Is Africa suffering for Chinese economic growth?

Chinese investment in Africa is in the firing line. Thaddeus Best unpicks these intercontinental ties

Those in Beijing in mid-November 2006 might have witnessed a curious sight. Overnight, hundreds of African-themed decorations were erected across the city, and walls were painted with posters of tribesmen, antelopes and the savannah. Drivers were forbidden from taking their vehicles on the roads for miles around, and palm trees surrounded the area. In the centre of Beijing, a lavish party with African drummers got underway, and one could be forgiven for mistaking China's capital for a sub-Saharan city.

This impressive reception was thrown for the heads of state and other key ministers of 45 African countries, and symbolised the relations between the continent's nations and China which have strengthened over the past decade.

Rapid growth

The rise in trade between China and Africa has been nothing short of phenomenal. Year-on-year trade increased by 45 per cent from last year, and it has been estimated that it will surpass £66 billion this year, up from just £7 billion in 2002. China now ranks as the continent's second-highest trading partner, behind the US and ahead of France and Britain. China and Africa have been doing business for centuries; the Chinese Communist Party even created strong links with the African liberation movement in the 1950s. However, no comparable increase in foreign investment, trading and capital currently flowing between China and Africa has ever been witnessed before.

Behind these statistics lies the fact that Africa now represents an essential part of China's economic strategy as China's dependence on African energy and minerals grows. China now receives over one-third of its oil imports from the African continent, as well as vast amounts of minerals. However, trade is not just one-way: in comparison to the saturated economies of Europe and North America, Africa can also provide tempting new export markets for cheap Chinese products.

Angry reactions

The rapid growth of Chinese interests in Africa has drawn accusations of imperial ambition from some in Europe and the US, which has angered Chinese officials. When Jack Straw casually made reference to China and what he saw as its "new colonialism", Chinese diplomats severed contact with the UK on African issues for a year. It's unsurprising that China has reacted in this way, given the distinct hypocrisy of countries like Britain accusing China of using African resources for its own economic expansion. China asserts that it follows a policy of non-interference in its dealings with other sovereign states, supposedly leading on from the lessons learnt during the Cold War. This "soft power" approach has been credited with helping to forge the Sino-African alliance. Loans and finance from western states are often conditional upon transparency, good governance and human rights. China, by contrast, keeps its distance from political and social intervention. This policy has proved enormously successful in securing trade with African countries; while US and European officials squabbled over economic recovery at the G20 meeting last year, the China-Africa Summit quietly secured £6 billion worth of loans and investment.

The fundamental question however, is how China's policy will affect Africa in the long term. There are without doubt many benefits for African nations in the short term. They have seen massive investment in infrastructure, and a influx of affordable Chinese goods.

Ethical controversy

However, China's policy of non-interference has proved controversial where China deals with African states with poor human rights records and a lack of good governance. For example, critics have argued that Chinese investment in Sudan is undermining efforts to alleviate the violence in Darfur, where over 200,000 people have been killed by government sponsored counter-insurgency operations. Furthermore, much of the bloodshed has reportedly been inflicted with Chinese manufactured weapons. In Zimbabwe also, large amounts of military hardware have been delivered by the Chinese, including an £8 million radar system, six jet aircrafts and over 100 military vehicles, largely purchased against Zimbabwean platinum reserves. Authoritarian African regimes see China as a means to grow economically without relinquishing political control, damaging the effectiveness of western embargoes.

The policy of non-interference raises awkward dilemmas for the west. On one hand, western nations have ostensibly promoted free trade and the removal of international barriers to it. On the other, the provision of loans and aid to African nations often has strict conditions attached, and vigorous economic sanctions are enforced on states to control their behaviour and promote western-style democracy and governance. After decades of controlling and manipulating African nations through colonial rule, many European countries are embarrassed to oppose a trade policy which imposes no such conditions, even if they regard such actions as reckless and irresponsible.

Non-interference?

In many ways the "non-interference" title is a misnomer; there are those who question whether China's trade policy is really as laissez-faire as it is presented. The non-interference model could potentially alter the political landscape of Africa permanently, as examples of the same policy in action in Asia have shown. For example, Burma's political crisis shows the potential dangers of failing to intervene. China has persistently refused to be drawn into any comment on the Burmese regime, and has gone as far as to use its influence on the UN Security Council to block international efforts to do so. Essentially, many see the policy of non-intervention as not non-ideological, but as simply representing humanitarianism and aid being put on the back burner in order to promote free trade and foreign direct investment. In addition, Chinese financing might not be conditional on human rights, but China has been accused of actively interfering politically in the governance of many of the African states with which it deals by aiding presidential campaigns, or diminishing the chances of opposition parties.

However, it could be argued that the controversy around China's involvement in Africa is more indicative of western fears and anxieties about China than the reality of its engagement with Africa. Before China's expansion into Africa, African nations largely had to accept the trading terms offered to them by the west or go without, leaving little room for negotiation or leverage. With the introduction of China as a major trading partner, Africa now has options. Given the choice between dealing with their old colonial rulers and the stringent conditions they often set, and the ostensibly disinterested Chinese, it's perhaps no surprise that so many African states have reacted favourably to the introduction of China as a trading partner.

And the winners are...

The key question is who stands to benefit from the arrangement? Investment conditional on transparency and good governance undoubtedly favours the general population and it's harder to judge whether the Chinese approach will create the same opportunities.

There are some clear examples of Chinese investment in infrastructure that have provided universal benefit. War-battered Angola, for example, has recently been helped by three oil-backed loans from Beijing, where Chinese companies have built roads, schools, hospitals, railways and water systems. However, there is an underlying suspicion that the majority of deals will favour the African elite and Chinese investors rather than the general African population. Chinese factories based in Africa have generally eschewed local workers in favour of Chinese immigrants, and, even when locals are employed, wages are pitifully low. Chinese exports now flood African marketplaces, proving popular due to their relative cheapness and superior quality compared to locally produced products, which has had a detrimental impact on local manufacturers. Nascent African industries have been killed off, unable to compete on quality or price with China. Major government contracts also often go to Chinese companies, due to their ability to keep costs down.

Ultimately, whether China's policy of non-interference is sustainable is highly questionable. While there are undoubtedly short-term economic and political benefits in offering no-strings attached financing and trade to African nations, it is doubtful whether they can provide long-term stability. China needs to protect its significant investments in Africa, and political instability may eventually force it to make some uncomfortable decisions or face a serious backlash. It is not acceptable for superpowers to revert to political inaction on a region's issues while reaping the economic benefits of their relationships there, and such a policy may start to breed resentment in those who start to find the Sino-African exchange increasingly one-sided.

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