The Increase of Chinese Investment in Africa

This article was co-authored with Giorgi Shengelia who is  a graduate of University College Dublin (UCD) with a bachelor’s degree in Politics and International Relations, and a master’s degree in Geopolitics and Global Economics. He has completed an internship in the Georgian Embassy to Ireland and is currently working in the Human Rights Committee in the Parliament of Georgia. His fields of interests include Geopolitics, Human Rights, European Union and Middle East Politics.

*You can find him on Facebook and Linkedin 

Sino-African relations

China and Africa have been partners for nearly 60 years, having enjoyed good diplomatic ties since the mid 1950’s. These ties began after China received a great deal of support from many African nations in its successful attempt to achieve international recognition as the People’s Republic of China (PRC), established in 1949.

Half a decade later China had the opportunity to directly contact African leaders through the 1955 Conference of Bandung in Indonesia. This lead to China’s first diplomatic tie with Africa with the establishment of a diplomatic relationship with Egypt in 1956. At that time while China was developing its African policy, many African nations were stuggling against colonialism. China’s move towards Africa at this time was done with the intention to support independence and anti-imperialism movements as well as promote its economic ideals in the continent. Later during the cold war, Beijing moved even closer to Africa to cultivate their relationship based on their shared colonial past and promote brotherhood in order to counterbalance the Soviet Union and western imperialism. In 1971 China managed to join the United Nations (UN) due to the support of developing countries, mainly from Africa.

In the 1980’s China began to focus more on its own economic development, increasingly transforming its economy in favor of capitalism from the socialist economic development model. During this period China’s relationship with Africa started to decline until it was revived in the 1990’s. Since then China and Africa’s relationship has deepened and areas such as trade, investment, technology transfer, development assistance and training have received increased investments from the chinese private and state-owned sectors. Additionally the number of African countries that received development assistance with a focus on the development of infrastructures and technical support increased.

Chinese language and aid

The study of the Chinese language in African nations has increased significantly. China operates approximately 38 Confucius Institutes in several top African universities. More students are opting to study Chinese and institutes are expanding to meet the demand.

Researchers in the USA recently managed to compile an open database listing nearly 2,000 Chinese investment projects undertaken between 2000 and 2012 in at least 50 African countries. The database illustrates projects backed by the Chinese in all but three countries that have diplomatic ties with Taiwan, namely Burkina Faso, São Tomé and Príncipe and Swaziland. Gambia severed ties with Taiwan in 2013.

The map below taken from the open database and compiled by Aid Data shows the amount of Chinese backed projects in each country:

Investment or exploitation?

The re-emergence of Chinese investment in Africa since the 1990’s has attracted much attention, and current debate is focused on two main questions: what is China’s motivation and what effect will its investment have on development in Africa? Many commentators have suggested that China’s interest and actions in the continent are no different to that of many western countries’ during the colonial era of the late 19th and early 20th century. This has caused China’s intentions to be questioned; is it a true partner country helping to encourage development or is it simply another exploitative colonial power?

The answer remains to be seen but it is clear that China considers Africa as a political ally and a promising investment opportunity.

One of the facts that point to the latter accusation is that China’s hunger for natural resources has been increasing rapidly over the past years to keep up with its fast growing economy. This rising consumption of natural resources by the Chinese has been pushing fuel, metal and grain prices up. Many NGOs are concerned that Chinese companies are ignoring basic environmental and labor standards in their rush to obtain natural resources, leaving corruption, pollution and exploitation in their wake. These concerns are not completely unfounded as Angola for example declined money from the International Monetary Fund (IMF) in 2006 as it had received a lot of Chinese aid and investment without having to comply with requirements such as transparency.

China and South Africa

Indeed, the high level of corruption and human rights abuses in Africa has not deterred Chinese investors cooperating with the autocratic governments of Africa. So much so that some experts see the increased presence of Chinese companies in Africa as a threat to the dominant position of South Africa, the largest and most developed economy on the continent holding considerable influence over its neighbouring countries. However, there is also much cooperation between the two.

