Chinese Investment in Africa
With China's recent economic surge, the African continent has reaped the benefits of China's increasing demands. As shown in the picture above, almost every country in Africa has experienced interests from China, those who are rich in natural resources have seen a huge demand from the economic superpower and for those who are not as blessed, have benefited from trading and investment opportunities from Chinese companies. China has seen Africa as a huge opportunity and market where it's needs for infrastructure such as roads, schools, computer networks, telecom systems and power generation has attracted many Chinese firms. What gives China an advantage over it's western counterparts is that it offers a "no-strings"aid policy and do not mix economic interests with human rights, political or economic issues. Another benefit African countries provide is that they are able to keep costs down and though they hire a lot of local workers with low wages, the extra benefit is that these workers are able to learn new skills because of the Chinese funded work. What has also been frequently seen in Africa, is that along with many of it's many projects such as mining extraction, they also tend to build a lot of the infrastructure that comes with the business such as railroads and roads. China's economic attaché in Ethiopia explains that China's policy is that "it never imposes its own will on African countries, nor interferes in the domestic affairs of African countries".
The reason I've chosen this article and to speak on this subject is that we are seeing a new approach and economic relationship growing in the region and it will be important to keep an eye on how it develops further. Most people outside of Africa do not see it as having a huge market potential, rather a burden with aid flow being dumped into the region. Also previously, Western countries and International organizations such as the IMF and World Bank, when investing in Africa placed a ton of austerity measures which has often placed huge economic burdens on the continent when they were meant to help the continent. These burdens have resulted in talks of debt relief and forgiveness since they have placed many countries on a crutch. I believe with China's economic growth has come as a relief to African countries and has had huge benefits to both countries with the building of infrastructure and huge gains of capital while China has been able gain access to many of the metals and energy needed to power its population of a billion people. Though critics have said that China's disregard of human rights and political situations in the African countries when it comes to economic matters will in turn prolong conflicts and turmoil (such as its huge investments in Sudan), i would reply that these were still prevalent before the influx of Chinese investments, and in fact in the long term, with the building of infrastructure and education of the local people, conflicts and democracy will follower quicker than if there was no capital or infrastructure building. It has come to a point where African countries are asking for more Chinese development and are concerned for it's economic well being since it is directly tied with the demands of Africa natural resources. The U.S. and the west have not taken advantage of Africa's opportunities and at this point i do not think U.S. firms can compete with China's firms due to political and economic externalities.
"African Countries Demanding More from Chinese Investment." Mining Weekly. N.p., n.d. Web. 11 Nov. 2012. <http://www.miningweekly.com/article/african-countries-demanding-more-from-chinese-investment-2012-11-02>.
"China in Africa: Developing Ties." BBC News. BBC, 26 Nov. 2007. Web. 11 Nov. 2012. <http://news.bbc.co.uk/2/hi/africa/7086777.stm>.
"Chinese Slow down Would Hurt African Growth." Brisbane Times. N.p., n.d. Web. 11 Nov. 2012. <http://www.brisbanetimes.com.au/business/china/chinese-slow-down-would-hurt-african-growth-20121110-294d8.html>.
This is an interesting topic as China expands in influence and present around the world. China has experienced high growth relatively recently compared to the West and because of their experience with Western influence tend to approach developing nations and FDI differently. However, I do have a hard time believing the statement that China will not interfere nor impose its own interests in Ethiopia. China will seek to protect its own interests and as it grows into its own on the world stage, I think we will see it take on more of a direct influence in other nations affairs.
ReplyDeleteI think that China, as it stands now is not necessarily directly imposing its influence on smaller countries the same way other western countries are doing. I think since it is just establishing its global influence it is focusing on building economic ties, but that is not to say they are indirectly benefiting from the build up of relations with many of these countries backing China in many other issues. This is contrasting with the U.S. and other western countries who say either you do what we say or you wont receive money or aid. But as China's international influences rises, im sure that we will see a change.
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ReplyDeleteAfter reading this and considering our discussion in class today, I'm curious if there's any rationale among Chinese citizens to undertake these infrastructure-aid programs because of a moral imperative. I feel like this plays a big role in the US, and it's what motivates many average citizens to take interest. I'm wondering if it's the same in China as well, or if it's strictly driven by fiscal and ideological interests. Just a stray thought!
ReplyDeleteI've read extensively on the matter and from what i learned is that the Chinese government have the luxury of having foreign affairs separate from domestic issues. What this means is that the Chinese people do not necessarily care or are involved with foreign affairs and is seen as being left to the government. Whereas here in the U.S. politicians need to play a two level game where international moves is closely linked to domestic grievances (a little too much some may say). We have even called for cutting foreign aid when its less than a percent of our total budget. This is also why we tie aid with politics and morality very often while China does not mix that with their business and economic dealings. This also means China can make many quicker decisions in regards to international affairs and there is no doubt they are benefiting from this freedom. And even if the Chinese people would be more involved you see a lot of economic benefits from these aid projects being developed.
ReplyDeleteI think Africa's trade relations with China are disconcerting. The stipulations that the IMF and World Bank put in their loan agreements are there to avoid inflation and other serious problems. For African governments, the revenue generated from business with China may just exasperate the problems that IMF & World Bank hope to avoid.
ReplyDeleteWhat you said about Chinese foreign and domestic issues existing in two separate spheres is really interesting and something I hadn't thought about before.