July 18, 2012

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TSG IntelBrief: China’s Evolving Engagement in Africa

As of mid-July 2012, eight African heads of state will join senior leaders from virtually every country on the continent for the opening ceremonies in Beijing of the fifth ministerial meeting of the Forum on China-Africa Cooperation (FOCAC). Since the first summit in October 2000 drew more than eighty ministers from forty-four African countries, the triennial conferences have become the preeminent showcase of China's engagement with Africa. However, the terms and strategic contours of the Sino-African relationship have been significantly transformed over the years, becoming both broader and deeper.

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Beijing's Burgeoning Economic Stake in Africa

The quest for resources motivated the reengagement of the People's Republic of China (PRC) with Africa beginning in the 1990s, after a period when, focused on internal reform and development, Beijing had paid little attention to the continent. At that time, under the leadership of President Jiang Zemin and Premier Zhu Rongji, mainland China launched a national strategy of "going out" (zouchuqu zhanlue) to secure access to stable supplies of raw materials and natural resources needed to sustain the country's rapid economic development — and forestall any social instability. Chinese firms were actively encouraged to explore investment opportunities abroad and open up new markets by establishing either joint ventures or wholly Chinese-owned subsidiaries in various countries. This policy has been reaffirmed under the current leadership, with Premier Wen Jiabao telling the country's diplomats in the midst of the global economic downturn in 2009 that Beijing should use its vast foreign exchange reserves — the largest in the world — to support and accelerate overseas expansion by Chinese companies: "We should hasten the implementation of our 'going out' strategy and combine the utilization of foreign exchange reserves with the 'going out' of our enterprises."

And while resources have been a big factor in China's engagement and investment  in Africa, the focus has shifted in response to changes in Africa's economic landscape. In fact, of the estimated US $9.3 billion worth of Chinese foreign direct investment (FDI) in Africa in 2010 — almost fourteen times the US $681 million in FDI just ten years earlier — the largest chunk, 42.3 percent, went to services and another 22 percent went to manufacturing, with only 29.2 percent going to the extractive industries.

Trade is booming between African countries and China, with some 12.5 percent of all African exports going to China — a figure fifteen times larger than in 2001. According to a report published by the State Council, China's cabinet, despite a slump in 2009 that was attributed to the international financial crisis, the volume of bilateral trade between Africa and China surpassed that between Africa and the United States, making China the continent's biggest trading partner. The downturn, in fact, was temporary as trade jumped 43.5 percent during the first ten months of the following year to total US $114.8 billion. In 2011, that volume soared even further, to US $160 billion.

Beijing has encouraged and vigorously supported Chinese firms in expanding their investments in Africa, to include signing trade agreements with forty-five African countries, bilateral agreements regarding the promotion and protection of investment with thirty-three, and accords to avoid double taxation with eleven. The PRC government has also set up the China-Africa Development Fund, a stock equity fund that gives special support to Chinese enterprises when they invest in Africa. Since its establishment in 2007, the fund has invested in everything from agricultural development to machinery manufacturing to electric power generation to building materials to industrial parks and port logistics.

Another recent trend is the establishment of industrial parks as well as special economic and trade cooperation zones in key African countries — including Egypt, Ethiopia, Mauritius, Nigeria, and Zambia — with the goal of improving infrastructure to facilitate the opening of manufacturing operations by Chinese firms, which then can benefit from favorable tax and regulatory regimes. There is also an additional advantage to these new industrial parks in Africa, as one Chinese researcher admitted candidly in a recent study of the phenomenon: "By setting up factories in African countries, not only could we overcome the import restrictive measures in Africa itself, but we could also access [the] European market via Africa."

China has also astutely recognized the opportunities for itself, both diplomatically and commercially, in the significant infrastructure build out that is underway throughout Africa in the transportation, communications, power, water, healthcare, and other sectors. The PRC State Council's report, "China-Africa Economic and Trade Cooperation," notes, "In order to help African countries to improve their infrastructure, the Chinese government has offered many preferential loans, and supports its financial institutions to expand the amount of commercial loans to Africa. China has constantly intensified its efforts in financing for Africa since the establishment of the FOCAC. From 2007 to 2009, China provided [US] $5 billion of preferential loans and preferential export buyer's credit to Africa. It has also promised to provide [US] $10 billion of preferential loans to Africa from 2010 to 2012." These government credits have helped to finance major infrastructure projects across Africa involving Chinese enterprises, including everything from the new terminal at the Sir Seewoosagur Ramgoolam International Airport in Mauritius to the 400-megawatt Bui Dam in Ghana to the even larger 1,250-megawatt Merowe High Dam in Sudan, which, when completed, will be the largest hydropower project on the continent.

Government encouragement and facilitation has also helped paved the way into African markets for telecommunications equipment manufacturers Huawei Technologies and ZTE. Between them, the two companies are active in some fifty countries on the continent. Furthermore, the pair has established more than forty third-generation telecom networks in more than thirty African countries and built national fiber-optic communications and e-government networks for more than twenty African countries. All told, an estimated 300 million Africans use communications services from one or the other firm on a daily basis.

