Sino-African Relations During China’s Re-balancing

by Dennis Wang
In a 2011 speech in Zambia, former Secretary of State Hillary Clinton commented, “We saw that during colonial times, it is easy to come in, take out natural resources, pay off leaders and leave,” referring to China’s increasing presence in Africa. While the public perception in America — where anti-China rhetoric is fierce — is that China is the new colonial power in Africa, the debate rages as to whether the Chinese presence in Africa is beneficial to China in the long run. Although China will seek to gradually rebalance, it appears that its future will remain intertwined with Africa’s for the next decade, to the benefit of both China and Africa. When China does relax its dependence on Africa in the long term as it shifts from an export-led economy to a consumer-led one and from the secondary (manufacturing) to the tertiary sector (services,) its growth will become more sustainable, and Sino-African economic relations will be supplemented by stronger diplomatic relations.
China’s rebalancing imperative
China is notoriously dependent on natural resources and resource-intensive sectors such as manufacturing, construction, and infrastructure to fuel its economic growth. Inefficient use of natural resources by state-owned enterprises, the imperative to maintain GDP hyper-growth and employment given China’s labor-saving growth in the same sectors, and China’s lack of its own primary sector (raw materials) have driven what Stephen Roach calls an “outsize claim on global resources.” China consumes approximately 50% of the world’s iron, coal, and cement, and in 2009, it surpassed the U.S. as the world’s largest consumer of oil. The same year, China consumed 384 million tons of petroleum, 66.8% of which was imported. Of this, 35% came from Africa.

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Profile of Sino-African trade

China’s macroeconomy is primarily supported by export-led growth, which is susceptible to global demand shocks. But China is also dependent on imports of resources, which also makes it vulnerable to global supply shocks. Many economists have stressed the need for China to rebalance its labor-saving, resource-intensive, and export-led economy to one that is less “unstable, unbalanced, uncoordinated, and ultimately unsustainable,” in the words of former Premier Wen Jiabao.

In 2009, China became Africa’s biggest trading partner with USD $91 billion in total exports and imports ($48 billion exports to Africa, $43 billion imports) exceeding U.S. trade with Africa. China exports mostly manufactured goods, machinery, and transport equipment to Africa, and imports mostly crude materials and mineral fuels from Africa, including natural resources such as petroleum. Man-made products make up 90% of China’s exports to Africa, while raw materials make up 87% of Africa’s exports to China. The result is a kind of dependency, suggestive of the mercantilist nature of transatlantic trade in the 17th and 18th centuries.

Can China successfully rebalance?

While it is not clear how much of growth in China is caused by growth in Africa and vice versa, bilateral trade means that the two, which are engaged in an economically mutualistic relationship, are co-dependent to some degree. Though trade with Africa accounted for only 4.3% of China’s total trade volume, real GDP growth in Africa and China have been correlated since China’s New Africa Policy in 1999, which opened trade with the continent. Though Africa depends more directly on China for trade and investment than China depends on Africa for GDP growth, one of China’s major problems with this relationship is its effect on China’s ability to rebalance.

Africa is not only a source of natural resources, but also a new market for Chinese goods. As demand from the West decreases due to economic and political forces, the profile of China’s exports will pivot increasingly to developing markets in Asia and Africa. Furthermore, a decline in the supply of natural resources from Africa can have unpredictable effects on the Chinese economy. The importation of oil has additive and multiplicative effects on the Chinese economy as an input in the resource-intensive sectors, which create the jobs and promote the capital accumulation necessary to fight poverty given that population growth is projected to continue until 2026. A break in the flow of natural resources would also have multiplicative effects on the Chinese economy beyond just the balance of payments. The solution to such threats to China’s economic growth and thus social stability is unclear.

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Former President Hu Jintao with President Obama at the Nuclear Security Summit and President Jacob Zuma of South Africa at the Forum on China-Africa Cooperation

Sino-African Relations

An image of President Jacob Zuma of South Africa bowing to former President Hu Jintao at the 2012 Forum on China-Africa Cooperation (FOCAC) where China pledged an additional $20 billion in credit to Africa over the next three years to support infrastructure, agriculture, and small businesses, is reminiscent of an image of President Obama doing the same at the 2010 Nuclear Security Summit. This loan was double the size of the loan in 2009, when China became Africa’s number one trading partner and lender. UN Secretary-General Ban Ki-moon also attended the Forum, highlighting the worldwide attention it received.

