Does the country deserve its anti-imperial reputation in sub-Saharan Africa?
“Imperialism is capitalism at that stage of development at which the dominance of monopolies and finance capitalism is established; in which the export of capital has acquired pronounced importance; in which the division of the world among the international trusts has begun”
Vladimir Lenin, Imperialism: The Last Stage of Capitalism
China, the communist autocracy, who after a failed attempt at collectivization, opted for a capitalist alternative by inviting foreign capital and opening their economy to international trade and commerce. Despite the embrace of capitalism, among the countries that at one time or another found themselves subjects of European powers, China retains its reputation as the anti-imperial alternative and defiantly opposed to the idea of imperialism but should it? Today, African states still feel the legacy of European imperialism and are increasingly looking eastward for alternative sources of capital and trade.
It is no secret that China is interested in investment and trade opportunities in sub-Saharan Africa. An influx of highly publicized gifts to African governments, particularly the building of ‘friendship projects’ like soccer stadiums and opera houses, has substantially increased many African’s positive perceptions of China. Perhaps the highest profile project being the headquarters of the African Union in Addis Ababa. Beijing claims that over half of their foreign aid goes to sub-Saharan Africa. Despite these gifts and aid, has China’s presence in these countries actually benefited these nation’s economies and the welfare of their citizens? In other words, do African governments have any more reason to favor Chinese capital over western capital?
Many economists and political scientists believe that Chinese FDI, or as China refers to it, overseas direct investment (ODI) and trade—due to lax democratic institutions in some autocratic governments shunned by the west in Africa—is directed to a more diverse selection of countries, particularly those accused of human rights violations. A comprehensive study by Brookings found that while the level of democracy was, in aggregate, slightly lower in countries with a high concentration of Chinese ODI relative to western FDI, there was no discernible difference in the relative strengths of judicial and administrative oversight in the countries that receive more Chinese or Western investment. This is good evidence that Chinese investors still prioritize rule of law, so stability may be maintained regardless of whether those countries adhere to liberal democratic. This was certainly found true at the firm level.
The rapid growth of the Chinese economy propelled the country into the echelon of large economies with significant amounts of overseas investment. Today, China is the largest exporter and second largest importer in the world. Considering the size of the African continent and abundance of natural resources, it is unsurprising that the continent has attracted Chinese capital and trade. Relative to China’s total ODI, however, only about 4.3% of it actually flowed into sub-Saharan Africa. Furthermore, of China’s total trade volume, only 5% is shared with sub-Saharan Africa. While sub-Saharan Africa only accounts for a small portion of China’s trade, as of 2009, the majority of sub-Saharan trade was exchanged with China.
What is the nature of Chinese trade and investment on the continent and what are the motivations behind it? Should African states continue to regard China as the primary opponent of western imperialism that many do?
The Brookings Institution found that Chinese ODI in sub-Saharan Africa was positively correlated with proven resource abundance in the countries they invest in. Similarly, Chinese ODI correlates with the relative market size of the economies they invest in according to the same study. Nigeria, soon to become the third most populous country, receives the largest relative amount of Chinese ODI, though it should be noted that the country, despite its internal conflict, attracts ample western FDI as well. That said, a World Bank paper found that Chinese investments on the continent generally employed more domestic labor than western projects. Moreover, the study also found a positive correlation between the amounts of skilled labor in the economies they invest in arguing that like any foreign investment, Chinese prefer to exploit comparative advantage on the continent. Resembling FDI from any western country. An IMF paper supported this finding.
The destinations of Chinese investment are also interesting to consider. Again we see evidence that resource rich countries and large markets attract the most ODI, evidenced by the below map.
China’s has also entered the loan business on the continent, lending $3 billion to Ghana in 2011. With an alternative to the IMF and World Bank, some African states may be inclined to look toward China for credit. Considering Chinese loans are not contingent on structural adjustment programs, countries may continue their level of market liberalization.
The composition of trade between sub-Saharan Africa and China is worth noting. In recent years, Africa has become a major market for cheap consumer goods originating from China. A study by Brookings noted a steady decline in value of African exports to China. While they have seen an increase in volume, the majority has been in natural resources and energy resources in recent years and notably not into secondary industries or service. This, to a neo-Marxist, is what Raul Prebisch and Hans Singer warned when they discussed dependency theory. Where developing economies are subject to dismissing value of their exports. The Brooking’s study found that a only a small fraction of African exports had any value added unlike Chinese exports. That said, the volume of trade has certainly grown in recent years, contributing to growth in their economies. This is perhaps the best argument against China’s current reputation as an anti-imperial power.
Ultimately, it seems that sub-Saharan Africa is less important to the economic interests of China than they are to the political interests. If we adopt the long cycle theory, China is likely positioning itself to become an alternative world power in the ever changing balance of power. One political scientist put it,
“Rather than being seen as “key” or a “priority,” Africa is seen to be part of the “foundation” on which China’s broader strategic ambitions are built. “
Garnering the support of African governments, to China, is perhaps the best method of becoming a more influential power on the global stage. Perhaps it’s the Chinese student service projects, the soccer stadiums or opera houses that have sprung up across the continent that serve China’s interests more than raw resource, energy extraction or access to the export market that serves their long-term objectives. Still, China’s ODI behavior is not discernibly different from western FDI so African governments should approach investors with the same caution they might a western investor. If the United States remains interested in being an influential economic and political power in sub-Saharan Africa, they might adopt a policy of gift giving to attract individuals and governments to the American sphere of influence and away from China’s.
While today China does not claim to be a proletarian paradise that Lenin once dreamed of, the behavior of the government and commercial interests seems to resemble what he once warned would be the ultimate state of capitalism: the exploitation of the poorer regions of the world. The World Bank projects that sub-Saharan Africa will see a slight decline in growth rates as a whole in the coming years. The previous decade saw an average growth rate of 5% due to declining to about 3% for the next few decades. China will likely remain interested in the continent for decades to come making them one of the ‘international trusts’ Lenin warned of.