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As African Presence Grows, China Should Become a Better Stakeholder

Richard Weitz

From May 16-17, Shanghai hosted an annual meeting of the Board of Governors of the African Development Bank (AfDB). The Bank’s decision to meet in Asia for the first time in its history testifies to China’s growing hold over the African continent.

During the past decade, China’s political, economic, and military presence on the continent has surged. Notwithstanding Africa’s declining share in world commerce, trade between Africa and China rose approximately 30 percent during each of the past five years. It now exceeds $50 billion annually, making China Africa’s third-largest trading partner. Sub-Saharan Africa currently supplies about 30 percent of China’s oil, with Angola’s recently replacing Saudi Arabia as the largest national exporter of oil to China. Besides oil, Chinese importers purchase other African natural resources including timber, magnesium, and aluminum.

Chinese government representatives insist that they aim to promote local industry, create a more favorable investment climate, and support the AfDB as well as other African institutions. China has already given more than $5.5 billion in economic assistance to Africa, including over $300 million through the AfDB. Beijing has also cancelled almost $1.5 billion in debt incurred by African countries. The Chinese military has provided major contributions, including over 1,000 military personnel, to various U.N. peacekeeping operations in Africa.

Premier Wen Jiabao told those attending the AfDB meeting that China was committed to providing even more assistance in order to accelerate Africa’s social and economic development. According to the AfDB’s president, representatives of China’s Export-Import Bank indicated they would loan African governments about $20 billion during the next three years to help develop their railroads, dams, and other economic infrastructure.

Yet, China’s growing presence in Africa has also proven controversial. Critics argue that Chinese representatives overlook instances when African governments violate their citizens’ human rights or hold fraudulent elections. They also complain that China’s delegation to the U.N. Security Council has helped block proposed economic sanctions and other measures designed to pressure African governments into enacting policies that improve their human rights practices and promote peace processes in internal conflicts.

Analysts concerned about the long-term health of African economies worry about China’s willingness to provide liberal loans on opaque terms in return for concessions such as access to African natural resources. For example, the G-8 finance ministers, who met in Potsdam shortly after the AfDB session, expressed concerns that China’s soft lending practices could undermine international efforts to pressure African governments into pursuing more appropriate macroeconomic policies. Some of China’s new African borrowers can only afford to incur new loans because former lenders forgave their existing debt while imposing strict requirements for further loans. The future could see renewed problems regarding African debt as foreign investors and governments relax their conditionality standards to increase their competitiveness in dealing with African regimes.

In general, Chinese enterprises tend to be less transparent than most Western corporations. This limited openness makes it difficult to determine whether Chinese investment in Africa expands local employment, especially since many Chinese firms appear to rely heavily on Chinese nationals in staffing their African projects. It is also difficult to confirm to what extent cheap imports from China undermine Africa’s textile production and other indigenous industries by offering lower-priced alternatives. These Chinese products often benefit from hidden Chinese government subsidies and the undervalued Chinese currency. While Chinese firms are helping to develop Africa’s economic infrastructure, Chinese investments appear primarily aimed at securing Africa’s vital minerals and energy products for export to China rather than to other markets.

Finally, China’s major role in supplying arms to the governments of Sudan and Zimbabwe has aroused protests since these regimes regularly employ military force against their domestic opponents. Amnesty International has accused the Chinese government of breaching U.N. Security Council Resolution 1591, which prohibits countries from supplying weapons to the parties engaged in the Darfur conflict, by overlooking Sudan’s diversion of Chinese arms to pro-government fighters.

In response to Western and African complaints, Chinese officials have modified their stance regarding some African issues. For example, Chinese rhetoric appears to have grown more critical of government policies in Sudan and Zimbabwe. In many respects, however, China still needs to make a more comprehensive commitment to the core principles associated with the concept of African “sustainable development“—political accountability, good governance, economic transparency, and human rights.

To this end, Beijing should consider joining the Extractive Industries Transparency Initiative, which encourages transparency in contracts and calls for environmental impact studies of potential investments. Chinese officials should also support international efforts to encourage economic transparency and counter major abuses of human rights. In addition, China would benefit from helping to promote the rule of law and effective judicial systems in Africa. By increasing its commitment to implementing these norms, China could enhance the prospects of long-term stability in Africa, encourage the development of more robust trading partners throughout the continent, and underscore its status as a responsible global stakeholder.

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