China and Africa

An Evolving RelationshipDavid H. Shinn

George Washington University

Map of Africa

Chinese Interests

• Four hard interests in 54 countries.• First, access to raw materials.• One-quarter oil imports from Africa.• 80 % of cobalt, 40 % of manganese & 30 % of

tantalum.• Sustains rapidly growing economy.• Helps keep CPC leadership in power.

China’s Crude Oil Imports

Chinese Interests

• Second, increasing exports to Africa.• Africa has 1 billion people & growing middle

class.• Becoming more attractive export market.• Helps sustain China’s industrial production.

Chinese Interests

• Third, political support from as many African countries as possible.

• Africa constitutes more than one-quarter of UNGA members.

• China often supports African countries in Security Council.

• Collaborate in UN Human Rights Council.• Other forums such as WTO.

Chinese Interests

• Fourth, ending Taiwan’s diplomatic presence in Africa.• Three countries—Swaziland, Burkina Faso, and Sao

Tome & Principe—recognize Taiwan. • Gambia broke with Taiwan in 2014 but has not

recognized China. • Unrelenting insistence on One China principle.• Diplomatic truce since 2008 election of President Ma in

Taiwan. • No objection to Taiwan commercial activity in Africa.

Taiwan-Africa Summit

US Interests in Africa

• Instructive to compare with US interests.• First, maintain access to raw materials,

especially oil, although declining imports.• Second, increase exports to Africa.• Third, obtain maximum African political

support in international forums.• Sound familiar, so far?

US Interests in Africa• US has 2 additional interests.• First, minimize impact in Africa of terrorism,

narcotics trafficking, international crime, piracy & money laundering so they do not harm US interests in Africa or the homeland.

• Second, US military access to African ports and ability to overfly and land.

• Military base in Djibouti and drone operations in Ethiopia, Niger and Seychelles.

• China does not yet have similar interests.

Government to Government Ties

• Diplomatic ties with 50 African countries.• Embassy in 49, all except Somalia.• US has diplomatic ties with all 54 countries,

but also has embassy in 49. • All 50 countries that recognize Beijing have

embassy there except Comoro Islands.

Government to Government Ties

• Frequent high-level visits.• President Hu Jintao visited Africa 4 times.• President Xi Jinping made first overseas visit to

Russia followed by trip to Africa.• Every year since 1991, Chinese FM has made first

overseas visit to African country.• Senior CPC officials make regular trips.• CPC has developed strong ties with many African

ruling political parties.

Xi Jinping in Tanzania

Government to Government Ties

• Beijing welcomes African officials.• Constant parade of senior African civilian and

military leaders.• Time consuming but low cost strategy.• In 2000, Forum on China-Africa Cooperation

(FOCAC) established.• Coordinates interaction with Africa.• Meets at summit level every 3 years, alternating

between Beijing and African capital.

FOCAC Summit

Trade• China became Africa’s largest trading partner in

2009.• 2013 total trade $210 billion, well over twice that

of US-Africa trade.• But Africa only 5% of China’s global trade.• China provides about 16% of Africa’s global

trade.• China’s total trade 3 times Africa’s total trade.• Total China-Africa trade historically nearly in

balance, but in past three years China has run modest trade deficit.

Trade

• Huge disparities in bilateral trade.• Some 15 African oil/mineral exporting countries

have large surpluses.• More than 30 countries have major deficits.• 5 oil/mineral exporting nations—South Africa,

Angola, Libya, Republic of Congo and DRC—account for most exports to China.

• 85% of all African exports to China are raw materials, mainly oil & minerals.

Trade

• African agricultural exports increasing.• China trying to increase imports from poorer

African countries.• Allows items to enter duty free from 30 least

developed countries. Covers 60% of their exports.

• Most Chinese exports to Africa are high value manufactured goods.

• Transportation equipment, machinery, and electronic products account for half of exports.

China-SSA Major Trade Partners

Investment

• Reliable investment figures not available.• Not clear how China defines FDI.• China’s official figures understate the amount.• In July 2012 China’s ambassador to South

Africa said China’s “investment of various kinds” exceeded $40 billion in Africa of which $15 billion was direct investment.

