Is China good or bad for Africa?
October 29th, 2012
05:14 PM ET

Is China good or bad for Africa?

By Peter Eigen, Special to CNN

Editor’s note: Peter Eigen is a member of the Africa Progress Panel, chaired by Kofi Annan. He is the founder and chair of the Advisory Council, Transparency International, and chairman of the Extractive Industries Transparency Initiative. The views expressed are the author’s own.

China’s growing presence in Africa is one of the region’s biggest stories, but even seasoned analysts cannot decide whether this booming relationship is good or bad for Africa.

Critics say Chinese strategy is entirely self-promotional, aimed at maintaining access to Africa’s precious mineral resources even when that means propping up odious governments. China’s supporters say the Asian superpower is strictly neutral and business-oriented, preferring to generate economic growth not a dangerous dependency on aid.

China has certainly been contributing to Africa’s economic growth, both in terms of trade and with building infrastructure. All over the continent, it has built roads, railways, ports, airports, and more, filling a critical gap that western donors have been shy to provide and unblocking major bottlenecks to growth.

The rehabilitated 840-mile Benguela railway line, for example, now connects Angola’s Atlantic coast with the Democratic Republic of Congo and Zambia. And Chinese-financed roads have cut journey times from Ethiopia’s hinterland to the strategic port of Djibouti, facilitating livestock exports.

Meanwhile, bilateral trade between Africa and China continues to grow at an extraordinary pace, reaching $160 billion in 2011 from just $ 9 billion in 2000.

More from CNN: Is West losing out to China in Africa?

But some 90 percent of Sino-African trade is still based around natural resources – oil, ores, and minerals. And exports of natural resources by themselves do not help Africa to develop as we can see from the examples of Nigeria and Angola, Sub-Saharan Africa’s two largest oil exporters.

First, oil and mining are not labor intensive industries. So while natural resources may create impressive headline growth figures, they do not necessarily translate into widespread job creation.

Second, as we saw in the Netherlands in the 1960s and Norway today, large oil and mineral reserves can distort the local currency, pushing up prices of other exports, such as agricultural products, and making them much harder to sell overseas.

Third, without careful management, oil and mineral revenues have often fuelled corruption which has a severely negative impact on a country’s development. It’s notable, for example, that China is not yet one of the supporting countries for the Extractive Industries Transparency Initiative (EITI), an initiative to promote transparency and accountability in the governance of natural resources.

Away from the oil and mining industries, critics of China say they don’t see much evidence of China advocating for Africa on global issues either.

Climate change and better access to overseas markets are two such issues. But at the Africa Progress Panel we see little evidence of China pushing hard for improved market access for African products in non-African markets. Indeed, South African and other manufacturers have frequently complained about the crushing competition from Chinese textiles. Nor do we see China pushing for any meaningful breakthroughs in climate negotiations that would favor African nations.

More heavily publicized, Chinese use of its veto in the U.N. Security Council to inhibit international action on Darfur has made a mockery of China’s supposedly “neutral” stance.

So what else could Africa and China do so that Africa benefits more from its growing relationship with China?

For a start, African countries could diversify their economies as much as possible away from supplying unprocessed natural resources to China. This will make them less dependent on the vagaries of both the Chinese economy and the ups and downs of global commodity prices. Trade with China may have helped insulate Africa from the full impact of the 2008 financial crisis, but Africa still looks vulnerable to China’s economic slowdown. Meanwhile, African nations should also prepare for the day when they no longer have natural resources to sell. At the Africa Progress Panel, we talk about transforming natural resource wealth into human capital, by investing revenues into health and education.

Second, African countries need to encourage Chinese investment into more labor intensive sectors. Africa’s population is growing faster than anywhere else in the world, and job creation is a top priority. If Africa cannot create jobs to keep up with the growth of its workforce, then we can expect to see a large and growing population of frustrated, jobless youth.

