By Yang Lihua

Senior research fellow of IWAAS

yanglh@cass.org.cn

China-Africa relations is on the right track with a fast growing speed. There are so many new moves and initiatives in various fields of cooperation. This paper would try to share some of my findings in this respect.

1. There is a will for further cooperation from both sides

1.1 Strategic importance of China-Africa cooperation

China sees its relations with Africa, as an important part of South-South cooperation. China and African countries have many areas for cooperation in the long run. As developing countries we face a lot of challenges and constrains, particularly in the relations of modernization and traditional values, in handling reform and social stability, in the balancing of economic growth and adequate distribution, in resources exploitation and the protection of environment, in the integration of globalization and the upholding of national integrity.

Strengthening political friendship and cooperation is still important to future development of economic ties. That is mainly because China and Africa have common interest in upholding national sovereignty and in world peace and security. By increasing communication and coordination between the two sides, the interests of the developing world can be better represented in the functioning of the UN and the WTO. A more equal and just world order could not come true without the consistent efforts by the developing countries. China and Africa have a historical role to play.

1.2 China reiterates its commitments

The year of 2000, marks the 50th anniversary of the establishment of Sino-Egyptian diplomatic relations in 1956 which started the process of mutual recognition between New China and newly independent African countries. In the last five decades friendship has been the key word in Sino-African relations. At the beginning of the 21st century, China and Africa are joining efforts in establishing a new type of strategic partnership to face the challenges of modernization and development in the trend of globalization.

On 12 January 2006, the “White Paper” on China's African Policy[1] was released. It is a policy statement of the Chinese Government to further consolidate and develop China-Africa friendship and cooperation in the new era. It emphases the importance of consolidating the long term friendship and continued cooperation between China and Africa which not only benefits both parties but is relevant to the building of a better world.

The document is the second of its kind addressing China’s policy toward a continental grouping of countries. The other one is China’s EU Policy Paper[2] released on 13 October 2003. In compassion between the two documents, one reads differences in emphasis. In its EU policy which targets a developed community, China explains that the two sides have worked jointly to find common ground in cooperation, despite of their differences in historical background, cultural heritage, political system and economic development level. In 1998 China and the EU launched their annual summit mechanism. In 2001, the two sides established a full partnership.

While in the paper on China’s African policy, you see many a “China will” that reiterates China’s commitment to Africa’s development. The paper covers China-Africa cooperation in four areas, as (1) the political field, (2) the economic field, (3) Education, science, culture, health and social aspects and (4) Peace and security. The objectives and principles of China-Africa strategic partnership include: Sincerity, friendship and equality; Mutual benefit, reciprocity and common prosperity; Mutual support and close coordination; Learning from each other and seeking common development.”

As the policy paper indicates, “the Chinese Government wishes to present to the world the objectives of China's policy towards Africa and the measures to achieve them, and its proposals for cooperation in various fields in the coming years, with a view to promoting the steady growth of China-Africa relations in the long term and bringing the mutually-beneficial cooperation to a new stage.”

1.3 The coming of age of Africa

To talk about Africa, there are always pessimism and optimism, but we have reason to say Africa has gone through her darkest decades. At the beginning of the 21st century, the world is witnessing the coming of age of Africa. The continent is facing enormous challenges as well as unprecedented opportunities for development. And the most important factor is that internal motivation for development is prevailing over external pressure for Africa’s reform. This “Black consciousness” (if I may borrow the term form Steve Biko) of self-reliance and self-ownership, is changing Africa and influencing the world’s perspective of Africa. As Mr. Nelson Mandela put it, “We mean it when we say: Africa's time has come. For I bring good news from Africa where, despite bad apples, the commitment to human rights and democratic values is broader and deeper than ever before. ”[3]

Africa has embarked onto the road of self-reliant and integrated development. Nepad is serving as a platform for Africa’s economic integration and for winning international cooperation. Regional organizations are increasingly active in linking regional programmes to Nepad frameworks and laying foundations for Africa’s integrated development. Through national and collective efforts Africa is better organized to forge equal partnership with other parties of the world. African countries are in a better position to protect their national interests than any time in history.

