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There is no doubt that US and China are competing ferociously on the global scene for economic dominance. China has made some pretty good encroachment in the global share of American market place. For instance China has surpassed United States as the largest African trading partner. And US did not take it lying down and have just concluded US-Africa Summit that brought nearly 50 African Heads of States to Washington DC.
Pew Research Center's Global Attitudes Project has just concluded its research and came up with a data and map showing countries with most favorability on China or United States. The map denotes and shows the nations that prefer either the U.S. or China. At the bottom and shaded black are the countries that have comparable opinions of the two countries.
35 percent Chinese favorable view
As African leaders gathered in Washington DC on the invitation by President Obama for US-Africa summit, the focus of the summit was centered on trade not aid. But the elephant in the room or in the minds of the summit participants is China. It is there for everybody to see that China’s business and commercial tempo in Africa is rising and rising. China is now the largest trading partner to Africa. Five years ago China surpassed the United States as Africa’s largest trading partner, with Beijing’s trade quantifying at the excess of $200 billion (150 billion euros).
“In 1980, the total Sino-African trade volume was US$1 billion. In 1999, it was US$6.5 billion and in 2000, US$10 billion. By 2005, the total Sino-African trade had reached US$39.7 billion before it jumped to US$55 billion in 2006, making China the second largest trading partner of Africa after the United States, which had trade worth US$91 billion with African nations. The PRC also passed the traditional African economic partner and former colonial power France, which had trade worth US$47 billion. In 2010, trade between Africa and China was worth US$114 billion and in 2011, US$166.3 billion. In the first 10 months of 2012 it was US$163.9 billion.
There are an estimated 800 Chinese corporations doing business in Africa, most of which are private companies investing in the infrastructure, energy and banking sectors. Unconditional and low-rate credit lines (rates at 1.5% over 15 years to 20 years) have taken the place of the more restricted and conditional Western loans. Since 2000, more than $10bn in debt owed by African nations to the PRC has been canceled.”
In addition “One-third of China's oil supplies comes from the African continent, mainly from Angola. Investments of Chinese companies in the energy sector have reached high levels in recent years.[when?] In some cases, like in Nigeria and Angola, oil and gas exploration and production deals reached more than $2 billion.[clarification needed Many of those investments are mixed packages of aid and loan in exchange for infrastructure building and trade deals.”
Economist magazine reported, “When it comes to trade, America trails in second place to China, which has long held summits with African leaders and hosted individual meetings (unlike President Obama). Still, America hands out about five times more aid to the continent than China, and invests considerably more too. Meanwhile, European countries still enjoy colonial ties, as the healthy level of trade, aid and investment attests. In recent years emerging powers like India and Brazil have increased their links to the region—but only in terms of commercial flows, not philanthropic ones.”
Former President Bill Clinton exchange ideas with Aliko Dangote (right), CEO of Dangote Group, and Jeff Immelt, the head of General Electric (left) after a panel discussion at the US-Africa Business Forum
Although aid maybe needed now and then, but the key for Africa’s growth must be centered on trade and not aid. Trade is the engine of commercial, economic and industrial development. No industrial nation has emerged on the global stage because of aid. Africa must shunned aid and must focus primarily on trade.
“No nation has been more aggressive in Africa than China. Its direct investment in sub-Saharan Africa has jumped from virtually nothing in 2002 to $18.2 billion in 2012. China is hungry for oil, coal and other resources and eager to develop the roads, bridges and ports needed to pull them out of Africa.
Africans tend to favor doing business with China in part because it’s less likely than Western nations to demand economic and political reforms to accompany trade and development deals.
“Investors from the U.S. and Europe have tended to be large investors who demand all kinds of facilitation, who expect all kinds of conditions,” says Frederick Golooba-Mutebi, a Rwanda-based researcher and honorary fellow at the University of Manchester. “I do not see Europe and the U.S. catching up with China.”
Indeed, this week’s summit is seen as an American effort to regain some of the influence lost in the region to China over the past decade. Next year, the United States hopes to expand a 14-year-old free-trade deal with Africa.