As China’s relationship with Africa shifts from being essentially government-to-government to business-to-business, some analysts see enormous potential in the manufacturing industry, especially for clothing and textiles. Rising Chinese wages in this sector may lead Chinese manufacturers to export jobs to African countries where labor prices are lower.

One example of how this might work is Zambia, where some 300 Chinese companies now employ around 25,000 people. Ethiopia’s shoemaking sector has also benefitted from Chinese investment that has created jobs and exports.

For the most part, however, and despite the scale of investment, linkages between Chinese investment and local economies remains weak.

Third, African countries could negotiate better terms with Chinese investors, including quality control and better linkages with local economies. African governments could urge China to improve market access for African goods overseas, for example in trade fora such as the World Trade Organization. The IMF estimates the average import tariff faced by low-income countries in Africa in the BRICS at 13 percent – around three times the level in the United States and the European Union (which also operate a range of non-tariff barriers).

On quality, observers describe shoddy workmanship in a range of Chinese investments from crumbling walls in a Chinese-built hospital in Angola, enormous potholes in Ghanaian and Zambian roads, and a leaking roof in the African Union’s new $ 200 million headquarters opened in January.

Fairly or unfairly, many in Africa complain that Chinese projects do not employ enough Africans or do enough to transfer skills and technology. The reality is that this will vary from project to project. When a country is emerging from a decade or two of civil war, its labor force may not have sufficient capacity to work on technical projects. But at the Africa Progress Panel we view job creation as a priority issue for Africa’s development. Skills development has a major role to play in this respect.

And when Africans are employed, working conditions are sometimes substandard. Human Rights Watch reports dangerous work conditions in Zambian mines. And pay disputes at a copper mine also in Zambia led to two Chinese managers shooting at miners in 2010, then the death of a Chinese manager this August.

Fifth, Africa could keep working to make itself as attractive a business environment as possible. At the Africa Progress Panel, we consider further regional economic integration to be a priority. Africa’s population will one day represent the world’s largest consumer market. If they can get increased market access by investing in a single country, Chinese businesses will want to invest much more.

Analysts see more Chinese businesses coming to Africa, meaning that the Africa-China relationship is diversifying away from simply government-to-government relationships. This makes it harder to characterize the relationship as either good or bad. However we view it, China’s growing presence in Africa is part of a rapidly changing reality that presents enormous opportunity.

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Topics: Africa • China

soundoff (331 Responses)
  1. SAS6907

    China is only in Africa to steal their natural resources. As soon as the resources run out, so will China.

    December 7, 2012 at 12:35 pm | Reply
    • el rey

      C'om, they are just doing what you ppl have done years ago.

      December 7, 2012 at 12:42 pm | Reply
  2. el rey

    All I can is that the west has lost all its credentials on this topic.

    December 7, 2012 at 12:42 pm | Reply
  3. Christopher Cronin

    Africa would be a place for China to get food resources .
    What ever else seems to make sense, theres a lot of ariable land out there, vs. China's 9% farmland, 25% of worlds population.
    Its the international tensions, if 'popped' that will make China bad for Africa...
    Lets argue under a sky thats only 20 miles high.

    December 7, 2012 at 3:09 pm | Reply
  4. Anthony M Ramos

    Even the flags are cheap see thru flags, I guess they are pretty shallow, I guess they are made in China.

    December 7, 2012 at 4:44 pm | Reply
  5. Jack 3

    China is raping Africa of its natural resources and comminting crimes to take it. They are taking gold, ivory and anything of value.

    December 10, 2012 at 12:37 pm | Reply
  6. Jack 3

    It's amazing how encredibly maive most people are in America. The Chinese are stealing and resources and killing animlas for the Ivory at alarming rates. China is on a mission and it's not from god

    December 10, 2012 at 12:40 pm | Reply
  7. Michael

    Ask the Rhinos and Elephants if China is good for Africa

    December 10, 2012 at 3:25 pm | Reply
  8. No Friend of China

    African wildlife will be wiped out due to the Chinese presence in Africa. Rhinos will be slaughtered for their horns for Chinese medicine, elephants will be wiped out for their ivory so Chinese homes can be decorated. Other breeds will also be wiped out for other cultural indulgences of the Han new guests.

