BEING A PAPER PRESENTED BY THE DIRECTOR, CENTER FOR CHINA STUDIES, (CCS) AT AN INTERNATIONAL SEMINAR ON CHINA-AFRICA COOPERATION AND AFRICA’S DEVELOPMENT, HELD IN LILONGWE, MALAWI, ON THE 7TH-9TH OF SEPTEMBER, 2017.
“In a mere two decades, China has become Africa’s biggest economic partner. Across trade, investment, infrastructure financing, and aid, there is no other country with such depth and breadth of engagement in Africa. The Chinese “dragons”- firms of all sizes and sectors-are bringing capital investment, management know-how, entrepreneurial energy to every corner of the continent-and in so doing, they are helping to accelerate the progress of Africa’s “Lions”, as its economies are often referred”. Mckinsey & Company Report (June, 2017).
The Mckinsey And Company is a U.S-based worldwide management consulting firm that conduct qualitative and quantitative analysis. Founded in 1921 and with offices across the world, the New York Times called the firm, the most prestigious and reputable management consultancy in the world. The company’s highly anticipated report from which our opening quote was taken in its own words is “a fact-based picture of the Africa-China economic relationship”, whose “foundation is large scale data… including on-site interviews with more than 100 senior African business and government leaders, as well as the owners or managers of more than 1,000 Chinese firms and factories spread across eight African countries that together make up approximately two-thirds of sub-Saharan Africa’s gross domestic product (GDP)”.
While this paper will draw substantially from the report of Mckinsey & Company, we will first set out, the context of the contemporary China-Africa cooperation drawing from its foundational antecedents, and key mechanisms that have driven its trajectories to the present and the future.
The dance of the loins and the dragon was forged very soon after the founding of the New China in 1949, as Beijing quickly committed to Africa’s struggles then, to end colonial domination. Prior, to the legendary Bandung conference, which held in Indonesia in 1955 on Asian-African solidarity, Premier Zhou Enlai has drawn attention in his report to the first National People’s Congress in 1954 on the need for the New China to promote business relations with African and Middle Eastern countries in order to improve understanding and create favorable conditions for the establishment of normal relations. Prior to that, the Communist Party of China (CPC) International liaison bureau has in 1953 hosted Walter Sisulu, then General Secretary of the South African National Congress (ANC) and Felix Moumie, leader of the Cameroun’s foremost anti-colonial movement (UPC), who has refused any form of collaboration with the French colonial regime.
The 1955 Asian-African conference at Bandung, in Indonesia which was attended by twenty nine Asian and African States was a watershed in China-Africa’s relations. Premier Zhou Enlai led the Chinese delegation and six African countries-Egypt, Ethiopia, Liberia, Libya and soon to be independent Sudan and Ghana also were in attendance.
Soon after, Bandung, the mutual empathies which flowed from shared history of colonial domination and anti-imperialist struggles translated to a commercial deal in which China agreed to purchase Egyptian cotton and an exchange of trade offices in their respective capitals, culminating in Egypt becoming the first African country to recognize the Peoples Republic of China, a rare diplomatic feat then, at a period of intense imperialist hostility to the emergence of New China.
The high point of China’s cooperation with Africa came with the historic visit of premier of Zhou Enlai to ten African countries from December 1963 to February in 1964. The two month-long diplomatic sojourn in Africa laid the foundation and also signaled “the beginning of a Chinese policy to emphasize the importance of regular, senior, face-to-face contact with African leaders, a practice which continues to the present day”. Since the past two decades, a tradition has evolved in which Chinese foreign ministers have visited Africa during their first foreign trips each year, a practice that Chinese foreign ministry spokesperson early this year, called, “a much treasured diplomatic tradition for China”.
The African tour of Premier Zhou Enlai, laid out principles and outlines for much of the crucial cornerstones that were to define Sino-African relations in subsequent years. In Accra, Ghana, Premier Enlai enunciated the five principles to guide China’s relations with African and Arab countries, which accorded with the fundamentals of China’s five principles of peaceful co-existence and also the “Ten principles of Bandung”. More importantly Premier Zhou Enlai outlined the eight principles that would guide Chinese aid and assistance to Africa. Because of its significance as a framework for understanding the contemporary growth of China-Africa cooperation, it will be outlined below in full.