Investment

• Official China white paper said cumulative FDI in Africa at end of 2012 totaled $22 billion.

• $40-50 billion probably closer to mark.• This includes investment through Hong Kong,

British Virgin Islands, Cayman Islands, etc.• China white paper said cumulative African FDI

in China reached $14 billion.

China’s OFDI to Africa

Investment

• Many explanations for understating figure.• Chinese FDI growing faster than Western FDI.• But Chinese FDI to Africa small percentage of

its global FDI—only about 4 percent.• Western investment collectively much larger

in Africa.• Western countries started much earlier.

Chinese OFDI 2012

Investment

• South Africa, Zambia, Nigeria, Algeria, Angola and Sudan account for 58% of China’s FDI in Africa.

• Much of it initially went into mining and petroleum sectors.

• More recent focus on business services, manufacturing, finance & telecommunications.

• Developing 7 economic and trade cooperation zones in Zambia (2), Nigeria (2), Mauritius, Egypt & Ethiopia.

Special Economic Zones

Aid

• Aid statistics are poor; China treats aid figures as state secret.

• China does not use OECD definition.• Journalists often confuse China’s aid with

commercial deals.• No central Chinese aid agency, complicating

compilation of data.• Ministry of Commerce controls most aid.

Aid

• Ministry of Education controls scholarships.• Ministry of Health controls health programs.• Ministry of Foreign Affairs is involved.• Most aid is concessionary loans.• Some cash grants and in-kind grants.• Good record on debt cancellation.• Between 2000 and 2009, China cancelled $2.8

billion of debt owed by 35 African countries.

China’s Foreign Aid 2010-2012

Aid

• China’s OECD-equivalent aid to Africa in last 3 years about $2.5 billion annually.

• No political conditions, except One China principle.

• But aid tied to Chinese companies and materials.

• Often a percentage of Chinese labor.• African governments prefer non-conditional

aid over Western conditional aid.

Aid

• West often imposes conditions on democratization, human rights & economic policy reform.

• As one Chinese official told me, “No African leader has ever asked us to attach conditions to our aid.”

• Countries such as Zimbabwe & Sudan, which have Western sanctions, especially appreciate Chinese aid.

Aid

• Much confusion over large China Export-Import Bank loans to countries such as Angola, DRC and Ghana.

• Highly attractive compared to commercial bank loans.

• But many loans do not meet OECD definition of concessionary loans.

• Recipient pays back loan, usually by exporting raw materials to China.

Aid

• Chinese companies benefit from loans as they build infrastructure projects on contract in recipient country.

• Some of loan remains in recipient country for local purchases and local labor.

• These are attractive commercial deals, not aid.• Much of China-Africa discussion today centers

on these deals.

Chinese Railway in Angola

Soft Power

• By end 2009, 30,000 African students received scholarships to study in China.

• China offers 5,000 scholarships annually.• Technical training for 30,000 Africans.• Youth program similar to US Peace Corps.• About 300 participants in program annually.• Since 1963, 18,000 medical personnel served

in 46 African countries.

Chinese Medical Team in Tanzania

Soft Power

• China claims teams treated 200 million patients.• Xinhua has more than 20 bureaus in Africa.• Regional centers in Cairo and Nairobi.• Competes with Reuters, AFP and Bloomberg.• China Radio International (CRI) transmits from

Kenya in Swahili, Chinese & English.• CRI has rebroadcast rights in Africa.• China Central Television has production center in

Kenya.

CCTV Opening in Kenya

Soft Power

• Broadcasts English-language African news.• CPC arranges tours in China for African

journalists.• 40 Confucius Institutes on African university

campuses.• 9 Confucius Classrooms in high schools• Teach Chinese language, history & culture.

Confucius Institute in Cameroon

Military/Security

• Supported African liberation movements in 1950s through 1970s.

• Africa low security priority compared to China’s periphery and Western powers.

