Friday, 04 October 2013 07:24

Newsletter 37

In this newsletter:

  • Togo Urges Africa to Emulate Chinese Development Model
  • China's New Competitor - Africa
  • Growing number of African entrepreneurs thriving in southern China
  • China's success story sets example for Africa

Togo Urges Africa to Emulate Chinese Development Model

Lome — Togo's Foreign Minister Robert Dussey has urged African countries to learn from the Chinese experience on matters of development.

"Through the Chinese experience and China's support, Africa should be able to craft its own development path and become a master of its own future," he said on Saturday during a dinner hosted by the Chinese ambassador to Togo, Wang Zuofeng, on the occasion to mark the 64th anniversary of the founding of the People's Republic of China.

Dussey hailed the courageous economic reforms that China initiated for several decades and which enabled the country to become the second largest economy in the world.

"The spectacular economic outcome shows without any doubt that hard work, determination and discipline are the only ways that a developing country can achieve similar results," he said, noting that China remains a model for Africa.

The Togolese chief diplomat reaffirmed his country's determination to continue supporting the principle of "One and Indivisible China."

Ambassador Wang said China and Togo are "traditional friends and China still remembers the strong support it got from Togo for several years on issues of vital interest to China."

He said China will continue working with Togo to consolidate and deepen the traditional friendship between the peoples of the two nations as well as strengthen the Sino-Togo cooperation relation.


China's New Competitor - Africa


"China: friend or foe?" was the title of a special Q & A session with the BBC's World Affairs Editor, John Simpson, on Tuesday 30 July. Of course loaded leading questions - cast in binary terms - tend to produce answers that are of little value. "China is neither good nor bad. China is a combination of these things", says Zhong Jianhua, China's Special Representative on African Affairs - a far more satisfactory starting point for discussion.

Nowhere is the debate about China's motives and practices more live than in Africa. China is either the saviour the continent has long awaited, or neocolonialist gargantuan solely intent on sucking up oil and minerals as fast as it can in the murkiest possible fashion. The reality is more complex - and it is evolving far more rapidly than the stilted relations between Africa and the West.

In March 2013, Lamido Sanusi, Governor of the Central Bank of Nigeria, delivered the boldest assessment to date of China-Africa relations by a senior African policymaker. In an open letter to the Financial Times, he argued that China Africa trade patterns were "a significant contributor to Africa's deindustrialisation and underdevelopment" and smacked of "the essence of colonialism".

He called on Africans to "remove their rose-tinted glasses through which we view China". The dragon-slayers cheered. The immediate response from China was muted and, when it came, more considered.

Zhong Jianhua is the most senior Chinese government official to have voiced his reaction to Sanusi's accusations in detail and on the record. In an interview with Africa Research Institute, an independent and non-partisan think-tank in London, Zhong was characteristically urbane.

"I would argue that Mr Sanusi made a number of important points that have been overlooked", he says. A highly respected career diplomat, Zhong knows the form. But his take on the broadside from Nigeria, China's fourth largest trade partner in Africa, is also illuminating.

For Zhong, the most important feature of Sanusi's polemic is his insistence that Africa must start to compete with China. "Africa is strong enough to fight economically", says Zhong, "but this is the first time we are hearing that it is willing to do so. I welcome this kind of attitude".

He believes that Africa's dilemma is similar to that confronted by Deng Xiaoping's China in the late 1970s and early 1980s. China chose to modernise and industrialise by "opening up" [Chinese word] and "going out" [Chinese words] - it chose to compete.

The process was "a hard battle" for China, akin to a "revolution", according to Zhong. While Africa is "on the point of take-off", its leaders will need to steer through something similar to achieve sustainable and transformative development.

It will require revenues from raw materials "to be managed and invested well", and investment in skills if the continent is to compete for manufacturing jobs. As it was for China, commercial agricultural development - small and large scale - is an absolute pre-requisite for Africa. Above all, it will require determination, tenacity and visionary leadership.

