Felix M Edoho. Africa Today. Volume 58, Issue 1. Fall 2011.
This article examines China-Africa relations by contextualizing China’s economic activities in Africa and interrogating the ramifications of the evolving relations for economic development in the region. China-Africa relations need to be understood as the logical outcomes of the marginalization of Africa in the age of globalization. China is filling the vacuum in Africa created by Western disengagement from the region since the end of the cold war. That Africa is embracing China is informed by the former’s appraisal of the consequences of its colonial experience and the realities of its postcolonial dependent relationships with the West. China-Africa relations embody opportunities and threats. Africa needs to utilize the new architecture of cooperation to maximize benefits and minimize threats. Africa’s economic interest and quest for development could be in conflict with those of China, yet Africa must determine how to leverage the deepening relationship with China to its own advantage.
Overview
Globalization is the integration of national economies, expansion of linkages, and deepening of partnerships and interdependence through trade, finance, investment, and technology transfer on a global scale (Edoho 1997; Lawal 2006; Omotola 2010); however, it is fraught with contradictions because it simultaneously tends to “integrate the world politically, fragment it economically, polarize it technologically, and differentiate it regionally” (Edoho 1997:2). It creates new markets and expands economic opportunities, but it engenders economic dislocation and accentuates global inequalities and mass discontent. These contradictions expose the chasm between industrialized countries, the main beneficiaries of globalization, in contrast to developing countries, embroiled in economic dislocation and social instability. Thus, globalization produces winners and losers (de la Dehesa 2006; Kapstein 2000; Williamson 2002).
Globalization has contributed to the marginalization of Africa in the global economy (Lawal 2006; Rocha 2007). Africa’s marginalization can be explained in terms of the decline in the amount of Western investment and volume of trade, and the levels of economic aid and technical assistance to the region. Capital flight and brain drain have exacerbated Africa’s marginalization (Okafor 2008). The level of Western investment in Africa underscores the gravity of marginalization (UNCTAD 1992). Both the adoption and launching of the New Partnership for Africa’s Development and transformation of the former Organization of African Unity into a more vibrant and dynamic African Union were predicated on the desperate “need to end the continued marginalization of Africa and reverse the development chasm between Africa and the rest of the world” (Rocha 2007:17).
China has gradually emerged from the shadow of an ideologically inspired closed economy to become a powerful global economic player in the age of globalization. Its economy has grown at an average of 9 percent per year for more than two decades. At the end of 2000, its foreign reserves stood at US$165.6 billion; in 2008, they were more than US$1.5 trillion (Gaye 2008); and by July 2011, they surged to US$3.1975 trillion (The Economic Times 2011). While globalization has propelled China into global economic prominence, it has left Africa behind. In view of its burgeoning economic fortune and its Investment Corporation, endowed with US$200 billion (Gaye 2008), China has emerged as a dominant player in Africa (Alden 2009; Brautigam 2010; Broadman 2007; Keenan 2008).
The pace and breadth of China’s economic activities in Africa are phenomenal. China has cancelled US$10 billion of debts that African countries owed it, and in 2003 offered further debt relief to thirty-one African states (Manji and Marks 2007:36; Obiorah 2007:36). During the first three quarters of 2007 alone, the volume of trade between China and Africa was more than US$450 billion-a 42 percent increase in just one year (Wallis 2008:1). Yet China buys oil from the pariah regime in Sudan, supports the tyranny of Robert Mugabe in Zimbabwe, builds industrial infrastructure in Gabon, and develops mines in Zambia (Askouri 2007; Keenan 2008).
China’s economic activities in Africa have attracted considerable attention in the West (Broadman 2007; McLaughlin 2005). Certain questions have been asked: is Chinese investment good for Africa? (Council on Foreign Relations 2007); is China’s incursion in Africa a curse or a cure? (Keenan 2008) and “Is China Influence Growing At the Expense of America?” (Nyepon 2007). These questions are complimented by headlines, such as: “a rising China counters US clout in Africa” (McLaughlin 2005); “China’s influence in Africa: implications for the United States” (Brookes and Shin 2006); and “China outwits the EU in Africa” (Berger 2007). A major problem in most headlines about China’s significant economic activities in Africa is the lack of context, namely, why does Africa embrace China?
This article addresses this question by contextualizing China’s economic activities in Africa and interrogating the ramifications of the evolving China-Africa relations for economic development in the region. First, it argues that China-Africa relations are the logical outcomes of the marginalization of Africa in the age of globalization. Second, it contends that China is filling the vacuum in Africa created by the Western disengagement from the region since the end of the cold war. That Africa is embracing China is informed by the former’s objective appraisal of the consequences of its colonial experience and the realities of its postcolonial dependent relationships with the West. Such an appraisal leads to a recognition that the “traditional relations and partnerships with the West have not helped Africa overcome the structural obstacles to eradicating poverty and reversing [Africa’s] marginalization” (Rocha 2007:17); yet, while the reasons for China’s interest in Africa are well known, what is unclear is how Africa can leverage the relationships to its own advantage. To address these complex issues, this article is organized into eight sections. Section two presents a brief review of the literature; section three provides a contextual analysis of why Africa embraces China; section four assesses the resource base in Africa to explain China’s growing interest in the region; section five examines China-Africa trade and investment in the region; section six discusses China’s involvement in building industrial infrastructure in Africa; section seven undertakes a critical assessment of China’s economic activities in Africa; and section eight draws conclusions from the analysis.
