Africa is primarily a political priority for China. China desires strong and predictable partnerships with African countries. Lack of political stability, such as now seen in Burundi, complicates China’s African calculus at an international level. It further increases pressure on China to take a political stand on matters that Beijing would prefer to leave to African countries.
China-Africa relations have been on the ascendance since about 2000. This trend was accelerated with the inception of the Forum on China-Africa Cooperation. Within this context, the two sides held the 6th FOCAC, as well the 3rd Summit in Pretoria and Sandton, respectively, in December 2015. What came out of the Summit was a package of economic cooperation that most observers agreed was both unexpected and staggering in the context of China’s slowing economy
Since then, the depth of China’s slowdown has become more apparent, with signs that the government may not be as adept (yet) at managing the factors driving China’s projected slow growth. From supposed capital flight, slowing (even more) real estate investment and relocating industry, China may yet experience more difficulties in transitioning from being the world’s largest exporter to being the world’s largest consumer. Projected growth figures of sub 6% suddenly look like they could be achievable in the short term. This from an economy that was growing in excess of 9% in 2011.
Inevitably, the slowdown in China has a direct material impact on Africa in the short-to-medium term. Exports to China are down 38%, investment another 40%, including the staggering decline of infrastructure investment from 50% of total investment in 2014, to 4% in 2015. On the strength of some of these numbers, the International Monetary Fund predicts sharply slower growth for African countries, especially those relying on commodities such as oil, iron ore, zinc, copper etc.
Despite the Chinese government’s unquestionable commitment to the partnership with the African continent, it is important to realise one of the cardinal principles underpinning China’s Africa; namely that China is itself a developing country. As such, though China may be a larger developing country than most, exhibiting distinct characteristics of a developed country, China must, if it to achieve its own long standing objectives of stability at home, redirect its resources and energies towards creating prosperity for its own citizens.
Already, countries such as South Africa, Angola, and Nigeria have seen the value of their exports to China decrease on the back of shrinking demand from the world’s largest consumer of commodities. The value of iron ore imports alone was down 40% by October 2015. This matters greatly to South Africans who, inevitably will find themselves without the jobs that have sustained their families. Angola and Nigeria are particularly hard hit, with fiscal deficits and devaluing currencies worsening the pain. Though China is not the only driving factor behind the downward adjustment of oil prices, domestic pressures within that country account for a significant part of the story. No other story can perhaps attest to the perils of dependence on single commodities, lack of an industrial base and undue reliance on one trade partner.
Despite the challenging times, it is important to recognise that China is in Africa for the long term. Those who argue that Africa may become less of a priority for China may be labouring under mistaken impression that China will disregard Africa in its quest to manage its own contradictions. Much as the country is developing itself, it still has pretensions to a global role.
Africa is primarily a political priority for China. The numbers tell the story: Chinese investment in and trade with Africa account for less than 5% of China’s global total. The situation is getting worse, not better because of the slowdown, with indications that this could be the new normal for Africa. The value of African exports to China is down by 38% in 2015 year-on-year, portending fiscal imbalances, slowing infrastructure construction, deteriorating social services, and possibly unrest in the worst-off places. China will be be keen to ensure that the gains made in the past are not recklessly reversed. After all, China needs politically stable Africa as much as its needs its own stability.
China desires strong and predictable partnerships with African countries. Lack of political stability, such as now seen in Burundi complicates China’s African calculus at an international level. It further increases pressure for China to take a political stand on matters that the country would prefer to leave to African countries in due recognition of its own aversion to international involvement in what it considers to be its core interests.
Chinese investment in Africa partly seeks to create space for the country’s rise in an international system dominated by western countries. China is aware that the deck is heavily stacked against it in the race to become a global power. Africa, Central Asia, South America and parts of South East Asia represent the theatre of most opportunity for China’s global rise. Of these, Africa is the least contested by a regional power.
Thus, Foreign Minister Wang Yi’s tour of Africa for 2016 is likely to generate some uncomfortable moments for both the hosts and the visitors. In all likelihood, the hosts will try to pin China down to further commitments on investment in infrastructure, foreign direct investment and trade. For its part, China is likely to be noncommittal and demand more rigour in the manner in which investment proposals are packaged. Even more, China may just demand a better return on its capital, which could require governments to stretch the limits of the palatable to unlock resources for desperate economies. Dwindling resources demand more stringent cost-benefit assessment, on the off chance that better returns could be had elsewhere. This is good.
It is good because in the past, the African side has tended to de-emphasize its own agency and responsibility for driving the partnership with China. Exceptions are plenty of course, including South Africa. Over the years, there has been a fatal tendency to assume that China had a more pronounced interest in African domestic politics than Africans themselves. Countries opened up their doors to investment without exerting themselves sufficiently in designing solutions that respond directly to their own problems.
Perhaps the new normal is just what Africa needs to embed sustainability in its economic thinking. The new normal may just spur the continent to sharpen its focus on many of its comparative advantages including agriculture, agro-processing, sustainable energy, ICT and harnessing its youth dividend via investment in future education outcomes etc. DM
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Thembinkosi Gcoyi is the Managing Director and Co-founder of Frontline Africa Consulting. He is a former South African Diplomat and has served as Economic Counsellor at the countrys Embassy in Beijing, China. He also runs a blog on his firms website - www.frontlineafricacons.co.za. He may be contacted at email@example.com.
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