CHINA’S NEW ROLE IN AFRICA
Ian Taylor
School of International Relations,
University of St Andrews
From China’s New Role in Africa, published by
Lynne Rienner Publishers this year
 Material and ideas based on fieldwork and
interviews I conducted in:
Botswana, Cape Verde, Eritrea, Ethiopia
The Gambia, Mauritius, Namibia
Nigeria, Senegal, Sierra Leone
South Africa, Uganda, Zambia, Zimbabwe
China (Beijing and Hong Kong)
London and Washington, DC.
CONTENTS OF BOOK
1. CHINA’S AFRICA POLICY IN CONTEXT
2. OIL DIPLOMACY
3. THE IMPACT OF CHEAP CHINESE GOODS
4. THE ISSUE OF HUMAN RIGHTS
5. ARMS SALES
6. PEACEKEEPING IN AFRICA
7. WHAT DOES IT ALL MEAN?
OIL
Oil dominates the profile of Africa’s exports to China (around
70%)
China’s dependence on imported oil rose to 47% of annual
demand, an
increase of 4.1 percent since 2005 - expected to rise to around
60% by
2020
FIVE KEY WAYS BEIJING SEEKS TO LESSEN
PRESSURE
1. Increased energy conservation (this will only
moderate growth in consumption)
2. Fuel switching—reducing the dependence on
imported fuels by switching to renewable energy
and coal, of which China has large domestic
reserves (but the environment…)
3.
Increase in domestic oil production by seeking
out new resources and exploiting existing ones
more efficiently (there have been new discoveries
within China but not enough to satisfy demand).
4.
Beijing encourages national oil companies
(NOCs) to increase purchases in international
oil markets
5.
Beijing facilitates acquisition of oil reserves
abroad through “sweetener deals” with foreign
governments
However, liberalization has resulted in a shift of
power away from Beijing toward NOCs
The ability by Beijing to tell the NOCs what to do is
limited
Question: Are particular ventures a
result of
Beijing directing an NOC or the NOC
seeking
diplomatic assistance once it has
identified a
target oilfield?
China lacks a central ministerial
agency
overseeing the oil industry
PROBLEM:
Beijing has as yet been incapable of enforcing
a geographical division of labour on the main
NOCs
Result: competition and overlap between:
China National Petroleum Corporation (CNPC)
China Petroleum & Chemical Corporation
(Sinopec)
China National Offshore Oil Company (CNOOC)
Example
• CNPC and China Petroleum and
Chemical Corporation (Sinopec)
competed against each other for a
pipeline project in Sudan.
The NOCs in fact view one another as rivals,
competing not only for oil and gas assets, but
also
for political advantage.
The more high-quality assets a company
acquires,
the more likely it is to obtain diplomatic and
financial support from Beijing for its subsequent
investments.
 especially true for CNOOC, which does not
have as much political influence as CNPC
and Sinopec
This inter-firm competition is normal in
the capitalist West, obviously, but puts a
different take on “China Inc.” and its “oil
strategy” in Africa.
Problem: the NOCs have the reputation to let
the
Chinese government take the dangerous
consequences
engendered by their foreign-oil and gas quest
Thus commercial interests of Chinese NOCs
can risk
damaging Chinese government’s diplomacy
and
international reputation overseas
- Same as some Western oil companies behave
But government control over the actions of
IMPACT OF CHINESE IMPORTS
• One of the more contentious issues in Sino-African
relations
• Cheap manufactured goods blamed for decline in
African exports—particularly of clothing and textiles
• African imports from China – 712% jump from $895m in
1996 to $7.3bn in 2005
• Many African observers see this as the cause of decline
of Africa’s manufacturing sector
• “Africa is becoming a dumping ground while African
companies are dying” - quote from an African
newspaper
INTERNATIONAL DYNAMICS
African Growth and Opportunity Act (AGOA) (May
2000)
offered incentives for African countries to open
their
economies and build “free markets”
Modifications made permitting least developed
African
countries to employ materials from the cheapest
contractors
worldwide
Effect was that global apparel industry took
advantage of
“Quota hopping”
 various foreign companies, mostly Asian, set themselves
up in
Africa as a means to evade the obstacles placed on them by
the
Multi-Fibre Agreement
The MFA allocated export quotas to low-cost developing
countries
and limited amount of imports for states whose domestic
textile
industries were negatively affected
 targeted at imports from Asia and particularly China
Triangular production networks thus developed whereby
Asian
firms made products in Africa for export to Western markets
•
Result: African exports of textiles and clothing to US boomed
•
In 2000, apparel exports to US = $776 m; by 2004 = $1,782 m increase of 130 %
•
HOWEVER, this was artificial - vast majority of “African” clothing
being exported to US was made using foreign fabrics:
Lesotho = 98%
Madagascar = 92%
Kenya = 98%
Mauritius = 64%
Swaziland = 98%
South Africa = 68%
Namibia = 96%
Malawi = 95%
Botswana = 99%
Since China is now being held
“responsible” for post-MFA collapse
of Africa’s clothing industry, we should
note that a sizeable proportion of the
fabric in question was actually Chinese
CLOTHING’S “BIG BANG”
MFA expired January 1, 2005, affecting 87% of US quotas and
73%
of EU’s
Market share enjoyed by African exporters now taken over by
Chinese manufacturers - also, many Chinese companies that
had
relocated to Africa during the MFA moved back to China
African textile and clothing manufacturers exports to US fell
by 16%
from 2004-05
US imports from China went up by 44%
EU imports from China went up by 78%
IS AFRICA COMPETITIVE?
