It was a master class in the complexities of the China-Africa relationship, staged in London’s Commonwealth Club, where Zimbabwe’s former finance minister, Nkosana Moyo, and London University academic Professor Stephen Chan were debating the merits of China’s engagement in Africa.
For Moyo, “Chinese business is unambiguously good news for Africa.” The People’s Republic of China was “the world leader in achieving rapid development from a very low baseline,” he argued. Beijing’s strategy chimed with African efforts to use “market-oriented policies at home and pursue productive investment from abroad”. The commodity boom was a “direct result of China’s entry into our markets”.
China’s operations are boosted by “Beijing’s clear support of African commercial ventures, state-guaranteed financing for Chinese firms operating in Africa and robust diplomacy,” Moyo said. Those strategies’ success explained much of the Western criticism of the China-Africa dalliance.
“You might have expected me to agree with all this,” smiled Chan, an overseas Chinese and fluent Mandarin speaker who has lived in many Asian and African countries. Some Western reporting was misplaced and ill informed, but that should not lead African states to approach Beijing’s overtures uncritically; he replied: “Beijing and Chinese companies have strategies and policies – they know what they want from Africa, but I haven’t seen any sign of Africa’s China strategy.”
African states should evaluate what is on offer much more clearly, Chan said – not least to confront two dangers: China has a medium-term need for energy security and mineral resources so it wants deals with African states, many of which are desperate for short-term finance; meanwhile, some resource-rich African states were locking themselves into supply and equity contracts that could prove extremely disadvantageous in 10 years’ time.
Chan added that Beijing was reluctant to engage with Africa’s regional and multilateral organizations. “The emphasis has been on the strong bilateral relationship with the resource-rich countries – Angola, Nigeria and Sudan – which emphasizes the economic imperative above all.”
This is the experience of such countries as Tanzania, which do not have the sort of resources China wants in sufficient quantities to tempt Beijing. Despite the legacy of its socialist past, China has signalled that Tanzania – once its pre-eminent African client – cannot expect the kind of large-scale involvement seen in oil-rich countries. China maintains the Tanzania-Zambia railway it originally built and is building a new national stadium, but Chinese construction of roads and the new parliament in Dodoma is transacted on a purely commercial basis.
Enthusiasts for the Chinese contribution to Africa believe that everyone can benefit from the rollercoaster economic ride. After years of being ignored, Africans have found in China a partner that can get infrastructure built quickly and efficiently – and without asking too many questions. Thus, former Morgan Stanley managing director Andy Xie has argued, China’s willingness to build above-the-ground infrastructure in return for access to mineral assets “will transform Africa”.
Neither, Xie argued, should critics – which include the International Monetary Fund and Western governments – overstate governance concerns, even if Beijing’s intervention in such countries as Zimbabwe and Sudan raises hackles: “China is saying let’s make the physical world first and then, if everyone gets a share of a bigger pie, people will stop fighting.” According to this view, China’s African intervention “is all about economic interest” – and Africa should move quickly to benefit.
Raising the stakes
Africa is an important element in a new global Great Game pitting the world’s emergent second-biggest economy against the established superpowers in a race for influence and resources. This has raised the cost of assets and reflects a critical shift in the geopolitical balance – suggesting that a new world order, from which African leaderships are hoping for significant benefits, is emerging from China’s staggering economic growth rates, which are underpinned by a steady but determined diplomatic campaign.
The Chinese effect is apparent in everything from the commodities price boom to the Zambian presidential contest – where challenger Michael Sata made opposition to Chinese penetration of the economy an election rallying cry [see box] – and the rhetoric and actions of leaders in such countries as Angola and Chad, who have been doing battle with the World Bank and international oil companies (IOCs) over their policy direction and control of resources.
A new generation of East-West tensions is visible in OECD government and IOC concerns at Chinese companies buying into African oil acreage. Critics, including the US administration, say oil-backed loans to Angola and the PRC’s support for Zimbabwe are examples of Chinese intervention that allow governments to bypass the conditionality imposed by such institutions as the IMF and even human rights bodies.
Perhaps the real issue when assessing the new China-Africa boom, Chan argued, was that the PRC was too much like the West in its relations with Africa: dominated by pursuit of raw materials with little dividend for Africa in terms of the transfer of skills and technology.
Cambridge University’s Professor Christopher Clapham reinforces the point. “The Asian states – particularly China and India – are inserting themselves into Africa’s existing bilateral relationship with the West and converting it to a triangular one,” he says. The risk, according to Clapham, is that “the extraordinary efficiency and low cost of Chinese industrial production may undermine Africa’s efforts to diversify
its economies”
.
That was also the thrust of South African President Thabo Mbeki’s coded warning following Beijing’s grand Forum of China-Africa Co-operation last November. Mbeki spoke of the need for Africa to break with the “neo-colonial pattern of its foreign policy”– and that its economic relations with China should be different from its “inherited colonial ones with the West”.
Mbeki’s government has faced growing pressure from South African textile workers facing heavy competition from cheap Chinese manufactures. Several clothing factories in Cape Town and Johannesburg have closed in recent years. After bilateral negotiations, China last year agreed to voluntary restrictions on its textiles exports to South Africa. It is not making much difference. Last year, Chinese exports rose by just over 50% to $5.8 billion. Although the exports were dominated by electrical and general machinery for South African manufacturers, clothing exports went up to $1.24 billion; woollen goods (not subject to the quota) went up by 128% and woven apparel by 47%. In each of the main sectors – textiles, clothing, footwear and leather – China has more than 50% of the local market.
Beijing’s trade data show that South Africa’s bilateral surplus of $3.6 billion with China three years ago has been transformed into a deficit of $1.7 billion. Both Mbeki and African Development Bank president Donald Kaberuka see this as a challenge not a crisis. “We have to work on our trade policies and investment climate,” Kaberuka says. “In our discussions with the Chinese, we have to look for forms of finance that can help us achieve two goals – growth and sensible debt management.”
Rwanda example
Kaberuka’s native Rwanda has been among the most enthusiastic about working with China. It was the first African state to open a permanent trade office in China, based in Shenzhen and staffed by two Rwandans, one of whom has lived in China for 12 years and speaks fluent Mandarin. It helps Rwandan importers who visit Hong Kong and the factories of Guangdong in search of electronics and textiles.
The office has had less success in persuading Chinese entrepreneurs to invest in Rwanda, although a Chinese cell phone company is due to start operations shortly in Kigali in partnership with a local firm. Kigali has also contracted a Chinese company to build the headquarters of its Ministry of Foreign Affairs. The remainder of China’s aid and trade programme in Rwanda is limited so far – some small health and agricultural programmes and the management of a state-owned cement factory.
There’s little chance that China will match the hundreds of millions of dollars that Rwanda draws in from European Union and North American countries. Officials in Kigali are looking more for investment than trade and want to see what difference the proposals for continental co-operation at the China-Africa forum will make in countries such as Rwanda that lack the spectacular reserves of oil or mineral riches to be found elsewhere in Africa.