of GDP and some 99 percent of government revenues. Juba shut down oil production in January 2012 in a dispute with Khartoum over pipeline transit fees. Juba lost almost all of its new revenue. Following deals with Khartoum, the oil started to flow again and with it cash. In October 2013, the International Monetary Fund predicted a 43 percent real GDP growth for South Sudan in 2014. An important part of this projection had to do with the oil that was flowing again and another aspect was China’s anticipated role—as both financier and implementer of plans for economic development.
China’s interactions with independent South Sudan had not in practice been as smooth as glossy official rhetoric claimed, as seen in the expulsion of a Chinese oil executive in February 2012, but there were improvements in day-to-day working relations in Juba. Following a protracted saga about a mythical $8 billion Chinese loan unilaterally announced by Juba in April 2012, which had not in fact been agreed upon, both governments had worked to set more realistic targets and find ways to work together better. Negotiations focused on funding modalities that would underwrite a Chinese corporate expansion in South Sudan. Optimism about China’s role in South Sudan’s infrastructure development had overlooked practical difficulties, and progress was slow. As the dust settled from the loan affair, however, it seemed that innovative institutional relationships in Juba between the Chinese embassy, the Export-Import Bank of China and South Sudan’s Ministry of Finance could overcome the key bottleneck.
South Sudan’s Return to Violence
Since mid-December, prospects for development of any kind have been severely set back. Violence has returned the new country to a state of civil war. There has been an economic contraction, decreasing trade and investment, at the same time as a massive increase in the level of human suffering and humanitarian need, including nearly a million internally displaced as of April 17. The oil industry, formerly the principal means through which the government of South Sudan might have started, at least, to make some tangible progress in addressing its developmental deficit, has been hit hard by the conflict. Oil production stopped completely in the Unity blocks (1, 2 and 4) soon after the violence flared but has continued in Upper Nile (blocks 3 and 7), running at some 159,000 bpd compared to a pre-December output of some 260,000 bpd.
The fighting derailed negotiations between Juba and Beijing over a financial package that could have allowed a more substantial Chinese infrastructure role in South Sudan. Most projects remain on paper and, instead of expansion, Chinese companies had to retreat. The withdrawal of most Chinese oil company personnel was hasty but orderly, partly because it had happened before. Having experienced a forcible shutdown of operations in 2012, CNPC managed to safely extract its employees and the Chinese government, facing domestic anxiety about protecting nationals abroad, was able to claim success. First catalyzed by the killings of five Chinese oil workers in 2008, the concern for Chinese nationals’ safety continues to be underlined in official exchanges, such as a mid-April telephone call between China’s minister of commerce and South Sudan’s foreign minister.
The more obvious centrality of protecting Chinese economic assets reveals just how much relations have changed in the past two decades. In the 1990s, conflict was in some senses conducive to the commercial prospects of Chinese oil companies, which were then in the early stages of learning their trade overseas on the testing ground of Sudan. Now, the government and corporate appetite for risk has lessened. Myriad threats are not just more visible but also more dangerous. In the 1990s, Sudan was not yet an oil exporter. Once the Chinese-led drive to build Sudan’s integrated oil export apparatus was completed in 1999, CNPC and its partner oil companies from Malaysia, Canada and later India operated very profitable assets. By the time of South Sudan’s independence, however, production of Sudan’s Nile blend had peaked. There were already diminishing returns in South Sudan before the oil shutdown, and recognition, if little action, of the need to diversify beyond oil over the medium to long term. With damage to its infrastructure and reputation, the latest fighting has set the industry back even further.
Diplomatic Engagement
Instead of the development showcase some dreamed that South Sudan might become for China, again it is Beijing’s diplomatic-political engagement that is in the spotlight. Unlike in Darfur before 2008, this time Chinese investments may be in the line of fire but China is not so directly linked to the drivers of conflict. Meanwhile, continuing on from its previous engagement with Sudan, Beijing’s role has evolved to feature a more developed humanitarian, peace and security component.
Rather than new investments of note in South Sudan, and despite Beijing’s exhortations about the role of development in resolving conflict, a more visible Chinese humanitarian engagement is emerging beyond its contribution of peacekeepers to the UN Mission in South Sudan (UNMISS). This makes sense. The space for significant economic interventions is now highly constricted in key parts of South Sudan. China’s program of humanitarian and development assistance long predates December 15 but now has expanded to, for example, support UNMISS efforts to build camps for the internally displaced.
