A meeting of minds - and needs

China's increasing presence and influence in Africa has now become a hot item of discussion and debate on a global level. In less than 10 years, China's investments and trade with Africa have registered what can only be described as stunning growth.

The pace of Chinese involvement with Africa

China is the third largest investor in Africa with FDI commitments of around $29bn. Analysts expect China to overtake the US as the second largest investor by 2010 and to push Europe, currently Africa's number one investor, into second place by 2030. By the end of 2003, some 638 Chinese companies had set up shop in Africa. These included wholly-owned, joint-venture and co-managed enterprises. The current figure is around 1,000 Chinese enterprises active in Africa.

China is also strengthening and deepening diplomatic ties with African countries and winning friends and influence among the masses. At the first China-Africa Forum held in Beijing, China acceded to South Africa's request to cancel some African debts and wrote off $lbn. It also placed 190 products from 28 least developed African countries on a tarifffree roster.

State owned companies have been investing heavily in agriculture, fisheries and related secondary production facilities. For example, it has set up joint-ventures in fisheries in Gabon and Namibia and leased agricultural land in Zimbabwe, Zambia and Tanzania. It has just made a deal to operate coal mines and built a thermal station in Zimbabwe to ease that country's energy shortfalls.

Chinese manufacturing companies are already producing consumer items like air-conditioners and bicycles and capital equipment such as farm and other agricultural processing machinery. China has found a ready market for its manufactured items, which are cheap but durable. Many of these are produced by loss-making state owned enterprises, imported by Chinese commercial companies and distributed through extensive, often informal networks, not only in African towns and cities but also deep in the rural areas. Most of these products are ideal for African conditions which in many ways are similar to those in China.

Chinese construction firms, supported by the state apparatus and employing low-cost but highly efficient Chinese labour (estimated to be around 80,000 at present) have been able to outbid contractors from other parts of the world and are winning an increasing slice of Africa's construction sector. They have been building roads in Ethiopia, railway lines in Angola, stadiums in Mali, Djibouti and the Central African Republic and government offices in Mozambique and Uganda.

China has broken long-standing protocols and has provided peace keeping troops to Liberia and the Democratic Republic of the Congo. Its donations to UN operations in Africa have increased substantially and it has provided humanitarian assistance to combat drought in the Horn of Africa and recently to Darfur.

War of words

China is now the third largest economy in the world, after the US and Japan, but well-researched projections predict that by 2040, China's GDP will rise to $29.4 trillion, just shading the US's projected GDP of $29.1 trillion.

With oil and commodity prices breaking all previous records (see pages 20 and 24) thanks in large part to China's inexorable double digit growth, alarm bells have been ringing in London, Paris and Washington. Pundits are already prophesying a new scramble for Africa's resources, pitting the West against a resurgent China.

The war of words has already started. Heavyweight columnists in the West's leading newspapers have been loudly wondering about 'China's hidden agenda in Africa'. China has been accused of turning a blind eye to human rights abuses in some African countries and of refusing to lay down governance conditionalities on its African trading partners. The US has openly criticised China for selling arms to 'irresponsible regimes' by which it probably means Sudan.

The Chinese, on the other hand, counter that their main interest in Africa is economic, that China and Africa have a great deal in common in terms of shared historical experiences and that a strategic and economic alliance with Africa is 'natural'.

Bering's Africa Policy White Paper, which was released while Chinese Foreign Minister Li Zhaoxing was sweeping through Africa on a charm offensive, emphasises the Five Principals of Peaceful Coexistence. These include mutual territorial respect, non-aggression and non-interference in each other's internal affairs.

This aspect has gone down very well with most African governments. Over the last decade, Western aid to Africa has progressively declined while what is considered by many Africans as 'interference in internal affairs' - such as governance conditionalities - has increased.

African leaders have long argued that Western models of democracy including the length of presidential tenure and forms of public institutions are often not suitable for some African conditions. Some African states are still trying to recover from internal conflicts, others are facing critical poverty related problems, yet others have to finely balance class and ethnic divisions.

Each case, African political scientists argue, is unique often requiring unique governance solutions taken in line with national cultural and historical sensibilities. The blanket onesize fits all approach often advocated by Western donors and multilateral organisations could, and has, been a disaster.

China, they contend, faced similar problems to those confronting African nations and worked out their own solutions. These included a strong central government, limited democracy, powerful state-owned enterprises and long-term development plans. Africa, it is increasingly believed, can learn far more from China than it can from the developed nations.

