Copying and distributing are prohibited without permission of the publisher.

Watermark

Rifts deepen over Sino-African ties

By Sid Verma, Pauline Bax
26 May 2010

Calls are growing for a rebalancing of Sino-African ties amid mounting fears Africa’s failure to deepen its commercial leverage with the Asian giant will blight the continent’s economic destiny

Calls are growing for a rebalancing of Sino-African ties amid mounting fears Africa’s failure to deepen its commercial leverage with the Asian giant will blight the continent’s economic destiny.

Fifty years after independence swept a third of Africa, a rift has emerged among policy-makers over whether there is a level playing field in the relationship that could make or break the region’s rise.

“Why are we exposing our young industries to be battered by the Chinese?” said Lamido Sanusi, governor of the Central Bank of Nigeria, citing fears that open African markets has destroyed local manufacturing capacity. His intervention comes in the wake of a recent flurry of Chinese deals in Africa, including a $877 million investment this week in South Africa’s platinum industry.

The dealflow has triggered a volley of criticism that China’s voracious appetite for Africa’s resources will exacerbate the region’s dependence on commodities.

“Chinese come in great numbers to get raw materials to fuel their industries, and [in] return [they provide us with] cheap manufactured goods. But let us now have a level playing field,” Bamanga Tukur, president of the African Business Round Table, said in Abidjan yesterday.

He added: “the Chinese must understand that there has to be a meeting point. Let them establish partnerships so that they can produce goods in Africa. That would be a win-win situation.”

Michael Pettis, economics professor at Peking University, said: “In graduate school we were taught that developing countries can never get out of being developing countries, because of their dependence on commodities exports. The world has changed since then, but I don’t see that this has changed fundamentally.”

Caleb Fundanga, Bank of Zambia governor, shot back at China critics, arguing the Asian nation’s investment in the Copper Belt region will build non-commodity industries. “It is no use blaming China for any lack of industrialization in Africa, they are bringing money, resources and expertise. If Africa is failing to industrialize – it is Africa’s fault,” he told Emerging Markets in Abidjan.

“How African nations attach themselves to China’s internal dynamic could define their own economic trajectories and determine the success of a crucial rebalancing of Sino-African commercial ties,” said Simon Freemantle, Standard Bank economist.

He added that Africa must step up its agricultural trading links and win preferential trading agreements with China in order to gain a foothold in what could become the world’s largest market in the coming years.

AfDB president Donald Kaberuka said the rise of Asia provides African countries with an historic opportunity to deepen its economic ties to growing emerging markets. “Relations with Asia and emerging markets must become more important, whatever it is with China, India, Malaysia, or Brazil, we must really develop new relations of our continent with these nations.”

Sino-African trade volumes peaked at $108 billion in 2008 and dropped 15% last year. By contrast, US-Africa trade peaked at $145.8 billion in 2008 and slumped by 39% in 2009.

By Sid Verma, Pauline Bax
26 May 2010