China in Africa

There are few things that illustrate the changing position of China in the world today as does its evolving relationship with Africa. While China still refers to itself as a “developing nation” when dealing with western and other countries with advanced economies, it has simultaneously emerged as one of the largest investors in and aid providers and the biggest trading partner to the entire undisputedly still developing continent that of Africa. China’s presence in the region today take many forms and can be felt across the continent, whether in the form of Chinese owned retail shops in Nigeria, the Chinese built eight lane Nairobi-Thika highway in Kenya, or in financial assistance such as the $5bn loan to Angola being repaid in oil. For Africa, China is clearly someone who has been through the early development phases and is now a strong advanced partner. A combination of China’s government, its corporations and its emigrants to Africa are making a significant impact on a region which has been abandoned time and again by the West as a too difficult. Clearly, China has the potential to transform Africa but Africa also has the potential to transform China. Africa gives China the opportunity to develop its model of how to engage what is still an important class of country in the world: rich in resources, poor in infrastructure and governance and mostly written-off by the developed world. Aside from the obvious acquisition of natural resources essential to China’s development, engaging in Africa can help China develop its own philosophy as it concerns engagement with developing countries, to hone a wide variety of skills and establish a new international political base. These are all important to its transition to a developed economy and global geopolitical player and can help to shape China’s strategy and mode of engagement with other countries and enhance its role in the international community.

The China-Africa Balance Sheet

The numbers underlying the China-Africa relationship are, at least by African standards, staggering: bilateral trade last year totalled US$200bn, having grown more than twentyfold since the year 2000, making China the largest economic partner of the continent, and is expected to further increase to US$280bn by 2015. By comparison, US trade with Africa (its second largest trading partner) last year was less than half of China’s. China has also pledged more than US$20bn in loans and development assistance for infrastructure and other projects over the next three years, in addition to the US$40bn of total direct investment that has flowed into Africa from China to date. In terms of corporate activity, over 2,300 Chinese firms have operations across over 50 countries in Africa.

In spite or perhaps because of the large numbers involved, China’s presence and activities in Africa elicit strong responses, particularly from western observers, who have called the country’s African policies as “neo-colonialist” and a new form of economic exploitation. China is also often criticised for its willingness to entreat with countries widely shunned by other nations due to political instability or their repressive regimes, such as Zimbabwe or the Democratic Republic of the Congo. China for example conferred an honorary professorship on Zimbabwe’s Robert Mugabe in 2005, at a time when universities in western countries were rescinding previously granted PhDs over concerns about human rights violations and election fraud. Finally, China’s non-political agenda, based on its policy of non-interference in other countries’ political affairs, through which aid and trade are given without requirements to improve democracy, transparency or human rights domestically, is also subject to western criticism. Within Africa though, the perceptions of China are more nuanced, and more positive generally. Many Africans are happy to take investment without political strings or onerous requirements attached and in places where there are no other options for investment. To the accusation that China is exploitive and lax in upholding environmental and labour regulations, local supporters counter that China’s companies act no different than the domestic industries they are competing against (or co-operating with). Clearly, western governments are holding China to a different higher standard. What is clear is that Africa has benefitted immensely overall from its relationship with China, developing significantly as aresult: economic growth in the past decade has averaged 5.5% annually, average annual inflation is down from 15% to 8% and average external debt of African countries is down from 63% to 22% of GDP. While China is not the only factor than has contributed to this strong performance, it has clearly been an important driver of development and prosperity. However, Africa still clearly has a long way to go. Economic performance during the last decade non-withstanding, its countries rank at the bottom of the lists for human development indicators (life expectancy, education and standard of living), political stability, transparency and human rights. Solving these issues in Africa will require more than just economic growth and trade. China too has and continues to benefit from its relationship with Africa, which in a number of ways is an ideal partner given the two countries assets, needs and current capabilities. Africa’s value to China today lies in its role as the following:

  1. Source of Minerals and Energy.At over US$100bn annually, imports from Africa exceed exports, making it one of the few major trading partners with whom China has a trade deficit. 95% of exports from Africa to China are in the form of natural resources, from minerals to oil, wood, and metals. Oil in particular is a critical trade good, with African oil supplying 30% of China’s needs. Africa also represents that largest supplier of minerals including bauxite, cobalt, diamonds and phosphates to China, all of which are of varying degrees of importance to China’s industrial economy and economic development. Despite China ongoing economic rebalancing away from industrial manufacturing to domestic consumption and services, the country will continue to the world’s largest (and growing) consumer of natural resources, making its African imports a matter of national security and highly strategic as a result.
  2. Destination for Chinese Products.Africa is a highly complementary market to China’s industrial export economy, being characterised by its demand for the sort of high volume and low cost manufactured goods that China based its industrialisation upon and still excels at. China’s more than US$60bn of exports to Africa reflect the breadth of the economic needs of the latter’s citizens and include textiles, light plastics, entry level white goods and simple consumer durables, electronics as well as a more sophisticated industrial machinery. With six of the world’s ten fastest growing economies, Africa represents a high growth opportunity for Chinese firms facing a domestic slowdown in demand, without the significant established competition present in other potential markets.
  3. Attractive Investment Destination. Africa also represents an attractive investment destination for Chinese capital and enterprises. China’s Ministry of Commerce, which is responsible for reviewing overseas corporate investments, has approved over 2,300 direct investments by Chinese companies into Africa, a number which significantly understates actual activity as it fails to include investments made by Chinese companies with offshore funds. As China’s cost competitiveness in manufacturing continues to deteriorate , Africa represents a key destination for low cost outsourced manufacturing. For example, Huajian Group, a Chinese shoemaker, plans to invest as much as $2 billion in Ethiopia over the next decade, where labour costs today are 75% lower than in China.
  4. Foreign Policy Supporter.Its poor reputation for soft power to the contrary, China appears to have been reasonably successful in leveraging its economic relationships in the region to garner political support. Of the 54 countries in Africa, 50 do not recognise Taiwan diplomatically in favour of the P.R.C. This political support “China will continue to offer, as always, necessary assistance to Africa with no political strings attached. China sincerely hopes to see faster development in African countries and a better life for African people” President Xi Jinping has been a cornerstone of China’s relationship with Africa for decades: in 1972, when the UN voted for the P.R.C. to resume its seat in United Nations, one third of votes in favour of China came from African nations. China’s leadership has since invested heavily into the soft power relationship with Africa: Xi Jinping’s first trip abroad after becoming president in2013 included three African countries and this past month Premier Li Keqiang visited four countries in Africa on an eight day tour. By contrast, President Obama did not visit Africa once during his first term and only recently completed his first trip there, visiting three countries. While China has yet to fully activate potential support from African countries in supranational organisations, it has now built up a considerable store of goodwill to leverage at the appropriate time.

However, it is important to realise that economically speaking, Africa accounts for only a small percentage of China’s foreign activities, and despite the goodwill it has built up there, it provides little tangible support for the key foreign policy priorities China is pursuing, such as projecting regional power in East Asia or its sovereignty disputes with its neighbours. Africa however is in some respects a testing ground for the China’s foreign engagement strategy. In a relationship unburdened by shared history or core geographic security issues, China has the opportunity to test and refine a wide range of mercantilist, security focused, and even ideological policies (in the form of the Beijing Consensus ) that have the potential to form the bedrock of a comprehensive grand strategy with regards to foreign engagement with a wide range of countries. Given that China has not yet clearly formulated such as strategy, its engagement in Africa is therefore of long term strategic importance.

Emerging Challenges for China in Africa

China’s strategy is that of a “merchant trader”; the purpose is business not rule. However, world history is awash with examples of merchant traders who decided to transition to rulers. The East India Company famously came to trade initially but came to rule large areas of India with its own private armies. Africa’s history too is full of examples in which local tribes entered into initially commercial relationships through treaties that became increasingly lopsided and eroded their sovereignty over time. These lessons have been lost on neither of the parties and China’s cautious and long-term approach to building relationships in the region indicates that it is trying hard to avoid this path.

However, it is important to note that despite its decade long engagement, China’s relationship with Africa has only just begun and has yet to develop beyond the initial trading phase. China’s ability to move beyond this phase and constructively shape the next phase of the relationship will require it to successfully manage or avoid three transitions that have happened in history:

Transition One: From Non-Interference to Interference.Firstly, as China’s influence and interests in the region continues to grow, the approach of non-interference that has served it well to date is becoming less and less viable “China has three kinds of engagement in African conflict zones. First, China has made positive contributions to peacekeeping and anti-piracy operations and provided de-mining assistance. Second, China has a significant arms trade with Africa, and some of the arms make their way into African conflicts. Third, Chinese nationals are increasingly finding themselves in harm’s way as they become subject to kidnapping or worse” as a strategy of engagement that protect its interests. China has invested a total of US$28bn in Sudan (between Sudan and South Sudan) and purchases 80% of the oil produced by South Sudan, whose production has fallen by 75% since the start of its civil war. While Beijing been called up to mediate a solution to conflict and has the most leverage to broker a deal as well as a strong incentive to do so, its current foreign policy principles prevent it from proactive engagement. However, even it was to abandon its non-interference principles, China today also lacks the hard power required to fully protect its interests in Africa. For example, during the Libyan civil war, due to the lack of its own security infrastructure in the region, China had to charter Greek planes and ships to evacuate the 36,000 Chinese nationals from the country ahead of the no-fly zone being implemented by the UN. Building up hard power to levels sufficient to protect its interests will take time and money and China will need to manage its relationships carefully when doing so. More importantly, it will need to deploy its power sparingly and judiciously. In the 18th century, Britain and France launched three wars in China when the Qing Dynasty threatened their mercantile interests there, subjecting the country to a series of humiliating peace treaties and impacting Chinese perceptions of the west to this day. Having been the victim of aggressive mercantilism in the past, China will be careful to avoid being shed in the same light.

