A week ago I had the pleasure of watching our President address the Oxford Union – which is a debating society affiliated but not strictly part of Oxford University.
It was momentous when you thought of the illustrious figures throughout history who had addressed the union; Gladstone, Disraeli, Churchill, Mother Theresa, Gorbachev, Malcolm X, Martin Luther King, Bill Clinton and many others.
Indeed to name them all would take several days because it has been going since 1823. The sense of history there is palpable; the library has books that have been in use for nearly 190 years.
In this context it was a great honour to our nation for our President to be asked to address this meeting. He was there to talk about the challenges facing African development in this global financial crisis, the house was full and the students were attentive.
He spoke of the dilemma facing African nations; whether to look East or West, because although the Western world is still dominant but the rise of China is inevitable, so we have a double-focus or “mirari” as we would say in Kinya-rwanda.
We traditionally view China and America as opposing forces or polar opposites but I came across a theory that debunks that myth. The concept of “Chimerica” as christened by Moritz Schularick of Berlin’s Free University; this concept urges us to view China and America as two sides of the same coin.
Economic data from both countries should be pooled to provide a wider picture.
The concept of “Chimerica” is understandable when you think that most of America’s heavy industry has relocated to China; when in the past you’d think of Ohio, Illinois, Michigan, New Jersey, Pennsylvania and New York as being the industrial heartland of USA, now this heartland has moved to Shenzhen, Shanghai and Guangzhou.
Far from being polar opposites they are symbiotic co-dependants like the concept of yin and yang. While America has been spending, China was saving; while America was consuming, China has been producing, when America pulls then China pushes but they are still part of the same organism.
China has amassed $1.7 trillion in its sovereign fund; the sovereign wealth fund (SWF) is a modern phenomenon that has resulted from nations accumulating capital very quickly, however due to a lack of a dynamic internal economy, the state is forced to build vast amounts of capital.
Hence China, UAE, Qatar, Saudi Arabia, and other petroleum economies have SWF’s but America, UK, France don’t because their economies can absorb and retain capital.
The USA is a dynamic internal economy that can trade with itself; California is the 6th biggest economy and can trade with Texas and vice versa but although China has up to 300 million consumers, it is still producing goods for exports and not the internal market.
China is going to suffer the ill-effects of an American slowdown; it relies on the US to buy most of its goods, its game-plan to reach global dominance was to use America to lever its way to the top.
That is why China is effectively bailing out America; it is buying up American debt, government bonds and accruing paper currency because they will sink or swim together.
Between China and USA we have nearly a quarter of the world’s population and 35% of global GDP.
Chinese development aid to Africa now rivals Western aid, it doesn’t come with conditions attached and is heavily focussed on infrastructure and has tangible benefits.
But the Chinese drive a hard bargain with regards to commodities and will use this time period when commodities are lowly priced to tie nations to long-term contracts and guarantee low prices much like their $5 Billion contract with DR Congo.
The emergence of China has given Africa a new impetus and the West for once is taking Africa seriously; but no doubt that this is an inter-regnum when China will emerge as king but until then we have to give to Caesar what belongs to Caesar.