How will the Beijing Consensus benefit Africa? – China and Africa
Throughout Africa, China is challenging the West, not only in terms of economic investments, but also through its development aid.
China’s growing presence in the global arena is causing alarm in the United States and Europe, for economic and geopolitical reasons. One main issue of interest at the moment is the country’s mounting influence in Africa. Academic researchers have to avoid reducing the discussion to questions such as ‘burden or boon?’ or ‘new colonialist or friend and benefactor?’ 1
China’s foreign policy, especially in relation to Africa, is now the subject of research and of international meetings around the world. 2 A conference in Cambridge, UK, for example, brought together a wide variety of speakers, including international experts like Deborah Bräutigam, Daniel Large and He Wenping, to discuss ‘A Chinese scramble?: The politics of contemporary China–Africa relations’, in July 2006. 3 The stimulating papers presented at this conference (to be published as China Returns to Africa later this year) will undoubtedly set the stage for future research. Yet they also highlight the need for a solid empirical basis on which to base policy considerations and analyses of various aspects (trade, aid, governance) of this emerging field of research.
In the Netherlands, China’s involvement in Africa is still an emerging field of academic research. A first impetus was given at a seminar, ‘Red star, black gold: China’s new engagement with Africa’, held at the African Studies Centre in Leiden, in September 2006, where the guest speaker was Chris Alden of the London School of Economics. 4
Most recent studies have focused on China’s investment and commercial activities in Africa, rather than its development aid. But trade and aid cannot be disentangled, for both have political implications.
The commercial side of the story is clear. To feed its booming economy China needs resources – minerals, timber, foodstuffs and, above all, oil. The country imports 40% of its oil, a growing percentage of which (nearly one-third) comes from Africa. Sudan, the continent’s third largest producer, exports 60% of its oil to China, fulfilling 5% of China’s needs. Angola has overtaken Saudi Arabia as the country’s largest oil supplier. It is no surprise, therefore, that most Chinese foreign direct investment (FDI) in Africa is resource oriented. 5
Africa’s fast-growing population offers a welcome market for China’s manufactured goods. Yet experts like Nicolas Pinaud of the OECD agree that the effects on African industry are debatable. The textile industry is a case in point. During the 1990s, as a result of the Multifibre Agreement (MFA) quota system and investments from Asia, several African countries were able to develop their clothing industry. When the MFA quotas on Chinese exporters were lifted in January 2005, however, African clothing and textile exporters that had benefited from the US African Growth and Opportunity Act (AGOA) were hit hard. South Africa was the main casualty, with a 45% decrease in clothing exports. 6
But Southeast Asian exporters of textiles, shoes and plastics who cannot compete with China in African markets have also been affected. This Asian competition has increased the purchasing power of many African consumers. A study by Deborah Bräutigam, moreover, has shown that expanding Chinese business networks in Africa can serve as a catalyst for local industrial development. 7 Cotton growers in West Africa, for example, have benefited from increased exports to China. Nevertheless, most observers today share the concern that by purchasing raw materials from the continent and selling value-added products back, China’s increased involvement will create an unfavorable trade balance for many African countries.
- In the 1990s, China–Africa trade grew by 700%; between 2000 and 2005 it quadrupled to $39 billion and is projected to reach $100 billion by 2010.
- Since 2000, African exports to China have grown at an annual rate of 56%.
- Oil and mineral exports from just five countries account for 85% of African exports to China.
- The share of Africa’s exports to China rose from 1.3% in 1995 to 9.3% in 2004, accompanied by a significant decline in African exports to OECD countries in the same period. Still, an estimated 70% of Africa’s $435 billion world trade is with the EU, and just 10% with China. 21
An emerging aid donor
The World Bank, the International Monetary Fund and Western donors also express concern about China’s role as an ‘emerging donor’ in Africa. To begin with, this is a misperception, since Sino-African bonds go far back. In the 1950s and 1960s China supported African independence movements in an ideological campaign against Western imperialism. 8 China’s aid to Africa during the Cold War served to outdo the revisionist communist Soviet Union as well as to mark its opposition to the West. Ideology has waned, however. China’s activities in Africa today are profit-centred, and its aid pragmatic.
