how does china benefit from africa

China wants to use Africa as a location to secure maritime roads (and the OBOR projects) thatfacilitate Chinese exports, as evidenced by Beijing’s large military presence in Djibouti

. Then there are Africa’s resources, oil, rare earth metals, and fish.

Full Answer

Who is benefiting more from Chinas relationship with the African continent?

eNCAs Yusuf Omar explains who is benefiting more from Chinas relationship with the African continent. JOHANNESBURG - South Africa is the biggest recipient of Chinese investment on the continent, and that relationship is likely to grow. The China-Africa Cooperation Forum is being held in Johannesburg this week.

What does China need from Africa?

China needs what Africa has for long-term economic and political stability. Over a third of China's oil comes from Africa, as does 20% of the country’s cotton.

How much does China spend in Africa each year?

That’s not such a large amount, considering it covers a 14-year period and nearly 50 countries. In terms of foreign direct investment, China still spends less in Africa than the United States, the United Kingdom, and France, whose FDI stocks in Africa were $64 billion, $58 billion, and $54 billion, respectively.

How has China changed the African economy?

From building railways in Kenya and roads in rural Ethiopia to running mines in the Congo, China has drastically changed the African economic landscape in the twentieth century. China lent nearly $125 billion to Africa between 2000 and 2006 and recently pledged $60 billion at the 2018 Forum on China-Africa Co-operation.

Why do Chinese invest in Africa?

Proponents of Chinese investment in Africa have argued that these long-term investments foster greater independence of African countries because they do not have the paternalistic or imperialistic conditions often common with Western investments.

What does China import from Africa?

The main products China exports to Africa are machinery and electronics, textile and apparel, hi-tech products and finished goods, while imports from Africa concentrate on crude oil, iron ore, cotton, diamond and other natural resources and primary goods.

Why does China have strong links with Africa?

Although separated by vast oceans, China and Africa have had close friendship since ancient times. China and Africa began direct contacts by sea route as early as in the 7th century. Since then, trade and cultural exchanges between China and Africa have expanded.

How does China benefit from South Africa?

Finally, South Africa, with its world-class banking sector and internationally competitive construction companies, can supply services to the Chinese market. Moreover, these services are set to benefit from the broader trade expansion with China, potentially establishing a virtuous circle of investment and exports.

What resources is China getting from Africa?

Over a third of China's oil comes from Africa, as does 20% of the country's cotton. Africa has roughly half of the world's stock of manganese, an essential ingredient for steel production, and the Democratic Republic of the Congo on its own possesses half of the planet's cobalt.

Where does China get its resources?

The main import sources are Japan, Taiwan, South Korea, Australia, the countries of the European Union (EU), and the United States. Regionally, almost half of China's imports come from East and Southeast Asia, and some one-fourth of its exports go to the same countries.

Which African country owes China the most money?

Between 2020 and 2022, Angola will get $6.9 billion in debt relief, mostly from China. Chinese banks have offered significant debt restructuring both before and during the coronavirus era acting within and outside of the G-20 arrangements.

How much debt does Africa owe China?

Africa's rising debt: Chinese loans to continent exceeds $140 billion.

What does China trade with Africa?

Africa's main exports to China include minerals, metals, agricultural products, crude oil, and agricultural products.

Does China own land in Africa?

Out of over 6 million hectares of alleged Chinese land acquisitions, CARI found that only 252,901 hectares of land have actually been acquired. Cameroon alone accounts for 41% of all lands actually acquired: driven by two large purchases of existing rubber plantations (over 40,000 hectares each) in 2008 and 2010.

Where is China investing in Africa?

The top 10 recipients of loans – accounting for 68 percent of the total – include varied countries such as Angola, Ethiopia, Zambia, and Cameroon. The top 10 recipients of FDI – such as the Democratic Republic of Congo (DRC) and South Africa – accounted for 63 percent of total Chinese FDI stock in Africa.

What does SA export to China?

The top five products that were exported to China during the second quarter were ores, iron and steel, wood pulp, copper and fruit and nuts, altogether accounting for 88% of South Africa's total exports to China by value.

How does China finance its infrastructure?

