Fact #1: China is growing like crazy
The Giant Panda is very hungry, hungry for energy, hungry for resources and inputs for its manufacturing machine. To give some examples, it is buying oil from Angola and Sudan, copper from Zambia and Congo, timber from Gabon, platinum from Zimbabwe and many other minerals from all around the continent.
Fact #2: China wants to sell its cheap manufactured goods
Africa is seen as an incredible export market opportunity.
Fact #3: Therefore, China wants to be best friends with Africa
“China has forged a new type of strategic partnership with Africa that features political equality and mutual trust, economic win-win cooperation and cultural exchange”. So writes the Chinese Ministry of foreign affairs (2006) that did develop its own format of foreign aid. To put it very basically, China gets access to resources and in return builds infrastructure. This aid come with no strings attached in terms of governance and involves way less bureaucracy than Western aid. As Sahr Johnny, Sierra Leone ambassador to Beijing, puts it, “we like Chinese investment because we have one meeting, we discuss what they want to do, and then they just do it…There are no benchmarks or preconditions…”
Chinese’s strategy is not only an extractive one. It is investing heavily in social infrastructure in return of the granted access to resources. Not only is it building roads and railways, ports and dams, but also hospitals and schools, concert halls and stadiums, mobile phone and fibre optic networks, and this where no other investor dares to go, deep inside the tropical forest, where extracting sites are located.
On these huge infrastructure projects, China brings many workers from home. What’s special is that many of them actually stay in Africa afterwards, when the project is done. According to Akwe Amosu of the Open Society Institute, hundreds of thousands of Chinese citizens have moved to Africa since the mid 1990’s. This offers a promising export future for Africa as it will create Chinese networks that could boost trade with China. Indeed, according to a branch of trade theory, ethnic networks are an important factor in facilitating trade (Rauch, James E., and Vitor Trindade. (2002). "Ethnic Chinese Networks in International Trade." Review of Economics and Statistics).
Another nice feature of China’s strategy is the incentives it gives to its own companies to do business in Africa.
Fact #4: The West is not happy
The West is going crazy first of all because they are losing influential power as the main commercial allies (think of the pride with which France or England think of their former colonies). Hence the West accuses China of promoting corruption and of damaging their anti-poverty efforts. As a matter of fact, China is hurting the West’s efforts in establishing transparent and accountable governments in Africa, by not caring at all. But this Western “structural” strategy never really seemed to have worked and I think Africans are fed up of all the western style bureaucracy that just creates corruption. And anyway, it’s not by imposing good governance that it can take root. Every time it seems to be achieving something, such as in Uganda or Nigeria, the President turns out corrupt and undemocratic in the end.
A serious menace is the supposed poor ethics of Chinese business practices. Transparency International, an anti-corruption watchdog, found in its “Bribe Payers Index Report 2006” that Chinese companies behaviour, when operating in developing countries, was indeed alarming. Is China really promoting corruption? Akwe Amosu affirms that Chinese negotiators and businesses routinely pay bribes to secure deals. In Sudan, the President is getting a new Chinese style palace. Still, Transparency International’s 2007 CPI results show that Africa is producing good results in the fight against corruption. So it remains unclear. Anyway, good governance may come with openness and growth, and not the other way around, as wanted by the West.
But what annoys the West above all is that China does not seem to care that the Sudanese government is using its oil windfalls to buy weapons and create a racist genocide (China buys 64% of Sudan’s oil). They do not seem to care that Mugabe is completely destroying a once African superstar. They’re in Africa to do business, not politics.
Is China messing things up or giving Africa a new opportunity?
Thanks to Chinese manufacturing and exporting, instead of having access to only expensive and not that great French or American products, Africans can now consume a multitude of cheap goods such as electronics goods, football team jerseys, bicycles and low cost motorcycles, to name but a few. The welfare gain of these imports, in the form of lower prices and higher consumption, is tremendous. One question remains: will these exports, coupled with China’s appetite for resources, give Africa the Dutch disease, destroying its manufacturing sector? Furthermore, if the resource money is not well distributed or invested in well-managed funds, inequalities, corruption and conflicts will probably arise. This is another form of the resource curse. But could this investment and infrastructure boom become a blessing with beautiful spillovers and sustainable growth? China will play its part, African governments will decide the outcome.
Fact #5: Africa has a new opportunity
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