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The China Africa Relationship: Crossroads or Cliff?

A ChinaFile Conversation

Eric Olander and Cobus van Staden publish the China Africa Project website, whose weekly podcast we are proud to syndicate. As we approach the sixth Forum on China-Africa Cooperation (FOCAC) Summit in Johannesburg, we’ve picked up written commentaries Eric and Cobus first posted to their site in the hope of leading our contributors and readers into a discussion of how better to understand the main issues that surely will arise when Chinese President Xi Jinping and South African President Jacob Zuma meet on December 4 to deliver the FOCAC keynote addresses along with African Union Chairman Robert Mugabe, President of Zimbabwe. —The Editors

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The FOCAC 6 summit is coming at a crossroads in the China-Africa relationship. China’s shift from a manufacturing to a consumption economy means that it is importing fewer African commodities. On the African side, this shift has led to fears about repaying Chinese debt, and a general downsizing of African growth expectations. Coupled with a reported plunge in Chinese investment on the continent, the current situation seems to invoke warnings from the boom era, when figures as diverse as Lamido Sanusi and South African President Jacob Zuma called the relationship problematic and unsustainable.

However, being at a crossroads isn’t the same thing as being on a cliff. FOCAC 6 has the potential to move the China-Africa relationship to a more sustainable path. However, a more sustainable relationship will also require African governments to get out of their comfort zone.

  • Ivory: China was widely praised for announcing possible bans on the importing of ivory earlier this year. Since then, the world has waited impatiently for details and the enactment of actual policy. If Chinese leaders announce a comprehensive ivory ban at FOCAC 6, it will act as an acknowledgement that wildlife trade has become a central problem in China-Africa relations. Taking it seriously won’t only attack demand on the Chinese side, it could also force African governments to address their own lapses in governance that allowed poaching to flourish.
  • Investment: The 84 percent plunge in Chinese investment in Africa is indeed alarming. With it comes indications that the the fall pushed China back to its core investment strategy: African raw materials. Chinese investment in African minerals, metals, and oil actually rose during the first half of 2015. That said, the shift towards domestic consumption has the potential to open up new forms of demand for African raw materials, which could fuel new investments. This is particularly true if Chinese customers embrace greener technologies that demand African rare earths and platinum. The challenge for African governments is finding a way to move beyond trading raw minerals
  • Trade: While investment has plunged, Chinese trade with Africa is on the rise, despite its recent downturn. Trade is expected to hit $300 billion this year. While the influx of Chinese-made goods worry African producers, African consumers are gaining. This isn’t only good for African household budgets, it could be good for African societies generally. China exports cheap mobile phones and solar power generators. These two products alone can radically improve connectivity and power independence in societies with faulty infrastructure. As China increasingly offshores production, this trade can lead to Chinese companies setting up manufacturing and assembly plants in Africa to serve African markets.

When Chinese President Xi Jinping arrives in Johannesburg to lead the upcoming Forum on China-Africa Cooperation summit, he will be greeted as an old friend by his African counterparts. There will be smiles, the customary toasts to “win-win development,” and a projection of confidence from both sides that all is well in China’s engagement strategy in Africa.

But all is not well.

Lurking behind the diplomatic niceties is real worry that Africa’s fate is now dangerously intertwined with that of China’s. While Beijing may capably manage its own economic transformation from an agrarian to a manufacturing to a consumer-driven economy, Africa’s largely commodity-driven economies are far more vulnerable.

From Angola to Zambia to Uganda, the once promising resources-for-infrastructure deals are creating severe liquidity crises when these countries export natural resources to China but do not receive payment in cash. The problem is compounded by the ongoing slump in global commodity prices, so even when clients do actually pay for their raw materials, there is little financial benefit.

Fear of China’s deepening engagement in Africa is also spreading across the continent’s manufacturing sector. With the Chinese economy slowing, P.R.C. manufacturers are now looking farther afield for new markets, which presents a direct challenge for Africa’s budding industrial sector to compete with the “China Price.” If Chinese imports further undercut local prices, it could lead to real problems in markets where unemployment is already a serious issue.