Review of the Literature
Much of the literature on China-Africa relations employs the conventional foreign-policy and international-relations approach (Hutchison 1975; Taylor 2006). Departing somewhat from that approach, Chris Alden (2009) delineated and summarized three contrasting perspectives of China-Africa relations. The first perspective contends that China is a development partner in Africa, positing the mutuality of benefits; the second holds that China is an economic competitor that is scrambling for resources in Africa; the third asserts that China is repositioning itself to be a new colonizing power in Africa. Separately, each of these perspectives captures only certain dimensions of China-Africa relations; but taken as a whole, they provide a composite picture of the complex and dynamic relations between the partners. We outline each of these perspectives in turn. Finally, we discuss the view that China is filling a vacuum necessitated by the Western disengagement from Africa.
Development Partner
The perspective of China as a progressive development partner in Africa posits that China is driven by its economic interest to seek strategic development partnership with Africa: as a development partner, China will radiate its economic development impulse and model to Africa (Alden 2009). Perceived as mutually beneficial relations, China will share its technical expertise, human resources, managerial capabilities, industrial production techniques, and modernization experience with Africa (Guangxiang 2004; Guixuan 2005; King 2010). This perspective holds up China as a success of development model that third-world countries, particularly African countries, should emulate.
For those who believe that even if China has not yet arrived, it is definitely on its way to economic El Dorado, China-Africa relations occur at a unique time. China-Africa relations are considered a model of “South- South” cooperation and development (Mohan and Tan-Mullins 2009), which is likelier to generate win-win outcomes, in contrast to the zero-sum outcomes of globalization and marginalization that Africa has suffered during much of its five decades of postcolonial relationships with the West (Rocha 2007). This view is strongly promoted by Chinese officials (Guangxiang 2004; Guixuan 2005; Hu 2006), African officials, and some scholars (Brautigam 2007, 2010; Karumbidza 2007).
The official Chinese position is that China-Africa relations are mutually beneficial because they are constructed on the basis of equality of partnerships, mutuality of interest, and reciprocal respect (Guangxiang 2004; Guixuan 2005; Hu 2006). Akin to this is the presupposition that both partners face the same economic challenges, have the same internal needs, and share identical development goals, based on shared history and reinforced by common normative values: “Sincerity. Equality and mutual benefit; solidarity and common development: these are the principles guiding China- Africa exchange and co-operation” (Embassy of China in South Africa 2006). Chinese President Hu Jintao epitomized this thinking when he emphasized peace, development, and cooperation as the bedrocks of collaboration: in his address to the Nigerian National Assembly on 27 April 2006, he claimed that “Peace, development and cooperation are the calling of the times.” He asserted that “Working together to share opportunities, meet challenges and achieve common development is the desire of all peoples” (Hu 2006).
The perspective that China’s engagement in Africa will benefit the region is shared by some officials in the Western foreign-policy establishment. For instance, in a speech to the Nigerian National Assembly in February 2006, Jack Straw, the British Foreign Minister, discussed the British policy toward Africa: he considered “China’s engagement in Africa good news,” noting that such an engagement should support good governance, transparent business practices, economic growth and poverty reduction, and respect for human rights and the rules of law (Alden 2009). Robert Zoellick, President of the World Bank, has stated on several occasions that China’s investment in Africa’s infrastructure is good for the region: he has indicated that the World Bank is willing to take China as a partner in a joint effort to alleviate poverty in Africa (Beijing Review 2008).
According to Karumbidza (2007), Africa is well endowed with natural resources and has market potential, but it lacks the know-how and technological capabilities to develop its resources and market. In view of the fact that China has evolved endogenous technologies appropriate to its economic needs and circumstances, it is in a better position to bring to Africa effective practices, know-how, and cumulative years experience it has gained in the process of modernization. Thus, China-Africa relations should be grounded on developing and nurturing “knowledge-based cooperation such as capacity building, human resource training and science and technology exchanges; to promote value-added processing of primary products; to upgrade traditional industries; and to enhance social development for local communities” (Karumbidza 2007:91).
This view of China as a progressive development partner is echoed by Brautigam (2007, 2010) who believes that Chinese investment will create jobs, expand economic opportunities, and help African entrepreneurs access production technologies that they can easily adapt to their economic environment. Brautigam claims that Chinese investment in Africa will help leverage idle local capital. More importantly, “Chinese firms as catalysts and models could offer incentives for some of that wealth [corrupt African officials stashed in foreign banks] to return to a capital-starved region, much as Japan did when its firms began to relocate to Southeast Asia’s ‘little tigers’ decades ago, and as Korea did in Bangladesh” (Brautigam 2007). Also positing China as a progressive development partner, Felix Mutati, Zambia’s Minister of Finance, has stated that “There is no doubt China has been good to Zambia… They are bringing investment, world-class technology, jobs, value addition. What more can you ask for?” (Polgreen and French 2007).