On Tuesday, the Obama administration announced $14 billion in commitments from U.S. businesses to invest in Africa — money to be plowed into construction, clean energy, banking, information technology and other sectors. The money includes a $2 billion investment by General Electric by 2018, $200 million by Marriott and a $66 million commitment by IBM to provide technology services to Ghana’s Fidelity Bank.” – Associated Press
In addition, "Coca-Cola and its African bottling partners announced an investment of $5 billion, rising to $17 billion Coca-Cola’s investment in Africa from 2010 to 2020.”
Credits: AP, Wikipedia
Chinese Premier Li Keqiang arrived in Ethiopia Sunday for the start of a four nation Africa tour, his first visit to the continent since assuming his position a little over a year ago.
Li is scheduled to also visit Nigeria, Angola and Kenya during the week-long trip, and give a keynote speech on Monday at the Chinese-built headquarters of the African Union in the Ethiopian capital Addis Ababa.
The trip follows one Chinese President Xi Jinping made to the continent last year, shortly after taking office, a journey that underscored resource-rich Africa's importance to the world's second-largest economy.
"Ethiopia is the first stop because there is a deep friendship between our two countries and Ethiopia is a major country in Africa and the seed of African union," Li said in a news conference after his arrival and talks with Ethiopia Prime Minister Hailemariam Dessalegn.
"The relationship between China and Ethiopia is not only a relationship for one year or two years. China and Africa have destinies that are closely linked," he added.
Officials said the two premiers signed a number of legal accords covering diplomatic visa exemptions, cultural corporation and extradition, plus agreements on economic, trade and technical cooperation.
China's economic growth has been partially fuelled by African natural resources, including oil.
"China and Ethiopia have agreed on enhancing Ethiopia's industrialisation and on supporting Ethiopia's great vision to become Africa manufacturing house," Dessalegn said, hailing "many decades of strong economic and diplomatic relations".
US President Barack Obama may be trying to woo Africa but the continent's leaders seem more attracted by China's cold, hard cash. With Obama's African tour barely over at least three African leaders have rushed to China to sign deals worth billions of US dollars.
Obama visited Africa from late June to July 2, pledging US$7 billion to upgrade electricity infrastructure. But China's growing financial might appears to be holding sway over US influence.
During Nigerian President Goodluck Jonathan's visit to Beijing last week, US$1.1 billion of loan deals were signed, including a US$500 million Chinese loan for the construction of four new international airports in Abuja, Lagos, Harcourt and Kano.
China's investment in Africa has increased 30-fold since 2005, with 2,000 Chinese firms now present in 50 African countries.
Over the past 10 years, Britain has invested the most in Africa, with 437 deals totalling US$30.5 billion, law firm Freshfields Bruckhaud Deringer said in a report this month. France came in second with 141 deals totalling US$30.5 billion. China was the third-largest investor with 49 deals worth US$20.8 billion.
"The various MOUs (memorandums of understanding) signed between Chinese and Nigerian companies will lead to stronger economic ties between the two countries," said Jonathan in Beijing last week.
In recognition of the strategic trade link between China and Nigeria, the Central Bank of Nigeria recently converted part of Nigeria's foreign reserves from US dollars to yuan, Jonathan announced last week. During Jonathan's visit, Beijing agreed to expand tenfold its demand for Nigerian oil from the current 20,000 barrels per day to 200,000 barrels per day by 2015.
Chinese companies are already building roads across Nigeria in contracts valued at US$1.7 billion. On July 11, state-owned China Machinery Engineering Corp (CMEC) signed a US$201 million agreement to build a 120-megawatt power station, oil storage tanks and other infrastructure in the Nigerian city of Bauchi in 33 months, the Hong Kong-listed firm announced.
On the same day, CMEC signed a US$420 million contract to build a 500MW power station within 31 months in Benin City, Nigeria.
