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Tuesday
Jan012013

China in Africa: Partners in the Year of the Snake

 Contributed by Jen Alic of Oilprice.com.

African exports to China have increased six-fold since 2000, the bulk of it in oil; and in 2012, China surpassed the US and Europe as Africa’s largest trading partner.

Starting from $11 billion in bilateral trade in 2000, Beijing racked up $160 billion dollars in trade with Africa by 2011, and for 2012

Chinese businesses have also invested some $15 billion in Africa in 2012 alone—that’s up from $500 million in 2002.

China is hot for Africa’s natural resources, which include 40% of the world’s total chromite deposits, 60% of the world’s cobalt and 20% of its gold. But most importantly—oil and gas. For starters, we’re looking at a possible 72 billion barrels of crude in the East Africa Rift, more than 250 trillion cubic feet of natural gas offshore Kenya, Tanzania and Mozambique, and 5 billion barrels of proven reserves in the Sudans. And this is only scratching the continent’s surface.

China is also hungry for minerals in the West, North and Central nations, oil from West Africa and agricultural products from Chad, Mali, Benin and Burkina Faso, which do much to supply China’s massive textile industry. But West Africa is also a key importer of Chinese products, with Nigeria the lead consumer (42%).

Related Article: ExxonMobil Eyes South Africa's Untapped Frontier

East Africa and Southern Africa are ripe with massive Chinese investment in infrastructure, mining and trade. Most Chinese firms operating in these regions are state-owned and they enjoy major government support. This support allows them a leg up in the competition: They bid low on contracts, and usually get them.

It is in East Africa that the Chinese presence is most keenly felt—and seen. Here, China enjoys joint ventures with African state-owned companies. China’s Sinopec oil has joined forces with state-owned Sonangal in Angola ($3.5 billion). In Gabon, China’s CMEC/SINOSTEEL consortium has invested about $3 billion in the exploitation of iron ore deposits.

In terms of foreign policy and economics, African policymakers pay the most attention to China. To put it simply, Africa’s wealth is tied to China’s economy.

The New Year—China’s Year of the Snake—will see Beijing expand its footprint in Africa, while the US tags along, behind the game.

Related Article: Russia – The New Player in African Politics

Why? China has consistently offered Africa a broader relationship, and while the US and Europe remain very significant economic drivers in Africa, China offers something bigger—a clear path to the creation of regional economic blocs. China’s willingness to invest in major infrastructure projects across the continent has been one of the primary attractions. And we’re not talking just about pipelines—China has been busy building thousands of kilometers of new roads and railways across Africa.

Nigeria has recently benefitted from this Chinese ambition. In late December, China completed the rebuilding of the railway connecting the south commercial hub of Lagos to Kano, the largest city in the north. It was a $166 million project that involved rebuilding 1,160 kilometers of railway.

In the end, Africa’s China choice comes down to Beijing’s business model, which in terms of long-term development is preferable to that of the West. Beijing offers a package deal that Africa has embraced for its pragmatism.

And there is a philosophical element to Africa’s love affair with China: In Beijing’s efforts to push through real infrastructure development on a regional level, it tends to view Africa through a completely different lens than the West. For China, Africa is a partner, not a parasite that happens to be rich with natural resources.

True to form, though, Washington lags behind in Africa, unable to figure out how to structure a broader relationship. As such, 2013 will be another year of Chinese progress in Africa—and Africa is very much looking forward to the development this promises. Cross-posted from Oilprice.com.

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Reader Comments (11)

Why doesn't China use all of its economic might to find a replacement for oil, coal, and natural gas? If China steals so much technology from the USA, then it should already have access to the top secret inventions that have been suppressed by the US government for many decades. Free energy would end the 21st century version of the "Great Game" in Africa and in Eurasia.
January 1, 2013 | Unregistered CommenterAnon E. Maus
Trading with China even after all that money we dumped on them to help curtail their epidemic AIDS problem. That's gratitude for ya!
January 1, 2013 | Unregistered Commenterjohnnygeneric
Anon, what suppressed inventions? Are you in the weed again? Don't you think China has access to anything they want to know by now? The 'suppressed' inventions are just that, inventions of the techie dreamers who deny thattheir wolrd is collapsing around them and tech is NOT going to save it.

Johnny, have you ever considered that we might have started that 'epidemic'? Not we as in you and I, but as in those who would not mind killing a few billion of us unnecessary consumers while making a few more billions doing it? We (the US) never 'gives' anyone anything. There are always ropes attached around the 'gifts' that pay back much more than is 'given'.

