While there has been a lot written about China-Africa relations over the past few years, it is often difficult to get a hard-nosed, objective assessment of the topic.
So I’m thankful that Ambassador David Shinn, former U.S. ambassador to Ethiopia and Burkina Faso and an expert on China-Africa relations, has posted his recent remarks on Chinese aid, trade and investment patterns in Africa here.
I attended the final lecture of his Africa class at George Washington University a month ago where he touched on the subject, but this four-pager has some great statistics and analysis.
Some of the things I found interesting…
- Resources: Resources — specifically oil, minerals, base metals, stone products and raw logs — comprise a whopping 90 percent of Africa’s exports to China. And about 80 percent of Africa’s exports to China come from just five oil and mineral exporting nations. China also imports from Africa about 90 percent of its cobalt, 35 percent of its manganese, 30 percent of its tantalum and 5 percent of its raw logs.
- Oil: While African countries now provide almost one third of China’s petroleum imports, this is only about 13 percent of total African oil exports (whereas the U.S. and Europe, both larger global oil importers, each purchase about a third of Africa’s total oil exports).
- Trade Balance: China’s overall trade with Africa is nearly in balance, but there are huge country-by-country disparities. 16 African countries, mainly oil and mineral exporters, have trade surpluses with China, while 37 , mainly poorer ones, have trade deficits.
- Foreign Direct Investment: Since 2000, most of Chinese FDI into Africa has gone into resource extraction, especially oil, minerals, telecommunications, construction and banking. However, charges that China is buying or obtaining long-term leases on land in Africa to feed its own people are usually inaccurate, since investment in agriculture is modest and new. “Most independent observers agree that the Chinese government’s policy is to minimize acquisition of land in Africa or elsewhere to feed Chinese”.
- Aid: While it is difficult to measure China’s aid, it is clear that China provides three different kinds of aid –1) grants; 2) interest-free loans; and 3) concessional loans with subsidized interest rates. The total amount in the past several years is about $1.5 billion, with infrastructure constituting as much as 70 percent of this. “China has become the hydropower, road and bridge builder of Africa…companies such as ZTE and Huawei are replacing Western telecommunication companies in much of Africa as a result of their support with governmental concessionary loans”.
- Conditions Tied to Aid: China does not attach political strings to aid other than the requirement that the recipient accept the “one China principle”. However, there are economic strings: most Chinese aid is tied to the purchase of Chinese goods and services (also usually the case for Western aid), and sometimes comes with a significant component of Chinese labor (not the case with the West).
- Nature of Business Practice: As of 2008, there were probably more than 2,000 Chinese companies operating in Africa. Upon arrival, they often build new facilities, buy supplies from China rather than locally, and tend to sell to government entities. They are sometimes willing to take losses and support prestige projects to gain market entry or share, and, in the case of state owned enterprises (SOEs), support Chinese government policies.
Mr. Shinn also has a few cautionary notes on Chinese influence in Africa:
Africans continue to be critical of some aspects of Chinese corporate social responsibility (CSR) such as inadequate attention to worker safety, failure to comply with minimum wage laws, minimal attention to environmental concerns, unwillingness to train African workers, sale of counterfeit and adulterated products and unfair investment practices. …Chinese FDI in manufacturing emphasizes projects that do not build local capacity or expertise. It has tended to focus on retail, general trading, and textiles, which has led to the displacement of African companies.
You can read the entire thing at his blog here.