Nigeria is not the only African nation lining up for mainland funding. During a trip to China this month, Ugandan Prime Minister Amama Mbabazi visited CMEC's headquarters in Beijing, where he said: "Our government is concentrating on a few priorities due to insufficient funding and China is to fund a number of these."
Uganda would offer most of its infrastructure projects to Chinese companies, because they could be repaid from Uganda's future oil revenue, unlike Western businesses that expected advance payment, Bloomberg quoted the office of the Ugandan prime minister as saying.
On July 8, China Harbour Engineering, a subsidiary of China Communications Construction, signed a US$700 million contract to build a new airport in Khartoum, the capital of Sudan, in 40 months. The project will be financed by a loan from the Export-Import Bank of China.
Sierra Leone President Ernest Koromo last month said he signed US$8 billion of infrastructure deals on his visit to China.
This includes a US$1.7 billion contract with China Kingho Energy Group for the construction of a port, mine, power facilities and a 250-kilometre railway; and a US$300 million contract with China Railway International for a new international airport 60km from Freetown, the capital of Sierra Leone.
Dam builder Sinohydro on July 2 signed 13 contracts to build 3,482 flats in Algeria, said Sinohydro's website.
This article appeared in the South China Morning Post print edition.
Bilateral relations between China and Nigeria will likely take one of two paths in the long term: either China will remain the overwhelmingly dominant actor or Nigeria will become a regional superpower, evening out the playing field. If China remains the stronger player it will shape Nigeria in its own interests (commonly referred to as "Chinese Imperialism"). If, however, Nigeria rises to reach its economic and political potential, Beijing may one day find Abuja a potential rival in Africa.
China has only recently started to play an important role in Nigeria. During the first eleven years of its independence, Nigeria and China had no diplomatic relations. The Nigerian government's view of China grew especially sour after Mao officially supported the secessionist state in Biafra by supplying the Biafran administration with weapons. Throughout the 1970s and 1980s, China was not a trading partner of Nigeria, as its international trade was conducted primarily with European and North American countries.
During the period of General Abacha's military rule (1993-1998), Beijing's no-strings-attached development projects were increasingly well received. Nigeria's leaders grew resentful of Western conditions for aid and investment, and many Nigerians began to question what a generation of economic dependence on the West achieved for Nigeria.
Abuja subsequently adopted a new approach to international trade, balancing traditional Western partners and China. The evolution of Nigerian-Chinese relations mirrors that of China's relationship with other African states (such as Angola, Sudan, and Zimbabwe) that sought alternative forms of aid and development packages following the imposition of sanctions by Western nations based on alleged human rights violations.
Between 2000 and 2010 annual Nigerian-Chinese trade increased nine-fold, from $2 billion to $18 billion. Ten major bilateral agreements concerning commerce, agriculture, tourism and security were signed during that period. Nigeria imported more goods from China in 2012 than it did from the U.S. and India combined (Nigeria's number two and three import partners, respectively). Today, more than 200 Chinese firms operate in Nigeria. While in Beijing last week, Nigerian President Jonathan signed nine memoranda of understanding with the Chinese government. China agreed to provide Nigeria with a soft loan of $1.1 billion loan in exchange for Nigeria agreeing to increase its daily supply of oil to China ten-fold (from 20,000 barrels per day to 200,000) by 2015.
However, in spite of the skyrocketing growth of Nigerian-Chinese trade over the past decade, the U.S. remains Nigeria's top trading partner. Total Nigeria-U.S. trade reached $38.6 billion in 2012, and France (Nigeria's number nine export partner) is a larger export partner of Nigeria than China. So China has a long way to go before it will replace Western nations as one of Nigeria's main trade partners.
Economics is the obvious driver of Beijing's agenda in Nigeria, but China recently embraced a new foreign policy in West Africa that contrasts with its traditionally passive approach to the spread of Islamic terrorism and extremism in Africa. Last year a Chinese diplomat in Mali pledged support for the Economic Community of West African States (ECOWAS)'s military campaign to dislodge Al Qaeda-affiliate groups in northern Mali. In May of this year, Chinese Ambassador Li Baodong spoke before the UN Security Council and asserted that African nations should not combat extremism without foreign support. He noted that Beijing "resolutely supports" West African governments and international organizations (such as ECOWAS) in their battle against militant Islamist extremism.
