The “Made in China” label has become synonymous with less expensive purchases.
By the 1980s when China opened its economy to international trade and investment, it came to dominate the lower-end manufacturing sector. Low wages were at the heart of China’s success. The majority of the population lived on less than a dollar a day, so businesses had no need to pay high salaries. Combined with high productivity, this enabled them to undercut manufacturers in more advanced economies, and later to become the second largest global economy.
China’s President Xi Jinping appears to have made Africa one of the top priorities of his foreign policy.
The Chinese have been building relations on the continent, both in diplomatic and resource terms. It has invested in multiple projects such as building roads, railways, ports and dams and winning access to minerals like copper, uranium, ore, and oil needed to fuel China’s economic growth.
Despite this, many in Africa are suspicious of China’s growing interest in the continent. And one fact raised is that although Chinese imports may benefit Africans, they have destroyed indigenous light industry vital for development. It is also possible, however, that China is taking a longer view, and that a major motivation for expanding its African interests is to partner with the continent to build up its low-end manufacturing base, as the wages in China have grown.
China has increasingly become a dominant alternative for development finance for most African countries. It is now the largest non-traditional contributor of aid to sub-Saharan African countries. However, Chinese official financing is not, at least as yet, a direct alternative to the aid on offer by traditional partners. Government officials in charge of the national budget, or those responsible for sectors dependent on traditional donor financing, such as health and education, cannot afford to alienate traditional Western donors.
Nevertheless, China has been good for African nations.
Chinese trade with the continent has exploded from $20 billion in 2001 to $200 billion in 2012, while African countries reported some of the world’s fastest growth. Zambia-born economist Dambisa Moyo, in her new book Edge of Chaos: Why Democracy is Failing to Deliver Economic Growth, praises China as an exemplar of sound economic policy for managing the economy for the long term interests of growth. Of course, China’s economic success is due precisely to the fact that it was not subjected to neoliberal structural adjustment many African nations faced from such institutions as the World Bank. This doesn’t mean that there aren’t serious problems with how Chinese officials and firms, mostly state-owned, operate. The widespread pollution and health problem in China and its penchant for massive and often shoddy infrastructure projects in African countries.
While China provides aid for different projects over a wide spectrum, for the most part it is focused on a few specific sectors such as mining and infrastructure. As a result pertinent issues that enable domestic resource generation on the continent are not necessarily addressed. China’s economic relations with the continent have been heavily criticised with claims that it continues to load Africa with loans that most countries may struggle to repay.
This suggests that there is a need to re-assess the type of Chinese aid sub-Saharan countries accept and to make sure that the aid ties in with these countries’ development agendas, signing bilateral agreements on terms that favour both.