Bright B Simons, Evans Lartey and Franklin Cudjoe : China smiles at Africa with two faces

Asia Times, Jan 13, 2007

ACCRA, Ghana – When Chinese President Hu Jintao on November 2 threw open the doors of the Forbidden City to 48 invited African heads of state and governments, many people around the globe were for the first time served the prospect of an intriguing new geopolitical alliance, between the world’s fastest expanding major economy and the most economically challenged continent.

For those with a long-standing interest in China, however, the November 2 Sino-African summit was noteworthy only for its symbol-laden opulence: it seemed China had had enough of camouflaging its claim to superpower status. As regards the hard economic and political realities, November 2 marked no watershed.

China has long been involved in Africa. Throughout the Cold War, Chinese ideologues insisted that China was together with Africa the backbone of what Marshal Lin Biao described as the ”world countryside”, or what Marxist development economists call the ”periphery”, as counterpoised to the Western ”core” and the Comecon (Council for Mutual Economic Assistance) ”semi-periphery”.

China was for most of this period motivated by two geopolitical imperatives: rivalry with the Soviet Union and the containment of Taiwan. In the case of the former, the tussle was over the soul of communism, though as is often the case with these things, a spattering of nuclear-armed rocketry was also involved. China’s ideological proposition was that the USSR was a ”revisionist” – not true communist – imperialistic superpower, while the West, beholden to the USA, was overtly and decadently imperialistic.

The concern over Taiwan had much more to do with China’s domestic pressures. China may seem ethnically homogenous, but that is only because over the centuries strong rulers at the center have managed to keep it so, through force, awe or persuasion. Simmering ethnic tensions are never too far beneath the surface in China. The Tibetans want the Han out of their homeland and the Uighurs want an Islamic state in their part of the country. To allow Taiwan to become independent is in the eyes of China a dangerous policy that might prove contagious. If other ethnic groups realize that the center can be defied, who knows what subversions they might dream up?

It was then in Africa, more so than anywhere else, that China found both the opportunities and contexts most conducive to shaping its foreign policy based on its "one China" principle. Countries that renounced diplomatic ties with Taiwan were to be rewarded; those that didn’t were to be punished, ostracized or ignored, depending on their economic or political importance.

So, in the case of South Africa, China patiently waited for the post-apartheid government to make up its mind, until eventually president Nelson Mandela decided that, Taiwan’s close commercial links with South Africa notwithstanding, China might well prove the more lucrative ally. Burkina Faso and The Gambia could not afford this treatment, and so were haughtily sidelined.

In this, China had perfected its ”Griffin” image – part graceful bird, part bully beast, a "brother" of Africa in the face of common subjugation, and a paternal figure dispensing discipline at the same time. Two-face diplomacy had proved its merits.

It is interesting that despite the strength, and to a considerable extent the tenability, of the perception that China’s concerns these days have shifted from the geopolitical to the geo-economic, remnants of these Cold War orientations still persist.

During the recent Zambian elections, a candidate reported to have expressed an opinion to the effect that Taiwan was ”a state” so incensed Chinese diplomats in the southern African country that, in an unusual breach of protocol, China threatened to cut ties with Zambia should the offending candidate be elected.

It is also interesting that aside from China, the strongest interest in African natural resources in recent times has come from Russia.

The implication of these two facts appears therefore to be that China’s contemporary relationship with the continent of Africa ought not to be seen as an abrupt transition, but rather in the light of general transformations at the global level that have touched both China and Africa, accentuating some pre-existing patterns of engagement while attenuating others.

A false dichotomy inspired by ‘two Chinas’
It is partly from this perspective that some have expressed concerns over China’s seeming lack of moral inhibition in its pursuit of lucrative contracts to source African natural riches. Critics recall that it was China, through its North Korean proxies, that armed Robert Mugabe’s Fifth Brigade in an effort to gain an upper hand over the USSR, which, having backed Mugabe’s rival Joshua Nkomo during the civil war following independence, had lost diplomatic leverage in mineral-rich Zimbabwe.

When the Fifth Brigade went on to commit what many historians of the period consider genocide against the minority Matabele ethnic groups, those intimate with the Chinese role began to subject China’s activities on the continent to greater scrutiny. Consequently, interest in recent Sino-African economic cooperation in Sudan, Nigeria, Angola and elsewhere is heavily infused with human-rights concerns.

Justified as such skepticism and suspicions may be, an unintended consequence has been an overemphasis on the "natural resource" issue. A crude dichotomy has been planted between opinions that hold China’s engagement as positive for injecting competition into the erstwhile Western-dominated bidding for rights to develop Africa’s mineral wealth, and others that contend this optimistic view with clear evidence of Chinese arms trading with the murderous Khartoum regime. In the latter pessimistic frame of analysis, China is following the well-beaten track of neo-colonial exploitation.

Much objective evidence exists to sustain this dichotomy. It is easy to conclude that China is in Africa solely to leverage its new "world power" status for commodities to fuel its massive industrial growth.

China today consumes a third of the world’s steel, half of its cement, a quarter of its fertilizers and more than a quarter of both its copper and aluminum. Since China is far from self-sufficient in most of these commodities, it has steadily built up foreign-exchange reserves that have overtaken Japan’s to become the world’s largest. By the time you read this tomorrow, the country will have sold almost a billion dollars’ more goods and services to the US than it will have bought from the latter, lifting another 30,000 of its citizens from grinding poverty.