While China's number one concern in West Africa is access to natural resources and new consumer markets - as it is in the rest of Africa and the world -- Beijing sees the rise of groups such as Al Qaeda in the Islamic Maghreb (AQIM) and the Movement for Oneness and Jihad in West Africa (MOJWA) as a threat to energy corridors and regional stability, and thus, a threat to vital Chinese national interests. As Nigeria is the dominant military force within ECOWAS, a growing partnership between Beijing and Abuja may be expected, and will clearly contain political undertones.
Yet several factors threaten the prospects for deeper ties between Nigeria and China. Although Chinese investors maintain a reputation for being less risk-averse than most, the conflict between the Nigerian military and Boko Haram increases political risk for all foreign investors there. The violence has thus far been contained to Nigeria's Muslim-majority regions in the north; the bloodshed has not yet spread to Lagos. If the turmoil spills into Lagos and other southern areas, Chinese investors may well adjust their calculus.
During the presidency of Ọbasanjọ (1999-2007), many "oil-for-infrastructure" contracts were implemented, yet when his successor (Yar'Adua) came to power, some of these were canceled or suspended, as the two administrations pursued different approaches toward China. While many Nigerians consider China's growing presence to be nothing short of a God send, others have raised concerns about Nigerian sovereignty, bearing in mind the impact Chinese trade and investment has had on other African countries. The Chinese model of importing its own workers to build infrastructure projects, for example, does not sit well with many Nigerians.
A number of Nigerians have also voiced objections to the "slave-like" labor conditions in Chinese-operated factories across Nigeria. Attention was first brought to these conditions when 37 Nigerian workers died after being trapped inside a locked Chinese-owned factory that caught fire in 2002. Nigeria's trade unions have similarly complained that the ramp up in Chinese imports have eliminated more than 350,000 manufacturing jobs, primarily in the textile sector. Much of the bilateral trade is also "off the record", given that many Chinese imports arrive in Nigeria via the porous borders that Nigeria shares with its neighbors. This exacerbates the already problematic level of corruption in Nigeria.
In spite of all this, Nigerian-Chinese economic ties can be expected to continue to grow. China's dependency on Middle Eastern oil and gas is a grave concern for Beijing, given the rising political uncertainty in the region, and rising political risks for foreign investors. In this context, a deeper partnership with Nigeria, the world's 13th biggest producer of crude oil, provides China with a more diverse set of options for acquiring oil and gas.
Despite all the concerns voiced by certain constituencies within Nigeria, most Nigerians recognize that China's growing presence is likely more beneficial than harmful. Western powers that claim a desire to help Nigeria develop are often perceived as insincere, with their own aid being viewed as an infringement on Nigeria's sovereignty, since it often comes with strings attached. In this respect, China is seen as non-hypocritical and more respectful of the African peoples' aspirations to manage their own affairs without fear of meddling by a foreign power.
The Nigerian government also understands that China's growing presence in the country will not inevitably provide solutions to the plethora of domestic challenges Nigeria faces, from grinding poverty to indigenous violent political movements. In the end, it accepts that China's number one objective is meeting China's strategic interests. At least China is up front about saying so.
An old Nigerian proverb states that "a man cannot sit down alone to plan for prosperity". The growing economic partnership with China provides average Nigerians with reason for optimism about their own plans for prosperity. It is President Jonathan's job to successfully direct the influx of Chinese money and resources to the benefit of Nigeria's masses, rather than to a powerful and influential few. His chances of doing so are not good, however, until the political culture changes in Abuja and beyond. But Beijing knows it has a strengthening relationship with one of Africa's most important countries. The bilateral relationship between the two may yet serve as a model for China's growing influence throughout Africa.
