From our 25 July LDESP Africa News Update.
China’s investment and influence in Africa has been a subject of reporting for some time. While there are a range of perspectives regarding the costs and benefits of China’s involvement throughout the continent, one thing is clear: it is on the rise. In late June, just as President Obama was carrying out his tour of Africa, China announced that it would send combat troops overseas on a peacekeeping mission for the first time. Their destination is Mali. Military.com reports:
“We will send comprehensive security forces to Mali for the first time” Wang Yi, China’s foreign minister, said in a speech at a security forum in Beijing on 26 June, the Financial Times reported.
The expected dispatch of about 500 Peoples Liberation Army combat troops would mark a major shift in policy for China, which has previously limited its peacekeeping contributions to engineers, medical and aid personnel. China currently has about 1,900 troops involved in UN missions, the most of any country on the Security Council.
Aboard Air Force One en route to South Africa from Senegal, Obama downplayed China’s growing influence in Africa, part of Beijing’s continuing efforts to expand its economic and military clout internationally to challenge the superpower status of the U.S.
In recent years, China has displaced the U.S. as Africa’s leading trade partner, and China has major mining and other commercial interests on the continent. While Chinese President Xi Jinping has made frequent trips to sub-Saharan Africa, Obama is on his first substantive visit there.
“This is not the Cold War,” Obama said in a session with reporters at the back of the plane. “You’ve got one global market, and if countries that are now entering into middle-income status see Africa as a big opportunity for them, that can potentially help Africa.”
“What we have going for us, though, is our values, our approach to development. Our approach to democracy remains one that is greatly preferable to a country like Senegal,” Obama said.
African nations “recognize that China’s primary interest is being able to obtain access for natural resources in Africa to feed the manufacturers in export-driven policies of the Chinese economy,” he said.
Chinese troops in Mali would signify “a major breakthrough in our participation in peacekeeping,” said Chen Qian, head of the UN Association of China, a Chinese think tank, the Financial Times reported. “With this, our contribution will be complete. We will have policemen, medical forces, engineering troops and combat troops.”
In a visit to Beijing in late June, UN Secretary General Ban Ki-moon praised China for its “strong and growing operational and political engagement with peacekeeping.”
The UN peacekeeping force of about 12,800 troops was expected to deploy to Mali in August to begin displacing French troops who entered the country in January to push back Islamic rebels who had taken over large swaths of northern Mali.
France has committed to withdrawing its 4,000 troops by the end of the year but has pledged to leave behind trainers and advisors for Mali’s military.
(…) The U.S. military has established training and advisory roles with sub-Saharan African nations to shore up local governments and counter the influence of Al Qaeda-affiliated groups, and that role was expected to be enhanced under Army Gen. David Rodriguez, new head of the African Command.
In his initial visits to the region, Rodriguez quietly stopped in Mali to meet his French counterparts and gauge the effectiveness of U.S. assistance to the French effort.
The U.S. provided air transport for French troops during the initial stages of the French campaign, and the U.S. has continued to supply aerial refueling for French Mirage and Rafale fighters in ground support missions. The U.S. has also set up a drone base in neighboring Niger to fly unarmed reconnaissance missions for the French over Mali. (Military.com)
In an article expounding upon President Obama’s recent tour of Africa, The Economist contextualized China’s influence throughout the continent:
“America’s weak spot in Africa is investment, a main point of the president’s trip. American firms have long operated on the continent but failed to keep up with China, Africa’s biggest trading partner, which buys and sells about $200 billion a year. American trade is half that, though still up fivefold in the past decade, much of it in oil imports from Angola and Nigeria.
Mr Obama will lobby for more American participation in infrastructure projects. But American fears that China is taking over Africa are exaggerated. America and its Western allies are still more influential across the board, whereas Chinese knowledge and political engagement remain shallow. America has 51 embassies in Africa to China’s 41, of which many are largely limited to commerce. Still, China plainly wants to catch up; its new president, Xi Jinping, visited the continent on his first foreign trip this year. His predecessor went there five times during ten years in power and held Africa summits every three years.
