Is China Africa's New Colonial Power?

Africa is the second largest continent in the world and together with south Asia indubitably the ones with the most indigent people. There are a number of preposterous and sensible arguments trying to explain the hopelessness in the continent. Without attempting to identify a singularly important factor, it is clear that African countries collectively and individually have been receiving very little Foreign Direct Investment. And where such FDI is available, it is often directed to select countries that are largely endowed with natural resources and therefore not sufficiently diversified.

China has attracted interest by investing quite heavily in Africa over the last decade. Indeed as argued in this piece in the Irish Times, the value of trade between China and Africa has grown nearly sevenfold from €6.75 billion to more than €47 billion between 2000 and 2007. As expected for a continent that is bereft of proper infrastructure, most of the the Chinese investment is in resource rich countries such as the Democratic Republic of Congo, Nigeria, Sudan, Angola and Zambia. There is also expansion in construction of roads and railways but it is clear that infrastructure makes it easier for the extraction to occur by connecting to the ports.

The controversy arises from the concern that China appears to be particularly friendly to some of the most corrupt and brutal regimes in the continent. Chinese investment, while it appears to take the form of mercantilism, should be welcome even if the justification from African leaders shows poor understanding of the ingredients for sustained growth. It is certainly wrong-headed to believe that China on its own will drag the entire continent into growth through its investment principally because China is itself still a lo-income nation. Secondly, the thinking that China is either a counterweight or alternative to the West is completely false because China has benefited immensely from export markets in the west and will continue to need that to maintain its growth. For all its endowment with natural resources and business opportunities, China needs Africa's markets less that it needs those in the EU and North America. Africa's best bet is to expand investment opportunities with both sides.

One must understand Africa's desperation for new investment and the benefits of trade with China. In spite of this fact,sub-Saharan African countries are well-advised to consider opening up as China did to other investors too. China is neither an African country nor is it capable of leading to Africa's economic development and diversification all on its own. The pattern of its trade and investment together suggests that these are driven by the need to expand its markets and to secure natural resources. More importantly though, African countries should recall that they are not a monolithic whole and the benefits from trade and investment with China will require domestic political and economic reform. The former of which China will not insist upon but is indispensable for sub-Saharan Africa's leap.