China’s growing trade and particularly investment in Africa has its critics. Now China has come to its own defense. Its first policy paper on the subject says the fast growth of Chinese trade and investment has helped African countries meet UN Millennium Development Goals and is transforming the continent by building infrastructure and creating a new class of consumer.
Two-way trade only reached the $10 billion mark in 2000. In the first 11 months of this year, it was worth $115 billion, a 43.5% year-on-year rise, with that growth rate likely to accelerate in coming years. Natural resources flow east with low-cost manufactures coming in the opposite direction, with the balance of trade in Beijing’s favor. According to U.S. embassy cables published by WikiLeaks, the imports have also included some arms and other security related equipment.
Beijing is pushing Chinese companies to expand their investment from the extractive industries, where it has been concentrated as China has sought to secure supplies of natural resources, to manufacturing, construction and real estate, finance, tourism and agriculture. The policy paper says the stock of China’s investment in Africa at the end of 2009 was $9 billion, a surprisingly low looking number to our eyes. It is spread across 49 African countries, but mostly in (resources-rich) South Africa, Nigeria, Zambia, Sudan, Algeria and Egypt. The policy paper says there is a matching stock of African investment in China, though the multinational brewer SABMiller, the SA standing for South Africa, probably accounts for a big chunk of that.
The $9 billion reckoning of Chinese investment in Africa will also likely not include the ports, roads, railways, dams and sports stadiums built with preferential loans and credits provided by China, $5 billion worth in 2007-09 with another $10 billion in 2010-12. Chinese aid is also going into schools, wells, hospitals public housing and agriculture. It has also cancelled $2 billion of African nations’ debts over the past decade.
China is building six economic trade and cooperation zones across Africa in which Chinese firms build the infrastructure for Chinese and other foreign firms to move in to create industrial clusters. It says the first of these in Zambia has attracted 13 companies, investment of $600 million and created 6,000 local jobs — the lack of employment for locals being a widespread complaint of Africans against Chinese firms. Regardless of the unease it causes others inside and outside the continent, China’s presence and influence in Africa is only going to get larger.