Mercantilist Enterprise: The State of China in Africa

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Congo is a part of the Chinese strategy of economic development. China does not possess sufficient strategic resources to fuel its industries. Hence, it has been procuring them abroad, locking up supplies by encouraging state-owned enterprises and private companies to strike exclusive mining deals worldwide. 

China already has a monopoly over rare earth elements, which are key ingredients for most hi-tech manufactured goods, including cars, television sets and mobile phones. Congo is one of the few places that boast a dependable supply of these elements. This is a source of the synergy between Chinese and Congolese interests. 

By contrast, US strategy remains caught up in a political time warp even in the face of Chinese advances. US aid has gone largely into the improvement of health care and other humanitarian areas while China speeds ahead with helping Congo’s infrastructure development.

http://www.scmp.com/comment/insight-opinion/article/1940036/how-china-building-future-sub-saharan-africa-and-why-us

The slowing of output growth in major emerging economies has been associated with lower commodity prices. Next to supply factors, the marked decline in investment and (rebalanced) growth in China is depressing commodity prices, particularly in metals and energy. Three key factors have underpinned Africa's good economic performance since the turn of the century: high commodity prices, high external financial flows, and improved policies and institutions. Macroeconomic headwinds for Africa's net commodity exporters may imply that Africa's second pillar of past performance - external financial inflows - will suffer as well. 

While lower commodity prices are providing significant headwinds to Africa's commodity exporters, the rebalancing of China may also provide backwinds, albeit gradually. The relocation of low-end manufacturing from China might reinforce positive income effects of lower commodity prices in oil-importing countries. The backwinds can be expected to stimulate FDI inflows into Africa. Benefits from reduced fiscal pressures in countries with high fuel shares in imports (Egypt, Ethiopia, Kenya, Mozambique and Tanzania) mirror significant challenges for energy exporters (Angola, Chad, Congo, Gabon and Nigeria) and other commodity exporters (Ghana, South Africa and Zambia) arising from depressed commodity prices.

http://seekingalpha.com/article/3976962-rebalanced-china-will-affect-africa

In his speech at a recent mega-economic conference in Yaounde, Cameroon president Paul Biya billed his country’s strategic position at the crossroads between West and Central Africa, in addition to its coastline in his pitch to investors, who also included Chinese representatives. 

There are at least five ports on Africa’s western coastline that have some form of Chinese involvement and which are considered strategic by Beijing, according to the plan. These include those in Tunisia, Senegal, Gabon and Ghana. 

With a number of Central African countries either building brand new ports or upgrading local infrastructure, Beijing should not be surprised at being propositioned into extending its maritime plans into Central Africa. 

http://mgafrica.com/article/2016-05-29-african-countries-bid-to-be-anchor-points-for-chinas-billion-dollar-silk-road-initiative

While China’s water footprint in Africa is unlikely to be felt through food – via trade or unnecessary land grabs – it will be felt through the manufacturing industry.  

Chinese manufactured goods have been cheap and plentiful, so the argument goes, because of low labour costs within China. This is only partially true. Another key reason is that the costs of environmental damage – borne by the Chinese – have not been included in the price of the goods it produces (Watts, 2010). Those costs are huge. Growing water scarcity and pollution are reckoned to cost the country some 2-3% of GDP – a sizeable sum in an $18 trillion economy (Doczi et al., 2014). This is one reason why China’s ‘exports’ of water in industrial products far outweigh its imports. In short, exports are environmentally subsidised.  

This situation is likely to change. As labour and resource-intensive manufacturing shifts to Africa, and China begins to import rather than export such goods, the environmental burden will shift from China to Africa. The question then arises: will Africa learn from the mistakes of China and take steps to avoid the damaging effects of water degradation? 

https://degrp.squarespace.com/degrppublications/2016/5/20/china-africa-a-maturing-relationship-growth-change-and-resilience (PDF, article begins p. 42)