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Wednesday 23 Aug 2017 | 16:33 | SYDNEY
Wednesday 23 Aug 2017 | 16:33 | SYDNEY

China's engagement in Africa: Gargantuan or puny?

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COMMENTS

10 March 2008 16:43

Reading Harry Broadman’s essay (subscribers only) in Foreign Affairs — China and India go to Africa — was a reminder of just how hard it is to get a handle on the scale of China’s involvement on the continent. Broadman claims China’s cumulative FDI in Africa at the end of 2005 was a rather meagre $US1.3 billion. That contrasts sharply with EIU investment estimates of $US14.1 billion (2006) and the $US11.7 billion estimate (2006) by the Chinese Academy of Social Sciences. One World Bank macroeconomist claims China has invested $US15 billion (subscribers only) in Sudan alone. Broadman’s estimate would make China’s cumulative FDI less than a World Bank estimate of China’s annual African aid budget.

The big discrepancy in the figures helps explain the confusion and suspicion over what China is up to in Africa. Are its loans to Africa worth more than the OECD’s total aid budget, or is it giving next to nothing? Is it sneakily and unscrupulously locking up the continent's vast mineral wealth, just competing to buy resources like any other state or doing almost nothing at all? Are we witnessing the decline of the US and Europe and the emergence of the Dragon?

The hype surrounding China’s engagement in Africa seems overblown. China’s trade with Africa is growing exponentially: increasing from $US10 billion in 2002 to more than $55 billion in 2006, and projected to reach $100 billion by 2010. But more than 75 per cent of that trade is with only four countries — South Africa, Sudan, Angola and Nigeria. A big slice of China’s imports are resources, but for all the hype surrounding China’s grab for African oil, just nine per cent of Africa’s oil goes to China: the EU and the US take around a third each. 

In many respects, China’s activities in Africa reflect the past practice of other big powers. Desperate for resources and with many sources already tied up, China is looking to secure them and Africa has them in plentiful quantities. Its linking of aid to resource access has also been tried by Western states. What is perhaps different about China’s engagement with the continent is something Broadman only mentions in passing: ‘the newest phase of globalization – the maturation of South-South commerce, which China and India are leading’. If China’s booming economy gives African states a fresh chance to grow and if cheap Chinese labour can build critical infrastructure in countries too unstable, poor or distasteful for Western investors, then China’s engagement in Africa might truly be said to be something different.

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