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The Impact of China’s Growing Influence in Africa

The Impact of China’s Growing Influence in Africa

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Published by David Shinn
Article by David Shinn, former U.S. ambassador to Ethiopia and Burkina Faso and adjunct professor of international affairs at George Washington University, published in the April-May issue of The European Financial Review.
Article by David Shinn, former U.S. ambassador to Ethiopia and Burkina Faso and adjunct professor of international affairs at George Washington University, published in the April-May issue of The European Financial Review.

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Published by: David Shinn on Apr 20, 2011
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16
The European Financial Review | April - May 2011
Te Impact o China’s Growing Infuence in Arica
By David H. Shinn
Historical backdrop
China is not new to Arica but the changeover the decades in its relations with thecontinent is as revolutionary as China’s owninternal revolution. From Mao Zedong’s lead-ership in 1949 until the end o the Cold Warin the late 1980s, China’s ideological oreignpolicy, Chinese internal developments andother events exogenous to Arica deter-mined the nature o the China-Arica relation-ship. Although the Cold War had the great-est impact on China’s ties with Arica, theSino-Soviet conict that began in the late1950s and continued until the mid-1980swas almost as important. China’s Great LeapForward rom 1958 until the early 1960s andthe Great Proletarian Cultural Revolution thatbegan in 1966 and continued in a milderorm until 1976 also had signicant implica-tions or China’s relations with Arica. The1989 Tiananmen Square protests coincidedwith the end o the Cold War and marked awatershed in the way Arica viewed China.Only a ew Arican countries were in-dependent in the 1950s and China’s weak economy limited its ability to interact withArica. China-Arica trade was a paltry $12million in 1950, although it grew to $100million by 1960. China strongly supportedArican liberation movements, starting withAlgeria, in spite o its limited resources. Chi-na even provided assistance in the late 1950sand 1960s to several let-wing movements incountries such as Cameroon and the Congothat opposed the existing independent gov-ernment. The Great Leap Forward and theCultural Revolution restrained China’s inter-est in engaging countries ar rom its shoresand rom providing economic aid. In 1971,Arican countries played an instrumental rolein helping Beijing replace Taipei as the oc-cupant o China’s seat in the United Nations.China requently reers avorably to this sup-port in its political interaction with Arica.China-Arica trade passed the $1 billionlevel in 1980 and jumped to $10 billion by2000 while China has experienced an aver-age 9 percent GDP growth rate since the
China-Africa trade passed the $1 billion level in 1980 and jumped to $10 billion by 2000 while China has experi-enced an average 9 percent GDP growth rate since thebeginning of the 1980s. This set the stage for dramaticallyincreased economic interaction between China and Africa.
beginning o the 1980s. This set the stageor dramatically increased economic interac-tion between China and Arica. The end o the Sino-Soviet conict and the Cold Waropened additional possibilities or expandingeconomic relations and ended any rationaleor supporting governments or movementssolely on the basis o their revolutionary ide-ology. The Arican reaction to the events at Tiananmen Square provided an indication o uture China-Arica political relations. While Tiananmen Square resulted in harsh criticismrom the West, Arican countries remainedlargely silent and a ew even publicly sup-ported Beijing’s position. China avoids criti-cizing governance deciencies and humanrights abuses in Arican countries. Nearly allArican governments, even those with strongdemocratic credentials and good humanrights records, reciprocate and almost nevercriticize China’s human rights policies or in-ternal political issues.
China fexes its economic mus-cle at the turn o the century 
 The 21st century ushered in a dramatic in-crease in China-Arica interaction. China be-
GeopoliticsEmerging Economies
China is not new to Arica but thechange over the decades in its relationswith the continent is as revolutionary as China’s own internal revolution.
 