President Xi should be well-advised to take these economic concerns seriously. African leaders across the continent want to see China as a positive force for economic development, but if their populations begin to link their own economic hardships to China, this could present a grave challenge to Beijing’s strategy on the continent. These are volatile economic times in Africa, China, and around the world, and that calls for a far suppler Chinese policy that both acknowledges this new reality and responds as a genuine partner whose engagement benefits ALL Africans.

This will not be an easy challenge, which is why this year’s FOCAC will be different.

Today, Chinese business has been everywhere in Africa. Along with many great successes, there are many challenges facing sustainable development of Chinese business in Africa: lack of local knowledge and localization which lead to business failure, labor relations challenges, environmental conflict, wildlife trade and the image problem it presents, and the communication gap. More and more, we have been witness intensive conflicts in Ghana, in Zambia, in Kenya, in Tanzania. Many Chinese businessmen in Africa have expressed their concerns to me: they are afraid that one day Chinese may be completely kicked out of Africa, like we have never been here before.

In my eyes, public diplomacy is the key to addressing such challenges. So far, China-Africa engagement is more on the government and business level, and we do not have enough exchange in terms of civil society and media. Believe it or not, with 1 million Chinese in Africa, you almost cannot find one Chinese NGO on the continent.

Such Chinese non-governmental actors should be the ones who can build a bridge: they can speak to Chinese stakeholders and can also freely speak to local and international communities. Unlike companies who need to focus on earning today’s bread, Chinese NGOs could spend more energy and time studying the challenges that are more long-term but more substantial; unlike government, NGOs and media could quickly respond with more open conversation, and therefore would help people understand Chinese in Africa better; unlike the old generation of Chinese in Africa, they would be more open, more internationalized, more devoted to community development, wildlife conservation, and so on, and therefore could help build a different image of Chinese in Africa.

We at China House are trying to play such a role, as the first and so far only Chinese non-governmental organization in Africa focusing on a sustainable China-Africa engagement. But we hope there will be more people like us, as we have realized how many important things are there to be done.

The FOCAC platform is an indicator of the extent China-Africa relations have evolved and expanded over time. Yet unlike the past, the current context appears to be more of a “crossroads” scenario than ever before—and the outcomes depend on how dynamics unfold, beyond the upcoming summit. There has been much reported concern over a changing (and normalizing) Chinese economy, in particular the impact on Africa’s commodity exports. Yet this development also opens up the opportunity to progress relations beyond the trade narrative.

China is already placing greater emphasis on multilateral relations. During President Xi’s speech at the U.N. General Assembly, he announced China’s pledge of 8,000 troops to the U.N.’s peacekeeping mission. In early 2015, China and the African Union (A.U.) also signed an agreement to connect major African capital cities through transport routes and collaboration was further expanded in May, when China officially opened its permanent mission to the A.U. These developments run against concerns that China-Africa ties essentially are a set of bilateral trade relations.

Moreover, it is not just China’s domestic economy that could impact Africa. There is uncertainty about where FOCAC (and Africa) fits in China’s current global agenda. For example, since 2013 China has promoted the “one belt, one road” initiative, which essentially is reviving a historical overland trade route between China and Europe that now includes a maritime component across the Indian Ocean. However, besides the current emphasis on port and railway assistance in East Africa, there is a lack of understanding about how this drive would impact or include Southern or Western Africa. Of course, similar questions can be raised about FOCAC’s relationship with other “new” platforms such as the BRICS New Development Bank and the Asian Infrastructure Investment Bank.

It is likely that FOCAC 6 will give reference to new issues and circumstances, such as China’s economy’s “new normal,” the recent Ebola outbreak in parts of Africa, the changing peace and security environment, and the seriousness of the global illegal wildlife trade. Of particular interest are the actual details about how these issues will be approached and what specific links are made between them and China’s broader global initiatives.

