Typically, Chinese government entities and companies finance and build infrastructure in exchange for African repayments and/or concessions of commodities or land. The conventional wisdom says that Africa needs infrastructure and China needs natural resources to fuel its industrializing economy, so the relationship is mutually beneficial. In addition, China benefits from creating new markets for its goods among Africa’s 1 billion people. Because of this level of involvement, the United States and European powers are frequently portrayed as “losing” to the Chinese in Africa on influence, trade and investment.
Then there are the critiques of China’s perceived conduct in Africa. The Chinese are often accused of a lack of transparency or uneven partnerships (e.g., privately demanding outsize commodities concessions or exclusive use of Chinese materials and workers on projects). China is also hammered for not pressing democracy and human rights in Africa deals and for shoddy labor standards applied to the Africans its ventures employ (as occurred in 2012 when Zambian miners rioted over their treatment). The most stringent China-in-Africa critiques border on conspiracy theory, even labeling China’s Africa venture as 21st-century colonialism.
These characterizations make “China in Africa” an easy target, but they are not reflective of reality. Closer scrutiny reveals that China is not taking over Africa in one dominant swoop. There is no singular standard by which the United States and others are losing a race to China in Africa. Technology is diversifying Africa’s economies and investment partnerships. And African governments and citizens are far more attuned to their own interests in relations with China and other nations than they are often portrayed.
When it comes to trade and investment, China does not lead in every category. It is one of a number of countries increasing commercial engagement in Africa. While China has become Africa’s largest trading partner, the United States leads in annual foreign direct investment (FDI), contributing 6.3 percent of Africa’s total $54 billion FDI inflow vs. China’s 4.5 percent, according to the United Nations Conference on Trade and Development’s 2015 World Investment Report. Bolstering these numbers are recent Africa expansions by U.S. companies such as GE, Procter & Gamble, Mastercard and Marriot.
The United States also ranks first in new FDI projects in Africa, while China ranks seventh. Moving forward, China will be less of a standout, as many countries take advantage of economic opportunities in Africa. Already, Brazil, Russia and India collectively invest more in Africa than China. In 2013. Malaysia, not China, held the largest Asian FDI portfolio in Africa. An expanding world eager to do business with Africa is creating more competition for China and more leverage for African governments and business to negotiate better terms with all of its trading partners.
While there certainly are some bad business deals and practices in China’s Africa partnerships, trends are in motion across the continent to address these criticisms. China-in-Africa critiques often gloss over the fact that African governments are sovereign entities with plenty of capable actors to look out for their interests — and that they often have active media and civil societies watching. These actors pressure African governments to better manage business with all outside partners. As in China, Africa’s freer markets are accompanying growing consumer power, stronger civil society actors, and more educated publics demanding freer media and more political accountability.
Finally, the characterization of China’s near-singular interest on commodities in Africa overlooks technology’s growing role on the continent. A burgeoning IT sector has taken root in Africa’s major economies, and it is shifting the setting for partners and investment. An increasing amount of venture capital (nearly $1 billion) and technical capacity to Africa’s new tech ventures and startups is coming from Silicon Valley. African entrepreneurs who worked in U.S. IT sectors are teaming up with American investors, both eager to tailor apps and digital services to a consumer market expected to spend more than $1 trillion by 2020. China and Chinese companies have been diversifying their interests in this direction, particularly in telecommunications. For example, Chinese cellphone maker Huawei has entered almost every African market.
Africa’s 21st-century business landscape is much more dynamic than the typical China-in-Africa narrative portrays. Expect this week’s summit to bring fresh pledges of investment and commercial partnerships between Africa and Asia’s largest economy. But talks on new investment deals by the 36 African heads of state and their entourages attending won’t be limited to this week — or simply with the Chinese.