China’s relations to Africa are likely to get stronger this year as the world’s biggest economy appears poised to once again double its investments across the fast growing continent.
In July, China celebrated its trade with Africa anniversary in Malawi, as a sign of its integration agenda between China and countries in Africa. But has this relationship been as good for Africa as it has been for China?
As the poster child for economic growth in recent decades, China has been increasingly keen to spread its wealth and influence around. Even though the country is suffering from a slow down and is expected to achieve only single-digit growth rates in the coming years, it remains one of the fastest growing economies in the world. Its success has been, in part, the result of it being the recipient of huge amounts foreign direct investment. Another contributing factor is the BREXIT which has stirred up most of the major Euromarkets and economies.
In addition to investment projects, China has quickly become the continent’s biggest trading partner, with trade volumes of above $160 billion in 2015. As it gradually embraces the roles and responsibilities of the world’s biggest economy, China is increasingly reversing cash flow, and is expected to surpass the USA as the largest investor in other countries.
But despite the substantial investments, most of them have been routinely cast as detrimental to Africa’s overall competitiveness. The projects are dependent on deals made at the highest political levels. They lack competitive and transparent bidding processes, and most of the work force employed at these ventures has been Chinese. Promises of job creation have not been fulfilled. Further, when Africans are hired, local rules and regulations are often flouted, leading at times to poor safety.
For instance, at Chinese-run copper mines in Zambia, employees must work for two years before being eligible for safety helmets. Ventilation below ground is poor, and deadly accidents occur very often.
Adding on to this, jobs are lost to Chinese employees who are ferried to Africa for projects. An example of this may be seen by the growing Chinese presence in South Africa, which may have cost the South Africans over 60,000 jobs from 2011 to 2015. In Nigeria, the influx of low-priced Chinese textile goods has caused 80% of Nigerian companies in this industry to close.
Perhaps making matters worse are the kinds of goods that the two partners trade with each other, which have done little to change such perception. Whereas China buys natural resources (minerals and metals) mainly from Africa, African countries primarily import finished products from China, which range from machinery and electric goods, to plastics and rubber. Such an arrangement could benefit both parties, but its more often seen as China exploiting Africa’s natural resources to feed its need for industrial output.
At the same time, by exploiting cheap manufactured goods to African countries, local African companies not only become less competitive, but they also grow increasingly dependent on China. A good example of this can be seen by the crippled Zimbabwean economy (excluding other factors such as political instability, European sanctions etc.). Research has also suggested that Chinese presence has failed to bring significant skill developments, adequate technological transfer or any measurable upgrade to the productivity levels in the African part of the world.
Recently, China has become more tactful in its approach to Africa, trying to preempt the perception that its presence in Africa may be one sided only. Contrary to what many believe, China’s investment is not concentrated in countries with inadequate rule of law. the biggest recipient is in fact South Africa-though the Chinese presence is often more visible in other countries from which Western governments have shied away. (Zimbabwe s a good example here!)
Researchers have pointed out that Chinese investments are not only concentrated in natural resources: Services are the most common sector with significant investments in manufacturing as well. This suggests that China is now doing more to help African countries to build up their competitiveness.
The key is ensuring that Chinese companies operating n Africa comply with local rules and regulations. they also have to change their views of the locals, so that the latter are seen as equal business partners.
Only making such fundamental shifts can China capture people’s hearts and minds, and not just their mines.