A Special Friend: How Africa’s Partnership with the Middle Kingdom Will Define its Future

Almost 100 years before Columbus discovered America, a Chinese explorer named Zheng He (also known as Cheng Ho) led seven expeditions from China all the way to the Cape of Good Hope in South Africa. His ships are said to dwarf anything sailed by later European explorers and continue to amaze today. In all, it is estimated that he had between 48 to 317 ships with a crew of over 28,000 men. During each of Zheng’s voyages, he brought back diplomats from other countries or encouraged ambassadors to go to the capital Nanjing on their own, according to historical records.

Nonetheless, the era of exploration for China was soon over as subsequent emperors prohibited trade and even the construction of ocean-going vessels. Following this, China’s superiority in the Indian Ocean begun to phase out starting the 16th century, when the Portuguese arrived and established their colonies along the rim of the Indian Ocean. It has taken more than five and a half centuries for China to venture in to Africa again. And this time around, its presence may shape the continent for the years to come.

The establishment of the People’s Republic of China in 1949 marked the initiation of contemporary China-Africa relation.

From the 1950s through the 1970s, African countries were preoccupied with their fight for national liberation while China was busy trying to safeguard its own sovereignty and territorial integrity.

In 1956, Egypt became the first African country to establish diplomatic relations with China. In 1960, 17 African countries gained independence, increasing the total number of independent African countries to 26. In the same year, trade between China and Africa crossed the USD 100 million mark for the first time, this number reached USD 1 billion by 1980, according to the China-Africa Trade and Economic Relationship Annual Report 2010. In 1978, China began to implement its policy of reform and opening up, giving top priority to economic development. Following this, the number of African countries that China has diplomatic relations with reached 40.

During this period, trade and economic cooperation between China and Africa focused mainly on bilateral trade and relatively small assistance to Africa. Between 1978 and 1999, the complementarities between the two economies started to be manifested, thus deepening trade and economic relations. Together with the rapid growth of bilateral trade, Chinese companies began to get contracts to engineering projects in Africa.

The trade volume between the two parties continued to grow fast in subsequent years, exceeding USD 10 billion in 2000. In 2008, the share of China-Africa trade in Africa’s total foreign trade rose to ten pct from one percent before the 1990s. Twenty African countries saw their trade with China surpassed USD 1 billion.

According to the Chinese Ministry of Commerce, between 1979 and 1990, China invested USD 51.19 million in 102 projects in Africa. By the end of 2008, Chinese investors had set up around 1,600 companies in Africa, while the cumulative Chinese direct investment net stock reached USD 7.8 billion, which was 4.2 pct of China’s total outward direct investment stock.

Not so complicated

The one thing that stands out in the Sino-Africa relationship is the relative absence of historical and political complications. This is as opposed to the historical baggage that shadows the relation the continent has with the West, its traditional patron.

In addition to the compatibility of the two economies the ‘political understanding’ that Chinese leaders and their African counter parts seem to have reached has helped further strengthen the unprecedented economic and business ties they are forging. The Chinese partnership model that is based on mutual benefit and respect seems to resonate in most African capitals. “China consistently respects and supports African countries; it never imposes its own will on African countries, nor interferes in the domestic affairs of African countries.” Yan Xiao Gang, China’s economic attaché in Ethiopia, told a British media recently.

This has helped China to gain access to African resources and do business with almost every country in the continent (as long as they recognize China’s long standing claim over Taiwan), even in places that alleged human rights violations have been carried out. Of course this has led many in the West to doubt China’s seriousness in carrying out its responsibility as a world power. In almost every corner of Africa, there is something that interests China. The continent is rich in natural resources that promise to keep China’s booming, fuel-hungry economy on the road. There is copper to mine in Zambia, iron ore to extract in Gabon and oil to refine in Angola.

As a well known writer, named Asad Ismi points out in a Canadian Center for Policy Alternative (CCPA) Monitor article, one-third of Chinese oil imports comes from African countries, due to Beijing’s focus on long-term agreements that guarantee its access to African resources in exchange for aid, credits, and soft loans, along with its support in the construction of roads, schools, housing, hospitals, and railways. In other countries less blessed by natural resources, Chinese companies spy for trading and investment opportunities.

Reciprocally, this partnership of minimum conditionality has availed alternative funds and investments for Africa, to some extent liberating some development minded African leaders to follow new development paths outside the policy menu that is prescribed by the West and multilateral institutions. .

“It may be too early to call China’s economic miracle a success story, or determine how many African countries are willing, interested or indeed capable of following a similar course, but for the first time since the end of the Cold War people from Algeria to Angola have a genuine alternative to the Western donor bloc,” according to Solange Guo Chatelard, an associate at the Max Planck Institute for Social Anthropology.