Voracious Competitor
The second perspective characterizes China as a voracious economic competitor in Africa (Alden 2009). It argues that given its embracing of the Western-type capitalism, China has no genuine desire to help Africa to bring about authentic development, nor will China support the cause for good governance, encourage the rules of law, and promote respect for human rights (Keenan 2008). Evidence shows that joint ventures between African government and foreign firms often militate against environmental sustainability (Edoho 2007) and undermine sustainable livelihood (Edoho 2008). Because of globalization, China’s quest to compete aggressively against Western interests in Africa (Berger 2007; Brookes and Shin 2006; McLaughlin 2005; Nyepon 2007) will override the need for environmental stewardship and accountability.
Assessing the long historical narrative of the Western role in Africa, proponents of the view that China is a voracious competitor assert that its overreaching interest in Africa centers critically on resource exploitation; in other words, the same factors that motivated the Western interest in Africa are motivating China’s interest in the region. These factors include vast cheap raw materials and abundant natural resource reserves. Thus, Rocha argues that “Historically, the availability of cheap raw materials and the prospects for huge returns on investments, particularly from the exploitation of natural resources, has always provided an incentive for the expansion and deepening of political and economic ties with Africa” (2007:18).
This perspective contends that in view of the fact that China has enjoyed sustained robust economic growth, which enabled it to enhance its technological capabilities, deepen its production capacity, and accumulate enormous wealth (Keenan 2008), China-Africa relations are essentially asymmetrical. Unequal relationship has the potential to erode embryonic indigenous technical skills, as well as threaten economic development in the region. Given the massive capital at its disposal, coupled with its “nostrings” assistance and aid, China could easily undermine good governance, political reforms, and suffocate the ongoing war against official corruption in Africa: “The emergence of China has raised fears that its non-adherence to the West’s approach of imposing aid conditionalities has the potential to nullify all the efforts made in fighting corruption and improving governance” (Rocha 2007:29).
Finally, China’s engagement in Africa is portrayed as a strategy that, in the long run, will dislodge the West as the traditional destination for African oil and gas and other raw materials. From this perspective, China intends to outcompete and overtake the West and dominate the African market for its low-cost manufactured goods; China is compelled by its internal economic imperatives and driven by globalization to search for energy and market. Thus, it is not in Africa to help the region: it is in the region to challenge Western interests and dominate the region. In other words, Africa has the resources that China needs to sustain the momentum of its increasing modernization and rapid industrialization: “China sees the fate of Africa as crucial to its growth” (Mohan and Power 2009:4).
New Colonizer
The third perspective presents China-Africa relations as paving the way for China to replace the West and emerge as a new colonizer of the region (Alden 2009). This view is a radical extension of the previous theorization about China as a voracious competitor; but in the present context, the proponents argue that China’s hidden interest is recolonizing Africa. More than eight hundred Chinese firms are doing businesses in forty-nine African countries, with 480 of them involved in joint ventures with African firms (Alden 2009). Accompanying these deepening China-Africa relations have been the influx of Chinese to Africa (Broadman 2007). Estimates vary (Mohan and Tan-Mullins 2009), but probably more than three-quarters of a million Chinese migrants are living in Africa (French and Polgreen 2007), “arguably among the new shapers of development in Africa” (Mohan and Tan-Mullins 2009). Thus, the leaders of Nigeria and South Africa have been warned against a creeping Chinese neoimperialism (McGreal 2007). Michael Sata, a Zambian opposition politician, who ran his presidential campaign on the anti-China platform, argued that China’s “interest is exploiting us, just like everyone who came before. They have simply come to take the place of the West as the new colonizer of Africa” (Polgreen and French 2007).
Hillary Clinton, the U.S. Secretary of State, in what is believed to be a veiled statement against Chinese growing interest in Africa, warned against “creeping colonialism” from foreign investors and governments: she has argued that “it is easy to come in, take out natural resources … and leave… We don’t want to see new colonialism in Africa (HuffPost World 2011). The fear that China-Africa relations might replay the classic Western approach that began with positive trade, then slave trade, and ultimately colonization of the region runs deep: “China is not in Africa for a philanthropic reason,” but “another imperial power pursuing its national interest, and it can be an unreliable partner despite its claim to build a true equal partnership with Africa” (Gaye 2007).
Mohan and Power (2009) ask whether China-Africa relations should be “characterized as a resource scramble reminiscent of the ‘age of empire’ “? Their answers are both yes and no. There is an ingrained fear that China might see Africa as merely a source of raw materials for its industries, and a destination for Chinese manufactured goods. Moeletsi Mbeki, deputy chairman of the South African Institute of International Affairs, articulated the issue forcefully at a 2005 Beijing conference organized by the Chinese Parliament. He stated that the pattern of trade between China and Africa is “dangerous” and is unsustainable for several reasons: “First Africa needs to preserve its natural resources to use in the future for its own industrialisation. Secondly, China’s export strategy is contributing to the deindustrialisation of some middle-income countries… It is in the interest of both Africa and China to find solutions to these strategies” (quoted in Marks 2007:5).
