On June 21, 2007, the Center for Global Development (CDG) hosted a panel discussion on China's rapidly growing influence in Africa. The panel featured David Dollar, the World Bank's Country Director for China and Mongolia and Callisto Madavo, a former World Bank economist specializing in Africa and East Asia, and currently a professor of African Studies at Georgetown University.
During the session, Dollar and Madavo noted that thanks to its red-hot economy, China has become an increasingly important international lender, trade partner, and development actor, particularly in Africa. While the speakers largely voiced optimism about China's involvement in African affairs, they also warned that these developments have the potential to negatively effect the environment, government accountability, and human rights on the continent.
Chinese-African Ties
The Chinese economy has averaged 9% annual growth over the last 20 years and has yet to slow, with China's 2006 GDP tallying an impressive 10.7% increase. As the most populace country in the world, these developments have implications far beyond China's own borders. Nowhere is this truer than on the most underdeveloped continent in the world - Africa.
Source: EarthTrends 2007, Using Data from The World Bank 2006
Dr. Dollar noted that while China has long been involved in Africa, its recent role has become quantitatively and qualitatively much larger. China's hunger for Africa's natural resources to feed its growth is an obvious example of this fact. Over the past 20 years, China has gone from being a net exporter of oil to the second largest oil importer in the world (behind the United States). This need has driven China into trade deals with oil-rich African countries like Angola, Algeria, Gabon, Equatorial Guinea, and the Republic of Congo.
Besides petroleum, China has looked to the Democratic Republic of Congo and Zambia for copper and cobalt, South Africa for iron ore and platinum, and Gabon, Cameroon and the Republic of the Congo for timber.
The economic link between China and Africa, however, is not unidirectional. Africa has become an important emerging market for China's cheap manufactured products. Textiles are one particularly prominent example of this fact, with China's clothing pouring into many African markets.
China has also become a principal purveyor of foreign development aid and lending. In addition to being the third largest food aid provider in the world (much of which is earmarked for Africa), China has used its Export Import bank to fund over 259 infrastructure development projects in 36 African countries, including power plants, oil refineries, dams, and railroads.
Importantly, China is now adept at combining all of these areas – resource extraction, export of Chinese goods, foreign aid, and infrastructure construction – into a one-stop development shop for poor countries. This has provided a number of nations an alternative to, and more bargaining power with, development agencies in the West. In Angola, for example, China has gained access to this troubled country's substantial oil reserves with a $2 billion development package that will be used to build railroads, schools, roads, hospitals, bridges, offices, and a telecommunications network.
China's growing development aid and investment in Africa, combined with simultaneous increases in Western assistance, has resulted in a major upswing in total development aid flowing to the continent.
Source: EarthTrends 2007, Using Data from The World Bank's World Development Indicators
Impacts
Given the large sums of money involved, China's involvement has had both positive and negative effects on the political economy of the region. On the one hand, Chinese demand for natural resources has pushed up the prices of many primary commodities, providing a boon for African economies. In sub-Saharan Africa, for example, GDP grew at a 4.4% clip in 2001-2004, due in no small part to increased Chinese demand for a host of raw materials. The development aid and infrastructure projects that China has brought to African countries is usually also seen as a plus for its capital-poor trading partners.
According to both Dollar and Madavo, these benefits are quite welcome, and outweigh possible negative impacts. However, both speakers did cite areas of concern regarding China's dealings with Africa, reflecting warnings from a number of other development experts.
In particular, some western policymakers are concerned that much of China's assistance comes with an explicitly stated, "no-strings-attached" policy. China has sought to separate business from politics, and has rejected the practices of western donors who provide aid only if the receiving country meets certain minimum social, environmental, and financial standards. While even these standards are often criticized for being inadequate, they are usually more stringent than the terms offered by the Chinese. As Dr. Madavo noted, China's alternative approach could de-emphasize emerging norms that stress the need to use aid to leverage efforts to prevent corruption, promote financial accountability, respect human rights and the environment, and foster social equality.
In Angola, for example, China has pushed ahead with a huge oil-for-aid deal that has made this strife-torn country China's largest supplier of oil. As a result of this condition-free funding, some observers fear that past efforts to improve governance and root out corruption in the country have been undermined.
The case of China-Sudan relations is also illustrative. The pariah state's internationally unpopular behavior has caused significant amounts of western capital to leave the country. China, however, has stepped into this void, helping the Sudanese governments with projects such as the Merowe Dam, a $1.8 billion hydropower dam on that Nile that will displace more than 50,000 people and could endanger the region's environment and health. In fact, analysts claim that the dam's construction violates over 60 World Bank environmental and social standards.
Remaining Questions
According to Dollar and Madavo, these and other examples leave a number of unanswered questions regarding the ultimate impact that increased Chinese influence in Africa will have. Possibly most important, they said, is whether or not China can be brought into the same "development architecture" as the West, and persuaded to respect (or even improve) basic safeguards for all aid projects.The alternative is the creation of two competing development systems that could hinder efforts to improve the environmental, human rights, and socioeconomic conditions of African societies. If, on the other hand, China's increased funding and economic activity is used to further these important efforts, Africa's chances of escaping its current situation will greatly improve.
RELATED LINKS:
The Export-Import Bank of China
The World Bank's China Division
EarthTrends