Ø “The Chinese Government always bases itself on the principles of equality and mutual benefit in providing aid to other countries. It therefore, never regards such aid as a kind of unilateral alms but as something mutual.
Ø In providing aid to other countries, the Chinese government strictly respects the sovereignty of the recipient countries, and never attaches any condition or asks for any privileges.
Ø China provides economic aid in the form of interest-free or low interest loans and extends the time limit for repayment when necessary so as to lighten the burden of the recipient countries as far as possible.
Ø In providing aid to other countries, the purpose of the Chinese government is not to make the recipient countries dependent on China but to help them embark step by step on the road to self-reliance and independent economic development.
Ø The Chinese government tries its best to help recipient countries build projects which requires less investment while yielding quicker results, so that recipient governments may increase their income and accumulate capital.
Ø The Chinese government provides the best quality equipment and material of its own manufacture at international market prices. If the equipment and material provided by the Chinese government are not up to the agreed specification and quality, the Chinese government undertakes to replace them.
Ø In providing any technical assistance, the Chinese government will see to it that the personnel of the recipient country fully master such technique.
Ø The experts dispatched by China to help in construction in the recipient countries will have the same standard of living as the experts of the recipient country. The Chinese experts are not allowed to make any special demands or enjoy any special amenities”.
In a cold war era, where countries use aids, assistance and even humanitarian support as instruments to extract political concession and forge ideological and military allies, China’s principles of official aid and assistance were significantly epochal, in been devoid of any hegemonic designs and the tradition is still discernable even today as Beijing takes bigger role in shaping the contemporary global system.
In 1967, China took the final decision to finance the Tanzania-Zambia railway project, a flagship and precursor to the contemporary Sino-Africa cooperation and notwithstanding its internal political upheaval- the disastrous cultural revolution that spanned from 1966 to 1976, China delivered on the completion and handover of the project in 1974, setting out the tradition of promise fulfillment and target deliverables that would be the key hallmark of contemporary China-Africa cooperation.
The Mckinsey Report agreed that “one of the concrete expressions of that early cooperation between China and Africa was China’s construction of Tanzania railway, which linked landlocked Zambia, with the port of Dares Salaam in Tanzania. Britain, Japan, West Germany and the United States, as well as the United Nations (UN) and the World Bank had all declined to fund the project, deeming it financially unviable. Only China-at the time poorer than both Tanzania and Zambia-agreed to fund it, to the tune of 3 billion U.S dollars in today’s money. Mao told Nyerere, “to help you build the railway, we are willing to forsake building railways for ourselves”. This is the extent to which the historic China-Africa cooperation transcends mere economic logic.
The return of China to the United Nations in 1971 with the support of twenty six African countries to defeat U.S obstructionism provided vital vigor to the development of Sino-Africa cooperation.
From the 1970s and to the 80s and into the new millennium, China-Africa cooperation developed at a steady pace and culminated with the founding of the Forum on China-Africa Cooperation (FOCAC) in the last quarter of the year 2000. Prior to then, President Jiang Zemin visit in 1999, to the headquarters of the Organization for African Unity (OAU) that became African Union (AU) in 2002, reaffirmed the initial principles that has driven Sino-Africa cooperation and laid out the roadmap for its development, especially in the new millennium. The five points, according to him includes
Ø “To foster a sincere friendship and became each other’s “all weather friends”.
Ø To treat each other as equals, respect each other’s sovereignty and refrain from interfering in each other’s internal affairs.
Ø To seek common development on the basis of mutual benefits;
Ø To increase consultation and cooperation in international affairs; and
Ø To look into the future and create a more splendid world”.
The Forum on China-Africa Cooperation (FOCAC) consummating the historic trajectories which relations between the two sides have earlier traveled, inaugurated a new path of immense possibilities and opportunities that is currently the dancing floor of the lions and the dragons, which is now at the cutting edge of global scholarly interrogations and political punditry.
