THE RISE OF CHINA AS AN EMERGING POWER IN THE GLOBAL POLITICAL ECONOMY AND ITS IMPLICATIONS FOR AFRICA’S DEVELOPMENT

1.  INTRODUCTION:

This paper provides further perspective on the rise of China and specifically its ‘rise into Africa’.  Is it an unqualified good? It looks at how China’s rise occurred and the significant role its government played in steering that rise. It concludes with a look at what this rise means for Africa and its development goals, it calls for the facts to be studied and assesses China’s likely impact on Africa’s Millennium Development Goals, governance and issues of conflict and peace – factors that will influence and shape the global political economy and Africa’s development.

2.  CHINA’S RELATIONS HISTORY WITH AFRICA AND ITS RISE:

Throughout its varied history, both China and Africa, have been characterised negatively by the West: China was always some form of red dragon to be suspicious of; Africa was always the undeveloped bush – a trend which continues in many circles today, which I choose not to perpetuate.  From about the start of China’s cultural revolution in 1966, though the 1970’s, followed by Deng Xiaoping’s ‘opening up’ and modernisation drive in the late seventies, until around mid-1989, China’s low key relationship with Africa continued decreasing in line with Africa not being of significant strategic importance to China (Large, 2008: 1). It thus received less aid, trade was marginalised and criticisms of Africa’s policies became more frequent (Taylor, 1998: 1-3).  This contributed, in part, to Africa’s ‘lost decade’ of the 1980’s as Africa failed to keep up with international markets.

China’s transition from an isolated state with a failed cultural revolution and an under-developed economy to where it is now, in roughly 30 years, is nothing short of phenomenal.  After Mao Zedong’s death in 1976, Deng Xiaoping introduced a series of modernisations called ‘gaige kaifang’ (‘opening up’ reforms of domestic, social, political and economic policy) from 1978, in order to jumpstart Chinas’ stagnant economy. The many significant reforms that were introduced can be grouped into agriculture, industry, defence and science and technology (Pretorius, 2008: 11) with, inter alia, the communal farming system being abandoned, the banking system being diversified, State-owned-enterprises being made more autonomous, private ownership of businesses being allowed and in-bound foreign direct investment being encouraged for infrastructure development, in the form of building factories and production centres. These initiatives created employment for millions of people who, with rising incomes, being increasingly economically active and benefitting from technology transfers and rapid growth foreign investment, helped create a vibrant export economy.

However, after the Tiananmen Square shootings on 04 June 1989, and the strength of international condemnation it received from the West, but muted sympathy if not open support it received from many African states, China changed its approach to Africa (Taylor, 1998: 5).  In fact, Africa and China began to rediscover their commonalities arising from the shared criticisms from, as well as experiences and suspicions of the West.  This created a ‘third-world solidarity and resentment at Western, Neo-Imperialist interference into the affairs of fellow developing countries’ (Taylor, 1998: 5). Subsequently, China dramatically increased its attention and financial support to Africa as a way of winning over and rewarding allies and sympathetic associates in a comparatively cheap and quick way (1998: 8). ‘In the period 1991-2005, its aid-programme to Africa increased from 1,68billion RMB to 7,47billion RMB, representing some 30% of all its aid contributions world-wide.  This aid has sponsored some 900 infrastructure and social development projects’ (Xiaoyun, 2004: 7). As opposed to the numerous conditions attached to Western aid, China’s is modelled on four distinctly different factors: It is aimed as a means of support to countries to strengthen, develop and change where needed;  It is aimed at infrastructure development, capacity development, joint ventures, etc;  China attaches no conditions to its aid; And, It’s transaction costs are less complicated and time consuming (Xiaoyun, 2004: 10) than the West’s.

