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Press officer:China-Africa relations win-win, threaten none
2006/08/21

 

(Ask the Embassy)

This year can be called China's Year of Africa. China released its White Paper of African Policy in January. Chinese President Hu Jintao and Premier Wen Jiabao visited some African countries in April and June respectively. In November, the Forum on China-Africa Cooperation will be held in Beijing. As a result, China's relations with Africa attract much attention and debates. Some believe China presents a global economic opportunity not seen since the rise of US in the early 20 century while some others think Chinese manufacturing power poses great threat to local industry. Some even argue that China is now following the path of "old colonialism" in Africa by milking the continent of its mineral resources and dumping cheap manufactured goods. As a heated debate on China-Africa relations is undergoing in the continent and some readers write to the Chinese Embassy in South Africa for its opinions on this issue, the press officer of the Embassy wishes to make a few observations as follows.

China: a new colonialist or a supporter for African renaissance?

At the first glance, the allegation of China's "new colonialism" in Africa seems to have some grounds, but further examination finds it quite misleading, for China's economic engagement with the continent takes place under quite different circumstances.

From 17 to the first half of 20th century, major European powers engaged this continent by means of military aggression, economic exploitation and political oppression. Politically, Africans were thought inferior and there was a virtual master-slave relationship between Whites and Blacks. Economically, the exchanges between Africans and European powers were unequal, the Europeans extracted local raw materials and exported expensive manufactured goods.

China's engagement with Africa is quite a different story. China has always advocated that all countries in the international community should be regarded as equals, no matter big or small, strong or weak, developed or developing, China follows this principle when dealing with African countries. China was a strong supporter in Africa's struggle against colonialism and for national independence from 1950s to 1960s and was firmly behind developing countries, including African countries in 1970s for a new international economic order when the terms of trade of developing countries, especially exporters of raw materials were deteriorating. Since 1980s, with China's rapid modernization, China's economic engagement with Africa is increasing as well, but under quite different circumstances.

China's economic involvement in the continent coincides with globalization process with its impact felt worldwide. The accelerating pace of globalization has resulted in major global economic structural changes. Since 1980s China has decided to join the process. As a result, China has become the largest recipient of FDI in developing countries since 1990s, as transnational corporations from major developed and neighboring countries move labor intensive operations to China, making China a major world workshop. This in turn makes China a major importer of raw materials and exporter of mainly low-end manufactured goods, which also explains its trade pattern with African countries. As African countries are moving in the direction of opening up their economies, trade between China and Africa has quadrupled since the beginning of this decade. China is currently Africa's third largest trading partner after the US and France and second largest exporter to Africa after France. In 2005, China-Africa trade volume hit US$39.8 billion, with China's import from Africa totaling US$21.1 billion, more than its export to Africa.

Besides trade and investment, China has made its best efforts to address Africa's development plight. Over the years, China has completed some 900 projects of economic and social development in Africa, provided scholarships for 18,000 students from 50 African countries to study in China and sent 16,000 medical personnel to 47 African countries, who have treated 240 million patients. And over 3000 Chinese peacekeepers have been involved in peace-keeping operations in hot-spot areas in Africa. The China-Africa Cooperation Forum has become an important platform for both sides to strengthen dialogue and cooperation. Up until now, China has established joint economic and trade committees with 35 African countries. These arrangements have played a significant role in coordinating bilateral economic cooperation and properly handling problems cropping up in the process.

China: a threat or a new opportunity?

Some African countries' major concern about Chinese economic impact on their economy is mainly twofold: number one, cheap Chinese imports would displace regional production in domestic and third country markets; number two, Africa would remain the status of a primary products exporter. In 1990s, Australia, New Zealand and some Southeast Asian countries once had the same anxieties. Almost one decade has passed since then, Australia and New Zealand are now trying to conclude a FTA with China at an early date, while Southeast Asian countries and China have agreed to reach FTA arrangements by 2010. As Financial Times reported, Australia's booming resource exports and imports of cheap manufactures have given Australian its most favorable terms of trade since 1970s. The Reserve Bank of Australia estimates that this contributes 1-2 percentage points to Australian growth in national income per year. According to a survey done by Australian Industry Group in 2004, more than two thirds of Australian manufacturers said they were affected by China in either product or input markets, but they are trying to adapt to China's competition in the following four main respects. One, they are actively seeking to improve efficiency. Two, they are sourcing cheap inputs from China. Three, they are hasten the pace of adopting new technology to partially offset price competition, and finally, they are moving either up or down the value chain. African countries can learn valuable lessons from Australian experience that international competition will force domestic enterprises to improve efficiency and consumers, especially poor consumers will benefit a lot from cheap Chinese imports.

Though China's trade pattern with Africa apparently resembles that of former colonial powers, there are major differences. As a well-known South African scholar Peter Draper correctly pointed out that China's sustained economic development would underpinned African commodities prices, "thus mitigating the age-old problem of the commodity exporter's declining terms of trade. This would support fragile balance of payments positions in the region and alleviate pervasive debt payment problems."

China and Africa are complementary in economic structures and will gain from closer economic ties because of comparative advantage each enjoys. Of course one should not neglect the fact that in the process of integration into world economy, every country also faces challenges to make necessary economic structural changes so as to compete more effectively in world markets. Though China itself is still a developing country, it is ready in its own way to help Africa's infrastructure, natural and human resources development. As of January 1, 2005, China exempted tariffs for 190 categories of goods from 28 least developed African countries, thereby doubling those countries' export of those products to China.

The legacy of colonialism continues to contribute significantly to the instability and fragility of some African states. Today some African countries are still heavily depending on Western countries for markets, economic assistance and development models. The rise of China will provide an alternative market, a new source of economic assistance and a new development approach. Just like Sanusha Naidu, a scholar from the Human Science Research Council of South Africa, points out recently, as China-Africa ties get closer, "for Africa it means less reliance on its former colonial powers in achieving its development goals."

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