In a recent Financial Times article, the relationship between Africa and China was analyzed to be beneficial for both parties. The working relationship between the two countries embodies “the essence of colonialism.” China currently exports manufactured goods and in return imports primary resources from Africa. The article focuses on four main areas that are beneficial for both parties:
Skills: The exchange of knowledge is a major benefit for the African countries due to the effort by the CHinese to encourage companies to use local equipment and labor instead of straight importing. Currently, it is too expensive for Chinese companies to build and install locally and therefore Chinese imports of equipment is much more cost efficient, but the use of local employees has been prevalent.
Trade: Africans have the ability to choose what to buy instead of being forced as in previous colonialism by other countries in the past.
Industrialization: China has actively approached the criticism of deindustrialization by their joint relationship with Africa through incentives such as China-Africa Development Fund and the China-Africa Economic and Trade Co-operation Zone.
Energy: Africa is rich in natural resources that is the main cause for comparative advantage between the two parites. This should help Africa in a developmental advantage.
Source: Africa and China are good for each other
I agree that the relationship is mutually beneficial. However, the question become how much is enough. We saw from an earlier post on this blog that it appears as though China is purchasing vast amounts of Africa. That is, they are pouring billions of dollars into oil and mining companies as well as investing in large amounts of infrastructure. In the present China and Africa are opporating to the benefit of eachother, but when the threshhold is crossed where China can no longer help Africa develop and China owns a lot major portions of the African economy will China relax a potentially straining relationship?
Is this your term paper project? – I’m doing comments from home so can’t check. One curious thing is that none of the news stories I’ve read put it in the context of what (say) the former colonial power is doing. As the “new kid on the block” the Chinese presence stands out, and in addition Chinese firms don’t (yet) have much experience with doing FDI (as opposed to being recipients of FDI). The French and British know how to be more discrete and firms have more employees who are from Africa and don’t stand out…