China has used a form of financing that functions like a bartering system: In return for investment capital and infrastructure development projects, some sub-Saharan African countries grant China resource concessions . (Such was the case with the Sicomines copper project in the Democratic Republic of Congo and in various oil projects in Angola.) The arrangements differ. Sometimes Chinese entities take an ownership stake in the newly constructed infrastructure project. Sometimes loans are secured against resources as a form of collateral. Sometimes debt service is paid in resources instead of money. But just because a loan is backed with an asset—in this case, commodities—doesn’t mean loans can’t turn sour if the borrower struggles to extract or sell enough of its natural resource to service the debt. These terms can also leave the borrowing country with little left over from their commodity production to generate their own revenue. Angola and Congo have both encountered this problem.

What would happen if China had a debt crisis?

A debt crisis would have social implications that would make doing business extremely difficult, limiting the upside to China and decreasing the likelihood of other powers opting to compete with it. Even if it did, the arena would be peripheral to great powers’ core interests. Unlike the colonial economies of the 17th–19th centuries that drove European competition in Africa among other places, the scale of modern-day economies and their supply chains rely on a global market rather than sequestered mercantilist ones. China’s presence and influence in Africa is real, but in terms of global geopolitical consequence, it is likely to remain limited.

What happened to the dollar when interest rates went up?

When interest rates in the United States went up, the dollar appreciated relative to local currencies in sub-Saharan Africa, making repayment even costlier. Meanwhile, the price of the commodities on which so many of these countries depend fell, decreasing the amount of money they had to pay back their loans.

What would happen if China defaulted on its debt?

Defaulting on their debt would cause foreign investment to dry up. China’s willingness to accept repayment in commodities would leave it as one of the few remaining options for countries struggling to build infrastructure. Beijing could, therefore, drive as hard a bargain as it wanted.

What was the public sector debt in Africa in 2016?

Median public-sector debt in sub-Saharan Africa was 48 percent in 2016. The current situation resembles the African debt crisis of the 1980s. In the time leading up to the debt crisis, many sub-Saharan African countries similarly took advantage of lower interest rates and took on more debt.

Will China mine Africa?

China will continue to mine Africa for its resource needs. The only thing that will constrain its behavior in that regard is its own capital needs. It will, in other words, have to determine how much to spend as its own economic problems continue to mount.

Was China a major power in the 1980s?

The second and more important difference is that China was not a major power in the 1980s. China’s remarkable industrial growth has required an equally remarkable amount of natural resources for fuel. So, China has been investing more capital in Africa through vehicles like its Export-Import Bank, building infrastructure, and developing trade relations.

Why is China a good partner for Africa?

For Africans, China has four major attractions: Unconditional soft loans and access to capital; quick delivery of services and cheap goods; funding of peacekeeping; and an alternative development model.

What is China's investment in Africa?

The other two-thirds of China’s investment in Africa is in infrastructure, construction, electricity production, manufacturing and finance. In fact, compared with the US and other developed countries, China’s share in extractive investments in Africa, in the form of mining, for example, is lower.

Why does Africa love China?

Why Africa loves China. Contrary to what the West believes, Africans do not see themselves as victims of Chinese economic exploitation. Mehari Taddele Maru. Dr Mehari Taddele Maru is a scholar of peace and security, law and governance, and human rights and migration issues. 6 Jan 2019.

What did the South African President say about China-Africa cooperation?

At the FOCAC meeting in September, South African President Cyril Ramaphosa summarised the African position by saying that Africa “refutes the view that a new colonialism is taking hold in Africa as our detractors would have us believe.”

How much did China trade with Africa in 2016?

In 2016, the trade between China and Africa reached $128bn, a drastic surge from $1bn in 1980. At FOCAC in Beijing this year, China offered $60bn for development financing until 2021. While the financial crises in the US and EU limited their investments in Africa, China committed to investing more in the continent.

What is Kagame's view on Africa?

Kagame argued that the cooperation between China and Africa is based on mutual respect and is for the benefit of both partners. This sentiment is perhaps shared by most African heads of states and governments if their attendance of the summit is anything to go by.

How many peacekeeping missions does China have?

Chinese troops participate in eight UN peacekeeping missions of which five are in Africa. Moreover, China is the second largest financial contributor to UN peacekeeping missions and it also contributed funding to the African Union Mission in Somalia (AMISOM) and the IGAD South Sudan mediation.

What are the key concerns of Africa-China?

To ensure the sustainability of the Africa-China partnership, three key concerns need to be addressed: Corruption, personal safety, and language and cultural barriers.

