Thomas P.M. Barnett :: Weblog

EDITORIAL: “Wrong model, right continent: China knows what it wants from Africa and will probably get it. The converse isn’t true,” The Economist, 28 October 2006, p. 17.

ARTICLE: “Never too late to scramble: China is rapidly buying up Africa’s oil, metals and farm produce. That fuels China’s surging economic growth, but how good is it for Africa?," The Economist, 28 October 2006, p. 53.

Good editorial and good article.

Some factoids: China now consumes 10% of Sub-Saharan Africa’s exports, controls over $1b of FDI and boasts an overseas presence of 80k people.

So out comes the oil and ores and timber and down go the Taiwanese embassies.

Here’s the real point:

Sadly, China’s success is an obstacle, as well as an inspiration. Its rise has bid up the price of Africa’s traditional raw commodities, and depressed the price of its manufactured goods. Thus Africa’s factories and assembly lines, such as they are, are losing out to its mines, quarries and oilfields in the competition for investment. Even if Africa’s labor is cheap enough to compete with China’s, its roads, ports and customs are far from good enough. If they are to provide jobs for their workers, not just rents for their governments, Africa’s economies must find less-exposed niches in the world economy.

In the end, China needs to help build that local infrastructure more broadly (and not just around the sources of raw materials) and eventually help move lower-end manufacturing to Africa as it moves up the production ladder itself. But before that happens, the editorial notes, Africa should bargain better on a more collective basis with Beijing.

For now, China’s share of African total trade with the world is not much more than half America’s (we’re almost 20 percent) and still way below the dropping EU share (currently at just above 30%), but it’s likely to continue growing. For example, Angola recently surpassed Saudi Arabia as China’s chief source of oil. So trade is expected to double by 2010, with high concentrations in places like Sudan, where China absorbs 70% of the country’s exports.

Nigeria is a good example of China’s tactics: low-interest loans to the government allow Chinese companies to come in and rebuild infrastructure destroyed in decades of civil war. The debt is then repaid in oil.

Yes, China’s aid reduces Africa’s dependence on Western aid--and Western demands. And yes, China is more forthcoming with technologies.

But both China and India are still sporting too many tariffs against cheap African manufactures while flooding those same markets with their own cheap goods, thus stifling movement toward diversification away from raw materials.

Eventually, the backlash will grow and expand from complaints to resistance to riots to serious targeting of Chinese firms and people as purveyors of unfair globalization practices.

And this will be a good thing that helps China see it’s purpose in the world as being something beyond just taking what it needs for development back home.