Review: China gives Africa handy investment lesson
By Stephanie Rogan
The author is a Reuters Breakingviews columnist. The opinions expressed are her own.
In the last decade nearly a million Chinese citizens have taken up residence in Africa. In his vivid new book, “China’s Second Continent,” Howard French tells stories of these migrants and the Africans whose lives they affect. The book weaves anecdotes and interviews with historical and geopolitical background to tell a larger tale of the PRC’s economic engagement in the continent. The result is an unflattering portrait of China’s involvement.
China’s push into Africa began in the 1990s when former President Jiang Zemin challenged Chinese enterprises to “go out” in search of opportunity abroad. Since then, the Middle Kingdom’s companies have poured into Africa, typically seeking entry into natural resources and related infrastructure development.
Along with the companies came the first wave of Chinese workers, many of whom stayed on. French makes a case that the interactions of these smaller actors will ultimately have a bigger impact on China’s future relationship with Africa than Beijing’s broader policies.
Many Africans complained to French about poor working conditions in Chinese operations, and about rampant corruption. They clearly believe they are getting the short end of the stick. Putting a human face on these economic forces is a fresh way to explore the consequences of foreign investment. As French shows, however, these individual opinions and experiences are shaped by the actions of larger players.
In recent years, massive resources-for-infrastructure deals have been popping up throughout Africa. In the Democratic Republic of Congo, for example, China negotiated a $6 billion deal that guaranteed it a 20-year supply of copper and cobalt in exchange for building new roads, hospitals, rail lines and more.
The danger is that these transactions can start out, or become, one-sided. Purchasers lock in discounts that protect them from long-term price increases as non-renewable supplies of natural resources are depleted. And Chinese companies often import layers of more senior employees from home, confining Africans to menial jobs and suppressing the spread of knowledge and wealth that might otherwise take place.
To be fair, China’s huge enterprises have a tradition of going where Westerners fear to tread – places where political and security risks are high, where investment pays off only in the very long term and, less laudably, where corruption is entrenched. Even if benefits disproportionately go to the Chinese, a portion of the wealth accrues to local economies. There’s a more general halo effect, too: A 2011 Organization for Economic Cooperation and Development study suggested that for every 1 percent rise in China’s per-capita economic growth, 7.7 million people outside of China were lifted out of poverty.
Beijing’s policy of non-intervention in sovereign affairs makes it more welcome than, say, U.S. companies in some countries, while the provision of cash with few humanitarian strings attached leads critics to argue that the Chinese are propping up authoritarian, self-enriching regimes.
French doesn’t judge definitively whether China’s natural-resource empire-building in Africa is closer to a mutually beneficial model that lifts Africans out of poverty or to an echo of the plunder indulged in by the worst European colonizers of old. What emerges from his compelling book, though, is a picture of African nations desperate for investment, hampered by a lack of options and politically ill-quipped to resist easy money.
The West may now be waking up to Africa’s potential – perhaps partly because of China’s growing presence there. The African Development Bank, the United Nations and the OECD recently predicted that Africa will receive its highest-ever flow of foreign investment this year. Developed-world companies and investors have suddenly become excited about the possibilities for growth.
For Africans, that’s good news. And even if the Chinese investment blueprint leaves a lot to be desired, as French’s book suggests, at least it gives governments and businesses a comparison for other offers now that Africa is attracting Western interest too.