Analysis Brief

PrintPrint EmailEmail ShareShare CiteCite
Style:MLAAPAChicagoClose

loading...

China in Africa: Strictly Business

Prepared by: Stephanie Hanson
Updated: November 6, 2006

Share

Thanks to a temporary shutdown of factories and construction sites, Beijing’s skies were unusually blue for the Forum on China-Africa Cooperation this weekend, at which more than forty African heads of state and Chinese officials discussed expanding an already booming China-Africa trade. China offered $5 billion in loans and credits, promising to double aid to Africa by 2009, and Chinese companies signed $1.9 billion in new trade deals (China Daily). The trade deals included an aluminum plant in Egypt, a highway upgrade in Nigeria, and a copper project in Zambia. China’s investment in Africa—which is projected by Chinese officials to reach $50 billion this year, up from nearly $40 billion in 2005—has boosted growth rates (NYT) and spurred much-needed infrastructure improvements in many African countries. Some Africans welcome the aggressive inroads China is making on the continent. “China knows what it means to be poor (BBC), and has evolved a successful wealth creation formula that it is willing to share with African countries,” writes former Nigerian finance minister Ngozi Okonjo-Iweala.

But the positive feeling between China and Africa might be just as fleeting as the cloud-free skies in Beijing. Popular resentment in Africa—where some complain that cheap Chinese-manufactured goods are damaging local industry—is growing, and in September China became an issue in Zambia’s presidential election. Francis Kornegay of the Centre for Policy Studies in Johannesburg, South Africa asks, “It is simply going to be a mutual admiration society, or is there going to be some real give and take?” (AP). Even Chinese media sources acknowledge that trade friction has cropped up (China Daily) in the relationship.

Western officials and human rights organizations express alarm at China’s willingness to invest in countries with questionable human rights records. Beijing’s policy of “noninterference in domestic affairs” allows it to feed its voracious appetite for oil without regard for Sudan’s refusal to accept UN peacekeeping troops in Darfur, as discussed in this Backgrounder, or the repressive regime of Zimbabwe’s Robert Mugabe. These countries welcome China’s ability to offer a “total package” of “cash, technology, and political protection from international pressures,” says a CFR Task Force report on Africa. The United States should not take China’s lead and ignore issues of governance, transparency, and human rights, the report suggests, but rather increase its infrastructure investment in Africa to better compete.  

Many stress the need for China to reconsider its “strictly business” policy and encourage good governance and transparency in its investments. China should sign on to the Extractive Industries Transparency Initiative, which requires full public disclosure and verification of energy and mining transactions, write CFR's Elizabeth C. Economy and Karen J. Monaghan in the International Herald Tribune. World Bank president Paul Wolfowitz recently criticized China for its failure to sign on to the Equator Principles, a voluntary code of social and environmental standards that nearly 80 percent of the world’s commercial banks have adopted (FT).

While there is little indication China is considering a change in the ideology of its economic policy toward Africa, some expect the summit to produce deals that will reduce or eliminate Chinese tariffs on some of Africa’s exports. Economists agree that such deals would reduce the trade imbalance between the two countries, but a new book from World Bank economic advisor Harry G. Broadman, Africa’s Silk Road, also recommends “behind-the-border” reforms to strengthen market institutions within Africa and “between-the-border” reforms to improve transport infrastructure and simplify regional customs administration. Broadman argues that such reforms are at least as important, if not more, than tariff elimination.

More on This Topic

Backgrounder

Expanding China-Africa Oil Ties

Authors: Christopher Alessi and Stephanie Hanson

China has increased its economic ties with Africa as it seeks to fulfill its growing energy demands. But China's way of doing business has...