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Is Chinese investment good for Africa?

Is Chinese investment good for Africa?

China stands to gain a lot from its relationship with Africa. When the Chinese invest in African industry, it is rarely at cost to themselves. Westerners are often cynical about this, and warn African nations to remain wary. But China has always acknowledged that it expects mutual benefit from its relations with other countries.The question is, what are the benefits for Africa, and is Western criticism plain hypocrisy?

When taking a view on Chinese investment in Africa, Westerners often think about China’s use of the continent’s natural resources. China’s growing industries require oil, ores and minerals and the Chinese have therefore invested heavily in mining and extraction ventures, as well as infrastructure to reach the resources. China is also now investing in other sectors, such as agriculture. This increasing involvement led the former US secretary of state, Hillary Clinton, to warn developing countries to be “wary of donors who are more interested in extracting your resources than in building your capacity”.

This is good advice, though perhaps somewhat hypocritical. Any cursory analysis of Western involvement in Africa will reveal many decisions based primarily on national interest and wealth-protection. With this in mind, economists therefore argue that China is only doing what other global powers already do.

Chinese investments in Africa’s industries are only part of the picture. As well as providing long-term loans to African nations, China also funds a variety of aid and development projects. This is clearly done to court governments and show ‘solidarity’ (or use ‘soft power’ as the politicians would say). But this doesn’t necessarily negate the beneficial effects. Some projects are cultural. For example, the Chinese have financed a National School for Visual Arts in Mozambique, as well as sponsoring a network of sports stadiums and concert halls across Africa. Education is also being supported, with Chinese sponsorships of education and training programmes. This conforms to one of the eight principles laid down by the Chinese government on ‘Economic Aid and Technical Assistance to Other Countries’, which states “China will help recipient countries master the techniques of any technical assistance”.  In the health sector, Chinese doctors have been bringing their experience to Africa and Chinese money has funded hospitals and clinics, such as the malaria prevention centres in Liberia.

There have been examples of under-utilised public buildings and badly constructed roads and hospitals. Poor labour practices in some Chinese-run companies have also been cited by those concerned about Chinese involvement. However, African workers have long suffered from poor working conditions (well before the arrival of the Chinese) and deficiencies in buildings and roads may merely reflect inexperience in understanding Africa’s volatile weather conditions.

Cynics point to the benefits China gains from its ‘philanthropy’. Training programmes in Africa help to provide skilled workers and China’s drug companies benefit from the country’s involvement in the health sector. However, China has always been open about the fact that it expects an exchange of benefits in its relationship with other countries.

Perhaps the real test for Westerners is to ask the views of Africans themselves. Naturally, some are concerned about exploitation. But many Africans also feel positive about the opportunities offered by Chinese investment. For example, in an interview with the Guardian, the new Malawian president, Joyce Banda, said “we have so much to learn from China”. Ms Banda particularly welcomed the speed with which Chinese businesspeople engage with her country, saying that when a Chinese company agrees to invest in a project, “the next day you sign and work starts”. This compares with Western investors, where negotiations can go on for years and extra conditions are often set which are “not related to the project”. Since the Chinese rarely have preconditions, it’s no wonder Africans find them more straightforward to deal with.

Nevertheless, as Hillary Clinton was right to suggest, African governments must be strong to manage their relationships with foreign investors and ensure their own people benefit equally. But this remains as true for relationships with Western companies, as it does for Chinese investors.