SINO-AFRICAN RELATIONS: FOR BETTER OR FOR WORSE?

(Posted by PSIA Review on Thursday, January 2, 2014)

A symposium marking 50 years of Sino-African relations was held on the 22nd of October 2013 at Harare, Zimbabwe. This three-day event, organized by the Southern African Research and Documentation Centre (SARDC) and the Chinese Embassy, brought together more than 40 scholars, policymakers, and officials from Africa and China.[2]

Welcoming Chinese investment to the African continent, Christopher Mutsvangwag, Zimbabwe’s deputy foreign minister argued that the growing economic relationship with China is the opportunity African countries have been waiting for to start durable development.[3] This Sino-African relationship provides African states with the opportunity to have access to alternative investors other than western countries, at a lower interest rate, and without political conditions. The deputy foreign minister declared that this economic cooperation is proof that it is possibility for African countries to develop their economy without the help of western countries that have treated Africa as a “charity case” since Bretton Woods.[4]

Effectively, these recent years have witnessed a dramatic increase in trade between African countries and China. According to a white paper on “China-Africa Economic and Trade Cooperation” published in August 2013, China has become the leading trading partner of African states during the fiscal year of 2009.[5] China’s direct investment in Africa jumped from 1.44 billion U.S. dollars in 2009 to 2.52 billion U.S. dollars in 2012, at an annual growth rate of 20.5%, which represents a 75% increase.[6]

In the case of Zimbabwe, the World Bank estimates that Zimbabwe has witnessed an increase of its FDI from just $51.6 million in 2008 to $387 million in 2011: “Last year, according to Zimbabwean government officials, FDI in their country grew upwards of $450 million.”[7] This overall better performance over the past years can be partially linked to the Chinese investment. Indeed, China has become the principal foreign investor in Zimbabwe covering around 72% of the $900 million worth of foreign investment-projects approved by the Zimbabwe Investment Authority for 2012.[8] Overall, the People’s Republic of China has invested more than “half a billion dollars in foreign direct investment (FDI) into Zimbabwe in the past four years, and has lined up projects valued at more than $10 billion 2012.”[9] With these important investments into Zimbabwe, China has played a considerable role in helping the country experience positive GDP growth since 2009. This is illustrated by the fact that the “Zimbabwean economy has grown over the last three years, averaging 7.1% [growth in GDP] between 2009 and 2012.”[10]

One might argue that the main reason why China is interested in Zimbabwe is because of the economic restrictions imposed on the country by the West. Interestingly, despite the fact that these restrictions have permitted China to become the top trading partner of Zimbabwe, the Zimbabwean picture is similar to a lot of other countries in Africa such as Algeria, Zambia, and South Africa which do not have trade restrictions applied to them.

It is undeniable that the presence of China in the African market is more and more important permitting the creation of millions of jobs that the continent desperately needed. Today, more than 2000 Chinese enterprises are investing in the continent in various sectors such as transport, minerals, and the manufacturing sector.[11][12] During the symposium, the Chinese ambassador to Zimbabwe, Lin Lin argued that the cooperation between Africa and China has never been better and he further promised the creation of numerous jobs within the continent thanks to the China-Africa relationship.[13] Indeed, as shown by the graph below, trade between the continent and the Asian superpower in 2012 reached new records both in exports and imports.

Photo Credit: Xinhua/Ma Yan[14]

According to the China-Africa Economic and Trade Cooperation (2013) database, “From 2000 to 2012, the proportion of China-Africa trade volume as a part of Africa’s total foreign trade volume increased from 3.82% to 16.13%: the proportion contributed by Africa’s exports to China up from 3.76% to 18.07%, and that by Africa’s imports from China from 3.88% to 14.11%.”[15]

A Win-Win Relation?

One would be optimistic given the growth of the Sino-Africa partnership. Indeed, most of the participants at the symposium were in favor of growing this relationship and were deeply convinced by the potential welfare benefits for both parties. However, the Sino-African relationship has produced contrasting reactions among African nationals in the last few years. Such reactions vary from economic hope for the continent, to those of resource robbery or neo-colonialism by the “Chinese Empire,” as mentioned by Lamido Sanusi, the Nigerian central bank governor.[16]

Even though the amount of exports to China has grown in recent times, the pattern of trade shows the heavy proportion of raw materials in the products exported by African nations to China, while the imported products are overwhelmingly manufactured.

Photo Credit: The Economist[17]

One of the reasons why the sustainability of this relationship is questioned is the intensive extraction of natural resources from the African continent as portrayed in the chart above. As shown in the chart, almost 80% of the exports to China are minerals.[18] The intensification of the exports of raw products to China may lead to exploitation of African natural resources that might in-turn lead to environmental disasters, as it has been the case in the exploitation of the Ivory Coast’s (Côte d’Ivoire) tropical woods.

Moreover, African governments may see relations with China as a repetition of the errors of the past. Historically, African trade relations with the West have been unfair and exploitative. Western companies have been keen on extracting raw materials and on buying cash crops at very low prices imposed by them, making tremendous benefits with the final products without consideration to the original producers. This has hindered the industrialization of African economies, and dampened prospects of economic growth. Therefore, a reasonable relationship with China should be beneficial to both parties namely the African continent and China, by taking into consideration for instance, further investment in the services and manufactured sectors instead of the raw mineral industry.

Another obstacle to this relationship is the confidence African countries have in their new principal partner. The case of the “ghost” Chinese fishing boats operating intensively in African seas illustrates why some countries have reservations concerning a relation with Beijing. The term ghost has been employed because although these ships have been operating as industrial boats, China allows them to operate “under the radar” of regulations on the seas. According to independent expert studies like the one conducted by Daniel Pauly, these pirates who are operating 24/7, would capture each year around 4.5 million tons of fish, while Beijing only declares 370,000 tons worth to the Food and Agriculture Organization (FAO).[19] This behavior, sometimes condoned by some African governments, is not only unfair to local sailors and harm the West African fisheries and self-sufficiency, but can also lead to future environmental issues concerning the world’s fish reserves.

