Chinas increasing presence in sub-Saharan Africa - Literature review Example

?Chinas Increasing Presence in Sub-Saharan Africa Kaplinsky, McCormick, and Morris (2007, p.3) that China is one of the fastest growing economies in the world. The speedy development has particularly been experienced over the last few decades. The growth has been attributed to the economic restricting coupled with improved efficiency (Adisu, Sharkey, and Okoroafo 2010). Data shows that China was the third largest economy in the world in 2004, but at the same time ranked 129th in terms of per capita because it is the most populous country in the world with over a billion people according to the World Development Indicators (Bloomberg 2010). The Central bank of China projected that the economy of the country was to grow by 9.2% in 2006 (Trofimov 2007). However, as at the second quarter of 2006, the Chinese economy had grown by 11.3%, which was the highest in the world in 2006 according to De Lorenzo (2007). The growth in Chinese economy is also attributed to its active role in the global economy, particularly in Sub-Saharan countries where China has invested heavily over the last few decades (Lafargue 2005). As at 2006, the Chinese economy was projected to overtake the U.K. and become the fourth largest in the world. China obtains more than 28% of its gas and oil from sub-Saharan Africa, which among the highest inn the world according to Ajakaiye (2006, p.11-13). This paper will first examine driving forces that have suddenly driven China towards spending billions in sub-Saharan Africa. Secondly, the paper will explain the role that the Chinese companies operating in Africa play. Thirdly, it will explore how different the Chinese aid is to the western aids that African countries are used to. Finally, the paper will gives an overview of what the local Africans think regarding the Chinese heavy presence in their countries. Sautman and Hairong (2007, p.16-18) note that the growth of trade between China and Sub-Saharan Africa (SSA) has improved significantly over the last few decades. In this regard, the data available shows that in 2003, the transaction between China and SAA was valued at $18.5 billion, which was a significant improvement in comparison to the 2002, which registered $12.39 billion (Swartz and Hall 2010). Presently China ranks among the top trading partners with SSA with Gabon being the second largest client after the U.S. Some of the SSA where Chinese investments are highly noticeable includes Kenya, Benin, Nigeria, Angola, South Africa, and Tanzania, Algeria and South Africa just to name but a few (Taylor 2006, P. 937-939). The Chinese companies, particularly the Building and Public Works (BPW) are competing actively against other companies in Africa (Muekalia 2004). This is evident from the Chinese increase in infrastructural projects, a field that many experts say China has high expertise as noted by Zafar (2007). China’s motives for its presence in Africa Oil deposits are arguably one of the reasons why China has had a lot of interest in investing in SSA. Kaplinsky, McCormick and Morris (2007, p.14) reveal that the government of China has all a long been very anxious regarding the country’s energy dependency. For instance, Kaplinsky, McCormick and Morris (2007) note that China was the eighth leading oil importer in 2000 and rose to fourth in 2006. China’s oil import was projected to increase to the extent that it was likely to overtake countries like Japan and Japan by 2010 (Fine, and Jomo 2005, p.76). ORAM (2005) cites that the dependency on oil imports present a major challenge to the international duty china intends to undertake. A report shows that Indonesia, Iran, and Oman, for a long time, have been the principle suppliers of oil to China (Anshan 2007, P.70). However, some of the oil producing countries that China has depended on is undergoing depletion such as the Indonesian oil reserves. Further, the U.S. has been able to consolidate its control over Middle East Oil except Iran since its intervention in Iraq (Wang and Bio-Tchane 2008). In addition, the oil deposits in the Caspian Sea has been disappoint in the recent past supplying only about 2% of world reserves. Therefore, China has found it prudent to invest in African countries in order to be able to reduce its dependency on oil imports from the Middle East, where the America appear to have consolidated control (Broadman 2007, P.6). Africa has been of interest to China since its oil production represents about 8.9% of global oil reserves and 11% of world production (Alden 2005, p.147). Currently, China is the second importer of oil from Africa after the U.S. In fact, China’s oil import from African countries has increased to more than 25% compared to the 15% it used to import in the 1980s according to Mohan and Kale (2007). The Chinese interest in African oil supplies was evident during President Hu Jintao’s tour of African Gabon, Egypt, and Algeria in 2004. During this tour, Jintao signed a joint agreement with Omar bongo in Libreville for the exploration and production of oil (China Monitor 2006). Similarly, the Sinopec and the Total-Gabon company signed an agreement for the supply of one million tons of Gabon crude oil to China in the same year (Konings 2007, P.13). During the same visit, Jintao also signed various agreements with the Algerian government most of which pertained to the supply of oil. Currently China is seventh largest foreign supplier of Algeria (Wu 2010). In 2002, Sinopec entered into an agreement with China to develop a Zarzaitine oilfield costing 420 million euro (China Monitor 2006). In addition, The China Oil and Gas Exploration is currently constructing