China-Africa relations currently are at a crossroads where they probably will continue to be for a while as the parties involved gain more experience learning how to work with one another. Since the year 2000, when the FOCAC platform was launched, China-Africa relations have entered a new era of cooperation. However, as we approach the sixth edition of the FOCAC summit and look beyond it, those relations seem to be moving away from the luster, excitement, and novelty of the earlier curious encounters and into a more normal and typical kind of cooperation. Indeed, China’s “New Normal” also could mean a less intense rhetorical interest in Africa. At such a stage, it is expected to see the quality of cooperation projects prioritized over their quantity. With this in mind, this FOCAC summit will in all likelihood address some of the issues that reflect that transition, and here I broadly address a few key to both Chinese and African interests.

Mainly from the Chinese side, there have been several attacks, abductions, and other incidents involving Chinese citizens, which means that, for China, the security of Chinese nationals and interests in Africa is a growing concern. Chinese companies are asking for more support from their government to ensure their safety. Equally important is an increasing interest in evaluating and taking stock of the returns from completed projects. Due to legitimate concerns, the schools, hospitals, highways, and scholarships whose number seems to double at each FOCAC are under increased scrutiny to determine their effectiveness and sustainability.

From the African side, there is a call for more agency and transparency in the distribution of development projects announced under FOCAC auspices. As China’s economy slows down, each African country is concerned that its existing trade imbalance with China might grow larger, a phenomenon both Cobus and Eric pointed out. In addition, an increasing African consumer dependence on Chinese goods is not congruent with the “Africa Rising” narrative—does Africa’s middle class have to depend on Chinese goods to actually qualify as middle class? African reactions to these developments are also at crossroads.

To end, I ask: what will FOCAC—not the sixth but the tenth edition— look like? In other words, what is the long-term vision of China-Africa cooperation? If this vision is to be sustainable in the future, actors on both sides will have to take proactive measures to solve several pressing issues, some of which are mentioned in the responses above, such as making energy extraction more sustainable, ending ivory smuggling and poaching, fighting corruption, and promoting sustainable development. Action takes more than lofty rhetoric during summits oversaturated with media coverage.

The current state of the China-Africa relationship is being scrutinized with arguably more doubt and trepidation than at any time during recent history. The success of the China-Africa relationship was built on the seemingly simple convergence of interests: the Chinese need for minerals and the African need for an alternative trade partner, investment, and infrastructure. Currently, China-Africa relations appear to be struggling to deal with a divergence of interests. Chinese demand for raw materials is decreasing steadily as China manages its economic slowdown. Furthermore, the Chinese government has implemented measures to transform the Chinese economy from one based on investment to one based on domestic consumption, which has caused a drastic drop in Chinese investment in Africa. Coupled with a sharp decline in global commodity prices, the current situation does not bode well for African countries. How Africa and China deal with the shifting and seemingly conflicting interests will be a crucial question at the upcoming 6th Forum on China-Africa Cooperation.

Amid the frantic reactions to China’s economic slowdown and the downturn in global commodities prices, it is essential to continue to analyze the China-Africa relationship with a sober mind. Given the unbelievably rapid increase in China-Africa trade witnessed from the early 2000’s, it is possible that we are witnessing a trade relationship still very much in its infancy. Should this be the case, the trade relations will surely develop a significantly greater level of complexity and depth. If anything, the current shock should force African states to reassess what some have labeled an overdependence on China. This reassessment potentially could lead African countries to diversify their trade portfolios by seeking out other emerging economies also in need of raw materials. More importantly, it could prove to be the necessary catalyst in transitioning African economies away from a trade profile dominated by raw materials. This can only be beneficial for Africa’s development.

Fifteen years after the first FOCAC, the most pressing concern at this year’s FOCAC should still be the issue of African agency. It often has been argued that while China has an “Africa Policy,” Africa does not have a cohesive and unified “China Policy.” Africa seems to be a passive beneficiary of Chinese interests. The role of the African Union and other regional and sub-regional organizations in this regard is of vital importance. With agricultural reform; structural transformation of key economies; diversification of trade portfolios; and continued investment in infrastructure topping the agenda for African development, it is essential that a coherent policy position is presented to China which will ensure that African interests become decisive factors in the championed “win-win” cooperation.