3.  CHINA’S IMPACT ON THE GLOBAL POLITICAL ECONOMY:

China has entered, shaken and changed the global economy through its modernisation reforms and the resultant impact of a massive, economically powerful middle class fuelling consumer demand, with state-driven demands for foreign investment and infrastructure development, for a workforce of near one billion people requiring vastly increasing quantities of the worlds raw materials and energy in order to fuel its own growth and produce exports of price-competitive goods through a politically choreographed entry into and navigation of the global economy by a regulatory state. Many commentators call China the ‘worlds workshop.’ ‘Far from simply a gigantic production machine that consumes vast resources and has the ability to undercut Western prices, China has the ability to rewrite the rules of the game of global market competition’ (Bach, Newman and Weber, 2005: 3), who call it the ‘China Price’-effect.

China’s exports have grown by some 19% per year between 1981 and 1994 (Hearne, 2009: 1) while ‘its GDP has grown some ten times with real growth rate still high at 8,7% with only 4,3% unemployment. Industry contributed 48,6% to GDP, the service sector 40,5% and agriculture 10,9%’ (Yadav, 2010: 1).

As can be seen, the growth model is exports-driven.  But, as Das (2009: 2) confirms: ‘export success created large foreign reserves, that now total over $2 trillion… which became the centre of a gigantic lending scheme where China would finance and thereby boost global trade flows. Reserve investment grew to an estimated 60-70% of its $2 trillion.  Chinese funds helped keep American interest rates low encouraging increasing levels of borrowing, especially among consumers. In effect, China was lending the funds used to purchase its goods’, this was enabled further by a strong US Dollar (Chan, 2010: 1).  Whilst the widely-held global wisdom that prevails at the moment ascribes the 2007/8 Subprime crisis and resultant Global Financial Crisis to a variety of factors including, inter alia, lending to ‘un-creditworthy’ debtors, our interconnected, globalised economic world, unbridled greed, capitalism and the notion of free markets (ie: free from as many forms of government meddling as possible), one should not downplay the role China had in creating the preconditions for this crisis in almost overwhelming the global economic stage with the sheer size, speed and diversity of its ‘juggernaut economy’ (Chan, 2010: 2). Giles Chance calls it the ‘China effect’, saying that Western policy-makers have failed to appreciate its effect then and now, the impact of its exports on the fall in prices of goods and labour, its impact on inflation and on fuelling further consumer demand, etc, to the extent that the worlds ‘search for yield added to the pressures that caused the crash’ (Chan, 2010: 3).

In as much as the worlds markets have seen a surge in very well priced Chinese goods, which has impacted consumer spending and helped keep economies going,  many commentators are now pressurising and criticising the Chinese government, for example on what they call their ‘manipulations of currency to bring themselves as much as a 40% price advantage’ (Johnson, 2010: 1).

There is no doubt that China’s geo-economic and commercial impact has been significant and that it is challenging international investment norms. The Chinese government is cautiously encouraging direct investments abroad rather than holding US Government debt securities, causing a dramatic increase in the mid-2000’s (Rosen and Hanemann, 2009: 1-2). But they argue that even while this is the case, ‘China’s outbound FDI (OFDI) profile is poorly understood and a laggard in global investment terms’. They also cite that the ‘global economic turbulence is making Chinese investment insecure, that half of Chinese firms had scaled back their overseas investment plans as a result thereof, even whilst the government’s more cautious line includes withholding certain approvals and publically rebuking several high profile firms for their overseas investment plans.’  What’s more, China’s net FDI position is still negative with inward FDI stock of US$876billion well out-weighing its US$170billion of OFDI stock in 2008; and with US$5 of FDI assets under foreign ownership in China for every US$1 of Chinese OFDI, a consistently widening gap (2009: 7).

But how is China managing this politically?  Notwithstanding the dramatic political,  economic and social changes that have taken place since Deng Xiaoping’s reforms, China remains deeply concerned with securing its own future, safeguarding its interests and its national territory against the perceived unilateralism of hegemonic USA as its ‘primary destabilising power’, and advancing its socio-economic growth imperatives and political aims.  It has therefore adopted a defensive military strategy, makes every effort to avoid unwanted entanglements in international matters or in any internal matters of other countries and wishes, generally, to be a non-polarising force (Geissmann, 2006: 3-5).  Furthermore, to counterbalance US predominance, China is building strategic partnerships with other states through balancing, hedging and bandwagoning.