Infrastructure projects – frequently financed by soft loans – are the centrepiece of Chinese aid. 9 Its development assistance also consists of technical support for agriculture, medical services, and human resources development. African students and professionals are granted scholarships to study in China. By 2004, 15,000 Africans had graduated from Chinese institutions. Without providing exact figures, Barry Sautman, of the Hong Kong University of Science and Technology, notes that most graduates return (not least because of racism), resulting in a small ‘brain gain’ for Africa. 10 In 2000, China cancelled the bilateral debts, totalling US$1.27 billion, of 31 African countries. 11
China’s aspirations in the area of development cooperation are laid down in the Programme for China–Africa Cooperation in Economic and Social Development, a subsidiary of the Forum on China–Africa Cooperation (FOCAC) set up in 2000. 12 The approach professed by China today is a continuation under new circumstances of the Five Principles of Peaceful Coexistence adopted at the Bandung Conference in 1955. It is a policy based on non-interference, respect for sovereignty, equality and mutual benefit. China’s aid comes without talk of human rights, good governance, economic reforms or environmental concerns. It is merely conditional on the adoption of the ‘one China’ policy.
This approach is appreciated by African governments, yet it worries Western donors, who fear that access to growing funds from China will undercut internationally agreed standards and encourage unsustainable policies. This concern persists, even though China signed (but indeed does not actively champion) the 2005 Paris Declaration on Aid Effectiveness. Daniel Large, of the School of Oriental and African Studies in London, notes that, at least in the short term, the ‘progressive’ governance and democratization agenda in Africa has generally been undermined. Denis Tull, of the Institute of International Affairs and Security in Berlin, another speaker at the Cambridge conference, asserts that while the economic impacts may be mixed, the political consequences of increased Chinese involvement in Africa ‘are bound to prove deleterious’. 13
The Forum on China–Africa Cooperation (FOCAC) in Beijing 4–5 November 2006, the biggest diplomatic gathering ever hosted by China, was a landmark event in modern China’s relations with Africa. Among the 1700 delegates were the leaders of 48 of Africa’s 53 countries. The summit, with its slogan of ‘Friendship, Peace, Cooperation and Development’, adopted a declaration proclaiming ‘a new type of strategic partnership’. China offered a package of aid and assistance for Africa, including:
- Exports: $3 billion in preferential loans and $2 billion in export credits to African countries over the next three years.
- Investment: the creation of a $5 billion China–Africa development fund to encourage Chinese investment in Africa.
- Health: a programme for building 30 hospitals; a grant of $37.5 million for anti-malarial drugs; and 30 demonstration centres for the prevention and treatment of malaria.
- Education: a programme for building of 100 rural schools; plus 4000 scholarships per year for African students to study in China.
- Trade: 14 agreements were signed between 11 Chinese enterprises and African governments and firms, worth $1.9 billion.
An alternative approach
China’s approach to Africa – popularly referred to as the Beijing Consensus 14 – may thus have serious implications for the continent’s development paradigm. Many African leaders view emerging South–South relations as an historic opportunity to escape their neo-colonial ties to the West. China’s example – 400 million people were lifted out of poverty in two decades, without externally enforced structural adjustment programmes – has bolstered African countries’ optimism that they too can devise their own development path, and that the Western model is not holy. By presenting a ‘different’ approach to development, China styles itself as leader of the global South and champion of a progressive international order.
All recent studies show that China’s involvement in Africa should give pause for thought. Although China is an outspoken supporter of the Millennium Development Goals, its support for the African Union and the New Partnership for Africa’s Development (NEPAD) has so far proven to be little more than rhetoric. Also, its aid is almost entirely bilateral, and thus outside the existing architecture of international development assistance. 15 Denis Tull is not alone in his observation that ‘sizeable benefits of China’s return will accrue to state elites’. 16
Furthermore, although little detailed information on the quantity, terms and conditions of Chinese loans and grants to Africa is publicly available, it is no secret that most Chinese aid is highly intertwined with trade and investment, and is tied to Chinese goods and services. In Angola, for instance, 70% of the US$9 billion injected by China was to be allocated to Chinese contracts. Daniel Large, based on his observations at the last FOCAC meeting in Beijing, expects that non-investment related aid being upgraded to facilitate economic relations could be a rising trend. Finally, a danger lies in wait for formerly highly indebted poor countries eager to accept the new (non-concessional) loans offered by China, since they may result, once again, in unsustainably high levels of debt.
