THIS IS ABOUT AFRICAN TRADE WITH CHINA

Africa trading with China: A positive focus

"The evolving relationship between China and Africa could be one of the most important developments in the international relations of the post-Cold-War era," say Kweku Ampiah and Sanusha Naidu.

The past two decades have witnessed the growth of an increasingly close relationship between Africa and China. China's phenomenal economic growth has had many positive implications for the African continent, including increased trade, investment, and development. Africa has experienced significantly higher levels of foreign direct investment as a result of its engagement with China, the latter having established more than 540 companies and 1600 development projects in 47 African countries. This number rose sharply to 750 companies by 2007.

However, the Africa-China relationship has sparked much debate, as scholars and economists alike try to interpret what it means for Africa's development in the long term. Ampiah and Naidu present two competing visions of this relationship: one casts China as a coloniser, the other views China as a competitor with the West. Many see China as an imperialist that seeks to exploit Africa and perpetuate its deplorable state of underdevelopment, but others argue that China competes with the West for Africa's resources and that this situation affords Africa the opportunity to promote its growth and development in an international system largely dominated by the West. This newsletter by Consultancy Africa Intelligence (CAI) argues that the China-Africa relationship, questionable as it may be, should be hailed for challenging hegemonic Western power and for actively supporting development in Africa.

Increased infrastructure and trade for Africa
Despite China's phenomenal growth levels, which quickly rendered it an international economic force, it maintains and displays solidarity with developing countries. China is one of the biggest aid donors to African countries. Its infrastructure-development projects have ranged from building railway lines in Tanzania and Zambia, to erecting skyscrapers in Luanda and stadiums in Ghana. China has further invested millions of US dollars in oil-rich countries such as Sudan, Nigeria, Angola and Algeria, and has granted loans to numerous African countries.

Due to its own history of economic stagnation and poverty, China realises the importance of infrastructure development in developing countries. Unlike the West, it does not simply offer Africa humanitarian aid, but rather growth and development opportunities through increased trade and infrastructural capacity. Struggling African countries have grabbed these opportunities for growth with both hands. The China-Africa relationship can thus be considered a strategic partnership rather than simple patronage. It has not only contributed towards Africa's infrastructure, but also encouraged South-South trade. China's engagement with Africa has made other developing countries, such as India, aware of the lucrative investment opportunities the African continent has to offer. China's involvement in Africa put it on the international trading map and increased its international trade with southern-hemisphere countries.

An alternative to United States hegemony
China's own development sets an example for other developing countries that are working to find their place in the international system, yet want to remain relatively independent. China's alternative development model, the Beijing Consensus, challenges the Western Washington Consensus. The Beijing Consensus emphasises the importance of innovation, non-interference by investors in domestic affairs, and self-determination in Third World states' bid to promote their economic development. These development tenets differ significantly from the Washington Consensus approach, which suggests that poverty alleviation and development be achieved by the liberalisation, deregulation and privatisation of domestic economies. The Washington Consensus has had devastating effects on African countries as their economies struggled to cope with the ‘shock therapy' of liberalising their markets and subsequently being exposed to the unfair trade practices of the West.

Apart from offering an alternative to the Washington Consensus, the Beijing Consensus affords African states the advantage of a choice between two major economic poles. They are no longer coerced to align with United States hegemony. However, the Beijing Consensus should not be seen as a development model that can simply be applied to all African countries, but rather as one that can bring about the global terms that would accommodate and encourage the development of African countries.

Non-intervention and sovereign equality for Africa
China's relationship with Africa has been based on five tenets since 1996, namely, "reliable friendship, sovereign equality, non-intervention, mutually beneficial development and international cooperation." These five points strongly contrast with the conditions attached to loans and development packages offered by the West, the International Monetary Fund (IMF) and the World Bank. Developing African states, who are reluctant to turn to the West and the IMF, now have an alternative source of funding. China's dynamic economic growth has increased its need for energy sources, in which Africa is rich. African countries that have abundant amounts of crude oil, titanium, copper, iron ore, platinum, coal, zinc and a wide range of other natural commodities such as timber and natural gasses, have experienced high levels of investment by China along with growing markets (due to China's increasing energy needs) in which they are able to sell their products at a competitive price.

