China’s interest in Africa is absolutely not just about raw materials. The new policy is closely related to internal dynamics. It is useful to examine the economic development model of this country in order to understand Beijing’s new African policy.
The averaged GDP Annual Growth Rate in China is 9.58% since 1989 till 2018. In 2017 GDP dropped to 6.90%. In order to maintain its current economic policy, China needs to maintain at least 5% average annual growth. In order to maintain this 5% growth, the markets of the developing third world countries are not enough. This is why Beijing is forcing African governments to work for Chinese companies through low per cent credits, bribe and barter agreements.
According to a recent PwC report, by 2050, China will be the world’s largest economy, followed by India, and the U.S. in third place. Which means China will account for 20 per cent of the world economy, with India at 15 per cent and the USA at 12 per cent.
China Africa Trade amounted to $10 billion in 2000 and by 2014, it had grown to $220 billion. Considering the fact that in 2015, the US pledged to invest about $14 billion in Africa over the next decade, China pledged to invest $175 billion in the same time period, which overshadowed US’s commitment.
TRADE WITH CHINA: ANY POSSIBLE TO BENEFITS?
With the increase of foreign trade with China, the industrial production in the developing or third world country has not improved. İn fact, countries where cheap labour is intense, such as Pakistan and Turkey were not able to even compete against Chinese products. For example, all African countries that have commercial cooperation with Beijing continue importing cheap and “low quality” Chinese motorcycles. In these countries, it will never be possible to create a national motorcycle manufacturing industry. Worse still, these countries are completely dependent on China for spare parts. This simple example highlights the inequality in trade with China and why the local industry cannot develop.
CHINA-AFRICA RELATION: THE RAW MATERIAL STORE OR, NEW A ‘HUGE’ MARKET?
Chinese, demonstrates a different approach from the classical sense of western powers in Africa.
China has made lending agreements with the governments of African countries in a number of different ways. One of such is the oil-guaranteed loan agreement, just as in the case of Angola. China’s top providers of imported crude during 2017; Russia: US$23.7 billion (14.6% of China’s total crude oil imports) and the second large importers Angola: $19.8 billion (12.2%).
Angola is the only country that has been able to impose its own rules in relations with Beijing and who can profit from this relationship. In this context, Angola is able to sell oil to China and obtain credit for infrastructure, and at the parallel establish its own industry.
CHINESE NEWS AGENCIES AND BEIJING’S SOFT POWER
In the 21st century, one of the tools that made the greatest political impact is undoubtedly television and internet news. In the past, especially the British and French-based news agencies were able to use this influence for their own political purposes in the sub-Saharan. France and the UK-based news agencies are losing their popularity rapidly in Africa, on the other hand the Chinese- based ‘official’ news agencies continues to grow very fast. A very good example is CGTV.
CGTN Africa is the African Bureau of China Global Television Network, the English-language news channel run by Chinese state broadcaster China Central Television. According to some analysts, in the next decade, the most followed links by the African will be Chinese news linked news agencies. It is possible to calculate, the huge political power that this influence will create.
MILITARY INFLUENCE OF CHINA
China’s economic influence as an investor and trade partner continues to grow in Africa and new strategies are being discussed to ensure the security of Chinese business interests and investments.
With regards to this, Beijing’s chosen country for its ‘first’ military base in Africa was Djibouti, which had strategic importance in maritime traffic.
In August 2017, China drew attention to its military engagement in Africa by opening its first overseas military base in Djibouti. It is an understandable strategy for the Chinese Peoples Liberation Army to secure trade routes, especially maritime traffic.
İn fact, PLA’s military bases will increase across the continent. In parallel, some conspiracy theories are being produced about China’s military strategy in Africa. According to this context, the Chinese government has been pressing the countries to allow them to set-up Chinese military bases that cannot pay back their loans to China. As in the case of Zambia, governments having problems with credit repayment will likely have to make concessions to Beijing.
HOW TO RELATE TO CHINA?
With the help of The African Continental Free Trade Agreement (AfCFTA), Chinese dominated trade influence could be reduced. One other major issue is that many African countries are becoming excessively indebted to China.
China is acting independently from the BRICS organization in African relations. Credit agreements with BRICS countries such as India, Russia and Brazil can be used against China.
China’s foreign trade with African countries and the issue of credit should be interpreted in different cases. However, it is possible for the Africans to benefit from this strategy. With Beijing, only credit agreements should be realized, which can be beneficial if the source is used for the establishment of a local industries or infrastructures.
AFRIC Editorial Article.