Imen Khemakhem – YSMCHN –International Economic Relations and Financies -- 2022

China versus the United States geo-economic African aftermath

Following the cold war, countries are more apt in altering their foreign policies to align with
their geoeconomics purposes. With China and the United States in the front, this phenomenon is
seizing national interests and is prevailing over geo-politics.

Briefly, geo-economics is the use of economic tools as a state craft, instead of military tools per
se. It is the use of power politics by economic means1. Nevertheless, as similar as it is to
international political economy, geo-economics deals with a narrower range, as it is focused on
geographical attributes of countries. Using geo-economics is less apparent than military
interventions, as it is less noticed by the public opinion and media, as it is not cruel and human in
the broader sense. The tools used can be positive, negative, or strategic. Positive, such as
humanitarian aids, investments, finance, and trade. The negative instruments (aka used for
negative consequences), can be translated through economic sanctions, cyberattacks, taxes on
foreign products usually as punishments for political moves. At last, strategically such as well as
governments purchasing other governments’ debts to refrain movements2.

As such, ‘’The logic of geopolitics is traditionally zero- sum, while the logic of economics is
traditionally positive- sum2’’ . Geo-economics started 30 years ago, and is only revealing itself
during this century, more and more countries are joining the field and the impacts are already
shaping our world balance.

Currently, in terms of total capital invested -a prominent geo-economical tool-, China persists as
the highest foreign development investor in Africa. From 2014 to 2018, China have invested
more than $72 billion in Africa, generating more than 137 000 jobs3. Impressively, China has not
contributed to economic growth through most of its projects, but it has contributed more than
twice as much as France and the United States in dollars, making it one of the top investors in
FDI4. Another source stated China as the first top economy followed by Luxemburg with a value

1
Geo-economics and power politics in the 21st century the revival of economic statecraft Mika Aaltola, Mikael
Wigell, Sören Scholvin (2018)
2
STRATEGIC SECURITY ANALYSIS Geo-economic competition:global disruptions from the new frontline by Jonathon
Cini.
3
https://afr-ix.com/comparison-of-fdi-in-africa/
4
https://afr-ix.com/comparison-of-fdi-in-africa/
 Imen Khemakhem – YSMCHN –International Economic Relations and Financies -- 2022

of 133 billion American dollars, when it comes to foreign investment development in the world5.
The most recent source declared China as the largest investor in Africa for the last 10 years
followed by the US, and France6.

A free trade African treaty was supposed to become operational on July 1, 2020, namely
“African continental free trade area”, transforming Africa into the largest free trade area, when it
comes to the participants number (Garth L. Le Pere 2021). Nevertheless, the US and China still
have an excessive influence over the continent through institutionalized trade, foreign direct
investments and cooperation frameworks, though regional trade agreements remain the main face
of geo-economics. (Garth L. Le Pere 2021).

As a background introduction to the Chinese and American leverage over Africa, certain
organizations and agreements must be shed to light. The Chinese geo-political and geo-
economical leverage can be represented through foreign direct investments by private and public
Chinese companies, the belt and road initiative to connect between Asia, Africa and Europe, the
Chinese banking systems, and mainly the forum on China – Africa cooperation. As for the
American leverage, it can be translated primarily through the US African Growth and
Opportunity Act (AGOA), which includes conduct codes, participation standards, and various
parameters that those African countries have to abide by to benefit from it (Mzukisi Qobo et al,
2019). According to the Economist, those two giants are currently Africa’s biggest trade
partners7. This in turn escalate the rivalry between the two countries, with a flagrant contrast in
ideologies, goals, strategies and market conducts.

In this era, the United States as a prominent liberal figure in international relations is bound by
several universal treaties, rules of law and conducts, which translates into narrow foreign policy
possibilities and capacities vis a vis Africa, and as such cannot deal lightly when it wants to
acquire deals with the African continent -As several countries are authoritarians with various
violations and crimes against humanity allegations-, and thus have to go the hard way for
resources. Meanwhile, China have been trading and dealing with oil rich countries to extract
their riches, in exchange of investments, UN council veto protection, and various infrastructure

5
https://hbs.unctad.org/foreign-direct-investment/
6
Business Insider Africa China ranks ahead of America as the largest investor in Africa since 2010
VICTOR OLUWOLE February 20, 2022 11:20 AM
7
https://www.economist.com/leaders/2019/03/07/the-new-scramble-for-africa
 Imen Khemakhem – YSMCHN –International Economic Relations and Financies -- 2022

deal. Thus, the imbalance in the choices laid out in front of the Chinese Republic and the United
States.

