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"Probing the Frontiers of an Emerging Multi-Polar World"

The Chinese-African Relationship: Can Sub-Saharan Africans Think?

by Collin Spears

In 2001, Former Singaporean Ambassador to the United Nations, Kishore Mahbubani asked a simple question, which was also the title of his book, “Can Asians Think?” Mr. Mahbubani sought to challenge, what he perceived as, Western paternalism. He believes that Asians do not need indefinite guidance by the Western world, because Asians are capable of independent thought, and just because these thoughts may differ from the West does not mean they are the result of defective thinking. A befitting question for the coming decade is, “Can Sub-Saharan Africans think?” For many Westerners it would seem the answer is, “No”, at least as far as Africa’s relationship with China.

In 2005, the Western media began to express “concern” with the increasing Chinese presence in Sub-Sahara Africa (Africa). During this period, many foreign policy observers began to promote the idea that China is plotting to take over Africa in some neo-colonialist attempt to gain unlimited access to natural resources. For example, Karin Kortmann, a German parliamentary state secretary stated in November of 2006, “our African partners really have to watch out that they will not be facing a new process of colonization”. The same year, Lord Chancellor of Great Britain, Jack Straw, made similar allegations “Most of what China has been doing in Africa today is what we did in Africa 150 years ago.” This Sinophobic boilerplate is hyperbole, but the narrative suggests that the average African is impotent and their leaders are all iniquitous or ineffectual.

Modern Sino-African relations were born in the aftermath of the Sino-Soviet split of the 1960’s. The government of Beijing was isolated from the Soviet bloc and the U.S. did not recognize it. China moved to increase its links with the developing world by exporting its own variant of revolutionary communism, Maoism. China had a special appeal to many in Africa, as it was not a former colonial power.

In recent years, the Sino-African relationship has evolved toward capitalist trade. Chinese and African officials routinely describe their relationship as a mutually beneficial one, based on mutual respect, and free of exploitation or paternalism, both common complaints against Western nations. China has over 800 Chinese companies with 750,000 Chinese nationals operating in 49 out of 53 African countries. Since the 1990’s, the Chinese have invested billions of dollars in African infrastructure, resource extraction, and other business ventures. This investment has been the source of much Western suspicion.

Trade between Africa and China went from $10 million in the 1980s, to $100 million in 2008. This was a rapid increase from $55 billion in 2006. The West still holds a dominant economic position to China in Africa. Harry Broadman (2007) found in his book, “Africa’s Silk Road: China and India’s New Economic Frontier”, that although China’s investment is growing quickly, it is not yet comparable with that of the West. China’s overall exports to Africa in 2006 were about 35% of total exports, equaling $27 billion. These exports were predominately light-manufacturing products. The growth rate of African exports to China was 1.7 times the global export total, 73% were oil products. One-third of China’s oil imports are from Africa, which was only 9% of Africa’s total oil exports, as compared to 33% going to the U.S. in 2006. The same year, 10% of Africa’s total global exports went to China, which amounted to $29 billion.

By 2008, China exported $50.8 billion worth of goods to Africa, which was a rise of 36% from the previous year. The import of goods from Africa rose 54% or $56 billion, as reported by the Chinese news agency Xinhua. China’s major trading partners in terms of total trade were Angola; South Africa; Sudan; and Nigeria. By some estimates, China will likely surpass the United States in 2010 as Africa’s single most important trading partner. Currently, China ranks as Africa’s second highest trading partner, only second to the U.S.

In 2006, African FDI to China was $1.1 billion whereas Chinese FDI to China was $900 million. China’s total FDI to Africa was 5% of its total, mainly to the mining and oil sectors, although there has been a diversifying trend. Europe and North American were still the main foreign investors in Africa, accounting for 68% and 22% of the FDI stock, respectively. No recent reliable data exists, but estimates put Chinese FDI as high as 30% of Africa’s total 2008.

China’s prevailing business model in Africa has been to look for niche opportunities where Western companies have found it too politically controversial, too risky, or financially enviable. For example, many of the assets held by China’s national oil company were too small for international oil companies and were either passed on or relinquished. China has also marketed itself as an alternative for African nations that are no longer interested in traditional Western aid programs, which often required economic and political restructuring. China offers less aid and more loans and business opportunities.

