Panos MourdoukoutasContributorMarkets
China wants everything from Africa: its strategic location, its oil, its rare earth metals, and its fish, leaving African nations indebted to Beijing.
In its long history, Africa has served the global ambitions of many foreigners. Foreigners have reached out to Africa as missionaries, financiers, and infrastructure builders.They have promised to place the continent on the globalization map and help its people grow out of poverty. But they ended up grabbing Africa’s riches, colonizing one nation after another, and letting their people steep in poverty.
That may end up being the case again, with China’s recent infrastructure investment projects in the continent.
On the surface, these projects seem to serve the quest of African nations to build a sound infrastructure. But on closer examination, they serve China’s ambitions to write the rules of the next stage of globalization.
China wants to use Africa as a location to secure maritime roads (and the OBOR projects) thatfacilitate Chinese exports, as evidenced by Beijing’s large military presence in Djibouti.
Then there are Africa’s resources, oil, rare earth metals, and fish.
“As a South African, I’ve seen China’s activities on the continent up close,” says Ted Bauman, Senior Research Analyst at Banyan Hill Publishing. “It’s clear that China’s primary goal with foreign investment is geopolitical, not economic. The most consequential investments are undertaken by state owned companies, not by Chinese private capital. They tend to focus on infrastructure like highways, ports and dams, and on public networks like the electrical grid.”
That’s something many African countries desperately need in their bid to develop their economies.
The trouble is that “these investments help to bind countries to China politically, and through debt obligations,” explains Bauman. “It creates a form of leverage that China can use to force these countries to support Chinese ambitions globally. In some cases, such as the Angolan oil sector or Congolese rare earth mining, Chinese investment helps to lock-in supply relationships with essential commodities.”
Meanwhile, Chinese boats are reaching to west Africa, sweeping the sea of any kind of fish that tries to swim through the spread nets.
Xiaomeng Lu, China practice lead at Access Partnership, a global public policy consultancy for the tech sector, raises a more fundamental problem with Chinese investments. “China’s investments are being rolled out in a somewhat awkward, if not controversial fashion,” she observes. “For example, Huawei’s Smart City project in Colombo Port City, Sri Lanka, faces criticism for being overly ambitious and debt-laden.” Not to mentionthe Hambantota port, which has been placed in Chinese hands for the next century, as a result of Beijing’s debt trap.
“Chinese President Xi aims to realize the “great rejuvenation of the Chinese nation” by projecting power overseas through the “Belt and Road” initiative, which covers both Southeast Asia and Africa,” adds Lu. “This political economy effort is paired with China’s growing military might in the South China Sea and the African continent, posing a growing challenge to the U.S. security umbrella worldwide.”
Then there’s the high-risk tolerance of the Chinese business model, which is more conducive to the developing world, according to Lu. “Chinese companies’ high-risk tolerance, low profit margin business model fares well in the developing world,” explains Lu. “China’s commercial sector’s interest overlaps with its government’s initiative in these geographies. For example, Huawei operates on very thin profit margin and is the industry leader in many emerging markets where western competitors such as Nokia and Ericson failed to make profit.”
“China’s behavior is essentially the same as that of the United States in the second half of the 20th century,” explains Bauman. “It’s using its rising economic power to build political “soft power.” And with the United States essentially rudderless when it comes to international relationships, the chances that China will succeed are very good indeed.”
But on its own terms, rather than the terms of African nations.