Chinese Engagement in Africa: Trends, Challenges, and Implications

[caption id="attachment_13491" align="aligncenter" width="640"] A Chinese construction sign in Angola near Kavugi Kifunta. Photo courtesy of jbdodane via Flickr Commons.[/caption]

Chinese engagement in Africa is highly varied, politicized, and wrought with pessimism regarding China's intentions and its impact. In this blog post, I plan to discuss some misperceptions about China's relationship with Africa, address some of the challenges that African nations will face as Chinese investment grows, and speak to the potential opportunities for greater cooperation and better development on a large scale.

Financing and Investments

Funds from non-Western donors represent a growing share of development financing, especially on the African continent.[1] China's major role in this new type of development has led to many Western misperceptions about Chinese investments in African development, regarding size, focus on natural resources, and lack of concern toward bad governance.[2] The West views the engagement of both the Chinese Government and private companies guided by the government as much larger and more focused on natural resources than it is in reality, and that the Chinese Government exploits the bad practices of African governments such as corruption and lack of regulation as deciding factors in where it would be easiest to invest.

Contrary to popular perception, Chinese investment in Africa accounts for only 3-4 percent of the African continent's total foreign direct investment (FDI). While that is not a huge percentage (South Africa accounts for more annual investment on the continent in US dollars than China does),[3] the Chinese FDI is increasing: Chinese capital investment rose by over 500% between July of 2015 and July of 2016.[4] African countries that are rich in extractive resources receive Chinese foreign investment more often, at about the same rate as Western investment in natural resource-rich African nations. Chinese overseas investment also shows a correlation between investment and domestic market size, indicating that market size matters to China in the same way as it does to Western nations.[5] The West and China are similar in their focus on natural resources as they invest on the continent. Lastly, Chinese investment correlates positively with political stability and lack of violence or terrorism, but it is effectively indifferent to rule of law: the Chinese invest in countries regardless of their history with corruption and repressive state tactics.[6]

Whether it is due to taking advantage of untapped markets that Western governments will not (or cannot) touch under international law, a lack of concern for rule of law, or strategic military considerations, the Chinese disregard for rule of law affects Western perceptions of Chinese investment in Africa negatively. To the West, Chinese willingness to engage with authoritarian dictatorships that blatantly violate human rights seems offensive, but to an emerging economy like China, it may just be considered an innovative and resourceful policy. Chinese investment on the African continent is profit-driven and relatively indifferent to poor governance. Although it is relatively minimal now, Chinese investment in Africa is certainly growing fast.

The Changing Brand of Chinese Development

China's commitment to South-South cooperation has strong roots, starting with China's involvement in the Non-Aligned Movement during the Cold War and continuing with its current role in the G77, the largest supranational group of developing states in the United Nations. However, South-South cooperation has been weakening. As China becomes much more powerful than the rest of the developing world, the nation has begun to replace South-South cooperation narratives with other ways of incentivizing non-interference and don't-ask-don't-tell investment practices, such as bribery and wooing elites.[7] This differs from Western strategies, which are characterized by conditionality and selectivity.[8]

Critics of China's brand of South-South engagement argue that promotion of 'noninterference' policies means that China advances bilateral investment in a moral vacuum. Supporters of the West's liberal development style argue that China's brand seeks to normalize both its own apathy in the areas of human rights and those practices in the countries where they invest. Critics of Chinese aid also argue that help is not received by those who need it most: rather, Chinese aid benefits the political and economic elite, resulting in an 'elite circle courtship' between the elites of China and the nation receiving aid.[9] Despite the critiques and the historic difficulty that China has had in spreading its influence, evidence from the Pew 2015 Global Indicator report suggests that public opinion of China has been increasingly positive in Africa (over 50 percent favorable in the nine countries surveyed).[10][11]Ensuring Positive Development

Despite high favorability ratings, China's development can and has led to exploitation of Africa by Chinese businesses and state-run enterprises. Chinese "aid," oftentimes bundled in trade or energy deals (which are banned by the OECD out of concern for the potential consequences of leveraging aid for profit), consists primarily of shoddy construction with cheap materials, employs Chinese rather than African workers, and ignores decades of lessons learned from failed development ventures.[12] One solution to potential exploitation would be to implement requirements for foreign companies to transfer technological knowledge and to limit foreign worker visas, which would create conditions wherein foreign companies must train and invest in locals.[13] Another solution would be to modify all development narratives (Western and South-South alike) to encourage competition between developers of Africa, allowing African countries to be more selective in the development projects they engage with.[14]

Generally, increasing assistance from non-Western donors presents a challenge to development experts and scholars in measuring, monitoring, and evaluating aid.[15] Emerging donors, like China, India, Russia, and Saudi Arabia, are not members of the Development Assistance Committee of the Organization (DAC) for Economic Cooperation and Development (OECD), and they therefore do not follow the same rules and regulations. Initiatives such as the China Africa Research Initiative at the Johns Hopkins School of Advanced International Studies and Tracking Underreported Financial Flows (TUFF) at Aiddata, seek to better monitor and evaluate Chinese engagement on the African continent.

