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Foundry Daily News

05. November 2007

China's presence in Africa grows

Source: IOL

The purchase of a 20 percent stake in Standard Bank by the Industrial Commercial Bank of China (ICBC) is but the latest sign of China's growing presence in Africa and of its capacity to influence events in the continent from Cape to Cairo and Lagos to Lilongwe.

The size of the ICBC - it is the world's largest bank if market capitalisation is the yardstick - emphasises the importance of the deal for South Africa and Africa as whole, given that Standard Bank is located in no less than 18 African countries.

There is another perhaps more imperative reason for the importance of ICBC's acquisition: its largest stakeholder is the Chinese government, which has identified Africa as a major arena in which to secure natural resources in general, but oil and gas in particular for its burgeoning economy.

The link between the Chinese bank and the mandarins in Beijing implies that its further ventures into the African interior from its South African base will have the sanction and support of President Hu Jintao and his ministers.

The origins of China's economic drive into Africa go back to the pro-market reforms introduced by Deng Xiaoping after the death in 1976 of Mao Zedong and the revitalising impact the reforms had on the Chinese economy after more than 25 years of stultifying control by government bureaucrats.

The liberating influence of Xiaoping's bold reforms is manifest in the phenomenal growth of the Chinese economy from the mid-1980s to the present day: during the last two decades annual GDP growth has been in the order of 10 percent, an incredible achievement in light of the huge setbacks suffered as a consequence of Chairman Mao's policies of enforced collectivisation and industrialisation.

Once the boom started the Chinese government had no option but to press ahead to avoid political and social instability.

Although the reforms had aroused hopes for a more open society and stimulated the emergence of the pro-democracy student movement - which was ruthlessly crushed in the Tiananmen Square massacre of June 1989 - a contracting economy would, in all likelihood, have accentuated the widening rift between the age-old poor and the emerging new rich.

In a very real sense it was boom or bust for China's post-Xiaoping rulers, the more so as relaxation of controls over the economy had not been accompanied by a matching reduction of political constraints.

For the increasingly industrialised economy to continue expanding, China had to acquire new sources of raw materials as its own resources became increasingly insufficient to sustain its dizzyingly rapid growth rate.

As an article published by the United States Council of Foreign Relations notes: "China's manufacturing sector has created enormous demand for aluminium, copper, nickel, iron ore and oil."

China's decision to take its quest for new supplies of natural resources to Africa was - and is - prompted by two considerations:

Africa's large, varied and relatively untapped reserves of mineral and hydrocarbon fuels and the dominance of the United States and the European Union as the main consumers of Middle East oil.

The figures below - culled from an article published by the Heritage Foundation in the US, entitled "China's influence in Africa" - summarise the growing volume of trade between China and Africa:

In 1999 the trade between Africa and China was valued at $5,6-billion (about R36,7-billion).

By 2004, after the establishment of the Forum for China-Africa Co-operation (FCAC), Sino-African trade had quadrupled to $29,5-billion.

Before the end of 2005 it had increased to $32,2-billion, well in excess of the total for the whole of 2004.

It has continued to grow since then, partly as a result of the summit meeting of the FCAC in Beijing in 2006, attended by African heads of state, at which China undertook to double its aid to Africa and to strive to increase Sino-African trade to $100-billion by 2010.

A hostile interpretation of China's growing and increasingly conspicuous pressure in Africa is that it is re-enacting the role played by Britain and its European rivals in the late 19th-century scramble for Africa. The analogy - which casts China in the role of a colonising power - is without substance, however.

Unlike the 19th-century European powers, China has not sent soldiers to Africa to fight wars of dispossession against African indigenes or presumptuously raised its flag over huge tracts of African territory and issued proclamations annexing it.

A more subtle but no less disparaging interpretation portrays China as a neo-colonialist power seeking to undermine African governments subtly by making them dependent on Chinese aid.

There is no evidence, however, that China wishes to usurp the power of African governments.

Its primary objective is to attain a substantial share of Africa's resources, for which it is prepared, in turn, to offer financial assistance and low-interest loans, as well as sign trade treaties and enter into partnerships with local companies (of which the ICBC-Standard Bank deal is a prime example).

Leaving aside its invasion of Tibet in 1950 - which China regards as one of its historical provinces - and its border dispute with India in the early 1960s, it has not engaged in territorial wars with any of its neighbours for close to 50 years, let alone against countries in a faraway continent.

Its government has quite enough problems governing one of the largest countries in the world, containing a culturally diverse population of 1,3 billion people, without adding an African empire to its burdens.

Having jettisoned Mao's penchant for exporting revolution, China's current drive into Africa is predicated on the principle of noninterference in the internal affairs of sovereign nations, for which it has been accused of giving comfort and solace to African dictators presiding over countries that they have impoverished by their greed and/or incompetence.

The Heritage Foundation article quoted above exemplifies the charge when it accuses the Chinese government of "securing exclusive access to African natural resources with an aggressive political campaign to ingratiate itself with African tyrants and despots".

The authors seems to have forgotten US support over decades for the corrupt regime of Mobutu Sese Seko, who was an accomplice in the conspiracy to oust and eventually murder the legitimately elected prime minister of the Democratic Republic of Congo, Patrice Lumumba.

South Africans know that the CEO of Standard Bank, Jacko Maree, is no fool. As a hard-headed businessman who saw Standard Bank beat off a predatory takeover bid by Nedbank in 1999, he is presumably inured to ingratiation, irrespective from whom it emanates and least of all if it come from a company that is a prospective partner.

African heads of state - whether democratically elected as in the case of South Africa or politicians versed in the skills of palace coups or street demagoguery - are usually astute enough not to surrender readily the national sovereignty entrusted to them or acquired by them to foreign merchants.

China's leaders have invested huge sums of money in Africa in their quest to restore China to its past greatness of two millennia ago, when it generated one-fifth of the world's total economic output.

They are not about to discard it in favour of reckless adventurism in a distant continent.

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