    December 13, 2012 at 3:24 am | Reply
  9. lejaune

    China should learn the western way of doing business in Africa: Colonize it first, take everything valuable for free or as "taxes", when all is done, let them become independent again and they will become one of it's protectorate. This is the only way the west will recognize China as their friend.

    December 13, 2012 at 6:50 am | Reply
  10. Markus

    I would be nice too see how descents of slave owners will advice China, which of course is one the oldest cultures in the world and was populated by descents of Africans much before Europe was populated.

    December 18, 2012 at 7:11 am | Reply
  11. Rev Dr Felix Nwosu

    TO ME I SAY BOTH IN THE SENSE THAT THEIR PRODUCT IS CHEAP THE OTHER WAY INFERIOR. THAT IS GOOD AND BAD SIDE OF IT, AND BY THIS DEVELOPMENT THE ARE KILLING OUR OWN ECONOMY..

    December 18, 2012 at 11:54 am | Reply
  12. Truth

    lol Africa is exploited by everyone. I feel bad for blacks

    December 18, 2012 at 5:57 pm | Reply
  13. Nanson Hwa

    China' relationship with countries in Africa are beneficial to China and the African countries. Foreign policy is predicated on mutual benefit, trade, construction of the infrastructure in return for raw materials. The relationship that China presently has with Africa is far more balanced and equitable than with Western European countries in the 19th and 20th century.

    December 18, 2012 at 7:45 pm | Reply
  14. Not sure if this is true

    The Chinese government has been renting land from other nations and moving it factories and workers there. This make me wonder if the Chinese government is doing the same thing with Africa. Let all hope Africa will not become China trash can.

    December 20, 2012 at 1:28 pm | Reply
  15. greasy phil

    Me chinese me tell joke. Me put pee pee in your coke.

    December 21, 2012 at 11:30 am | Reply
  16. oko

    It is very surprising every natural resources come from Africa but the continent is still poor. This is because the continent have been manipulated by colonial masters .China has done more developments in Africa in resent years than so called colonial masters but my biggest problem is that China has flock the continent with their prisoners working for them ,thereby depriving the locals from getting jobs. African leaders need to sign sensible agreements instead thinking about their 10%

    December 21, 2012 at 8:22 pm | Reply
  17. RLTJ's

    Is China good or bad for Africa? [Did someone also asked who will replace America as world number one?]

    Here is the number one contender to world economic supremacy – China. Economics is more or less the same everywhere. It is a branch of science following many principles that are universal.

    China is also in world Financing. Financing and building of infrastructures for credits. Not only in Africa, but soon many countries will be financially indebted to them in the same manner that all of them are financially indebted to IMF-World Bank.

    What would be the consequences of economic indebtedness?

    December 21, 2012 at 9:52 pm | Reply
    • RLTJ's

      f you are in government and you have no money and you need to show achievement it is good there is a partner there to build roads, bridges, airports, dams – infrastructures.

      These countries are living beyond their means. It is the problem of the next administrations.

      December 21, 2012 at 10:01 pm | Reply
  18. Youknow

    How can the USA lose out to China? We don't make anything anymore so there nothing to lose to China. As for China being good for Africa I think if anyone can put a end to teh black killing black genocides China can.