Is the positive, supportive rhetoric merely the stock-in-trade of China's top diplomat in Africa? Maybe, but often overlooked in any discussion of China's engagement with Africa is the vulnerability of China itself.

The political project of the Communist Party of China is almost entirely reliant on foreign markets and resources to drive its economy and legitimise the state. Although it is the world's second largest economy, China also remains a developing economy confronting immense challenges. Counter-intuitive as it may seem to Africans who lament their lack of bargaining power, China and its partner countries in Africa are mutually dependent.

This is a point and opportunity grasped - unsurprisingly - by Sanusi, but not by all African policymakers. Just as China's deep pockets, "can do" mentality and respect provided resource-rich African governments with unfamiliar and welcome room for manoeuvre on the international stage during the 2000s, options for dealing with China in its many guises have now emerged. The canny have learnt fast and are reading the game well - something that Zhong acknowledges China needs to emulate when he asserts "we want - and need - to improve our understanding of Africa".

Playing hard-ball with China may not be an option for every African government. But understanding that the Chinese government feel morally obliged to give if they are also to take is imperative - as is knowing what to ask for. Sanusi knows what to ask for - he has effectively challenged China to deliver jobs to Nigeria if it wants greater access to oil and other commodities.

Sanusi rejects "a divorce" from China. He is far too pragmatic for that. But he has called time on the honeymoon and has set out his terms - the tough business of making the marriage work has begun. He is likely to find China receptive. "We are happy to move forward together," says Zhong. "Chinese reform and prosperity have benefitted the whole world - and African development and prosperity will also benefit the whole world".

Although there will still be much talk, particularly from China, of win-win relationships with Africa - and of Chinese neocolonialist exploitation from Africans - patterns of engagement which emerge in the next decade will be much more complex, even messier, than in the last.

This will be confusing for the dragon-slayers and panda-huggers: "China: friend or foe" will prove be a singularly inadequate frame of reference. But it will be fascinating for the rest of us to observe.

Edward Paice is the Director at Africa Research Institute

Jonathan Bhalla is the Research Manager at Africa Research Institute


Growing number of African entrepreneurs thriving in southern China

From a windowless room in a dilapidated Hong Kong high-rise, Ali Diallo sells Chinese electronics to retailers across Africa. The modest surroundings belie the multimillion-dollar business the West African trader has built in the five years since he moved to the city.

The 39-year-old from Guinea is part of a growing number of African entrepreneurs thriving in southern China, as trade between the world’s second-largest economy and fastest-growing continent soars.

Sitting in a small room cluttered with cardboard boxes destined for Nigeria, Diallo welcomes the latest delivery of Chinese-made mobile phones to his office in Chungking Mansions - a bustling labyrinth better known for budget hotels and no-frills restaurants.

The building is also the go-to place in Hong Kong for African buyers in search of cheap electronics, with phones selling from around US$8 each.

“In China there are opportunities for people who can start from scratch and build up their own business. Obviously not in one day but through hard work and networking you can do it,” says the trader, whose company sees an annual turnover of US$11 million a year through the sale of phones and tablets alone.

Trade between China and Africa hit new highs of nearly $200 billion last year, according to official Chinese data, driven by Chinese industry’s appetite for African raw materials.

The African traders in southern China are the flipside of this deepening relationship. Entrepreneurs like Diallo have made Chungking Mansions one of the most important passageways for Chinese gadgets air-freighted to Africa.

According to Gordon Mathews, professor of anthropology at the Chinese University of Hong Kong, up to a fifth of all mobiles in Africa have passed through the building’s corridors in recent years.

But while this 17-storey hive is the storefront, the engines behind this trade lie in the industrial heartland of neighbouring Guangdong province in southern China.

This mecca for low-cost manufacturing has drawn entrepreneurs from across Africa, creating one of the largest black communities in Asia.

In the provincial capital Guangzhou, at least 20,000 Africans live in the city, research from local Sun Yat-sen University shows.

Though their number is a fraction of the million Chinese now living in Africa, these migrants are playing a pivotal role in their new home.