*Daniel Wagner is CEO of Country Risk Solutions, a cross-border risk advisory firm, and author of the book "Managing Country Risk". Giorgio Cafiero is a research analyst with CRS based in Washington, D.C.
President Mahama has urged Ghanaians to shun any xenophobic sentiments harboured against illegal Chinese miners in Ghana.
According to President Mahama, the laws of Ghana should be allowed to function as far as dealing with the illegal miners is concerned.
Hundreds of Chinese are in Ghana doing illegal mining. They have, in several instances, clashed violently with their local hosts.
Some of those conflicts have been bloody in the past resulting in deaths and injuries on either side.
The Ghana Immigration Service recently deported some Chinese and also prevented more of them from entering the country as a result of some of these illegal mining activities.
Detained Chinese in Ghana
At a meeting with a delegation from China at the Flagstaff House in Accra on Wednesday, President Mahama said inasmuch as Ghana frowns on the illegal activities of the Chinese, the laws must be left to work.
He added that xenophobia against the Chinese is not the way to go.
“We should not stereotype and target or prejudice, the thing is we shave laws that need to be obeyed”
“It doesn’t matter who it is, whether it is an Eskimo, Nigerian or a Chinese, it is not about who it is; it is about what the law says and how we implement it”. President Mahama said.
Only 11 days since taking over as Chinese president, Xi Jinping is already in Africa.
He spent Monday in Tanzania and will next attend the BRICS summit in seaside Durban, South Africa, before winding up his tour in Congo-Brazzaville. Speaking in a new Chinese-built conference hall in Dar es Salaam, Tanzania's largest city, Xi conveyed a continuation of China's policy toward Africa under the previous top leadership.
"China will continue to offer, as always, necessary assistance to Africa with no political strings attached," according to Reuters. He added, "We get on well and treat each other as equals."
Xi hailed Africa as the "continent of hope and promise," and spoke of Beijing's "sincere friendship" with Africa. He also indirectly addressed the criticism that China is only interested in exploiting Africa's natural resources.
"Africa belongs to the African people," he said, according to Agence France-Presse. "In developing relations with Africa, all countries should respect Africa's dignity and independence." Xi is no newcomer to the continent—this is his sixth visit to Africa, the last being in 2010.
Throughout the trip, Xi and his team will be announcing an array of trade and development deals. At the BRICS summit, the Chinese are expected to jointly back a development bank along with fellow members Brazil, Russia, India and South Africa. Xi is scheduled to sign around 20 trade, development and cultural agreements, before journeying to Durban.
He renewed an offer of $20 billion in loans to Africa between 2013 and 2015 and noted that trade between China and Africa had reached some $200 billion in 2012. However, much of the attention may be focused not on Xi but rather on his glamourous wife Peng Liyuan, a famous folk singer in China who stole the show during the first stop on the trip, in Russia.
China imports many raw materials, including minerals, from resource-rich Africa. Chinese imports from the continent reached $113 billion last year, a 20-fold increase over a decade. GlobalPost senior correspondent Benjamin Carlson called Xi's visit Africa "a fascinating, intriguingly symbolic second choice for a foreign visit after Russia."
Xi's visit may be a sign that China's primarily economic interest in the continent may be extending to political influence as well. "Chinese media is filled with glowing reports about China's harmonious relationship with African countries now, so clearly there's a propaganda imperative to portray relations as improving now," Carlson said.
Source: Global Post
He was speaking in Tanzania - the second country he has visited since taking power 11 days ago. Addressing leaders at a conference hall built by China in Dar es Salaam, he said trade between China and Africa topped $200bn (£130bn) last year.
Mr Xi and his Tanzanian counterpart Jakaya Kikwete signed 16 different trade agreements including improvements to Tanzania's hospitals and ports, and the building of a Chinese cultural centre. The Chinese leader is expected to arrive in South Africa on Tuesday to take part in a summit of the emerging economies, known as Brics (Brazil, Russia, India, China and South Africa).
He will wrap up his African tour with a visit to Congo-Brazzaville.
