Don’t view China as a threat

A proper assessment of China’s role in Africa should not be the realpolitik or sterile shibboleths of the ‘China threat’ or the ‘Yellow Peril’.

#Focac: A proper assessment of China’s role in Africa should not be the realpolitik or sterile shibboleths of the ‘China threat’ or the ‘Yellow Peril’.

It should rather be its normative ambition coupled with Beijing’s pragmatic posture in crafting a different calculus of development and economic cooperation with Africa.

The threat perception, grim tableaux, and near hysteria about China’s growing role in Africa have in large measure been a product of Western-inspired hypocrisy and arrogance.

The historical record has shown that European and American policies, while clothed as a “civilising mission”, were characterised by a volatile mixture of exploitation, aggression, hubris, and injustice. China by contrast has demonstrated its ability to adapt to Africa’s social and political environment in a manner where it does not have to labour under typical Western sentiments of atavistic guilt when it comes to Africa.

This helps to explain why China’s economic engagements – especially trade – have provided a strategic vector for Africa’s growth and development, and indeed, has generated the gravitational pull for closer cooperation in other areas and sectors under the umbrella of the Forum on China-Africa Cooperation (FOCAC).

In 1995, China’s total trade with Africa accounted for only 1 per cent of its total world trade. By 2006, it had grown to 3 per cent and is currently about 6 per cent.

This is indicative of the extent to which trade has accelerated: between 2001 and 2006, Africa’s exports to China rose at an annual rate of over 40 per cent, increasing from $4.8 billion to $28.8 billion.

During the same period, there was a quadrupling of Africa’s imports from China to $26.7 billion. The compound growth rate shows that total trade between China and Africa increased by 26 per cent between 1995 and 2012.

Notwithstanding the effects of the global financial meltdown, during the 2011-2012 period, the value of total trade increased by 19 per cent from $166 billion to $200 billion; and is expected to be close to $300 billion by the end of 2016.

On a country-to-country basis, China is now Africa’s largest trading partner.

The same trading pattern has been replicated in China’s trading relationship with South Africa which has grown at an average rate of 30 per cent a year to reach $75 billion in 2013, thereby also making China South Africa’s largest country trading partner despite South Africa not being an oil producing country.

South African firms also represent the largest African presence in the Chinese market with over $500 million invested in 200 projects that include mining, breweries, banking, construction, oil and zinc refineries, and consumer goods.

Located in South Africa, the China-Africa Development Fund established in 2007 with $5 billion seed capital provided by China, stands to make significant contributions to private sector expansion and joint entrepreneurial activity between Chinese and African firms.

Two state-owned financial institutions, China’s Export-Import Bank (Exim Bank) and China’s Development Bank (CDB) drive China’s economic relations with African countries: the Exim Bank manages the preferential credit component and the government’s concessional loan arrangement while the CDB handles and directs investments.

In the area of direct investment, there has been significant growth. From $320 million in 2004, investment has increased to almost $10 billion in 2013, representing some 800 Chinese enterprises of which about 100 are state-owned.

They are involved in mining, manufacturing and processing, construction and engineering, financial services, telecommunications, social infrastructure, transportation, and agro-processing.

By the end of 2013, China’s direct investment stock was worth $25 billion.

China’s development aid is also a critical underpinning of the normative logic behind its style of cooperation: aid provides a positive branding profile for China and is a useful instrument in countering the sceptical perceptions that increasingly accompany Western assessments of China’s economic activities in Africa.

According to the Chinese State Council’s first White Paper on foreign aid, between 2004 and 2009, China provided a total of US$38 billion in aid to foreign countries, and during this period Africa received 46.7 per cent (or $17.6 billion) of the total.

Compared to the intrusive conditionalities that come with Western aid, China’s does not attach any conditions to its aid other than recognition of the “One China” policy.

The final area of economic engagement is infrastructure financing which is a unique element of China-Africa cooperation for its impact and scope.

This type of financing has increased from US$500 million in 2001 to US$18 billion in 2013, two-thirds of which has gone to the energy and transportation sectors and most of which is financed by the Exim Bank.

Other than direct financing, between 2001 and 2010 US$67 billion of Exim’s loan portfolio was for African projects compared to the World Bank’s US$55 billion for the same period.

China’s competitive and comparative advantages in civil works and construction play themselves out with good effect in a general African environment with serious deficits in telecommunications, power, and transportation networks.

This helps to explain why more than 35 African countries have entered into infrastructure financing deals with China.

It is estimated that African firms suffer losses of as much as 8 per cent due to power outages and that poor transportation accounts for about 4 per cent of sales losses.

China thus brings economic complementarities to infrastructure development, considering that Africa requires investments of $20 billion a year in this sector and another $10 billion a year to address associated infrastructure funding gaps.

These levels of engagement demonstrate that at a time when Africa was experiencing a retrenchment of commitments from the European Union and the United States, China has extended and entrenched the scope and scale of its cooperation across the African landscape.

African countries thus find the China model of cooperation particularly attractive and straightforward because the principles of ‘non-interference’, mutual benefit, and respect for sovereignty constitute the quintessential cornerstones of China’s approach to Africa.

Quite crucially, the nature of African countries’ engagement with China allows them to pursue an alternate growth and development trajectory through trade, aid, investment, and infrastructure.

Garth L le Pere, Visiting Professor at the University of Pretoria.

This article first appeared in an Independent Media supplement.