Friday, 6 November 2015

AFRICA in the 21st Century: Legacy of Imperialism and Development Prospects PART II: China's Role in Africa

Is China threatening to displace the Europeans from Africa at some point in the second half of the 21st century, as the mass media in the US has been hinting since the global recession 0f 2008? Or is EU-Chinese capital so intertwined that what may be counted as China’s market share in Africa could very well be yielding profits for French, British and German multinational corporations? If capitalist China is such a threat to the West, why has the very Western World Bank been collaborating with China on a number of fronts? Is it merely the fear of the US that China as the inevitable number one economic power in the world will corner the most abundant and cheapest markets in Africa?

In 2010, the Wikileaks organization published the US concern about China helping to develop the infrastructure strategically in those countries in Africa where it plans to do business. Two things alarmed the US: a) no strings attached to infrastructural development, at least no direct strings as the US and EU always impose on the recipient country; and b) the clever way the Chinese are including the World Bank and European governments and EU-based multinational corporations. In short, China’s multilateralism as a strategy of secur5ing market share has been upsetting to American unilateralists who see a fiendish plan that would entail Africa transferring its historical dependence from the West to East. 

Another issue regarding China is the scope of its role in Africa in 2015, considering that the Western media present it as hegemonic and potentially threatening to “US and Western interests”, thus invoking national and trade bloc capitalism as a populist tactic. In reality, as we will see below, China currently has a small role while the Europeans, US and wealthier Gulf Arab states enjoying the lion’s share of the market.
What has alarmed the Western capitalists and politicians is the reality that African exports to China went from a mere 1% of world share in 2000 to 15% in 2012, and likely to continue rising for the indefinite future. Despite the inevitable cyclical economic slowdown in China, it is just as inevitable that by the 2030s we can safely predict much closer trade, investment and overall economic dependency of Africa on China. This in itself poses not just a threat to Western capitalism but to Western geopolitical designs on a continent with very rich in natural resources. Because the US does not compete with China in Africa using the same tools of economic integration, about the only response the US has is to flex its military muscle and secure as much as it can for US-based multinational corporations. 

Before we assume China’s role is benign, the issue of China as the panacea for Africa is one that many have emphasized, given that European and US economic, military and political roles throughout Africa have not resulted in improvements as judged by standards the West has been proclaiming – democracy, freedom, economic development and higher living standards. Some in and outside of Africa believe that China’s integration model which starts with infrastructural development that would help the domestic economy as well as forge greater regional integration while stimulating the export sector is promising. After all, the European imperialists had done nothing but pillage Africa from the start of the trans-Atlantic slave trade in the 15th century when the Portuguese landed until the more subtle late 20th century policies of assisting corporate exploitation of natural resources. Moreover, if China is so well integrated into the global economy and it is helping to forge a new integration model in Africa, this presents new opportunities for African counties, at least for those rich in natural resources. 

The bottom line is whether China will help Africa develop or merely perpetuate underdevelopment as did the Europeans and the US. Underdevelopment is a process just as development that takes place amid domestic and international political and economy dynamics. Development is not a matter of a country having a surplus labor force, or having near self-sufficiency in minerals and raw materials, or enjoying an infrastructure that can accommodate rapid development to buttress the capital-intensive export sector mostly of extractive industries.  Africa is one of the richest continents on the planet in natural resources and it certainly has a surplus labor force at the lowest cost on the planet in comparison with the other continents. Can Chinese investment do something with these cheap assets to help itself while also help Africa?

In order to secure a segment of Africa’s natural resources for its own growth and development at the lowest possible cost, China has been investing in the continent and counting on it for rapid export growth in the 21st century. Despite its rich resources and new investment from China as well as Gulf Arab countries, Europe and US, the persistence of underdevelopment in Africa defies logic at least on the surface beyond the GDP growth numbers and marginal decline in extreme poverty. Why is there reason to believe the Chinese will change a history of five centuries of colonialism and neo-colonialism?

One could argue that the structural causes have everything to do with the corrupt and incompetent political regimes combined with the uneven development complicated by the periodic famines and droughts in a number of sub-Saharan regions. Another argument that the apologists of globalization and neoliberal politicians make is that Africa has not fully integrated into the world capitalist economy, leaving much of its productive capacities underutilized or outside the domain of international trade owing to persistence of tribalism. Is Africa’s problem underutilization of natural resources or uneven terms of trade, chronic exploitation of low labor values, massive capital concentration in the hand of very few comprador bourgeoisie linked to foreign capital, and of course corrupt politicians that foreign corporations bribe to secure contracts.

Another issue that Western analysts are constantly making is that there is instability owing to civil conflicts in a number of countries, from Sudan and Nigeria to Central and East Africa where rebels are an obstacle to stability and development. In the Islamic countries north of the Sahara, there is the instability caused by jihadist elements as there is in the East; activities which also impact Africa more broadly. However, Jihadist conditions, as we will see below, are of fairly recent origin and even so a reaction to neo-colonial conditions, among other causes related to tribal and religious differences. If we were to sum up, the Western analysts conclude that the fault for the absence of development in Africa rests squarely with internal dynamics and has absolutely nothing to do with Western imperialism as a chronic presence. 

When we examine the lofty promises of growth and development by the UN, World Bank and Western governments whose only interest is to assist corporate control of Africa’s resources and market share the result is that by 1995 25% of the people in the sub-Sahara region had no job and were homeless. Even more alarming, Africa’s agricultural growth rates have been declining since 1965. From an annual average of 2.2% (1965-1973), to 0.6% (1981-85), per capita food production continued to decline throughout the 1980s and 1990s, necessitating four times as much food aid. Why is anyone surprised that there is the level of rebel activity, including Jihadist as of late, when the question really ought to be why is there not more such activity given these conditions that people in the West would not tolerate and demand change?