China’s commitment to non-interference evidently does not prevent it pursuing its own political interests. It is no coincidence that the resurgence of Chinese interest in Africa (including generous aid packages) followed the 1989 events in Tiananmen Square. Faced with fierce condemnation from the West, China needed new allies, and its current involvement in Africa has indeed provided it with valuable diplomatic support. 17
Economics, however, remains top of the list. The Chinese Ministry of Commerce is the lead agency in the provision of bilateral aid. Development assistance and soft loans (as well as investments) pave the way for favourable concessions for the exploitation of oil fields (Angola, Sudan), or access to fishing waters (Sierra Leone, Gabon) and agricultural land (Zambia, Zimbabwe). Further, China’s policy of non-interference offers opportunities to its (private and state-owned) companies that are unavailable to their Western competitors. When American and Canadian oil companies left Sudan following their governments’ imposition of sanctions against the Sudanese regime, China soon stepped into fill the gap. 18The West, in response, was quick to accuse China of maintaining links with the most unsavoury of regimes.
An interesting question, but one that is hard to answer at this point, is whether the political profile of China’s involvement is likely to change as Chinese companies become more firmly established in African markets and political systems. Some find first proof of this in President Hu Jintao’s call for a ‘comprehensive political solution’ to the conflict in Darfur during his Africa visit in February 2007. Others, including Large, interpret this as a strategy of being seen to say the right thing in public (i.e. to encourage Sudanese President Bashir to accept a UN mission), while continuing to ensure good relations with Khartoum in practice. ‘We shouldn’t interpret better language as indicative of changed policy’, cautions Large.
Nevertheless, the fundamental similarities between Western and Chinese approaches to Africa can hardly be denied. China is not alone in supporting authoritarian regimes in Africa – witness US and French support to oil producers such as Gabon, Angola, Chad and Equatorial Guinea. Like China, the EU is a large purchaser of illegally harvested African timber, and disadvantageous terms of trade have characterized Africa–Europe relations for centuries.
China matters in Africa. Observers welcome the multi-polar world (replacing the North–South divide) with its emerging pluralism in development options. 19 As yet, however, there is little evidence whether China’s renewed, and most probably lasting, involvement in Africa will serve the continent better than the decades of aid from Western governments, which have scarcely delivered on their promises. In any event, according to Richard Manning, chair of the OECD’s Development Assistance Committee, current Chinese grant aid is insignificant compared with that provided by ‘traditional donors’. Sino-African trade and investment will have a far more consequential impact. While Chinese FDI is contributing to economic growth (especially in resource-endowed states), apart from an infrastructure construction boom, there is little evidence of a positive impact on broader human development. 20
Whether Africa’s asymmetrical position in the world economy will change for the better is not least dependent on Africa’s answer to what has hitherto been a process largely driven and directed by Beijing. To date, there is little sign of a coordinated African response to or common position on China. A task for the African Union and NEPAD clearly lies ahead.
——————————-The author wishes to thank many individuals for their comments on earlier drafts of this article: Daniel Large (School of Oriental and African Studies, London), Dr Leo Douw (ASiA, University of Amsterdam), Professor dr Peter Ho (Director of the Centre for Development Studies, University of Groningen), Dr Stefan Landsberger (Olfert Dapper Professor of Contemporary Chinese Culture, University of Amsterdam), Dr Axel Schneider (Professor of Modern China Studies, Director of the Modern East Asia Research Centre, University of Leiden) and Dr Eduard Vermeer.
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- C. Alden, D. Large and R. Soares de Oliveira (Eds) (2007, forthcoming) China Returns to Africa. London: Hurst. B.V. Sautman (2006) Friends and interests: China’s distinctive links with Africa . Working paper 12, Center on China’s Transnational Relations, Hong Kong University of Science and Technology.
