China strengthens economic ties with Africa
China’s interest in Africa has surged in recent years and is now the continent's second-largest trading partner, after the US. Asia:NZ contributor Vaughan Yarwood explains the motivations behind increasing China's economic presence and the mixed reactions it has prompted, both in Africa and the West.
Please note that the views expressed by the author of this feature do not necessarily reflect the views of Asia:NZ.
In November 2009, representatives from 50 African states gathered at the Egyptian resort of Sharm el-Sheikh to hear Chinese overtures about closer relations with the continent. For years Africa’s development has been handicapped by poor transport and patchy electricity supply and many countries in the region now see China as a potential economic saviour.
‘We need the ports, roads, electricity, the airports to help Africa’s poorest countries grow. You can’t do that without money for infrastructure’, said African Development Bank special adviser Youssouf Quedraogo.
At the meeting China’s prime minister, Wen Jiabao, pledged NZ$14 bn in low-cost loans over three years, along with 100 clean-energy power stations. The aid proposal is double that outlined by China’s president, Hu Jintao, at the previous summit in Beijing in 2006.
Wen dismissed critics who likened China’s activities in Africa to a ‘resource grab’, aimed at little more than securing the raw materials needed to stoke the Asian giant’s economic machine. Instead, he characterised China as a ‘true and trusted friend’ of the continent, saying that China’s financial institutions would be encouraged to lend to smaller African companies and that markets for African goods would be expanded. Wen also called for greater international commitment to the continent, saying ‘Africa’s development is an essential part of achieving global development’.
China’s interest in Africa is not new. It dates back at least to the independence movements of the 1960s. But whereas the initial motivation was largely diplomatic — an attempt to garner support for isolating Taiwan internationally and to counteract the influence in Africa of both Russia and the West — it now has an economic driver. Crucially, it needs oil. The International Energy Agency projects that China, until 1993 the largest oil exporter in Asia, will require net oil imports totalling 13 million barrels a day by 2030. It is also interested in Mozambique’s timber, Zambia’s copper deposits, iron ore in Gambia and the minerals of the Democratic Republic of Congo.
As a consequence, after a lapse in the 1980s, when it was overshadowed by Western aid programmes, China has redoubled its activities in Africa. In 2005 it became a significant investor in the energy fields of West Africa, which supply the United States with 15 percent of its oil imports. In particular, it invested in the region’s main producers, Nigeria and Angola, offering the latter a long-term aid package that included a NZ$2.75 bn soft loan in connection with a (successful) bid for exploration rights.
In the face of strict conditions related to governance, fiscal probity and transparency attached to aid by Western donors, some African countries find the unconditionality of Chinese investment attractive.
As China’s deputy foreign minister, Zhou Wenzhong, told a New York Times journalist in 2004: ‘We try to separate politics from business... You have tried to impose a market economy and multiparty democracy on these countries which are not ready for it. We are also against embargoes, which you have tried to use against us’.
In an example of what one analyst has called a ‘complete package’ of money, technical assistance and diplomatic support, China — the largest importer of Sudanese crude oil — prevented significant UN Security Council sanctions against Sudan for alleged genocide and other crimes in Darfur.
China also proved a staunch ally of the Mugabe regime in Zimbabwe, investing in infrastructure, agriculture and minerals and supplying military hardware to the politically isolated state.
More recently, a Chinese company, China International Fund, provoked criticism in the West, and even within Africa, by entering into a NZ$10 bn deal for oil and mineral rights in Guinea just weeks after Guinea’s military junta killed some 150 protesters who had been calling for civilian rule. Though the deal involves a private company, the Economist concluded that it cast doubts on the notion that the Chinese government had become more sensitive to criticism over its non-interference policy. In 2008 human rights activists had decried what they termed the ‘genocide Olympics’, in reference to China’s commercial activity in Sudan. ‘Seemingly chastened, China began to back UN intervention in Darfur. If the Guinean deal is done, it would suggest China respects human rights only when shamed into doing so’, said the Economist.
Nigeria’s minister of state for foreign affairs, Bagudu Hirse, expressed mounting anxiety in Africa when he said ‘We welcome [China’s] investment. But they must understand that we are very sensitive to good governance and democracy. We can’t start thinking of imposing sanctions on Guinea or Niger for bad governance and then they go behind us and strike some other deal’.
The Egyptian politician Mustafa al-Gindi was even more forthright. ‘Whatever they say, it is a fact that the Chinese come to Africa not just with engineers and scientists — they are coming with farmers. It is neocolonialism’, he told the BBC’s Christian Fraser.
China’s new engagement with Africa has, however, found unlikely support in Philippe Maystadt, the president of the European Investment Bank (EIB). Maystadt called China’s increasing investment ‘a good thing’, saying ‘the financial needs re so large in Africa that if there are more resources available outside the traditional sources, then all the better’. He acknowledged that the EIB had lost some projects in Africa to Chinese banks.
The real question is whether China can continue to influence development in Africa without taking a position on ethical issues. ‘They are trying to be friends with everyone’, investment adviser Angus Blair told the BBC. ‘But in the end, in one form or another, China is going to have to take a stand if it wants to maintain its long-term interests’.
- by Vaughan Yarwood
Fact box: China’s Africa Trade In Perspective
In 2008 trade between China and Africa reached almost NZ$140 bn, making China Africa’s second-largest trading partner behind the United States. In that year, China exported NZ$70 bn worth of goods to the continent and took imports valued at NZ$77 bn — mostly from Angola, Equatorial Guinea, Nigeria, the Democratic Republic of Congo and Sudan, which have significant oil and mineral resources.
In 2008, Angola became China’s second-biggest source of oil and its largest African trading partner, with bilateral trade reaching more than NZ$34 bn. China is at present negotiating to buy six billion barrels of Nigerian oil — a sixth of the country’s estimated reserves — worth NZ$620 bn.
Most African countries have a worsening trade deficit with China. In 2006, for example, Ethiopian exports to China totalled NZ$182 m, while imports from China reached NZ$594 m.
- by Vaughan Yarwood
Image sourced from Wikimedia Commons
