Why China won’t take over the world, Including Africa.

The rise of China is, as we all know by now, the definitive economic and political story of our time. Every week a new book title announces an “irresistible” tilt east, the emergence of “Chimerica” and a not-too-distant future when China “rules” the planet. The mainstream media, and especially the business press, are gripped by the narrative of China taking over the world—every other headline in the Financial Times and The Wall Street Journal has a China focus.Newsweek

There has been a transformative effect on Africa with China’s engagement.  The continent’s relations with the outside world, have been shaken up, especially among the old and fraying order dominated by cautious foreign donors and former colonial powers.

Trade between Africa and China rose tenfold, from $10bn to $108bn, between 2000 and 2008, dipping back last year during the global recession. Chinese direct investment is also steadily up, although inflows still trail those from the US and Europe. Thanks to Asian demand, world prices for African commodities have risen strongly over the decade. The price of African imports, increasingly sourced from Asia, have also decreased.

While most of China’s inroads in Africa are covered through the prism of economics; were china outbids and out-maneuvers mostly western firms and governments, it still has a long way to go before surpassing the U.S. as a global power, especially in Africa were the U.S. is the most admired country by your average Africa.

Based on those views, the U.S. is in an easier position to further its aims and goals.  It will be easier for America to exploit Chinese mismanagement, especially when it comes to corruption.

There are plenty of stories of a Chinese-sponsored infrastructure project or a Chinese company cutting a deal to feed its “insatiable thirst” for raw materials, while Western involvement of similar or greater magnitude is lucky to make a headline at all. Meanwhile, a close look at the key economic metrics and the subtler shades of power, such as cultural influence and humanitarian aid, reveals that while China is indeed one of the great powers in the world now (late last month it officially overtook Japan as the world’s second-largest economy), its influence is mixed, and often undercut by America’s.

While China’s trade with regions like Africa and Latin America is growing exponentially, it is still outpaced by America’s, which tends to be more diverse. In Asia, China is now the dominant trading partner, yet the flows are mainly in low-end goods, while America dominates higher up the food chain. U.S. aid and foreign direct investment in these regions still eclipses that of the Chinese, and its soft power still reigns, as does its military might, despite recent Chinese buildups in this area. “Economic heft alone has never been enough for a country to be dominant outside its borders,” says Charles Onyango-Obbo, a journalist who writes for the weekly newspaper The East African. He recently penned a column titled “Chinese Takeover? I’m Not Losing Any Sleep.” “It’s really been American education, technology, culture [Hollywood and music], business, and sport that has enabled it to be so overarching,” says Onyango-Obbo. “China is going to be a very important power in the world, but it will not be dominant.”

Perhaps nowhere is this more apparent than in Africa, where China has been depicted as the shrewd winner of a neocolonial scramble for resources, offering developmental assistance—mainly in the form of low-priced manufactured goods, infrastructure investment, and soft loans—all proffered with no pesky Western-style demands to respect human rights. In exchange, China gets access to raw materials to fuel its economic boom. No doubt China’s presence on the continent has expanded considerably in recent years. But the U.S. remains sub-Saharan Africa’s largest trading partner, accounting for 15 percent of Africa’s total trade versus 10 percent for the Chinese (it’s also worth noting that Africa has been a low trading priority for the U.S., accounting for a mere 2 percent of its global trade).

Indeed, the bulk of China-Africa trade is made up of Chinese oil imports from five countries, and even with respect to oil—said to be at the heart of China’s drive on the continent—America holds a sizable lead. China imports 17 percent of all African oil compared with 29 percent for the U.S. (and 35 percent for Europe). Western companies are the leading foreign partners in oil projects in Nigeria, which is sub-Saharan Africa’s largest oil producer, and in the continent’s largest emerging oil producers such as Ghana and Uganda.

US influence in Africa will only grow due to the fact the oil imports from the region, particularly from west Africa are quickly outpacing oil imports from the middle east. Nigeria is the third largest oil supplier to the U.S. Oil from African countries will soon be the majority suppliers to the U.S. by 2020. America only has to ask the question: Where should we get our oil from? The middle east where we are greatly hated and resented or from Africa, the most pro-America region in the world? The answer is simple.

