Saturday, 19 December 2009

FINANCIAL TIME's ASIA EDITOR EXPLAINS CHINA IS NOT FOLLOWING COLONIALISM's EXAMPLE IN AFRICA

Africa is getting a better deal from Beijing

By David Pilling
Financial Times

A few years ago, Lukas Lundin, a mining executive, rode his
motorbike 8,000 miles from Cairo to Cape Town. His journey,
which took just five weeks, meandered through 10 countries,
including Sudan, Ethiopia, Malawi, Zambia and Botswana. He
was amazed to discover that 85 per cent of the roads he
travelled were tarred and of high quality. Many had been
built by Chinese companies.

That was 2005. Since then, China’s interest in Africa has
intensified. In November 2006, Beijing hosted a lavish
Sino-African summit at which it promised more than 40 of
the continent’s leaders a new era of co-operation. Giant
elephants and giraffes appeared on hoardings across the
capital to mark the occasion.

Beijing has offered more than long-necked symbolism. In
2006 alone, it signed trade deals with African countries
worth $60bn. Investments, which often include a
resources-for-infrastructure element, have poured in thick
and fast. China’s stock of foreign direct investment has
shot well past $120bn (€81bn, £74bn). In 2006, Angola
temporarily overtook Saudi Arabia as China’s main supplier
of oil, and Africa now accounts for nearly 30 per cent of
China’s oil imports.

Nor is China’s interest limited to oil and minerals. In
2007, Industrial and Commercial Bank of China, the biggest
bank in the world by deposits, paid $5.6bn for a fifth of
South Africa’s Standard Bank. Only last month, at yet
another Sino-African jamboree, this one in Egypt, Beijing
pledged $10bn of new low-cost loans to Africa. It also
promised to eliminate tariffs on 60 per cent of exports and
to forgive the debt of several countries. Trade between
Africa and China has already risen spectacularly: last
year, it jumped 45 per cent to $107bn, a tenfold increase
over 2000.

Beijing’s engagement with Africa has caused much
hand-wringing. Western donors decry Beijing’s supposedly
scruples-free approach to investing in countries such as
Sudan. In some African countries, too, China’s growing
shadow has provoked anger. Nigerian radicals likened an
attempt by the China National Offshore Oil Corporation
(CNOOC) to secure 6bn barrels of oil to being attacked by
locusts.

Such objections are overdone. They are often disingenuous.
China is no philanthropist, but its rise may still
represent Africa’s best hope of escaping poverty. In the
eight years to 2007, before the financial crisis, African
countries were growing, on average, by more than 4 per cent
a year, far higher than previously. That was thanks partly
to better economic management, debt relief and increased
capital flows (some from China), but also to the higher
commodity prices driven by Chinese demand. Dambisa Moyo,
the Zambian economist who riled western donors with her
book Dead Aid, says: “China’s African role is wider, more
sophisticated and more businesslike than any other
country’s at any time in the postwar period.”

Much of the criticism of China’s influence rings hollow. As
Chinese – and Japanese – officials point out, the west’s
record is less than exemplary. European contact with Africa
can best be summed up as decades of naked rapaciousness
followed by a spectacularly unsuccessful attempt to make
amends. During the cold war western governments supported
dictators and kleptomaniacs across the continent, from
President Mobutu Sese Seko of what was then Zaire to
Uganda’s murderous British-trained Idi Amin. More recently,
in the name of conditionality, benefactors have rammed
frequently disastrous economic fads down the throats of
hapless recipients. With donors like that, who needs
enemies?

China’s pragmatism may produce better results. First, an
emphasis on infrastructure means that, even if deals are
corroded by corruption, at least the recipient country ends
up with a road, port or hospital. (OK, or perhaps a soccer
stadium.) Much Asian growth, including that of China
itself, was predicated on infrastructure. Officials in
Tokyo often contrast Japan’s own business-oriented approach
to south-east Asia – where countries such as Thailand,
Malaysia and Indonesia benefited greatly from Japanese
trade and investment – with dubious development strategies
pushed by the west in Africa.

Second, China’s approach is built on trade. Ms Moyo argues
that genuine business opportunity is more likely to
catalyse development than government-to-government aid that
is prone to being siphoned off. Robert Zoellick, president
of the World Bank, told the FT there was Chinese interest
in helping to create low-cost manufacturing bases in
Africa.

Third, and crucially, China is not alone in seeking
opportunities on the continent. As well as the west, India,
Brazil and Russia are also vying for business. That ought
to give resource-rich African countries the ability to
haggle for better terms, though of course there is no
guarantee that increased funds will not simply line bigger
pockets.

It would be wrong to be wide-eyed about China’s
investments. Some Chinese businesses are rightly condemned
for lax safety standards and for shunning African labour.
Critics are doubtless right that Chinese money has helped
prop up unscrupulous regimes in Khartoum and Harare. Yet
China is hardly alone in dealing with thieves and villains.
Whatever its side-effects, a scramble to invest in Africa
has got to be better than the European precedent; a
scramble to carve it up.

david.pilling@ft.com

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