China is Africa’s top business partner, with trade between the two exceeding USD 200 billion in 2012, soaring from USD 10 billion in 2000, according to a Chinese state media. An estimated one million plus Chinese are now residents in Africa, up from a few thousand a decade ago, and more keep arriving.

Keeping with economic momentum created in the continent, at the fifth ministerial meeting of the Forum on China Africa Cooperation held in July 2012, the then Chinese President Hu Jintaio announced a new pledge of USD 20 billion line of credit for Africa. This is an easy task for the Chinese treasury with its multi trillion dollar reserve. But China’s growing involvement and influence is not unique only to Africa but the reflection of its growing international clout, which is being felt from the mineral fields of South America to the manufacturing hubs of Western Europe and the US.

Can’t let you go

When one sees the waning relationship, economical in particular, between Africa and the West, it is hard not to be reminded about what happened to the Brits in the Middle East after WWII. Faced with a much superior and emerging power: the US, the Brits were forced to let go part of their Empire because it was economically unwise for the fading kingdom to run it anymore.

With a similar analogy the West is being forced to cede from Africa because their role is being overtaken by emerging countries like the BRICs and China in particular. Of course it may be a little early to see the full force of this process, but the signs are becoming more visible.

The West still is the dominant force in Africa, more so in politics. In the whole of Africa the main source countries for FDI flows are still the developed (OECD) countries which command over 72 pct of the flows between 2000 and 2008 and 93 pct of the stock in 2010. Among them, France, UK, Germany and the US are very important. But the Chinese are caching up fast, according to the Chinese Ministry of Commerce, China’s Foreign Direct Investment (FDI) in Africa approached USD 20 billion by 2012, ranking the country among the top four source of investment on FDI stock and flows in Africa.

According to Fitch Ratings (2012), a UK-based rating company, EXIM Bank of China extended about USD 67.2 billion to sub-Saharan Africa between 2001 and 2010. The World Bank by comparison provided USD 54.7 billion to the region during the same period, wrote Prof. Alemayehu Geda, an economist at Addis Ababa University. China has posed itself as a serious alternative to international financial institutions. “If you want concrete things you go to China. If you want to engage in endless discussion and discourse you go to the traditional donors,” a senior coordinator at United Nations Economic Commission for Africa tells an online medium.

The West claims, China’s approach threatens the promotion of democracy, transparency, liberalism and free trade; engaging instead with authoritarianism, economic development at the expense of civil progress. In its resolution of 14 March 2013 on EU-China relations, the European Parliament acknowledges the Chinese contribution to economic development in Africa, while expressing its concerns that the increasing Chinese presence in Africa has led to grave social tensions. It urges China to follow the principles of “human rights, the promotion of sustainable development and human security”.

But Western countries are not implementing what they are preaching as well. According to the OECD’s Statistics Bureau, in 2010, the US has refused to release official data on its firms’ investments in twelve resource rich African countries including Libya, Guinea and Zimbabwe.

The arrival of a new actor in Africa has led Westerners to review their own strategies as they analyze Chinese actions in Africa, which are diametrically opposite to theirs and working relatively better. Maybe now they will start realizing that Africa is not a problem for them to solve.

The Chinese way of doing business

While some argue that China is a 21st Century partner for development and a unique catalyst for growth, critics fear that China is a new colonial power, plundering Africa’s natural resources and exacerbating existing patterns of corruption and inequality. Botswana’s President Ian Khama agrees with this, recently, he told a South African News Paper “China takes our primary goods and sells us manufactured ones. This was also the essence of colonialism”, while elaborating how Chinese companies had let down his country, particularly over a power generation project.

Chinese involvement in big investment ventures are not going without complaint in other corners of the continent as well. The quality of the construction undertaking itself in combination with lack of proper supervision by professionals and independent firms, lack of technological transfer, the remuneration and the work relationship to the local labour and local experts and limited opportunities for local labour are some of major draw backs sited by analysts with regard to Chinese projects in Africa. But according to Xinhua 85 pct of the staff employed by more than 2,000 Chinese companies operating in Africa are locals.

Undoubtedly, China’s new strategic approach to business and economic agreement in Africa, suggests a new trend of responsible agreements in Sino-African relations (like manifested in the new way of considerate dealings with DRC), potentially providing the continent with the means to continue its economic growth and global market integration.

