This article was written by two Fall 2011 Fellows in PSA’s Congressional Fellowship Program.  All CFP articles are produced by bipartisan groups of Democrat and Republican Fellows who were challenged to develop opinion pieces that reach consensus on critical national security and foreign affairs issues.

The Dragon Comes to Africa

Africa’s development has been a focus of goodwill for the American people for decades, and a central topic of geostrategic importance for policy makers. China is working to develop Africa too—but how they aid and invest in the continent is different. This is leaving Africans with a choice about how to develop and where they end up. The countries of sub-Saharan Africa are learning quickly that even free money can come with negative effects.

China, the source of a massive influx of cash into the sub-Saharan continent, is offering sub-Saharan Africa money and technical support, ostensibly with no conditions.  This is the opposite of most Western trade and aid which comes with a number of conditions for transparency, good governance, and encourages sound economic planning.

China is taking a modern version of the mercantilist approach towards its trade, aid, and investment in Africa.  While the easy money may seem attractive to African leaders now, they may yet rue the day they fell under the sway of the Chinese.  Most Chinese loans to African governments and private firms for infrastructure projects are offered under agreements that require Chinese firms to do much of the work involved and in which African natural resources are often used as a source of collateral or payment.  So the Africans not only lose out by forgoing opportunities to  build technical expertise (because the Chinese are importing labor from mainland China), but also by depleting their natural resource stocks and failing to use them locally to modernize their own economies.

Most development economists agree that when a country relies solely on natural resource exploitation, the manufacturing and other industrial sectors of the economy often remain seriously underdeveloped. Digging and shipping natural resources is a low-value added and commodity process. Africa is starting to develop some advanced processing facilities for minerals, but not with much help from the Chinese. And this is the key to understanding the approaches and the risks to Africa right now.

Chinese trade with Africa has increased by 1,124% from 2000 to 2010, when it reached $100.5 billion and China became the largest investor in Africa, beating out even the World Bank.  In 2010, about 63% of African exports to China consisted of crude oil and another 32% was made up of raw materials – mostly metals and wood; 95% of China’s imports from Africa were basic natural resources that China then uses to fuel its own economy, leaving the Africans far below them on the value-chain ladder.

While China’s use of imported labor, natural resource exploitation, and general lack of investment in the domestic African economy are all concerns, perhaps the largest concern is that China provides its financial largesse to governments with unsavory leaders (Robert Mugabe of Zimbabwe and Omar al-Bashir of Sudan come to mind) with no restrictions on how the funds may be used or limitations that prevent those funds from being used to purchase firearms (often from China) or other destructive goods that can be used to subdue their own domestic populations.  China insists it is only upholding the principle of sovereignty, but the international community has consistently worked to forbid such capital transfers to autocratic governments that commit human rights violations.

Even if you look past the financial support of the most despotic regimes, China’s increasing economic dominance of Africa gives quarter to those in pseudo-democracies who need aid or funds for infrastructure projects and prefer the soft terms of the Chinese aid or loans against the more forceful and accountability-producing restrictions that are placed on them by American or other Western aid.  Why deal with the foreign assistance bureaucracy of Uncle Sam when you can get an easy deal with the Chinese?

U.S. restrictions on aid and trade are put there to encourage governments to observe human rights norms, strengthen democracy and governance systems, and provide for the equitable well-being of their people.  When there’s an easy alternative to U.S. funding, U.S. influence in the region is significantly diminished as Americans begin to look like colonial-era missionaries trying to “save” the African people.  Unfortunately, it is the Chinese who, through their mercantilist practices and investments, may be enabling many of the countries of sub-Saharan Africa to go through another generation of endemic poverty by undermining local labor markets, failing to observe labor rights, and exploiting natural resources without building domestic capacity that enables countries to truly prosper from their innate natural wealth.

All is not lost.  The United States, working with its global partners, can continue and expand upon its funding to good governance, transparency, and human rights civil society groups that can use the technical skills they learn to better pressure their own governments.  Secondarily, African states should be encouraged to create better financial due diligence procedures to ensure that the money that’s promised them is going into sustainable endeavors that will benefit the people first and the elites second.  If the United States and other responsible actors do not use their leverage to intervene, we fear the second “scramble for Africa” will leave the continent as destitute as did the first.

Related posts:

1. The Need for US Leadership as China Continues to Exert its Influence in the South and East China Seas
2. Chinese Naval Build-Up and Policy Response
3. Bridges Not Barriers: Securing Futures and Improving Lives Through Expanded Foreign Aid