Jan 9 2012

Africa and China: How it all began

This is the first of a series of articles looking at one of the most talked about issues in Africa right now – China’s ever-burgeoning investment in the continent. In this post, LSE’s Dr Chris Alden looks at how China’s interest in Africa was born.

The rise of China, from a stalwart of revolution in the 1950s to its emergence as a significant global actor in the last decade, is one of the defining features of the 21st century.

China’s forthright engagement with the African continent, built upon their historical support for the independence struggle and increasingly the economic power wielded by Beijing, has helped re-ignite continental economies through new investment and trade opportunities as well as restore African political agency within the international system.

Since the onset of economic reform in 1978, China has had an unmatched record of sustained growth that has transformed key sectors of its economy into the globe’s leading site for manufacturing and production.

To keep the high levels of domestic output, seen to be crucial not only for the Chinese economy but for overall social and political stability in this authoritarian state, the economy needs critical energy, mineral and other resources from abroad.[i]

The promulgation of the government’s ‘going out’ strategy, whereby ultimately over a hundred restructured state-owned enterprises were given the legal and administrative means, preferential access to finance, and diplomatic support necessary to break into markets outside China, has been the main policy response to this need.

Given the financial resources of what, in the aftermath of the global financial crisis in 2008, had become the world’s largest holder of capital with over US$2.4 trillion in foreign reserves and applying these to the problem of carving out a position in the energy and strategic minerals markets was, in retrospect, fairly straight-forward in a capital-starved African environment.

Concurrently, the willingness of the Chinese government to provide a whole package of inducements alongside any leasing or supply agreements for resources, aimed at elite defined needs ranging from presidential palaces to large-scale infrastructure projects, has proved to be crucial to securing deals in Africa.[ii]

Underlying this approach is a highly publicised provision whereby the Chinese government forswears any interest in the domestic affairs of African governments, in direct contrast to the European Union (EU) or the United States (US), both of whom have selectively applied conditions to their development assistance programmes and even some investments.

In parallel with this state-led drive for resources abroad is a search for new markets aimed at expanding the investment and trade opportunities for Chinese firms though the relatively small size of the African market poses some constraints on Chinese ambitions. And, finally, there is a diplomatic imperative tied to the decades of competition between Beijing and Taipei over official recognition with countries in Africa being particularly targeted.

At the same time, as these interests have become more embedded and, concurrently, China’s own status as one of Africa’s leading trade and investment partners recognised, the pressure on Beijing to initiate appropriate policy responses to the complexities of fragile and post-conflict environments is growing.

This can be seen most vividly in the high profile case of Sudan, where Chinese finance and construction projects have taken place against a backdrop of armed conflict, initially in the south but more recently in the western Darfur region.

Responding to African and Western criticism, of its role in Sudan and self-interested motivations produced by a more complex role in Sudan, China’s engagement has evolved from one of the narrowest pursuits of self-interest to active involvement in international efforts at conflict resolution.

At the same time, Chinese involvement in other fragile and post-conflict states such as Liberia, Angola and the Democratic Republic of Congo – under circumstances often as challenging as those in Sudan– has not received the same level of attention or scrutiny.

Indeed, as a newly established external force in Africa, the expectation of Africans and the international community alike is that, as Beijing’s exposure to fragile and post-conflict environments will continue to be an important feature of its engagement, China will need to become more directly involved in managing these complex terrains.

While China has yet to produce a formal policy aimed at addressing the problems of fragile and post-conflict African states, like so many of its initiatives, the basis for such an approach is already taking shape through two clearly discernible trends:  practical peacekeeping, as has been seen in Liberia and quick impact financial reconstruction packages as has been seen in Angola.

 

 


[i] See, for instance, Erica Downs, ‘The Energy Security Debate’, China Quarterly, No. 177, March 2004, pp. 21-41; Ricardo Soares de Oliveira, ‘Making Sense of Chinese Oil Investment in Africa’ in Chris Alden, Dan Large, Ricardo Soares de Oliveira, eds., China Returns to Africa: an emerging power and a continent embrace (London: Hurst 2008), pp. 83-109.

[ii] For further details on this, see Chris Alden, China in Africa (London: Zed 2007), pp. 11-36.

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One Response to Africa and China: How it all began

  1. Post for LSE Africa and China: how it all began

    a href=”"China: a not so different donor”"
    China’s aid to Africa began as early as 1956. In the Afro-Asian Conference held in Cairo in 1957, China defends the active engagement with national movements’ struggles, namely the sending of Chinese volunteers to Africa.
    Besides several forms of military support (subventions, arms, military training), the railway connecting Zambia to the port of Dar es Salaam in Tanzania became the great accomplishment of Chinese Foreign Aid in the 1970’s, remaining up to the present the single most important project ever financed by China on account of foreign aid. The project cost amounted to 500 billion dollars and was delivered in 1973 to the Tanzanian government.
    In the beginning of the 1980’s, despite political concerns with internal economic reform and development, the compromise with foreign aid remained, with China ranking as the 8th donor in aid commitments to Subsaharan Africa in 1984 (OECD 1987) (1) . In the same fashion Zhao Zhiyang, the Chinese premier in an African tour in 1982, restates the Chinese interest in maintaining the link to Africa, through new principles of engagement that stress the importance of cooperation, replacing the concept of aid which implied a unilateral relationship with one only beneficiary, with the idea of mutual benefit and the diversity of the financing forms of cooperation.
    This new form of engagement is raising concerns in what regards economic cooperation and investments, but also towards more policy-oriented cooperation. Schueller et all (2) in a study on Chinese economic cooperation in Southeast Asia (Laos, Cambodia and Vietnam), found that the RPC cooperation is predominantly directed towards the sector of transport infrastructures (66%), communications (18%) and social infrastructure (47%) through mainly concessional loans and characterized by tied aid, which implies that most of them are awarded to Chinese companies, and also that the materials used in the projects have to be mostly from Chinese origin.
    Chinese aid is however welcomed by government representatives because it is prompt in arriving, once agreed between governments, without bureaucracies and directed towards the sector of infrastructures that is in great need in these countries. The fact that development assistance bolsters trade and investment relations with China is also signaled as a positive outcome of China’s modality of foreign assistance.
    Also Dreher and Fuchs (2011) (3) in a research on the allocation of Chinese aid, state that China’s aid is not more addressed to corrupt countries than DAC donors aid, stressing the point that an extensive literature on traditional donors emphasizes the fact that aid is given for political interests of the donor rather than for the economic needs of the recipient country. The authors also find that Chinese economic aid is not driven by geographic proximity, contrary to other emerging donors aid, takes into account commercial and political interests, but shows also responsiveness to recipient countries economic needs in the long term.

    (1) OECD (1987) The Aid Program of China, Paris: OECD

    (2) Schuller M, Brod, M, Neff, D et all (2010) China’s emergence within Southeast Asia’s aid architecture: new kid on the block? Paper presented at the ‘Aid Transparency and Finance Conference’ held on March 22, at the University College, in Oxford

    (3) Dreher, A and Fuchs, A (2011) Rouge aid? The determinants of China’s aid allocation, Working papers CEB 11-035

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