Economic Analysis - China-Africa: Challenges Will Increase As Relationship Deepens

The FINANCIAL -- BMI View: Closer economic ties between China and Africa will inevitably result in occasional tensions between the two economies. Beijing is aware of this, and we expect the Chinese government to devote greater effort to winning popular and elite support for its activities in Africa.

China is now Sub-Saharan Africa's largest export market. While surging Chinese demand for African resources has spurred economic growth across the continent, some commentators - both African and Western - have argued that the relationship benefits Chinamore than Africa.BMI believes that these criticisms will become more common as China's economic influence grows.


Former Nigerian central bank governor Lamido Sanusi became one of China's most high profile African critics in March 2013 when he said cheap Chinese imports were contributing to Africa's 'deindustrialisation and underdevelopment'. The respected banker called on African leaders to abandon their 'romantic' image of China as a 'third world' ally and see the rising superpower as an economic rival.

Familiarity Breeds Contempt
It is no coincidence that criticism of China's economic ties with Africa is growing as Beijing becomes increasingly influentialon the continent. The country's demand for African resources is fundamentally reorienting whole economies - a multi-billion dollar economic relationship will inevitably lead to any number of commercial, legal and political disputes.

Recent months have seenChina National Petroleum Corporation (CNPC) entangled in a series of environmental disputes in Chad (see 'CNPC To Stay Despite Regulatory Dispute', June 6). Investments in countries with dubious human rights records - Sudan, Angola, Zimbabwe - have angered human rights advocates, while the migration of up to a million Chinese workers has been controversial in several states (see 'Growing Chinese Diaspora Complicates Beijing-Africa Ties', 3 August 2013).

Beijing's Charm Offensive
The Chinese government is generally thick-skinned in the face of foreign critics. Even so, BMI believes that Beijing will increase its efforts to win popular support for its policies in Africa. Negative media attention risks sullying China's reputation and deterring potential African investment partners. Chinese firms have faced popular opposition in several countries and Michael Sata won Zambia's 2011 presidential election campaigning on an overtly anti-Chinese platform.

This public relations offensive is already under way. BMI recently attended a roundtable that allowed NGO workers, business leaders, and journalists to question Zhong Jianhua, China's special representative for African affairs. A similarly open exchange with a high-level government official would have been unimaginable in previous years. The position of special representative for African affairs is itself a sign of increasing diplomatic involvement - the post was created in 2007 in response to pre-Olympics criticism of Chinese investment in Sudan during the Darfur Crisis.

BMI believes that Chinese diplomats will be more vocal over the coming years, and we expect Beijing to beef up its support for friendly media coverage. CCTV Africa - a Nairobi-based arm of China's state broadcaster - is likely to be expanded. Cultural outreach will also increase - the 2013 African launch of 'Doudou et ses belles-mères' (a Chinese soap opera dubbed into French by Senegalese actors) is likely to be the first of many Chinese cultural exports.

China's defenders are not without compelling arguments. Beijing's support for infrastructure development has had many tangible successes. Its policy of non-interference in political affairs finds many supporters among Africans tired of being lectured to by former colonial powers. Chinese firms may have their occasional environmental or legal failings, but British, Frenchand American ones hardly have perfect records. Western media seldom attackShell, Total orGlencore for valuing profits over economic development, and these firms have been active in Africa for decades.

The Price Of Success
Despite increased efforts, BMI believes that Beijing will have limited success in dampening criticism of its engagement in Africa. Some disputes are inevitable, and Western biases mean that the English and French- language media will play up Chinese controversies more than those involvingAmerican and European investors.

We expect anti-Chinese protests to become more common, and believe that policies targeting Chinese workers will be enacted in states like Ghana and Zambia, where democratic governments will pander to populist pressures. Chinese investments in dangerous and unstable places like South Sudan, the Democratic Republic of the Congo, and northern Nigeria will also expose some Chinese citizens to the risk of kidnapping or attack. Fundamentally, China will have to learn to live with more criticism and opposition. It is not possible to have the economic weight of America but the political anonymity of Switzerland.

Author: The FINANCIAL


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