China believes, “the 21st Century will bring peace and development to Africa. This is an irresistible historical trend. The Chinese people will continue to stand side by side with their African brothers and sisters on this journey of historic significance.” [4]

1.4 Enhancing the framework and mechanism for cooperation

China-Africa relations in the new century is a new type of dynamic strategic partnership being built according to the principles and goals adopted by the 2000 China-Africa Cooperation Forum Ministerial Conference in Beijing. And it is consolidated by the Forum’s Second Ministerial Conference in Addis Ababa. The Action Plan for 2004-2006 has witnessed the cooperation in broader areas and in new approaches.

The Forum “has become an effective mechanism and major platform for China-Africa collective dialogue and practical cooperation against the new backdrop. In autumn 2006, the Forum will hold a summit and the third ministerial conference in Beijing”, as stated by Chinese Ministry of Foreign Affairs.[5] The summit in 2006 is expected to focus on strategic interests as well more specific issues of common concern.

2. Exploring the great potential of China-Africa cooperation

2.1 China and Africa can benefit a lot from cooperation

Greater economic cooperation will serve the needs of sustainable development both in China and in Africa. The first two decades of the 21st century, are of strategic importance to socio-economic developments in China and in Africa. There are increasingly more complementary areas for cooperation. The priority areas are in agriculture, infrastructure, trade, investment, tourism as well as human resources development and public health. Cooperation in science and technology should also be taken into consideration, such as in the area of biotechnology, telecommunication and information, environment protection and even in the space industry.

With the success of the past more than 20 years in economic reform and rapid development, China is in a better position to play a more active role in the economic and social development in Africa.

And at the same time, China needs Africa. China has a large territory, but in per capita terms China is not rich in natural resources. The future development in China is facing an increasing requirement of mineral and energy supplies. As Mr. Moeletsi Mbeki says, “Today Africa is playing an important role in the economic development of China. This has benefited China; it is also benefiting Africa. Africa is a treasure trove of valuable minerals which are of strategic importance to China’s industrialization.”[6]

It is true that “China and Africa have much to offer one another”, and  "the vast and rich natural resources of the African soil are in need of Chinese technology and know-how, to be exploited and transformed in a sustainable way", correctly pointed out by Kofi Annan. The Un General Secretary stressed that “Beijing can help the continent reach universally agreed Millennium Development Goals (MDGs) for cutting poverty and tackling a range of social ills by the year 2015.” [7]

2.2 China-Africa trade grew 10 times in 1996-2005

Trade between China and African countries is increasing rapidly. The markets are seen as mutual complimentary.

According to statistics from China Customs, China’s trade with Africa in 1996 totaled US$4.03billion with Chinese exports valued US$2.566billion, while Chinese imports valued US$1.464 billion; in 2000 bilateral trade totaled US$10.598 billion with Chinese exports valued US$5.043 billion and imports totaled US$5.555 billion, Africa has a surplus of US$502 million. In 2005, China’s trade with Africa was close to US$40 billion, with Chinese exports at US$18.683 billion while Chinese imports from Africa was US$21.063 billion.[8] In the ten years between 1996 and 2005, bilateral trade increased nearly 10 times. China’s trade with Africa have been growing faster than China’s total annual foreign trade growth since the late 1990s. In 2004 China’s total foreign trade growth rate was 35.7%, while China-Africa trade increased by 58.9%; in 2005 the relative numbers were 23.2% and 34.9%.[9]

The increase of Chinese imports from Africa is for the aim of addressing trade imbalance between the two sides. The Chinese government has a policy to promote exports from African countries so as to address the imbalance of trade between the two parts. China’s investment in Africa’s agricultural and mineral processing industries is a way of promoting value added products for export. Chinese products of textile, electronics, farm machinery are regarded suitable to the African consumers.

