• Perspectives @fr

China in Africa

China’s interest in Africa is rooted in its experience with Japanese investment almost forty years ago. Complementary economic interests fuelled relations between the two nations as Japan became a major force behind China’s drive for modernization.  In 1973, Japan began to import oil from China.  In 1978, Japan offered to use low interest Yen loans to finance the export of $10 billion of its modern plant, materials and industrial technology, while China agreed to pay for the loans by exporting the equivalent of crude oil and coal to Japan.  By the end of that year, Chinese officials had signed 74 contracts with Japan to finance turn-key projects that would form the backbone of China’s modernization.  All would be repaid in oil.

In her recent book[1], Deborah Brautigam presents the well-documented real story of China in Africa.  I would like to highlight the following:

China learned from its Japan experience, which proved to be win-win for both countries.  In the fall of 2000, the Forum on China–Africa Cooperation (FOCAC) was launched and 44 African countries sent their foreign ministers and economic ministers to Beijing.  Soon, Chinese contractors were winning more than half of the construction contracts funded by other donors in the early years of that decade.  At that time, a total of over 42,000 Chinese engineers and skilled workers were working in Africa.  The two-way trade between the two regions surpassed the $10 billion mark.  By 2005, China’s outward investment in manufacturing exceeded that for mining.

Created in 2006, the China-Africa Development Fund (CADF) helped Chinese companies to relocate their more mature factories to 50 special economic cooperation zones offshore.  The CADF was not aid but rather a market-based fund that invested between $5 million and $50 million in individual projects like a glass factory in Egypt, a power plant in Ghana, and a chromium plant in Zimbabwe.

China’s overseas zones were not only about export processing; they were to be built by Chinese enterprises as profitable ventures.  Half of the expenses for Chinese enterprises moving into the zones could be reimbursed.  This facilitated an orderly way to transfer mature industries abroad rather than simply letting them destruct.  The Ethiopia zone would concentrate on textiles and the Zambia zones on metal processing while the zone near Lusaka concentrated on electronics.  The Chambishi zone in Zambia will, by 2011, have 40 Chinese companies and 10 from other countries.  The operators of that zone will have its environmental management certified at the global standard ISO 14000.

The idea that the Chinese always bring over planeloads of their own workers and do not employ Africans is wrong.  Construction of the famous Tan-Zam railway employed 16,000 skilled Chinese, but many tens of thousands of Africans.  In the case of the multi-billion dollar infrastructure and copper mining venture in the DRC, at least 80 percent of the workers must be Congolese.

China has further deepened its ties with Africa by developing relationships at the community level.  Its medical aid to Africa began in 1963 and, by 2008, there were 1000 Chinese medical workers on the continent.  Following the 2006 FOCAC summit, China built 27 hospitals in Africa and 30 anti-malaria centres equipped with diagnostic and treatment facilities.  Each country receiving a centre is assisted by two Chinese experts who were dispatched to train African medical workers in the use of Chinese herbal drugs.  With respect to education, Beijing gives over 4000 scholarships annually to African students.  These scholarships cover the costs of air fare, tuition, housing and a small stipend. In return, students incorporate Chinese history, literature and philosophy into their field of study.

Under the 2006 FOCAC pledge, China will provide short-term training in Africa to 15,000 Africans over three years including 1500 principals and teachers for the schools built by China and 1000 doctors and nurses for the hospitals they are building in 30 African countries.  In Ethiopia, a large training and vocational education centre financed by Chinese Aid and jointly operated by the two countries opened in early 2009.  The school will eventually enrol 3000 students.  China also builds and operates vocational training centers in Uganda and Angola.

Western nations have much to learn from the way China has woven itself into the African landscape. When the West buys natural resources from African countries, part, or in some instances all, of the sales revenue ends up with the respective government.  More often than not, only a small part of it trickles down through the country’s economy.  China has taken a very different approach.  With its Resource-Backed Infrastructure Loans, a loan granted to a country will be serviced and repaid through the sale of, for example, copper or oil valued at market prices prevailing on the day of its sale.  China, however, remains in control of the cash of the total loan amount and will use it, in consultation with the local government, to build roads, schools and hospitals while supplying equipment, engineers, doctors and skilled workers.  Such infrastructure-linked loans have the dual benefit of supporting Chinese exports while, at the same time, developing the host country’s vitally needed infrastructure.

As Brautigam concludes, “China is now a powerful force in Africa and the Chinese are not going away.  Their embrace of the continent is strategic, planned, long-term and still unfolding.  China’s own experiments have raised hundreds of millions of Chinese out of poverty, largely without foreign aid.  They are applying the tools of investment, trade and technology as levers for development, not out of altruism, but because of what they learnt at home, namely that their own natural resources could be assets for modernization and prosperity”.

April 2010