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China-Africa Cooperation: Resource Shortage or Resource Curse?

Author:Brima Patrick Kapuwa
Source:The African executive
Source Date:06-20-2012
Publish Date:2012-07-17 03:30:51
Times Read:2852 reads

The relationship between China and Africa is not a new romance. Economic and political cooperation between the two dates back as far 500 years. Contemporary relationship between Africa and China dates to the founding of modern China in 1949, the Sino-African (Bandung) Conference of 1955, which brought together African heads of states – most of which were newly independent aimed among others to promote Africa-Asia cooperation and to combat neo-colonialism. As noted by Muekalia (2004), “China began to cultivate ties and offer economic, technical, and military support to African countries and liberation movements in an effort to unite with them against both superpowers.” Sino-Africa economic or business contact has since then seen three phases: The first from 1850-1950 mostly attributed to colonial labour demand called “coolie trade” that focused mainly on plantation, mining and railway. The second phase covers the period 1960-1980 which with the establishment of the Peoples Republic of China and subsequent cold war saw the relations between China and Africa become more political. Phase three; from 1990 to date have witnessed the movement of Chinese companies and firms into Africa particularly in the areas of construction, mining, oil exploration and agriculture.
Given the historical narrative on the birth of China-Africa cooperation, this paper aims at addressing some pertinent questions: How have the long historical ties benefitted both partners? If the assertion that China is heavily investing into Africa on a win-win basis is a truism, what or how should we think of such an investment? Is there any link between these historical ‘business’ ties with the allegations of resource shortage on the part of China and ‘resource curse’ on Africa? Is such cooperation likely to have the same effect as resources aid conditionalities from Western governments and organizations? In this paper therefore, while I agree that China is actually in Africa to satisfy her resource shortage quest and nothing like a ‘win-win’ relationship, I however do contend that it is not so much of a ‘resources curse’ or ‘Dutch disease’ scenario in Africa, rather it is as a result of weak state policies on economic development, vices like corruption and bad governance.
I posit that these vices and the social problems in domestic sovereign Africa states stems from very weak state institutions, laws and bad politicians rather than the exploitation of her resources by foreign governments or firms. Unfortunately, the presence of these resources somehow creates incentives for African politicians to eliminate avenues for popular inclusion and participation in national governance (probably a way of avoiding to share the wealth), and hang onto power there by leading to social instability. Resources are natural and could not have been cursed by nature. It is man’s greed and selfish nature that makes society unstable. Will the renewed interest and desire to cooperate with China end up exacerbating resource curse, instability emanating from the want of it or enhance national stability, cohesion and development? Does China realize the ‘Dutch disease’ nature of Africa and so takes advantage of it or could it be that the dragon will eventually heal Africa from its ‘Dutch disease’?
To me, the question is no longer about "a balancing act" by Beijing, but what we think of such “balancing.” Is it likely to have the same effect as oil revenue or aid conditionality from western governments? The relationship between China and Africa has progressed through strategic stages. After 1949 when Mao declared the People’s Republic of China, the country was in dire need of international recognition. During such trying moments, China turned to its “brother” and fellow third world partner Africa to boost its quest for prominence on the international stage. After almost four decades of uninterrupted growth and prominence mostly enhanced by Africa in international organizations like the United Nations, China is again turning to Africa to rescue it from its resource shortage dilemma. This Sino-Africa relation has attracted an accelerated pace, a reason we can attribute to the rationality and utility maximization of the relationship.
Having lived and studied in China, I realized that the key reason for China’s interest in Africa could be found right in China itself because its economy, industry, energy and society. To China, a country that is taking the city to its people with huge expansion of its domestic needs and consumptions, and where the farmers and poor also want TV, Computers Cell phones, cars fridges etc, it has to stay largely supplied in raw materials - oil, copper, zinc, cobalt - from abroad so as to avert the potential implosion that is been predicted. When eventually the city moves to the people with factories and infrastructures, millions of farmers are going to lose their land, hence undermining agricultural productivity and many more will be jobless. The only option then will be exporting these labour forces elsewhere...notably Africa, a resource rich continent. This is the maxim to me that best explains China’s resource shortage hypothesis and why it needs enough supply of these resources if domestic and social stability are to be enhanced. Ideally, other viable options open to China can and ought not to be Europe anymore especially in the near future because of the crippling financial crisis and recession out there. Unquestionably, the European Union is China’s largest market especially in purchasing power while China is but the second largest market to the European Union. This trend is bound to change significantly and China might have to consider other options such as Africa which is the largest growing market in the world. These asymmetries are bound to explain why the dragon is offering her ‘chop sticks’ to enhance cooperation in Africa.