How many Chinese companies are there in Africa?

There are estimated to be over 10,000 Chinese firms in Africa that have created work for several million Africans. This economic stimulus continues to have significant economic impact in communities riddled with historic economic disparities.

How to address polarization in Africa?

The current economic polarization in Africa needs to be addressed by actively creating a middles class. Clan-based economic feudalism needs to be replaced by an educated and economically engaged middle class. Economic empowerment in turn will promote political development leading to healthier international trade relations.

What were the first examples of China's zero interest loan?

One of the first famous examples is the Tanzania-Zambia Railway built between 1970 and 1975, for which China provided a zero-interest loan of RMB980 million ($150 million). Sectors including agriculture, banking, insurance, transport and logistics, housing, information communications technology and telecommunications are poised to see significant ...

What is the role of entrepreneurs in Africa?

Agriculture, manufacturing, retail, and tourism can act as an employment sponge for basic labour intensive work. While not a cornerstone employment strategy, it will lead to rapid, broad-based job creation, often requiring very basic skill sets. Further vocational training can be provided in these sectors to prevent generational skills gaps.

Is China a big investor in Africa?

China has catapulted from being a relatively small investor in the continent to becoming Africa’s largest economic partner. Africa-China trade is poised to grow 20% year on year making it seem like dragons are the new king of the African jungle.

Is China a part of Africa?

By Forbes Africa. The past three decades have seen a marked step change in Africa’s international relations. While geography historically favoured a European focus – especially in North Africa – the continent has shifted its gaze to the East. China has catapulted from being a relatively small investor in the continent to becoming Africa’s largest ...

What are the main exports of Africa to China?

The above map highlights the major categories of products exported from Africa to China in 2017. In the east, food products such as livestock, coffee, and grains are the biggest exports to China. Textiles, once dominant in North African countries like Morocco and Tunisia, have been surpassed by ores and plastic goods, respectively.

What countries did Xi Jinping visit?

Chinese President Xi Jinping recently completed a week-long trip to Africa, where he visited Senegal, Rwanda, South Africa, and Mauritius. During the trip, Xi discussed and signed new trade and investment deals with these countries, in an effort to capture greater opportunities ...

Why does China want to use Africa as a location?

China wants to use Africa as a location to secure maritime roads (and the OBOR projects) thatfacil itate Chinese exports , as evidenced by Beijing’s large military presence in Djibouti.

What does China want from Africa?

China wants everything from Africa: its strategic location, its oil, its rare earth metals, and its fish, leaving African nations indebted to Beijing. In its long history, Africa has served the global ambitions of many foreigners.

Where are Chinese boats reaching?

Meanwhile, Chinese boats are reaching to west Africa, sweeping the sea of any kind of fish that tries to swim through the spread nets. Xiaomeng Lu, China practice lead at Access Partnership, a global public policy consultancy for the tech sector, raises a more fundamental problem with Chinese investments.

Is Huawei a thin margin company?

For example, Huawei operates on very thin profit margin and is the industry leader in many emerging markets where western competitors such as Nokia and Ericson failed to make profit.”. “China’s behavior is essentially the same as that of the United States in the second half of the 20 th century,” explains Bauman.

What is the China-Africa Cooperation Forum?

The China-Africa Cooperation Forum, or FOCAC, was set up about 15 years ago. China is committing a trillion dollars in financing to Africa by 2025. Critics say, however, that Chinese state-owned enterprises create jobs with the lowest wages, and haven’t done much about transferring skills.

Which country is the biggest recipient of Chinese investment?

JOHANNESBURG - South Africa is the biggest recipient of Chinese investment on the continent, and that relationship is likely to grow. The China-Africa Cooperation Forum is being held in Johannesburg this week.

What is the Asian powerhouse?

The Asian powerhouse grapples with this perception that it has imperial ambitions, boosting investments in exchange for Africa’s natural resources -- with projects like the Zambian power plants, Egyptian trade deals, mines in the DRC, and laying railway tracks across East Africa.

Does China have a non-interference policy?

While many Western countries continue to have a more extractive and exploitative relationship with African economies, China professes to have a non-interference policy, although they are planning a naval base in Djibouti. So, it’s in the hands of Africa’s political and business leaders to determine its future.

Is China industrializing Africa?