In addition, China is often willing to pay for goods with infrastructure projects and training. By the end of 2008, China trained 11,000 African professionals. Two thousand African students receive scholarships to study in China each year, most of whom study engineering, medicine, and science; that number is expected to double. China sends professionals to Africa to work on various environmental, medical, and agricultural projects. China has also dedicated $3 billion to the China-Africa Development Fund, which has funded 20 projects. The fund provides preferential loans to African nations and preferential buyers’ credit, as well as waives bad debts.

In spite of these humanitarian efforts, China continues to take heavy criticism from the West. Many complain that much of Africa is already struggling to develop and China not only promotes and enables bad governance, but also destroy domestic businesses through unfair competition. Beijing’s economic model for development runs counter to Western free market neo-liberalism, which critics often complain is a detrimental example for African governments.

There are also complaints about China’s lending practices. The former Bush Administration accused China of being a “rogue creditor” by not only bypassing the World Bank and the International Monetary Fund, but also not adhering to their lending standards, which encourage transparency and assesses the overall fiscal health of the lender. To maintain good long-term relations, China has canceled the debt of 31 African countries to the tune of $1.2 billion.

China has been panned for its military sales and reluctance to punish nations the West see as pariah states. It is true that China has a non-interference policy in the domestic affairs of sovereign nations, which it has long promoted in the UN Security Council. Despite this, China has pushed for a stronger role for Peacekeepers in Sudan, where it has contributed its own troops, as well the Democratic Republic of Congo and Liberia.

From 2003 to 2006, 15% percent of total arms sales to Africa came from China, putting them behind Russia and Germany. These sales included those to Sudan, Equatorial Guinea, Ethiopia, Eritrea, Burundi, Tanzania, and Zimbabwe. Still the United States and other Western nations express hypocritically selective outrage. During the Cold War, the West propped up dictatorships or overthrew democratically elected governments based on its interests and continues to do so. China’s behavior is far from unique; the real issue is that China and the West have interests that currently conflict.

Many in the West also charge China with unfair competition, citing that their government heavily subsidizes many Chinese firms, and in turn, these companies flood struggling African markets with their goods without hiring Africans workers. China’s oversight agencies do not have direct authority over Chinese corporations overseas, especially the many that are not government owned. The Chinese government organizes loose syndicates that work in coordinate to further business goals.

Chinese goods do often flood African markets, often smothering local fledgling competition, which causes unemployment. Most of this labor cannot transfer to Chinese companies because up to 70% of their laborers are imported from China. Chinese firms are vertically integrated which allows them to avoid negotiating with African trade unions and transferring skills that might eventually make Africans more competitive, but there are not many corporations that willingly help potential competition.

Many Western China critics attack the Chinese government and business for allegedly assisting African governments to oppress their people in order to gain a firm control over resources that China needs to fuel its development. They complain about China’s failure to engage the broader African population in an altruistic manner. These detractors seem to forget that the Chinese are engaging in business, not charity. Further, they do not believe that Africans are capable of doing what is in their own interest. Hypocritical attempts to take the moral high ground, claiming to be a champion for Africa’s oppressed masses is a cover to mask the discomfort generated by unwanted strategic competition with China in Africa.

The reality is that the primary barriers to Africa’s development are internal; but it is rare a Western analyst looking at China’s position in Africa, asks what responsibility Africans have to themselves. Countries with significant oil and mineral deposits frequently fail to grow, despite investment, due to corruption and the Dutch Disease. Africa’s non-commodity exports have limited penetration to China’s market, not due to tariff barriers, but due to lack of competitive products, high transportation costs, and a weak financial system that does not properly allocate capital to domestic firms. As to corruption, Transparency International reported that China is one of the most willing nations to pay bribes, but at the same time, a World Bank survey of 68 countries found that Africa leads other regions in corruption. These issues are internal to Africa and not the responsibility of China.

African leaders can drive a harder bargain by exploiting existing political advantage and strengthening continental institutions. Africa is responsible for China gaining its seat in the UN Security Council, as well as China’s ascension to the WTO. Africa also supports China in the UN against human right allegations and by limiting Taiwan’s diplomatic movements. Africans need to build a stronger African Union that can provide a multilateral trade infrastructure and coherent continental Chinese economic policy; this will only strengthen the continents ability to negotiate. The current situation is a type of “prisoner’s dilemma” where individual countries benefiting from Chinese trade do not want the African Union involved in their affairs.