On her part, Africa by the end of 2008 had China as its 2nd largest trade partner but later replaced the US in 2011 as the continent’s largest partner with bilateral trade growing by 28% per year. Unlike China which has a resource shortage curse, Africa suffers from a resource ‘curse’ situation. To her disadvantage, Africa’s resources are been viewed by many as a form of ‘Dutch diseases’ where its resources are having adverse negative consequences on its economic growth and development, especially for countries with resources strategic such as oil, copper etc. The ‘Dutch disease’ according to economists explains the apparent relationship between the increase in exploitation of natural resources and a decline in the manufacturing sector which eventually stifles the socio-economic development of a nation. Accordingly, it is argued that African resource-abundant countries have remain relatively stagnated in economic growth since the early 1970s.
While African scholars have argued that the notion of a disease or ‘resource curse’ might be misleading for a continent that is fast growing, it actually appears that sovereign countries do not have the much trumpeted sovereignty especially in economic terms. The case of the Republic of South Sudan now trumpeting the Chinese tune more than its Khartoum rival is a classical case. Today, a relationship that was suggested to be sour has turned into the sweet apple. However, notwithstanding the ‘curse and shortage’ challenges, there seems to exist some incentives for cooperation between the dragon and Africa as the two have carved out a new, mutually ‘beneficial’ economic and regional alliance schemes. For China, the need to source raw materials and energy to desperately service its industrial and economic growth would not only enhance domestic and socio stability, but will record success in its quest to maintain domestic political security for its elites. China in addition sees her dominance in Africa as a way of further enhancing the isolation of Taiwan, its diplomatic rival. Low cost, exporting of cheap labour for its budding market is another huge incentive for these entrenched Sino-African relations, often built on the propaganda of ‘victims of Western imperialism. African incentive stems from legitimacy issues which China guarantees.
China cooperates with any type of regime in Africa by providing key structural assistance like road networks, bridges, stadium, railways, ports, hydroelectric dams, refineries etc. This purportedly unconditional cooperation without Western conditionalities like democratization, rule of law, human rights and justice etc makes China-Africa romance more cooperative and stable. Ideally, such cooperation and assistance from China will help Africa avoid or overcome its ‘resource curse’ allegation, and successes in establishing these infrastructural investments could also mean avoiding exploitation of Africa’s natural wealth and the beginning of fundamental socio-economic transformation on the continent. Perhaps realistically, Africa’s economic cooperation seems to be providing economic hope and shows African researchers examples of success stories or development models they should replicate. To Africa, these incentives can further have bad outcomes because where access to wealth is associated with access to political power, incumbent governments will face daunting challenges and will create the incentives to remain in power at almost any cost. African states receiving unconditional aid like the ones from China, will want to centralize control of and access to such source of wealth.
To conclude therefore, my opinion is that the key to a successful romance between Africa and China lies with the intellectual class and politicians. How do we expect a dissimilar relationship between China the second largest economy in the world, and Africa, a developing economy to be ‘win-win’? From my resource shortage and curse hypothesis of China and Africa, can we still think it is a split-split or win-win situation? My guess is a NO. Infact, economic interdependence, balance of interest and power, economic corporation does not enhance equilibrium. Let’s take the two Sudans for example. Beijing is been accused of balance the two for its strategic interest, but what we actually see is the two countries enjoying investment interests from China that are never commensurate to the resources it is getting from the country, thus actually leading to a split-split situation by creating more tensions between the two sister countries.
By Brima Patrick Kapuwa
PhD Contemporary International Relations
Institute of International Studies, Jilin University
Changchun, China.

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