China's push praised and censured in Mauritius

TERRE ROUGE, Mauritius (Reuters) - Sitting under a pair of mango trees and sipping coconut water, Toolsy Poorun, 87, says he thought he would live in Terre Rouge forever. But then Chinese investment came to this part of Mauritius.

A Mauritian man tends to his vegetables in Terre Rouge May 8, 2008. REUTERS/Ed Harris

Poorun, who lives in the suburbs of the Indian Ocean island’s capital Port Louis, now finds himself caught up in China’s African push which has seen it pour billions of dollars into the continent, seeking to lock in access to rich resources, including oil and minerals.

The investment rush has sparked tensions with former colonial masters and international donors, Chinese workers have sometimes clashed with locals angered at foreign labor taking jobs, and some Africans have questioned what the flows of money mean for China’s role in internal politics.

Some of these tensions are visible in Mauritius, where China plans to open a trade development zone for more than a dozen Chinese firms in Terre Rouge, at a cost of around $730 million, making it the largest foreign direct investment in the country.

Details of what exactly will be in the Shanxi Tianli Enterprises Ltd business park are still sketchy, but Mauritian officials say it will provide a launch pad for Chinese operations in the region.

As a member of trade blocs like the Common Market for Eastern and Southern Africa (COMESA) and the South African Development Community (SADC), Mauritius offers a gateway to African markets comprising half a billion people.

But some of the 1.3 million people on the palm-fringed island are wary of what is known as the Tianli project.

Poorun is among them. He settled in Terre Rouge in 1960 and is one of 106 farmers who have been told to leave their farms and homes to make way for the Tianli zone.

“It was a big shock. Where should I go next?” he said.

Beyond the plight of the farmers, who will be compensated, there are other broader concerns about the Chinese plans and some doubts that the project will ever actually go ahead.

“It is one of these projects that ... looks too good to be true,” said Tim Taylor, former chief executive of Rogers, one of Mauritius’ largest firms with interests in tourism and logistics.

“They need quite a lot of water, power, what have you. That is going to put a strain on the infrastructure.”

Government officials appear to have no doubts, however.

“This is an investment of approximately 20 billion rupees ($734 million) over a five-year period that would create direct, indirect or induced jobs of about 40,000,” Finance Minister Rama Sithanen told reporters earlier this month.

A large project for a $9 billion economy with a workforce of just 550,000, Sithanen said the Chinese zone will also create exports worth an estimated 6 to 7 billion rupees per year, almost 10 percent of Mauritius’ total last year.

But while officials are happy to rattle off the headline figures, they are less comfortable discussing the division of benefits and labor between China and Mauritius.

“We will give priority to local people but we know that we have an acute shortage of skills, so in some cases obviously we will need to recruit people from outside,” Sithanen said.

Around half of all foreign workers in Mauritius are Chinese. Unemployment on the island was 7.2 percent at the end of 2007.


Mauritius has no mineral resources, but it is stable, strategically located, has preferential trade access to African markets and is seen as having a strong business environment.

It also offers a cultural link to China. Chinese traders first came to Mauritius between the 17th and 19th centuries, and the Chinese account for about 2 or 3 percent of the population.

Mauritius’ first prime minister visited the Asian giant in 1972, four years after independence from Britain. Since then, Mauritius has consistently backed Beijing’s policy on Taiwan, while China has provided funding for airport construction, a sports stadium, and low-cost housing.

This month, Mauritius asked for another $380 million to build a bridge and expand its congested airport.

Chinese textile firms, mainly from Hong Kong, had a major presence in Mauritius until the end of the Multi-Fibre Arrangement (MFA) in 2005, which led to the loss of 25,000 Mauritian jobs. This was compounded by high oil prices and the loss of trade preferences for sugar exports to Europe.

The triple shock and a desire to improve the business environment prompted Mauritius to launch reforms in 2006 to open and diversify its economy by boosting industries such as seafood, tourism and financial services.

The Tianli project was initially billed as an industrial hub, centered on textiles, but the idea has shifted to a business services platform, Ken Poonoosamy, senior manager at Mauritius’ Board of Investment, said.

“A lot of the Chinese operators who would want to go to Madagascar, for example, they would prefer to have their administrative offices housed in that (Tianli) economic zone,” he said, citing Mauritius’ business climate.

Since the reforms, the World Bank and other groups, such as conservative think-tank the Heritage Foundation, have ranked Mauritius as Africa’s top country for economic freedom, ease of doing business and good governance.

The International Monetary Fund said in March that Mauritius would grow about 7 percent in 2007/08. Per capita gross domestic product is around $6,700 dollars, one of the highest in Africa.

It is not yet known which Chinese companies will be setting up in the Tianli site, which is managed and part-owned by the Shanxi Tianli group. Officials from Shanxi Tianli declined to comment on the project for this story.


So far the only visible signs of the project in Terre Rouge -- the prime minister’s parliamentary constituency -- are signboards in English and Chinese, some Chinese workers and a small compound in the middle of a sugar field.

It is not clear when construction will begin. Sithanen said very shortly but some business leaders are skeptical, and questions over the whole basis of the project are being asked.

“Must our future be linked so closely to a country which tolerates atrocities in Darfur?” said an opinion piece in the broadly pro-government newspaper L’Express.

China has been criticized by Western governments and activists for supporting Sudan, which supplies it with oil and which has been accused of abuses in Darfur, where international experts say around 200,000 people have been killed in a five-year conflict. Khartoum says the figure is around 10,000.

L’Express likened the Tianli project to “a voluntary colonization” and asked what measures China might take to protect its commercial interests, noting Mauritius’ small army.

The uncertainty is widespread.

“We don’t know what there will be in there. Will there be factories, offices, housing?” said Jacques de Navacelle, former president of Mauritius’ Joint Economic Council.

The farmers who have grown sugar and vegetables on the 211-hectare (521-acre) Terre Rouge site for decades, and who have now been asked to leave, say they have received some compensation but are worried about the future.

“We are too small to fight the government, we do not want to stop the project, but we would like to get better compensation,” planter Ravin Bijloll said. He does not expect to get a job.

“Tianli will bring his own people because in China, labor is cheap.”

As for Poorun, he has no idea what he will do next. He says the government has given him some land, but on a lease.

“The government took the land and gave us money. But that money is already finished,” he said, sitting on a plastic chair next to an enormous field of sugar cane.