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China and Africa: friends with benefits

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In Brief

There has been a change in ideological sentiment on China’s involvement in Africa. The paradigm shift has been led by Zambian economist Dambisa Moyo’s bestseller, Dead Aid, which gave voice to the possibility of a development model defined by diligent business practices as opposed to the traditional Western model which is driven by foreign aid. If managed prudently the Sino- African relationship could prove to be an empowering change for several African governments and provide the foundation for the continent to take its place as a partner in the global economy.

For China, Africa is an excellent complement to its resource and market-seeking global agenda. Since 2000 China-Africa trade has grown at an average annual rate of 33.5 per cent.

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Although still second to the United States (whose trade with Africa amounted to US$140 billion in 2008), trade rose from US$55 billion in 2006 to around US$107 billion in 2008, accounting for 4.5 per cent of China’s total trade and surpassing the US$100 billion trade target set for 2010 at the 2006 Forum on China- Africa Cooperation (FOCAC). Trade is supported by modest yet rapidly expanding levels of direct investment, which reportedly jumped by 77 per cent in the first nine months of 2009, compared with the same period in 2008.

China has also identified the value of Africa as a political ally in its quest for a greater role in international affairs. The benefits of China’s African diplomacy became clear in 1971 when China’s accession to the UN General Assembly and Security Council was assisted by 26 affirmative votes cast by African countries. Today China has diplomatic relations with 49 of 53 African nations and China’s deepening engagement means that the US, Europe and other emerging partners have little choice but to compete for access to the continent’s emerging markets and resources. In November 2009, Chinese Premier Wen Jiabao took the opportunity to declare China’s commitment to African development while challenging the established industrial powers to do the same:

‘In the global financial crisis, what people tend to easily ignore is the implementation of the Millennium Development Goals … Here I would like to once again appeal to the international community to work hard with firm determination and effective measures to reach the MDGs while tackling the global financial crisis.’

This declaration was accompanied by the announcement of US$10 billion in preferential loans to support African countries over the next three years. In light of the OECD’s prediction that the G8 will fall US$23 billion short of its 2005 promise of US$50 billion in foreign aid to the poorest and most vulnerable by 2010 (Africa contains 33 of the 49 Least Developed Countries, as classified by the UN ), it is little wonder China’s diplomacy is gaining traction among African governments.

Although the China-induced resource boom is providing a shortterm fillip to African growth and Moyo’s ambitions for a business-driven model of growth, China alone will not be the continent’s saviour. To avoid destructive competition in the region, a cooperative framework on African issues is required between China, the US and Europe and emerging partners to the continent such as Brazil, India and Russia. This is increasingly important in the context of trade frictions that are present in the current global economic environment.

Legitimate concerns about human rights and exploitative practices surround China’s non-interference based involvement in African nations. The list includes arms dealing with repressive regimes, support for autocratic governments isolated by the West, plundering resources with little concern for environmental issues and importing unskilled Chinese labour who are culturally ignorant and unwilling to integrate.

Many of these issues highlight what seem to be self-serving political and strategic motives behind China’s activity in Africa. Many are fuelled by Western hypocrisy. The West’s involvement on the continent has been, and continues to be, littered with tales of mismanagement, exploitation and funding despots. Furthermore, China is hardly alone in marrying political and strategic considerations to its aid agenda. In December last year the US President, Barack Obama, signed off on a deal with Israel worth US$2.77 billion in 2010 (worth a total of US$30 billion over the next decade) with 75 per cent tied to the purchase of US-made military hardware.

Defending exploitative behaviour is not the issue. The business-driven model of development provides new opportunities to several African nations long overlooked as legitimate trading and investment partners. African countries and the African Union need coherent, longterm strategies to apply leverage to international commercial interests and to create opportunities for enduring economic competitiveness and growth. With the prediction by the International Energy Agency that China’s oil imports will increase four-fold by 2030, it is vital for Africa itself to respond strategically to the opportunity that China offers the continent. Although the FOCAC provides an effective forum to develop diplomatic and commercial relations, the issues cited above will continue to bedevil China’s involvement with the continent if strong institutional frameworks of governance and dispute resolution mechanisms are not properly implemented.

Luke Hurst is the Pacific Trade and Development (PAFTAD) Fellow at the Crawford School of Economics and Government, The Australian National University and a graduate student in International Development Economics.

6 responses to “China and Africa: friends with benefits”

  1. I do take exception with your characterisation of Chinese investment in Africa as being a fairly benign influence. Where Western Governments tend to tie aid to humanitarian projects and direct it towards governments who are moving towards democracy and liberalism, China has no ethical qualms about supporting regimes such as in the Sudan where ethnic cleansing is still occurring with great gusto.

    Where such behavior has occurred in the past with support given to non-Communist regimes, these days it is no longer au fait to provide support to dictatorships.

  2. Dear Luke,

    A good article.

    The enlarged graphics were helpful.

    What is a preferential loan? Concessional?

    Best wishes

    Andrew

  3. Hey Luke, well done!

    I like how you are balancing the multiple intentions and drivers of China’s motivation of its engagement in Africa. In my opinion, clearly China’s key driver is a grown understanding of the limitations of its economy: shortages of natural resources. So China started to build allys: with Russia-as a more a less settled economy- through a clearly defined contract for oil supply, as well as with Africa.

    The point is, the (rather turbulent) situation in Africa just needed to be treated a little bit more subtle – therefore China has developed a highly advanced network of direct and indirect investments in African infrastructure projects over the last decade! Gradually China will be able to increase its sourcing of natural resources in Africa and reduce the risk of dependencies of the Middle East.

    A classic portfolio diversification; a smart move if you look at Europe and the US, that a rather increasing its dependencies from Russia, respectively the Middle East!

  4. Luke

    Good article, with a cracking title. Perhaps you can tease out this idea of “legitimate concerns over human rights practices” with exactly what you mean by “business driven development”? Which human rights exactly are you talking about? Ecosoc rights and political rights for example are not the same things, and interact with what you are terming “business driven development” in many ways. You have treated here human right concerns solely as they stand imported from China; what about domestic abuses of human rights allowed by external funding (sort of Jack’s point 1)? And what happens when different human rights intrinsically conflict- doesn’t business driven development just make these problems internal to the country? To be clear, and to not get us caught up in a pointless epistemological debate, my comment is solely that human rights concerns here are worth specifying and integrating tightly into your model rather than being lumped together as “human rights”.

    Jack, point 1, you are presuming that tying aid to “humanitarian concerns” leads to “democracy and liberalism”- err, is that always the case? That’s a wee bit simplistic isn’t it?
    Ryan

  5. Dear Luke,

    Very interesting article, many thanks indeed.
    Would there be any chance to get those graphics with a better definition?

    Best,

    Nico

  6. Hi, thanks for the interesting article. I was wondering your opinion on the environmental impact chinas involvement in Africa will have on the country’s delicate eco system before the majority of the African countries can even be called developed? Surely damaging and polluting their land and air, and raping it of its natural resources before Africa even begins to prosper will result in a ruined country in the long term?

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