Prior to an engagement in the topic, geo-economics should be discussed from a theoretical and
scholarly point of view. Scholvin, S., & Wigell, M. (2018) introduced geo-economics as a state
foreign policy tactics, that applies economics, as a tool to achieve strategic goals. The authors
insinuated that the doctrine transcends IR realism, as it is fixated on geographical characteristics,
that are rooted in foreign politics and IR, as such geo-economics concerns the power that is
based on economics, and that have a geographical dimension. Moreover, Scholvin, S., & Wigell,
M. (2018) tried to highlight the controversies of the discourse, and a probable distinction
between it and international political economy (IPE). They questioned its relevance, as to be
defined by its means or its ends? As used only by states, or even private enterprises? As to be
complement military statecrafts, or be on another spectrum? As to being a policy-oriented
version of IPE or related to geo-dimension issues. Thus, the evolving conceptualization of the
framework, that the only solid component rests upon geography. In an article, Mohan, G (2015)
mentioned the transition from geopolitical to geo-economics, as the link between “transnational
capital” and “domestic political economy”, in which he explained through the example of
China’s effort to secure oil, starting from owning equity shares, to switching to long term loans.
As for Morgan, P. (2019), she went on to categorize and highlight the possible tools of economic
statecraft, mentioning the negative ones as sanctions, discriminatory trade policies, exchange rate
manipulation, cyber-attacks and energy governance, and the positive ones as aid, investment
policies, and preferential trade policies.

Chinese Influence Model:

According to the UNCTAD 2021 report, China is the first globally when it comes to FDI, with
0.9 of its total GDP. On the other hand, the US only devoted 0.4 of its GDP for foreign
investments. The regress of the US has been theoretically tackled by scholars.

Table 1: 2020, China and US FDI Outflows, Source: UNCTAD (2021). World Investment Report 2021: Investing in Sustainable
Recovery. United Nations publication. Sales No. E.21.II.D.13. New York and Geneva.

Year: 2020, Foreign direct Value (Billions of US Ratio To GDP (Percentage)

investment outflows. Dollars)
China 133 0.9
 Imen Khemakhem – YSMCHN –International Economic Relations and Financies -- 2022

US 93 0.4
Source: Jan 2022, The statistical bulletin of China’s Outward Foreign Direct Investment, US Bureau of Economic
Analysis. China Africa Research Center, Johns Hopkins School of Advanced International Studies.

Table 2 Chinese FDI vs US FDI to AFRICA

Table 2 showcases the FDI of both hegemons to Africa. It shows that the US was outrun by
China from 2012, until today. This phenomenon has been discussed by several authors.

Garth L. Le Pere (2021) have discussed the BRI (One belt one Road Initiative) outreach in
Africa, that was valued with 170 Billion US Dollars between 2005 and 2017, whereas he also
mentioned the Sub-Saharan African’s debt to China valued at 24% of the whole Sub Saharan
Debt, and for that China have been using its own geoeconomics platforms such as the AIIB
(Asian Infrastructure Investment Bank) and the NDB (New Development Bank). According to
Power, M., & Mohan, G. (2010), China’s current aid offensive portrays it as a “Rogue Creditor”,
as it lacks political conditionalities, and have deepened African debts, moreover such moves are
legitimized through the shared experiences of colonialism between China and Africa, as part of
the currently developing world. As for Carmody, P. R., & Owusu, F. Y. (2007), they mentioned
the Chinese hegemony and geo-economic strategy goals as following: to maintain access to
natural resources, to reutilize its huge foreign exchange reserves into investments internationally,
to ensure the development of Chinese multinationals, to identify new markets for the Chinese
products and to develop Africa’s agriculture to supply Chinese industry, and as such the
“asymmetric power” projection of China peacefully against the US. Besada, H., & Moyo, N.
(2008) also showcased the achievement of such goals by mentioning the Zimbabwean example,
where now China owns 70% of the country’s electricity generation capacity, and where it is
 Imen Khemakhem – YSMCHN –International Economic Relations and Financies -- 2022

illegal to mention “Zhing Zhong” (power quality Chinese goods), and where student are learning
mandarin.