The Mckinsey & Company Report that would be generously referred to in this paper is one aspect of the global purview of China-Africa relations in the contemporary times.
The development of China’s several national aggregates, especially since the historic 3rd plenary session of the 11th Central Committee of the CPC in 1978, that took economic modernization as the core of the reform and opening up policy, has raised the profile of Sino-African relations. The resurgence of Beijing to the center of international affairs and her assumption of bigger global responsibility as a major country, has put her relations with Africa on the global spotlight, but has more importantly increased the dimensions, depth and intensity of Sino-Africa cooperation, with the effect that Beijing is in the frontline of the current exponential revival and renewal of Africa, especially in the key socio-economic fundamentals of infrastructure construction, industrialization and agricultural modernization.
The platform of the Forum on China-Africa Cooperation (FOCAC) has proven to be effective mechanism through which Sino-Africa relation has been deepened and widened. Its three yearly ministerial conferences which have had between them, since inception, two heads of state and government summits are defined by its unique structure of absence of bureaucratic behemoth but with efficient processes of follow-up mechanisms of implementation monitoring, deliverance of specific goals and targets. The strategic driver of the FOCAC process has been consultative and dialogue framework through which Africa and China maintain steady momentum of contacts and coordination. The trust and confidence built through these processes of engagements have trickled to people-to-people contacts and triggered flow of business transactions among the organized private sectors of the two sides. According to the Mckinsey & Company’s study, “In the eight African countries we focused on, the number of Chinese-owned firms we identified was between double and nine times the number registered by China’s Ministry of Commerce (MOFCOM), until now the largest data base of Chinese firms in Africa. Extrapolated across the continent, these findings suggest there are more than 10,000 Chinese-owned firms operating on Africa today. Around 90% of these firms are privately owned-calling into question the notion of monolithic, state-coordinated investment drive by “China-Inc”. Although state-owned enterprises (SOEs) tend to be bigger, particularly in specific sectors such as energy and infrastructure, the sheer multitude of private Chinese firms working toward their own profit makes Chinese investment in Africa a more market driven phenomenon that is commonly understood”.
The FOCAC mechanism through which China and Africa have deepened engagement, has undoubtedly laid out the strategic fundamentals and framework, upon which the market have thrived to drive the exponential growth in business confidence.
The election of president Xi Jinping in 2012 not only further consolidated the strand of China-Africa cooperation as one of the key fundamentals of Chinese foreign policy but was a decisive and remarkable game-changer in Africa-China relations. The second leg of his first ever foreign visit in March, 2013 as president was to Africa, straight from Moscow in Russia. During the visit to Tanzania he reaffirmed the historic bond of affinity that has existed between China and Africa, and also pointed to the future of the two sides and the huge opportunities and possibilities, it hold for the two peoples.
According to him, “China-Africa relations, enjoying a favorable international and domestic environment as well as popular support, stand at a new historical starting point. Africa, a continent of hope and promise has become one of the fastest growing regions in the world and is forging ahead like a galloping African Lion. China, on its part, continues to enjoy a sound development momentum. The foundation of China-Africa cooperation is more solid and our cooperation mechanisms have been further improved. Advancing China-Africa cooperation represents the trend of the times and the will of our peoples”.
President Xi Jinping’s indefatigable optimism about Africa and the bright prospects of China-Africa relation were to echo even more loudly at the 2nd summit of the heads of state and government of the Forum on China-Africa Cooperation (FOCAC) that held in South Africa’s city of Johannesburg between the 4th and 5th of December, 2015. President Xi Jinping said that “In conducting China’s relations with Africa, we adhere to the principles of sincerity, practical results, affinity and good faith and uphold the values of friendship, justice and shared interests, and we will work with our African friends to embrace a new era of win-win cooperation and common development”, and against the background of the foregoing, he proposed “that the new type of China-Africa strategic partnership be upgraded to a comprehensive strategic and cooperative partnership”.