Chinese participation in infrastructure development is the cause of some controversy in Africa, as Chinese firms are widely perceived to be bringing their own workers. Moreover, increased trade with China is, in some ways, a double-edged sword for African countries when it comes to imports. On the one hand, it makes relatively affordable goods available, which clearly benefits African consumers. On the other hand, Chinese manufacturers tend not to establish many links with local firms, preferring instead to turn to reliable and cost-competitive established suppliers back in China. As a recent African Development Bank study concluded, "On the whole, in the sectors where China and Africa compete, increased Chinese exports translate into reduced African production."

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China's African Political and Security Plays

Paralleling China's growing investment in Africa are its expanding political and security interests. If Africa's abundant natural resources are critical for maintaining China's "peaceful rise" (heping jueqi) in the world, then certainly African states, which together constitute the largest regional bloc in many international organizations, are just as integral to Beijing's long-term grand strategy of promoting its version of "democracy in international relations" (guoji guanzi minzhuhua) — that is, a more multipolar political and economic global order.

The People's Republic of China currently has diplomatic relations with fifty of Africa's fifty-four states — the sole exceptions being Burkina Faso, The Gambia, São Tomé and Príncipe, and Swaziland, all of whom continue to have diplomatic relations with the Republic of China on Taiwan. In January of this year, the new twenty-story African Union Conference Center and Office Complex was inaugurated in Addis Ababa. The US $200 million edifice, built with Chinese assistance, stands as a symbol of the close ties that Beijing has carefully cultivated with Africa's governing institutions and elites.

Of note, Beijing has a consistent policy of not imposing explicit political conditions on its aid recipients. This philosophy of non-interference in the internal affairs of other nations fits well with the policy preferences of many African heads of state or governments that bristle at the pro-democracy and good governance ethos promoted by traditional aid donors in the West.

A relatively new area of Chinese engagement in Africa has been in the security sector where China's involvement has been hitherto limited to arms sales to various governments, some quite questionable. After having long taken a dim view of international peacekeeping missions, in 1989 the PRC joined the other permanent members of the United Nations Security Council in contributing personnel to the UN Transitional Assistance Group (UNTAG), which oversaw the transition of South-West Africa to independence as Namibia. Since then, China has become increasingly involved in international peacekeeping to the point that the number of People's Liberation Army personnel currently participating in UN stability and security operations is roughly equal to the combined total of the other four permanent members of the Security Council. As of the end of June 2012, the PRC has deployed 1,928 military and civilian personnel on twelve UN missions.

What is most interesting is that the majority of Chinese peacekeepers are deployed in Africa. Currently 1,518 PLA personnel — that is, three-fourths of all those assigned to peacekeeping duties — are involved in seven African missions: the UN Mission for the Referendum in Western Sahara (MINURSO), the UN Mission Organization Stabilization Mission in the Democratic Republic of the Congo (MONUSCO), the African Union/UN Hybrid Operation in Darfur (UNAMID), the UN Mission in Liberia (UNMIL), the UN Mission in South Sudan (UNMISS), and the UN Mission in Côte d'Ivoire (UNOCI). Whatever formal reasons are given for these engagements, it remains that the PLA has accrued significant tactical, operational, and strategic advantages from the deployment of its personnel across Africa.

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An Expanding Role and Proven Capabilities for the Chinese Military

Moreover, since January 2009, vessels of China’s People’s Liberation Army Navy (PLAN) have been operating almost continuously in the Gulf of Aden and other waters off Somalia as part of a worldwide naval deployment to counter Somali piracy. While, by all accounts, the PLAN has cooperated with other coalition forces in anti-piracy operations — including the United States-led Combined Task Force 151 and the European Union Naval Force (EU NAVFOR) Somalia’s Operation Atalanta — it is also true that the deployment has the double advantage of advancing a number of wider Chinese interests off the East African littoral. In fact, a strategy paper published by the Central Committee of the Chinese Communist Party in December 2010 forthrightly acknowledged that the antipiracy operations off Somalia would be an opportunity for the PRC to gain a foothold in a strategic region: “China can make use of this situation to expand its military presence in Africa.”

China’s increasing capabilities with respect to military operations in Africa were on display last year when the PRC had to come to the rescue of its nationals who found themselves caught up in the Libyan crisis. In the first such operation they have ever undertaken, the Chinese military and civilian authorities acquitted themselves quite well, safely moving nearly 36,000 people out of harm’s way in less than two weeks. While most of the civilians were transported by merchant vessels or airplanes chartered by Chinese diplomats and companies, some 1,700 were evacuated on constant flights by four IL-76 transport aircraft sent by the People’s Liberation Army Air Force (PLAAF). The PLAN also deployed the new Jiangkai II-class frigate Xuzhou to the Libyan coast to coordinate the evacuations by sea. The PLAAF and PLAN deployments were especially significant insofar as they represent not only a capability to conduct such operations in Africa, but the first military action by China in the Mediterranean — a major milestone in the evolution of the Chinese military’s overall expeditionary capabilities.

The extensive network of economic, political, and military ties that the PRC has constructed across Africa testify not only to Beijing’s emergence as one of the leading actors on the continent — as well as a major force in its politics and security — but also to Africa’s buoyant economic prospects and its growing geopolitical importance. The challenge for the United States, the European Union, and Africa’s other traditional partners is thus to move beyond mere humanitarian sentiments and old habits about aid and develop a comprehensive, proactive strategy for broader engagement in an increasingly significant and dynamic region.

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This report was produced in collaboration with the Michael S. Ansari Africa Center at the Atlantic Council.

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