Filling a Vacuum
The final perspective of China-Africa relations is that China is filling a vacuum created by the Western disengagement from the region. In a study of China-Africa relations, Hutchison (1975) theorized that China’s foreign policy toward the region was driven by a multiplicity of factors intimately linked to one another; he analyzed the significance of the Chinese revolutionary and development model and the desire to export this to Africa. China’s success in exporting its development model to Africa, he argued, was intended to demonstrate the superiority of Maoism, particularly the Chinese version of Marxism-Leninism, to Western capitalism. Hutchison further postulated that China moved in to fill the vacuum created by the retreat of the colonial power in Africa.
Hutchison was publishing more than a decade after most African countries had attained political independence, leading to the argument that China saw decolonization as the dissipation of capitalist ideology that created an ideological vacuum that it was bent on filling. Yet, although the colonial powers had granted political independence to African leaders, African economies were still under the grip of the departing colonial overlords. Political decolonization did not mean that the West had actually ceded economic control. This is why it has been argued that, while the Western colonizers had granted African countries “flag independence,” they had institutionalized “neocolonialism” (Onimode 1983). Literature of the 1970s and 1980s is inundated by theorizing on the need for African countries to design “autonomous development” strategies as a means to achieve authentic “economic independence.” Advocates of this view believe that achieving economic independence would be tantamount to the “second liberation” of Africa from neoimperialism.
This paper’s epistemological claim is that the economic vacuum created by the Western disengagement from Africa is a post-cold war phenomenon, compounded by globalization. This contrasts sharply with ideological vacuum of the 1960s articulated by Hutchison (1975). The economic vacuum resulted not from decolonization, but from the collapse of the Soviet Union, the end of the cold war, and the ascendancy of globalization as the defining attribute of the twenty-first century. As the U.S. and European Union diverted attention from Africa and redirected foreign aid and economic assistance toward the reconstruction of Eastern Europe, they have disengaged from Africa and left an economic vacuum now being filled by China.
This position strikes resonance with Chike Okafor’s argument that Europe used to be the lifeline for Africa; however, the engagement of Europeans in Africa has been detrimental to the region, so that “Today, the Africans have suffered from capital flight and brain drain which benefits the Western world, thus leaving a vacuum for those like the Chinese to fill” (Okafor 2008). Economic disengagement of the West from Africa is manifested by its passivity and imperviousness to the crippling poverty and protracted socioeconomic dislocation and crisis in the region. The lukewarm attention of the West to prolonged desperation in Africa has left a vacuum that China is filling through favorable terms-of bilateral trade, infusion of investment, construction of infrastructure, and so forth.
Contextualization of China-Africa Relations
This section provides a context for a proper assessment and understanding of the deepening China-Africa relations. It argues that by disengaging from Africa, the West has compromised its dominant status in African affairs. The Western retreat from Africa stemmed from the collapse of the former Soviet Union and the end of the cold war. During the cold war, the United States and the Soviet Union used economic assistance and military aid to extract and retain “loyalty of African states. With the collapse of the Soviet Union, the money dried up. No longer did the U.S. need to use foreign aid and investment to reward strategic allies” (Keenan 2008:87). Thus, the end of the cold war has contributed to the West’s downgrading of the status of Africa among its strategic allies.
During much of the past five decades, Africa has been plagued by proxy wars-in Angola, Ethiopia, Chad, Mozambique, Nigeria, Somalia, Sudan, Zaire, and elsewhere (Edoho 1997). Western colonialism had sown the seeds of contradictions in Africa that dovetailed in internal conflicts, ethnic rivalries, and genocidal civil wars. The desperation in the region was such that “To think of Africa [was] to think of poverty” (O’Connor 1991:1). In the 1980s, an anonymous Western aid official, quoted in The Financial Times of London, stated that recolonization of Africa would involve “sending smart white boys in to tell them how to run their countries” (quoted in Timberlake 1985:203). The newspaper indicated that African leaders were being forced to swallow their pride and accept postcolonialists’ prescriptions, “apparently convinced that the white man’s medicine can be adapted or Africanized to serve their countries’ needs” (quoted in Timberlake 1985:203). Similarly, in the 1990s, an American diplomat quipped that “in the next five years Africa will be begging to be recolonized” (Michaels 1993:104).
Such negative perceptions and images of Africa dominated the thinking of the Western foreign-aid establishment. Africa was considered a “never to be developed world” (Pirages 1990:2). The West disparaged Africa, believing that virtually all global problems would disappear if the region were completely wiped off the earth. Writing under a pseudonym in Le Monde, a top French diplomat had claimed that “Economically speaking, if the entire black Africa, with the exception of South Africa, were to disappear in a flood, the global cataclysm will be approximately nonexistent” (quoted in Chege 1992:148). As the cold war ended, U.S. assistance to Africa dropped from $1.7 billion in 1985 to $1.2 billion in 1992. In 1994 alone, the U.S. Agency for International Development closed eight of its thirty-five missions in Africa. Mirroring the directions of foreign policies in their home countries, Western firms embarked upon massive divestment from Africa. The resulting capital flight and economic decline plunged the region into economic crisis (Edoho 1997).
