Saying that China has now become Africa’s most important partner, René N’Guettia Kouassi raises his concerns as to whether the Sino-African relationship is going to remain a win-win one. In other words, he’s asking whether China can help reduce poverty in Africa.
The answer to this has both global and bilateral dimensions. The global dimension includes the impact on global wages, interest rates, manufactured goods and raw material prices, and eventually on global imbalances and net investment positions. It’s a global dimension that is rarely addressed in the context of poverty reduction. Most analysts concentrate on the bilateral channels that link China and Africa, such as the extraction of raw materials, trade, investment, export credits, aid and migration. Mirroring that focus, many concerns about China’s development impact concentrate on the bilateral channel, as is the case in Mr. Kouassi’s article.
Emulating its own experience at the hands of Japan, China provides less in grant aid than in cooperation, but usually prefers a package involving low-interest, resource-backed loans, construction-for-equity swaps, occasional debt relief and training. Infrastructure, agriculture and industry are the pillars of China’s development policy; and like Japan or South Korea in earlier times, China is a developmental state actor that has used government-directed lending and a competitive exchange rate as major policy instruments for pursuing its own growth strategy.
Where blame is to be apportioned, it has generally centred on China’s scramble for extraction rights, which might intensify the resource curse in mineral-rich countries, on its violation of governance standards leading to a worsening of corruption, on its free riding on Western debt relief whilst itself extending new loans and, lastly, on the unfair corporate competition it has created through the use of subsidised capital and through a lack of respect for environmental and social standards.
A “global-channel” perspective would arguably yield a more positive assessment of China’s role in Africa. The OECD’s African Economic Outlook (AEO) for 2011 analyses Africa’s surge in relations with emerging partners like China that are now at the top table of economic decision-making alongside traditional partners from Europe and North America. The latest report’s insights into Africa’s expanding partnerships after the 2008/2009 crisis show a dramatic shift in the world’s economic centre of gravity away from OECD members towards the east and the south. Africa is benefiting from their investment, trade and aid, but also from the macroeconomic, political and strategic advantages the emerging countries can offer.
This year's AEO report gives a cautiously positive verdict on the emerging partners’ impact on Africa’s development. It sees good prospects for technology transfer and access to finance, and finds no evidence that the new players are hindering Africa's industrialisation, debt sustainability or governance. The report argues that China’s resource-for-infrastructure loans compel resource-rich African countries to re-invest at least part of their earnings for national development. But as Mr. Kouassi rightly stresses, Africa needs a clear engagement strategy and must show greater transparency on all sides.
To maximise the development benefits of these new partnerships, African nations must first draw lessons from their dealings with traditional partners, and from the successful development experiences of the rising economic powers themselves. The economic independence that African economies are beginning to gain from globalisation can best be sustained if these countries draw up their own national development policies and coordinate these either regionally or at a pan-African level so as to negotiate more effectively with both their traditional and their emerging partners.