ECONOMICS MADE SIMPLE: The Sino-Africa economic relationship as it stands

Increasing Sino-Africa relations in the recent past is among key issues of discussion. This is much so following the July 2018 visit by China’s President in Senegal, Rwanda and South Africa. Similar visit to the continent was made in Tanzania and other countries in March 2013. The several high level visits provide an opportunity to interrogate the contemporary Sino-Africa economic relationship.

History

In the relative recent past, Chairman Mao’s China and some African countries such as Tanzania and Zambia had relationships that were arguably built around the axis of politics in general and some variants of socialism in particular. The contemporary Sino-Africa relationship is arguably built more on the axis of economics and business than on the axis of politics. Given the current and forecasted position of China in the global economy on one hand and the economic situation in Africa on the other, this article outlines some key discourse issues as part of efforts to make the Sino-Africa economic deals (more) meaningful for Africa.

Chinese economy

It is important to understand the kind of partner that African countries are dancing and dealing with. Economically China is an emerging market and a very rapidly upcoming dynamic global economic power house. It is endowed with huge population that offers unmatched labour force and market. It is an economy that is considered to be the workshop of the world that produces a substantial amount of goods consumed across the globe. This Dragon of Asia has a relatively weak and arguably artificially fixed currency, the Yuan. This makes Chinese exports relatively very competitive when denominated in such major and vehicle currencies as the green back and Sterling Pound. It is an economy that prior to the 2008 global financial and economic crisis had unmatched and overheating growth of double digits. It is an economic powerhouse that is very resource-thirsty and hungry.

China’s demand from Africa

Given what it is, contemporary China as opposed to Chairman Mao’s China, has strictly economic and business motives and agenda in its relationship with Africa. It needs colossal amount and types of natural resources that Africa is endowed with. It needs Sudanese oil and gas as it needs Mozambican oil, gas and timber. It needs Zambian copper as it needs Tanzania’s oil, gas and agricultural land as well as the whole of the continent’s market.

On the market front, China is looking for markets for its products. As the workshop of the world, it needs consumers over and above what its colossal population offers. The country’s multinationals – some of which are said to be state-owned, funded and supported – need to locate in Africa for various reasons. These reasons include seeking resources, efficiency and markets. Many huge construction sites in Africa are decorated with Chinese flags. This is the case for various kinds of infrastructure such as roads and real estates both for public and private.

Southern engine of growth?

China and India are among the emerging economies that have been considered to be ‘Southern Engines of Global Growth’. As a global south economy, we need to interrogate whether China is really a growth engine of southern economies. If so, one would demand that this type of growth becomes pro-poor and poverty-reducing growth. There is a need to interrogate and demand that the growth due to China becomes inclusive and has inter-sectoral linkages with the local economy. There should be meaningful, tangible and sustainable trickle down effects to the local economies. For Sino-Africa relationship to be more meaningful there should be technology transfers to the locals and growth brought about by China should be green growth.

Unasked questions

There are many questions that remain unasked and therefore unanswered in the contexts of investments that flow to Africa whether from China or elsewhere, including from within the continent. There is a need to interrogate whether investments do adhere to labour standards including health, safety and human rights. Where answers to any of the above including on whether they are good FDIs, is not in the affirmative, then follow up questions are why and what can and should be done so that we get affirmative responses.

Kissing the West goodbye?

The emergence of China as an economic powerhouse tempts one to wonder whether Africa should now kiss goodbye and let go the ties with the West or not. Almost obviously, the answer is not. The African romance with the Dragon of Asia does not in any way justify it to kiss goodbye and let go the ties with the West.

Economically, it is important for Africa to be at the middle of the ever-increasing bi-polar as opposed to the hither-to mono-polar world. The tough question that needs answers is on whether Africa can strategically make use of this central position for its benefits in as many spheres as possible or not. The burden is on all lovers of the continent to make sure that the Sino-African ties work for a better Africa.