Business Day (Johannesburg)
COLUMN
July 15, 2006
Posted to the web July 17, 2006

By Leni Wild
Johannesburg

 

THIS week marks the anniversary of the Group of Eight (G-8) summit in Gleneagles, Scotland, which was also the culmination of possibly the largest civil-society mobilisation ever -- the Make Poverty History campaign.

Yet one important issue wasn't on the agenda last year even though it was changing the face of development in Africa. What's more, it doesn't seem to be sufficiently on the agenda at the St Petersburg summit this weekend. A pity, because it has the potential to shape (for better or worse) prospects for growth, investment and governance on the continent. That issue is China.

China's increasing role in Africa -- from bilateral trade to aid or soft loans, from debt relief to arms sales -- has, until recently, gone largely unnoticed. Policy makers, both in Africa itself and in the broader international community, have on the whole been slow to react to the emergence of China as a key external actor in Africa.

Yet China's policy towards the continent has evolved rapidly over the past decade. It is driven by both economic and political imperatives. In the process it is both creating new opportunities for African development and posing some serious challenges. These are changing the context for development in the continent.

The G-8 has tended to see Africa as a problem to be solved. By contrast, China has looked to the continent as a new investment opportunity. Its trade with Africa has risen from $12bn in 2002 to about $40bn in 2006 and could get to $100bn by 2011. It is now Africa's third most important trade partner after the US and France.

China's need for energy is to a large extent fuelling this trade.

Africa's impressive endowment of natural resources has therefore exercised a strong pull. China is now the world's second largest consumer of oil after the US; almost a third of its oil imports come from Africa (the exporting countries include Angola and Sudan, and increasingly Equatorial Guinea, Gabon and Nigeria).

China has also seen Africa as a potential market for its own products, particularly textiles, clothing, furniture and footwear.

This brings some benefits to African consumers (who can purchase cheap goods) but it has, in some countries, displaced African producers.

SA, Lesotho and others have seen parts of their textile industries almost wiped out by an influx of goods from China, leading to large-scale job losses and trade union protests.

China's relations with African countries have also been used to bolster its international standing.

Political ties with African states are partly linked to China's perceived vulnerability over Taiwan as it has sought to use these ties to encourage African countries not to recognise Taiwan.

China's ties with Africa also provide a buffer from international criticism: its policy paper says its relationships with many African countries are based on "independence, equality, mutual respect and noninterference in each other's internal affairs".

This creates a quid pro quo relationship when China is investing in countries such as Zimbabwe or Sudan, in which neither side is questioned about human rights. This mutual support has also been crucial at international level: African votes have been key, for example, in blocking resolutions at the United Nations (UN) human rights commission condemning China's human rights record, just as China has been key in abstaining in votes in the UN Security Council on Darfur.

These political ties have been cemented by soft loans, investment in infrastructure and arms sales. China has undertaken the construction of large prestige projects linked to institutional interests. In states such as Uganda, Mozambique, Gabon and Mali, this includes the building of football stadiums and even government offices or national parliaments. In Angola, China's $2bn soft loan enabled the government to resist pressure from the International Monetary Fund to improve the transparency of its oil sector and to tackle corruption.

African leaders have largely embraced China, with its anticolonial approach and ability to "get the job done".

As Sierra Leone's ambassador to Beijing Sahr Johnny points out: "We like Chinese investment because we have one meeting, we discuss what they want to do and they just do it."

But who really benefits from this investment? An unemployed textile worker in Lesotho will have a view rather different from a Liberian public servant whose wages are paid by the Chinese. And a member of the Sudanese government procuring arms from China will have a very different view from a member of an African human rights group campaigning to end conflict.

What can be said with certainty, is that China is changing the context for development on the continent. Duncan Green, head of research at Oxfam, says there is now a triangular dynamic to development with key actors in Africa, the US and western Europe and Asia. This gives African countries new-found leverage.

However, China also presents a new test for the African Union (AU) and the New Partnership for Africa's Development. The African Peer Review Mechanism was created to ensure the policies and practices of African states conform to agreed political, economic and corporate governance standards. To date, China's support for pariah regimes, its assistance without political conditions and its lack of adherence to international standards on corporate social responsibility could undermine these regional initiatives.

But what of the G-8? Should it give up on the momentum built up last year or can it too learn from China? The principal lesson might be: "do not demonise". The US in particular, seems intent on "containing" China or presenting it as a threat. This will not work. China's role in Africa, and in the world, is here to stay.

China should be invited to the Africa Partners Forum (a group of African governments, big development donors and African and international institutions), while joint initiatives can be established.

Over the past 20 years, China has lifted an estimated 400 million of its people out of poverty. In contrast, the numbers living in absolute poverty in Africa have risen an estimated 77 million. Perhaps what China offers is proof that there is no "one-size-fits-all" model for development.

But the G-8 -- and all development donors -- must also be clear on the need to support African-led initiatives on human rights and good governance. China does present real opportunities, in terms of increased trade and investment, and new forms of political leverage for Africans. But it could also undermine demands from African civil society for more progress by governments on issues such as corruption and governance.

The challenge is to engage with China to strengthen common interests and build understanding. Only then will we see real progress in making poverty history.