African leaders have traditionally welcomed the Chinese given the lack of historical colonialism that defines the relationship between Africa and China, and China’s commitment to keeping business and governance separate. Chinese workers live and work with their African peers under similar working conditions and standards of living. A 2007 Pew Research Center survey found that 86% of Senegalese believed that Chinese involvement was positive, compared to 56% who felt the same way about U.S. involvement through organizations such as the U.S. Agency for International Development (USAID).

As a developing country, China may be leveraging its involvement in Africa to increase its influence on the international stage. To this end, China focuses on positive-sum interventions that benefit both parties, and based on its own experience with what works and what does not, supports economic development as the sustainable solution for Africa. Unfortunately, this comes with the preconceived assumption that what worked for China in the 1980s will work for Africa today, and that Chinese priorities in development — which often sacrifice human and environmental rights — are aligned with African ones, even if China does have the continent’s best interests at heart. There are already signs that the Sino-African relationship is souring, and it is unclear if China’s leaders have the political will necessary to make the difficult decisions that can improve relations again.

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Former President Hu Jintao with President Omar al-Bashir of Sudan and President Salva Kiir of South Sudan

 

The future of Sino-African relations

Many Africans are becoming anxious about the presence of Chinese in Africa. China’s priority, some claim, is not development, but rather its own economic welfare. Thus, the World Bank and the International Monetary Fund are advising African governments to coordinate in order to maximize bargaining power in negotiations with China on new contracts.

Recognizing the rise of such sentiments, Wen Jiabao stated at the 2012 FOCAC that “We [China] need to promote balanced development of trade between China and Africa.” As African nations become stronger politically and economically, China will be forced to make its intentions clearer or risk having its influence on the continent decrease considerably. China’s new president, Xi Jinping is expected to pay as much, if not more, attention to Sino-African relations than his predecessor, Hu Jintao. He would do well to acknowledge the priorities outlined by the New Partnership for Africa’s Development and the African Union and to consult African stakeholders on the proposed initiatives. The Brookings Institution identified health, security, and peacekeeping as three priorities for Africa where China could contribute through coordination with USAID, the World Health Organization (WHO,) and the AU. If left unchecked, HIV/AIDS, malaria, small arms, and drug trafficking will threaten social stability, and by extension China’s economic interests, in Africa.

Though China may maintain its ties to African governments and thus secure its source of natural resources, Chinese manufacturing and retail firms will find it much more difficult to maintain cooperative ties with their local counterparts. Given the accusations of corruption and abuse of power, the Chinese government must take the initiative to promote transparency in its contracts with African governments and to hold Chinese citizens accountable for their actions in Africa. Although China is unlikely to cave in to Western pressure, it may realize that reform is in its own interests. China canceled a waste pipeline project in July 2012 in response to violent anti-pollution protests in Nantong and a Foxconn Technology plant was closed in September 2012 following violent riots in Taiyuan. Listening to complaints from its African partners and addressing them constructively will allow China to stay involved in Africa in the long term, and to continue this mutualistic relationship.

China’s Policy Imperatives Going forward

The future of Sino-African relations must be viewed in the broader context of China’s economy and its constraints such as population growth and overdependence on import of natural resources. For now, it is in China’s best interests to maintain a relationship where it is able to decide – on its own terms – when and how to engage with Africa. With the independence of South Sudan and the Egyptian revolution in 2011, the dynamics of the Sino-African relationship have already changed considerably since 2010. China will need to balance the risks associated with the changing political climate of an unstable continent with its great potential for growth. Indeed, a more democratic Africa will not just be a passive observer, but an active participant in future Sino-African relations. However, this relationship and its effects on Africa are almost surely more complicated, and difficult to predict without knowing the intentions of China’s new leadership, and China’s willingness to take on the social responsibilities that come with being an economic superpower.

At present, Africa is too volatile and unreliable as a source of stable economic growth, and China should prioritize the rebalancing of its economy. Although China and Africa will continue to trade to their mutual benefit, and Africa’s share of China’s imports and exports will almost certainly increase, China should first and foremost look within its own borders for growth.

Dennis Wang is a junior in Calhoun College, Yale University, majoring in Molecular Biophysics and Biochemistry, and Global Affairs. He is also an MPH student in the five-year program at the Yale School of Public Health. A member of the Yale International Relations Association, he is the Director-General of the Yale Model United Nations China Conference, and worked on development projects in Rwanda last summer. In the future, he hopes to work on global health issues in China. Contact him at dennis.wang@yale.edu.

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