Whether you’ve read it in a news report or heard it during a semi-enlightened braai-plek discussion, you must have come across the idea before. China is taking over the world, and the first thing on its itinerary is to buy Africa and exploit it for all it’s worth. Right?
Whether you’ve read it in a news report or heard it during a semi-enlightened braai-plek discussion, you must have come across the idea before. China is taking over the world, and the first thing on its itinerary is to buy Africa and exploit it for all it’s worth. Right?
The Ethics Institute of South Africa (EthicsSA) recently launched a survey to gauge perceptions about Chinese companies doing business in Africa across 15 African countries. The survey aims to address the negative global perceptions surrounding China’s economic activities in Africa.
Chinese trade and investment in Africa have been on the rise, especially in the last couple of years: total Sino-African trade volume has quadrupled since 2005, and China is now Africa’s largest trading partner.
Foreign Direct Investment (FDI) – where companies buy shares in African companies, expand their activities on the continent, build new facilities, and reinvest profits – from China has increased over the past 10 years in tandem with increased trade.
More than 2 000 Chinese companies and countless individuals are doing business on the continent. This flurry of economic activity has attracted great attention – and suspicion.
A closer look at the facts and figures making up this important relationship, however, prove that none of it is as clear-cut as it seems. Sino-African economic relations receive a staggering amount of reportage: you would be excused for thinking Chinese investments in Africa have long eclipsed those of the US based on this coverage.
But inflows from countries such as Europe and the US still far outweigh those from China. Although figures differ, FDI from developed countries is still thought to make up a staggering 70% of FDI in Africa. China’s FDI to Africa also remains marginal in terms of China’s total outward FDI flows (less than 10%, in fact).
It is consistently measured on a completely different yardstick: very seldom is money from anywhere else in the world viewed with the same consistent paranoia and overstatement. FDI is usually seen as the most desirable of economic interactions, and can stimulate the local economy, create jobs and improve infrastructure.
"FDI is always welcome," says Reg Rumney, Director of the Centre for Economics Journalism in Africa. "Except when it comes from China!" According to Rumney, this negative perception is fuelled by what seems like a mixture of racism and economic jealousy, especially in the US and Europe – Africa’s traditional trading partners.
Rumney says this bias betrays a sense of economic insecurity on the part of these global giants – who fear that their foothold in the resource-rich continent is under threat. “One must concede that China has made a positive and very visible impact on Africa’s infrastructure, with many of the big projects across the continent funded by that country,” says EthicsSA CEO Deon Rossouw.
Chinese investment in Africa might have improved infrastructure and brought affordable goods to our doorsteps, but it is time for bilateral trade and investment to address the continent’s biggest problem: unemployment.
First, one of the criticisms of Sino-African trade that is based in reality needs to be addressed: whereas China exports raw materials from Africa, it imports cheap final goods to our shores. This off-shore production means less economic value, fewer factories and fewer jobs are created in Africa.
China’s size, strength and willingness to invest make it indispensable to developing countries in Africa. But, for China to be a responsible economic partner to Africa, countries on the continent need to focus on restructuring trade, adding value to their exports and minimising their reliance on manufactured imports.
'Value-added trade’ can be created using a series of legislative and trade moves to protect and promote African industry, keeping money and jobs on the continent.
By promoting value-creating manufacturing activities and placing trade restrictions on final goods, economic policy can be used to create a friendly environment for African manufacturers to flourish.
While the economic future shared by China and Africa is uncertain, it’s clear that many of the fears surrounding the 'invasion’ are simply unfounded. The results of the EthicsSA survey could go a long way in dispelling some of the myths surrounding Sino-African relations, bringing to bear the opinions of those who matter most: the people who live in Africa.
You can read about the survey and fill it in yourself at www.ethicsa.org/index.php?page=Presschinesesurvey
