Africa-China relations likely to change

Chinese investment in Africa has the potential to be a win-win, but more visibility on these deals is needed if current bilateral relationships are to remain healthy.
Africa-China relations likely to change

Are African countries getting what they need out of their unbalanced relationships with China, and do the Chinese appreciate those needs?

So asks Akwe Amosu, director of Africa advocacy at the Open Society Foundations and a former journalist from Ethiopia, during a discussion in Hong Kong this week sponsored by the Asia Society.

China’s relationships with the African continent have been conducted at the topmost, bilateral governmental level. For people in Africa trying to understand the impact this will have, a habit of secrecy and a lack of data are problematic.

“It’s hard to get data on Chinese engagement,” says Buddy Buruku, policy adviser at the African Centre for Economic Transformation, a think-tank based in Accra, Ghana.

She estimates that in 2011 there was $166 billion in China-African trade flows, a figure that has come from almost zero a decade ago and is growing by around 30% per annum. The bulk of that trade is with South Africa, Angola, Nigeria and Sudan, with Africa exporting mainly crude oil. She believes only around 8% of exports involve African-manufactured goods.

Investments are even harder to define, as China prefers to package a range of programs, making it impossible to untangle individual sums in concessionary loans, commercial loans, aid, portfolio investments, and “miscellaneous”.

Buruku believes China may have invested around $15 billion last year. On July 18, at the annual, Beijing-organised Forum on China-Africa Cooperation, Chinese president Hu Jintao announced that China would invest $20 billion this year.

There are also plans for China to work with several governments to establish special economic zones, specifically to provide incentives to local manufacturers along the lines of China’s own successful SEZs established in the 1990s.

Buruku says that Africa can certainly benefit from such trade, provided its rulers insist on the right incentives and learn to negotiate better terms.

Hamadou Tidiane Sy, a Senegalese journalist, says African interests are at a disadvantage. The Chinese government has a clear idea of its strategic interest and is a formidable, well organised negotiator.

Africa’s 54 governments do not have similar interests, are sometimes unstable, and do not always know what they want. Some elites remain conditioned by their nations’ experience as European colonies or supplicants, and haven’t learned how to stand up for their own interests; or they only look after the interests of their family or ethnic group, not the nation as a whole.

China has been quick to take advantage of this, says Sy. He relates the anecdote that African ambassadors in Beijing do not know in advance the date of the China-Africa forum on cooperation.

It is not something they are able to spend time preparing for. Instead, they receive notice of the date just a few weeks in advance. Sy argues that when only one party controls dates and the agenda, there is little scope for negotiating as equals.

Buruku adds that while Africa does need Chinese investment in areas such as infrastructure, too often money is dispensed, calculated as aid, and provides no real benefit. She recalls stories of hospitals built in Liberia by Chinese workers, where the aid programme didn’t extend to roads to link the hospital to the population, or training for doctors, nurses or managers.

She blames this sort of thing more on the inability of African leaders to push China harder. African countries have the resources that China desires, and therefore they have an upper hand, if only they knew how to play it.

Howard French, a former New York Times correspondent and now associate professor at Columbia University, says African leaders are not used to the packages of aid and loans that China regularly presents to them, usually as a fait accompli. This means they don’t know how to calculate their market value.

For example, French cites cases where Chinese state-owned enterprises have demanded payment for building a dam in guaranteed supplies of cocoa over 20 years, rather than in cash. Such deals are hard for local governments to assess independently. What will be the price of cocoa in five, 10, 20 years?

French warns that African governments are underpricing their assets and will come to regret these deals – which poses a long-term risk of instability that Chinese leaders should also recognise.

By allowing Chinese companies or banks to present them with a deal, or a menu of packages, drawn up in Beijing, African leaders are automatically abrogating their duty to make sovereign decisions meant to address their countries’ needs, French adds.

Although bilateral governmental deals remain the preference for both Chinese and African governments, some frictions at the local level are developing. Sy relates growing frustration with the rapid growth of local Chinese populations that are often insular and do not treat locals with respect.

On the other hand, a lot of this growth is because increasingly Chinese individuals are finding Africa to be a land of opportunity. Despite negative stereotypes they are making comfortable lives there, and extending their own trading and business ties through personal networks back home.

French says he has seen credible estimates that over 1 million Chinese have moved to Africa over the past decade.

Although there is a positive side to this story, it also highlights that, beyond securing the resources that have brought China to Africa, Beijing has no real control over what individual Chinese people do. They can’t control their own SOEs back home, so managing corporate affairs abroad is impossible, notes Buruku. Nor is there any accountability or data regarding these private-sector activities.

The existence of such a huge Chinese population, with its own private interests, could also lead to a change in Beijing’s official foreign policy, which today is supposedly non-colonial and non-interfering.

The same could have been said for Portugal in the 15th century, when its merchants set up private trading enclaves along the West African coast, which ultimately morphed into issues of national interest.

(Another example is how private British interests made early contact in India, initially in mutually constructive ways, until their presence grew to the point that their activities were later assumed by the East India Company, itself a prelude to full-blown imperialism.)

Amosu says the current moment in China-Africa relations will evolve quickly. Overall, Africa has probably benefited from the investment brought by China, but she says Beijing should prepare for a new African response.

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