Transition Two: From Leadership Position to Competitor. While China has enjoyed a fairly open playing field in the region to date, its success and the ensuing development of Africa have attracted other countries seeking economic opportunities. Japan in particular has become active in the region, with Japanese Prime Minister Shinzo Abe visiting Africa earlier this year on a promotional tour for Japanese trade and industry, and the government has committed to provide $32bn of development and $16bn of investment over the next five years. The EU on the other hand has traditionally been the largest provider of development aid to Africa (the top ten donors globally by share of aid to “What have Western countries done for Africa in the 50 years since independence? Nothing, all they have done is criticize China and that is unfair” Lu Shaye, China Foreign Ministry Spokesman Africa are all European) and collectively remains the largest foreign investor on the continent. While Europe’s interest in Africa’s (particularly North Africa’s) security and prosperity has historically been driven by geographic proximity and historical ties, purely economic interest in the region continues to grow. India and the Middle East too have historically been strong trading partners with Africa who will continue to increase economic activities as Africa develops, and while the US today directs less than 1% of its foreign direct investment into Africa today, the increasing importance of Africa to America’s economy has been clearly recognised. While it is still premature to speak of a new “Scramble for Africa”, China’s successes in the region are driving increasing international interest and activity that will increase the competition China faces for resources, trade deals and investment. Competition will empower Africa and Africans themselves who will have the opportunity to choose with whom to engage and under what terms. This is a critical issue for Africa as well which needs to choose what it wants from the world. Maintaining its position as the continent’s preferred partners will test the goodwill and soft power infrastructure China has steadily built to date.

Transition Three: Africans, From Happy Traders to Demanding Participants. Finally, China will also need to contend with changing attitudes within Africa. As the continent develops and its countries broaden their options for partnerships, the rules for engagement are starting to change and China will need to adapt its practises accordingly. Issues such as labour rights and environmental protection which China and African governments alike were “We saw that during colonial times, it is easy to come in, take out natural resources, pay off leaders and leave. And when you leave, you don't leave much behind for the people who are there. We don't want to see a new colonialism in Africa.” US Secretary of State Hillary Clinton previously free to de-emphasise are becoming increasingly important domestically, and the implications for China’s interests are already being felt. Zambia’s government recently banned a Chinese mining company from running an $800m project after repeated complaints over labour abuses and environmental risks. Other countries are introducing (or enforcing) minimum wage rules or implementing employment quotas forcing international investors to employ 70% of more locals in major infrastructure projects. All of these trends will force Chinese companies to adjust their execution model in Africa or risk losing business to growing international competition over the longer term.

China will also need to manage a number of other challenges facing countries seeking to engage with Africa, including crime, kidnappings of its country’s nationals, and growing potential resentment from locals. While piracy off the Horn of Africa is down from its record levels of 2009, when pirates captured more than 50 large vessels for ransom in over 130 documented attacks, largely due to a NATO and EU led naval presence in the region, the participating countries are looking to the countries that depend most on safe shipping the region, such as Saudi Arabia and China to shoulder more of the responsibilities of policing the region. China will clearly need to decide what kind of power it chooses to be. The inevitable first step away from non-interference to interference is the establishment of military intervention capability. China has taken that step having already dispatched 16 fleets to the region since 2008 to protect shipping from piracy. China’s successes in Africa, particularly of its emigrant business community, have seen local resentment flare up, sometimes violently. Lesotho, where Chinese make up less than 0.5% of the population but are the country’s most successful traders, has seen violent riots targeting Chinese owned businesses and shops. While these incidents have been sporadic and easily contained to date, populist leaders in Africa’s past have singled out successful Asian traders for persecution for political ends, most famously in 1972 when Uganda’s Idi Amin expelled the country’s 50,000 Indians who made up the bulk of the country’s commercial community. Another danger facing Chinese workers in Africa, particularly given that they often operate in higher risk environment than other countries’ nationals, is the risk of kidnapping, most recently this past March when 10 Chinese construction workers in Cameroon were kidnapped by armed militia from Nigeria. While China will need to engage closely with African governments to manage these sorts of risks to Chinese people and businesses on the continent, over the long term it may also need to adjust its risk assessment criteria for bigger investments.

