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Analysis: China beats West in Africa

disclaimer: image is for illustration purposes only
by Leander Schaerlaeckens
Brussels (UPI) Feb 1, 2008
China's growth and close economic ties with Africa are affecting the ability of the United States and the European Union to influence politics on the continent, experts say.

Europe became aware of its new secondary role in Africa during the latest round of trade negotiations at the EU-Africa summit last month. The EU, which had grown accustomed to getting what it wants from Africa, was fiercely rebuffed by the majority of African nations that refused the terms proposed by the European Commission.

The reason African countries could now stand up to their former colonizers was an alternative and more attractive Chinese market, which has been offering African countries better prices and more investment.

"China's own economic growth has allowed it, and forced it, to accelerate engagement with Africa pretty much across the board in a way that the EU and the U.S. just don't," said Fredrik Erixon, director of the European Center for International Political Economy, an economic think tank in Brussels.

Africa supplies a third of China's oil, and trade between China and Africa has risen by 6,000 percent since 1990, according to Erixon.

"There's a new player out there and that player is the fastest-growing source of demand for a lot of commodity producers who are now provided with a new market," said Brad Setser of the Council on Foreign Relations.

"The EU most certainly overplayed its hand in trade negotiations," Erixon said. "They pushed Africa into China's hands. They just asked for too much. They demanded reforms from African nations that they would never be able to do."

Europe's inability to bully China into submission -- though a few countries have since caved in and signed the economic-partnership agreement -- confirmed China's status as Africa's preferred trading and aid partner.

Beijing's policy of non-interference compared to the EU's big demands is what makes it such an attractive alternative, according to Erixon.

"China does the opposite (of the EU)," John Fox of the European Council of Foreign Relations said. "It doesn't try to sign a partnership agreement. It's just negotiation and investment deals without governance strings attached. The EU clearly got it wrong and upset a number of African nations."

By offering itself to former colonies as a more attractive and respectful trading partner, China initiated Africa's refusal to put up with the EU's demanding policies. The Chinese aren't bothered about tariffs and export taxes. Instead, they turn a blind eye to dictatorships, sell them arms when necessary and have been generous with aid and soft loans.

"China doesn't ask anything of them," Erixon said. "They identify products and they make the investments and of course that's the relationship that any African government would prefer. Europe's demanding approach has raised the transaction cost to the point where it's impossible for any African government to prefer European investment or aid to Chinese investment and aid."

In the same way that China doesn't demand, it doesn't judge either, facilitating relations with certain nations.

"China has nurtured connections with (Zimbabwe President Robert) Mugabe and Sudan and such rogue states for a long time," Erixon said. "China doesn't demand any corruption or human rights reforms. The non-interference policy applies as long as they can see results from the investments that they are making."

"The U.S. is not pleased with the investment in Sudan," Setser said. "The U.S. development community is worried that China's unconditional support is displacing conditional support on economic support."

But China's undermining of European policies could prove disastrous for Africa in the long run. Although Europe can be demanding, it guards over Africa's development and protects it from its pitfalls of the past.

"Europe and the World Bank are a bit afraid of China's noninterference which might result in Africa building up its debt again," Erixon said. "Some of the damage China is doing in looking after its own economic interest is undermining good African governance and the environment," Fox said.

China's dispensing of soft loans to Africa makes it easy to plummet the continent back into the debt crisis that it's just starting to crawl out of. "A buildup of new debt and a new debt crisis could occur one or two decades down the road," Erixon said.

There could also be far-reaching repercussions for the United States and the EU.

"There's at the margin some erosion of U.S. economic leverage because China is a new alternative market," Setser said. "When it comes to bidding on the right to develop Africa's oil fields Africa will sell it to the highest bidders and it will have no qualms of going to Chinese companies instead of EU or U.S. ones."

The Chinese oil companies routinely overpay in order to secure oil fields, according to Setser. "Growing exports from Africa to China might interfere with exports from Africa to Europe," Erixon said.

Yet the U.S. government does not believe the American economy is in trouble. "China has important interests in Africa. These include access to resources, access to markets, and pursuit of diplomatic allies," Deputy Secretary for African Affairs James Swan said during a speech last year. "None of these is inherently threatening to U.S. interests."

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