4 June 2011 — Strategic Culture Foundation
A China-Africa summit convened in Sharm el-Sheikh in November, 2009, the two highlights of the forum being Beijing’s pledge to extend $10b in loans to African countries in return for commodity deals and the signing of a host of impressive contracts in the sphere of infrastructure construction by Chinese companies. As a result, China made a big step towards guaranteeing the supply of natural resources to its rapidly growing economy, not to mention the fact that the creation of new jobs in Africa for millions of Chinese certainly counts as a serious accomplishment against the backdrop of the growing unemployment in China.
The 2009 summit was the fourth one on record. The first two were relatively low-profile events, but the third one held in 2006 in Beijing drew leaders from 48 of Africa’s 53 countries. At that time China handed out to Africa loans adding up to a total of $5b, and 12 Chinese companies sealed contracts worth $1.9b with African governments. The package included a deal to cultivate oil fields in Nigeria and an agreement by which China was to construct 1,315 km of railways in Ghana.
The Sharm el-Sheikh meeting overshadowed the past three ones. Its key event was an address by Chinese premier Wen Jiabao who reaffirmed China’s commitment to assist Africa despite the lingering economic crisis, promised another $10b in low-cost loans, and unveiled a plan to establish a $1b fund charged with the mission of making credits available to small and mid-size African companies.
Beijing is expected to enact zero tariffs on imports from the poorest of African countries, to waive the hopeless part of the continent’s indebtedness, to donate $73m worth of medical equipment to 30 African hospitals, to build 50 schools in Africa, and to launch 100 renewable energy projects across the continent. China will also expand the program of training Africans in Chinese universities and offer free education to 5,500 undergraduate and 100 graduate students. On top of that, Beijing will cover the tuition of 3,000 doctors, 2,000 agriculture engineers, and 1,500 teachers from Africa.
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It should be noted that China’s African agenda is not limited to gaining access to the mineral riches of the continent, a task largely accomplished by Beijing back in the 1990ies. At that time, the policy of issuing loans with no political strings attached combined with arms supplies to African countries sitting on the continent’s key deposits of natural resources helped China befriend the regimes which the West branded dictatorial and sought to isolate. The benefit thus earned is that at the moment China brings in a third of its oil import from Africa.
Over the recent years, China has been switching from politics-free loans to focused loans meant to boost infrastructure construction in Africa. The infrastructures built with China’s help prop up the popularity of African leaders who routinely credit to themselves the signing of the corresponding agreements and also open important employment opportunities to locals in the recipient countries, though of course China is the party eventually gaining most. First, investments in infrastructures and access to natural resources are interlocking themes in China’s policy in Africa. Secondly, local administrations grateful for the financial infusions let Chinese companies have the lion’s share of the contracts arising in the process. Thirdly, Beijing gets a platform to explain that China is the country doing a lot to lift Africans out of poverty, which, by the way, is absolutely true.
Lending in dollars makes it possible for China to gradually dump its oversized holdings of the US currency and securities, swapping them for the much-needed natural resources. In this light, assistance to Africa can be regarded as Beijing’s fairly efficient anti-crisis strategy.
In 2007, Beijing opened a huge project of creating special economic zones in Africa, which are modeled on China’s own similar formations. The first special economic zone is coming into being in Zambia’s Copperbelt Province, the second one – on Mauritius which will serve as a trade hub linking under preferential terms the Chinese market and those of 21 countries bracketed within the Common Market for Eastern and Southern Africa. The island of Mauritius will be China’s more efficient outlet to the Indian Ocean and to the lucrative markets of South East Asia. A third special zone will function in Tanzania’s Dar es Salaam as a maritime transit facility.
The volume of Chinese trade with African countries has been swelling and topped $130b in 2010. The total of Beijing’s direct investments in Africa is currently estimated at $47.5b.
Interestingly, the Chinese approach to fostering development proves to ensure greater immunity against Africa’s painful corruption problem than the assistance models adopted by the World Bank. Instead of letting potentially corrupt African bureaucrats handle the finances, Beijing – much to its own advantage – channels them directly to trustworthier Chinese companies building infrastructures in Africa.
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The Somalian piracy surge was the first indication that the rivalry over Africa was shifting to a high-intensity phase. It did not evade watchers that piracy peaked in 2006-2007, exactly when China staked a bid for greater economic engagement with Africa. The character common to the majority of the piracy raids seems to warrant the conclusion that the activity as a whole is being carefully coordinated. For example, the seizure of Ukraine’s weapons-carrying Faina cargo ship was prompted by a signal sent to the pirates from Odessa, Ukraine. It should be noted in the context as well that the opposition to the passing of a tighter international anti-piracy code is mounted for the most part by the US and Great Britain, the two countries permanently putting roadblocks in the way of the initiatives others are trying to get the UN to stamp.
The conflict between Washington and Beijing over the global financial architecture which culminated during the Seoul G20 summit in 2010 sent the temperatures of the US-Chinese rivalries in other spheres climbing.In 2010, the currency dispute between the US and China put their Korean Peninsula allies – S. Korea and N. Korea – on the brink of a full-scale fight. A round of implicit struggle between the US and China over oil in Sudan followed shortly. Sudan is an important supplier of fuel to the Chinese market. In fact, as of today Sudan’s entire oil output – roughly 2m bpd – are absorbed by China. Along with pipelines, the money borrowed from China materialize in Sudan in the form of new schools and hospitals. The January, 2010 referendum which gave independence to Sudan’s oil-bearing southern part and was – with Washington’s crucial blessing – momentarily recognized worldwide dealt a heavy blow to the Chinese energy security.
No doubt, the unrest which swept across North Africa’s Tunisia, Egypt, and Libya in 2011 had a lot to do with US-Chinese rivalry over global primacy. Media staples – assessments of the impact of social media on protest activities in the above countries, rape charges against former IMF headDominique Strauss-Kahn, etc. – tend to divert attention from the root cause of what is happening in the world, though under scrutiny the proliferation of social media and the DSK case also appear to be elements of the grand game…
In Egypt, regional tensions – mainly between Israel and Iran – factored into the situation shaped by the US-Chinese global rivalry. Problems with Iran made Israel strengthen its positions in adjacent countries, the ejected Mubarak’s regime not quite measuring up to Tel Aviv’s needs. For Israel, the seizure of power in Egypt by the country’s army which is kept on a short leash by Washington could be the optimal outcome, and this is exactly what happened. It should be taken into account at this point that Egypt happens to be the oil-producing Sudan’s northern neighbor.
China will likely attempt to respond to the developments in North Africa, either by undermining regimes in US-friendly countries or by so far unknown countermeasures. The People’s Daily, the mouthpiece of the Chinese administration, dropped a meaningful hint that if China is not intervening in the domestic affairs of the countries of West Asia and North Africa, this should not be perceived as a complete lack of reaction on Beijing’s part.
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These days, the increasingly polarized former third world is preoccupied with alliance-building, Africa being no exception from the rule. As for China, it clearly is the top player in Africa. Even apart from Beijing’s economic and humanitarian advent across the continent, the soft power carried by the phenomenon of China’s rise puts the country ahead of the US and the EU. In Africa, the West continues to be seen as an alien and hostile force, and China with its history, values, and anti-imperialist aspirations which are anything but anachronistic – as a natural ally. China is sure to prevail in Africa.