Outlining China's policy on Africa, Mr Xi pledged to help the continent achieve "independent and sustainable development"
He said Beijing is "not only interested in shipping out raw materials but wants a relationship of equals that would help the country develop", Reuters reports.
China has become one of Africa's major trading partners in recent years, largely based on the trade in mineral products, including oil.
Nigeria, a country with a large domestic market of more than 160m people, spends huge resources importing consumer goods from China that should be produced locally. We buy textiles, fabric, leather goods, tomato paste, starch, furniture, electronics, building materials and plastic goods. I could go on.
The Chinese, on the other hand, buy Nigeria’s crude oil. In much of Africa, they have set up huge mining operations. They have also built infrastructure. But, with exceptions, they have done so using equipment and labour imported from home, without transferring skills to local communities.
So China takes our primary goods and sells us manufactured ones. This was also the essence of colonialism. The British went to Africa and India to secure raw materials and markets. Africa is now willingly opening itself up to a new form of imperialism.
The days of the Non-Aligned Movement that united us after colonialism are gone. China is no longer a fellow under-developed economy – it is the world’s second-biggest, capable of the same forms of exploitation as the west. It is a significant contributor to Africa’s deindustrialisation and underdevelopment.
My father was Nigeria’s ambassador to Beijing in the early 1970s. He adored Chairman Mao Zedong’s China, which for him was one in which the black African – seen everywhere else at the time as inferior – was worthy of respect.
His experience was not unique. A romantic view of China is quite common among African imaginations – including mine. Before his sojourn in Beijing, he was the typical Europhile, committed to a vision of African “progress” defined by replicating western ways of doing things. Afterwards, when he became permanent secretary in the external affairs ministry, the influence of China’s anti-colonial stance was written all over the foreign policy he crafted, backing liberation movements in Portuguese colonies and challenging South Africa’s apartheid regime.
This African love of China is founded on a vision of the country as a saviour, a partner, a model. But working as governor of Nigeria’s central bank has given me pause for thought. We cannot blame the Chinese, or any other foreign power, for our country’s problems. We must blame ourselves for our fuel subsidy scams, for oil theft in the Niger Delta, for our neglect of agriculture and education, and for our limitless tolerance of incompetence. That said, it is a critical precondition for development in Nigeria and the rest of Africa that we remove the rose-tinted glasses through which we view China.
Three decades ago, China had a significant advantage over Africa in its cheap labour costs. It is losing that advantage as its economy grows and prosperity spreads. Africa must seize the moment. We must encourage a shift from consuming Chinese-made goods to making and consuming our own. We must add value to our own agricultural products. Nigeria and other oil producers need to refine crude; build petrochemical industries and use gas reserves – at present often squandered in flaring at oil wells – for power generation and gas-based industries such as fertiliser production.
For Africa to realise its economic potential, we need to build first-class infrastructure. This should service an afro-centric vision of economic policies. African nations will not develop by selling commodities to Europe, America and China. We may not be able to compete immediately in selling manufactured goods to Europe. But in the short term, with the right infrastructure, we have a huge domestic market. Here, we must see China for what it is: a competitor.
We must not only produce locally goods in which we can build comparative advantage, but also actively fight off Chinese imports promoted by predatory policies. Finally, while African labour may be cheaper than China’s, productivity remains very low. Investment in technical and vocational education is critical.
Africa must recognise that China – like the US, Russia, Britain, Brazil and the rest – is in Africa not for African interests but its own. The romance must be replaced by hard-nosed economic thinking. Engagement must be on terms that allow the Chinese to make money while developing the continent, such as incentives to set up manufacturing on African soil and policies to ensure employment of Africans.
Being my father’s son, I cannot recommend a divorce. However, a review of the exploitative elements in this marital contract is long overdue. Every romance begins with partners blind to each other’s flaws before the scales fall away and we see the partner, warts and all. We may remain together – but at least there are no illusions.
Sanusi Lamido Sanusi, governor of the Central Bank of Nigeria since 2009.