Will China help Africa or will it over-extract?

Published on Author harbaugh

President Xi Jinping is currently on his first overseas trip as China’s leader and the question of the Africa-China relationship is extremely relevant. A recent concern among many Africans is that China is a new colonial power that will over-extract the raw resources from Africa and sell manufactured goods. When in Tanzania, Mr. Xi actually had a speech heavily focused on easing the concerns of Africans:

“China frankly faces up to the new circumstances and new problems in Sino-African relations,” Mr. Xi told an audience of Tanzanian politicians and officials in Dar es Salaam, the country’s economic hub and a center of government, speaking in a conference center built with Chinese loans and support.” (New York Times)

Mr. Xi pledged to help Africa achieve independent and sustainable development. During Mr. Xi’s time in Tanzania “he and his Tanzanian counterpart Jakaya Kikwete signed 16 different trade agreements including improvements to Tanzania’s hospitals and ports, and the building of a Chinese cultural centre.” (BBC)

Although the statements and actions of Mr. Xi appear that China will work in favor of a mutually beneficial relationship, it is very likely as industry continues to rise in China, the need for extracting African resources will rise as well. Instead of building up their own industry African nations will be sending their raw materials out, not focusing on domestic development. As emphasized by the chart below, the relationship between China and Africa is growing quickly and it will be interesting to see how it progresses. China still has an extremely rural population and I am unsure if they will be able to take on the task of advancing Africa and China simultaneously.
From New York Times BBC

5 Responses to Will China help Africa or will it over-extract?

  1. Hopefully China can give African countries fresh ideas on how to successfully develop their economies. It seems to me that every developing nation could learn a lot from China’s incredible sucess.

  2. With multiple billions worth of goods exported to China, there is no doubt that these are mainly raw materials such as ores and petroleum. In exchange, China is exporting its technologies, human resources, and capital. In addition, it is also selling its finished goods in Africa. Moreover, some of the state-owned enterprises build many of the railroads for Africa. I do believe that it is a mutually benefited relationship between two and the worry that China will over extract is not a very valid one. Under today’s world with monitoring from all over the countries, it is difficult for China to forcefully extract materials more than what Africa is willing to pay. It is impossible to conclude that it is a fair trade between two but I doubt it will go far from it. As a matter of fact, China treats Africa not only as a trading partner but also a good friend on the political stage. In many of the voting held at United Nations, Africa always votes in favor of China to support its ambition to advance to be a superpower in the world. China sets as a role model to Africa as the most successful developing country in the world and Africa offers its support in political affairs and its abundant raw materials to China to support its growth. I see this as a typical process for a developing country to grow into a more developed one. Just like years ago when China was used to be a world factory for developed counties contributing its cheap labor and taking in the pollution resulted in exchange for money and technology, Africa is doing its turn now.

  3. Given historical trends and the increasing profit motive of Chinese investors, it seems within the bound of possibilities that overextraction may occur. However, from a political economy perspective, the key factor leading to potential african development lies within *how* africa utilizes the tools it has purchased from china. If continued rent-seeking and excessive (relative to proximity countries) corruption continues, it is likely that the knowledge and capital sourced from the Chinese will be squandered by the ruling class of Africa.

  4. We need to separate into two issues: do prices today encourage “too fast” of extraction [or alternatively, do African governments have an ability to run “sovereign wealth” funds and extraction policies that attempt to overcome boom-bust market signals]? In that formulation, who does the actual extraction is irrelevant; it’s global prices that drive things.

    Second, is China interferring politically in Africa? The US has its history of “banana republics” in our own backyard, where private resource companies ran our foreign policy. That however was under the shadow of the Monroe Doctrine. China has no such overarching policy or interest in Africa. So my take is that to the extent there’s “Chinese” political interference, it’s only because Chinese firms have been the highest bribers, er, bidders in the scramble for resource deals. Now these firms are titular “state owned” ones, so it is “China” at work – though in some cases what happens is clearly not in accord with Chinese foreign policy, it is the commercial tail wagging the dog, not the governmental dog shaking the commercial tail.

  5. Another little query: the growth of bilateral trade is impressive, but I have no ability to put $60 billion dollars into the African context. There are a goodly number of companies around the world that have revenues of over $60 billion, indeed CNOOC (China Natl Offshore Oil Co) had revenues of $78 billion. A quick check with the World Bank database shows sub-Saharan Africa with $470 billion in exports; all of Africa was $570 billion. So China’s share isn’t trivial, 12% or so.