China’s Economic Colonialism

Abstract

African countries are increasingly concerned about Chinese meddling as a result of China’s rapid rise to prominence as a political and economic force on the continent in the last few decades. The emergence of Africa as a powerful economic and political player has been perhaps the most significant change for the continent since the Cold War’s end. This week’s Macroscan looks at China’s economic and political ties with Africa and the influence of Belt and Road Intiative which is leading to economic colonialism.

History of Sino-African Relations

Since the thirteenth century, trade relations have existed between China and Africa. The Ming Imperial Tomb in Beijing contains a giraffe wall painting that Chinese admiral Zheng He sent to the palace in Nanjing during one of his frequent trips to Arabia and Africa between 1413 and 1419. In 1911, after Sun Yat-sen was elected Provisional President of the Young Republic of China, diplomatic contacts with South Africa were formed. China did not initiate a more aggressive effort of establishing ties with African nations until the early 1950s. In 1955, 29 leaders of African and Asian political movements gathered in Indonesia to debate decolonization and economic expansion, among other things. Former Chinese leader Mao Zedong coined the term “third world” to describe the emerging world’s inhabitants.

Despite Africa’s relative lack of development at the time, Chinese funding to Africa was considerable. The Tanzam railway project, which linked Zambia’s copper belts to the port of Dar Es Salaam in the early 1970s, is one of the best-known instances. Zambia was now able to export copper without passing via Rhodesia or South Africa. Since the 1990s, China has had a “grander plan” for Africa, and this was just the beginning.

Some people believe that the purpose of China’s financial assistance and loans to African nations is to enslave those nations and make them more compliant in international forums where China relies on their voices. On the other hand, China’s involvement in Africa may be seen in a favourable light because the continent’s infrastructure is undergoing improvement and expansion as a result.

A more thorough analysis of the Afro-China relations warrants a study of their economies independently as well.

Brief Overview of African Economy

The African continent is abundant with natural resources, so much so, that it has been one of the worst affected victim of the Dutch Disease or the Resource Curse. Resource curse basically means that a country prosperous in resources is unable to sustain economic growth due to over dependence on perishable resources. The reasons for this absurd phenomenon include lack of government accountability, currency fluctuations and reliance on export of raw material instead of upskilling to be a manufacturing exporter. China comes into play in Africa as a trading partnerand proposes bilateral infrastructure investment agreements to resource-rich nations. As an illustration, China “pays” for some commodities by making investments in the infrastructure of the nation that supplies them. This strategy has been used by several African nations, notably Angola, Sudan, Nigeria, and Ethiopia.

Economically Sub-Saharan Africa (SSA) is expected to experience 4% growth in 2021, up from a 2% decline in economic activity in 2020. However, the global environment in 2022 is expected to have several (new) shocks, high volatility, and uncertainty, causing regional growth to slow. The economy is expected to grow by 3.6 percent in 2022, down from 4 percent in 2021, as it struggles to gain traction in the face of global economic slowdowns, ongoing supply shortages, outbreaks of new coronavirus variants, high inflation, and escalating financial risks due to the economy’s high and increasingly exposed levels of debt.

Despite minimal economic and financial linkages with Russia and Ukraine, the Russia-Ukraine war have affected Sub-Saharan African economies through increased commodity prices, greater food, gasoline, and headline inflation, tighter global financial conditions, and fewer foreign financing flows into the region.

Chinese Economy & The Belt and Road Initiative

Historically, the rapid Chinese growth has been attributed to large capital investment and rapid productivity growth. Although economists use the neo-classical model of growth (which uses capital and labour) to explain a country’s growth, the Chinese context brings up some limitations in the model. Upon conducting a through research for the period of 1979-94, IMF discovered that the capital stock in China grew only by 7 percent and the capital/output ratio hardly budged (lack of capital deepening). Moreover, the labour input- which was abundant in China- also saw a decline in weight due to the One Child Policy which significantly reduced the availability of labour. It was the increase in productivity per capita and productivity per capital input that led to the rapid growth during this period. China started it’s growth journey by opening doors to foreign investment which led to massive technology transfers and rise in productive. Nonetheless, the economy slowed down eventually and took a major hit at 2008 due to the Glocal Crisis and saw declining trend post that as seen below:

This time China decided to become the foreign investor and proposed the Belt and Road Initiative (BRI), reminiscent of the Silk Road,  in 2013 to improve connectivity & cooperation on a transcontinental scale and re-accelerate their economy. It enabled them to sign bilateral agreements with Asian & African Countries where-in they promise to develop roads, railroads, dams, ports and airports in exchange for future repayment, cordial relations, diplomacy and trade. Over sixty countries, representing two-thirds of the world’s population, have signed up for projects or expressed interest in doing so. Alongside the Made in China 2025 economic development agenda, the BRI is viewed by experts as one of the pillars of a more assertive Chinese foreign policy under Xi. For Xi, the BRI is a response to the much-publicized U.S. “pivot to Asia” as well as a means for China to generate new investment possibilities, cultivate export markets, and increase Chinese incomes and domestic consumption.

Quite contrary to the Chinese objectives, the BRI is often critiqued as so-called “debt trap diplomacy.” According to this narrative, China provides infrastructure funding to developing economies under opaque loan terms, only to strategically leverage the recipient country’s indebtedness to China for economic, military, or political favor.

Re-Colonizing Africa?

Since 2000s China has provided loans worth $143 billion to African countries. Financing from western countries usually involve strict regulations and compliance standards which African countries are unable to comply with. Hence, Chinese investment and loans are an attractive alternative. Taking this into cognizance, as a part of BRI China has invested in 52 countries out of the 54 countries in Africa. Even though, colonizing Africa is not one of the agendas under BRI, some facts and incidents affirm the fears of several experts regarding this matter.

There are several implications of this continuous investment:

China is investing in ports and port areas along the coastline from the Gulf of Aden to the Mediterranean Sea, passing through the Suez Canal. This region consists of 34 countries that have signed MOUs. China could use its dominance over these ports for commercial (movement of raw materials, finished goods, and labour) and military (monitoring and blockade of international and deep-sea maritime traffic) purposes in the future to support its strategic goals. Moreover, in recent years, as China’s presence in Africa has grown, nations have one after another, turned their backs on Taiwan. Eswatini is the only African country that has resisted China’s push and continues to disallow Chinese investments. It continues to remain the only ally of Taiwan in Africa. This highlights the political power which China holds in these nations.

There have been several protests, not limited to Kenya, Cameroon & Ghana, against the poor working conditions associated with BRI companies but China has retaliated by bribing top African professionals and silencing the protestors. As a cherry on top, China has military alliances with 6 African states allowing them to exert influence in intra-country decisions. Consequently, the global recession has severely weakened the negotiating position of African nations and expected profits intended to repay Chinese loans are collapsing. China’s uncritical support of the African elite in a resource-rich country may worsen ‘resource curses’ by encouraging elites to tighten their on-control resources and damage other economic sectors.

Nonetheless, Sino-Chinese partnerships give off a mixed signal. Although China’s role in infrastructure development, resource extraction, and the military capacity building appears beneficial, Africa resents Chinese enterprises’ treatment of African labour, the large presence of Chinese workers, the aggressive behaviour of some retail traders and farm owners and the unending support of corruption which is a threat to African democracy. In a word, China’s sweeping ventures into Africa are characterised by unequal collaboration and latent streaks of imperial dominance, with Africa looping back to what it sought to avoid – the wretched resource curse and colonialism.

References

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