What is China doing in Africa?

An interview to Eric Olander, founder of “The China Africa Project

1) What is China doing in Africa? How is it building relations with African states? What did it learn from the mistakes that the Europeans made decades ago?

Entire PhD dissertations are being written about the above questions so it’s incredibly hard to summarize a relationship as varied and dynamic as that between China and Africa. The bottom line is that there is no single thing that the Chinese are doing in Africa. That is, is this a trading relationship? Yes. A large one in fact. Is this an investment relationship? Sort of. Chinese investment on the continent remains relatively small compared to other major powers. Is this diplomatic relationship? Absolutely! China is actively involved in every major African multilateral organization including the African Union, ECOWAS and many others. Is this a military relationship. It is and growing fast. There are more Chinese soldiers in Africa today under UN command than that from any other permanent Security Council member. Is this a cultural relationship? Sure is. While there are no accurate figures on the precise number of Chinese expatriates in Africa, the estimates range between 1–2 million people. Moreover, there are more African students in China than in any other country in the world.
This is only a short list of the various levels of integration, dialogue and cooperation between the Chinese and Africans. So it’s really difficult, if not impossible, to boil down a relationship as vast as this one is to any single defining category. It is economic, political, diplomatic, agricultural, corporate all wrapped up together.

When we consider how the Chinese are building relations with African states it is important to first define who exactly you are referring to when you say “the Chinese?” The Chinese state prefers to deal with its counterparts, particularly at the elite level. So the “Chinese” here are on the political side. There are other Chinese who work lead the country’s vast state owned enterprises who interact both political and corporate counterparts in Africa. Then there are private sector companies, particularly in technology, who are engaging governments, investors and entrepreneurs across the continent. The point here is that Chinese actors of all sorts are building relationships across both public and private sectors as they continue to expand their presence in almost every African country.

The Chinese approach to Africa is entirely different from that of the Europeans, and even the Americans to some extent, given the historical differences. Don’t forget that China too was the victim of European imperialism, an issue that remains highly potent in China to this day. So when the Chinese approach Africans there is this shared bond that Beijing leverages in a very sophisticated manner to build trust. The most visible manifestation of this Chinese attitude towards Africa can be seen in how its diplomacy. Unlike the West, who for the most part retains a paternalistic attitude towards Africa, the Chinese approach is more as equals. The Chinese also have a more positive outlook towards the economic potential in Africa than is common in Europe. While most Europeans still think of Africa as a basket case filled with disease, war, rape, famine and other depressing adjectives, the Chinese largely see untapped markets for Geely cars, Huawei phones, Baidu internet searches and more. Africa is an emerging market of one billion people, who are young, rapidly urbanizing and home to some of the world’s fastest growing economies. The Chinese are accustomed to working and investing in highly volatile regions where ROI is measured in decades not years. Europeans and Americans don’t have that same appetite for risk which explains how the approach of Westerners and Chinese varies so much from one another.

2) What is the expected ROI, and after how much time are they likely going to see the results?

The Chinese don’t measure ROI in the same terms that Europeans and Americans do. They are playing a long game in Africa where the dividends will come over the next few decades. Take some of the mining investments that Chinese companies have been making in the DR Congo, home to some of the world’s most valuable strategic minerals used in electronics, defense systems and other vital technologies. Slowly, quietly, out of sight, Chinese companies have been buying up small to mid-size mines with an eye on cornering the market for certain minerals. This is a strategy that is playing out over years but will give them a huge advantage when they have same market leverage with these minerals as they currently do with Rare Earths where the Chinese have 90+% market control.

Chinese companies are also shifting more manufacturing operations to the continent, particularly to South Africa where they are supplying both African and international markets. This too is a long term investment given the difficulties of succeeding in Africa as the consumer market continues to evolve. Nonetheless, they are there.

3) How will these investments affect the energy policy of China?

Not too much. While Sudan, Angola and Nigeria are all major oil exporters to China, the overall percentage of China’s carbon-based energy consumption is relatively small compared to Mideast and Persian Gulf countries. Africa is part of China’s energy diversification strategy but it is not a major player by any means. Remember, Africa accounts for around 4% of China’s global trade balance (including energy) which is about the same as Australia, so although China is very important for Africa the same is not true in reverse (economically speaking).

4) What role does Africa play in the new China’s “One Belt, One Road” initiative?

Countries from Kenya up along the northeastern coast from Djibouti through the Suez Canal in Egypt are all playing a critical role for OBOR. The new navy base in Djibouti will allow for the Chinese to provide enhanced protection for its commercial naval operations in the Gulf of Aden as well as access to the Indian Ocean. Djibouti will also be home to a massive new Chinese data network operations center focused on supporting OBOR. Just as the great powers of the 20th and 19th centuries recognized the strategic importance of the Suez Canal, the Chinese are now the latest foreign power to focus on this vital waterway. The Chinese are investing billions to upgrade the canal’s facilities so its naval forces and commercial shipping vessels can best take advantage of access this strategic route.

In Kenya and Tanzania, the Chinese are building vast ports, airports and railroads that are intended to feed raw materials into the OBOR trading network. While this infrastructure will initially focus on extracting natural resources, the longer term plan no doubt includes using ths network to supply finished goods back into the African market.

5) In which countries is China investing more? Why?

Much like the United States and European countries, the bulk of China’s investments in Africa are focused on oil producing regions and those countries with valuable natural resources. That said, China’s investment portfolio is increasingly much more diverse than the West’s as Chinese companies move into manufacturing, telecom and services.

6) How are the migratory fluxes between Europe and Africa, or China and Africa, going to be affected?

These two totally different and unrelated migratory phenomena so it’s not possible to make any linkages between them. The Chinese for their part are cracking down hard on African migrants in the PRC so I would expect migration to China from Africa to slow. While thousands of Chinese have migrated to Africa over the past 10 years, I expect that number to slow as well due to worsening economic conditions on the continent along rising anti-Chinese sentiment in some countries.

7) What role does Italy play in “The China Africa Project”?

None whatsoever. Italy is an insignificant player in this relationship and is simply too small to ever have an impact. That said, your prime minister is a source of amusement for those of us in China-Africa space as he utters ridiculous statements like: “We can’t consider Africa as the second Chinese continent.” It’s this kind of rhetoric that demonstrates how far behind the times Italian and European leaders are in their thinking. China is the 9th largest foreign investor in Africa, far behind the former colonial powers, even Kenya and South Africa, so when Paolo Gentiloni says something ridiculous like this it just demonstrates that he is clueless on the issues involved and thus no one really takes him seriously on such important geopolitical matters involving China-Africa.