www.europeanfnancialreview.com
17
gan to assert its global economic power at atime when western nations were experienc-ing pesky stock and housing market bubblesand ill-advised nancial dealings that result-ed by 2008 in the most serious economic re-cession since the American depression o the1930s. China’s economy held up much bet-ter than did western economies. At the sametime, western companies had been drawingback rom Arica while China and its state-owned and private companies signicantlyincreased their engagement in Arica, in partdue to China’s voracious appetite or Aricanraw materials. China-Arica trade exceeded$100 billion in 2008, ell back because o theglobal recession to $91 billion in 2009 andeasily passed the $100 billion mark again in2010. China also surpassed the United Statesin 2009 as Arica’s most important bilateraltrading partner. Even with this phenomenalgrowth in trade, Arica constitutes only about4 percent o China’s global trade. On the oth-er hand, more than 10 percent o Arica’s totaltrade is with China.While trade between China and Arica’sty-three countries has been nearly in bal-ance during the past decade, there are somestorm warnings. Because o the drop in theprice o oil, China had a $10 billion trade sur-plus with Arica in 2009. About 70 percento Arica’s exports to China are crude oil andanother 15 percent is raw materials, mostlyminerals. Some teen Arican oil and min-eral exporters have large trade surpluses withChina while more than thirty others havesizeable trade decits. In the case o thoseArican countries with consistently largetrade decits, the trade relationship is prob-ably not sustainable. China is taking stepssuch as duty ree imports rom poorer Aricancountries to rectiy the situation, but China’sexport power simply overwhelms most o itstrading partners. The Arican countries justdo not have signicant amounts o productsother than raw materials that can crack theChinese market.Chinese investment in Arica, which hadnot been a signicant actor until the begin-ning o this century, reached according to o-cial Chinese statistics more than $9 billionby the end o 2009. China actually reportedslightly higher direct investment in China byArican countries as o the end o 2009. WhileChina’s ocially reported investment in Ari-ca constitutes a modest amount comparedto western investment in Arica, it also seemsto understate signicantly the magnitude o Chinese investment, which would appear tobe at least double the ocial amount basedon inormal calculations. Although accuratestatistics are elusive, China may have beenthe single largest investor in Arica during2009. In any event, in just ten years China hasgone rom an insignicant investor in Aricato one o its most important investors.China remains well behind western coun-tries in the amount o OECD-equivalent aidthat it provides to Arica. Most o China’slarge inrastructure projects in Arica, whichare receiving signicant publicity, are actu-ally based on loans. They usually come withlow interest rates and long-term repaymentschedules. While this component qualies asaid, they are also tied to Chinese constructioncompanies, sometimes with a signicant Chi-nese labor component. China does not pro-vide annual country-by-country aid statistics.In 2006, Premier Wen Jiabao stated that Chinahad provided $5.6 billion in oreign aid to A-rican countries since the beginning o its as-sistance program. The Arican DevelopmentBank concluded in 2009 that China’s annualaid to Arica is averaging between $1.4 billionand $2.7 billion, while loans had reached $8.5billion. While China remains an aid recipient,it has also become an important aid donor toArica, although its total assistance remainswell behind that rom the West.
Motivations o China and theWest in Arica
 The motivations o China and western coun-
Most of China’s large infrastructure projects in Africa, which are receiving significant publicity, are actuallybased on loans. They usually come with low interestrates and long-term repayment schedules.
tries in Arica are surprisingly similar. Both seeArica as a major source o oil and minerals. The United States and Europe each importabout one-third o Arica’s total oil exportswhile China takes only about 13 percent.Higher total oil consumption in the West ac-counts or this; about 90 percent o Aricanexports to the United States consist o oil.China does import more mineral productsrom Arica than does the United States. Nev-ertheless, western countries need to exercisecare in criticizing China’s imports o raw ma-terials rom Arica when they are doing thesame thing on a larger scale.On a global basis, Arica does not yetconstitute an important export market ororeign goods because o its relative povertyand underdevelopment. Arica purchasesonly about 3 percent o total Chinese exportsand only about 2 percent o total Americanexports. This situation is likely to change,however, now that Arica’s population haspassed the 1 billion mark and Arican coun-tries have achieved on average in the last veyears an annual GDP growth rate o about5 percent. Both China and the West under-stand that Arica is becoming a more impor-tant market or their exports; they want tobe in a position to take advantage o Arica’sgrowing prosperity.China and western countries, especiallythe United States, look to Arican countriesor political support in international orums.China has a particular interest in mobilizingArican support in the UN Human RightsCouncil where it is sometimes under pres-sure rom the West. Western nations andChina welcome Arican support in the World Trade Organization. Arican states have threenon-permanent members on the UN Secu-rity Council where China, the United States,France, the United Kingdom and Russia all
Western countries needto exercise care in criti-cizing China’s imports of raw materials from Africa when they are doing thesame thing on a largerscale.
 