In 1990, the inflow of foreign direct investment plummeted by 50 percent to $2.2 billion from the level of 1989 (UNCTAD 1992). The inflow of Western investment into the entire region in 1990 was slightly higher than what the West pumped into a small country like Portugal alone in that year. Such a worrisome phenomenon led the UNCTAD (1992) to comment that the decline of the Western foreign direct investment in Africa had exacerbated the marginalization of the region. While it watched Africa disappearing from the global development map, the West “can gloat and patronize as it welcomes its prodigal sisters and brothers back to the common, white European fold” (Baird 1991:188). Johnson (1991:109) noted that, “It is ironic that, after decades of first plundering and then neglecting the African continent, Western European countries now appear to suggest that the reconstruction of the Eastern Europe is a much more pressing need.”
The focus on Eastern Europe and relegation of Africa to the background were the results of the end of the cold war. They coincided with the heightening tempo of globalization, whereby the status of individual countries in the global economy was no longer defined by their military capability and superiority, but by their competitive capacity in the global marketplace (Amin 1993; Bergsten 1990). Globalization has spurred the strategic realignment of nation-states along economic interests, producing a new global economic development cartography, which marginalizes and virtually excludes Africa (Edoho 1997; Mohan and Power 2009). The West did not show major commitment to help integrate Africa into the global economy through increased trade and investment and opening of its market for African goods. Thus, the region cannot benefit from globalization (Lawal 2006). Disappointing economic performances led African countries to depend exclusively on loans from the International Monetary Fund, which imposed draconian structural-adjustment programs and devastating “conditionalities” for loans: “the World Bank puts in 20 percent of all multilateral funding, writes 80 percent of all the new rules called conditionalities and controls nearly all data coming out of Africa” (Michaels 1993:98).
By contrast, China attaches no strings or conditionalities to its investment and infrastructural development projects in Africa: its technical assistance, debt writeoffs, foreign aid, or preferential access of goods from Africa to its market. There is no trivializing the obvious, that China is pursuing its own economic interest in Africa (Alden 2009; Broadman 2007; Karumbidza 2007; Keenan 2008; Rocha 2007). For example, it has been accused of opportunistic lending that threatens well-meaning donors (Naim 2007). This is why Drew Thompson posits that China’s “presence in Africa is illustrative of Beijing’s efforts to create a paradigm of globalization that favours China” (quoted in Servant 2005). However, it is likely that China’s interest in Africa will not be any different from or worse than what Western interests have been and continue to be.
Hitherto, the West considered Africa a burden; China, however, considers the region an untapped territory with enormous potential and economic opportunities. For Africans “who are physically and intellectually exhausted by two decades of economic ‘reform’ … driven by Western governments, donors and the IFIs, China represents hope that another world is possible” (Obiorah 2007:38). Beyond this, China adds to the growing “new multipolarity in international development and growing sources of investment and aid ‘outside’ of the western axis that has dominated for much of the last century” (Mohan and Power 2009:4). Our collective efforts should be focused on asking how Africa can derive maximum benefits from China’s engagement in the region. Ultimately, Africa is the one to define the terms of its relationship with, and what it needs from, China. China cannot do this for Africa. The region must realize that its own economic interest and quest for development could be in conflict with China’s own economic interest. Africa needs to determine how to leverage its relationship with China in a manner that will be mutually advantageous. This means that China’s interest “should not be allowed to follow the usual pattern of big powers that have traditionally treated Africa mainly as a source of raw materials, cheap labor and market for finished goods” (Nyepon 2007).
African Resource Base and China-Africa Relations in Perspective
At the heart of China-Africa relations is the region’s resource base. Thus, the view that China is a voracious competitor for African resources holds. Some African countries boast significant shares of the mineral resources relative to the world reserves (table 1). Guinea alone accounts for 13 percent of global bauxite reserves; Zaire (45 percent) and Zambia (10 percent) jointly account for 55 percent of global cobalt, as well as 6 and 8 percent, respectively, of copper; Algeria holds 16 percent of the world’s mercury, while Gabon holds eight percent of global manganese reserves.
African resources have contributed to the industrialization and economic development of the West, but the region itself remains underdeveloped and impoverished. The paradox of Africa’s wealth and poverty (Onimode 1983) has given rise to the resource-curse theory (Nnadozie 1995; Pegg 2005). Because of resource gaps and lack of viable options, foreign partners have often exploited Africa, yet “the continent has had to bear with these exploitative relationships, subjecting its masses to deeper poverty, humiliation and desperation for the sake of accessing resources” (Karumbidza 2007:117). Most African countries depend almost exclusively on one or a few minerals for a disproportionate portion of their export incomes. Nigeria obtains more than 90 percent of its foreign exchange from the export of crude oil, Sierra Leone depends on diamonds for more than 60 percent of its foreign-exchange income, and Zambia obtains 85 percent its foreign exchange from the export of copper. Zambia’s copper mines have long been dormant; however, the country’s economy is doing relatively well because copper prices soared from 75 cents per pound in January 2003 to more than US$3 per pound in 2007. Chinese demand has pushed the copper mines into record production (Polgreen and French 2007).