Hillary Clinton, who visited 15 African countries on four trips as secretary of state, last year lashed out at those she saw as being too cosy with China. America, she said, would stand up for human rights “even when it might be easier or more profitable to look the other way, to keep the resources flowing. Not every partner makes that choice, but we do and we will.” Asking Africa to choose between prosperity and democracy is not only a false choice but also an unattractive one. The more America trades with Africa, the more political influence it is likely to gain. That, it seems, is also the view of Mr Obama.” (The Economist)
A recent Reuters article highlights the drawbacks of China’s investment in Africa, especially with regard to the continent’s industries and job prospects. “Africa Investment – China Brings Goods and Roads, Now Africa wants Jobs”:
China has brought cheap consumer goods, roads and schools to many parts of Africa over the last decade but the continent’s leaders are increasingly pushing for it to provide more of what many Africans want most: jobs.
From Pretoria to Abuja, governments have begun voicing frustration that China’s use of Africa as a source of natural resources and a market for its goods may be hindering the continent haul its billion people out of poverty.
A recent report by the U.N. Economic Commission for Africa (UNECA) highlighted the risk that the continent’s relationship with the world’s second largest economy could strangle its attempts to industrialize.
China’s trade with Africa ballooned from $10 billion in 2000 to an estimated $200 billion this year – four years after it overtook the United States as the continent’s largest partner.
But some 85 percent of China’s exports from Africa are raw materials, such as oil and minerals. According to the African Development Bank, most minerals mined in Africa are exported raw, meaning the jobs and wealth from processing them is created elsewhere.
A flood of Chinese produce, meanwhile, has accelerated the decline in industrialisation since the 1980s. Africa’s textile industry alone lost 750,000 jobs over the last decade, according to the Johannesburg-based Brenthurst Foundation.
“The romanticized relationship surrounding China’s investment in Africa has passed,” said Alex Vines, head of the Africa programme at the Chatham House research institute.
“With the world’s youngest and fastest-growing population, the main pressure on governments in Africa is to provide jobs. Having the Chinese take those jobs doesn’t help.”
(…) It is true China’s boom has brought many benefits to Africa. Beijing has won fulsome praise from many governments for its willingness to finance massive infrastructure projects without conditions relating to democracy, governance and human rights – the “strings” Africa has often criticised in aid from the West.
Chinese economic growth rates averaging 10 percent a year for almost a decade fuelled a commodities “super-cycle” which has lifted Africa’s own growth to unprecedented rates.
And the cheap Chinese goods being imported help make everyday living more affordable and develop the consumer sector across the continent.
But in many countries, China’s demand for ore, timber and oil is forcing African states to specialise at the bottom of the value chain in areas with low productivity gains, UNECA said.
With Africa supplying one-third of China’s oil, much of it from Angola, UNECA highlighted the risk of ‘Dutch Disease’ whereby demand for raw materials inflates a currency, making other sectors uncompetitive against foreign competition.
(…) Respected Nigerian Central Bank Governor Lamidu Sanusi said in March that China’s extraction of resources from Africa had all the attributes of “colonialism”.
In an apparent response to such criticism, Chinese President Xi Jinping took pains during a six-day African tour in March to stress his country was seeking a win-win partnership.
“The development of China will be an unprecedented opportunity for Africa, and Africa’s development will be the same for my country,” he told lawmakers in Congo Republic.
Beijing has provided much-needed capital to a continent starved of investment. The China Import-Export Bank is the continent’s largest creditor and Beijing has promised $20 billion more in loans over the next three years.
But Beijing’s money comes with its own strings: it must be spent on Chinese goods or Chinese-built infrastructure. And Chinese firms often source their supplies and workers back home.