In terms of timing, China has a measure of leeway to manage these challenges and the transitions laid out above: Africa today still needs China more than China needs it (barely). While China could, if it were forced to, source resources from other regions (at increased prices) and find other markets for its products, Africa remains dependant on China, as other countries have not yet demonstrated the level of appetite required to fill China’s shoes should it pull out of Africa. However as Africa continues to develop this current imbalance will further decrease and erode China’s advantages and goodwill in the region. The case for immediate action is therefore a strong one.

Resisting History: Requirements of the Blueprint for the Future Given the opportunities and the challenges laid out above China will clearly need to develop a new strategy for engaging with and in Africa. Such a strategy would need to build on the elements of the engagement that are working today while also adding a number of key dimensions to the relationship namely:

  1. A Unified Grand Strategy. While most of China’s tools for engaging Africa today are economic in nature, the rhetoric of engagement and the ruling Chinese Communist Party’s ultimately goals (domestic or foreign) will inevitably be both economic and political. A comprehensive strategy of engagement in Africa would unify economic and political objectives directly and in a way that creates synergies between the two. Such a strategy would need to look beyond the immediate China-Africa relationship and encompass the relationships with third “China has selflessly assisted Africa when itself was the poorest. We did not exploit one single drop of oil or extract one single ton of minerals out of Africa” Chinese Premier Wen Jiabao, 2011 parties, including working with and within supranational organisations as well as with third party partners or allies with related priorities, something China has not yet done well to date, focusing instead on simple bilateral relationships with African countries. China will need to move beyond tactical positioning to take an integrated long- term view of its regional objectives and act accordingly. During the war in Darfur in 2007, for example, China strongly resisted the passing of any UN Security Council resolutions or sanctions against Sudan, securing the continued supply of Sudanese oil over the short-term. Over the long-term however, the prolongation of the conflict increased the instability of the region, enabled the creation of South Sudan and contributed to a severe drop in oil production, largely to China’s detriment. A Grand Strategy approach would have taken a longer term view of China’s position in the region and placed greater emphasis on development cooperation over simple trading. Beyond giving cash as development aid, China has the potential to export best practices from its own development model. Having successfully industrialised its economy, modernised agriculture, developed large scale infrastructure and lifted a billion people out of poverty within the past forty years, African nations have much to learn from China, not least the creation of an effective public sector, without which the reforms and programs required for development cannot be implemented. The fact that China’s own development was accomplished without implementing democratic free markets actually serves as an additional incentive for many African countries to cooperate, given the authoritarian nature of many of the regimes in power today.
  2. Rules of Engagement and the Limits to Use of Hard Power.Following the Second World War, the U.S. and its allies developed rules of engagement (such as globalisation, free trade, international cooperation, non-proliferation of weapons of mass destruction) which allowed them to calibrate their engagement with the rest of the world and effectively create a promote a set of values. These were undermined following the 9/11 attacks but had served America well. Others are inferring a view of China’s rules of engagement in the absence of stated ones. Although it may not be wise to share these at this stage, it is unclear whether China has developed a sustainable and defensible perspective. While China’s soft power push has been successful to date, continued investment in Africa will inevitably take it to building hard power infrastructure to protect China’s interests. In the absence of a clear set of principles and rules of engagement, China may well evolve into a more traditional “great power” mode with the ability to deploy necessary force. China has in recent years begun to step up its security presence in the region and there are currently ~1,900 Chinese soldiers deployed in Africa on U.N. peacekeeping missions, but this is still only about half the number of soldiers the US has stationed on its base in Djibouti on the Horn of Africa alone. China’s current path seems to lead to where others have been, namely, further build-out of a serious military intervention capability, including bilateral security and defence partnerships, providing engineering, medical and other forms of advisors to support militaries and eventually even overseas defence installations (of which the US maintains ten throughout the region, by way of comparison.) This need not mean that China militarises its commercial presence in Africa, however, it is difficult to avoid the gravity of history taking China to that place. The logic will be to protect China’s growing investments which will be at risk and the increasing strategic importance of Africa to the resources China needs for domestic stability.
  3. A Partnership with Civil Society. China’s relationships with Africa to date have been concentrated at the government level. As Africa continues to develop and reaps the accompanying stability dividend, African citizens will demand more transparency and accountability from their own governments and their partners. “No matter how the international situation changes, China will always be Africa’s friend and partner in all weather … I believe the China-Africa friendship will last forever just like the unceasing flow of the Yangtze and Congo rivers.” President Xi Jinping Managing these demands will require China to engage more broadly within the African countries as well, forming relationships with civil society on multiple levels and increasing the soft power required to win the goodwill of empowered citizens. China has recognised the urgency of this engagement has started an ambitious cultural and educational attack in Africa: there are currently 31 Confucius Institutes in Africa to teach Mandarin and China has created university scholarships for 18,000 African students in China over the next three years as well as one of the world's largest short-term training programmes, bringing 30,000 Africans to China over the next three years. A Grand Strategy like the one laid out above will require China to reach out beyond the regimes of its African partners to collaborate with citizens directly in some fashion or another. Again, China’s own development path can provide the basis for large scale programs to drive education, improve rural health, reduce poverty and create entrepreneurship. Doing most effectively so will require China to both coordinate its efforts at the national level as well as work through and with multi-laterals, foundations and NGOs to manage projects independently on the ground.

