Foreign investment has long been a way for larger states to inject capital into less developed nations and their markets. Incentives for this vary from gaining industrial footholds for business advantages to diplomatic soft power. In recent years, the African continent has been the recipient of a large portion of such funding. With an economic boom and rising political clout to match, China has viewed many countries in Africa as the perfect piggy bank in which to store, invest, and diplomatically gain from through large financial investments. In 2015, President Xi Jinping announced a pivot towards Africa, with the promise of a new era of “real win-win cooperation between China and Africa”. China is now Africa’s most important trading partner, with trade growing by 20% each year since the year 2000. Infrastructure has been a priority for the Chinese, who have recognized the strategic importance of owning the means through which intracontinental and foreign trade must use to move goods and people. Who are the key Chinese actors investing? Is it primarily state-sponsored or privately-held business? What makes gaining soft power and business advantages such an investment draw? Has Chinese business had a positive or negative impact on the continent? Regardless of the answers to these questions, it is time the West returned their focus to the continent it once colonised, because in the meantime the Chinese will continue to bolster their regional influence.
Many journalists have generalized the concept of ‘Chinese investment in Africa’. Exactly who are the Chinese actors being referred to? According to a recent research report issued by Mckinsey, there are over 10,000 Chinese-owned firms operating on the continent, and of these, 90% are privately owned. This may indicate that the investment is more market-driven than politically strategic. However, whether or not these private firms have ties to the Communist Party of China (CPC) has yet to be determined and included as a variable within statistical research. There are both privately-held enterprises and state-sponsored enterprises conducting business simultaneously. Savvy business executives have identified profit potential from the land, resources and manpower of the African continent, while the Chinese government is also aware of the continent’s strategic importance, potential, and soft power attainability.
China is playing a very long game. After the unveiling of Beijing’s pan-continental One Belt One Road Initiative, the CPC has been attempting to craft their image within the international community as one of peace and benevolence. Unlike past American endeavours, the Chinese have not shown any desire to interfere within foreign political institutions and are reluctant to tell others how to order their affairs unless it involves Taiwan or Tibet. Despite the perceived inaction on that front, their rising soft power has given them an indirect medium through which to influence the ideologies and political structures of the recipients. This serves to counteract the power of “Western efforts to spread Liberal democratic capitalism”. As a result of subtly promoting the Chinese model of authoritarian, state-driven development, major political parties such as Ethiopia’s ruling EPRDF party has “copied much of what it has seen in China”, especially paying homage to tightly controlled business and the CPC’s party cadre system. Their passive approach has been well-received by most of the African countries they are forging relationships with. According to recent survey, 63% of people in 36 African countries consider China to be a positive influence. As well as minding their own business politically, Beijing has sought to provide needed facilities and training to local people. In addition to building a dam, Sino-Hydro is constructing hospitals and schools in Uganda, making sure the composition of the workforce is majority Ugandan. By showing indifference towards political practices and directing funds towards facilities that benefit the African people, the Chinese are demonstrating their commitment to a mutually beneficial relationship that they are hoping will translate into a positive reputation on the global stage.
China’s role as Africa’s most important trading and investment partner provides advantageous business footholds in the industries of infrastructure and natural resources. Given China’s rapid economic and demographic growth, the country has seen an unprecedented need for more resource. China is now the world’s largest energy consumer and producer which has further pushed Beijing into the trade agreements and business partnerships with the African oil, copper and iron ore industries. To secure these crucial resources, China has focused on strengthening the infrastructure on the ground. Without railways or roads to ensure transport, the goods cannot be moved for profit. Therefore, China has deployed its state-owned enterprises to win African infrastructure contracts. Legality of ownership aside, eyebrows have been raised over fair evaluations by Chinese businesses on African natural resources, with some suggesting the compensation is undervalued and reflects a new era of possible Chinese colonial practices.
China’s major presence in the African region contrasts with the West’s far more limited comportment. Western companies are far more sceptical of African countries with less legal regulation over property rights and corruption than are Chinese companies. This leads to a disproportionate number of Chinese business and investment into the majority of the continent. The United States and United Kingdom are used to operating under their respective countries’ US Foreign Corrupt Practices Act and the UK Bribery Act, which although gives them a reputational edge, limits their markets. Despite Chinese President Xi Jinping cracking down on domestic corruption, he has not enforced similar laws overseas. Especially if these Chinese companies in Africa are privately held, it has become harder to monitor their behaviour. A corruption charge made headlines recently when it was discovered that Chinese millionaire businessman, Chi Ping Patrick Ho, paid bribes to UN officials and African leaders in exchange for business advantages. This arrest is significant as its one of the first times corruption by Chinese businesses has been legally proved. Will it change Chinese reception in Africa? Perhaps, but only if the Western states begin capitalizing on their reputational advantage to orchestrate a string of partnerships and trade deals.
Overall, the increased Chinese presence in Africa has been warmly received and has positively impacted local African communities. Chinese-owned business employs several million Africans, with 2/3 of them providing valuable skills training. Investing in African people may yield happier locals and equip many with vocational trades otherwise unavailable in such undeveloped areas. Additionally, half of Chinese-firms on the continent have introduced a new product, service or technology to the African market. Chinese recent commitment to African investment has started to attract more foreign investors to the market in an attempt to tap into this potential workforce and land. However, despite benefiting employment rates and opening up the market to new industries, Chinese goods are inundating African markets, threatening domestic producers with extinction. The large volumes of cheap products are hard to compete with and could wipe out traditional craftsmanship. China’s activity in Africa has also faced criticism from Western and African civil society over its controversial business practice. The flip side of choosing to passively operate on African territory is that Beijing has explicitly not interfered with government practice, including the promotion of good governance and human rights. Their perceived indifference to harsh authoritarian regimes and weak health and safety regulations has allowed them more flexibility to expand business, but has the potential to damage their increased soft power in the eyes of the world. Zambia has experienced the most anti-Chinese sentiment. There has been an increase in civil strife in response to local protests against unsafe work conditions and exploitive conditions in Chinese-owned copper mines. The protesters were aggressively threated unless they silenced themselves.
Chinese investment in Africa has opened the door towards increased foreign funding for African countries, market growth, lowered unemployment rates, provided skills training for locals, augmented Chinese soft power, insight into business corruption and higher natural resource consumption. Such attention from Chinese President Xi Jinping has contrasted with US President Trump who has “barely mentioned Africa in his public statements and his ‘American first’ rhetoric, some Africa experts say, is pushing the continent further into China’s embrace”. Sure to regret this nonchalance, American policy towards Africa during a period of Chinese interest is bound to be strategically damaging in the future. Not only is China motivated by profit, infrastructure ownership and business advantage, but their desire to achieve ‘great power’ status has only acted to further intensify private and state-sponsored investment. According to Yong Deng, a professor in the Department of Political Science at US Naval Academy, Africa carries an “enormous amount of diplomatic weight in shifting China’s diplomatic and political influence away from [a US and Western dominated world order]”. With foresight and vision that extends far beyond the typical eight-year American presidency terms, Beijing and Chinese businessmen have planted seeds of economic and political power into a continent once believed to be far too arid and undeveloped for profit and gain. The rest of the world has started to take notice, and there may be a burgeoning race for African business advantages. However, China has a head start and the finish line may be one only they can cross.