“Traders bring with them vast skills and capital, supporting large amounts of Chinese manufacturers… If all the African traders were to vanish it would have an enormous effect on the south China economy and business people realise this rather strongly,” says Mathews.

Many traders work in and around a downtown neighbourhood dubbed “Little Africa”, or more insensitively “Chocolate City” by the local media. Along its winding central alley, a restaurant serves Tilapia with fufu - a staple Congolese meal of fried fish and cassava - as well as traditional Chinese fried rice and steamed fish.

A few kilometres away at Canaan Export Clothes Trading Centre, a vast complex where Igbo is spoken as often as the local Cantonese language, Lamine Ibrahim loads thousands of jeans into bags destined for Africa.

He is one of several hundred Africans who has forged a deeper connection to the city by marrying a local Chinese woman - a relationship founded on love but also economic prudence.

“For [communication] with the Chinese people… she can do. I buy my car, she is there, I open my own factory, she is there. So if I have no wife it’s not easy,” says the Muslim trader from Guinea in broken English.

Five months ago Ibrahim and his wife Choi Zoung-mai - renamed Maryam Barry after converting to Islam - opened their first factory hiring 43 Chinese workers. With this latest investment they hope to secure a bright future for their four-year-old son who speaks fluent Potunghua as well as French, English and Fula.
While there are several success stories, not all African entrepreneurs make it in China - for some rising costs and intense competition make it difficult to stay afloat. But this migrant community, which began forming in Guangzhou in the 1990s, has built a network of groups to support each other’s ambitions.

This is vividly apparent in the handful of African Pentecostal churches that have sprung up across the city. Tucked away on the ninth floor of a building behind Guangzhou railway station, 150 worshippers crowd into Royal Victory Church.

“Our prayer is that you will prosper,” the pastor preaches to cries of agreement from a mostly male congregation drawn from Nigeria, Cameroon and Ghana.

The African entrepreneurs who are flourishing in Guangzhou are succeeding where many foreigners fail. Not only are they navigating the notorious Chinese bureaucracy but at times overt racism in a country where prejudices can run high.

This can range from mild snubs from taxi drivers who refuse to pick up black customers to more serious accusations of traders being unfairly targeted by police when they conduct raids for illegal immigrants.

Even so others report good relations with the Chinese. “Many traders feel much more comfortable working in China than they do in Europe,” says Roberto Castillo, a Lingnan University researcher in Guangzhou.

Ojukwu Emma, president of the local Nigerian community, says the main problem for Africans trading in China are the increasing clampdowns on visas. He says it is getting harder for African residents in the city to renew visas, or for those travelling back and forth to gain re-entry.

“You cannot allow foreigners to come in and not give the foreigner confidence to stay. Once you are out to the world, you must be open,” says the businessman who has lived in the city for 16 years.

But for now booming Sino-African trade continues to draw new waves of African entrepreneurs, drawn to the shores of Guangzhou in search of the Chinese dream.


China's success story sets example for Africa

Three decades ago, countries like Malawi, Burundi and Burkina Faso were ahead of China on a per capita basis. But China is now the world's second largest economy, with 400 million people lifted out of poverty.

"This success has attracted attention from other developing countries, especially Africa," says He Wenping, professor and director of African Studies at the Chinese Academy of Social Sciences. "Hopes are high for drawing lessons from China's experiences to speed up their own development."
Much has been said about China's interest in Africa and whether Beijing intends to influence the continent's vulnerable countries with promises of funding and development, but there is no doubt China has played a crucial role in lifting the African economy.

The Chinese-government funded China-Africa Economic and Trade Cooperation (CAETC) has collected fresh data on China-Africa trade in a new report published this month.
China's direct investment in Africa had risen from USD 9.33 billion as recently as 2009 to USD 21.23 billion by last year, and investments have been growing at 20.5% per annum over the past three years

"The rapid growth of China's direct investment in Africa is indicative of Africa's development potential and investment appeal, and also points to the mutually beneficial nature of China-Africa cooperation," the report noted.