As of 2006, the U.S. now imports more crude oil from Africa than it does from the Middle East. The latest Energy Information Administration data shows that in 2006, Africa pumped 2.23 million barrels per day into the U.S. market. This marked the first time the U.S. received more oil from Africa than from the Middle East. Those Middle Eastern imports have been declining for three consecutive years, although the area is still a big supplier to the U.S., providing some 2.22 million barrels per day.

Two African oil giants, Algeria and Angola, witnessed an impressive up-tick in the volume of crude oil exported to the U.S. In December 2006, for instance, crude oil bound for the U.S. market from Angola rose by 41 percent when compared to the year-earlier period. Angola, OPEC’s newest member, supplied an average of 513,000 barrels of crude per day throughout 2006. Meanwhile, Algerian crude exports to the U.S. jumped by 57 percent to 357,000 barrels daily, its highest level since 1980. Algeria is also a big products supplier to the U.S. market, to which it provided about 300,000 barrels of products per day in 2006.

Africa’s new status as a strategic energy partner(PDF link) for the U.S. is bound to grow in the years ahead. That’s because other traditional sources of U.S. crude, like Venezuela and Mexico, are undergoing output constraints due to their aging oil fields. Meanwhile, African oil output is growing. Dr. Peter Taniform, an economic analyst at Amity Energy, a Cameroon-based energy consulting firm, told ET that over the past few years more Middle Eastern crude has been flowing toward Asia. He said that fact, conflicts in the Middle East, and “anti-American campaigns in the Mideast are driving U.S. giants to invest billions to explore and drill across Africa.”

Add to that allegations of corruption and shoddy execution in a number of Chinese energy and infrastructure projects throughout Africa. Compare and contrast this with with the U.S., which greatly and morally praises transparency and good governance.

An $8 billion Chinese-sponsored road and mine project in Congo, deemed the “Marshall Plan of Africa” when it was unveiled a couple of years ago, has been tainted by allegations of corruption and poor implementation, as has a massive Chinese-funded fiber-optic project in Uganda. A recent study from the African Labor Research Network, called “Chinese Investments in Africa: A Labour Perspective,” looked at labor conditions at Chinese companies in 10 African countries and found them “among the worst employers everywhere,” according to the report’s author, Herbert Jauch.

There is also growing resentment of China.  The growing resentment among the populations of most of the African states in which China is investing, particularly with respect to employment issues. When China invests in an African infrastructure or development project, they typically bring their own citizens to provide labor. In countries that face upwards of 50% unemployment in the formal sector, this breeds resentment and anger.

African leaders might consider this resentment when making deals with the Chinese in the years to come. Accepting aid and investment only on Chinese terms could backfire on some African leaders come election time, especially in places where the perceived general benefit of infrastructure improvement or development activities is low.

Disenchantment with the Middle Kingdom is particularly strong in Angola and Nigeria, which a few years ago were both tilting China’s way, lured by the promise of soft, unconditional development loans and noninterference in domestic politics. Two-way trade between China and Nigeria doubled to $7 billion between 2006 and 2008 (though still dwarfed by $42 billion with the U.S. in 2008). Yet Nigeria’s late president Umaru Yar’Adua ended up canceling a number of the projects due to scandals and delays. Washington has been quietly capitalizing; according to the U.S. Department of Commerce, exports to Nigeria have risen 48 percent and imports (consisting predominantly of oil) by 16 percent this year alone.

The situation is the same in Angola, where Angolan Rafael Marques de Morais, founder of Maka, which monitors corruption in the country, says, “Corruption and a lack of accountability on China-Angola deals have undermined a more sustainable and long-term relationship between the two countries.” He points to the General Hospital built by Chinese contractors in Luanda, the capital’s first new hospital since independence, which “four years after its inauguration is basically collapsing.” In July patients and staff were evacuated due to safety concerns. Once again, Washington moved to exploit disenchantment with Beijing, meeting with Angolan officials in June to discuss ways to deepen and diversify trade, and pushing a newly signed IMF agreement of understanding that may lead to fresh loans from Western banks.

