China Ups the Ante in Africa
December 1, 2006
In November, China hosted its largest diplomatic event ever, celebrating 50 years of Africa-China relations with a red carpet reception and conference for 48 African delegations. No fewer than 35 African heads of state attended. The meeting produced an action plan that covered not only extensive economic commitments, but a wide range of areas for political cooperation. Subjects included cooperation on U.N. reform, countering terrorism, promoting Africa as a nuclear weapons free zone, combating illicit traffic in arms, and assistance in managing natural disasters. But it was the economic agreements that have captured the most attention. The breadth of those agreements should cause western observers to rethink some of their assumptions about China’s motives and long term objectives, which are more far reaching than normally thought. The breadth and vigor of Chinese activity has been breathtaking. Prior to the summit, China had been steadily expanding its economic role in Africa over several years. This included multibillion dollar loans to Angola, pledges of billions of dollars in investments in Nigeria – in both cases related to acquiring oil exploration rights and, in the case of Angola, the loans were secured by oil deliveries. Hundreds of Chinese companies are involved across Africa in everything from agriculture, textiles, and telecommunications to the building of stadiums, public buildings, roads, and railroads. China’s heavy investment in Sudan’s oil industry, from which China obtains 7 % of its oil imports, has been a source of international criticism, and this has also been the case with respect to China’s investment and arms sales in Zimbabwe. But China’s investments and aid have been well received in Africa, as has Chinese diplomacy. There have been repeated visits to Africa by China’s president, prime minister, and other top officials, making the once or twice in a term visit by the American president seem paltry by comparison. For Africa, China offers a new source of both capital and investment. China’s engagement also comes with none of the conditionality that marks much western and multilateral aid, in particular conditions on governance, human rights, and economic reform. China boasts that in its approach to Africa, “business is business, politics is politics,” and that economic relations fall in the former category. From China’s point of view, whether Africans choose to pursue democracy, protect human rights, liberalize their economic and trading systems, or open their books, are all decisions for Africans to make and not the concern of China. Until the recent summit, figures on China’s economic involvement in Africa were difficult to determine. There were widely variant estimates of the sum of Chinese direct investment, the full extent of aid, and the conditions or terms of loans. How much Chinese private investment was being promoted and subsidized by the state was also not clear. There had been wild has speculation on the number of Chinese citizens in Africa, including not only government and corporate officials, but also Chinese workers carrying out infrastructure projects and merchants selling low cost Chinese consumer goods. Claims of as many as 70,000 Chinese in Angola, and similar numbers elsewhere, have been common. Not all the details are yet clear, especially regarding the number of Chinese in Africa. But the breadth and extent of Chinese activity is becoming clearer, as are the sources of financing. According to Chinese officials, Chinese investment in Africa has reached $6.27 billion, covering trade, manufacturing and processing, resource development, communications and development. China also claims to have completed 720 projects in 49 African countries and launched another 58, all financed by preferential loans. China has canceled $1.3 billion in African debt and has promised to raise to 440 the number of products from least developed African countries that can enter China duty free. China’s trade with Africa has grown sharply, from $11 billion in 2000 to an estimated $50 billion in 2006. Most of the trade is in Africa’s favor, through export of oil, minerals and other natural resources. Nevertheless, African countries have complained that imports of Chinese consumer goods are undercutting local production and costing African jobs. China has agreed to voluntary restraints on textile exports to South Africa, and also to look into other ways to ameliorate the impact of Chinese exports to Africa generally. At the November summit, China made extensive new economic commitments. Over the period 2007-2009, China will establish a $3 billion preferential loan package and a $2 billion preferential buyer’s credit for Africans. It will double aid to Africa, and cancel all debts owed by African countries that came due in 2005. China will establish a $5 billion China-Africa Development Fund to provide start-up capital to Chinese companies investing in Africa. In addition, China, which claims to have already trained over 14,000 Africans, will train another 10,000 professionals and set up 10 centers of agricultural excellence. Finally, China will establish five trade and economic zones in Africa to promote trade and investment. What emerges from these figures and other Chinese actions is that the accepted wisdom about China in Africa – namely that China’s interest is primarily to gain access to and in many cases ownership of vital oil and mineral resources to feed its fast growing economy – is short of the mark. China sees in Africa not only an important source of raw materials, which clearly have been a major focus of Chinese attention, but also a growing market and possibly a source over the long run for food, manufacturing, and industrial goods. China’s investments and aid thus range over the full spectrum of economic sectors, and are especially interesting in agriculture, long thought to be one of Africa’s weaknesses, as well as in tourism in such unlikely spots as Sierra Leone and Zimbabwe. Another exaggerated claim may be that China takes no interest in Africa in issues of stability and conflict. China may not yet pay much attention to transparency or form of government in choosing its partners – witness its strong positions in Sudan and Zimbabwe and the less than transparent terms of its loans to Angola and other countries. . However, China was reportedly helpful in trying to persuade the Sudanese government to accept a combined U.N./African peacekeeping force in Darfur. China also now provides over 1,600 peacekeepers to the U.N., mostly in Africa, including troops in southern Sudan. China has even taken a role in the U.N. Security Council in trying to find a solution to the crisis in Somalia. China’s engagement thus presents extraordinary challenges and opportunities, both for Africa and the west. For Africa, the availability of new financial resources, coming not only from China but also from India, South Korea, Malaysia, and elsewhere in Asia, are accelerating growth and providing the opportunity to construct badly needed infrastructure. The opening of new markets in Asia is welcome as well. But if Africa uses alternative resources from Asia to push back on western pressures for further and highly necessary economic reforms, and regresses on transparency, its gains will only be short term. If these negative consequences can be avoided, China’s rising engagement in Africa may come to be seen in the west as a welcome fresh source of capital, which the G8 has agreed Africa desperately needs, and as a complement to western aid programs that have long eschewed basic infrastructure. China is demonstrating that Africa offers rich opportunities for investment across a broad range of sectors – and not just in oil and natural resources where western investment is concentrated. But China’s ability to combine its state-owned company bids on resources with aid “sweeteners” presents a serious challenge to western private companies that cannot work hand in glove with government aid programs in this way. China’s rapid response capability on projects – no negotiation of conditionality and no environmental studies or other requirements – also presents a challenge both to western contractors and to western aid agencies. In sum, for the west, competition with China will demand new means of cooperation with Africa and perhaps less conditionality, but at the same time continuing encouragement of reform. The west should also engage China more actively on the areas where the west and China can collaborate in Africa, such as health, agriculture, and stability – and perhaps on the development of "rules of the road" that would govern the unavoidable competition that will also be taking place ____________________________________________________________________
Princeton Lyman, Adjunct Senior Fellow at the Council on Foreign Relations, served as U.S. Ambassador to Nigeria and to South Africa, and was Assistant Secretary of State for International Organization Affairs.
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