25 July 2012

Africa: Sino-Africa Partnership - Beneficial or Exploitative


The formal involvement in Africa of China cooperation dates back to 1955 when African and Asian nations held a conference in Bandung, Indonesia, to promote economic and cultural cooperation and bring an end to colonialism and reduce developing countries' dependence on industrialised countries. From that date, more and more forums for engagements were initiated such as the Sino and Forum on China-Africa Co-operation (FOCAC).

Recently, the fifth Ministerial Conference of the FOCAC was held on July 19, 2012 in Beijing, under the theme "Building on past achievements and opening up new prospects for the new type of China-Africa strategic partnership." It provided an opportunity for both parties to review their engagement and devise strategies that are mutually beneficial to China as a country and Africa as a continent.

If one analyses the China-Africa relationship, it has evolved over the years, and it is time for African countries to gain greater leverage to ensure that they benefit from it as much as China does. For instance, the benefits from China such as Chinese aid and investment, if managed effectively can complement the social sector focus of most Western aid by strengthening Africa's inefficient infrastructural capacity and untapped private sector.

It is an open secret that most of the continent's infrastructure requires more aid and investment to improve on intra-regional trade as endorsed recently by Africa Union summit held in Addis Ababa and Africa Development Bank in Arusha, Tanzania. China can play an important role in supporting continental and regional initiatives besides building stadiums, parliaments and military bases as the current case.

Conversely, if managed properly, Africa risks Chinese exploitation and missing a prime opportunity to advance its political, economic, and social development. Thus Africa must proactively monitor and review the relationship and ensure that its interests are safeguarded in order for this relationship to provide a win-win solution.

Indeed, evidence suggests that both parties (China and Africa) have benefited from their political and economic co-operation, despite the imbalances that still prevail in terms of geographic distribution of trade and investment.

However, the partnership also carries significant risks, especially for Africa. Unless Africa carefully manages this relationship, it risks becoming the victim of Chinese exploitation.

A closer look at the trade figures between China and Africa reveal an imbalance, mainly concentrated on few nations with oil and minerals. For instance 70 percent of China's imports from the continent come from Angola (34 percent), South Africa (22 percent), Sudan (13 percent) and the Congo (six percent), while close to 50 percent of exports from China went to South Africa (19 percent), Nigeria (13 percent), Egypt (10 percent) and Liberia (seven percent).

A worrying trend is also on product composition on trade which is mainly of more finished good exports from China and primarily raw materials export from Africa to China. A positive development though is that the trend has been changing for the better in the past years but at a snail's pace.

China has become Africa's largest trading partner, and the continent is now China's fourth largest investment destination. The latest data indicate that China-Africa trade has reached a year-on-year growth rate of 30 percent.

The success of China is partly attributed to the economic reforms that were undertaken since the 1970s. We have witnessed China's economy change from a closed centrally planned system to a market-oriented economy that has rapidly growing private sectors. Surely, Africa can use China as a spring board to accelerate its growth.

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