The rise of the dragon

2012-09-29 12:54

Africa is in a prime position to take advantage of China’s shopping spree, says economist

A Chinese company bought a mini Mount Everest five years ago in Peru for $3 billion (R25 billion at the current exchange rate).

The reason for the acquisition was simply to mine the area’s rich deposits of copper, of which China has next to nothing.

And that hasn’t been the end of the Chinese global shopping spree.

From metals to minerals, timber to grain to everyday food, China has been busy in the past decade.

“The Chinese are misunderstood,” says global economist Dambisa Moyo on a blissful afternoon this week in Sandton, with the JSE towering behind her.

“Critics who say the Chinese are the new imperialists are talking rubbish,” she says.

“It undermines the dialogue of what exactly is happening in a new world.”

Her new book, Winner Take All, focuses on China’s race for resources and what it means for the world at large.

In 2009 Moyo was named by Time magazine as one of the world’s 100 Most Influential People after her bestseller, Dead Aid: Why Aid Is Not Working and How There Is a Better Way for Africa, established the Zambian as a leading economist with a different take.

Her Winner Take All has already rattled Western cages about a new geopolitical order with far-reaching repercussions.

Moyo is in awe of the Chinese juggernaut’s race for economic supremacy and she churns out one breathtaking fact after the other in her book.

And the statistics around China and the race for commodities are certainly staggering.

In 2010 China had 40 cities with populations of more than a million and by 2020 economists say the figure will stretch to more than 225.

China’s gross domestic product has grown by almost $4 trillion, meaning it has created nearly another seven Indias, nearly three Italys and more than two Frances, Moyo writes.

“Simply put, more economic growth means more wealth, means more commodity growth,” she writes.

“If China continues on this trajectory, it is poised to become the world’s biggest economy by 2025.

“In less than 20 years we will witness the creation of a middle class of roughly the same size as the current total population of Africa, North America and Europe.”

And this middle class, says Moyo, will want the newest iPhones, cars and appliances.

And it will need food.

“Forecasts are that global demand for food and water will increase by 50% and 30%, respectively, by 2030. The Chinese are preparing for this brave new world by going on a shopping spree and everyone else is lagging behind.”

An optimist in nature, Moyo believes Africa is in a prime position to take advantage of the Chinese’s shopping spree.

“The success depends on Africa’s own attitude and policy they take on the Chinese expansion,” she says.

“African leaders must understand that the continent has rare arable land, resources and minerals. Africa is unique.

“And African leaders must get better at bargaining around these advantages.”

She believes China’s development was a plus for Africa, “or it could be very positive. China does business with everyone. Why is their business not objectionable in developed countries?

“It is borderline demeaning to say China is exploiting Africa,” she says.

“We as Africans must ensure we get maximum bang for our buck in the way we implement our policies and do business with China.”

The 43-year-old writes in her book that the Chinese are quite extravagant shoppers with deep cheque books they are prepared to take out to get what they want.

They treat their African business partners not as charity cases or discriminate against them because of dodgy political policies.

“If they need something they are willing to pay, no matter who you are. They will gladly overpay. If African leaders play it right, it is all about mutual benefit.”

But surely the unchecked growth is unsustainable and would ultimately destroy the environment?

Moyo’s response is that there was a play-off now between economic growth versus environmental  sustainability.

“But we are living now and very real decisions have to be taken,” she says.

“The debate is more nuanced. Are our societies willing to sacrifice economic growth to save the planet?”

Her parting shot is that the next 50 years might be some of the most interesting in history.

“We find ourselves on earth at a unique time,” she writes, predicting we will have to deal with commodity shortages at some point.

“At present, we are ill-prepared to contend with this eventuality.”

She says the challenges we face today go beyond our living standards to the survival of the planet as we know it.

“This is a fight about life or death.”

» Winner Take All by Dambisa Moyo, Basic Books, 257 pages, R265

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