17th
Ask Michael! China, Africa, and the New Cold War
This week’s Ask Michael! is sort of a sequel to the previous installment, Africa: what the fuck? Here, our favourite former activist and lover of fine jazz music deals with China’s relationship to Africa, and what that means for the rest of us.
Q: Is Chinese world domination imminent? Also, why are they so interested in Africa?
A: It’s become a commonplace to say that China is poised to assert itself as a superpower. Some would even argue that China will eventually bypass the US to become the world’s major power. This is far from being an absurd assertion, as long as one doesn’t believe it will happen in the short term. The combined total of the gross national product (GDP) of the entire world (in purchasing power parity – PPP) in 2007 was, according to the International Monetary Fund (IMF), 64,903,263 million dollars. The European Union accounted for 14,712,369 million dollars of this total. The US, the world’s largest single national economy, was worth 13,843,825 million. China’s GDP in 2007, the third largest behind the EU and the US, was a mere 6,991,036 million, only slightly more than half the size of that of the US. (When GDP is analyzed on a per capita basis, the US finds itself in sixth place, with China way back at 99.) As such, the US and the EU (with a shared GDP more than 4 times the size of China’s) are certainly not immediately threatened.
Nonetheless, China’s growth in the early part of the 21st Century has been impressive, as the figures for 2006 indicate. In that year, with a 10.7% ($2.7 trillion) increase in its GDP, China scored double-digit economic growth for the fourth consecutive year – China’s growth has in fact exceeded 6% annually for the last decade and a half, putting it well ahead of many developed countries in each of these years. In the same year, China’s labour productivity rate grew by 9.5%, the greatest increase in the world. India’s growth was in second place at 6.9%, with the EU showing a growth rate of 4.1% and the US registering a pallid 1.4%.
What all of this means becomes clearer if we look at it in terms of world population. The current world population (July 2008) is estimated to be 6.68 billion. The single largest population is that of China: 1.321 million or 19.84% of the total world population. India is in second place with 1,132 million or 16.96%. (Given their respective birth rates, India is set to overtake and pass China to become the most populous nation on Earth within the decade.) These two countries, therefore, account for more than 1/3 of the world’s population (36.8%). The US for its part has a total population of 304 million or 4.56% of the world’s population.
The US is none to keen on losing its role as the world’s leading national economy, but there is no way of ignoring the threat posed by China. China has the advantage of a growing, educated middle class and a disciplined labour force. A 2003 UN report into education in the developing world showed China with a 97% grade five school completion rate. Only one country in this category, Jordan with 98%, showed a better result – Thailand and Aruba shared second place with China. Among 52 countries surveyed, including European countries, China was one of only 9 with rates this high. Not surprisingly, China is rated amongst the best countries in the world when it comes to increasing literacy.
Unemployment rates are generally a good indicator of economic health, and while it is generally accepted that China faces a potential difficulties in this area, it’s 2007 urban unemployment rate stood at a relatively low 4.1%. By comparison, unemployment in the US currently stands at 5.5%. So with a massive, disciplined, reasonably educated labour force, a relatively high level of employment and low wages, China is in good shape to continue making inroads into the consumer economy in the West – dollar stores, cheap electronics, etc.
So what is to prevent China from overtaking the economies of the US and the EU? The answer in a nutshell, raw materials, particularly oil and natural gas – without ready access to energy sources, China’s economic growth will be constrained. Given that the EU has the world’s largest economy and China the world’s fastest growing, cooperation between them seems a natural fit, and there are certain signs that the early steps towards just such a cooperation are under way. Under the title Interdependencies on Energy and Climate Security for China and Europe, the British think tank Chatham House, also known as the Royal Institute for International Affairs, has launched a project meant to strengthen cooperation in this area. (It is worth noting in passing that a November 2007 BBC opinion poll of 23 countries found the Chinese most willing to make lifestyle changes and pay higher energy prices to protect the environment, giving lie to the suggestion that China’s growth will de facto prove environmentally disastrous.) And just last month, Serge Abou, the European Commission’s Ambassador to China, delivered a speech to 200 MBA students in Shanghai. Abou said, ”In the future, the first trade link in the world will be the Europe-China trade link.” Europe is already China’s #1 trade partner and the largest foreign investor in China. He also called for increased cooperation between the EU and China in offering foreign aid to Africa. We have already seen what the nature of such foreign aid is.
