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China Flexes Its Economic Muscle in Africa


Africa is becoming an increasingly important trade and investment partner for the People’s Republic of China. Nearly 700 Chinese companies now invest in Africa, with trade reaching over 30 billion dollars a year. Today China is Africa’s third largest trading partner, ahead of Britain and France. Much of that rise is due to an increase in inexpensive exports, including textiles, from China to Africa; a second factor is China’s growing dependence on African oil.

Africans welcome China’s offer of trade and aid, which can be seen in the country’s involvement in oil fields in Sudan, Angola, Kenya and Nigeria; vegetable farms in Zambia; a lucrative construction trade in Botswana; mines in central and southern Africa; and telecommunications, road and rail lines in Ethiopia. China also helped launched Nigeria’s first space satellite.

Sanusha Naidu is a research specialist the Human Sciences Research Council in Durban. She told English to Africa reporter William Eagle that much of Africa now looks to China: “The way in which China has emerged in the global economy means that everyone wants to be seen as doing business with [Beijing]…. Everyone wants a relationship with an economy that’s recording up to 10% growth rates. And the incredible consumerism that emerges within China – you want those products in there.“

That’s particularly true of South African companies, which are trying to gain a foothold in China’s enormous domestic market. They include mining companies SASOL and Kumba Resources and beer brewer SABMiller. China’s own growing urban population means a greater demand for food and potential market for southern African food and livestock exports.

In return for low-interest loans and aid, China asks that African countries accept its “one-China” policy and drop relations with Taiwan. (As a result, all but about six of Africa’s 53 countries have now done so). And, unlike many western countries, China promises that its aid and investment comes without pre-conditions requiring promises of good governance, a reduction in corruption, or democratization.

Naidu adds, “In the case of Nigeria, it will be very interesting considering the latest visit by [Chinese] president Hu Jintao. They signed a memorandum of cooperation…and the Chinese companies were given first preference in four licenses [regarding] offshore oil drilling. [The Chinese don’t bring up] the third term debate for President Obasanjo and changing the constitution. [By contrast] if you see what the US is arguing for and the [recent] visit there by US Deputy Secretary of State Robert Zoellick, [for the Nigerians, it meant] a need to begin thinking about political reform, increased transparency and political governance, accountability and allowing for the democratic process to emerge. For [other] countries with bad human rights records or who do not have (an economic or political) profile with the West, the Chinese are seen as an open line (of credit) they can trade with.“

But Naidu says some are concerned about the growing number of cheap goods on the African market. Textile manufacturers complain that Chinese products are driving them out of business. Chinese companies, and businesses that deal with them often hire Chinese laborers rather than local help.

Naidu says, “Last year, a contract awarded to a Chinese consortium, CITIC-ARCE, by Steelmaker Ispat Iskor allowed for several hundred Chinese workers to be brought into South Africa to construct Ispat Iskor's plant in northern KwaZulu Natal. There are also indications from Sasol, South Africa's energy company that it would import 2000 qualified artisans mainly from Asia due to domestic shortages in the local economy. Now this has raised questions about what is the responsibility of South African companies towards addressing South Africa’s unemployment crisis and skills deficiencies. If they see it is easier to get foreign workers to come in, then there will obviously be a backlash. This is happening not only in South Africa but in other parts of Africa as well."

Naidu believes the Sino-African relationship will strengthen in years to come, although she says Africans need to better study the Chinese market so that Beijing’s economic opening to Africa guarantees that everyone wins. The alternative would be a situation resembling colonial times, with Africa continuing to ship inexpensive raw materials to the industrialized world, which in turn would sell the finished products back to the continent. Historically, it’s a formula that leads to continuing under-development.

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