Africa’s strategy must be to gain from China

2013-05-12 14:00

Angola, SA and Nigeria are the fulcrum of the relationship, write Mthuli Ncube and Michael Fairbanks

China has fine-tuned its statecraft in ­Africa and morphed into the world’s most radical pragmatist. What can Africans do to gain from China’s new strategy?

China’s approach is broad and opportunistic, because it did not have a competitive edge over Western firms. Nonetheless, three nations are the fulcrum on which the Chinese-African relationship must balance: Angola, Nigeria and South Africa.

The continent has bargaining power: It has only uncovered 25% of perhaps $30?trillion (R273?trillion) in subsoil assets, has a market of more than 1?­billion people, and represents ­increased power in multilateral organisations.

Still, Africans work bilaterally and appear weak in negotiating with the world.

The triad of Nigeria, Angola and South Africa alone has the ­leverage to bargain with China on behalf of the continent.

Africans require up to $100?billion in infrastructure investment every year; they should work with the Chinese to build more cross-border infrastructure with a focus on regional strategic oil reserves that offer predictable futures for smaller nations.

The power grids, ports, roads and rails between these installations and their consumers would lower costs and foster intraregional commercial trade, now only 13% of total trade. This would test the identity, pragmatism and capabilities of China, and help achieve African goals for growth, stability, and justice.

The relationship between China and Nigeria may be the most strategic and is the most delicate.

Nigeria is the most populous nation in Africa, has the most oil, and has the most leverage with China. Some 70?000 Chinese citizens live there, and at least 600 companies and joint ventures are operational.

For Nigeria, China represents a huge trade deficit, with accusations of dumping and a loss of 350?000 Nigerian jobs and 170 ­Nigerian textile companies forced to close.

Angola is more preoccupied with the threat from a Chinese ­monopoly. China is Angola’s ­largest trading partner and Angola is China’s largest trading partner in Africa.

In 2004, the countries negotiated an oil-backed infrastructure loan that has become a model for the Chinese throughout Africa.

China has 50 state-owned enterprises, 400 private companies and up to 100?000 workers in ­Angola.

South Africa and China have a history intertwined with the anti-apartheid movement and with Cold War relations.

China helped South Africa become the S in the Brazil, Russia, India, China and South Africa economic group Brics, and it values South Africa because it shapes the discussion with global South-South relations.

China is also South Africa’s largest trade partner while South ­Africa is China’s second-largest ­trading partner in Africa.

There are 80 Chinese companies and 300?000 Chinese people in South Africa.

China employs the broadest scope of instruments of any international power. The goal is simple: stability on the African continent that fosters trade to fuel China’s thousands of factories.

Its diplomatic instruments are geared towards being seen as an ancient and vibrant culture, ­another developing nation, and a ­responsible member of the ­international community.

Its non-state diplomacy is based on people-to-people contact using the ubiquitous Confucius Institutes and rising numbers of student exchanges.

Financial incentives for infrastructure investments make up another part of China’s toolkit.

Its State Council oversees the “go global” policy institutions, which oversee among others the China Exim Bank, China Development Bank, Sovereign Wealth Fund, and the China-Africa ­Development Fund.

The latter plans to deploy up to $5?billion in incentives.

China’s development assistance observes the same principles it did in the 1960s, but the tactics have broadened. It makes all measurements a secret, has no official definition of aid, and ministries, banks and funds are involved in implementation. Funding estimates range from ­$2?billion to $2.7?billion a year and loans of $8.5?billion.

A full 95% of aid is bilateral, country to country. Concessionary loans go mostly to transportation infrastructure (33%), power (33%), and communications (17%).

On the military side, African relationships with China go back to the 1950s and extend to all nations in Africa.

Between 2003 and 2009, ­Chinese arms transfers to Africa were $3.5?billion – 20% of all arms transfers. Priorities include military construction, training, exchanges, anti-piracy, protecting Chinese personnel, supporting ­African law enforcement (particularly regarding drugs, ­terrorism and small arms smuggling), and peacekeeping.

China is building influence in global institutions. It joined the International Monetary Fund in 1945, took a UN seat in 1971, joined the World Bank in 1980, the African Development Bank in 1985, co-founded the Global Fund and joined the Inter-American Development Bank in 2009.

It views the UN as the preferred platform for multilateral responses to common challenges. It also sees the UN as the only way to constrain aggressive American unilateral behaviour.

The Forum on China-Africa Cooperation (Focac) began in Beijing in 2000. Some have called it a “stroke of genius”.

Recent initiatives include a ­climate-change partnership, science and technology projects, $10?billion in concessional loans; 95% of goods duty free to China; agriculture cooperation; upgrading hospitals and customs facilities; press exchanges; and 100 programmes for academic research.

The most recent Focac declared that the global balance of power was tilting towards developing ­nations, and reaffirmed that “the historical injustices endured by ­African countries should be undone, and priority should be given to increasing the representation of African countries on the UN ­Security Council”.

»?Ncube is the chief economist and vice-president of the African Development Bank

»?Fairbanks researched China’s strategy in Africa as a fellow at the Weatherhead Center for International Affairs at Harvard University. The authors write in their personal capacity

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