As has been noted, India is the second most populous nation on the planet. In January 2006, the Financial Times reported that China and India reached an agreement to cooperate in securing overseas crude oil. This development appears to be in response to China beating out India to acquire oil fields in Angola, Nigeria, Kazahkstan and Ecuador. The two countries have already cooperated in purchasing interests in a Syrian oilfield. In January of this year, senior Chinese and Indian officials announced plans to cooperate in the fields of construction, investment, financial services, technology, education and tourism. Their 2007 bilateral trade reached $38.7 billion, 34 times the 1995 level; $40 billion is the projected figure for 2010, but it already seems likely they will bypass that number as early as this year. Close economic cooperation between these two behemoths would, of course, radically change the picture.
China’s interests in this area are fundamental to understanding China’s relationship with Africa. The Chinese are currently in talks with Sudan regarding a joint search for oil in the Darfur region (expect the regional violence to increase if this goes ahead, with rebel attacks and criminal kidnappings). China also plans to provide $135 million in oil-backed credit for infrastructure development in Angola with the objective of developing Angola’s oilfields (in April, Angola overtook Nigeria as Africa’s major oil producer). It is interesting to note that this aid will allow Angola to avoid dealing with the IMF and World Bank. On June 2, China signed a deal with the government of Niger to invest $5 billion in the development of the Agadem oil block, including the construction of a refinery with a daily capacity of 1 million tons and a 2000 km pipeline. And other potential Niger oil blocks are being eyeballed. The Chinese have also begun talks with the government of Somalia with an eye towards oil development (their main competitor in this case being a small Canadian company, the Africa Oil Corp.). China has numerous oil interests in Nigeria, including a partnership with India to develop oil refineries in the country. They have also signed $2.5 billion infrastructural development aid package with Nigeria in exchange for oil exploration rights. Earlier this year, China and Mozambique held talks regarding the development of Mozambique’s coal and natural gas reserves. They have also held bilateral talks with Algeria regarding the development of Algeria’s offshore oil reserves (and they have signed accords on civilian nuclear power production). Meanwhile, Egypt and China have also been cooperating in technology exchange and exploration meant to develop Egypt’s oil reserves. Given all of this activity, it should come as no surprise that 1/3 of China’s oil imports come from Africa, and they plan to increase that to 40% in the coming years.
The January 4, 2008 Petroleum Review report penned by Mojgan Djamarani opened with the ominous statement:
“If Europe provided the scene for the US-Soviet ideological rivalry during the Cold War, in recent years Africa has emerged as the arena on which US and China intend to play out their rivalry over acquisition of energy resources.”
It seems unlikely that any of this will serve to improve the lives of the beleaguered citizens of Africa (the example of Nigeria is one of increasing levels of criminality and violence as adjuncts to oil production – even the work created borders on slavery, with extremely dangerous working conditions and horrendously low wages), although it will likely help corrupt African governmental officials and facilitate China’s efforts to eventually overtake and bypass the economies of the EU and the US, with Africa’s people caught in the pincer.
While all of this has been going on, China hasn’t overlooked Canada. Recall that in 2005 China and Canada signed a bilateral agreement on energy development, with a particular focus on developing the tar sands and uranium production.
Is China poised to take over the world? Hardly. But they do seem in a position to corner control of significant parts of Africa. And if everything goes as the Chinese hope it will, your great grandchildren might want to learn Mandarin. How all of this unfolds very much depends on energy resources, and Africa is key to the equation.
