Interactive Investor

China in Africa: A threat to the West?

8th November 2012 09:00

Darshini Shah from interactive investor

In the last of our three-part series, Interactive Investor looks at whether the West is threatened from China's increasing existence in Africa, and whether history will repeat itself. For parts one and two, read: The battle for resources and Who benefits?

It seems that for the West, the meteoric rise of China in Africa has raised questions about Europe and America's ability to restructure the economic, political and social life of the continent.

"Traditional Western actors are finding that their once undisputed influence and dominance of Africa is being challenged by Chinese corporations," writes Chris Alden in his book, China in Africa.

At a public hearing held by the US Congress a few year ago, one State Department official declared: "China is playing an increasingly influential role on the continent of Africa and there is concern that the Chinese intend to aid and abet African dictators, gain a stranglehold on precious African natural resources, and undo much of the progress that has been made on democracy and governance in the last 15 years in African nations."

However, this criticism invoked bemusement in the Chinese government.

As China's deputy foreign minister put it: "In recent years, China has imported 30 million tonnes of oil from Africa annually. I don't understand why this amount of 30 million tonnes has made some people anxious and caused them to say that 'China has taken away resources from Africa'. There are other countries that imported 100 million tonnes of oil from Africa, and we have not said anything."

Chinese aid not a gift

Navin Shah, a property developer in Kenya, stresses that the Chinese are not philanthropists, and that Chinese aid is not just a gift, but also serves to benefit the benefactor: "Ultimately, it is another imperial power pursuing its national interests.

"And history has shown us that it can be an unreliable power despite its claim to build a true equal partnership with Africa. At the end of the 1970s, for example, when it decided to focus on its internal challenges, China's leadership forgot about Africa," he scorns.

Indeed, China's engagement with Africa is not 'new'. Its roots date back to the 1950s, when China fought the Soviet Union and the United States for Africa, which was then seen as an ideal terrain in the Cold War. Known as the "coolie trade", China focused its efforts on African mining, plantation and railway construction.

This development assistance continued for the next two decades - the most notable being the construction of the TamZam railway between 1970 and 1975, which linked Zambia directly to Dar-es-Salaam, breaking the dependency on white-ruled Zimbabwe. It was during this period that the Sino-African relations became political. By 1978, China had established diplomatic relations with 43 African countries.

This period of intense activity turned to outright neglect in the 1980s. The inauguration of the new leader, Deng Xiaoping, in 1978 led to a new political direction and the uncertainty of economic development in China. Economic aid to Africa was reduced, accompanied by a decline in bilateral trade. However, self-sufficiency - a central pillar of Chinese policy - could no longer be maintained in a host of vital areas including energy, forestry resources and even food production.

Alden sums up this situation perfectly when he writes: "The situation was ripe for outreach to a new source of energy and natural resources - Africa."

Some African economists doubt the credibility of the Chinese promise that their presence in Africa is for mutual benefit. They believe Chinese oil investments in Sudan, Nigeria and Angola will fuel the resource curse and make a mockery of human rights.

Other scholars, however, argue China has proven to be better than the West at addressing Africa's concerns. With the World Bank estimating that African elites keep 40% of their wealth outside the continent, they say these Chinese firms could act as catalysts and offer incentives for some of that wealth to return to the capital-starved region, similar to Japan's impact on Southeast Asia's "little tigers" a decade ago, where, currently, only 6% of their wealth is kept outside the continent.

At the end of the day, the facts are these: Africa is the poorest and most underdeveloped of all of the continents, despite its wealth of natural resources. The average person in sub-Saharan Africa is estimated to live on just 43p a day. There are fewer people with internet access in the entire continent of Africa than in New York City alone.

According to Cui Janjui, the secretary general of China International NGO Network, there seems little prospect for improvement of the African situation without substantial intervention and concerted financial support from the world's leading economies such as China: "We Chinese had to make the same hard decision on whether to accept foreign investment many, many years ago. [Africa has] to make the right decision or lose, lose, lose. [Africa has] to decide right, or remain poor, poor, poor."