Abstract
China’s new position in the international economy, and especially the rise of Sino-African commercial and financial relations, has contributed strongly to the improvement of macroeconomic conditions in Africa. Export volumes and export profits have increased, while investments and aid have created new opportunities. However, the new relationship has raised once again the fundamental question regarding African countries’ dependence on primary goods exports. This analyzes the general features of Chinese expansion in Africa in the first decade of the twenty-first century, focusing on China’s foreign policy towards Africa, the new commercial and financial relations, and their impact on socioeconomic trends and structural change in Africa.
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Notes
- 1.
In the same year, the United States registered a GDP of USD 18,036,650, both in terms of Purchasing Power Parity (IMF 2013).
- 2.
This trend began to show signs of exhaustion after the 2008 crisis, mainly due to the plunge in external demand in the United States and the European Union. China presented much less impressive growth rates after 2009, and responded with an anticyclical policy to sustain domestic demand by means of state investments in heavy industry, construction, and urbanization (Wei 2016; Ocampo and Erten 2013). More recently, the country has been searching for a more sustainable growth regime, less capital-and energy-intensive, less dependent on state investments, and more articulated to a widening domestic income and consumption base (Cintra et al. 2015). But despite these changes, the external expansion of the country does not seem to have been interrupted, at least for now, due to the already established strong linkages to the external market, including reliance on energy and mineral resources, consumer markets for Chinese goods, the expansion of financial flows, and the creation of the Asian Infrastructure Investment Bank to finance infrastructure mainly in Asia.
- 3.
The Fund would begin with roughly US$5 billion, financed by the China Development Bank, and would be used to boost and support Chinese companies investing in Africa. The fund operates on certain market rules and not as a government aid organ, and invests in projects alongside Chinese companies to promote the expansion of resources available to companies, as well as investments of capital and in management support and consultancy. It targets companies in agrigulture, manufacturing and infrastructure, as well as natural resources, such as oil and minerals (China Development Bank 2013).
- 4.
By the end of 2009, 107 schools were built in Africa with Chinese assistance and 29,465 African students were received in Chinese schools, while China had also sent 312 young volunteers to Africa, who offered courses on Chinese language, medicine and public health, physical education and computer science. By 2010, the Chinese government had conceded 5,000 scholarships per year to African students.
- 5.
According to this document, China has cooperated with the United Nations Food and Agriculture Organization (FAO) and signed a treaty (the South–South Tripartite Agreement) with Mauritania, Gana, Ethiopia, Gabon, Serra Leoa, Mali and Nigeria, sending to these countries more than 600 agricultural experts and technicians.
- 6.
While Chinese imports from Africa dropped after 2011, following the deceleration of the Chinese economy and the drop in the price of commodities, Chinese exports to Africa continued to grow.
- 7.
Among the main receivers of Chinese investments is Hong Kong (which received US$38.5 billion in 2010), followed by the Virgin Islands (US$6 billion) and the Cayman Islands (US$3 billion), which in fact are tax havens through which investments are channeled to many other places (Shambaugh 2013).
- 8.
The FGI statistics provided by the Chinese Ministry of Commerce do not present the investments by sector. The data used here is drawn from secondary sources and documents provided by the Chinese government.
- 9.
In 2007, China announced a loan of US$5 billion to the DRC, aimed at the development of infrastructure. This was followed in 2008 by another loan of 3,5 billion for mining projects. In all, China conceded credit of approximately US$9 billion to the DRC, aimed at infrastructure, construction, and mining projects. These loans occurred in exchange for concessions to exploit copper and cobalt mines over 15 years, and included some conditionalities aiming to limit Chinese workers in the mines to one in five, to sub-contract 10% of the work to Congolese companies, allocate half of the investments to technology transfer and personnel training of Congolese, and devote a percentage to social and environmental expenditures (ERA 2009). The deal caused controversy in the West, especially through the IMF, and also in the DRC itself. The IMF was contrary, claiming that the risks of such a large loan were too great, while sectors of the Congolese society and Member of Parliament complained of the consequences for present and future generations (Lee 2009).
- 10.
For example, Chinese investors have entered joint ventures in the proccessing of fish in Gabon and Namibia, and have leased land in countries such as Zambia, Tanzania and Zimbabwe (Blakendal 2008: 52). In 2006, the China Development Bank and the Ministry of Agriculture announced a deal to cooperate and promote projects that utilized land and water resources in other countries. China Exim Bank also promised financial support to agricultural projects in Africa. At the same time, China has promoted a series of support, formation and technical aid programs. In 2003–08, for example FOCAC trained about 4,000 African students in agricultural courses in China, apart from the investing in the the construction of research centres in African countries (Brautigam and Xiaoyang 2009).
- 11.
Besides these sectors, and among the various financial flows to Africa, it is important to note that foreign aid, which is not FDI, includes credit lines specifically directed to projects linked to development, infrastructure, and humanitarian areas, in addition to those linked to cooperation or technical assistance, and also the cancelation of debt. A large portion of these flows, especially the loans, comes from China Development Bank and from Emix Bank (Exim Bank Anual Report 2011).
- 12.
In the 1980s and 1990s, Africa presented a low GDP growth rate and an even lower GDP per capita growth rate. In sub-Saharan Africa, the growth rate was of only 2.1%, while the GDP per capita growth rate was negative. Inflation remained hihg and reached 27.36% in the 1990s, while external debt constituted 61.7% of GDP (IMF 2013).
- 13.
According to Prebisch (1949), for example structural change is linked to a country’s ability to incorporate technical progress through industrialization, reduce structural heterogeneity and increase domestic income levels.
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Ribeiro, V.L. (2019). Chinese Expansion in Africa in the Twenty-First Century: Characteristics and Impacts. In: Moyo, S., Jha, P., Yeros, P. (eds) Reclaiming Africa. Advances in African Economic, Social and Political Development. Springer, Singapore. https://doi.org/10.1007/978-981-10-5840-0_2
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