Building capacity to help Africa trade better

tralac at Rhodes University’s China Week 2009


tralac at Rhodes University’s China Week 2009

tralac at Rhodes University’s China Week 2009
Professor Tang

Rhodes University held a China Week in Grahamstown from 28 September to 2 October. This colloquium, which examined economic relations between Africa and China, was supported by the Confucius Institute at the University. Presentations and discussion rounds gave attending students an outline and assessment of the history, current trends and perspectives on China’s engagement on the African continent.

tralac published a book ‘South Africa’s Way Ahead: Looking East’ in 2008. Drawing on this and more recent work, tralac associate Ron Sandrey presented three papers: China’s manufacturing sector competition and industrialization efforts in Africa, The role of technology in the rise of Chinese agriculture and the lessons for Africa, and The China-Africa merchandise trading relationship in 2008. Niki Cattaneo, also a tralac Associate, organised the colloquium and Chaired two presentations of the South African Department of Trade and Industry focusing on China’s impact on regional integration in southern Africa and China’s role in the WTO negotiations on trade in services since its accession to the WTO.

Discussions concluded that well-defined Sino-African trade and investment governance can contribute to Africa’s economic and social development. China’s recent rapid development provides important lessons for Africa. Provided African countries have a strategy for engaging China, it can be a key partner in Africa’s development.

Summary of Conclusions of the Colloquium

No to ‘Sinophobia’

Where China is perceived as a new major actor in Africa, it outshines Western states in their efforts to act as a peace-keeping, development enhancing and moral player on the African continent. China’s engagement, on the contrary, is perceived as purely market-driven, without any ideological alignments and intention to get involved with internal matters such as the status of civil society, labour rights and environmental standards. Due to China’s rapid industrialization and increasing demand for energy supply, it appears as a prominent actor in the global “scramble” for resources. Locating the footprint China leaves in Africa apparently raises the question: Is China to be seen as an invading red dragon and as such providing opportunities for African countries to develop?

China is not a total newcomer in Africa. Sino-African trade can be traced back into medieval times and studied migration from China to South Africa starts in the late 19th century. Chinese migrants to Africa have never been a mass phenomenon though.

Proportions related to the Chinese economy and business operations in African countries, however, are enormous. With an impressive growing GDP (Gross Domestic Product) rate since its market transition and opening in the late 1970s, China became a major trading partner to countries coming from north and south. Its appearance as a rising star in the global economic order was driven by exemplary industrialization efforts in many respects. China was able to build up a manufacturing sector that is capable of delivering significant export shares to satisfy demand from the US predominantly, but also other major consumer markets such as the EU and Japan. The consequently increased production activity also contributed to a rising GDP. The strategy of the Chinese leadership was a policy package comprising a gradual opening and liberalisation of its domestic market, the implementation of favourable terms of trade and exchange rates, secure property rights, a supportive attitude towards investment opportunities and a stable government.

The Chinese industry started with merely labour intensive manufacturing and moved on to technology and service sectors requiring high-skilled labour. How that knowledge has been gained, remains debatable considering the diverse perceptions of “plagiarism” and the concept of intellectual property, which is pleaded by technologically highly developed countries like Germany and the US above all. However, know-how has not only been gained in practice by daily business operation. The Chinese government also implemented education programmes and an education system from kindergarten up to the tertiary education level of university and academia. Where a lack of specialists appears in one sector, scholarships are provided to allow its citizens to study the relevant subject abroad. The incentive for these scholars to go back to China is promotion in their jobs. Related to matters of education is information policy. It is common practice in neighbourhoods, for example, to pin newspapers in display windows.

Not only education, but also the agricultural sector is an example for China’s strategy to lift the people up. Again, technology was the key factor for a cultivation of the agricultural sector that is destined to employ and feed the people. Being fed and educated, individuals are ready to think further and beyond borders: towards Africa.

China’s aim is to maintain Sino-African relations over the long term. Long term means at least over decades as a focus on Africa has repeatedly been manifested into the famous 5 year plans. Origin for concerns about Chinese projects in Africa is the fact that China’s outbound investment into Africa is predominantly made into Africa’s extractive industry although it is often combined with infrastructure building. Not only crude oil, but also aluminium, steel, iron ore, coal and copper are wanted materials. Infrastructure projects mostly encompass mining facilitation, road construction, facilitation of transport, dam construction, power installation, ICT (Information and Communication Technologies) development and financing of socially relevant infrastructure like sports facilities and public buildings.

Rather than ‘overseas development assistance’ (ODA) in the “classical” sense, this kind of engagement is referred to as ‘economic assistance’ (EA) from the Chinese perspective. China is willing to invest into African markets, also known as high-risk markets for a number of reasons related to political instability, natural vulnerability and social and economical instability. Although the recent global financial crisis forces many nations to save, the Chinese government is rolling out huge packages of financial contribution to Africa related projects. It accumulated enough savings and reserves of US Dollars to spend them now as stimulant anti-cyclical packages. The current status of crisis is taken as one of extraordinary productivity. Saving of funds and sacrifice of oneself can thus be seen not only on the individual, but also on the governmental level.

The Chinese leadership approaches bilateral partnerships scattered all over the African continent. As far as southern Africa is concerned, South Africa’s trade relations with China predominates as China is one of the main suppliers of imported goods to South Africa and one of the main destinations for exported South African natural resources (iron ore, gold, copper, chrome). Further significance accords to mineral extraction and major mining projects in Namibia (diamonds, copper, iron ore, coal), Zimbabwe (platinum, chrome, tobacco) and Zambia (copper, cobalt, zinc). In return, infrastructure development regarding transport, electricity and telecommunication is realised not only for the benefit of the countries supplying traded materials but also for the ones relevant in terms of their transit, like Botswana and Mozambique.

China does not interfere in internal matters of other nations and does not seek to become a ‘new imperial power’ in Africa. China’s bilateral relations with southern African countries do not visibly affect the process of regional integration, because the interests of African countries in terms of their China relations are of similar, if not the same nature: the further promotion of trade and acquisition of development projects. Whether or not and to what extent the southern African region is going benefit from an engagement with China, lies in its own hands.

Another pattern of China’s external relations is the acknowledgment of so-called win-win situations. On the African side, however, appears a lack in manifesting own interests.

China’s thirst and crave for resources is one relevant factor in the rise of commodity prices. Consequently, countries relying on the export of natural resources are in a better position to negotiate for their benefit. It only requires governments to act out of the shadows, not hesitating to consider the welfare of their nation. After all, China appears to be a promising leading voice for developing countries in multilateral negotiation rounds, such as the WTO (World Trade Organisation) and the UNFCCC (United Nations Framework Convention for Climate Change). As long as African states do not act consistently together and state a policy rationale in China affairs, institutions such as the upcoming Forum on China-Africa Cooperation (FOCAC) remain marginal.

It is wrong to picture China as one solemn big conglomerate of a state corporation. State owned enterprises only give a broad picture and overview over China related businesses. Private Chinese investors have sufficient opportunities to explore the African playing field on their own. A responsible government is not meant to moan about disadvantages but to implement an internal policy that brings the country forward by its own efforts and according to the local conditions (culture, environment and capacities, for example). Thus, economic relations with China under a firm regulatory framework are an opportunity, not a threat. The answer to ‘Sinophobia’, it follows, is strictly no.


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