The reason China needs to consume these large amounts of commodities is obviously that despite having raised more people from poverty than any other economy in world history – 400 million by some accounts – it still has a long way to go before the remaining 400 million or so are similarly elevated.

Its leaders have to burn much midnight oil – quite literally – to develop strategies that will keep the price of labor and other factors of production from rising too high, because more so than anything, it is its low-cost environment that has made it, according to many credible estimates, the manufacturer of one-third the world’s goods and poised to surpass, by 2050, the combined production volume of the entire Western Hemisphere.

Clearly, China needs its commodities. But it also needs to keep their cost low. If it were solely the economic cost that was at issue, the way to go about that would simply have been to support an increasing sophistication of the global economy so
that prices were efficiently set and goods efficiently distributed. But China understands the input of political costs into the final prices of commodities too well to trust in such a process.

Thus, according to the standard account, China has arrived in Africa to safeguard its investment.

The above set of facts inevitably leads one to the track of analysis illustrated above. But if one were to pay slightly more attention to another set of relatively less-discussed statistics, a number of other prospects suggest themselves. To put it simply, there is another China.

China is the world’s second-largest polluter after the United States. In terms of per capita gross domestic product – that is, relative to the share of each Chinese or American person’s share of their country’s GDP – however, China far outstrips the US, perhaps by as much as four times. The inference is that for every dollar of wealth China creates, it emits a huge amount of pollution, and expends a profligate amount of resources, for the effort. According to China’s vice minister in charge of the State Environmental Protection Administration, the country requires as much as seven times the amount of resources as Japan to create an identical unit of GDP.

When you look at China’s energy efficiency and other industrial efficiency statistics, it immediately hits you how bad the situation is. In the production of ethylene, an industrial chemical found in a wide range of products, for instance, China lags behind the rest of the world by as much as 70% in efficiency. In fact, in many areas of production, it not only lags behind the West, it also trails behind the world average.

Furthermore, China’s vaunted ”export-oriented economy” that has achieved near-mythical status because of the country’s huge surplus in its trade with the US shows a couple of serious creaks under serious scrutiny. For one thing, as many as 55% or more of the goods China sells on the world market are produced by foreign firms based predominantly in the country’s coastal provinces.

Discounting the surplus with the US, China actually currently records a deficit with the rest of the world of about US$100 billion per annum, showing an acute dependence on the US market. Last, as Andrew Leung of London’s International Consultants has calculated, Chinese factories operate on less than a 5% margin of the selling price of a great many of the goods they produce under foreign license.

One word sums up all these disparate threads: "innovation", to counter severe inefficiency within the system.

China’s innovation challenge
China needs to innovate to enable its industries to make more efficient use of raw materials, to enable it to sell more of its indigenously developed brands abroad and thereby create sustainable, home-grown sprawls of excellence beyond the coast, emit far less pollution, and enhance the quality of life for its huge population to forestall social tensions. China, the burgeoning superpower, and China, the bungling overpopulated Third World giant, can only be fused into China, the modernizing innovator, or the two will be pulled apart.

The problem is: it is easier said than done. Chinese companies may try to take on Western behemoths in Western markets or wait until the domestic consumer becomes wealthy enough to patronize highly innovative products. The risks with the first route are obvious, as Lenovo’s faltering steps since it purchased IBM’s personal-computer division have shown. The second route is what many economists and business consultants foresee as the likely path to success. But it is also fraught with risk.

While foreign technology transfer to Chinese firms is accelerating at an extraordinary pace, the weak intellectual-property environment is interfering with absorption at one critical layer: the small-to-medium-scale business level. Given World Trade Organization liberalization, which prospect has driven thousands of overseas firms to enter the Chinese market, China’s middle class, when it eventually does arrive, cannot be taken for granted in regards to tastes and shopping habits. And at any rate, Chinese companies have only the intervening time to build their capacity until the much-touted dramatic expansion of the middle class becomes reality.

It is against this background that some watchers of Sino-African relations are interpreting recent trade data showing a substantial African trade shift from the West and Japan to China. Trade in many, many goods other than those under the spotlight – oil, copper, bauxite etc – is booming. Importers in many African nations are turning to Chinese suppliers for a wide range of goods they once sourced in such places as Turkey, South America and of course the West. Already Kenya, South Africa and Ghana have begun to mutter about their fast-expanding trade deficits with China.

It seems to us that Chinese entrepreneurs are increasingly becoming aware of a vital role for Africa in their quest for presence in the global marketplace. And no, it is not simply that they see a new destination for their products. More significantly, they see an environment where less mature innovations may be tried, tested and honed – a market that Western companies are unwilling to engage beyond the customary hassling over raw materials, and one in which they can quickly become benchmarkers.

The early success of South Korean firms Daewoo and Samsung in Africa will definitely not have been lost on Chinese business strategists. Daewoo’s fuel-efficient small sedans captured cost-conscious market niches in West Africa well before the company’s brand became a global household name.

So just as during the Cold War China found in Africa an exceptional venue to hone its geopolitical competence, it may very well be that it now perceives the continent as an optimal environment in which to nurture its geo-economic competence, with special regard to innovation. This is not to say, of course, that the raw materials do not matter, but that they are not the whole story.

In Africa, the two Chinas meet in perfect synchronicity. Bright B Simons is an adjunct fellow at the Center for Humane Education (Imani). Evans Lartey is director of development at Imani, which is a think-tank based in Accra, dedicated to researching economic trends to glean practical public-policy insights for the benefit of government, business and civil society in Ghana. Franklin Cudjoe is the executive director of Imani.

From :