African citizens are not helpless. In some African nations, civil society has pressured governments concerning their nation’s relationship with China. This has promoted some African governments to change the nature of their engagement with China. This is something China has shown flexibility for, because China wants to avoid some of the strong anti-Chinese movements that have occurred in Namibia, Zimbabwe, Angola, and Lesotho, Zambia, and Gabon in recent years. There is likely a correlation between good governance and the amiability of citizens to trade with China. This is something China might be reflecting upon.

Due to the current global financial crisis, revenues have been falling for many Chinese firms. Harry Broadman found that Africa averaged 6% GDP growth in 2007, but projects growth to be 3% in 2009. The economic contraction is greatest where capital markets are most developed, as in South Africa and Nigeria. FDI has also declined an commodity prices have dropped significantly in some markets, 50% in the oil market. Consequently, these firms have become more risk averse in their African business.

The contraction of Western economies will push Africa even closer to China, as China’s economy probably only slow to 8% GDP growth in 2009. The demand generated by this growth will be important to Africa, as it might prevent a complete collapses of commodity prices. In 2007, Pew Global Attitudes Project found that most Africans see China’s influence being more positive and growing faster than America’s. This finding will be prescient, if the West does not change its attitudes. To remain competitive the West should focus on trade over aid. Aid is will still be necessary, but as William Easterly stated in his book “The White Man’s Burden”, the West should target aid based on what Africans wants not on what they think Africans need; which is a de facto acknowledgment of the fact that Africans can think.

The Center for New Politics and Policy

BFPR

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Obama and Africa: Much Room For Improvement

President Obama in Africa:

Course to a better way for Africa

By Genora Akosua Reed

BFPR African Affairs Contributor

July 30, 2009

President Barack Obama’s visit to Accra, Ghana, in early July coincided with the 100th anniversary of the birth of Ghana’s founding father Kwame Nkrumah - Africa’s first post-colonial symbol for change. President Obama’s visit and his speech on America’s engagement in Africa and Africa’s responsibility signified another change --the long awaited need to change the nature of United States engagement in Africa, which to this point has largely been based on national security interests, such as America’s growing dependence on Africa’s oil exports, Africa’s im¬portance as a key player in America’s “Global War on Terrorism,” and Africa’s central position in the global competition among America, China and, most recently, Russia for economic and political power. Let’s hope his visit seeks to honor US support for development that “enriches people’s lives” and a partnership with Africa in “new ways” that are mutually beneficial.

President Obama’s stated policy rejects the status quo policies as supported by former US Presidents, particularly George Bush’s. President Obama, for example, supports Africa’s efforts to defend local, small-scale farming unlike the IMF and World Bank. In most of Africa, 80% of the population depends on farming to derive their incomes. President Obama said he intends to tackle the difficult economic downturn, as experienced by African farmers, by supporting the creation of a new $15 billion program funded by G-8 countries to boost agriculture in developing nations. Obama declared, “…our $3.5 billion [US share] food security initiative is focused on new methods and technologies for farmers – not simply sending American producers or goods to Africa.” He has also thinks that, rather than shipping American-grown produce thousands of miles, he favors removing current restrictions on using locally grown crops to supplant U.S. food aid in Africa. Congressman Donald Payne (D-NJ), Chair of the US House of Representatives Subcommittee on Africa and Global Health, similarly, supports the notion to redirect US foreign assistance towards promoting Africa’s agriculture infrastructure. In a recent interview with AllAfrica.com, Congressman Payne noted “[t]here is so much potential for agriculture in Africa, not only to feed Africa [itself] but to supply the world.”

President Obama clearly supports debt relief for developing nations. In April 2009, his Administration announced it would cover up to $20 million in debt service payments for Haiti until the country reached “completion point,” which Haiti reached in June 2009. This means that $1.2 billion in external debt owed by Haiti to bilateral and multilateral lenders, including the Inter-American Development Bank, World Bank, and the US government, has been cancelled. Now, Haiti has the opportunity to increase markedly their expenditures on food, health, education, and other social services.

This critical issue has not gone ignored nor was forgotten as one organization, members of the Freedom from Debt Coalition (FDC), staged a protest in front of the World Bank on the first day of the G8’s 35th Summit in Italy. FDC affirms debt cancellation for the Global South as the best economic stimulus package the G8 can develop to mitigate the scope of the economic crisis.

