Trade between China and Africa hit a new high of $55.5 billion last year, up 40% from the year before. A special report from Tim Bennent and our U.K. affiliate, MoneyWeek Magazine, explores Beijing's motivations for upping its trade relations in Africa.
The latest project to hit the headlines is a $5 billion offer from the Chinese government to fund roads, railways, hospitals and clinics in the African Congo. Elsewhere, China is already "the biggest investor in the Sudan," says the Seattle Times. In Freetown, the capital of Sierra Leone, office blocks, military headquarters and a refurbished stadium are all the work of planners from Beijing. In Uganda, Chinese money built the new State House.
While in Zambia, an "economic partnership zone" that will attract $800 million in investment was promised by the Chinese president on a recent state visit. Even Zimbabwe's international pariah, Robert Mugabe, has declared: "We have turned East, where the sun rises, and given our backs to the West" – perhaps grateful for Chinese assistance in cultivating crops on land seized from white farmers.
Sino-African trade hit a new high of $55.5 billion last year, up 40% from the year before. In short, as Granta magazine put it, "the Chinese are everywhere."
What's China's Interest in Africa?
Beijing is interested in Africa because of oil and mineral rights. China ranks second to the United States in its consumption of oil, and needs huge quantities of other commodities to sustain its ongoing boom. So it's no surprise that China president Hu Jintao is anxious to foster relations all over the resource-strewn African continent.
Oil-rich countries such as Angola – which accounts for around 14% of Chinese imports – plus Chad, Nigeria and Sudan have seen investment from Chinese companies for years. About 60% of Sudan's oil goes to China.
Money has poured into a booming copper industry in Zambia and the Congo, while the Chinese are keen buyers of timber from such states as Cameroon, Mozambique and Liberia. As J. Stephen Morrison at the Centre for Strategic and International Studies sees it, "those places that are energy-rich and mineral-rich are awash in cash."
What Does Africa Get in Return?
The reason why China is "winning friends in Africa" is simple, says economist Philip Alves. Many African countries that have struggled to access funds from the International Monetary Fund (IMF) and the World Bank find the Chinese easier to deal with. For the poorest continent on the planet, offers from Beijing – such as those made at last November's China-Africa Cooperation Forum for billions of dollars worth of preferential loans, buyer's credits and the training of 15,000 African professionals – are very attractive.
All the more so when Chinese money rarely comes with any of the political conditions attached to Western funds. As Sudan's energy minister noted recently: "With the Chinese, we don't feel any interference in our traditions or politics or beliefs."
Meanwhile, a flood of cheap Chinese goods from motorcycles to T-shirts to kitchen utensils leads one ambassador to comment, "The Chinese are doing more than the G8 to make poverty history."
There are Risks
Some argue that closer economic and trade ties will lead to "neo-colonialism", where African resources are plundered by Beijing and sent back in the form of Chinese goods. They point out that an influx of affordable Chinese goods doesn't raise the wealth of most impoverished Africans and actually makes life harder for local firms. As a Zimbabwean newspaper owner put it, "If the British were our masters yesterday, the Chinese have come and taken their place."
Another concern is that China's links to – and implicit support for – controversial regimes will undermine efforts to introduce democracy and improve human rights in countries such as Angola, Nigeria and Sudan. For example, data on arms sales produced by the Council on Foreign Relations are highly troublesome. Over 10% of Africa's weapons purchases from 1996 to 2003 were from China, with big deals struck with states such as Sudan, Ethiopia and Zimbabwe.
So is this just Africa being exploited yet again?
Not necessarily. As Lindsay Hilsum says in Granta, poverty remains Africa's greatest and most urgent problem. Western countries may rail against Beijing's business practices, but the fact is that Africa needs trade and – in contrast to Western capital – China's cash arrives quickly and "with no colonial hangover and no complex relationship of resentment."
Today, many African economies are enjoying their fastest growth rates in 30 years, largely on the back of Chinese demand for raw materials. Chinese investments in African infrastructure have very deep roots, including some that reach back to large projects in the 1960s and 1970s.
And Granta's Hilsum says that many Africans look at China and see success rather than threat. World Bank figures suggest that China has lifted 400 million of its own people out of poverty in the last 20 years. Could Beijing do the same for them, Africans wonder? Unless Western institutions up their game in the region (one African diplomat observed, "If a G8 country had wanted to rebuild our stadium, we'd still be holding meetings"), China could provide opportunities for Africa that Europe and the United States have often failed to deliver.
Tags: China, Chinese Investments, Volatile