China juggles its future in Africa
By Bright B Simons
ACCRA, Ghana - China isn't in Africa merely to snap up raw materials, exploit
African labor, or build geopolitical influence. Rather, its goals blend a
combination of all the above with a need to beta-test future global brands,
open new markets, enhance its soft power through international organizations
such as the International Standards Organization - where African votes carry
more than a third of the weight - nurture a new diaspora and build a resilient
microeconomic bridge by exporting entrepreneurs.
This consensus has taken a while to arrive, and even today there is a residual
school of thought still enamored of the old "African commodities for Chinese
cash - full stop" theory.
It appears we may have to shatter another myth: China is
deserting Africa because its global priorities are changing in the face of the
global recession.
China's engagement with Africa has barely begun. As far as the stock of foreign
investment in Africa is concerned, the Asian giant is still dwarfed by the West
10 to 1, but not for long if Beijing has anything to do with it. For China,
Africa is a strategic play, requiring the stamina for which its strategists
have always been famous.
It is true that Beijing is hurting badly from the global economic crisis, much
more than its Ministry of Commerce's massaged statistics will let on, but it
would be analytically unsound to treat any perceived change in Sino-African
trends as a panic-response dictated by the souring global economy. China is
engaged in a deliberate, calculated, and carefully scheduled re-pricing of risk
in its African project.
Its reversal of investment partnership policy in Guinea and the Democratic
Republic of Congo, where Beijing had been expected to pour billions of dollars
into the mineral-rich but impoverished and poorly governed countries for
ambitious infrastructure projects, is being read in some circles to imply a
retreat into Western-style, condition-governed, economic partnerships, and a
potential continental trend for Chinese investment.
Insofar as Chinese economic partnerships in Africa had always come with strings
attached (though certainly not the flocks of consultants and other hangers-on
that attend Western-initiated projects), whether in terms of procurement
guidelines or Taiwan, any suggestion that China's unease with Guinea's new
junta is a sign of recidivism is pedestrian, to say the least. The reference to
a global economic crisis, on the other hand, is pertinent, though not in the
manner being discussed in some places.
The global downturn will, if it hasn't done so already, further weaken the
position of the West in the African investment contest, reducing the cost of
viable competition on the African continent in China's view. Prudently, Beijing
is re-pricing the risk premium of its projects in Africa, as part of the
realization that it need not pay more than necessary to strengthen its
strategic position, whether in Congo, Guinea, Ethiopia or elsewhere. The fact
that this re-visioning of competition dynamics cannot be uniform across Africa
is evident in the observation that while Chinese telecom companies are trying
to disengage from Congo, Chinese oil companies are offering a premium for
stakes in Ghana's offshore oil sector, and also in the fact that dampening
enthusiasm in Eritrea is being matched by growing fervor in Malawi.
Bolting the nail into the coffin of the "China desertion" theory is the clear
empirical evidence of China actually expanding its economic engagement with the
African continent, beyond the government-to-government, mega-project inspired,
relationship of yesteryear. The China-Africa Development Fund (CADF) has
already come on-stream, with a medium-term facility of US$2 billion, and a
projection of $5 billion under management in five years. About $400 million has
already been sunk into an array of prospects.
Rather than focus on the infrastructure behemoths that earlier Chinese inflows
helped to put up, the CADF will emphasize entrepreneurial opportunities in a
wide range of sectors where private-sector African operators could engage with
their Chinese counterparts under the eagle eye of the state-appointed fund
managers.
True to fashion, Chinese strategists had long sought to transition the
Sino-African partnership to a more pluralistic model, and the CADF is a clear
expression of that intent. All the evidence suggests that China has encouraged
the continuing flow of Chinese private entrepreneurs into Africa in the clear
belief that, as these dynamic opportunity-seekers familiarize themselves with
the terrain, they will be "de-risking" the African project in readiness for
even greater integration. In many local municipalities across West Africa, the
sight of small-scale Chinese contractors working on minor drainage schemes,
landfill sites and sidewalk electrification schemes has become commonplace, as
has that of Chinese retailers, food vendors and brothel-shack managers.
As far as the impact of the global economic crisis is concerned, it has only
served as a stark illustration of why China's perceived model of engagement
with Africa couldn't have been sustained for very long, were it indeed the case
that it was the model of engagement.
Consider the subprime situation: speculation drove largely imaginary house
equity to seemingly unstoppable heights, artificially inflating the credit
standing of mortgage borrowers, who could then secure additional debt against
this dubious "equity" and thus fuel an artificial expansion of the consumables
market, which in turn fed another cycle of "boom". On and on, until a few
"improbable events" pulled the rug from underneath the tower of cards.
Now consider the mythological view of the Sino-African economic partnership,
which is likewise built on a foundation of "commodity trade leverage": the more
China bought, the higher prices rose, the more valuable the reserves became,
and the greater the debts that could be secured against said reserves to be
subsequently expended on shiploads of foreign junk. The foreign junk,
increasingly of Chinese origin, boosted GDP numbers and in turn jacked up the
cycle again by justifying the need to borrow more for poorly integrated
infrastructure schemes rather than to increase domestic capital formation.
It is a good thing that this picture forms only a part and not the whole of the
ongoing and incoming Sino-African economic partnership and that progress
towards an increasingly more sophisticated relationship has always been
embedded in the post-Dengist structure of Sino-Africanism.
One can only hope that the strategic vision of Beijing's Sino-African thinkers
does not fail them before the chips of the unfolding new shape are all in
place. Or to use a simpler idiom: that they catch the first set of balls before
the next set falls.
Bright B Simons is affiliated with IMANI: The Center for Policy &
Education in Accra, a think-tank adjudged the sixth-most influential in Africa
by Foreign Policy Magazine in 2009.
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