China creates training and employment opportunities
These investments, as well as the infrastructural development discussed above, have led to job creation and the increase of technical training programmes in Africa. Chinese companies that establish business initiatives in Africa provide training in technical areas such as agricultural production, irrigation and telecommunications to African citizens. The maintenance and repair of the equipment used in these business initiatives and technical areas further stimulate job creation. Large numbers of previously unemployed Africans can now provide for their families.

Whilst food security has become a growing concern in China, Africa is rich in agricultural goods and able to supply China with much-needed foodstuffs. This has led to further Chinese investment in African industries like agriculture, farming machinery, fisheries, secondary production and agricultural processing facilities. China has also used military cooperation with Africa as a means to further gain access to its resources and economy. China has provided uniforms to Mozambique's army, as well as equipment, training and arms to various African countries. It has provided fighter jets and helicopters to Zimbabwe, Angola, Namibia, Sierra Leone and Mali. China has also contributed humanitarian aid and peacekeepers to the African Union (AU) and United Nations (UN) missions in Africa, in an attempt to promote stability on the continent. Last but not least, China has granted many African countries complete debt cancellation.

Trade and investment with no strings attached
Chinese investment came with some political conditions, such as trading partners not being allowed to have relations with Taiwan. They must accept the ‘one-China' policy. However, investment and development aid from the West came with political conditions, too, including adherence to the practice of good governance and acceptance of a liberalised economy, in exchange for financial assistance. Many feel that the West has always regarded Africa as a backward, poverty- and disease-ridden continent. It has treated Africa as a burden to the international system, and engaged with the continent in a spirit of paternalistic and cultural superiority.

Africa's relationship with China has given the continent an opportunity to escape old stereotypes and Western conditions and to promote its development instead. China and the West have now become strategic competitors for Africa's resources. As a result of China's regarding Africa as a sovereign equal in the international system and a lucrative investment destination, it has also promoted Africa as an official approved travel destination. More Chinese citizens now travel to African countries, which generates revenue, motivation for growth, and other positives in destination countries.

Concluding remarks
It is true that China's interest in Africa is economically and politically motivated, but it has produced a magnitude of possibilities and developments. China found a lucrative market for investment, and Africa continues to gain from the infrastructural and economic developments arising from that investment. The China-Africa relationship challenges US hegemony in the global economy, which may convince the West to alter its policies in order to maintain desired levels of involvement with the African continent. Some may argue that China has dark motives, but even if this is true, China's supportive involvement in African countries is still an example that the West is not necessarily the best answer to Africa's challenges.

By Veleska Langeveldt
Consultancy Africa Intelligence (CAI)
Consultancy Africa Intelligence (CAI) is a South African-based research and strategy firm with a focus on social, health, political and economic trends and developments in Africa. CAI releases a wide range of African-focused discussion papers on a regular basis, produces various fortnightly and monthly subscription-based reports, and offers clients cutting-edge tailored research services to meet all African-related intelligence needs. For more information, see http://www.consultancyafrica.com.


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Some further perspective on China in Africa:

Between 2005 and 2008 China consistently outspent the World Bank in Africa - in 2005 China committed $8 billion in lending to Nigeria, Angola and Mozambique as opposed to the $2.3 billion lent by the World Bank to the whole continent.
In 2006 China's premier lending arm in Africa, China Exim Bank, lent approximately $12.5 billion mostly to finance infrastructure upgrades in Africa.
Between 2006 and 2007 China's President Hu Jintao visited no less than 17 African countries, the most ever by any foreign head of state in such a time frame.
Several large South African firms such as SABMiller, Naspers, Richemont and Sasol have moved into China and benefited hugely from access to the world's largest and fastest growing market.
China's foreign direct investment (FDI) into African in 2007 presented less than 3% of its global FDI outflows, and annual trade with the entire continent amounted to half the value of China's total trade with South Korea.
Source: South South cooperation: The BRICS in Africa by Simon Freemantle in Africa The Good News (2008)