Posted by Martyn
In 2004, China-Africa trade increased to almost US$30 billion. This years figures are on track to show an even greater increase. China-African trade can be roughly split into two halves, African natural resources going to China and cheap Chinese manufactured goods going to Africa. In addition, China has invested in over 715 enterprises, particularly the infrastructure needed to develop natural resources.
Surely a ‘win-win’ situation, right? Wrong. These numbers hide a worryingly lopsided relationship. China buys mostly raw natural resources from Africa, produced by low-margin businesses that use low-skilled workers – hardly the building blocks of a modern economy, but China sells mostly finished goods to Africa.
As Chinese finished goods flood into Africa, the continent, like much of the world, finds that it simply cannot compete. Across Africa, governments are prioritizing a manufacturing-based industrial strategy which runs directly against China’s export juggernaut. Recently, 6 clothing factories shut down in Lesotho with the loss of 55,000 jobs. With unemployment rates of over 30%, these are jobs that African countries can ill afford to lose.
African producers accuse China of dumping goods below cost. Meaning that the export prices of finished Chinese products are below those of the raw materials needed to make them. Subsidized raw materials and other inputs are a big feature of Chinese economic policy. For example, a barrel of oil is roughly US$25 cheaper in China than on the international market. Such price advantages exist right across the industrial spectrum for Chinese factories. Needless to say, many Africans worry that closer economic ties with China may not be good in the long run.
Politics also plays a large part in China-African relations. Many African governments see China as an alternative, and political balance against, Europe and the United States. Particularly since China does not link trade, aid and investment to fre3d0m, d3m0cracy and hum@n r1ghts.
For instance, China’s much-publicized relations with Zimbabwe and the Sudan have given these countries the economic and diplomatic help they needed in order to resist international efforts to impose economic sanctions. China is also moving into the traditional role of institutions like the International Monetary Fund (IMF). In 2004, Angola refused to agree the terms of a US$2 billion loan from the IMF for national reconstruction. A Chinese state bank loaned them the money instead, on more easily agreeable terms.
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By Filthy Stinking No.9
The fact is, the Africans are their own worst enemies, and until they sort out their own ****, blaming someone else for their problems is a waste of time.
It may have been on this website, or another one … that I read the tale of how incredibly overpriced concrete is in a certain African country. The American who saw this then tried to send a shipment of cement to his contact in Africa … only the discover that the reason for the high cost were all the bribes he would have to pay to ship the goods. I recently had that confirmed through my own experience of chatting with some people from a different African country, and learned that chainsaws, bandsaws, etc. are all MUCH cheaper in Australia.
The problem here is not China, or Europe or America screwing over the Africans. It’s Africans screwing over Africans.
October 5, 2005 @ 7:35 am | Comment
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By Logan
Martyn,
Good post. Also check out Chris Alden, “China in Africa,” Survival 47:3 (Autumn 2005): 147-164. There’s more in there on why African leaders are so receptive to the new Chinese initiatives as well.
There’s also a discussion of the unintended diplomatic consequences of the Darfur crisis for this strategy.
October 5, 2005 @ 7:42 am | Comment
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By ACB
I am far more worried by the fact that China is investing ‘without judgement’. China’s investements in Africa come without concern for human rights, environmental protection, or sustainability.
Take Zimbabwe, China has invested a lot there, but in doing so it is propping up a dangerous regime that has shown its willingness to sell out to China to the detrement of its own people. China is also getting people in Zimbabwe to grow cash crops like Tabaco for export to China, rather than grain for domestic consumption.
I’m also concerned that China appears to be buying support just like the US did after WWII. Right now the EU is stuck in a dipomatic rut that it seeing it being content with the satus quo (excluding the bit about Turkey of course), the US is making a new enemy every day by trying to threaten or bomb half of the world, and China is throwing money in and getting political support out.
Don’t be surprised if you wake up one morning and find that China owns Arica, and that Africa has imported Chinese odeologies at your expense.
October 5, 2005 @ 9:10 am | Comment
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By RJT
Martyn ,
excellent post, once I start getting real traffic ( it could happen ) I will have to hunt you down and force you to contribute to my site as well.
October 5, 2005 @ 9:45 am | Comment
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By Richard W
This is another blindingly good post, why don’t you set up your own blog?
I’ve been reading about this for ages, but didn’t really know enough about it to write anything. Thanks Martyn.
October 5, 2005 @ 1:06 pm | Comment
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By Simon World
Daily linklets 6th October
Move over Amazon wishlist, it’s the Neiman Marcus Christmas Book and an excited Spirit Fingers says they ship to Hong Kong. A property slump hits Hong Kong. China’s changing landscape – a review of China’s environmental efforts gets a cautious thumbs …
October 5, 2005 @ 9:55 pm | Comment
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By Martyn
Continuing from ACB’s points above, another worry is that as China continues to turn its arable land into industrial parks, luxury housing developments and god knows what else, it’s lessening the ability to feed itself. It just turned into a net IMporter of food recently, despite higher grain prices which shocked the communist apparachiks raised on Maoist self-sufficiency.
Therefore, it’s already started leasing land in places like Khazakstan where it grows grain and other staples. Why not Africa?
Yet another related worry is that PLA troops already wnet into the Sudan to “look after” Chinese investment projects and their workers. Protecting China’s money. There’s a chance that as China buys up Africa, political, military, economic etc support will expand with it.
This is all already happening, just on a very small scale.
October 6, 2005 @ 6:21 am | Comment
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By Martyn
Thanks about the post. It’s funny that the more interesting I think a post is, the fewer comments it attracts. Unfortunately, China-African relations doesn’t polarise people into two rival camps, doesn’t stir the blood, doesn’t arouse strong feelings etc. That’s why I can only squeeze posts like this in between other ‘normal’ posts. Oh well.
October 6, 2005 @ 6:24 am | Comment
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By Brian
Great post! Very interesting.
I kinda see what you mean about some interesting subjects not bringing many comments but it is good for a blog to have a nice mix of posts about different subjects. Just because a post does not have 100 comments does not mean that readers do not enjoy it. Please continue.
October 7, 2005 @ 8:00 am | Comment
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By Double T
First I feel sad that people here got really alarmed by China trading with Africa “without judgement” while the USA and European nations have been long supporting the worst regimes on this planet in the middle east for their oil interest. History shows that a country cannot be democratized or its people be freed by starving its economy, never happened and will never happen. The reality is, by looking into history and today’s events, no country, not even the USA, has reached the moral high ground to say it can truely put the plight of people in another country as its priority. In short, human civilization isn’t that advanced yet as a whole. So if you really want to resolve or talk about things seriously, don’t put a moral standard higher than the reality on anyone or any country. China advances its interests in Africa through trade is better than western powers advance their interests in other parts of the world through military might. BTW, Chinese government is still a authoritarian one. What the XXXX are you expecting?
October 7, 2005 @ 2:59 pm | Comment
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By ACB
“the USA and European nations have been long supporting the worst regimes on this planet”
I do recal something about putting in puppet governments and propping up murdeous regimes in Africa, south Ameirca and South Asia.
October 10, 2005 @ 10:06 am | Comment