(…) Unlike Western immigrants, the Chinese diaspora comes from the poorest section of society and competes directly for work with Africans, some 80 percent of whom are in “vulnerable employment” according the International Labour Organisation.
(…) Responding to the criticism from Nigeria and South Africa, China’s Commerce Ministry has encouraged firms to increase investment in Africa. China is launching Special Economic Zones for manufacturing companies on the continent.
Though it is Africa’s largest trading partner, China has only 6 percent of the stock of foreign investment – well behind France on 18 percent – according to U.N. trade body UNCTAD. (Reuters)
In an excellent primer on Chinese financial activities in Africa, Johns Hopkins University professor and a scholar on China’s African engagement, Deborah Brautigam wrote the chapter on “Chinese Development Aid in Africa: What, Where, Why and How Much?,” in the monograph Rising China: Global Challenges and Opportunities. There, Brautigam explains:
“China’s development aid to Africa has increased rapidly, yet this might be the only fact on which we have widespread agreement when it comes to Chinese aid. Analysts disagree about the nature of China’s official development aid, the countries that are its main recipients, the reasons for providing aid, the quantity of official aid, and its impact. Why does this matter? Knowing more about Chinese development aid is important for understanding Chinese foreign policy and economic statecraft: how and to what ends does China use its government policy tools? It is also important for more accurate comparisons between Chinese practices and those of other donors and providers of finance. Finally, for those who are interested in the question of whether, as it rises, China will transform, reform or maintain the existing system of norms and rules, development aid provides a particularly interesting case study.
(…) China’s Official Finance in Africa: What Instruments?
China’s official finance in Africa consists of grants, zero-interest loans, debt relief, and concessional loans (which would all qualify as ODA) as well as preferential export credits, market-rate export buyers’ credits, and commercial loans from Chinese banks, none of which would qualify as ODA. China also provides equity funds that assist Chinese companies investing in Africa through the China–Africa Development Fund, and has established a fund to on-lend up to US$1 billion to African small and medium enterprises (SMEs) through local African banks.
(…) Chinese Aid in Africa: Where and How Much
China’s first official white paper on foreign aid discussed only those Chinese aid instruments that most closely resemble official development assistance. ‘By the end of 2009’, the paper stated, ‘China had provided a total of 256.29 billion yuan [US$37.7 billion] in aid to foreign countries, including 106.2 billion yuan [US$15.6 billion] in grants, 76.54 billion yuan [US$11.3 billion] in interest-free loans and 73.55 billion yuan [US$10.8 billion] in concessional loans’. It also revealed that aid had grown by 29.4 per cent annually between 2004 and 2009.
(…) China’s economic push to ‘go global’ is coordinated by many policy instruments, some of which were described above. In this way, China resembles Japan’s outward march more than it resembles the experience of the other OECD countries. Chinese banks have developed instruments that they believe can link Africa’s riches—its natural resources (agricultural and mineral)—to its development. Because they regard these resources as a source of wealth, they do not offer resource-secured loans at concessional rates. To the Chinese, even resourcepoor countries whose balance sheets might not look good sometimes have untapped capacity to service a future debt, if borrowing goes for productive projects. It remains to be seen whether fears about the sustainability of this debt are borne out. The challenges presented by China’s engagement in Africa are large—for African countries, who need to learn how to manage this eager new development partner strategically, and for Africa’s traditional partners, who feel as though their efforts to reform governance and economic policy might be losing ground. But all the stakeholders will benefit from a more accurate description of the dimensions of this engagement, and a more realistic and grounded idea of the realities of Chinese development assistance and economic cooperation on the continent.” (Excerpted from Rising China: Global Challenges and Opportunities)
Professor Brautigam also maintains an excellent blog on this subject called “China in Africa: The Real Story.” She is also author of The Dragon’s Gift: The Real Story of China in Africa (Oxford U. Press, 2009, 2011). According to her bio, she “first went to Africa in 1983 to research Chinese engagement and never stopped.”