And to construct and promote the “comprehensive strategic and cooperative partnership, President Xi said at the historic summit that “China will implement ten cooperation plans with Africa in the next three years”, which includes the following:
Ø China-Africa industrialization plan
Ø China-Africa agricultural modernization plan
Ø China-Africa infrastructure plan
Ø China-Africa financial plan
Ø China-Africa green development plan
Ø China-Africa trade and investment facilitation plan
Ø China-Africa poverty reduction plan
Ø China-Africa public health plan
Ø China-Africa cultural and people-to-people plan
Ø China-Africa peace and security plan
And to effectively implement the plans President’s Xi Jinping announced a funding support of 60 billion U.S dollars.
It is now nearly three years since the historic summit held and nearly most of the funding support has been disbursed with the consequence that Africa’s landscape has greatly changed with several infrastructural projects completed and put to use, while many others are ongoing. The declaration of the Johannesburg summit which was endorsed by all the participating heads of state and government agreed that “China-Africa cooperation has been constantly enriched, covering broader areas with more diversified participants and FOCAC has become a resounding brand of China-Africa solidarity and cooperation in Africa, having earlier observed “that FOCAC has achieved mutually beneficial results during the past 15 years since its establishment”, and with “highly commendable major follow-up actions…..”.
The Report of the Mckinsey and Company, released some few months ago, precisely in June, bears out eloquently the strategic significance of the cooperation. According to the Report “We evaluated Africa’s economic partnership with the rest of the world across five dimensions; trade, investment stock, investment growth, infrastructure financing and aid. China is in the top four partners for Africa in all these dimensions. No other country matches this depth and breadth of engagement”.
Among Chinese firms surveyed in Africa in the Mckinsey’s study, 74% of them said they are optimistic about their future in Africa and these firms are in several diverse sectors of the African economy. According to the Report, “Nearly a third is involved in manufacturing, a quarter in services, and around a fifth in trade and in construction and real estate. In manufacturing, the report estimate that “12% of Africa’s Industrial Production-valued at some 500 billion U.S dollars a year in total-is already handled by Chinese firms, and in infrastructure, Chinese firm’s dominance is even more pronounced and they claim nearly 50% of Africa’s internationally contracted construction market”.
The report further underscored the three main economic benefits to Africa from Chinese investment and business activity, identifying job creation and skills development, transfer of new technology and knowledge, and financing and development of infrastructure.
Specifically the Report outlined that
- “At the more than 1,000 companies we talked to, 89% of employees were Africans, adding up to more than 300,000 jobs for African workers. Scaled up across 10,000 Chinese firms in Africa, these numbers suggest that Chinese-owned business already employ several million Africans”.
- “Nearly two-thirds of Chinese employers provide some kind of skills training in companies engaged on construction and manufacturing where skilled labour is a necessity, half offer apprenticeship training”.
- “Half of Chinese firms have introduced a new product or service to the local market and one-third has introduced a new technology. In some cases, Chinese firms have lowered prices for existing products and services by as much as 40% through improved technology and efficiencies of scale”.
- “Chinese construction contractors command around 50% of Africa’s international engineering, procurement and construction (EPC) market. African government officials overseeing infrastructure development for their countries cited Chinese firm’s efficient cost structure and speedy delivery as major value-adds”.
On the whole, the report believed that “China’s growing involvement is a strong net positive for Africa’s economies, governments and workers,” but also noted areas that need significant improvement which includes that “by value, only 47% of the Chinese firm,s sourcing was from local African firms, representing a lost opportunity for local firms to benefit from Chinese investment,”… and also some instances of “major labour and environmental violations by Chinese-owned businesses. These range from in inhumane working conditions to illegal extraction of natural resources, including timber and fish”.
Optimistically, the report said “one thing is clear to those who are closest to the Africa-China relationship: it will grow”. Summarizing the views of more than 100 African business and government leaders interviewed in the study, it held that “nearly all of them said that Africa-China opportunity is larger than that presented by any other foreign partner-including Brazil, the European Union, India, the United Kingdom and the United States”.