The dilemma of African monoproduct economies is that they are vulnerable to the vagaries of the global market. Thus, economic booms and busts in Africa are determined by external economic circumstances far beyond its control. Table 2 indicates the levels of crude oil production in 2009 and proven reserves as of 29 April 2011. As shown, the major crude oil producers in the region are Nigeria and Angola. There was no oil production in Chad, Sao Tome and Principe, Mauritania, and Guinea Bissau, and Uganda up till 2009, but these countries are known to have oil in commercial quantities. For example, proven oil reserves in Uganda are estimated at 1,500,000,000, ranking it thirty-eighth in the world (CIA 2011). China’s joint venture in the oil industry will intensify upstream activities that are likely to yield more oil discoveries and production. Compared to the Middle East, Africa is a minor player in aggregate global oil production and reserves. The region holds only 9 percent of the global proven oil reserves, compared to 62 percent in the Middle East; but Africa likely has significant undiscovered reserves. An estimate is that the Gulf of Guinea will generate at least one out of every five new barrels of oil for the global market, the bulk of which will come from Angola and Nigeria (Rocha 2007).
Africa is a more attractive alternative source of energy because it is comparatively peaceful. For the major consumers of crude oil from Africa (the United States, the European Union, Japan, and now China and India), oil reserves in Africa constitute an appealing alternative to oil in the Middle East. For years to come, both China and the West may increasingly scramble for oil in Africa; however, China’s economic interest in Africa is not limited to oil: rather, it extends to other industries (Karumbidza 2007; Rocha 2007).
China-Africa Bilateral Trade and Investment Regimes
The Forum on China-Africa Cooperation (FOCAC) was inaugurated in 2000. Since then, China’s increasing presence in Africa has manifested in expanded trade and investment. The year is considered pivotal in China-Africa relations (Keenan 2008; Large 2006a, 2006b). The impact of FOCAC is that since then, China has abolished tariffs on 190 kinds of imported goods from twenty-eight of the least-developed African countries (BBC News 2006). In 2001, China established trade ties with fifty-three African countries, signed bilateral trade agreements with thirty-nine of them, had an agreement for encouragement and protection of investment with seventeen, and signed an agreement on avoidance of double taxation with four. Furthermore, there were nineteen African countries whose bilateral trade with China had exceeded US$100 million mark (Guangxiang 2004).
FOCAC has led to a significant surge in trade volume: in 2004, the volume of trade between China and Africa hit a new record high, of US$29.46 billion, an increase of 58.9 percent over the previous year. Of this, China’s export to Africa was US$13.82 billion, growing by 35.7 percent, while its import from Africa stood at US$15.65 billion, an increase of 87.1 percent over 2003 (Guixuan 2005). The aggregate trade volume between China and Africa surged to US$10.598 billion in 2000, an increase of 63.3 percent from the previous year, a record high in the history of China-Africa bilateral trade relations. A breakdown of trade data shows that China’s export to Africa stood at US$5.043 billion, an increase of 22.5 percent over the previous year, while China’s import from Africa reached US$5.555 billion, an increase of 133.9 percent over the previous year. This means that Africa enjoyed a historic trade surplus of US$512 million with China (Guangxiang 2004).
On 1 January 2005, China listed twenty-five least-developing African countries that enjoyed zero tariff treatment and a special preferential tariff rate for exports. During the first ten months of 2005, the volume of bilateral trade between China and Africa increased to US$32.17 billion, representing an upward swing of 39 percent. Of this amount, US$15.25 billion represented China’s total exports to Africa, while US$16.92 billion represented its import from the region. In 2010, China-Africa bilateral trade topped US$115 billion, and it continues to grow at a rate of 44 percent annually (Hu 2011). Table 3 shows top eight sub-Saharan African countries with their corresponding percentage shares of exports to China. The eight countries account for 92 percent of the total exports to China (Morrisey 2010). The main products that China exports to Africa are machinery and electronics, textiles and apparel, high-tech products, and finished goods. By contrast, the main exports from Africa to China are crude oil, iron ore, copper, cotton, diamonds and other natural resources, and primary goods. Sudan supplies 7 percent of China’s total crude-oil imports (Blair 2005). In the first six months of 2007, Angola supplied 465,000 barrels of oil per day to China.
China’s investment in Africa has grown over the years, from US$5 million in 1999 to more than US$50 billion. Beyond infusing additional capital to help resuscitate economies of African countries, Chinese investment does much to leverage dormant local capital for development. In 2000, Chinese firms established fifty-seven subsidiary firms in Africa, with a total contractual investment of US$251 million. Of this amount, Chinese capital was US$216 million, which was US$119 million over the level of investment in 1999 (Guangxiang 2004). Chinese investment capital leveraged US$35 million of idle local capital. By the end of 2000, Chinese firms had set up a total of 499 subsidiaries with a total contractual investment of US$990 million, of which Chinese capital was US$680 million (Guangxiang 2004).
