China and Africa: A Fruitful but Complicated Relationship

In 1999, China implemented the “Go Out” policy, which sends investment money and employees of Chinese state-run companies to Africa. In 2000, the Forum on China-Africa Cooperation (FOCAC) was established, and since then, trade between the two parties has grown exponentially. At the FOCAC 2018 summit, President Xi pledges $60 billion towards Africa. President Xi also urged Chinese companies to invest at least $10 billion over the next three years.

China’s presence in African cities is undeniable. From new Chinese infrastructure projects to Chinese on billboards, one can feel China’s presence the moment they land. China’s presence is a recurring conversation theme among locals and media. The famous book “China’s Second Continent: How a Million Migrants Are Building a New Empire in Africa” is accurately titled. Just a few years ago, it would be hard to imagine such focus on a China-Africa relationship. For centuries, Europe had near-exclusivity of trade with Africa; however, by 2008, China became Africa’s biggest trade partner. Between 2001 and 2018, China went from making up 4% of Africa’s imports and 3% of Africa’s export to being at 16% and 15% respectively. A Chinese immigrant in Nairobi this past summer told me about “The African Dream” for many Chinese people. The graph below shows how the loans from China to African countries went from less than a billion to 2000 to over $11 Billion in 2017.

As the relationship between China and Africa continues to grow at a relatively fast pace, it is under scrutiny because it is arguably not equitable for Africa. First, the type and quality of contracts between the two parties is being questioned. China has imposed contracts that make it difficult for Africa to (re)gain financial independence in the future. China investments made have colossal collateral: exclusivity and even future ownership, in the use of ports or natural resources like oil. Second, many have asked if China is acting any differently than the Europeans before them. There is little difference in the goods being traded. Africa imports from China high value-added products (i.e.: machinery, vehicles), while it exports low value-added goods (i.e.: oil, copper and wood). This trade pattern mirrors the trade issues Africa has had with Europe. However, there is a difference regarding the capital invested: Europeans’ capital was mostly privately owned whereas Chinese’s capital is state owned. Moreover, China has built a lot more infrastructures, and projects are completed faster. Also, China has imposed contracts that make it difficult for Africa to (re)gain financial independence in the future. Chinese investments have colossal collateral: exclusivity and even future ownership, in the use of ports or natural resources like oil.

The trade set-up as it is, leaves the African continent in a weaker position. However, blaming China alone on this matter would be incorrect and, an incomplete view on the matter. African private business owners do not have a solid backing in and outside of China from their own governments. African governments have been accused to be at the mercy of corruption and short-sighted vision. In an episode of The China in Africa Podcast, Hannah Ryder of Development Re-imagined makes the valid argument that African governments should exchange expertise and information with Latin American countries on negotiating contracts with China. One of the most compelling supporting argument on why Africa is left in a weaker position is about jobs. When China comes in the build infrastructure, they do so while using their own human capital. It is not uncommon that after the contract is over, the Chinese employees stay and open up their own businesses. This map shows the number of Chinese enterprises in each African country by the end of 2014. It is far to assume that the numbers are moving in an upward direction.

The basis theory as to why China is building in Africa has been that it affects China’s position in the world. China has established itself as a powerful alternative to the U.S. and Europe. In building bridges, ports and roads, China gets to influence over 50 nations who have voting rights at the United Nations. It is often compared to what China has accomplished in South East Asia. Also, by instituting exclusivity over African ports as contracts collaterals, China will have the power to affect global trade routes. Imagine one country having control over ports by the Red Sea and the Gulf of Aden.

Nonetheless, there is a striking divide among Africans on China’s role. The divide is mainly between the government (with the elite) and the population (mostly low-income class). As the Research brief from the Rand organization summarizes: “African officials overwhelmingly view China’s role in Africa positively, welcoming China’s heavy emphasis on government to-government contracts with few, if any, strings attached. Many African leaders believe that as a fellow developing country, China has more altruistic motives than Western governments and corporations do.” Unfortunately, there is a growing feeling among locals that “The African dream” is only for Chinese migrants. Locals criticize China for poor labor conditions, unfair work practices like not hiring locals at leadership positions, and job displacement. It has even led to protests and violence against Chinese migrants. In response, China has initiated programs with scholarships and job opportunities. The most popular ones allow Africans to pursue their studies in China and return to manage Chinese projects in their native country. The graph below from the National Bureau of Statistics of China shows the increasing number of Africans visiting China.

China and Africa are now entangled, and they need each other. On one side, Chinese investments help advanced the continent’s industrial and infrastructure development. Furthermore, China presents itself as a competitor to the U.S. and other western Europeans countries. On the other hand, China cannot maintain its powerful position without Africa on its side. China’s growing relationship with Africa over the last 15 years is helping reshape China’s position as one of the world’s leaders.

Bibliography

Ayenew, Lina Getachew “The Complete Beginner’s Guide to China-Africa Relations: Mega-themes from Five Crucial Years”

Havenga, Marthinus “ China’s growing reach in Africa: are we seeing a fair trade?” The Africa Report, September 19th 2019. Accessed September 22nd, 2019. https://www.theafricareport.com/17380/chinas-growing-reach-in-africa-are-we-seeing-a-fair-trade/

Mourdoukoutas, Panos “What China wants from Africa? Everything.” Forbes Magazine, May 4th 2019. Accessed September 22nd, 2019. https://www.forbes.com/sites/panosmourdoukoutas/2019/05/04/what-china-wants-from-africa-everything/#4ff73bc2758b

Mourdoukoutas , Panos– “Why is China Building Africa” — Forbes — September 21st 2019. Accessed September 22nd, 2019. https://www.forbes.com/sites/panosmourdoukoutas/2019/09/21/why-is-china-building-africa/#b60898c502cf

Zhou, Youyou,– “Why Chinese are traveling to Africa, and why Africans are traveling to China” Quartz Africa, September 9, 2019. Accessed September 22nd, 2019. https://qz.com/africa/1680094/why-chinese-are-traveling-to-africa-and-why-africans-are-traveling-to-china/

Abdi Latif Dair — “Africa’s resource-rich nations are getting even more reliant on China for their exports” Quartz Africa, April 26, 2019. https://qz.com/africa/1605497/belt-and-road-africa-mineral-rich-nations-export-mostly-to-china/