CHANGING CHINA, CHANGING AFRICA:
FUTURE CONTOURS OF AN
EMERGING RELATIONSHIP
Peter Draper
South African Institute of International Affairs
(presenter)
Martyn Davies and Hannah Edinger
Frontier Advisory
OVERVIEW
• Background
• China in Africa: Current Frame
• China’s Economic Rebalancing – Implications for Africa
• Broader Considerations
Background
• Moving beyond the current frame
• Key driver: Chinese economic rebalancing
China in Africa: Current Frame
• Politics/security
• FOCAC
• Conflict zones and human rights
• Non-interference
• Economics
• State capitalism (SOEs; policy banks; ODA)
• Resources
• Trade structure
NB: ‘Deindustrialization’ concerns
• SEZs and their development impacts
China in Africa: Current Frame
• Social
• Corporate social responsibility
• Labour practices
• Environmental impacts
• Culture
• Formal engagements (eg Confucius institutes)
• Informal/community (eg Chinese traders)
China’s Economic Rebalancing –
Implications for Africa
• Chinese drivers
• Increased domestic cost structure
• Concerns over resource-intensive manufacturing
• Major problems in the financial sector
• Emphasis on new sectors (services)
• Domestic competition
China’s Economic Rebalancing –
Implications for Africa
• Implications for Africa
• Increased outward FDI from China
• Changing composition of OFDI towards middle-sized private firms
• Role of SOEs will probably decline, relatively
• Therefore less emphasis on resource acquisition, relatively
• And relatively declining emphasis on role of policy banks/finance
China’s Economic Rebalancing –
Implications for Africa
• Is Africa the ‘final frontier’ for export-oriented
manufacturing FDI?
• Will take time, perhaps a long time
• Enduring Chinese advantages
• Broader Asian advantages
• African challenges
• But consider the ‘flying geese’ paradigm
• In relation to some emerging African advantages,
particularly demographic
9
African Population growth dynamics
Mostly a west and east
African phenomenon
Rapid growth and urbanization,
mostly from low bases, holds out
the ‘middle class’ proposition
China’s Economic Rebalancing –
Implications for Africa
• The most likely to benefit are those that:
• Grasp the governance reform nettle
• Are favoured by geography and resource endowments
• Welcome FDI by MNCs
• Chinese SEZs could be a key policy tool to faciitate this
process
Broader Considerations
• Smarter Chinese diplomacy towards Africa will be
required to service diversified footprints
• Commercial (project oriented):
• targeting new sectors
• working more with the Chinese private sector
• Economic (rules of the game):
• Greater emphasis on good governance in order to secure Chinese
commercial interests
• Promoting trade liberalization
• Securing investments through BITs
Broader Considerations
• Politics, society and culture
• Policy of non-interference could become increasingly strained
• Increasing contact with emerging African middle classes will require
greater attention to human rights agendas, corporate social
responsibility, labour rights, and the environment