By the end of June 2003, the Chinese government had authorized 602 firms to invest an aggregate of US$1.173 billion in Africa; by the end of 2004, the number of firms so approved had increased to 715 (Guixuan 2005). As global demand for energy intensifies, China will continue to compete fiercely against the interest of the United States, the European Union, and Japan in African crude oil. This reflects the fact that, since 1993, China’s domestic energy consumption had outstripped its production, leaving a net oil importer (Keenan 2008). In 2010, China was expected to produce 168 to 180 million tons, only 51 to 55 percent of its domestic demand. By 2020, crude oil production is expected to be 156 to 185 million tons, but that will meet only 34 to 40 percent of the local demand. A deficit of 275 to 304 million tons is projected (Chinascope 2005:2). According to the International Energy Agency, China’s net oil import will hit 13.1 million barrels a day by 2030, up from 3.5 million barrels a day in 2006 (Hanson 2008). In 2006, China obtained about one-third of its oil imports from Africa, which was about 9 percent of Africa’s oil exports, in contrast to 33 percent imported by the United States in the same year (Hanson 2008). But that is expected to change, as China has increased its stakes in oil in Equatorial Guinea, Gabon, and Nigeria.
The Chinese government has taken the following steps to secure its energy future in Africa (Brookes and Shin 2006):
Angola: China extended a US$2 billion loan to Angola in March 2004, in exchange for a contract to supply 10,000 barrels of crude oil per day. Under the contract, the loan will be heavily invested in infrastructure construction.
Gabon: China National Petrochemical Corporation (SINOPEC) injected massive investment into the country’s declining petroleum industry. This is intended to enable SINOPEC to explore onshore and offshore oil reserves.
Nigeria: In July 2005, PetroChina concluded an US$800 million deal with the Nigerian National Petroleum Corporation to purchase 30,000 barrels per day for one year.
In January 2006, China National Offshore Oil Corporation, after failing to acquire American-owned Unocal, purchased a 45 percent stake in Nigerian offshore oil mining license OML 130 for US$2.268 billion and promised to invest an additional US$2.25 billion in field development.
The China National Petroleum Corporation invested in the Port Harcourt refinery, while PetroChina is interested in the 110,000 barrels/day Kaduna refinery. ONCC Mittal Energy Ltd., the joint venture between Oil and Natural Gas Corporation and the L.N. Mittal Group, will invest US$6 billion in railways, oil refining, and power-sector development in exchange for oil drilling rights.
Sudan: The China National Petroleum Corporation (CNPC) is the single highest shareholder (40 percent) in the Greater Nile Petroleum Operating Company, which controls the country’s oil fields. It is pumping about 300,000 barrels per day. Since 1999, the CNPC has invested US$3 billion in refinery and pipeline construction. China provided US$500 million for the recently constructed oil refinery.
Additionally, China has injected US$150 million into Zambia to resuscitate the copper industry, “an industry that had been dead on its feet in the 1990s. Copper production in Zambia has in fact doubled since 2000” (Taylor 2006:179). China’s burgeoning investment in Africa is a challenge to the West. Insofar as Western investment comes with conditionalities that African countries are no longer willing to accept, the region will increasingly capitalize on the “Eastern Promise” (Brautigam 2010).
Industrial Infrastructure and New Economic Architecture in Africa
Another context for understanding China-Africa relations is that of infrastructural development. China’s investment in Africa extends far beyond the mineral sector to industrial infrastructure, such as telecommunication, seaports, railroads, road networks, and power generation (Karumbidza 2007:93- 94, 97). The lack of infrastructure has retarded economic development efforts in virtually all African countries. Industrial infrastructure in Africa had been dilapidated and crumbling, most of it being relics of the colonial age. A large proportion of the packages of Chinese investment, loans, assistance, and aid have been channeled into industrial infrastructure as a way to provide a new architecture for sustainable development in Africa.
In Nigeria in April 2006, President Hu of China and President Obasanjo of Nigeria signed an agreement that granted China four oil-drilling licenses in exchange for a commitment to invest US$4 billion in infrastructure, while China agreed to buy a controlling share in the Kaduna oil refinery and to build a power station. Other agreements also signed then included a US$500 million export credit from the Eximbank of China to Nigeria for infrastructural development (Obiorah 2007). On 29 March 2008, China and Nigeria signed a US$50 billion memorandum of understanding on infrastructural development (Okwe 2008). The Nigerian railways have been comatose for decades, and an epileptic power supply has adversely affected the country’s development. The ONCC Mittal Energy Ltd. will invest US$6 billion in railways, oil refining, and power-sector development in exchange for oildrilling rights in Nigeria.
The US$2 billion package of loan and aid that China offered to Angola in 2004 included funds for Chinese firms to build railroads, schools, hospitals, bridges, and offices; lay a fiber-optic network; and train Angolan telecommunication workers (Hanson 2008). China has initiated a US$20 billion investment in infrastructure projects, including dams and hydroelectric power-stations in Sudan. It has promised to provide US$750 million for the construction of the new Khartoum international airport and another US$750 million for a new dam on the Nile in the Northern Province. China has made significant investment in high-profile infrastructural development projects in other countries, such as Chad, South Africa, and Zimbabwe.
Critical Assessment of China-Africa Relations
The economic basis of China-Africa relations is glaring; this cannot be downplayed, and it should not be trivialized. In certain cases, China’s trade and investment behaviors may even be detrimental to the long-term economic interest of Africa; however, an objective assessment of China-Africa relations is necessary to identify potential areas that Africa should focus on and issues it should attempt to address to derive maximum benefits from its relationship with China. China-Africa relations are not static, but dynamic, and require continuous monitoring and reassessment.
