The complex story that is China in Africa

This is a cross-post of an article I wrote on Spundge…

Africa has been undergoing a tremendous shift in past decade, including increased stability, decreased political turmoil, and financial growth. During that same period, China has also experienced tremendous growth. It’s not such a coincidence.

The Chinese thirst for natural resources, along with its trade surpluses, have provided it with ample money and motivation to increase its soft power in Africa. The relationship is both complicated and fascinating, and the China in Africa Notebook curated by Erik Richer La Fleche provides a detailed look at how it is evolving.

China in Africa – More than an infrastructure game

In large part to provide easier access to natural resources such as diamonds, gold, iron, and petroleum, China has invested heavily in large infrastructure projects on the African continent.

For example, the China Railway Construction Corp. signed a contract valued at $1.5 billion for a railway system in Western Nigeria. A month after that,The Africa Report had news that “China South Locomotive and Rolling Stock Corporation, the largest train manufacturer in China, signed a $400 million deal to supply locomotives to a South African firm, Transnet.”

Included in these infrastructure investments is the need for greater mobility of people, as well as goods. In 2012, China invested in a new Ghanaian airline to serves domestic routes.

But it isn’t only transportation related infrastructure.

The Ghanese government and Sino Hydro signed an agreement to build the Bui Hydroelectric Dam, as a collaborative project. When Hu Jintao spoke before the 5th Forum on China-Africa Cooperation in July 2012, he listed off “…100 schools, 30 hospitals, 30 anti-malaria centres and 20 agricultural demonstration”, as evidence of the recent engagement of China in Africa.

To top it off, “China’s gift to Africa”, a $200 million state-of-the-art complex in Ethiopia, was built by the Chinese as a gift to house the African Union.

Oh, and they are also filling a gap in satellite coverage over Africa.

The Tech Wars?

Africa has different demands for mobile. Enter Baidu, the Chinese search engine.

In an effort to solidify its share of mobile internet services market, Baidu partnered with France Telecom subsidiary Orange to bring the Baidu mobile web browser to phones in to North Africa.

“Price and access have been a barrier to entry, but partnering with innovative companies like Baidu provides unique solutions that give our customers affordable access to all the services they desire without compromising on features or ease-of-use”, said Marc Rennard, senior executive vice president for Orange activities across Africa and the Middle East.

Microsoft recently announced a push into Africa calling it a “game changer in the local economy”. What is interesting here, is they launched a partnership with Huawei, called Huawei 4Afrika, to offer a phone with features and apps designed for the African market.

Lenovo is another big Chinese player to look to Africa for growth.

Two-Way Traffic

It’s was estimated that “by 2009 between 580,000 and 820,000 Chinese migrants were living throughout Africa,” according to The Global Mail.

The first three quarters of 2012 saw a 63.5% increase in Chinese tourists visiting South Africa – a total of just under 100,000 people.

It isn’t uniquely the Chinese coming to Africa. It goes the other way as well.

In Guangzhou, there are possibly up to 150,000 Africans, mostly from Nigeria, Ghana and Mali, chasing business opportunities. Many of them are there temporarily, or illegally. Walking the streets in Little Africa, as one area is known, you’ll hear Cantonese, English, French and Igbo — an ethnic language in Nigeria!

On a related note, AfricaBeauties.com, which “…connects available women from Africa with men around the world,” announced a new office in Foshan City, in southern China, in time for Valentines day. Given the gender imbalance in China, could this be an interesting trend to watch?

The Coming Global Competition

In 2009, China surpassed the U.S. as Africa’s top trade partner. A report from Bloomberg noted that “trade between Africa and China has doubled since 2007 to more than $200 billion.”

Analyst Sarah Baynton-Glen estimates that by 2015 trade between China and Africa could reach $385 billion.

There are two sides to this coin. There’s the cold political Sino-American relationship, meaning any big moves into Africa by the U.S. will result in an even colder relationship on other fronts. On the other hand, there’s a large market that the U.S. is missing out on, and as Senator John Kerry puts it “…there’re some places where we’re not in the game, folks. And I hate to say it. And we got to get in.”

 

Japan is also looking to Africa, announcing in June it would giving $14 billion in aid to Africa over 5 years ending in 2018, with half going to infrastructure. The leading factors behind this include:

• An effort to increase their infrastructure exports (Prime Minister Shinzo Abe previously said he expects “exports of infrastructure to 30 trillion yen a year by 2020“)
• The desire to build another market for exports down the road,
• Job creation (“Tokyo will work to find jobs for 30,000 people in Africa“)
• And of course trying to keep pace with China. After all, Chinese growth has propelled it past a stagnating Japan.

Yes, There Are Risks

China in Africa it’s not all a story of growth and opportunity.

In June, 124 Chinese workers were detained by Ghanaian authorities on suspicion of illegal gold prospecting. This is a drop in the bucket when compared to what some estimate as 50,000 Chinese prospecting illegally across the country.

Tensions between North and South Sudan prompted threats from President Umar al-Bashir to shut down an oil pipeline being operated by China National Petroleum, along with Petronas (Malaysia) and ONGC (India).

Zambia seized control over a coal mine in February, citing safety concerns.

With growth comes the desire to exercise sovereign control. Voice of America said that countries like Niger and Gabon “just want to get more for their natural resources – more state revenue, more local jobs and a better standard of living.”

Incidentally, the government in Gabon is looking to wrest back control of oil assets in from three international companies, including Sinopec, when their contracts expire in 2015. The reason? Allegations of corruption.

The trajectory carries echoes of the colonial and post-colonial phases of Africa. Will China in the end be seen as a true business partner to African nationals and industry? Or will governments on the continent move to reclaim the roads, dams and other projects that have been built in the current boom?

What do you think?