- China experts include Deborah Bräutigam (American University, Washington, DC), Martyn Davies and Ian Taylor (Stellenbosch University, South Africa), Garth Shelton (Wits University, South Africa), He Wenping (Institute for West Asian and African Studies, Beijing), Li Anshan (Peking University), and Barry Sautman and Yan Hairong (Hong Kong University of Science and Technology).
- D. Large (2006) A ‘Chinese Scramble’? The Politics of Contemporary China–Africa Relations . Report of a conference held at Sidney Sussex College, Cambridge, 12-13 July 2006. African Affairs, 106(422): 141-143. A preprint is available online.
- ‘Red Star, Black Gold: China’s New Engagement with Africa’. Seminar at the African Studies Centre, Leiden, the Netherlands, 28 September 2006.
- Chinese FDI to Africa remains a small proportion of its overall outward FDI, that is, some 5% of a total of $5.5 billion in 2004, compared to 32% for Latin America. Yet Chinese government-backed investment is set to increase. The FOCAC of November 2006 committed to setting up a China-Africa development fund of US$5 billion to encourage Chinese companies to invest in Africa. Overall, Chinese companies have become the most confident investors in Africa and based on planned investments, China may become one of Africa’s top three FDI providers within five years. H.G. Broadman (2006) Africa’s Silk Road: China and India’s New Economic Frontier. Washington: World Bank, p.97. D. Large (forthcoming) Introduction. In: C. Alden et al. (eds) China Returns to Africa. London: Hurst. B.V. Sautman (2006) Friends and Interests: China’s Distinctive Links with Africa . Working paper 12, Center on China’s Transnational Relations, Hong Kong University of Science and Technology.
- Overall African clothing exports under AGOA declined by 17% in 2005. In Lesotho, employment in the clothing sector declined by 28.9% (6000 textile workers lost their jobs in January 2005 alone), in Swaziland by 56.2% and in South Africa by 12.2%. Raphael Kaplinsky, Dorothy McCormick and Mike Morris (2006) The Impact of China on Sub-Saharan Africa. OECD (2006) The Rise of China and India: What’s in it for Africa? Paris: OECD.
- D. Bräutigam (2003) Close encounters: Chinese business networks as industrial catalysts in sub-Saharan Africa, African Affairs, 102: 447-467.
- The Tanzania–Zambia railway, which was of course more than an ideological project, is often quoted as the symbol of China’s solidarity and generosity. N. Mwase (1983) The Tanzania–Zambia railway: the Chinese loan and the pre-investment analysis revisited, Journal of Modern African Studies, 21(3): 535-543. R. Hall and H. Peyman (1976) The Great Uhuru Railway: China’s Showpiece in Africa. London: Gollancz.
- The total value of contracts for infrastructure projects for Chinese companies to date is over $30 billion. China’s Roads and Bridges Corporation, for example, is rehabilitating 1200 km of roads in Luanda and Uige in Angola. Chinese actors are also involved in projects such as Ethiopia’s dam and hydro power plant on the Tekeze River and Sudan’s controversial Meroe (Hamdab) dam, for which Chinese contractors won with a $650 million bid. D. Large (forthcoming) Introduction. In: C. Alden et al. (eds) China Returns to Africa. London: Hurst.
- Although Sautman does provide figures on the rapid growth of Chinese communities in Africa (pp.27-31) as well as on the brain drain of Africans to Europe and the US (pp.32-34). B.V. Sautman (2006) Friends and interests: China’s distinctive links with Africa . Working paper 12, Center on China’s Transnational Relations, Hong Kong University of Science and Technology.
- Promises of further debt relief were made at the last FOCAC in Beijing in November 2006. In January 2007, Chad received US$32 million in debt relief and Equatorial Guinea some US$75 million.
- Programme for China–Africa Cooperation in Economic and Social Development.