Trade Regime and Access to Market
Beginning in 2000, China-Africa relations have produced a trade regime that casts China as a progressive development partner. First, there has been a surge in the volume of trade between the two partners. While China’s export to Africa increased by 22.5 percent, China’s import from Africa increased by 133.9 percent (Guangxiang 2004). In 2006, the trade volume surged by 40 percent, and in October 2007, the volume increased by 30 percent (Hanson 2008). In each of these periods, improvements in exports from Africa to China generated a surplus of US$1.67 billion for the region during the first ten months of 2005, yet the volume of trade between China and Africa accounts for a mere 2.6 percent of China’s total foreign trade volume (Guixuan 2005). Overall, that African economy registered 5.8 percent growth in 2007, its highest in decades, is attributed to China’s trade and investment policies toward Africa (Hanson 2008). This fact is noteworthy because it suggests that China is more amenable to opening its market to African products than the West, where African products often encounter both tariff and nontariff barriers. China may be a voracious competitor against the Western interest in Africa. Globalization offers opportunities for Africa to diversify its sources of trade and investment. Africa should no longer depend almost exclusively on the West for its economic future.
As China searches for sources of cheap energy and raw materials to fuel its industrial development, the unhealthy history of colonialism may be replayed again-carting away of cheap raw materials and exporting finished goods at exorbitant costs to Africa. Some African countries that export oil to China have trade surpluses with it, while those without oil have recorded trade deficits. African countries should incorporate into all negotiations with Chinese firms the requirements to assist them in developing capabilities to process intermediate goods for export to China. Africa should not remain a perpetual exporter of raw materials.
Leveraging Local Capital
Most of the Chinese firms are government owned (Kaplinsky and Morris 2010). And most of the projects undertaken by them are joint ventures with African governments. It will help cultivate an indigenous entrepreneurial class if African governments would invite local private investors to participate in such ventures. China has taken practical steps to demonstrate its intentions in Africa. A symbolic signal in this regard is that in 2007, China’s more than US$9 billion worth of investment dwarfed the World Bank’s money flow into Africa. The World Bank, unable to inject more than US$2.5 billion into Africa, has tried to persuade Beijing to partner with it in financing projects in Africa, but so far to no avail (Gaye 2008). Insofar as Western investment comes with conditionalities, African countries will continue to prefer China’s offers.
Environmental Protection
Exploitation of natural resources contributes considerably to environmental degradation. Dams, unsafe mining, and logging practices by Chinese firms in Africa have been widely reported (Askouri 2007; Keenan 2008). China has been justifiably and scathingly criticized for providing financial support that helps prop up President Mugabe in Zimbabwe (Karumbidza 2007; Keenan 2008) and fuel genocide and destroy communities in Sudan (Askouri 2007). Left to their own devices, Chinese firms will not be different from Western firms, such as Shell-BP, ExxonMobil, and Elf, relative to their environmental records in Africa (Edoho 2007, 2008). African governments should task Chinese firms on environmental stewardship. They should demand environmental-impact assessment plans for new projects. Environmental audits should be done as projects are implemented. Nongovernmental organizations can be watchdogs in this regard.
Human Resources and Capacity Building
China has the technological capabilities and can bring its experience to stimulate latent endogenous know-how in African countries for economic development (Guangxiang 2004). China could assist Africa in the areas of human-resource development and capacity building, utilizing the instrumentalities of technical training and management development (King 2010). This calls for a greater involvement of African nationals in project conceptualization, planning, design, and implementation. The influx of Chinese migrants in Africa (Gaye 2008; Mohan and Power 2009) needs to be closely watched. Chinese firms will not contribute to economic development in Africa by using labor imported from their home country.
Conclusion
Globalization and marginalization have posed significant challenges to Africa. Compounding these challenges has been the decline in Western investment. Deepening China-Africa relations are the outgrowth of Western disengagement from the region. The relationships will help reverse marginalization in the global economy. For Africa to benefit from Chinese economic activities in the region, it needs to improve upon its productive forces. There is an opportunity for Africa to intensify its exports by capitalizing on the Chinese willingness to grant the region’s products access to its market, but its competition against Western firms that have taken Africa for granted over the years is beneficial for the region. China does not need to colonize Africa. Through its massive economic activities in Africa, China is doing what the West failed to do. It is expected that China will aggressively contest any attempt by the West to reclaim Africa as its oyster.
If China’s activities are not monitored closely, they have the potential to weaken the African economy in the long run. Thus, China-Africa relations embody both opportunities and threats. Africa needs to utilize the new architecture of cooperation to maximize the benefits from the opportunities the relationship is offering. China’s penetration in Africa may be opportunistic, and not unlike that of the West, yet the relations offer the opportunity for Africa to deconstruct its relations with the West. They offer Africa the bargaining power to renegotiate the terms of its relationships with the West. Most importantly, China-Africa relations will enable Africa to tap into global value chains made possible by globalization. Africa needs to seize the opportunity offered by its partnership with China to reconstruct a new architecture of mutually beneficial relationships.