However, it is locked in a never-ending battle in balancing these security-driven imperatives with its economic growth and energy demand imperatives, causing it for example, to align with Iran and other crucial producer countries (for energy) on the one hand, who are not politically favoured by ‘the West’, and the USA (for economic matters) on the other hand.

Yet China sees the need for and wants to be recognised as a global strategic partner (Geissman, 2006: 1-8).  How the government strategically plans and manages the country’s economic growth, its impact on the global economy, how it deals with human rights abuses in its own country and that of some states in Africa with whom it has economically beneficial relations (such as Zimbabwe), and how it responds to the pressures of compliance on various other ‘Western’ values and social norms, will determine how it fairs globally.  To the extent that it has outgrown every other country for the last 30 years, with, for example, average real incomes more than doubling in 1978-1989 period and then doubling again in the 1989-2007 period (Dimaranan, et al, 2007: 17), yet without it following the West’s Neoliberal Free-trade market ideology and subscribing to the Washington Consensus, has astounded even its harshest critics in the West.

4.  IMPLICATIONS OF CHINA’S RISE ON AFRICAS DEVELOPMENT:

Many alarmist views continue to exist, portraying China’s re-engagement with Africa as plundering for gain at Africa’s expense in a win-lose scenario. China’s rise, particularly in Africa, is seen by many as thorny at least, or more clearly an outright threat to territory, economic independence and ideological dominance.  One New York Times op-ed called China a ‘rogue donor…giving aid that is non-democratic in origin and non-transparent in practice… and its effect is typically to stifle real progress while hurting ordinary citizens’ (Naim, 2007: 1). Is China’s a new, unrivaled developmental model? Could it be a catalyst for Africa’s prosperity? Could it be a cloaked neocolonialist attempt, or elements of all three? Many in the West would have us believe the worst case scenario’s.  Whatever the reasons, they are distinctly political too. As Muekalia (2004: 3) records: ‘China’s rise into Africa reflects its acceptance of its post-Cold War role as sole balancing power to the US and torch-bearer of the Third World.’

There is no doubt that Africa’s development (of all kinds) is substantially behind that of the developed world in many respects, and that its governance record leaves a lot to be desired at times.  So assistance, interest, investment, aid or gain for Africa in any form, is to be welcomed.

If what has happened for China’s unemployment statistics can be replicated in Africa, who is anyone to complain?  Are unfulfilled, yet ‘democratic’ promises better than ‘undemocratic aid’? And after all, ‘It doesn’t matter if a cat is black or white, so long as it catches mice’ (Xiaoping, n.d). Certainly, all such interest carries with it implications for Africa, no matter who is expressing interest and whatever form that interest takes. There is no free lunch.

This section looks at four areas, each of which have significant implications for Africa’s development, namely: a call for the facts, Africa’s Millennium Development Goals, governance, conflict and peace.

The first matter I believe ought to be studied, debated and reported on, are the real facts as to China’s work, interest, investment and aid in Africa. Compare like-on-like with the West’s, separate the myths from the facts and what was promised from what was delivered. Establish what Africa’s development opportunities are and to what extent China is attending to those as opposed to attending to their own opportunities in Africa?  In other words: Is China rising in Africa for Africa, for China or for both and how does this compare with the West?  Failure to do so, and to deal with this politically, will escalate tensions and fuel Realist fears between Africa and the West, and between China and the West, which in turn will impact on Africa’s development, no doubt.

Africa’s development is massively dependent on correctly applied finance, trade and investment, donor funding and debt relief in ways that help Africa best meet the eight Millennium Development Goals, at least: eradicating extreme hunger and poverty; achieving universal primary education; promoting gender equality and woman empowerment; reducing child mortality; improving maternal health; combating HIV/AIDS, malaria and other diseases; ensuring environmental sustainability; developing global partnerships for development.  China has already demonstrated the ability to meet many of its own MDG goals and has the ability to make important, high-impact contributions towards Africa’s targets, with African states as partners, thereby addressing the most basic of daily survival needs for the majority of Africans.  This it must do and Africa should welcome it.  ‘China’s playing an important role – first as a buyer of resources, second as an investor of commercial capital and third as development donor. The point is to make all of this much more systematic, to have a real investment plan that enables governments to say, within the next five years here’s a power grid and a health system put in place with the help of partner financing’ (Sachs, 2010: 2).