The Asian giant has also sewn up bilateral investment treaties (BIT) with 32 out of the 54 African countries, as well as set up joint economic commission mechanisms with 45 African countries, casting its trade and investments wide across the region.

That has been reflected in booming business ties, as China-Africa trade was just shy of USD 200 billion last year.

"Of this, USD 85.319 billion consisted of China's exports to Africa, up 16.7%, and USD 113.171 billion was contributed by China's imports from Africa, up 21.4%," the report said. "Total China-Africa trade volume, China's export volume to Africa and China's import volume from Africa all reached new highs."

As both regions forge closer trade ties, they have captured greater market share in each other's economies as well.
Over the past 12 years, Chinese raised its market share of total exports to Africa from 3.88% to 14.11%. Meanwhile, Africa's share of global exports to China shot up from 3.76% to 18.07%.

More than 2,000 Chinese enterprises are investing and developing in more than 50 African countries, and working in sectors as diverse as agriculture, mining finance, transportation and real estate.


Western nations have been concerned about rising Chinese influence in Africa. As China beat the United States to become Africa's largest trading partner in 2009, OECD countries have been wary of rising Chinese control of African assets.

Much of the blame though, lies with the Europeans and Americans themselves. Their policy of aid, rather than trade, has not lifted millions of Africans from poverty and it has barely made a dent on economic growth.

Instead, the African countries have benefited from trade and investment from China and other emerging markets.
The rise of trade ties between developing countries have come at a time when OECD countries have been at their weakest.

Waylaid by global financial turmoil, both the United States and Europe have been focused on kick-starting domestic growth rather than nation-building projects abroad.
China stepped into the breach and focused on mutually beneficial agreements with virtually all the key African states.

"However, this does not mean China is being altruistic. Helping Africa is important, but China would not do so if it had nothing to gain," wrote Yun Sun, visiting fellow at the Global Economy and Development, John L. Thornton China Center, Africa Growth Initiative.

"Indeed, China emphasizes that any bilateral relationship has to be mutually beneficial. And China's investment in Africa does pay itself back in multiple ways economically: development and exploitation of Africa's natural resources, access to local market, employment opportunities for Chinese labors and service contracts for Chinese companies on infrastructure projects that China funds."


Supporting African countries with few natural resources also helps the country leverage its global political influence and smooth the path for regional transportation links between landlocked states.

However, not every one in Africa is convinced of Chinese influence in the continent.

Earlier this year, Lamido Sanusi, Governor of the Central Bank of Nigeria, noted that trade with China was "a significant contributor to Africa's deindustrialization and underdevelopment" and reeked of "the essence of colonialism".

However, Zhong Jianhua, China's special representative on African Affairs, told the Africa Research Institute, that China has no master plan of its involvement in Africa.
"When people generalize about China, I say to them, "the 'China' you are talking about does not exist. You must be precise". When referring to the Chinese government, you must be clear about which government - provincial, local or central - and which activity. You cannot generalize and say "this is China in Africa", any more than you can say "China is good" or "China is bad". China is neither bad nor good. China is a combination of these things."


Competing for Africa does not have to be a zero-sum game for both Chinese and Western governments.
Earlier this year China pledged financing of more than USD 20 billion to Africa over a three-year period, while the United States is focused on building trade ties with Africa by pledging to renew the African Growth and Opportunity Act that allows greater trade incentives for African and American companies.

"The growing importance of the sub-Saharan Africa region to the global economy has brought the region into focus for US and Chinese engagement," said The Brookings Institution in a report published in August.

"Despite a somewhat competitive stance from the US on China's actions in sub-Saharan Africa, the US, China and Africa have the potential to benefit from unified engagement in the areas of security, trade, investment and natural resource management."

These include focusing on common goals such as increasing African access to power and utilities, renewable energies and even cooperation in mining and other extractive industries.

Africa presents a great opportunity. And while China has taken the lead, there is no reason to think that other nations cannot develop their own trade ties with the continent and capture a piece of the growing pie of African opportunities.


Last modified on Friday, 04 October 2013 07:59