Chinese businesses are enjoying increased autonomy and economic freedom to invest in Africa, analysts say, challenging diplomatic perceptions that Beijing is playing puppet master on the continent.
With China’s role in Africa the subject of considerable tension with the US, the reality, according to financial experts, is that the sheer scale of Chinese interests makes overarching control impossible.
“To assume that everyone in Beijing is on the same page is incorrect,” said Martyn Davies, chief executive of Frontier Advisory in Johannesburg, an investment firm specializing in emerging markets.
“That somehow there’s this grand strategic plan and everyone is directed like pieces on a chessboard, as is often characterized, is not entirely the case,” he said.
Chinese capital has poured into countries including Nigeria, Angola, Zambia and South Africa at an intrepid pace over the past decade to capture the continent’s natural resources and fuel the booming economy back home.
Bilateral trade rose from US$10.6 billion in 2000 to US$106.8 billion in 2008, at an annual growth rate of more than 30 percent. Beijing claims trade will again top US$100 billion this year.
“Chinese oil companies have especially significant freedom to operate —- indeed they can sell to the spot market,” said Alex Vines, head of the Africa Programme for Chatham House. “Chinese construction companies are different, but there are so many of them, the government has difficulty keeping track of them outside China.”
China’s thirst for commodities is matched by Africa’s need for electricity, roads and clean water. The World Bank says Africa needs US$93 billion a year in infrastructure investment over the next decade to ensure its people have access to basic services, making Chinese efficiency attractive to governments.
The result has seen China dole out cheap money to state-owned companies to secure mining rights and infrastructure projects in Africa, outmaneuvering Western states and local competition.
A diplomatic cable published by the whistleblowing Web site WikiLeaks last week indicated that the US in particular is irked by China’s Africa policy.
The message quoted a senior US official in Nigeria describing China as “a very aggressive and pernicious economic competitor with no morals.”
However, many analysts believe Beijing is playing an enabling rather than controlling role, enticing Chinese businesses into Africa through financial perks, without the need to maintain direct links on the ground.
Chinese and African banks have formed joint ventures and other arrangements to stimulate trade.
The Industrial and Commercial Bank of China purchased a 20 percent stake in South Africa’s Standard Bank for US$5.6 billion in cash in 2007, at that time the largest foreign direct investment in Africa.
“Chinese firms are not relying solely on Chinese finance to do the kind of business that they’re involved in,” said Chris Alden, an expert on Africa at the London School of Economics. “They’re bidding for and increasingly getting tenders, World Bank tenders or other public tenders ... that are not linked with Chinese financial incentives or interests.”
Beijing also arranges contracts where commodities such as oil and minerals are exchanged for infrastructure, something the US and other Western states have not traditionally done. And as Chinese goods perforate African retail markets and trade becomes less commodity-driven, uncovering a Beijing master plan grows increasingly tricky.