Another reason for criticism of China is due to the private telecom giant Huawei, which has become the largest supplier of wireless technology CDMA products in Africa. Since Huawei is among the firms that scored zero on the TI (Transparency International) scale,[20] it has a of observers worrying about the real agenda of the firm in Africa. The implication is that the big networking and communication projects throughout the continent are suspected to be a vast operation of surveillance of African people.[21]

There is also the issue of strong competition that China presents for local firms. Although the argument for free trade would favor of competition via the opening of the markets on both sides given that some African enterprises have also been active in making investments in China, it has hurt the competitiveness of the local firms because of the lower prices offered by the Chinese businesses. In the long run, this may result in many workers ultimately losing their jobs, thus creating vast unemployment.

Overall, the Sino-African relationship has a lot of potential and must be given a chance to flourish. However, numerous adjustments need to be made in order to achieve a long-term relationship that will benefit both parties. Particularly in Africa, countries need to avoid the mistakes they made with past superpowers. They must negotiate better terms in the agreements they sign in order to get a fair and equitable share of the natural resources they are endowed with. As underlined by Sanou Mbaye, “China’s sacred text is not a holy book like the Torah, the Bible, or the Qur’an. Instead, it is The Art of War by Sun Tzu. Sun’s core belief is that the “ultimate excellence lies not in winning every battle but in defeating the enemy without ever fighting.”[22] Therefore, African leaders must be fully knowledgeable about the rules of the game and advance the core interest of their populations.

[2] “Southern Africa: China-Africa Symposium to Discuss 50 Years of China-Africa Relations and the China Development Experience,” AllAfrica. October 21, 2013, http://allafrica.com/stories/201310230445.html.

[3] An, “Interview: Emergence of “powerful” China an economic boon for Africa: Zimbabwe official,” Xinhuanet, October 22, 2013, http://news.xinhuanet.com/english/china/2013-10/22/c_132821052.htm.

[4] Ibid.

[5] Mengje,“China issues white paper on economic, trade cooperation with Africa,” Xinhuanet, August 29, 2013, http://news.xinhuanet.com/english/china/2013-08/29/c_132674128.htm.

[6] Hou Qiang, “Full Text: China-Africa Economic and Trade Cooperation,” Xinhuanet, August 29, 2013, http://news.xinhuanet.com/english/bilingual/2013-08/29/c_132674114.htm.

[7] Mamello Masote and Moyagabo Maake, “Zimbabwe picks up its FDI share,” BusinessDay, April 21 2013,

http://www.bdlive.co.za/africa/africanbusiness/2013/04/21/zimbabwe-picks-up-its-fdi-share.

[8] Luo Dan, “Envoy to Zimbabwe Defends China-Africa Ties,” Xinhua, October 23, 2013, http://english.cri.cn/6909/2013/10/23/191s793734.htm.

[9] “China sinks US$500 million FDI in Zimbabwe,” The Sunday Mail, September 22, 2012, http://www.sundaymail.co.zw/index.php?option=com_content&view=article&id=31275:china-sinks-us500-million-fdi-in-zimbabwe&catid=41:business&Itemid=133#.UpQL6tLrykt.

[10] Anita Kruger, “Investment in Zimbabwe: Continuing to Look East,” GBR Roundup, May 9, 2013,

http://gbroundup.com/2013/05/09/investment-in-zimbabwe-continuing-to-look-east/.

[11] Deborah Brautigam, “Chinese Investment in Africa: How Much?” China in Africa: The Real Story, September 28, 2013, http://www.chinaafricarealstory.com/2013/09/chinese-investment-in-africa-how-much.html.

[12] Mengje.

[13] Luo Dan “Envoy to Zimbabwe Defends China-Africa Ties, Xinhua, October 23, 2013, http://english.cri.cn/6909/2013/10/23/191s793734.htm.

[14] http://news.xinhuanet.com/english/bilingual/2013-08/29/c_132674114_2.htm.

[15] Ibid.

[16] “La “Chinafrique” et les poissons volés,” Jeune Afrique, November 25, 2013, http://www.jeuneafrique.com/Article/JA2759p006.xml0/afrique-chine-peche-neocolonialisme-ditorial-la-chinafrique-et-les-poissons-voles.html.

[17] http://www.economist.com/news/middle-east-and-africa/21574012-chinese-trade-africa-keeps-growing-fears-neocolonialism-are-overdone-more.

[18] Jeremy Groce, “Is Western Criticism of China-Africa Trade Fair?” VOA Zimbabwe, May 14, 2013, http://m.voazimbabwe.com/a/1661086.html.

[19] “La “Chinafrique” et les poissons volés.”

[20] Deborah Brautigam, “TI: Chinese Multinationals Score Low on Transparency,”

China in Africa: The Real Story, October 22, 2013, http://www.chinaafricarealstory.com/2013/10/ti-chinese-multinationals-score-low-on.html

[21] John Reed, “Africa’s Big Brother Lives in Beijing,” Foreign Policy, July 30, 2013, http://www.foreignpolicy.com/articles/2013/07/30/africas_big_brother_lives_in_beijing_huawei_china_surveillance?page=0,0#sthash.bVohXpfE.dpuf.

[22] Sanou Mbaye, “Africa will not put up with a colonialist China,” The Guardian, Febrary 7, 2013,

http://www.theguardian.com/commentisfree/2011/feb/07/china-exploitation-africa-industry.