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A developing tale of success

Updated: 2013-01-11 15:19
By David H. Shinn ( China Daily)

A developing tale of success

Increasingly stronger Sino-African relations hint at the shape of things to come

Trade between China and Africa began during the Han Dynasty (206 BC-AD 220). However, with the exception of the Zheng He (1371-1433) naval expeditions to the east coast of Africa early in the Ming Dynasty, imperial China had little direct contact with Africa until Chinese laborers were sent to South Africa in the mid-1600s and Chinese traders and laborers migrated to Africa's Indian Ocean islands in the late 1700s.

These modest migrations of Chinese to Africa continued through the 1900s. The Republic of China had limited contact with Africa from 1912 through to 1949, although it did establish official relations with South Africa and signed a treaty with Liberia.

The creation of the People's Republic of China in 1949 did not result in an immediate upsurge in relations with Africa. Most African countries were still European colonies, and the new government in China was preoccupied with internal affairs.

However, by the late 1950s, China began actively to support African liberation movements and, as countries became independent, ideologically like-minded governments in Africa. The new African governments played a key role in supporting Beijing's admission to the United Nations in 1971, replacing Taipei. A combination of the Cold War and the Sino-Soviet conflict significantly affected China's policy toward Africa until the end of the 1980s, when the policy became increasingly pragmatic.

In the late 1990s there was a major expansion of China's engagement with Africa because it had more capital to export and needed greater amounts of raw materials to fuel its rapidly growing industrial economy. Although the political relationship with African countries remained important, economic interests began to play a proportionally greater role.

Trade and mutual political support were the driving factors in the China-Africa relationship by the late 1990s, and this has continued into the 21st century. In recent years this interaction has been joined by China's foreign direct investment in Africa and increasing soft power, which includes numerous medical teams assigned for a year at a time, a youth volunteer program similar to the US Peace Corps, the establishment of 29 Confucius Institutes and the expansion of government media activity through Xinhua, CCTV, China Radio International and China Daily.

The security relationship includes frequent high-level exchange visits involving the People's Liberation Army and their African counterparts and participation of two frigates and a supply ship in the Somali anti-piracy effort in the Gulf of Aden. China also provides personnel to six of the seven UN peacekeeping operations in Africa.

It currently has about 1,500 non-combatant military personnel in Africa, most of them assigned to the UN operations in Liberia, the Democratic Republic of the Congo, South Sudan and Darfur in Sudan. China has diplomatic relations with 50 of Africa's 54 countries and an embassy in 49 of them. China has no embassy in Somalia where the security situation has limited the number of embassies to a very few countries.

The most dramatic change in the China-Africa relationship has been in trade. Total trade grew from $6 billion in 1999 to $166 billion in 2011 and is estimated by Standard Bank of South Africa to have exceeded $200 billion in 2012. China passed the United States in 2009 as Africa's largest bilateral trading partner and now accounts for about 20 percent of Africa's total trade. On the other hand, Africa accounts for only about 5 percent of China's total trade.

In recent years, China's imports from Africa and exports to Africa have been roughly in balance, although there are huge disparities with individual African countries. Most of China's exports to Africa are manufactured goods, while about 85 percent of its imports from Africa are energy and mineral products.

China's flow of investment to Africa was modest until early in the 21st century. According to the Ministry of Commerce, China's direct investment in Africa exceeded a cumulative total of $14.7 billion by the end of 2011. However, this figure is based on investment reported to the government and appears to omit a significant amount that is not reported.

In mid-2012, for example, China's ambassador to South Africa said that "China's investment in Africa of various kinds exceeds $40 billion, among which $14.7 billion is direct investment". While the difference between investment of various kinds and direct investment is not explained, the actual amount of China's cumulative investment in Africa's 54 countries is probably closer to $40 billion. By comparison, the cumulative total for the United States as of the end of 2010 for just Sub-Saharan Africa was about $54 billion.

While most of China's early investment was in the energy sector, more is now going into manufacturing, agriculture and the service sector, such as banking. International media accounts often inaccurately refer to China's large infrastructure projects in Africa as investments. These projects rarely qualify as investments. They are usually commercial deals based on Chinese loans repaid with products such as oil and built by Chinese companies that use varying amounts of Chinese labor.

China has also become a major aid contributor to Africa. Although Chinese aid to Africa dates back to the late 1950s, and includes signature projects such as the Tanzania-Zambia railway in the 1970s, the annual amounts of aid were modest until recently. In the past several years, it is estimated China is providing $2.5 billion annually in OECD-equivalent aid to Africa.

Most of this assistance constitutes the concessionary component of credits and large loans that are usually used to finance infrastructure projects by Chinese companies and to buy Chinese products. By comparison, US annual assistance to Africa totals about $8 billion and is mostly in the form of grants to combat HIV/AIDS, malaria, and tuberculosis, the provision of emergency food aid and training for capacity building.

China has developed cordial relations with the governments of the 50 African governments with which it has diplomatic relations. The Communist Party of China has also established strong ties with the ruling political parties in most African countries.

The state-to-state ties have been the strength of the China-Africa relationship. China has been less successful in cultivating relations with civil society organizations, independent labor unions and opposition political parties.

The dramatic growth in China-Africa relations has also brought some challenges. As more Chinese live and work in Africa, they confront the same security issues that other foreigners face, hence the evacuation of 35,000 Chinese nationals from Libya in 2011.

While some African countries, usually oil and mineral exporters, have large trade surpluses with China, others have huge trade deficits, and are increasingly concerned about the future of the trade relationship. Cheaper Chinese products also threaten the manufacturers of some similar African made products, although African consumers generally welcome the competition.

The author is adjunct professor, Elliott School of International Affairs, George Washington University, and co-author of China and Africa: A Century of Engagement.The views do not necessarily reflect those of China Daily.

(China Daily 01/11/2013 page8)

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