Very difficult to assess whether African textiles could compete
with Chinese imports because the playing field is not level
African manufacturers have to contend with chronic energy
and transport issues
Example: Nigeria has world’s 10th largest reserve of gas but
generates only 3,000 mw of electricity, even though domestic
demand is 6,000 mw
 Cost of doing business high and products expensive
World Bank: if Zambian and Kenyan power
systems were of same quality as the Chinese
the cost savings for Zambian and Kenyan
firms would be equivalent to their entire wage
bills
South Africa has been losing clothing jobs
since acceding to the WTO - the industry was
highly protected during apartheid but is
basically uncompetitive today
The popular image
THE REALITY
• Africa’s industries have been in decline for a
long time
• Between 1975-2000, Ghana’s textile output feel
by 50% and employment in the sector by 80%
• In Zambia, employment in the clothing and
textile sector fell from 25,000 in 1980s to below
10,000 in 2002
• In Kenya, number of large-scale garment
manufacturers dropped from 110 in 1980s to 55
in 2000s
• Africa’s textile exporting success in mid2000s was an artificial boom for an industry
that lost its competitive edge long ago
• Only factor supporting the growth of much of
Africa’s export-oriented clothing sector =
preferential access to overseas markets
• When these privileges were abolished,
Africa’s success in the clothing and textile
sectors evaporated
• Poor organizational procedures, low levels of
skill, and inadequate management
• Ghanaian manufacturers of textiles have to
face the imposition of an illegal 20% duty by
Côte d’Ivoire, a “transit tax” collected at
Benin and extortion by Nigerian authorities
• Poor packaging, poor finishing of products
(quality/conformity to standards), inability of
some manufacturers to meet export orders on
schedule also come into play
World Bank estimates that the cost of doing
business in
Africa is 20–40 % above that for other
developing regions
due to:
- Unpredictable property rights
- Ineffective/corrupt judiciary systems
- policy uncertainty
- unfair competition from politically connected
companies, which results in a few large firms
holding very dominant market shares
• Finished goods from China are arriving into
African
markets
with
few
domestic
competitors, wiped out not only by low prices
of Chinese imports but by African conditions
• BUT “the Chinese” are being blamed for
African governments’ failings
• Policymakers in Beijing will have to address
negative impressions
• Big challenge = increasing Sinophobic
resentment vs. Chinese traders whose products
dominate local African markets
KEY POINTS
Two main points stand out:
1. Degree of irrational hostility to China in Africa.
2. It is up to African leaders to manage their relations with China to
benefit their own economies and citizens
IRRATIONAL HOSTILITY
Chinese trade with Africa has become, in many
ways,
normalized, which is to say diverse, and
involving
multiple actors, rather than state directed and
controlled
Yet people still talk of “China” in Africa, as if all
actions
by Chinese actors represents official Chinese
foreign policy
Much of Africa’s manufacturing industry
collapsed long
ago, well before Chinese imports appeared on
the scene
Besides, it is not only African producers who
have had
to adjust to competition
— between 1995 and 2002, more than 15
million factory jobs, representing 15% of the
total manufacturing workforce, were lost in
China
• It is possible that some Chinese exports may
block avenues for Africa’s diversification away
from its traditional exports
• If Africa is to escape its dependent relationship
on the global economy and move on from being
simply an exporter of primary commodities, it
needs to start manufacturing
• But domestic problems figure more significantly
in African manufacturers’ plight
• Plus, Africans themselves import a huge amount
of Chinese-made products - go to Yiwu!
• Those that are shoddy or counterfeit should be
regulated and controlled by African governments
• But these corrupt governments instead prefer to
blame “China.”
• Beijing’s engagement with Africa is grounded in
pragmatism à it is up to each African state to decide
how and where it takes shape
• China’s abandonment of ideology for economic
growth gives Africa greater room to manoeuvre—but
Africa’s elites must do so wisely, with an eye toward
mutual benefit
• In some countries, they will
• In others, however, predatory elites at the apex of
neopatrimonial regimes, unconcerned with promoting
development, will forfeit the chance to make the most
of renewed Chinese interest in Africa
THE END