China’s approach to other states and governance matters more generally, is based on the Chinese Communist Party’s (CCP) 12th Congress decision in 1982: ‘independent, equal, respect for each other and non-interference in each other’s internal affairs’ (Anshan, 2006: 6). Whilst this is laudable in theory, and a distinct departure from the West’s often impatient and prescriptive approach, it may not always be the best approach considering the complex global implications of China’s actions.  Soon, China will have to take another ‘step up’ toward assuming its full role as a global leader, and that will mean distinguishing itself as a non-rogue state (as defined by many in the West) by taking a somewhat less opaque foreign policy approach to Africa’s ‘rogue leaders’ than its current approach.  ‘Good governance’ is not just ‘any governance’ and is certainly not ‘rogue governance’, if there is such a thing.  And rogue leaders cannot be rewarded or propped up.  Yet this is what China is all too often accused of doing with regards to Zimbabwe and Sudan for instance. At some stage, China will have to set its ‘non-polarising’ ideals aside, on occassion. That said, the MDG’s and other upliftment and development goals that are aimed at Africa’s humanity cannot be selectively applied to well-governed, ‘compliant’ states only, thereby denying the already oppressed and marginalised within the worst ruled, rogue states, hope.

China will have to separate the scepticism of the West it shares with many of world’s worst rulers, with that of joining the same West as a global leader. Can China build and travel on its own road of being a global leader, instead of being forced onto the Western road, yet still be going in generally the same direction?  I believe it can.  The step up I refer to therefore, contains the challenge for China to rather be the ‘weakest’ link initially in a strong good governance chain, than the ‘strongest’ link in a weak rogue governance chain – relatively speaking, of course.  And of course, it’s for the West to accept this different approach.

China can build on its already improved track-record of participation in peace-keeping missions, particularly in Africa. ‘So far, China has participated in all UN Peacekeeping Operations in Africa. In the case of Sudan, China has helped pressure President Bashir to accept a UN security presence and has contributed its full contingent of peacekeepers. A number of important actors, like UN’s Jan Eliasson, the British Foreign Minister and the US’ Special Rapporteur on Darfur have praised China for this consistent pressure since the autumn of 2006’ (Østergaard, 2008: 1).  And it can use these opportunities to prevent a states descent into chaos while employing credible soft-power to encourage phased liberalisation of the economy and its people.  The different road I referred to earlier, applies to their approach to sanctions too, not permitting the US to use the UN Security Council to bully states, and defending the principle that it is not the purpose of the UN to interfere in  in other UN members internal affairs, at least not without the acceptance of the country involved’ (Østergaard, 2008: 1).

5.  CONCLUSION:

There is no doubt that China’s rise is not yet complete and that its role in Africa has really just started.  The seemingly win-win relationship between Africa and China, of development to and resources from Africa, shows that Africa’s development is ‘everybody’s business. Yet, the manner in which China and African states pursue their agenda, has distinct political and economic implications, particularly because of its ‘double-edged’ nature, but also now as the world grapples with the after-shocks of the global financial crisis.  It is therefore in the best interests of all role players, including the UN and other international institutions, and the West, to adopt an approach to China’s rise in Africa that benefits all.  In sum, China’s rise into Africa is a qualified good with the extent of the qualification dependent on many factors that impact the global political economy.

6.  BIBLIOGRAPHY:

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One thought on “THE RISE OF CHINA AS AN EMERGING POWER IN THE GLOBAL POLITICAL ECONOMY AND ITS IMPLICATIONS FOR AFRICA’S DEVELOPMENT

  1. Usually I do not read article on blogs, but I would like to say that this write-up very compelled me to check out and do so!

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