China is committed to industrializing the continent, and like all investors, want to benefit from it. Africa has every reason to be suspicious. The continent’s history is riddled w ith failed economic relations with the rest of the world, from the exploitations, to colonialism, to disastrous structural adjustment programs and aid packages.

What does China need in Africa?

China needs what Africa has for long-term economic and political stability. Over a third of China's oil comes from Africa, as does 20% of the country’s cotton. Africa has roughly half of the world’s stock of manganese, an essential ingredient for steel production, and the Democratic Republic of the Congo on its own possesses half of the planet’s cobalt. Africa also has significant amounts of coltan, which is needed for electronics, as well as half of the world’s known supply of carbonatites, a rock formation that’s the primary source of rare earths.

What is Africa looking for in China?

It is precisely this kind of infrastructure-induced economic growth that Africa is looking for right now, and many African leaders are looking to China to bring their experience to their countries. The central players in many of Africa’s biggest ticket infrastructure projects — including the $12 billion Coastal Railway in Nigeria, the $4.5 billion Addis Ababa–Djibouti Railway, and the $11 billion megaport and economic zone at Bagamoyo — are being developed via Chinese partnerships.

Why are African contractors so ubiquitous?

The reasons for this ubiquitous presence are rather straight forward, as Roggeveen points out: many African contractors simply don't have the capacity for major development projects, “so if you want to do large-scale construction you either turn to a western firm or to a Chinese firm, but the Chinese firm is always able to undercut you on price.”

How many people will live in Africa by 2050?

The population of Lagos alone is growing by 77 people per hour. According to McKinsey, by 2025 more than 100 cities in Africa will contain over a million people.

Which country is the biggest player in Africa's infrastructure boom?

Since 2011, China has been the biggest player in Africa’s infrastructure boom, claiming a 40% share that continues to rise. Meanwhile, the shares of other players are falling precipitously: Europe declined from 44% to 34%, while the presence of US contractors fell from 24% to just 6.7%.

Which continent has the fastest urbanization?

Africa has become the fastest urbanizing region of the world, with rural migrants moving into cities a clip that has even surpassed that of China and India, as the continent becomes one of the final frontiers of the forth industrial revolution. This rapid transition presents big challenges but also offers big rewards for countries willing ...

Does Africa have a lot of coltan?

Africa also has significant amounts of coltan, which is needed for electronics, as well as half of the world’s known supply of carbonatites, a rock formation that’s the primary source of rare earths. However, there is a common misconception that all Chinese projects in Africa have the backing of Beijing.

How does China engage in Africa?

Chinese engagement in Africa is primarily concerned with natural resource extraction, infrastructure development, and manufacturing. U.S. engagement, in contrast, concentrates on higher-technology trade and services, as well as on aid policies aimed at promoting democracy, good governance, and human development. While China's "no strings attached" approach may foster inefficient decisionmaking and official corruption, Chinese engagement does not fundamentally undermine U.S. economic and political goals on the continent. On the contrary, Chinese-built infrastructure helps reduce businesses' operating costs and expand the size of regional markets, increasing opportunities for profitable ventures by indigenous and U.S. investors. U.S. and Chinese approaches and interests do not inherently contradict each other, and U.S. officials, including Presidents George W. Bush and Barack Obama, have denied that Washington and Beijing are engaged in a "zero sum" competition for influence and access in Africa. In short, China is not necessarily a strategic "threat" to U.S. interests in Africa.

Why is China attracted to Africa?

China is attracted to Africa by its natural resources and export markets, while African leaders hope Chinese engagement brings economic development. Africans' reactions to Chinese involvement have been mixed: Government officials have been overwhelmingly positive, while other elements of African societies criticize China for what they see as an ...

How Have Africans Reacted to Chinese Engagement?

African officials overwhelmingly view China's role in Africa positively, welcoming China's heavy emphasis on government-to-government contracts with few, if any, strings attached. Many African leaders believe that as a fellow developing country, China has more altruistic motives than Western governments and corporations do. African leaders praise China's contributions to their nations' infrastructure, highlighting visible improvements that contribute to expanded economic activity, job creation for local workers, and tangible improvements to roads, rails, bridges, and other transportation networks — all things that benefit ordinary citizens, if indirectly.

How Has China Accommodated the African Reaction?