18
The European Financial Review | April - May 2011
irrespective o the nature o the governingregime. China has close relations with theIslamist government in Sudan, democraticgovernments in Botswana and Mauritiusand authoritarian governments in Togo andEquatorial Guinea. China works hard to de-velop the government-to-government re-lationship and in recent years has generallybeen more successul than western coun-tries in establishing close ties with most A-rican leaders. The heads o state and/or gov-ernment rom countries as varied as Ethiopia,Kenya, Senegal, Sudan and South Arica havebeen efusive in recent years in their praise o China. It is dicult to nd similar warm state-ments by these leaders directed at westerncountries. To its credit, China has made a more seri-ous efort to establish personal ties with Ari-can leaders than has any single western coun-try. Hu Jintao has made six trips to multipleArican countries, two as vice president andour as president. Wen Jiabao has also been arequent visitor to Arica. The Chinese oreignminister has made his rst overseas visit eachyear since 1991 to a country in Arica. SeniorChinese Communist Party and military o-cials have a regular schedule o trips to Arica.solicit their backing on key issues. China hasoten been more successul than the West inrecent years in obtaining the support o Ari-can governments in international orums.China has one interest in Arica that is notshared by the West—ending Arican diplo-matic recognition o Taipei and replacing itwith Beijing. Only our Arican countries—Burkina Faso, Gambia, Swaziland and São Tomé and Principe—still recognize Taiwan.Since Taiwan’s election in 2008 o PresidentMa Ying-jeau, there has been an inormaltruce between Beijing and Taipei concerningcompetition or diplomatic recognition. Thetruce is probably temporary; this competitioncould return at any time as a major Chineseinterest in Arica.Western countries are motivated by sev-eral concerns that so ar have little relevanceto China’s policy in Arica. Although both theWest and China generally seek political sta-bility in Arica, western countries, especiallyFrance, the United States and the UnitedKingdom, have traditionally had strongersecurity ties with certain Arican countries.France continues to maintain several militaryacilities in Arica while the United States hasa base in Djibouti or countering terrorismin the region. The same western countriescontinue to rely on the consent o Aricangovernments or military aircrat over ightand landing rights and access by their navalvessels to Arican ports.Key western nations give a higher prioritythan China to a number o negative concernssuch as terrorism, money laundering, illegalimmigration and drug tracking that plagueArica and other world regions. The Westseeks to minimize these threats so that theydo not harm western interests in Arica ormaniest themselves in Europe and the Unit-ed States. China is demonstrating increasingconcern about them. For the past two years,China has been an active participant in theanti-piracy operation in the Gul o Aden asits own shipping interests have been threat-ened. China is also increasing its cooperationwith the Arican Union on counterterrorismand money laundering.
Strong China-Arica govern-ment-to-government ties
China gives its highest oreign policy priorityto developing strong links with governmentsChina also gives a high priority to invitingArican chies o state, heads o government,ministers and senior military and ruling partyocials to China. This attention has paid of handsomely in assuring high level access orChina in Arica and in helping to assure thatArican leaders do not criticize China. It helpsthat China rerains rom criticizing even themost egregious Arican human rights andgovernance practices.
Mixed relations with otherelements o Arican society 
Governments do not, o course, representthe views all elements o society. China hasnot been as successul in developing strongties with other important groups in Arica.Most Chinese engagement has been in theeconomic sphere. For the most part, Chinesecompanies have developed a reputation asreliable and reputable business partners. Al-though there are some complaints about thepoor quality o some Chinese goods, mostArican consumers appreciate the low pricesand understand you get what you pay or.I you want higher quality products, Chinaproduces them so long as you are willing topay the price. A problem that China has notsolved is the export o countereit and adul-terated products, especially medicine, to Ari-ca. Arican countries do not have institutionsthat are able to keep these products romentering the market and China has not takenmeasures to prevent private Chinese manu-acturers rom exporting them to Arica. There are serious complaints rom Aricanmanuacturers (textiles come to mind) whohave been unable to compete with Chineseimports and small Arican traders who havebeen driven out o business by Chinesetraders who have established shops in theirmarkets. In some cases, the Chinese tradersbenet rom integrated supply sources con-nected to relatives and riends in China. Inother cases, the Chinese traders simply work longer hours and in less desirable rural loca-tions. Aricans also complain when Chinesecompanies import a high percentage o Chi-nese labor to build inrastructure projects. The Aricans understand the need to bringin Chinese or highly skilled positions, butnot or work requiring minimal skills. Chinahas tried to respond to these complaints, butwith limited success especially in the case o 
The Africans understandthe need to bring in Chi-nese for highly skilledpositions, but not for work requiring minimalskills.
GeopoliticsEmerging Economies

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