Scramble for China

Africa is desperate for Chinese investment, but only South Africa will get much
September 23, 2006

Everywhere in the streets of Africa you find shops run by Chinese, selling Chinese goods—usually clothes and shoes. The locals call them "Zhing Zhong" shops. The wares on sale are cheap even if, like the products of the international Japanese expansion of the 1950s and 1960s, they have gained a reputation for falling apart. The huge textile combines in China make the clothes and the shopkeepers sell them in Africa.

If, for often resentful Africans, this is an unwelcome intrusion into their high streets, the Chinese invasion has been welcomed and applauded by African leaders. Presidents from Zimbabwe to Sudan, from Nigeria to South Africa, are looking to the expansionist Chinese as an antidote, if not an alternative, to western capital.

The Chinese role in Africa is hardly news. But what is not often realised is that this is not the first Chinese penetration of Africa. From the late 1950s to the end of the 1970s, under the rubric of third world solidarity, the Chinese spent an average of $100m in each of many African countries. Huge transport links were constructed—the 550-mile Somalia border road, the TanZam railroad between Zambia and Dar es Salaam—and numerous liberation movements were supported and trained. Not that everything was ideologically motivated; the Chinese sold reactor-grade uranium to apartheid South Africa. It was a curious mixture of genuine solidarity and a determination to hold Soviet expansionism in check. In the proxy wars of the 1970s, every great power was supporting one faction against another in Africa's sprawling conflicts. If the Soviets chose one side in Angola, the Chinese chose another. The same in Zimbabwe. Africa was part of a world competition. Only when the Soviets marched into Afghanistan in 1979 did the Chinese realise that they could not keep up. When the bear became properly bellicose, the dragon drew back its claws and departed Africa almost completely.

In the 21st century, the Chinese came back. Or, rather, people suddenly noticed they had come back. It had started silently in the 1990s, but as with a British high street, when suddenly one day you notice a mass of hamburger joints or sushi bars, in Africa it was the Zhing Zhong shops. The shopkeepers are not a key part of Chinese expansionism—though they are useful to the Chinese project. They are given incentives to set up their businesses in Africa, but are not centrally directed. And, for all the garments they sell, their usefulness as outlets for the Chinese textile industry is dwarfed when compared to winning the diplomatic trade wars with the EU.

The Zhing Zhong shops are a sideshow. Even Chinese praise of Robert Mugabe, as Zimbabwe's president desperately tries to find someone to bail him out, is a sideshow. The Chinese have put some money into Zimbabwe, but not much. Zimbabwe has very little that China wants. And what China wants is simple. First, it wants to move beyond textiles. Already the world's largest producer of personal computers, China is moving rapidly into the export of machine tools, and is graduating (at the rough level of the old British higher national diploma) over 400,000 engineers a year. It's going to be electronic and engineering products in the future, and Africa won't be the market for them.

Rather, Africa can help supply the means whereby the burgeoning Chinese industrial machine can work to produce for others. China consumes a tenth of global petroleum output, but is growing beyond that figure. It is the leading global importer of iron ore, aluminium, paper and pulp, and its demand for copper, steel, and cement is driving up world prices.

Taking two products from that list—copper and petroleum—helps understand Chinese interest in Africa. Zimbabwe's neighbour, Zambia, and the Democratic Republic of Congo have attracted far more Chinese investment than Zimbabwe. In the cases of these two countries, the attraction is copper deposits and mines. When it comes to petroleum, Nigeria and Sudan loom large, and Chinese support—although they call it their policy of non-interference in internal matters—has effectively allowed Sudan to sidestep UN condemnation for its violence and murder in Darfur. Nigeria and Sudan dwarf Zambia and Congo, just as these two dwarf Zimbabwe in the Chinese portfolio labelled "Africa."

But this portfolio is skewed. Nigeria and especially South Africa are designated long-term partners. With the South Africans, the Chinese will negotiate in a meaningful way. With the others, the typical formula comprises a range of welcome but short-term "sweeteners" up front, and long tie-ins that will benefit the Chinese for years to come while the Africans sell their own future flexibility on a narrow range of raw materials. This is a very old-fashioned capitalism by a very new actor in the world of global capital.

Chinese money is essential for Africa but Africa accounts for only some 3 per cent of Chinese international trade, of which around 20 per cent is with South Africa. It is an African scramble for China more than the other way around.

Meanwhile, on the sweetener projects, Chinese engineers and other workers come and smile and seem fraternal and full of camaraderie—then go home at night to their own compounds and drink and relax in their own little China away from China. And it was ever thus. The high-walled Chinese compounds have returned. Revolutionaries in the 1960s and 1970s, capitalist roaders in the 2000s—they still believe residually in the old third world internationalism. Just as Mugabe remembers those days he fought with Chinese weapons and instruction.