Beijing has adjusted its policies to assuage Africans' concerns and put the Sino-African relationship on a more balanced footing. These modifications include a greater emphasis on "sustainability" in the economic and trade relationship; the promotion of Chinese soft power, culture, and people-to-people exchanges; and proactive engagement in the security and stability of conflict-prone areas in Africa. Such adjustments represent an understanding among Chinese elites that China's increasing presence on the continent is producing negative consequences that must be addressed. Beijing's adjustments have the potential to benefit both China and its African partners. Closer cultural ties and aggressive outreach will likely foster broader public support for China; the resulting favorable climate will enable Chinese investments to continue securing natural resources and generating profits while also contributing increasingly to local job creation and economic development.

What is Sino-African relations?

Sino-African relations are a vibrant, two-way dynamic in which both sides adjust to policy initiatives and popular perceptions emanating from the other. RAND researchers have assessed Chinese and African goals, African perceptions of China, how China has adjusted its policies to address local reactions, whether the United States and China compete in the region, and how Washington and Beijing might actually cooperate to their mutual benefit.

What are China's strategic interests in Africa?

China has four overarching strategic interests in Africa. First, it wants access to natural resources, particularly oil and gas. It is estimated that, by 2020, China will import more oil worldwide than the United States. To guarantee future supply, China is heavily investing in the oil sectors in countries such as Sudan, Angola, and Nigeria. Second, investments in Africa, a huge market for Chinese exported goods, might facilitate China's efforts to restructure its own economy away from labor-intensive industries, especially as labor costs in China increase.

What is the relationship between China and Africa?

In their view, China perpetuates a neo-colonial relationship in which Africa exports raw materials to China in exchange for manufactured goods. In some countries, resentment at Chinese business practices has led to popular protests and violence against Chinese businessmen and migrants.

Why is China important to Africa?

First, China is the source of significant investment capital twinned with a prodigious ability to create infrastructure , both of which are needed by many African states. Second, China ’s behavior in Africa provides the rest of the world with insight into how it will behave ...

Why is China taking over Africa?

Why China Is Taking over Africa's Resources One Country at a Time. The new imperialism. Africa is on the cusp of a new period in its history, its renaissance. Freed from centuries of colonialism and neo-imperialism, Africa has the opportunity to become a center of economic might to provide prosperity to the continent’s growing population.

How does China influence South Sudan?

The Chinese influence in South Sudan also results from road construction and infrastructure development. South Sudan will provide thirty thousand barrels per day of crude to the Export-Import Bank of China to fund the construction of roads and infrastructure development. This includes the construction of a 392-kilometer (244-mile) road from Juba to Rumbek and from Juba to Nadapal on the Kenyan border, which is being built by a Chinese firm using Chinese technology and manpower.

What are the negative effects of Sino-imperialism?

One archetypical case is the China National Petroleum Corporation, the state-owned oil and gas company, which is a major investor operating in South Sudanese oil fields. The Chinese pollute the local environment with impunity, resulting in children born with deformities, the poisoning of livestock, destruction of fertile land, and the pollution of rivers. Additionally, the Chinese cause environmental destruction in the Northern Upper Nile and Ruweng states affects the indigenous Dinka Padang communities of South Sudan. The Chinese help produce oil generating revenue and economic opportunities but are not bound with environmental standards.

What is the Chinese Belt and Road Initiative?

The Chinese Belt and Road Initiative has introduced dynamic infrastructure projects such as the Standard Gauge Railway. The railway connects Djibouti, Ethiopia, and Kenya. The railway was Ethiopia’s first railway in over a century and Africa’s first fully electrified line. The railways cuts travel time from the capital Addis Ababa to Djibouti ...

How much trade is there between China and Africa?

Trade between China and Africa has grown from $10 billion in 2000 to $190 billion by 2017. It is estimated that 12 percent of Africa industrial production, or $500 billion annually—nearly half of Africa’s internationally contracted construction market—is carried out by Chinese firms. (This first appeared earlier in July 2019.)

What is the greatest threat Africa faces today?

The greatest threat Africa faces today is Sino-imperialism.

Valuable Infrastructure

• A spokesman for the ministry in Beijing cited a survey published in November 2021 by the pan-African institute Afrobarometer, which states 63% of Africans believe China has had a positive influence in their country. "I see the influence of the Chinese," admitted Bamidele Adekunle, adju…

See more on dw.com

The Fallout of Hidden Debt

The Need to Eradicate Corruption

The Importance of Regional Integration