Conclusion

With ten of the top twenty largest populations in the world projected to be African by the end of the century , the continent is clearly strategic to China on a standalone basis and China’s engagement to date shows that it is playing a long and patient game, investing significant financial and political capital in a region until recently overlooked by others. However, beyond the direct political and economic value, China will likely continue to extract from its partnerships in Africa, the China-Africa relationship has the potential to be an important testing ground and showcase for China to demonstrate to the world what type of power it will be. As the world’s largest country by population, the second largest economy and a growing Asian military power, China is still in the process of defining it role and mode of engagement in international relations. If China can solve the emerging challenges in its relationship with Africa and implement the blue print laid out above, Africa can become the benchmark for a China grand strategy comprised of strong partnerships for trade and development, coordination in terms of policies and engagement, both internally and with other stakeholders, and of responsibility and fairness in terms of engagement based on agreed upon engagement protocols. While the road to such a grand strategy is a long one, China’s relationship with Africa provides the nuclei from which such a strategy might be built, given patience and time. Successful engagement will allow China to redefine its role from that of the merchant trader and create something genuinely new. That something new is the development partner of the developing world. This would be a partner who sought no political control or adverse influence but sought to help leaders unlock the value of their assets, of which the critical and most abused today is the human asset. Such a vision would have seen and would see China walk away from some of its existing trading partners. If China successfully executes this strategy and develops Africa it will have a formula that is transportable across boundaries to its relations with other countries, particularly in Latin America and south and central Asia. If China fails in Africa however, it will likely have far greater consequences for China than the loss of cheaply procured natural resources. What is clear is that the building of such as strategy will fundamentally transform not just Africa but China itself as well.

Notes:-

1.    See appendix for definitions and sources

2.    See Feb 2014 Sign: “Decoding India’s 2014 Election: The Potential for Resetting India’s Course” and March 2014: “12% Growth Agenda: A Blueprint for India’s New Government”

3.    E.g. A 2013 Pew Global Attitudes study found that 72% of Africans have a favourable view of China, the highest of any continent

4.    African countries represent 24 out of the 25 lowest scoring countries on the 2012 UN Human Development Index,  seven out of the top ten countries on Foreign Policy’s 2013  Failed States Index, nearly half of the bottom twenty countries on Transparency International’s 2013 Corruptions Perceptions Index, and four of the ten highest risk countries on the 2014 Human Rights Risk Index

5.    See April 2014 Sign of the Times “China’s Changing Competitiveness to 2025– Far-reaching Economic and Political Implications”

6.    See  Krebs and Flores Macias (2013) “The Foreign Policy Consequences of Trade: China’s Commercial Relations with Africa and Latin America, 1992–2006”, Journal of Politics,  Vol. 75, No. 2, April 2013

7.    During Mr Obama’s first term, Hu Jintao, then China’s president, visited Africa seven times.

8.    Used to describe China’s economic model in contrast to the democratic-market model of the west, and usually defined to included state capitalism, authoritarianism, export led growth, incremental reform and innovation and experimentation cf. Williamson, J, (2012), "Is the 'Beijing Consensus' Now Dominant?", Asia Policy, No 13, Jan 2012 

9.    Shinn, D, (2009) ‘Chinese Involvement in African Conflict Zones’, China Brief Volume: 9 Issue: 7

10.    The number of African countries classified as “free” or “partially free” according to Freedom House’s Freedom in the World Index has increased from 43 to 47 during the past decade

11.    United Nations Population Division (2011) World Population Prospects database, May 2011