China's growing engagement with the continent is full of potential for both Africa and the rest of the world. For African countries, utilizing the comparative advantages of both Western aid and Chinese investment can result in better development. For example, Chinese "aid" projects in regions that have seen Western development practices tend to be more substantial, such as railroad construction. This is in opposition to less practical and substantial projects like the construction of 'huge, Olympic-style stadiums' that crop up in regions less dominated by Western development styles.[16]

The growing engagement between Chinese and Western development could also be seen as an opportunity for multilateral cooperation. With China's growing business involvement in Africa comes a growing interest to see political stability and decreased security risks (i.e., business costs) in the countries they choose to invest in.[17] Over the last half decade, China has increased its contributions to fighting piracy and provided more support to UN peacekeeping missions in Africa.[18] A prime example is China's deployment of its first infantry battalion on a peacekeeping mission sent to support UN troops in South Sudan in late 2015.[19]

Many Western perceptions of Sino-African engagement are negative because they consider Chinese development projects to be expansive, exploitative, and dismissive of human rights. However, China's growing engagement on the continent is misunderstood and more complex than the critics would have us believe. Within the ambiguity, one fact is definite: Chinese investment in African development and growth is not going anywhere soon.

Caroline Nutter was a summer intern with the Wilson Center Africa Program in 2016.  She is a rising senior at the College of William and Mary.

[1] Wenjie Chen, David Dollar, and Heiwai Tang. "Why Is China Investing in Africa? Evidence from the Firm Level." Brookings. Brookings Institution, Aug. 2015. Web. 25 July 2016.

[2] Wenjie Chen, David Dollar, and Heiwei Tang, "China's Direct Investment in Africa: Reality versus Myth." Brookings. Brookings Institution, 03 Sept. 2013. Web. 01 Aug. 2016.

Thompson Ayodele, "Misconceptions about China's Interest in Africa." Georgetown Journal of International Affairs, 21 Oct. 2015. Web. 03 Aug. 2016.

[3] Wenjie Chen, David Dollar, and Heiwei Tang, "China's Direct Investment in Africa: Reality versus Myth." Brookings. Brookings Institution, 03 Sept. 2013. Web. 01 Aug. 2016.

[4] Jadesimi, Amy. "How China's $60 Billion For Africa Will Drive Global Prosperity." Forbes, Forbes Magazine, 17 Mar. 2017

[5] Wenjie Chen, David Dollar, and Heiwei Tang, "China's Direct Investment in Africa: Reality versus Myth." Brookings. Brookings Institution, 03 Sept. 2013. Web. 01 Aug. 2016.

[6] Wenjie Chen, David Dollar, and Heiwei Tang, "China's Direct Investment in Africa: Reality versus Myth." Brookings. Brookings Institution, 03 Sept. 2013. Web. 01 Aug. 2016.

[7] Marco Bocchese and Elizabeth Linn. "Pricing Identity: Trade, Soft Power and Chinese Development in the Global South." Social Science Research Network, 21 Feb. 2016. Web. 22 July 2016.

[8] Marco Bocchese and Elizabeth Linn. "Pricing Identity: Trade, Soft Power and Chinese Development in the Global South." Social Science Research Network, 21 Feb. 2016. Web. 22 July 2016.

[9] Wenjie Chen, David Dollar, and Heiwei Tang, "China's Direct Investment in Africa: Reality versus Myth." Brookings. Brookings Institution, 03 Sept. 2013. Web. 01 Aug. 2016.

[10] Heimlich, Russell. "Opinion of China: Do You Have a Favorable or Unfavorable View of China?" Pew Global Indicators Database, Pew Research Center, June 2016.

[11] Sun, Yun. "China-Africa Think Tanks Forum: China Broadens Soft Power Campaigns in Africa." Brookings. Brookings Institution, 1 Oct. 2015. Web. 09 Aug. 2016.

[12] Princeton Lyman, "China and the US in Africa: A Strategic Competition or an Opportunity for Cooperation?" (n.d.): n. pag. Council on Foreign Relations, 2014. Web. 29 July 2016.

[13] Larry Hanauer and Lyle Morris. "Chinese Engagement in Africa: Drivers, Reactions, and Implications for U.S. Policy." RAND Corporation, 2014. Web. 20 July 2016.

[14] Chin, Gregory. "China's Challenge in Africa: Avoid Blame of Neo-Colonialism." Yale Global, 9 July 2014. Web. 09 Aug. 2016.

[15] Edwin Muchapondwa, Daniel Nielson, Bradley Parks, Austin M. Strange, and Michael J. Tierney. "'Ground-Truthing' Chinese Development Finance in Africa: Field Evidence from South Africa and Uganda." The Journal of Development Studies 52.6 (2016): 780-96. Aiddata, Jan. 2014. Web. 20 July 2016.

[16] Princeton Lyman, "China's Rising Role in Africa." Council on Foreign Relations, July 2005. Web. 20 July 2016.

[17] Yun Sun and Jane Olin-Ammentorp, "The US and China in Africa: Competition or Cooperation?" Brookings. Brookings Institution, 28 Apr. 2014. Web. 01 Aug. 2016.

[18] Fung, Courtney J. "China's Troop Contributions to U.N. Peacekeeping." /Www.usip.org, United States Institute of Peace, 26 July 2016.

[19] Allen, Karen. "What China Hopes to Achieve with First Peacekeeping Mission." BBC News, BBC, 2 Dec. 2015.