According to Chinese economists, China’s growing demand for mineral products in recent years was one of the factors that Africa balanced its expenditure for oil imports with incomes from minerals exports.

China’s Top Ten African Trading Partners (US$ millions)

Resources: From 2004 China Trade Statistics and 2005 China Trade Statistics, Chinese Ministry of Commerce Statistics, http://www.mofcom.gov.cn/

The policy document of China’s African Policy indicates that “the Chinese Government will adopt more effective measures to facilitate African commodities' access to Chinese market and fulfill its promise to grant duty-free treatment to some goods from the least developed African countries, with a view to expanding and balancing bilateral trade and optimizing trade structure.

2.3 Investment is on the rising

China’s investment to Africa started in the early 1980s. By the end of 2003, “China has signed bilateral investment protection agreements with more than 20 African countries”. (Li Zhaoxing, 20031216) In the last two and half decades, Chinese investment in African countries were mainly in the industries of electronics, textile and clothing, pharmacy and resources based mining. Till the end of 2004, Chinese investment in Africa by non-financial enterprises amounted to US$900million, covers 79% of African countries. In 2004 alone, Chinese investment was US$317million, 5.8% of China’s total overseas investment that year. Main destinations were to Sudan, Nigeria, South Africa, Madagascar and Guinea.[10]  

For cooperation in industries, China's need is in line with African countries' demand for establishment of resources-based industries. Well operating projects with Chinese investments are the gold mining project in Ghana started in 1994; chrome mining project in South Africa; copper mining project in Zambia.

Chinese investment in Africa has increased in a faster speed in the last 3 years. Headlines of Chinese investments projects in energy (oil and electricity), infrastructure, have been appeared in the media, such as Nigerian National Petro-leum Corporation (NN-PC) Approves China's $2.3 Billion Stake in OPL 246, CHINESE investment in (Nigerian) Cross River State to Hit $50bn, China Eximbank to Finance (Mozambecan) Mepanda Nkua Dam at 2.3 billion US dollars, Chinese Firms Invest $170m in Mining (Zambia), China Entrenches Position in (Angolan) Booming Economy, to mention a few. “China is the second largest consumer of Angolan oil after the United States, and under the terms of a US $3 billion oil-backed loan made by China's state-owned Eximbank, the country will remain a long-term importer of Angolan crude.”[11]

As stated in the document of China’s African Policy, “The Chinese Government encourages and supports Chinese enterprises' investment and business in Africa, and will continue to provide preferential loans and buyer credits to this end. The Chinese Government is ready to explore new channels and new ways for promoting investment cooperation with African countries, and will continue to formulate and improve relevant policies, provide guidance and service and offer convenience. African countries are welcome to make investment in China.” President Hu Jintao announced at the UN in September 2005 that “China pledges US$10 billion of concessional loans to developing countries in the next 3 years within the framework of South-South cooperation.” [12]Africa could benefit from this arrangement.

With these policies and concessional loans in place, it is to see more Chinese companies from national, provincial and even local levels looking for investment opportunities in Africa. And African investors have shown growing interest to get into the Chinese market. South African competitive transnational companies have made big strides in Chinese markets and exploring resources based ventures in Chinese. By the end of 2005, Chinese investment in South Africa under agreements totaled US$253million, while South African investments in China under agreements amounted to US$770million.[13]

Cooperation in resources exploration is the growing point.