American Influence Model:

Mensah, C. (2010) stated that the US Washington consensus unlike the BC, emphasizes on
hierarchy, and follows the same frameworks such as the economic partnership agreements under
the Cotonou agreement, and the Growth and Opportunity Act (AGOA), that renders the African
countries skeptical when it comes to the need to adhere to certain regulations and policies.
Mzukisi Qobo et al (2019) states that the AGOA enables the US president to determine the
eligibility of the African countries for economic agreements and perks based on certain factors
such as progress towards the rule of law, not undermining the US interests, not violating the
international human rights, and not being involved in terrorism. As such, for Mzukisi Qobo et al
(2019), the “nonreciprocal and unilateral arrangements” of the AGOA can be thought as an
anachronism in the liberal world, where perks come with a price. Moreover, the author stated
that the AGOA main exports is oil, which amounted for 86% of the total 2015 share, and besides
Africa, only seven countries -mainly oil rich- have exported to the US with a value of more than
100 million US dollars, thus a lack of diversity. Moreover, Cohen, H. J. (2020) stated that vis a
vis Africa, the administration recommended a cut of 30% of foreign assistance. This instead
reinforces the phenomenon of the declining US hegemony, and its focus on inward nationalism
in its foreign policy, as well as its focus on other instruments of geo-economics.

Conclusion:

Both the Chinese and American sides are currently maintaining a status quo over African
countries, with the latter employing more political power, instead of an economic one. China’s
game relates more to its economic power as a giant exporter of goods, and importer of natural
resources, its perk is that it does not require human rights standards and regulations from its
counterparts to maintain trade agreements. In return, the US maintains its position as a watchdog
to human rights and the rule of law, and will only maintain economic relations, if the country is
respecting those criteria, which is more unlikely for African countries, nevertheless it portrays its
supremacy through political means (UN council membership), and through military means (US
military bases globally), and its belonging to the powerful west. As such, China is reviving its
influence through investments, imports, and exports to mostly oil rich African countries. Whilst,
 Imen Khemakhem – YSMCHN –International Economic Relations and Financies -- 2022

the US is maintaining its position similarly economically and also militarily, by foreign
humanitarian aid, and politically by the globalization of liberalism, US led human rights, and
rule of law. As such, African countries are riding the waves of development by trying to
economically develop themselves, and accepting the Chinese aids, in the short term.
Nevertheless, on the long term, they will mostly turn to the west, as a long-term economic
development cannot be done with the democratization and the rule of law in that country. That
model can be seen by the correlation of the rule of law8 in Tunisia, Mauritius, South Africa, and
Botswana, and their development both economically9 and socially. Thus, geo-economics on its
own cannot guarantee hegemony and supremacy globally, as other statecrafts still matter.

References:

Besada, H., & Moyo, N. (2008). Zimbabwe in Crisis: Mugabe's policies and failures.

Carmody, P. R., & Owusu, F. Y. (2007). Competing hegemons? Chinese versus American geo-
economic strategies in Africa. Political Geography, 26(5), 504-524.

Cohen, H. J. (2020). US policy toward Africa: Eight decades of Realpolitik. Boulder, CO, and
London: Lynne Rienner Publishers.

Le Pere, G. L. (2021). US-China Geoeconomic Tensions: Implications for the African

Continental Free Trade Area. Asian Perspective, 45(1), 147-156.

Mensah, C. (2010). Chinas foray into Africa: Ideational underpinnings and geoeconomic
interests. African Journal of Political Science and International Relations, 4(3), 096-108.

Mohan, G. (2015). Queuing up for Africa: The geoeconomics of Africa’s growth and the politics
of African agency. International Development Planning Review, 37(1).

Morgan, P. (2019). Can China’s economic statecraft win soft power in Africa? Unpacking trade,
investment and aid. Journal of Chinese Political Science, 24(3), 387-409.

Power, M., & Mohan, G. (2010). Towards a critical geopolitics of China's engagement with
African development. Geopolitics, 15(3), 462-495.

8
https://www.statista.com/statistics/1204750/democracy-index-in-sub-saharan-africa-by-country/
9
https://worldpopulationreview.com/country-rankings/most-developed-countries-in-africa
 Imen Khemakhem – YSMCHN –International Economic Relations and Financies -- 2022

Qobo, M., & Le Pere, G. (2019). China and US Geoeconomic Tussle and Implications for
Africa. China and the World, 2(03), 1950014.

Scholvin, S., & Wigell, M. (2018). Power politics by economic means: Geoeconomics as an
analytical approach and foreign policy practice. Comparative Strategy, 37(1), 73-84.

Wigell, M., Scholvin, S., & Aaltola, M. (2018). Geo-economics and power politics in the 21st
century. New York: Routledge.