Not everyone is happy though. According to the Nigerian publication Business day, Nigerian workers at the Chinese construction project, CCECC Lagos-Badagry highway construction site, protested in February 2013, angry angry about their employment conditions. “The management does not have any medical facility for the workers. Our salaries are poor and there is no increment. The suffering is too much; I cannot pay the school fees for my children.” a protesting worker named Johnson told the paper.

But if there is a proper monitoring mechanism in place the situation can be corrected, and that seems to be the growing trend. In a recent article in The Economist, the British weekly, a writer argues how Africans are far from being steamrollered. How their governments have shown a surprising assertiveness. Citing the first person to be expelled from Africa’s youngest country, South Sudan,: is Chinese, Liu Yingcai, the local head of Petrodar, a Chinese-Malaysian oil company and the government’s biggest customer, in connection with an alleged USD 815m oil “theft”. And how Congo kicked out two Chinese rogue commodities traders in the Kivu region, Algerian courts ban on two Chinese firms from participating in a public tender, alleging corruption. And Gabonese officials ditching an unfavourable resource deal. While, Kenyan and South African conservationists are asking China to stop the trade in ivory and rhino horns.

Till death parts us

The Beijing Action Plan (2013-2015), was approved at the Fifth Ministerial Conference of the Forum on China-Africa Cooperation (FOCAC) to chart the future course of China-Africa cooperation, with regard to political and economic cooperation, development cooperation and cultural exchange. Many African governments were happy with this because they know they are partnering up with a future world superpower.

Africa’s economic strides since the last decade is not coincidental, rather it is the outcome of the combination of many positive economic variables, one of which is the strong economic and business relationship that the continent forged with compatible economies like China. In addition to direct investments by the companies and the growing business to business relationship, the relatively cheap and easy access to loans from the public banks of China are making a difference, fuelling the construction boom on the continent, especially in infrastructure development.

As the Africa’s economy heads for a take the need for massive investment is becoming evident by the day. With the biggest foreign reserve in the world, USD 3.312 trillion at the end of 2012, according to the World Bank. China has a real potential to solve the capital shortage in the continent.

With very complementary economies, China and Africa have experienced rapid growth in economic cooperation, their bilateral trade reaching USD 200 billion in 2012, and is set to continue in the future. Standard Chartered expects this number to hit USD 325 billion by 2015. This situation will provide African industrialists access to a reliable market with massive and growing middle class.

According to the World Bank economist Harry G. Broadman, Chinese firms can give African countries a “chance to increase the volume, diversity, and worth of their exports”, which would result in an increase of trade, both regionally and globally. Moreover, joint ventures between Chinese and African companies will make it easier for African companies to expand global integration.

Following rapidly growing wage in the country, Chinese companies are relocating their factories to other countries with relatively low wages, in order to keep costs low and stay competitive in the international market. Even though there is no substantial move by Chinese companies to relocate their factory to Africa, some signs are being seen, and this is good news for African economies. Huajian International Shoe manufacturer, one of the biggest shoe makers in the world, has started producing shoes in Ethiopia and is finalizing preparations to build an industrial city in the out skirts of Addis. Wei Yong Quan, general manager of the shoe maker told EBR “since labour cost in China and South East Asia is increasing by the day, Ethiopia seemed a better place to invest in and we found our calculation to be correct because there is an abundant and easily trainable labour force.”

“I feel that Africa’s overall momentum of peace and development is good, but it also faces various difficulties and challenges”, Chinese president Xi Jinping said during his recent visit to Africa. And these challenges are mirrored in the continent’s relationship with the middle Kingdom.

Africa needs a transparent and effective government to get the best out of this partnership. Fair competition will also prove to be essential to Sino-African relations. And China could play a dominant role in the industrialization of the continent, but this calls for a strong regulatory frame work from African governments.

Environmental protection will be a critical factor. Africa has long complained about the growing impacts of climate change in its economy, as African countries produce the lowest level of carbon emissions amounting to only 3.8% of the world’s total. Moreover, a reduction in tariffs related to African goods should be made in order to allow for their market entry at competitive prices. Additionally, African countries should impose limits on Chinese involvement, such as higher tariffs and regulations to avoid lopsided agreements resulting in unequal relationship and public resentment, according to experts.

If Zheng He and his sailors of the 15th century had wanted to conquer the lands they encountered like Africa, it is believed they probably could have done so. Fortunately for the indigenes, they simply wanted to be recognized for their greatness and they wanted tribute from these lands. They traded for exotic spices, woods, jewels, and rarities like giraffes. In exchange, locals had the opportunity to trade for porcelain and silk. Even though trade is still the main feature of the contemporary relation between the parties, China’s multifaceted engagement in Africa will shape the continent for good.

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