President Obama has reversed Bush's ban, “global gag rule”, to providing foreign assistance to US organizations operating internationally that also offer abortion services — a law that had hit many HIV/AIDS and family-planning programs in Africa negatively. The Department of Health and Human Services has also been authorized to reverse regulation that has restricted HIV-positive people from gaining entrance into the United States. Lifting both the “global gag rule” and the HIV/AIDS travel ban have been excellent starts toward distancing his Administration from the previous Administration’s anti-developmental policies.

However, President Obama’s speech failed to forge a concrete US-Africa policy which confronts the challenges of corruption, greed, hypocrisy, exploitation, human rights abuses and economic disparity experienced in African countries. His visit presented an opportune moment to recognize what has been achieved on the continent as well as barriers that still need to be overcome, in particular US foreign policy in sub-Saharan Africa, which must be amended to further advance Africa’s economic growth and political stability. His speech overlooked his outlook on the President’s Emergency Plan for AIDS Relief (PEPFAR) which is experiencing a budget shortfall from not being fully funded by his Administration.

Why is debt relief for sub-Saharan Africa no longer on the table? Unlike 2005 G8 Summit where debt cancellation was the primary concern, agriculture was the primary focus of this year’s G8 Summit. In 2005, the G8’s final declaration created the Multilateral Debt Relief Initiative which cancelled the entire $40 billion (US) debt owed by 18 Highly Indebted Poor Countries (HIPC) to the World Bank (WB), the International Monetary Fund (IMF) and the African Development Bank (ADB).

Yet, in July 2009, the G8 highlighted the development of a "rescue package." This entails “confirmation of the G8's commitment to development aid; the use of innovative financial tools; halving the cost of emigrants' remittance transactions; and imparting a fresh boost to international trade;” and, “… the debt issue” is mentioned as a passing thought. To date, we have yet to see President Obama’s administration attempt to hold the recent G8 Summit accountable to its commitment to develop a "rescue package," even with debt relief as a sub-priority.

What about fair trade? While the Bush administration extended the scope of the African Growth and Opportunity Act (AGOA), only few African countries have benefitted. The Clinton Administration created the AGOA initiative in 2000 to provide sub-Saharan African with liberal access to the U.S. market. The challenge is providing market access coincided with technical assistance, infrastructure development and adequate technology to take full advantage. The talks on comprehensive international trade agreements crumbled with the collapse of the Doha Round in 2007 which offered a real step forward for Africa on trade issues. US, India and China refused to compromise over measures to protect farmers in developing countries from greater liberalization of trade. This was a provision that would lower trade barriers in developed countries to enable the economies of developing nations, such as Ghana, to grow by exporting more of their own products. After seven years of negotiations with little progress, U.S and the developing countries came to a complete impasse. President Obama’s speech did not speak to the manner in which his US-Africa policy will protect America’s farmers while promoting African farmers, with an emphasis on women in agriculture. According to the UN Food and Agriculture Organization, women constitute 70% of the agricultural workforce in Africa. One feasible resolution is to assist in reducing intra-African trade barriers in order to create “self-promotion”- the notion that African countries have the right to promote trade within the continent and purchase food from local farmers in Africa. But, he will have that opportunity during the next round of Doha talks.

Dr. Martin Luther King, Jr., would call for a US-Africa agenda in support of the notion that, “true compassion is more than flinging a coin at a beggar; it comes to see that the edifice which produces beggars needs restructuring.” For Africa, the US must recognize that the edifice is complex, puzzled with the detrimental effects of colonialism and the reality of neocolonialism and the strain of corruption, greed, economic disparities and HIV/AIDS. President Obama, similar to his African ancestors, must strive to ensure Africa’s stability in the world economy.

Genora “Akosua” Reed focuses on US foreign policy in Sub-Saharan Africa. She has traveled to several African countries and worked with such noted organizations such as Global Rights: Partners for Justice and the Congressional Black Caucus Foundation. She has written for Blackpolicy.org’s Ascent Policy Journal, a former a project of the Center for African American Policy (CAAP) at the University of Denver. In May 2008, she played the key role facilitating the United Nations Special Rapporteur on Contemporary forms of racism, racial discrimination, xenophobia and related intolerance fact-finding mission in the US. She is also a graduate of George Mason University’s School of Public Policy and lives in the Washington, DC, area.