Zehner: An Unlikely Partnership

China has entered Africa in force, and the continent has benefited.

by Callum Zehner | 1/30/18 12:15am

Neocolonialism is a strong term, with implications of extractive and abusive control of a weak state by a strong one. It conjures up ideas of the dominant predator insidiously creeping up on its unsuspecting prey. It is also the term most frequently used to describe the fast-growing economic relationship between the People’s Republic of China and the African continent. But although this relationship certainly has grown quickly, with the value of Chinese trade with sub-Saharan Africa rising from $15 billion in 2003 to $100 billion in 2010, it cannot be described as neocolonialist. Despite how it is popularly portrayed, the relationship is not a destructive one. Africa’s industry and population have benefited from the rise of China.

Increased Chinese economic involvement in Africa has been consistent with a dramatic decrease in the prices of everyday goods. For example, after the arrival of the Chinese in Zambia, the price of chicken halved, and the price of cabbage fell by 65 percent. This may sound like a trivial change in cost, but in a country where 60.5 percent of the population lived below the poverty line in 2010, such a drop can amount to a substantial difference for most people. The lowered costs expand Africans’ disposable incomes, thereby improving their quality of life. The lives of everyday Africans have also improved through Chinese-backed projects on the continent providing a source of jobs. Kenya, for instance, has seen an aggregate of 2,170 jobs created through Chinese foreign direct investment. Thus, the PRC is the fifth-largest job creator in the country.

In addition to providing lower prices for the consumer, the presence of Chinese-manufactured goods exerts downward pressure on the prices of globally manufactured goods. This can result in improved terms of trade for resource-exporting African countries, such as Angola and Nigeria. Better terms of trade, when coupled with higher demand for exports from the massive Chinese market, allow African states to invest more readily in capital goods. This is because the capital goods are available at a much lower cost than they would be from, say, Europe. The infrastructure sector has especially benefited from this arrangement.

Yet, the World Bank estimates that the African infrastructure spending needs require $93 billion annually. The current standards of infrastructure in services, roads and ports are also estimated to increase input costs by up to 200 percent and reduce firms’ productivity by 40 percent. Thus, African infrastructure problems pose a major setback, and China has undeniably led the charge of ameliorating the situation. In 2015, it invested $20.9 billion into infrastructure projects across the continent, out of a total worldwide contribution of $83.4 billion for that year. The Nairobi-Mombasa railway in Kenya, 90 percent of which was funded by the Export-Import Bank of China, was completed only last year, and has cut travel time between the country’s capital and its main port from 10 hours to five. The Kenyan government anticipates that the railway will expand gross domestic product by 1.5 percent and that the loan will only take four years to pay back. This is just one illustration of the transport infrastructure China has helped to create.

China is also investing heavily in the African workforce. It has offered scholarships to 20,000 African students, trained in excess of 30,000 African workers and has sent 350,000 technicians, volunteers and agricultural experts to the continent. And this isn’t merely a state-driven exercise, with private Chinese companies also joining this fray. Telecom giant Huawei has spearheaded a program to train 12,000 Africans a year in telecommunications practices. Through these initiatives, the African labor force has become increasingly skilled, and local enterprises can take advantage of that to boost their productivity and, therefore, competitiveness.

Chinese involvement has facilitated the buildup of local African industries, assisting technological transfer, the growth of local capacity and the rising levels of intra-African exports. In the case of Zimbabwe, Chinese investors helped the local tobacco industry process their crop into cigarettes, thereby allowing the Zimbabweans to export the cigarettes as finished value-added products. Chinese investors and Zimbabweans also formed a joint venture to create a cement factory in Gweru to satisfy national demand.

This idea that China merely engages with Africa to extract valuable resources, in much the same manner as the historic European imperial dynasties, is incorrect. Extensive research of 3,989 Chinese-funded projects in Africa has found that only 20 percent of projects are in the natural resources sector, with 60 percent involved in the services sector. If any countries are culpable of shameless resource extraction, it is the United States and the European powers, which have funneled the majority of their African investment into the power and energy sectors.

It often seems that the collective American psyche holds China to be the nefarious arch-nemesis, a devilish instigator of selfish and destructive acts. This is certainly the case when it comes to the Middle Kingdom’s relations with Africa. A dominant power such as China could potentially exploit a region that was economically poorer but wealthier in resources. But this is not true in reality. China is simply giving much-needed attention to a historically marginalized continent, and the net effects on the ground have been positive for the African populace and its industry. And as Chinese influence in Africa grows in the future, we should be relieved that this is the case.