China is South Africa’s largest trading partner and South Africa is China’s largest trading partner on the African continent. In 2011, South Africa joined the BRIC bloc of developing economies with China, India, Russia and Brazil (thus turning BRIC into BRICS). During the apartheid era, Jacob Zuma’s African National Congress was supported by Russia, while China was backing the rival Pan Africanist Congress, however in recent years South Africa has maintained a strongly pro-Beijing foreign policy (declining visas to the Dalai Lama is one example of this policy)

Recently, South Africa and China signed new strategic agreements after a meeting between SA’s President Jacob Zuma and Chinese leader XI Jinping in Beijing. These agreements aim to improve and strengthen bilateral relations, trade cooperation and create sustainable investment between the two countries. China and South Africa also signed 5 to 10 year strategic programme on cooperation, focusing on bilateral cooperation in economic, international, political and BRICS-related affairs, along with an agricultural cooperation action plan. The two countries also agreed to improve bilateral trade in a more balanced way. These agreements will help to improve agriculture capacity of the two countries as well as strengthen the relationships between their research institutes, colleges and universities. Zuma added that the agreements affirmed the Chinese declaration on establishment of a comprehensive strategic partnership (signed in 2010).

Zuma’s African National Congress government is trying to increase growth and narrow the $2.7 billion-trade deficits with China by increasing exports. Zuma is defying the criticism of China by the West and aims to position South Africa as a major power in Africa. Some of the agreements signed between China and South Africa include joint efforts on the international arena; China’s economic weight in Africa has provided South African ruling elites with great bargaining power in the dealing with USA and European powers.

China in Kenya

China plans to transform its bilateral traditional friendship with Kenya into momentum for a common development and work with the country to convert its potential in natural and human resources into economic strengths. China and Kenya both desire to promote further cooperation in seven priority areas of infrastructure development, agricultural modernization, renewable energy, industrial relocation, people-to-people exchanges, ecology and environmental protection and peace and security cooperation. China and Kenya also signed a memorandum of understanding on establishing bilateral steering committee. Kenya is also one of the most important trading partners of China.

Chinese projects in Kenya include the University of Nairobi, Standard Gauge Railway construction (Mombasa-Nairobi), office blocks and shopping complexes. China has completed over 70 development projects in Kenya and more than 50 Chinese companies are working in the country.

China in Sudan

Another important partner for China in Africa is Sudan. Sudan is rich in oil and natural resources (even after the secession of South Sudan), but its government is accused of severe human rights violations. Sudan’s president Omar Al-Bashir is wanted in International Criminal Court for crimes against humanity but this does not stop China and its companies having economic, political and business relations with the country.

The two countries often support each other in the international arena and China sees Sudan as an important ally and partner in Africa. Sudan and China plan to deepen their relations and boost cooperation in many areas.

China is the main buyer of Sudanese oil and the largest investor in Sudanese economy, but the relationship between China and Sudan, and indeed Africa as a whole, does not end with trade and economic cooperation. China has built a presidential palace for Sudan’s president Omar al-Bashir and has built similar structures in Burundi, Guinea-Bissau, Angola, Malawi, Lesotho, Sierra Leone, Togo and Mozambique. China’s role in Africa is evolving; it is building railway lines and shopping malls, and sending peacekeepers to South Sudan. Around 1 million Chinese people now live on the African continent.

Conclusion

​China’s investment in Africa is growing visibly day by day, along with its need for natural resources​, and there is huge debate among experts ​on China’s true intention​s​; ​​are African countries being exploited or is this investment purely for development purposes? Perhaps​​ it is a combination of both​.​ ​T​he truth is that China has become an important player in the region and its investment in African countries has been welcomed as the case studies illustrate.

But the major downside of the Chinese investment​ in Africa​​, and also one of the reasons why it​ is so valuable in the region, is ​that it​​ does not make ​African countries comply with basic requirements such as transparency or labo​u​r standards. This allows for corruption, pollution and exploitation to continue thriving without being addressed, ​promoting​ a vicious cycle with little or no solution​.​ If China ​ truly wishes to promote development in Africa then it stands to reason that it must ​change its approach towards African countries​ and their governments​.

*Cover image ‘China-South Africa Business Forum Meeting, 5 Dec 2014‘ by  GovernmentZA