A notable change is that the Chinese government has shifted its efforts to bridge broken relations between Khartoum and Juba toward efforts to support the myriad negotiations to resolve the conflicts within both countries. Prior to December 15, China had tried to help overcome the strong differences between Khartoum and Juba. Beijing had good reasons to act: Its interests straddled a new international border, and were caught in the middle of a fluid, highly politicized and at times militarized process of final status negotiations amid civil wars in Sudan and various rebellions in South Sudan. Fronted by its special envoy for Africa, Zhong Jianhua, Beijing played a quiet but notable bridging role between Khartoum and Juba.
After December 15, China’s political engagement shifted gears to support efforts to resolve the conflict in South Sudan, even as Sudan’s civil wars remained on the radar. The Chinese foreign minister, Wang Yi, was in Addis Ababa in January and met with representatives of the warring parties. China has since supported the negotiations in the Ethiopian capital and welcomed the January 23 cessation of hostilities agreement signed between the Juba government and the rebels. Ambassador Zhong is leading China’s bilateral diplomacy, shuttling between Juba, Beijing, Khartoum and Addis Ababa. In the face of the failure of externally supported negotiations between the two sides to pause, let alone end, the conflict, the Chinese government has had to adjust to the likelihood of protracted combat. After denouncing the massacre of civilians in the oil town of Bentiu in April, the Chinese government reiterated support for political dialogue as the fighting worsened. The broad shift to helping resolve differences among parties within the two Sudans signals an unintended but important consequence of South Sudan’s civil war: the rapprochement it has compelled between Juba and Khartoum.
A Marriage of Convenience
In early 2012, having shut down oil production and accused Khartoum of stealing its revenues, Juba proclaimed its “economic sovereignty.” South Sudan advanced plans to build an oil export pipeline of its own to Kenya. Now, after the shutdown of its Unity oil blocks and the disruption of Upper Nile block, Juba’s empty rhetoric of “economic sovereignty” has been superseded by renewed dependency on Khartoum for oil exports and revenue. The dependency is mutual — Khartoum needs oil revenues — but nonetheless represents a striking about-face. Rather than a southern pipeline via Kenya, the pipeline that exports crude via northern Sudan has become Juba’s lifeline and, at the same time, an important revenue stream for Khartoum.
China appears to stand to benefit from the shotgun marriage between Khartoum and Juba. The rapprochement, at least in the short term, is better geared toward macro-stability of a kind than the previous pattern of conflictual relations since it reflects the realignment of economic and associated political and military interests.
The Chinese government had been awkwardly positioned between both sides. Whereas before China was a political gambit that both Juba and Khartoum sought to deploy against each other, now both sides need Beijing’s support in more aligned ways. Once again, it is armed non-state opposition groups that are targeting Chinese oil interests due to the de facto support these installations render both states. Instead of a Juba-Khartoum dispute over oil, the industry remains at the center of fighting and rebel disruption in South Sudan, and continues to be affected by conflict in oil-producing parts of Sudan.
Courting China
Despite and partly because of dire economic straits, the governments in both Khartoum and Juba are striving to attract more Chinese investment, as well as more investment, period. For Khartoum, facing severe economic crisis, it is an intensification of efforts made during and after South Sudan’s secession. In March, for example, Sudan’s minister of finance and national economy, Badr al-Din Mahmoud ‘Abbas, and minister of petroleum, Makkawi Muhammad ‘Awad, visited China for talks about oil prospects, Sudan’s debt and a number of other projects, such as an Exim Bank loan for a sugar project in Blue Nile state. There have been further meetings to promote economic ties, and the occasional gesture of Chinese support for Khartoum, as well as meetings about political relations, including with some of China’s most senior Communist Party interlocutors who also interact with leading South Sudanese politicians.
South Sudan and its governing party, the Sudanese People’s Liberation Movement (SPLM), are also seeking to entice Chinese investment even though their country has been turned upside down in a few months of intense fighting. In April, South Sudan’s influential presidential adviser Telar Ring Deng visited China with a business delegation. Convening the first South Sudan-China Investment Forum in Beijing, his message combined economic promotion — despite the conflicts, South Sudan is still open for business — with reassurance that foreign investment would be further protected. Deng met with a string of senior officials in the Exim Bank, the Communist Party and assorted state-owned enterprises.
