Economic Surplus: Michaelmas 2022 Week 10
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Navigating the West’s relationship with Africa in the drawback period of Chinese FDI
This week’s Marshall’s Thoughts are written by Philippa Stokes.
In African industry it is difficult to avoid the influence of Chinese businesses in all sectors from mining to technology all the way to ceramics. This expansion was part of a plan by China to secure business and political interests in Africa to support their economic expansion over the last 20 years. However, as Chinese FDI slows and investors get cold feet over the burden of debt of African industry and the low returns to infrastructure programs, there is an opportunity for the West to support Africa’s economic development without the conditions that Chinese investment. This would prevent the long-term harm to Western political and economic interests that an Africa beholden to China creates.
As China expanded globally and reframed its image on the world stage, its relationship with Africa did as well. The initial phase of Chinese – African ties during the cold war was characterised by individual railway projects with the aim of exporting Maoism and creating political allies. This political relationship supported the Chinese seat in the UN and the removal of Taiwan in 1971 however was broadly abandoned with the end of the cultural revolution and the next two phases focused primarily on economic ties.
For a growing economic powerhouse, China had limited access to cheap resources needed to build the manufacturing systems to support such growth so it turns once again to Africa. The era of investment in oil and metals began with huge amounts of FDI thrown at mining which was exported to China in return for the investment in crucial infrastructure in Africa. However since 2014, the relationship has shifted as Chinese growth has cooled and the ability of quick infrastructure to yield returns has decreased so the new primary focus is political once more which Mr Xi using Africa as part of his assertive foreign policy. This has not gone unnoticed by the West.
Hillary Clinton, while secretary of state under President Obama, described China’s activities in Africa as a “new colonialism”. The response of America and the EU has not pushed China to decrease their more exploitative activities in Africa and has played into the temptation of Western powers to patronise African politicians by assuming that they do not understand the drawbacks of Chinese FDI or their growing influence without actually providing concrete solutions to build the infrastructure China has promised to. Without another option from the West, many African nations will have no option but to continue taking Chinese investment with the risks it entails for their credit, politics, workers and ecosystems while enduring the diplomatic games played by both the west and China with aid.
There are environmental and political reasons for the West to be worried about the impact of Chinese business on Africa. Illegal goldmining, rosewood harvesting and over-fishing have irreparably damaged the environment. This is most often without consequences from authorities fearing retribution from China or in democracy’s heavily reliant on Chinese FDI whose citizens are reluctant to pressure their political parties to complain. This is in contrast to the strict conditions imposed on aid from the West. The CCP is also no stranger to using certain African nations’ reliance on their infrastructure or covid vaccine help to demanding the political support of African Nations with economic reliance on China. In June 2021, the critical statement on China over its treatment of Uyghurs in Xinjiang was supported by no African countries at the UN with 34 signing the counter-statement. There is a high level of correlation between voting alignment at the UN with China and an increase in credit and aid. A study done by Aid Data on voting between 1999-2016 found that a 10% increase in voting alignment with China yielded a 276% increase in aid and credit. Without a clear plan to back those projects currently loosing their financial support from China as their credit rolls back, the west has no way to restrict the political influence of China in the UN and global politics through their leveraging of their African business partners and governments.
According to Afrobarometer polls (pan-African polling), far more countries list America than China as their preferred future model (23 against five). In a survey done by Premise only two countries (Ethiopia and Tanzania) saw China more favourably than America. But why is it important for the west that there is an opportunity and demand for western investment.
The West has severe concerns about the establishment of Chinese military bases in African Ports and the market share of Chinese commercial and surveillance technology in African markets. It is also concerned about the grip China now has on key minerals that are necessary for the development on new green technology that will be key in the fight of the west against climate change. Without access to these minerals, the West will be in a reliant position and unable to lead the way for climate action.
So, what can the West do? The first steps taken are correct. The abandoning of the Trump Administration’s insistence on the binary decision between aligning with the West or China is one. And the beginnings of a West-Africa strategy though the Build Back Better World (US) and the Global Gateway infrastructure-for-Africa are movements towards a unified front and strategy from the West however they lack detail and therefore cannot compete with the scale of the Chinese program. Both programs are also yet to actually create any physical projects.
The West approach must be concrete with a promise to aid in the debt crisis and with demands of standards for African engagement in projects rather than then current projects which struggle to get African workers above base levels and restrict technology and infrastructure transfer to the area. The West’s approach cannot be patronising if they wish to engage the African population as well as their governments.
The West should redouble efforts to support democratic and civic institutions. It could be more generous in African debt crises. And it should welcome more African migrants. It should also publicise the work that it has done currently as it is important to stress that this is not a new environment to the West. The West also struggle with the diplomatic heavyweight that is China in Africa. There is heavy engagement of Chinese diplomats with Africa that the West must attempt to match to convince that they are serious in their commitment. Current diplomatic engagements do not highlight the work that is done by the West to help governments improve public health, fight extremists and import Covid-19 vaccines. And for big infrastructure projects for which China has often been the only option, the West must stand up to provide an alternative.
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