From: wolda002@umn.edu
Date: Wed Apr 15 2009 - 22:13:43 EDT
China juggles its future in Africa
By Bright B Simons
ACCRA, Ghana - China isn't in Africa merely to snap up raw materials,
exploit African labor, or build geopolitical influence. Rather, its goals
blend a combination of all the above with a need to beta-test future global
brands, open new markets, enhance its soft power through international
organizations such as the International Standards Organization - where
African votes carry more than a third of the weight - nurture a new
diaspora and build a resilient microeconomic bridge by exporting
entrepreneurs.
This consensus has taken a while to arrive, and even today there is a
residual school of thought still enamored of the old "African commodities
for Chinese cash - full stop" theory.
It appears we may have to shatter another myth: China is deserting Africa
because its global priorities are changing in the face of the global
recession.
China's engagement with Africa has barely begun. As far as the stock of
foreign investment in Africa is concerned, the Asian giant is still dwarfed
by the West 10 to 1, but not for long if Beijing has anything to do with
it. For China, Africa is a strategic play, requiring the stamina for which
its strategists have always been famous.
It is true that Beijing is hurting badly from the global economic crisis,
much more than its Ministry of Commerce's massaged statistics will let on,
but it would be analytically unsound to treat any perceived change in
Sino-African trends as a panic-response dictated by the souring global
economy. China is engaged in a deliberate, calculated, and carefully
scheduled re-pricing of risk in its African project.
Its reversal of investment partnership policy in Guinea and the Democratic
Republic of Congo, where Beijing had been expected to pour billions of
dollars into the mineral-rich but impoverished and poorly governed
countries for ambitious infrastructure projects, is being read in some
circles to imply a retreat into Western-style, condition-governed, economic
partnerships, and a potential continental trend for Chinese investment.
Insofar as Chinese economic partnerships in Africa had always come with
strings attached (though certainly not the flocks of consultants and other
hangers-on that attend Western-initiated projects), whether in terms of
procurement guidelines or Taiwan, any suggestion that China's unease with
Guinea's new junta is a sign of recidivism is pedestrian, to say the least.
The reference to a global economic crisis, on the other hand, is pertinent,
though not in the manner being discussed in some places.
The global downturn will, if it hasn't done so already, further weaken the
position of the West in the African investment contest, reducing the cost
of viable competition on the African continent in China's view. Prudently,
Beijing is re-pricing the risk premium of its projects in Africa, as part
of the realization that it need not pay more than necessary to strengthen
its strategic position, whether in Congo, Guinea, Ethiopia or elsewhere.
The fact that this re-visioning of competition dynamics cannot be uniform
across Africa is evident in the observation that while Chinese telecom
companies are trying to disengage from Congo, Chinese oil companies are
offering a premium for stakes in Ghana's offshore oil sector, and also in
the fact that dampening enthusiasm in Eritrea is being matched by growing
fervor in Malawi.
Bolting the nail into the coffin of the "China desertion" theory is the
clear empirical evidence of China actually expanding its economic
engagement with the African continent, beyond the government-to-government,
mega-project inspired, relationship of yesteryear. The China-Africa
Development Fund (CADF) has already come on-stream, with a medium-term
facility of US$2 billion, and a projection of $5 billion under management
in five years. About $400 million has already been sunk into an array of
prospects.
Rather than focus on the infrastructure behemoths that earlier Chinese
inflows helped to put up, the CADF will emphasize entrepreneurial
opportunities in a wide range of sectors where private-sector African
operators could engage with their Chinese counterparts under the eagle eye
of the state-appointed fund managers.
True to fashion, Chinese strategists had long sought to transition the
Sino-African partnership to a more pluralistic model, and the CADF is a
clear expression of that intent. All the evidence suggests that China has
encouraged the continuing flow of Chinese private entrepreneurs into Africa
in the clear belief that, as these dynamic opportunity-seekers familiarize
themselves with the terrain, they will be "de-risking" the African project
in readiness for even greater integration. In many local municipalities
across West Africa, the sight of small-scale Chinese contractors working on
minor drainage schemes, landfill sites and sidewalk electrification schemes
has become commonplace, as has that of Chinese retailers, food vendors and
brothel-shack managers.
As far as the impact of the global economic crisis is concerned, it has
only served as a stark illustration of why China's perceived model of
engagement with Africa couldn't have been sustained for very long, were it
indeed the case that it was the model of engagement.
Consider the subprime situation: speculation drove largely imaginary house
equity to seemingly unstoppable heights, artificially inflating the credit
standing of mortgage borrowers, who could then secure additional debt
against this dubious "equity" and thus fuel an artificial expansion of the
consumables market, which in turn fed another cycle of "boom". On and on,
until a few "improbable events" pulled the rug from underneath the tower of
cards.
Now consider the mythological view of the Sino-African economic
partnership, which is likewise built on a foundation of "commodity trade
leverage": the more China bought, the higher prices rose, the more valuable
the reserves became, and the greater the debts that could be secured
against said reserves to be subsequently expended on shiploads of foreign
junk. The foreign junk, increasingly of Chinese origin, boosted GDP numbers
and in turn jacked up the cycle again by justifying the need to borrow more
for poorly integrated infrastructure schemes rather than to increase
domestic capital formation.
It is a good thing that this picture forms only a part and not the whole of
the ongoing and incoming Sino-African economic partnership and that
progress towards an increasingly more sophisticated relationship has always
been embedded in the post-Dengist structure of Sino-Africanism.
One can only hope that the strategic vision of Beijing's Sino-African
thinkers does not fail them before the chips of the unfolding new shape are
all in place. Or to use a simpler idiom: that they catch the first set of
balls before the next set falls.
Bright B Simons is affiliated with IMANI: The Center for Policy & Education
in Accra, a think-tank adjudged the sixth-most influential in Africa by
Foreign Policy Magazine in 2009.
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