The Chinese know that there are no tech rescues coming. They know that they will need these resources to keep their country growing, so they are acquiring them without military adventures that only make more enemies. The Chinese build railroads, highways, hospitals and schools, not bomb craters and death. The West is dying...
January 1, 2013 | Unregistered CommenterMakati1
1. Look at the prices. 1160 km railroad rebuild for 166 Mn (not Bn). Same with bridges, highways etc. Some projest are 10 to 20 TIMES (not %) cheaper than by Western cies.
2. Africa consumes mostly relatively cheap and simple stuff the Chines are a) great at that and b) if the West 'produces' it is often Made in China anyway. They have the right products for a worldmaket that will grow mainly in the poor countries and EMs.
3. This is a long term strategy 20 year ago you already were falling over African government officials when you were in Beijing. Never been there when there were not several African government delegations.
January 1, 2013 | Unregistered CommenterRik
Makati1: Is this misinformation, disinformation or entertainment?

http://www.youtube.com/watch?v=NADfqbyn8bI


Maybe the Chinese elite will benefit, but not the Chinese workers:

http://www.thechinamoneyreport.com/2012/12/27/chinese-show-makers-now-exporting-from-ethiopia/
January 2, 2013 | Unregistered CommenterAnon E. Maus
January 2, 2013 | Unregistered CommenterFrank
Anon,
Do you think that there are not sweatshops in the US?
Do you not see that that is the direction the US is headed?
Are the people who work in sweatshops there because they have a gun to their head?
Do you think that they prefer working to dying in a bomb attack marked, 'Made in the US"?

I am very aware of the situations in the world. They are not new. Sweatshops have existed as long as man has had towns and extra money to spend. It is NOT a perfect world, but you will soon see that everyone will be leveled to the same lifestyle soon. Survival will over-ride pleasure and wealth.

With the ratio of maybe 4 million military and police and 1,300 million Chinese, I think the existing situation is because most the Chinese want it. At 300 to 1, they could certainly have a revolution and change it if they wanted to.
January 2, 2013 | Unregistered CommenterMakati1
Guys, wake UP. Nigeria “benefited”?? Sorry, the Chinese don't even make a pretence at benefiting the people of the countries they plunder, like European companies do. They grease the palms of those they have to grease, then, in many cases, fly in their won workers to do the job! There is mostly ZERO benefit, even in the form of near slave-labour and starvation wages for the locals.
January 3, 2013 | Unregistered Commenterboughies
Makati1,

My mom worked in one of those "sweatshops". She was a seamstress in South Carolina back in the 1960s and early 1970s. And as far as I recall, I don't even think the place was air conditioned, so most likely it was a real sweatshop. It was hard work and I never heard the end of it from her. But she was proud of her work. They were not paid by the hour but by what she called "production". They had quotas to meet in order to get paid. She was proud that everyday she met "production". And according to her, her supervisors loved her.

I got ongoing lectures from her about hard work and that it would pay off. She talked endlessly about how her income supplemented my dad's miserable military pay to buy a house and a '69 Cutlass Convertible (SWEET!!!) Of all the crap I had to sit and listen to, this was about the only thing I took away from her and it's stayed with me ever since.

And today...those jobs are GONE. Today my mom wouldn't have been able to find a job anywhere except flipping hamburgers. But you know what? She would have been happy to have that job as well.
January 3, 2013 | Unregistered Commenterjohnnygeneric
Makati1,

You wrote: "Do you not see that that is the direction the US is headed?"

I respond: I do see it. De-industrailization has been the policy of the USA since 1973. The article below chronicles the job losses in the USA since 1992:

http://articles.businessinsider.com/2011-02-11/markets/30028586_1_nafta-goods-trade-cumulative-job-loss

My point was that the Chinese are now engaging in "Free Trade" in Africa to the detriment of their own citizens. Who would have ever thought that Chinese jobs would have to be offshored to Africa????
January 4, 2013 | Unregistered CommenterAnon E. Maus
I have been reading about China's excursions into Africa (along with other nations, which are growing food for export for their homelands) for a few years now. All the minerals and goodies to be dug out the ground and tunneled out of mountains are very tempting to those in need of such.

To twist your analogy "For China, Africa is a partner, not a parasite that happens to be rich with natural resources", I would proffer that Africa needs to see itself as a host with China possibly turning into a parasite. Why? Because although Africa is benefiting, China is benefiting much more. The corruption model of greasing palms to enable those in power while the average workers (better of with work than USAID bowls of rice, of course) is only going to result in no changes across the board.

I do not have the inclination or power to tell someone (Africa) how much to sell their goods/services/resources for to a buyer(China) but as they have resources, then they need to think ahead. A fair bit of Jiminy Cricket short-term policies need to be transformed into habits of squirrels. Africa's quick-n-fast development seems not the best for any long-term growth.


But I am a Westerner with a captilstic mindset. I am wary of thinking that the good times last forever, that growth doubles by leaps and bounds to infinity and resources replenish themselves in a magic land of plenty and just appear.

Maybe my flaw is that I expect 'developing' economies to adjust themselves into a sustainable model of growth, not just a quick event that will be forgotten. What is left after the locusts eat their fill?
January 5, 2013 | Unregistered CommenterAnaneosis

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