There is a striking disconnect between diplomatic efforts to present the Sudans as attractive investment zones and the reality of multiple, overlapping conflicts in both countries. The mixed message is hardly new. But a decade or so ago, and certainly during the north-south civil war that the CPA formally ended, the cases of harm to Chinese nationals and investments were fairly few and far between and received little attention. Now reminders of how Chinese interests are actually caught up in Sudan and South Sudan’s conflicts are more frequent and commented upon. The April kidnapping of two Chinese workers in west Kordofan was thus only the latest incident to underscore the risks to Chinese nationals and investment.
Security in Command
There are pronounced limits to the prospects of Chinese economic engagement in the face of multiple conflicts in the two Sudans. That is not to say there will be no investment, only to underscore how times have changed. Once a frontier of high risk and high return, today Sudan and South Sudan are zones of high risk and diminishing or uncertain returns, increasing both physical vulnerability and the political visibility thereof. It is not surprising that the calculus of the Chinese government has changed, as has that of Chinese companies. China will necessarily continue its political engagement, in which the security aspect is now integral, until such time as there is a serious opening for the kind of cooperation with South Sudan being planned before December 15.
Whereas previously economic calculations were fundamental to relations, now political dynamics have come to the forefront. While these twin dynamics were always inseparable, the unified Sudan was China’s third largest trade partner in Africa, a lucrative oil theater and a political ally. As economic returns decline, China now faces an increase in the number of political and security challenges arising from the difficulties of managing established economic interests in conflict-affected states. There is much more than economic interest at stake and Beijing appears to be willing to stand by its “all-weather friendship” and cultivate renewed political links.
Both Khartoum and Juba have persisted in efforts to enhance political relations with the Chinese government and Communist Party. For Sudan, this initiative follows nearly 25 years of inter-state, military and party-to-party relations but reflects the July 2011 reset. There have been a number of high-level exchanges in the spring of 2014. In April, President Xi Jinping met the speaker of Sudan’s National Assembly in Beijing and, predictably, expressed China’s willingness to elevate relations for a new era. There have also been parliamentary exchanges. Linked as they are to cooperation between the ruling parties, these visits indicate a process of “sharing governance experiences” between Beijing and Khartoum.
South Sudan’s political relations with China are of much more recent origin. Quasi-diplomatic relations only began to develop seriously after the July 2007 visit to Beijing by Salva Kiir, who is now president of South Sudan. Kiir’s trip was followed by the official opening in September 2008 of China’s consulate in Juba. Today, a number of figures previously important in South Sudan’s China relations are out of the picture or playing new roles (just as on China’s side, the crackdown on Zhou Yongkang, a pivotal figure in China’s Sudan policy before, has displaced the man previously at the center of China-Sudan relations). Pagan Amum, the former SPLM secretary-general who spearheaded the SPLM’s relations with the Communists in China, is on trial in Juba for treason and participation in the alleged coup plot against Kiir. Riek Machar presided over the opening of the Chinese consulate and, as vice president, was instrumental in efforts to ensure Chinese endorsement of the January 2011 referendum on secession, as well as to attract Chinese investment before and after independence. Now, Machar is in rebellion against Kiir’s administration and forces loyal to him are attacking the very industry he helped to establish. It was Machar’s 1991 defection from the SPLM of John Garang that led to the southern oilfields being opened up to Khartoum and oil companies, thereby benefiting CNPC and others in the first place.
As conflict worsens in South Sudan, and fractures deepen between its government, UNMISS and key allies in the US, Britain and Norway, speculation abounds that China might gain politically because of its non-interference principle. Certainly, the SPLM went from decrying the principle as false when they were at war with Khartoum to embracing it once they were running a state on the receiving end of this defining aspect of Chinese foreign policy. Such an outcome would be fraught with challenges, however, and the situation is very far from zero-sum. Despite the whiff of competition in Juba provided by the alternative that is China compared to South Sudan’s Western allies, now is not the time for such speculation and, indeed, the UN Security Council has not been divided on the fighting in South Sudan as it had been over Darfur, for example. China has given Juba more diverse options, just as it did very successfully from the perspective of Khartoum before. More than how China might be influencing South Sudan, the question is how the many elements that together constitute China will be incorporated into the new country in various ways and with what results. Factors within South Sudan, as in Sudan, are driving relations, with the result that China, like UNMISS or other external actors, are in a reactive mode. Both Sudans continue to be a high-profile foreign policy test for China, but for now political and security considerations have overshadowed the economic calculus. That calculus, and a larger economic role in South Sudan, may yet return. It wasn’t, however, supposed to be like this, and for the foreseeable future such a role remains a fanciful mirage.