But China's non-interference policy has come under attack. The main argument is that this approach does not bring pressure on African leadership to show more accountability in terms of governance or in adhering to human rights conventions. Sudan and the ongoing tragedy in Darfur are cited as examples of this loose-rein policy. China's biggest investment in oil to date is in Sudan. But the Sudan situation is far more complex than is often portrayed in the mass media and there is some evidence that the conflict is being fuelled by foreign powers more concerned with global strategic interests than the fate of Darfurians.

Nor do Africans need reminding that during the Cold War, the US and the USSR supported and even championed some of the continent's worst regimes and individuals. Countries like Angola and Mozambique were devastated by proxy wars that had nothing to do with their own dynamics.

Nevertheless, the question continues to exercise minds. What is really behind China's Africa policy?

There is no doubt that China has identified Africa as an important strategic partner not only for its economic growth but also in its quest to establish itself as a major global power. Whatever doubts there may have been were laid to rest when the Chinese president, Hu Jintao, undertook two tours of African countries within a short interval (2004 and 2006). On each occasion, he signed what the Chinese term 'win-win' deals, gaining mining and trade concessions against industrial and infrastructural support.

On the economic front, China's main interest lies in securing supply lines for oil and minerals. China only has 2.3% of the world's oil reserves and even less of gas (1%). In 1993, China became a net importer of petroleum; by 2003, it was consuming 5.5m barrels per day which was marginally more than Japan's consumption. Today, it has to import 40% of its energy requirements; by 2020, this figure will have climbed to between 60%-70%.

What does China want from Africa?

In order to secure its oil supplies, it has moved aggressively into the African oil sector, mainly buying equity shares in established fields rather than exploring new ones.

Its appetite for industrial metals and materials is also growing, pushing up demand and prices, much to Africa's delight. Chinese imports of African resources include iron ore, copper, cobalt, titanium, nickel, zinc, platinum, diamonds and timber.

Food security is another Chinese preoccupation as the population and the urban drift increase while arable land acreage decreases. This may explain China's joint venture deals with several southern African countries and its investments in agro and fisheries processing.

Africa is also part of China's global strategic concerns. Africa has the single largest block of votes in the UN and the WTO. Africa, for example, helped secure the 2008 Olympics for China and could come to the rescue if China makes a serious attempt to contest for the UN secretary-General post when it becomes vacant. With Africa, Latin America and Asia behind it, China can emerge as the strongest single country within the WTO over the course of the next few years.

What does Africa want from China?

China represents a large and growing market for Africa's natural resources and in the near future, it could be the destination for considerable African agro products. It also offers an alternative to the traditional reliance on the West. China's financial and humanitarian aid is nowhere near to that from the West, but it gives Africa welcome room to negotiate terms.

Chinas finvestment pattern is also markedly different from that from the West which is mainly concentrated in the extractive industries. Chinese manufacturing firms are looking to produce for local markets as well as for the US (through the Agoa agreements) and Europe (through the Cotonou agreements). Chinese manufacturing and construction is certain, over a period of time, to stimulate the creation of numerous small and medium sized African firms - the only sure source of increased employment.

China has already indicated that it will support South African and Nigerian aspirations for a permanent seat on the UN security Council and it has become a de facto champion of African interests in the WTO.

China is also rapidly becoming a role model for Africa in terms of economic development. If the once impoverished nation can raise itself to the position of being the third largest economy in the world, despite its own colonised past, then so can Africa.

Africans appear to be more comfortable making trade and investment deals with the Chinese than they do with the highly advanced Western nations. They feel more in control of the situations and say they speak the 'same business language'.

The Chinese leadership has said on many occasions that the country has no hidden agendas and no strategic interest in Africa beyond mutual 'win-win' formulae for greater economic growth. This is in contrast to the suspicion with which many African countries view Western interest in their continent. The belief is that the West sees Africa primarily as an extension of its own foreign strategy (the Cold War, followed by the War on Terrorism) rather than taking the view from an African perspective.

Finally, it seems inevitable that China will become a superpower in the not too distant future and Africa will have done well to have positioned itself favourably with this Asian giant. China's march into Africa will gather momentum over the immediate future. On the evidence of what we have seen so far, Africa should be willing to welcome the Chinese with open arms.