New Power in Africa China's Trade in Africa Carries a Price Tag
By dumping boat-loads of money to finance trade and infrastructure in Africa, China promises it will bring a tide that lifts all boats. But some Africans worry that it amounts to little more than economic colonialism.
A visitor walks by a poster with a map of Africa at the meeting venue for the annual meeting of the Africa Development bank in Shanghai. China plans to spend $20 billion to finance trade and infrastructure across the continent over the next three years.
The factory used to roar. From the day it opened more than 20 years ago, the vast compound had shuddered to the whir of rollers and the clatter of mechanical weaving machines spooling out millions of yards of brightly colored African cloth.
Today, only the cotton gin still runs, with the companys Chinese managers buying raw cotton for export to Chinas humming textile industry. Nobody can say when or even if the factory here will reopen.
We are back where we started, said Wilfred Collins Wonani, who leads the Chamber of Commerce here, sighing at the loss of one of the citys biggest employers. Sending raw materials out, bringing cheap manufactured goods in. This isnt progress. It is colonialism.
Chinese officials and their African allies like to call their growing relationship a win-win proposition, a rising tide that lifts all boats in Chinas ever-widening sea of influence.
This year, China pledged $20 billion to finance trade and infrastructure across the continent over the next three years. In Zambia alone, China plans to invest $800 million in the next few years.
From South Africas manganese mines to Nigers uranium pits, from Sudans oil fields to Congos cobalt mines, Chinas hunger for resources has been a shot in the arm, increasing revenues and helping push some of the worlds poorest countries further up the ladder of development.
But China is also exporting huge volumes of finished, manufactured goods T-shirts, flashlights, radios and socks, just to name a few to those same countries, hampering Africas ability to make its own products and develop healthy, diverse economies.
Most of our countries have been independent for 35 to 50 years, said Moeletsi Mbeki, a South African entrepreneur and a political analyst. Yet they have failed to develop manufacturing for a variety of reasons, and for the Chinese thats a huge opportunity. We are a very important market for China.
On the one hand, Chinese imports give Africans access to goods and amenities that developed countries take for granted but that most people here could not have dreamed of affording just a few years ago cellular telephones, televisions, washing machines, refrigerators, computers. And cheaper prices on more basic items, like clothing, light bulbs and shoes, mean people have more money in their pockets.
There is no doubt China has been good for Zambia, said Felix Mutati, Zambias minister of finance. Why should we have a bad attitude toward the Chinese when they are doing all the right things? They are bringing investment, world-class technology, jobs, value addition. What more can you ask for?
But across Africa, and especially in the relatively robust economies of southern Africa, there are clear winners and losers. Textile mills and other factories here in Zambia have suffered and even closed as cheap Chinese goods flood the world market, eliminating jobs in a country that sorely needs them.
The Chinese investment in copper mining here has left a trail of heartbreak and recrimination after one of the worst industrial accidents in Zambian history, a blast at a Chinese-owned explosives factory in Chambishi in 2005 that killed 46 people, most of them in their 20s.
Who is winning? The Chinese are, for sure, said Michael Sata, a Zambian opposition politician who campaigned in last years presidential election on an anti-China platform. He lost, but with a surprisingly strong showing, and his party, the Patriotic Front, won many seats in local and parliamentary elections in Lusaka, the capital, and the Zambian industrial heartland, where China has made its biggest investments.
Their interest is exploiting us, just like everyone who came before, he said. They have simply come to take the place of the West as the new colonizers of Africa.
Officials at the Chinese Embassy in Lusaka did not respond to repeated requests to discuss the countrys role in Zambia. But Chinese diplomats across Africa and top officials in Beijing have emphasized the money and opportunity they bring to Africa. In Zambia, for example, government officials say that the Chinese are sending dozens of workers for training in China and that their investments will create thousands of high-wage jobs.
Measured in some ways, Zambias economy is booming. Copper prices have soared from 75 cents a pound in January 2003 to more than $3 a pound this year, driven in large part by Chinese demand. That demand has pushed Zambias long-dormant copper mines into record production.
Chinas Nonferrous Metals Corporation, a state-owned company, purchased rights to develop a mine in Chambishi, in the heart of the copper belt, in 1998, and it plans to build factories in an export processing zone that will bring as many as 60,000 jobs, according to government officials.
But Chinas growing presence in global trade is wiping out thousands of jobs in countries with fledgling manufacturing sectors like Zambia and South Africa.
Despite relatively low wages in many countries, African manufacturers find it very hard to compete, arguing that Chinas currency policies undervalue the yuan and give Chinese exporters a huge advantage.
Many industries in China also benefited at various points from subsidies and free or low-cost government financing, making their costs lower. Beyond that, there are major infrastructure problems in Africa, where industry struggles with inadequate roads and railways, and unreliable electricity and water supplies.
So who do you blame? said Martyn J. Davies, director of the Center for Chinese Studies at Stellenbosch University in South Africa. You cant blame China for being too competitive. China is doing what every other emerging market is doing.
The textile and clothing industry, one of the engines China used to fuel its own economic expansion in the 1980s, has been particularly hard hit in Africa. For decades, African countries exported large quantities of clothes and textiles to developed countries under a trade agreement intended to protect European and American markets from competition from China and others, while encouraging exports from the worlds poorest nations. But the trade provision, the Agreement on Textiles and Clothing, expired in January 2005, putting these countries in direct export competition with China.
Africa found itself once again on the losing end of globalization. If copper is Zambias bread and butter, manufacturing should have been its main meal just as many economies across the globe have progressed from producers of raw materials to low-tech manufacturing and beyond, a well-trod path to development.
- Part 1: China's Trade in Africa Carries a Price Tag
- Part 2: 'We Will See What God Brings Me.'