CHAPTER ONE RESEARCH DESIGN                             Background to the Problem Statement

Few years after Ghana’s independence in 1960 marked the beginning of official diplomatic relations between Ghana and China. Subsequently, the two countries signed the Peace Treaty of Friendship and Cooperation with the climax being the newly appointed Ghana’s ambassador to Beijing moving in to Beijing in 1961 the same year the peace treaty was concluded.1 Since this event, relations between Ghana and China have been consolidated by strong personal relationships between the political elites of the two countries, particularly during the era of Ghana’s first President, “Dr. Nkrumah and Premier Zhou Enlai, and by high-level official visits, including visits by Ghana’s President John Kufuor to China in 2002 and China’s President Hu to Ghana in 2003.”2

Ghana has provided substantial diplomatic support to China such as joining the lobby for China’s reinstatement into the United Nations and supporting China in the Sino-Indian war of 1962.3 China, on the other hand, has reciprocated with material and financial support for Ghana’s development. Consequently, within the last two decades, China has had an overwhelming influence in Ghana, affecting virtually every sector of the national economy. These include trade and investment, participation in the sale and marketing of consumer goods, exploitation of natural resources, infrastructure and agriculture. In agriculture for instance, exchanges have been facilitated in agro-processing, agricultural technology, agricultural infrastructural technology and irrigation.4 According to the Ghana Investment Promotion Center (GIPC), Chinese investment

activities in Ghana stretches across a wide variety of sectors such as construction, tourism, manufacturing service, and resource –based sectors.5

During the period, China has also increased development assistance to the Ghanaian economy with significant projects, including the Nsawam stretch of the Accra-Kumasi Road, the office block of the Ministry of Defence, the Complex of the Ministry of Foreign Affairs, the Atuabo Gas project and the Bui hydroelectric dam, one of the biggest Chinese-funded projects in Ghana, and a host of others.6 In 2007, China agreed to write off $25 million of Ghana’s debt, accumulated since 1985.7 Additionally, Ghana also benefited from about $170 million supplier’s credit from the Chinese government to enable the Electricity Company of Ghana extend electrification to about three hundred thousand households in 2009.8 Ghana’s resilient democracy has ensured that Chinese development assistance to the country generally benefits the general population.

Ghana-China cooperation on trade and investment have also increased strongly in the past with no signs of plummeting. “From September, 1994 to June 2013, the Foreign Direct Investment, (FDI) influx into Ghana from China reached $543.5 million, making it the tenth biggest FDI provider for Ghana, with the top five being the UK, South Korea, USA, UAE and Lebanon.” 9 “Of the $543.5 million FDI from China, $254 million went into the manufacturing sector, covering a variety of industries such as iron and steel, food processing, textiles, salt production and fishing while the trade, construction and service sectors attracted $120 million, $96 million, and $48 million respectively.”10 “In terms of the number of projects, China with 645 registered projects, topped the list of investor countries in Ghana.”11 Also trade between Ghana and China

rose to a historic high of $6.6 billion in 2015, representing an 18.2 percent year-on-year increase, ranking Ghana as sixth among China’s Africa trading partners.12 Chinese foreign direct investment in Ghana (FDI) have also provided a host of benefits, such as improving the competitiveness of local industries and contributing to government revenue via taxation as well as creating employment.13

Nonetheless, the growing influence of China on Ghana’s economy has come at a cost. Even though members of the Ghana Investment Promotion Center (GIPC) are happy with Chinese involvement in trade, some Ghanaian workers in that sector fear the Chinese may be displacing local businessmen and women. One sector suffering from Chinese business competition is the textile industry. Chinese firms have imported into the country, their “copying” abilities and provided low-priced, but fake, types of African cloth.14 Not only are the Chinese competing in the Ghanaian textile manufacturing sector, but Chinese merchants are also importing into the country large quantities of Chinese textiles, posing a great threat in the form of competition on locally manufactured ones. Additionally, growing numbers of Chinese have disregarded national laws and engaged openly in commercial activities at the threshold reserved for citizens. Others have used Ghanaian front men and women to engage in commercial activities at the level reserved for Ghanaians. Nowhere is the Chinese influence felt as in the illegal mining or “galamsey” sector. “Galamsey” refers to the unregistered and unregulated artisanal gold mining in Ghana.15 The unregulated nature of “galamsey” has had marked consequences on environmental resources as miners resort to practices such as the use of chemicals to blast river bodies and cutting down of trees which degrade Ghana’s vegetative covers as well as water bodies which serve as sources of drinking water. While the presence of Chinese in the illegal

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