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China outwits the EU in Africa

Asia Times | Dec 13, 2007

China outwits the EU in Africa

By Bernt Berger

During the past several years, an increasing number of differences have arisen in the strategic partnership forged between China and the European Union. Among the many critical issues clouding the mutual agenda are differing policy approaches towards Africa.

While China’s business-first approach is undermining EU efforts to boost sustainability and governance standards, its investments have benefited African economies. China has increasingly regarded Africa as an opportunity, while Europe has long regarded the continent as a burden. In truth, both external development approaches are lacking, and neither can competently deal with rising issues on the continent alone.

Initially, China was reluctant to put Africa on the agenda of the 2006 Helsinki EU-China summit. One year later, however, policy-makers seemed more comfortable with the issue, and at the 2007 EU-China summit in Beijing, both sides agreed to ramp up cooperation in the continent. Although China was invited to observe the EU-Africa summit, there is still no indication that EU representatives will be invited to future meetings of the Forum of China-Africa Cooperation (FOCAC).

Today, the presence of Chinese enterprises in Africa is unmistakable in many economic sectors. Alongside extractive industries and Chinese construction firms, an increasing migration of small entrepreneurs and laborers to Africa has set in. Chinese engagement has become a chance, and a challenge, for African economies.

China’s growing demand for resources has benefited African economic growth. At the same time, local industries, businesses and aspects of the labor market are now confronted with competition of an unprecedented scale. An estimate by China’s state-run Xinhua News Agency in August indicated that 750,000 long-term Chinese migrants were working and living in Africa.

According to the African Development Bank (AfDB), in 2006 Chinese investment in Africa amounted to US$11.7 billion. In the same year bilateral trade reached $55.5 billion, an increase of 40% from 2005. In October 2007, trade volume soared 30%. One third of China’s crude oil exports are now coming from Africa, with Angola as the largest single exporting country since early 2006.

China has engaged in non-bureaucratic cooperation: enhancing infrastructure, offering cheaper goods than Europe, inexpensive loans and a zero-tariffs policy. The EU has had difficulty matching these points

During this month’s EU-Africa summit in Lisbon, European nations faced the fact that Chinese influence and investment are increasing and that booming trade is just one example of Beijing’s eagerness to re-establish its Africa strategy. In 2006, Europe, with a turnover of $315.2 billion, was Africa’s biggest trading partner, with trade volume led by France ($30 billion) and Germany ($23 billion).

During the summit, European and African leaders failed to break the deadlock on regional trade deals or sign the Economic Partnership Agreement, a pact designed to replace a Preferential Trade Agreement ruled illegal by the World Trade Organization. The new agreement would impose lower tariffs on African agricultural products but is likely to make European markets inaccessible for exporters of industrial processed goods. Overall, the agreement would be another roadblock to nations transitioning from export to processing economies.

Until recently, competition with China over resources and influence in Africa wasn’t a pivotal issue in the EU. In the past, debate on Africa centered on differing development models and concerns over sustainability, governance and the environment. The EU is gradually moving towards a policy designed to avoid dependencies induced by aid and export-oriented economies. The EU Commission’s 2005 Africa strategy paper supported Africa’s regional integration and launched initiatives to boost development and provide aid for potential natural disasters.

Meanwhile, China’s external development is closely linked to its own development model and has been primarily commercially oriented. Officially, external development is coordinated by the Ministry of Commerce, which combines commercial interests with soft power initiatives. Industrial and social infrastructure projects are usually carried out by Chinese construction firms, and the links between the Ministry of Commerce and state-owned and private enterprises - particularly in the energy sector - are not transparent.

Because it lacks a specific external development policy, Beijing has made a virtue of necessity. As a latecomer to global resource markets, and one that must sustain its own development and serve the needs of an international manufacturing base, China has portrayed its commercial policies as "win-win", and beneficial for African economies. Already in 2006, reports by the Organization for Economic Cooperation and Development (OECD) and the World Bank have confirmed the success of this approach.

China has reconfirmed the principles of engagement with Arab and African countries formulated in the early 1960s by former premier and foreign minister Zhou Enlai. The baseline of China’s non-interference policy, combined with a neo-liberal, one-size fits-all economically based foreign policy approach, has earned China a reputation as a neo-colonial powerhouse. China has repeated European post-colonial strategies of asserting influence and shackling countries into dependency.

Looking ahead, however, diplomatic pressure and public image problems in the West and Africa, might prevail upon China to inch towards a proactive development approach. Case in point: the international backlash on China’s relationship with Sudan and stance on the Darfur crisis have proved a massive headache for Beijing. After all, state-run oil company PetroChina is the second-biggest shareholder in the Sudanese oil-consortium Petrodar after Malaysia’s Petronas.

China responded at the 2006 FOCAC summit by issuing critical statements to Khartoum and pledging support for the African Union and the New Partnership for African Development. Additionally, China is a stakeholder in the AfDB and involved in at least three other high-profile international aid and development groups. Beijing is also a signatory of the 2006 Paris Declaration on Aid Effectiveness.

The most pressing task of the EU and China, along with other players such as India and the US, is to ensure that Africa does not become victimized by global competition or the conflicting strategies of rising and established powers.

As part of its security policy, the EU has defined effective multilateralism as the key to deal with global issues. To achieve this goal, closer cooperation and rapprochement on bilateral levels is necessary. This will, in the long run, help improve cooperation in the larger UN framework. In the case of Sino-European development cooperation, the next step is to nurture diplomatic channels in and with Africa.

Neither China nor the EU can tackle their challenges and common interests on the continent alone. Both sides have a shared economic interest in Africa’s stability and security. Shared goals for energy and environmental security must be based on initiatives such as the Extractive Industries Transparency Initiative, the Action Plan on Forest Law Enforcement, Governance and Trade and the Kimberly Process, which aims to stem the flow of conflict diamonds.

Effective networks for any development agreements between China, the EU and Africa can only evolve out of practical cooperation. This will eventually lead to understanding, trust and rapprochement. Most importantly, China needs to consider the political dimensions of development. Focusing only on trade relations and government support can stand in the way of sustainable development, especially if governments remain ineffective and unwilling to reform. The EU, for its part, must revise its trade relations with Africa (including its own agricultural subsidies) and consider their crucial impact on locally owned development.

Finally, the first step towards effective cooperation can be taken at the OECD’S Development Assistance Committee, as agreed on at the G8 summit in June. So far, however, China has been skeptical about joining such a mechanism because its strategic role as a south-south partner would be at risk. In the end, Beijing is in a perplexing position: integration in the group would be at odds with its own agenda, but at the same time it would suit China’s role as a rising power ready assumes global responsibilities.

Bernt Berger is a research fellow at the Institute for Peace Research and Security Policy, Hamburg (IFSH).

 source: Asia Times