The most potential area for investments is the exploration of natural resources, particularly energy and mineral resources. In Mark Sorbara’s analysis, “Investing in African extractive industries is a risky business, but China is desperately in need of raw materials to feed its booming economy, hence the government is willing to shoulder most of the risk for Chinese companies looking to invest in Africa.”[14] In the area of resources cooperation, China’s African Policy says China would “facilitate information sharing and cooperation with Africa. The Chinese government encourages and supports competent Chinese enterprises to cooperate with African nations in various ways on the basis of the principle of mutual benefit and common development, to develop and exploit rationally their resources, with a view to helping African countries to translate their advantages in resources to competitive strength, and realize sustainable development in their own countries and the continent as a whole.”[15] 

2.4 Opportunities in Construction are enormous

China has been participating massively in African countries’ infrastructural projects in the last few decades. Apart from the Tazara railway, other cooperation projects have been basically bilateral. Nepad programmes and sub-regional projects have provide opportunities for Chinese companies to play a more active role in multi-lateral projects.

With the exploration of resources, China is actively participating in construction projects of the host countries. An outstanding example is China’s economic cooperation with Angola. According to the UNIRIN, “Chinese companies have been at the forefront of Angola's reconstruction bonanza. A new airport is being built at Viana, just outside the capital Luanda, one-third financed by the government, the rest by Chinese interests. The war-damaged Benguela railway, which stretches from the Democratic Republic of Congo to the coast, is being rebuilt as part of a Chinese deal worth US $200-300 million.”[16]

2.5 Exchange of experiences in development

Apart from the economic cooperations, China and Africa can also share experiences on common issues and challenges in development, e.g., rural development, labour migration, urbanization and population growth, imbalance of development in different regions in the country, the development of domestic market and the integration with the international market, to safeguard national interest in the globalisation of markets and to promote the interests of developing countries in world affairs.

China’s experience in promoting rapid economic growth has impressed many Africans, particularly in the areas of agricultural and rural development, the reform of state-owned enterprises, policies in attracting FDI and the development of human resources. Likewise, China appreciates the efforts by African countries in pursuing ways and approaches in their development suitable to the continent and respective countries, particularly in their growing budget inputs in the compulsory education, in their innovative efforts in the prevention and treatment of HIV/AIDS and in the area of environment protection.

China-Africa cooperation will be carries out on bilateral, regional and continental levels in all fields.

3. Building mutual understanding and mutual trust on the new bases

With changing situation in the world and both in China and Africa, it is necessary to strengthen communication and coordination between China and African countries and peoples. The rapid growing economies of China, India, and some Latin-American regional powers, have brought about intensifying competition in world markets. African businesses are “crying wolf”.

To address the worries of “Chinese competition” needs new initiatives from both sides. The Chinese government intends “to settle trade disputes and frictions properly through bilateral or multilateral friendly consultation, mutual understanding for mutual benefits”.[17]

As in the case of China-South Africa Free Trade Agreement negotiations, particularly on complains of “the flood of Chinese clothing and textile products into South Africa”, “it would go the same lines as that reached between China and the European Union (EU) early 2005, and  it would involve an offer of a voluntary restraint by the Chinese on clothing and textile exports to SA and also involve possible joint ventures with the Chinese in clothing and textile manufacturing "at a later stage", [18] explained by SA Trade and Industry Deputy Minister Rob Davies.

In the long run, uplifting competitiveness of African enterprises needs more consideration. As South African trade and industry deputy director-general Iqbal Sharma indicated, “(SA) Government's strategic long-term trade and political relationship with China could not be sacrificed for a clothing and textile industry that had failed to adjust to the demands of global competition”. There was a "tremendous opportunity" for the industry to partner with China, the fastest-rowing economy in the world, as part of its global supply chain -- but leveraging this would require "some initiative and creativity."[19]

African countries and their businesses have been adapting to the challenges of globalization. It is obvious that China-Africa cooperation will bring increasing opportunities to both sides. African countries are looking to the East to diversify their economic partners so as to change the colonial inheritance in their economic and trade patterns.

Undoubtedly, there are also constrains and difficulties to get into each other's market. Differences in economic structures, legal systems and even in language and culture, might be problems in doing business. So there is a need for increasing contacts and for mutual understanding.

There is reason to expect a successful cooperation between China and Africa. It is necessary for the two sides to treasure the long term friendly ties and to adjust to the changes of the global situation.