There are also opportunities for change in the way China views its relationship with the continent. The Chinese government is very aware that its bilateral relationships with African states are two-way streets. As these relationships have evolved, Beijing has moved away from its initial “one-size-fits-all” approach to a more nuanced understanding of the differences between Africa’s states. There is room to reimagine the nature of these agreements while still satisfying China’s need to expand its markets in a way that also benefits African markets.

Instead of allowing China to source all of its materials and labor force from home, African leaders might work to find ways for the projects to benefit communities while they are in process as well as when they are over. Contracts could be negotiated to set a minimum number of local employees on a project (for example, half the employees building a road might have to be national employees, while the other half would be Chinese). Some management positions should be reserved for African leaders, thus building the capacity of local construction managers, health care professionals, and engineers. Materials could be sourced locally when possible and from China when not. The possibilities are endless.

All these cases of corruption only underscores America’s deeper and more diversified engagement  with Africa. Here is a report about corruption involving Hu Jiatao’s son.

When the going gets tough, Africa turns to the U.S., not China.

the U.S. still tends to be the country to call when there is trouble. Consider the terrorist bombings in Kampala, Uganda, that left more than 85 people dead this summer. President Yoweri Museveni had been trading barbs with Washington prior to the incident about the pace of democratic reforms in his country. Museveni had also been tightening relations with China. But after the bombings, he swiftly turned not to Beijing but to Washington for assistance, and received $24 million in manpower and technical resources.

This sort of effort, particularly when contrasted with China’s recent political bumbles in Africa and elsewhere (for example, its growing reputation for shoddy construction work in Africa; its South China Sea squabbles with its Asian neighbors), makes America look good and underscores the opportunity for it to better play the myriad cards it has at its disposal—cultural, military, scientific, and economic. Many of these were underutilized or misused during its two decades as the world’s lone superpower. To the extent that China’s rise forces America’s nimble re-engagement with the world, the effect may be win-win.

It seems that once again that America is the indispensible nation.

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5 comments

  1. China does need to modify it’s policies in Africa. It will likely become more and more resented, to the benefit of the US and France/Britain there.

    However I wonder what the balance of US governmental interest with Africa are. I imagine that it’s pretty strongly negative in economic terms. We do a lot of aid to Africa. A lot of that is NGO but a lot of it is governmental too. Now compare that to the taxes extracted from companies having profits in business with Africa. I’d guess the balance is pretty sharply negative. Especially since in the case of readily fungible products like crude oil (though it is “sweeter” from some locations than others, and priced accordingly), any advantage of importing from relatively close Africa compared to the Middle East where the supertankers have to go around the horn of Africa (i.e. it’s our longest distance large supplier) would disappear if the cost of this governmental aid were priced in.

    What I’m saying is that Africa likes us more than China because we act a lot more like a money losing benefactor than they do.

  2. Our governmental elites like to have power and be respected and really don’t actually care that much what’s in the best economic interests of the US. They just like to appear to the electorate that we do. In the US unlike Britain the mainstream media (and entertainment media) is almost entirely left liberal, including the most influential papers, so this doesn’t tend to get much called out. The Wall Street Journal is too off it’s editorial page is too. (That’s what they teach in the universities and journalism schools these days.) The vitriol aimed at Fox news is precisely because it somewhat breaches this wall.

  3. hey be very careful, dont think that china has a good motive on africans,china is just there the for the sake of her own intrest, chinese are too wicked than even europeans, let’s stand as unity and pursue china as prey and it preditor, hahaha

  4. i dont know why i dislike china in this way, china is an evil country they dont know God, china will bring evil to the world, but let me be cleared, china can not nvertake u.s , never ever could that happen.. China must go back tn where she belongs down down to the bottnmless place, God is just puting u.s to the test, u.s will soon be on track, mark my words

  5. there is no democracy, freedom of speech and freedom of religion and even human rights, how can this country rule the world? Do u think china can become opened as united stated and europe ? Definately no, china will never do that, . For instant , if u are born in China u can not be a chinese and there u can not be treated as equal.. Take united for instant, even arabs have right to claim u.s as their country .they are treated equally,, far be that china will rule the world, God forbid

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