    December 22, 2012 at 8:32 pm | Reply
  19. Awareness

    In all of this, Africans are to be blamed. We allow our leaders to dictate, betray us, perform less than what they promised before we voted them in and yet after a few bribes they will be voted in again, and by us (laughable). We will always complain until we wake up and take the bull by the horn, manage our resources ourselves. But this will be done by education and education alone. If we educate our children properly which i doubt (standard of education today is nothing to write home about) education is key because that is the only visa to knowing when you are gaining or losing in a deal, whether brokered by Chinese, the Europeans or anyone at that. I believe all the worries from the world over about Africans arent genuine, who will feel your pains more than you? Africans should try and get the standard of their education system to work better, that way Africans will try to do more. Thats not to say we are doing badly considering where we are coming from unfortunately bad leadership is killing Africa once again, greedy people at the helm of affairs selling Africa cheap to whoever is the highest bidder. You cannot say China is good for Africa if they built roads that are not good enough, (if a roads collapse 4 months after construction then its not good) I have been to China and China is beautiful, if they build exactly the same standard then i am ok. Mind you Europeans and Americans got nothing on China, (go to China and witness for yourself) so the world should be worried cause if the Chinese really got bad intentions, who can stop them? Where China produces for almost every one ( there is this joke that goes "God created the world and everything else is made in China" My take is Africa can only look out for herself, no one can care for you more than you care for yourself. Going back to the question if China is bad or good for Africa, my answer is BOTH. After all something has to give. I rest my case

    December 23, 2012 at 4:13 am | Reply
  20. Somalia Voice

    We thing China like Turkish are good for such Africa countries or 3th world, because of challenges of western yet. in any case without a balance any holly country become enemy of man kind like America!! the world was peaceful 20 years ago when Somalia was peace because their where balance by Russian they where the other actor to play good or evil for our world. simply no balance no peace!!! to get happily live we wish a strong actor with balance with Vita for No or Yes..

    December 25, 2012 at 1:49 pm | Reply
  21. shivmedia

    History has shown that foreign inward investment has always and largely favoured the investors. It was unethical, inequitable and unreasonable. Such investment is one-sided and primarily done with the ulterior motive of benefits in mind debilitating the host countries. Africa has to be aware of these dangers and potential risk of letting China squat as an 'imperialist' investor to create a neo-imperialism which I believe is sweeping the entire Africa. While the world is looking the other way China has been switfly chipping away at Africa's above and underground natural wealth. During the British and the French imperial era raw materials were literally looted from African, Asian and Polynesian countries only to be sold back to them at exhorbitant prices. Instead of processing the materials in the host countries it was done in Britain and France to create employment. The unchecked and uncontrolled extraction of mineral deposits inevitably leads to impoverishment of colonised nations resulting in a skewed development leading in turn to dependency upon the investors. African leaders should watch out for the danger signs before it is too late.

    December 26, 2012 at 4:44 am | Reply
  22. IRAN MUST END.......this evil must go.......

    china is evil like iran and russia those evil muct be stoped ..fk them all

    December 30, 2012 at 3:42 am | Reply
  23. the mayor of medinah

    China will exploit Africa for its mineral wealth

    December 31, 2012 at 1:30 pm | Reply
  24. maomao007

    the butthurt in this thread is strong

    January 1, 2013 at 4:48 am | Reply
  25. famblykittens

    China is a plague on South Africa's Rhinoceros' – contributing to the killing more than 650 in the past year and most of those in Kreuger National Park. The horns are often cut off of LIVING animals left to suffer and die. The Rhino horn is thought to be the Chinese equivalent of Viagra. Killing those animals is an evil and illegal practice. The Chinese, through their silly supersticions are killing off an entire population of animals. There is NOTHING good about Asian cultre – NOTHING.

    January 6, 2013 at 3:12 am | Reply
  26. Shanghai

    Americans-

    Seriously, shut the f** up. "China's business in africa is entirely self-promotional" OH REALLY? And America's countless amount of decades intervening in other countries affairs for political and economical reasons in violent ways (contras in Nicaragua, the ousting of chile's democratically elected socialist government for a ruthless dictator in chile, the shah of Iran , the support of the taliban and osama bin laden, the support for saddam hussein , etc) Please, you are NO ONE to play the "i'm an innocent little girl and chinas a monster" card, you all are so annoying.

    January 7, 2013 at 1:05 pm | Reply
    • Jack 2

      and what have you done to the Tibetans

      January 17, 2013 at 12:49 pm | Reply
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