• But China relies increasingly on Africa for primary products.

• Security concerns re. Africa will increase.• Loose correlation between China’s military

cooperation and resource rich countries.

Military/Security• Has security link with every African country with which

it has diplomatic relations.• Some countries only military exchange visits.• From 1960s to 1990s, China’s share of conventional

arms deliveries to Africa between 3% and 5%.• Increased during 1990s to 15% to 20% in SSA.• 2006 through 2010, China accounted for 25% of

conventional arms deliveries to SSA.• These percentages exclude small arms and light

weapons (SALW).

Military/Security

• China major supplier of SALW.• No comprehensive SALW figures available.• China has 16 defense attache offices in Africa

accredited to some 30 countries.• Surprisingly few in view of large arms sales.• 28 African defense attaches in Beijing.

Military/Security

• As presence expands, Chinese nationals increasingly subject to attack.

• More than dozen business persons kidnapped in Niger Delta region.

• Oil company personnel killed in Sudan.• 29 construction personnel in Sudan kidnapped

and released in 2012. • China Evacuated 36,000 contractors from

Libya in 2011 and more than 1,000 in 2014.

Chinese Evacuated from Libya

Military/Security

• 9 energy prospection personnel killed in Ogaden region of Ethiopia.

• Chinese nationals becoming subject to same risks as Westerners.

• Since 2008, China provides 2 frigates and supply ship to anti-piracy efforts in Gulf of Aden.

• Took action because of threats to Chinese shipping and protect oil transported to China.

• Received praise for its anti-piracy contribution.

Chinese Frigate in Gulf of Aden

Military/Security

• Contributes troops to all 7 UN PKO in Africa.• China’s more than 1,900 troops exceed that of

any other permanent member of UNSC.• Most in Darfur, South Sudan, DRC, Mali & Liberia.• Mali & South Sudan have Chinese combat troops.• China 6th largest contributor to UN PKO at 6% of

global budget; US largest at 28%. • China’s performance widely praised. • No Chinese military bases in Africa. Future?

Chinese Peacekeepers

Challenges/Problems

• African civil society, opposition political parties and independent labor unions skeptical of China’s role.

• Some criticize China’s unwillingness to encourage better human rights & democratic governance.

• China can be heavy handed in justifying its policy in Tibet and treatment of Muslim minority in western China.

Democracy Not Part of Agenda

Challenges/Problems

• African leaders never criticize these policies, which implies tacit political conditionality.

• Chinese (and Western) arms end up in conflict zones: eastern Congo, Darfur, Somalia.

• Policy to keep them out, but huge quantity guarantees some get in.

• China does not monitor arms transferred to governments.

Challenges/Problems

• Concern that large Chinese loans may undercut efforts by World Bank and IMF to encourage good governance.

• May add excessively to African debt.• Some Chinese companies have poor record on

worker safety & following local labor laws.• Periodic problems in Zambian mines.• Contributed to victory by leader of Zambian

opposition party in 2011.

Challenges/Problems

• Counterfeit and adulterated goods in market.• African countries ill equipped to deal with

them.• China trying to prevent problem.• Environmental record has been criticized, but

China is improving.• Surfeit of cheap products undermines sale of

African goods.

Logging for Chinese Buyers

Challenges/Problems

• Harms African industry that can’t compete.• Asian textile imports caused serious harm.• Influx of Chinese traders is driving some

African traders out of business.• Especially serious in southern Africa.• Chinese have cheaper products, willing to

work longer hours & even go to areas where Africans reluctant to go.

Chinese Trader in African Market

Bottom Line

• China offers serious competition and alternative to West.

• African governments almost universally like China’s engagement, especially investment and loans.

• Countries running large, long-term trade deficits getting more concerned.

• Some elements African society unhappy about China’s role while others withhold judgment.

Bottom Line

• China is in Africa for long-term.• Chinese influence will increase vis-à-vis other

non-African countries.• As it becomes growing military power, it may

look for more formal arrangements in Africa.• So far, everything considered, China’s

engagement has been more positive than negative.