- D. Tull (2006) China’s engagement in Africa: Scope, significance and consequences,Journal of Modern African Studies, 44, p.459
- The Beijing Consensus is the brainchild of Joshua Cooper Ramo, a former journalist who now lectures at China’s Tsinghua University. In a May 2004 paper he pointed out that China and India, who ‘most pointedly’ ignored the World Bank- and IMF-championed Washington Consensus, ‘now have records that speak for themselves’. The Beijing Consensus is skeptical about the benefits of privatization and free trade. Other nations can, and should, fit into the global system ‘in a way that allows them to be truly independent, to protect their way of life’, argues Ramo, although he is unclear about what this platitude means precisely. It remains to be seen if Beijing’s top-down model will work outside semi-authoritarian China, or if the Chinese economy can continue to boom without a bust. Foreign Policy, September/October 2004 . Daniel Large (SOAS) questions the usefulness of the term ‘Beijing Consensus’ – an imposed construct rather than a term emanating from Beijing and, frthermore, one that implies undue coherence as to China’s development programme.
- D. Large (forthcoming) Introduction. In: C. Alden, D. Large and R. Soares de Oliveira (Eds) China Returns to Africa. London: Hurst.
- D. Tull (2006) China’s engagement in Africa, Journal of Modern African Studies, 44, p. 466.
- African states have supported China in different multilateral settings such as the UN Commission on Human Rights, where African nations have frequently played a crucial role helping China to avoid censure of its human rights record. I. Taylor (1998) China’s foreign policy towards Africa in the 1990s, Journal of Modern African Studies, 36(3): 443-460. D. Tull (2006) China’s engagement in Africa, Journal of Modern African Studies, 44: 459-479.
- There are more examples of Chinese aid being rapidly dispersed to seize political opportunities. For instance, China stepped in to bank-roll the (potentially oil and gas rich) Central African Republic’s civil service, which the EU and international lenders had refused to assist until a return to constitutional order. Stéphanie Giry (2007) ‘China’s Africa strategy’, New Republic, 15 November 2004; quoted in Large (2007), p.7. A continuation of past involvement, Chinese aid is also utilized in symbolic gestures and prestige projects, like constructing stadiums in Mali and Djibouti, or houses of parliament in Mozambique and Gabon.
- Richard Manning (2006) Will ‘Emerging Donors’ Change the Face of International Cooperation? Lecture at the Overseas Development Institute, UK, 9 March 2006.
- African countries have benefited to varying degrees from a world economic cycle driven by an industrializing China (reinforced by India) that has seen a decade-long rise in raw commodity prices. Stimulated also by low US interest rates, this has benefited commodity exporters in Africa. Real GDP in Africa grew at an annual rate of 4.2% between 2001 and 2004, compared with 3.3% in 1997–2000. OECD (2006) The Rise of India and China: What’s in it for Africa? Paris: OECD. (for a summary, see OECD Policy Insights 19) For differing views on China’s effect on Africa’s economic position, see H.G. Broadman (2006)Africa’s Silk Road: China and India’s New Economic Frontier . Washington: World Bank. D. Large (2007, forthcoming) Introduction. In: C. Alden et al. (eds) China Returns to Africa. London: Hurst. D. Tull (2006) China’s engagement in Africa: Scope, significance and consequences, Journal of Modern African Studies, 44: 459-479. C. Alden (2005) Red star, black gold, Review of African Political Economy, 32(104/5): 415-419. C. Alden (2005) China in Africa, Survival, 47(3): 147-164. I. Taylor (2004) The ‘all-weather friend’? Sino–African interaction in the twenty-first century, in I. Taylor and P. Williams (Eds) Africa in International Politics: External Involvement on the Continent, London: Routledge. G. Shelton (2004) Trading with the dragon: Prospects for a China–South Africa FTA, South African Journal of International Affairs, 11(2): 59-71.
- Harry Broadman (2006) Africa’s Silk Road: China and India’s New Economic Frontier. Washington: World Bank. B.V. Sautman (2006) Friends and Interests: China’s Distinctive Links with Africa . Working paper 12, Center on China’s Transnational Relations, Hong Kong University of Science and Technology. Denis Tull (2006) China’s engagement in Africa, Journal of Modern African Studies, 44: 463-4. OECD (2006) The Rise of India and China: What’s in it for Africa? Paris: Paris: OECD.