Africa for sale? Sold to China. Why?

Written by Yuhan Mo

“The countries that have been dealing with us [South Africa] before, particularly old economies, they’ve dealt with us as former colonial subjects,” Zuma, President of South Africa, continued. “The Chinese don’t deal with us from that point of view.”

China has become Africa’s largest trade partner, surpassed the Untied States, and Africa is now China’s major import source, second largest overseas construction project contract market and fourth largest investment destination. Realizing continent’s importance, Xi Jinping, the president of China, visited Tanzania, South Africa and the Republic of Congo as part of his first overseas tour after he become president in March last year.

In analyzing the rapid growth of trade volume between China and Africa, one has to understand why Africa favors China rather than its old partners.

In the history, various Western Powers colonized most the African Nations, and Africans have suffered tremendously under the colonial powers. Most of the colonial powers advanced their economy by exploiting resources from African land, and Africans remained poor, because they were denied the opportunities to do so. The IMF and the World Bank with help of OECD countries had significant trade relationship with Africa and created aid programs to alleviate poverty. However, implementation of foreign aids was not successful due to rules and conditions of the aids and yields little success of helping Africans who are really in need. Lack of overall consideration for African’s social welfare development and imperialistic approach economic policies of the Western powers resulted improvised economic approaches in the developing countries, and distanced themselves from the Western powers.

On the contrary, China is more prepared than Western countries to aid ordinary people in African countries, by constructing entire sectors of the country. China’s promises of huge aid program to build infrastructures like roads, hospitals, airport, railway stations, and even government department buildings are very attractive to the Africans as they are crucial part of social and economic development. By the end of 2009, the China-Africa development fund, created at China-Africa Cooperation Ministerial Conference (FOCAC) in 2000, had earmarked 700million USD aid for over 30 projects in various areas including agriculture, machinery manufacturing, power, construction materials, industrial parks, mining. The six trade and economic cooperation zones in Zambia, Mauritius, Nigeria, Egypt and Ethiopia developed well with an investment of 190 million USD in infrastructure.

 Chinese President Xi Jinping

Chinese President Xi Jinping (L, front) and Denis Sassou Nguesso (R, front), the president of the Republic of Congo, attend the completion ceremony of the China-Republic of Congo Friendship Hospital project in Brazzaville, capital of the Republic of Congo, March 30, 2013. [Wang Ye/Xinhua]

 

The largest motive behind this less profitable investment and assistance in Africa is to secure access to raw materials and natural resources. China’s exceptionally robust economic growth in the 1990s and 2000s has stimulated the huge upsurge in its demand for oil: between 1995 and 2005, China’s oil consumption doubled. However, Chinese government should not be criticized because of its interest in oil. First, oil and other natural resources are the comparative advantage of those resources-rich countries. The trade model decides that a country would export the goods that it has comparative advantage. Second, China is not the only country that looking for the resources in the continent.

Moreover, Chinese trade diplomacy has been dedicated in fostering African countries’ living standards and economic growth by encouraging investing more in Africa. The investments in infrastructure, agriculture, which are mostly ignored by western donors, will finally lead to a more economically prosperous and politically stable Africa. Africa’s significant need for investment in infrastructure, manufacturing, agriculture and energy has been fulfilled while China has the capacity to invest more in Africa to satisfy its need. The World Bank has estimated that loans from the China Export-Import Bank to sub-Saharan Africa in the infrastructure sector alone amounted to over US$12.5 billion by the middle of 2006.

In supporting of increasing African countries’ export volume to China, China established diplomatic relations with the twenty-five least developed countries (LDCs) in the export of China in Africa at zero-tariff treatment as an outcome of FOCAC in 2005. China increased the number of products receiving zero-tariff treatment from 190 to 440. China helps African companies to seek more opportunities, by further opening the market. African products receiving zero-tariff treatment rose to 4700 taxable items, and should cover 95% of all taxable items listed in the Regulations of the People’s Republic of China on Import and export. Driven by the zero-tariff policy, the rapid growth of exports of African goods to China appears. From 2005 to the end of June 2010, China zero tariff treatment to imports into the African total of U.S. $ 1.32 billion of goods (Xinhua, 2010).

It is not hard to understand why Africa would will to trade with China. Even though the China’s main interest in Africa is natural resources, as the same as Westerners’, the “equal and mutual-beneficial” trade relationships and aid programs that Chinese government advocates attract African leaders, who believing the policies could help with the overall development of the continent.

 

 

Sources:

Picture: http://www.china.org.cn/world/XiJinping_2013_visit/2013-04/01/content_28411947.htm

 

China-Africa Trade and Economic Relationship Annual Report 2010. Rep. N.p., 22 June 2011. Web. <http://www.focac.org/eng/zxxx/t832788.htm&gt;.

 

“China’s Impact on Intra-African Trade.” The Chinese Economy 44.4 (2011): 75-91. July 2011. Web.

 

http://www.globaltimes.cn/content/845318.shtml#.UxFC8PRdVEw

 

http://www.ecns.cn/2014/02-21/101787.shtml

 

China Africa Partnership:

http://www.youtube.com/watch?v=V0S_XS0y1Oo

 

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