Opportunities for expanding the frontiers of China-Africa cooperation and multiplying its value chains is a work in progress and China’s new initiative on international co-operation, the “One Belt, One Road” will add greater momentum to it. The “Silk Road Economic Belt and the 21st Century Maritime Silk Road”, announced in 2103 by President Xi Jinping have taken off earnestly. As a new strategic pillar of evolving multi polar global order, the “Belt and Road” as it is popularly called, is a system of global network of overland and maritime infrastructural connectivity that would deepen and facilitate people-to-people contacts and cultural cross-fertilization, enhance financial integration, and create a global community of shared interests and common aspirations. Originally aimed to revitalize the ancient Silk Roads that traversed Asia, Europe and the coast of Africa, the initiative already welcomed by more than 132 countries, is now a global framework of international cooperation, beyond the original ancient silk routes and embracing the entire world community. At an international conference held last May in Beijing, President Xi Jinping in a speech to the meeting titled “Work together to build the Silk Road”, outlined the broad vision and framework for the initiative. According to him “we should build the Belt and Road into a Road of peace. The ancient Silk routes thrived in times of peace but lost vigour in times of war. The pursuit of peace of the Belt and Road Initiative requires a peaceful and stable environment. We should foster a new type of international relations featuring win-win cooperation and forge partnerships of dialogue with no confrontation and of friendship rather than alliance.
All countries should respect each other’s sovereignty, dignity and territorial integrity, each others development paths and social systems and each other’s core interests and major concerns”, adding that “We should foster the vision of common comprehensive and sustainable security and create a security environment built and shared by all”
Underscoring the centrality of development, President Xi Jinping noted that “Development holds the master key to solving all problems”, and that “in pursuing the Belt and Road Initiative, we should focus on the fundamental issue of development, release growth potential of various countries and achieve economic integration and interconnected development and benefit to all”.
Identifying industries as the foundation of economy, he said “we should deepen industrial cooperation so that industrial development plans of different countries will compliment and reinforce each other”.
According to President Xi Jinping, “finance is the life blood of modern economy, and only when the blood circulates smoothly can one grow”, and added that “we should establish a stable and sustainable financial safeguard system that keep risks under control, create new models of investment and financing, encourage greater cooperation between government and private capital and build a diversified financing system and a multi-tiered capital market”.
Pointing at “Infrastructure connectivity as the foundation of development through cooperation President Xi Jinping exhorted that “we should promote land, maritime, air and cyber space connectivity, concentrate our efforts on key passage-ways, cities and projects and connect networks of highways, railways and seaports”.
The core areas of the Belt and Road framework that is identified in the Chinese leader’s speech are the principal areas of the concerns for Africa’s growth, sustainable and inclusive development.
This implies that the main areas of the Belt and Road international cooperation scheme, align fundamentally and objectively to the strategic requirements to re-invigorate the Africa’s economy, create the enabling framework, boast her competitiveness, and nudge her to the mainstream of the global value chains. The Belt and Road mechanism represent an advance framework of the FOCAC process, which has been the main institutional driver for China-Africa cooperation in the nearly quarter of a century.
The Belt and Road framework and the FOCAC process are integrated mechanism to consolidate and advance the strand of China-Africa cooperation and mainstream it to the top-notch of the evolving contemporary international economic architecture and inclusive global order.
The decisive opportunities presented by these frameworks to Africa’s renaissance are immense but cannot come on its own. Africa need to take proactive measures and deliberate policy engagements. As is well known in Africa, a single hand does not clap. It requires two hands to clap and the dance of the lions and the dragons would only be more strong and beautiful, if all hands from both sides clap more energetically and loudly too.
As the McKinsey’s Report observed that while it believes that “the acceleration of the Africa-China partnership will in large part be business driven, governments both in Africa and China can do much to enable increased investment, growth and development through better governance”. Among the Report’s recommendations, it suggest that “the most important step African government could take is to simply define what they want from the Africa-China relationship and to draw up some simple steps for getting there”, adding that “every country needs to think through what a good China strategy means for its unique context”.
This represents very broadly, the key challenge to Africa on the issue of the China opportunities to the continent.
Charles Onunaiju
Center for China Studies (CCS)
Abuja, Nigeria.
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