There are those who argue that China’s presence actually helps to tame the sociopolitical mood throughout the continent. China is investing in everything - Hydro-power, dams, water and sanitation, ports, railroads, roads, mining, timber, fisheries and agriculture. At the same time, France and the rest of Europe as well as the US and the rich Arab countries have been competing with China and want to maintain market share. What exactly this entails for the people of Africa and the development model that would eventually lift the majority of the people from abject poverty is another story. 

The Chinese are not in Africa to lift living standards for the population but to strengthen their global competitive position. China will need Africa’s raw materials, everything from foodstuffs to minerals in order to remain a global economic power in the 21st century.  China accounts for about one-fifth of the planet’s population, but it only has 6 percent of the planet’s water and 9 percent arable land, forcing its government to look outside its borders to sustain its growth and development. Just as Africa provided cheap raw materials and cheap labor for Europe and the US from the era of colonialism until the rise of China as a global economic power, in the 21st century it will play a similar role with China competing for Africa’s cheap raw materials and labor. Investment has risen from a mere 210 million in 2000 to 3.17 billion 2011 and it is expected to skyrocket.

Africa is the world’s fastest growing continent for Foreign Direct Investment (FDI), but it starts out at such low levels that it can only go higher. While historically FDI went primarily to the extractive industries, there is new emphasis on manufacturing with energy as a key industry where revolutionary methods could make a difference in bringing electricity to more people than ever and make manufacturing even cheaper.  The continent’s global share of FDI rose from around 3% in 2007 to 5% in 2012, a period of global recession. Among the top 25 countries in the world with the highest incoming FDI, Africa is nowhere to be found; and if it were not for South Africa, the continent as a whole would be at the very bottom along with some of the Eurasian countries. As miraculous as it may appear, China’s share of overseas direct investment in Africa is a mere $26 billion, while France and UK continue to lead in this category. On the other hand, few would argue that China is poised to impose economic hegemony of some type over Africa under an integration model presumably better than what the French and the British had imposed after decolonization. 

By extending concessional loans – more generous terms and longer term – to the tune of $10 billion amid the global recession of 2009 to 2012, China bought itself enormous influence without literally dictating terms down to the minute detail as do the IMF and World Bank. Chinese President Xi Jinping doubled the concessional loan commitment to Africa from $10 billion to $20 billion in the 2013-2015 period, and the Chinese EXPORT-Import Bank announced an ambitious financing program of one trillion dollars by 2025; something that could be scaled back owing to the slowing Chinese economy in 2015. 

Although Africa accounts for such a small percentage of Chinese global investment, Africa has been a top foreign aid recipient. Aid donors have always used it as a policy instrument and leverage in every respect to influence not only investment and trade policy of the aid recipient but defense and foreign policy as well. In providing various types of aid to Africa, from medical and humanitarian to debt relief and development, China is investing in fact investing in good will diplomatically as well as economically for the future market share that it wants in Africa.  

Can we expect from China what we have seen on the part of the European and US companies in Africa since the 1960s? From the early 1960s to the present, large foreign companies secure public financing for privately-operated projects that have been uneconomic across Africa. However, the foreign firms risk no capital of their own because their loans to finance their operation are guaranteed by their governments or developments banks, as are interest and profits.  Because most of the investment is invariably in mining and commercial agriculture, involving multinational companies like Monsanto, the Carlyle Group, Shell, and other Wall Street and EU giants, the goal is to strengthen the export sector by taking advantage of cheap labor without much benefit for the broader economic diversification in a continent desperate for greater self-sufficiency. 

Although China has followed this pattern, its focus on developing the infrastructure in a number of African countries has the potential of laying the foundations for a sustainable diversified inward oriented economy.  After all, China has provided assistance for schools and some textile factories, but it often labels loans as “aid”, and most of its investments go to those countries rich in natural resources. 

Foreign investment in Africa, under terms no developed country would permit is virtually unregulated, thus constituting a drain of natural resource wealth. Suffering the lowest labor values on the planet, Africa attracts foreign capital investment because it is the next frontier to realize high profits. Moreover, foreign capital flows because foreign businesses demand that African countries provide local financing under government-guaranteed loans and very generous terms that include profit repatriation, liberal terms on the environment, and minimal labor protection. 

According to the World Bank that has partnered with China on many projects, the goals in Africa include (i) accelerating industrialization and manufacturing; (ii) making special economic zones (SEZs) and industrial parks work; (iii) infrastructure and trade logistics, including regional integration; (iv) creating the conditions to accelerate responsible private sector investment, (v) skills development for competitiveness and job creation, and vi) improving agricultural productivity and expanding agribusiness opportunities.

These are indeed lofty goals, and one could argue that all countries undergoing industrialization had to suffer, so must Africa, despite its unique relationship with industrialized nations. If we analyze each of the above points that the World Bank has outlined, we conclude that the goal in Africa is to create a climate conducive to foreign corporate investment under the best possible terms. There is nothing about protecting workers rights, collective bargaining, livable wages, appropriate affordable housing, hospitals and schools, and above all under a political regime that respects human rights and civil rights pursuant to principles of social justice. The only concern of the investors, governments, and international organizations assisting them in Africa is the investment itself not the social, cultural, economic and political welfare of the people.
(PART III will follow, dealing with narcotics and human trafficking, among other issues )

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