an oil refinery near Adrar, within the Algerian desert. China’s interest in African oil is also evident from its presence in the Congo-Brazzaville and Sudanese oil fields. For instance, China is reported to have imported over a million tons of oil from Congo in 2003, which accounts for 1.5% of its total imports. The China National Petroleum Company (CNPC) also plays an active role in oil exploration in Sudan (Zweig and Jianhai 2005). These projects are undertaken with the aim of getting oil supplies in return according to Xinhua (2007). Kaplinsky, McCormick, and Morris (2007) reveal that China is also interested in SSA for raw materials. For instance, China is reported to be the leading importer of timber, it uses in its industries, most of which are imported from Africa. For instance, Gabon imports more than 60% of its timber to Asia, most of which are imported to China (Ministry of Foreign Affairs, and PRC.2000). In return, China gave Libreville$2 billion and additional $6 million interest-free loan. China also imports its timber from Congo, and Cameroun in exchange for development projects as noted by Wenping (2007, P.24). Increased Chinese presence in SSA is also due to commercial reasons. The African continent offers new commercial opportunities for Chinese companies according to Kaplinsky, McCormick, and Morris (2006). Despite trade between China and SSA still marginal, there has been significant growth over the last few years. This is because China sees Africa and a source of its raw materials and a market for its manufactured goods (Moin 2010, p.29). Kaplinsky, McCormick and Morris (2007, p.62) reveal that China is out competing its rivals in the textile industry and manufactured goods, most of which are cheap and affordable. In addition, it uses Africa as a market to test its industrial products (Dunning 1980P.10). For instance, the Zhongxing Telecom Company is in the process of increasing its outlets in sub-Saharan Africa such as Djibouti (Economy andMonaghan 2006). There are also several Chinese businesses nowadays found in Africa such as Kenya, Tanzania, and Nigeria just to name but a few. Mostly African countries have lauded the Chinese presence in their countries because it has contributed massively to the economic growth in the Africa countries especially through the improvement of infrastructural facilities such as electricity and roads (Bartels, Alladina, Lederer 2009, and P.142-144). Consequently, China has benefited hugely because it has been able to obtain raw material for its growing industries (Shenkar 1994, p.10). In addition, it has reaped massively from the oil it receives from Africa, which has reduced its dependence on oil from the Middle East according to Idun-Arkhurst and Laing (2007). Roles Played by the Chinese Companies operating in Sub-Saharan Africa The Chinese companies in SSA mainly engage in a number of activities in African countries supplying it will raw materials (Brooks and Shin 2006). Firstly, some of the Chinese firms engage in the exploration and production of oil, in Africa. For instance, the China National Petroleum Oil Company (CNPC) is currently undertaking the oil exploitation along the Muglad basic (Kang and Gongzheng 2009) In conjunction with the Nile Petroleum operating company, The CNPC has constructed 1,500 km pipeline to draw oil from the south to the Marsa al-Bashir harbor near the Red Sea (Brautigam 2003, P.448-449). Apart from exploration of oil, some companies take part in the building infrastructural facilities such as roads and electric power projects. In Kenya, for instance, the China Road and Bridge Corporation (CRBC) is among the top building and public works companies in the country (Ewing 2009). The company has constructed the Tambach-Kabarnet road in the western Kenya as well as the renovation of Mombasa-Nairobi highway (Hanson 2008). In fact, CRBC has set its African regional headquarters in Nairobi, which gives it easy time in expanding its operation in Eastern Africa. The China Wu-Wi has also completed the construction of Thika-Super Highway, one of the most modern highways to be constructed in East and central African region (Sautman and Hairong 2007). Other Chinese firms are also involved in the construction of hydroelectric power projects in Kenya such as the Sondu-Miriu hydroelectric power project phase II in the western part of the country after phase I was awarded to H-Young and Co according to Xinhua (2009). How different is Chinese aid to the well-known western aid that Africans are use to China’s warn reception in most African countries have been attributed to it approach to financial aid, which is quite different from those of the contemporary western countries (Alden and Davies 2006, 85-86). Unlike the other western countries, China advances loans to African countries at zero interest rates. To others, it allows for a repayment in exchange for the natural resources such as oil and other raw materials according to Brautigam (2003, p.44). For instance, China advanced $2 billion for its infrastructural projects in Angola enabling it to secure Shell Oil block by outbidding the earlier proposal made by India. On the same note, a Chinese company promised $7 billion of rehabilitation and investment to secure an oil exploration in the country, thereby outbidding the western firms, which had shown interest in the project as noted by Alden and Davies (2006, p.21). African perspective on trade between China and SSA Most African countries have embraced the Chinese investment in their countries due to a number of reasons. First, China makes no political demand in exchange for an aid in African countries, as has been the case in most western countries (McLeary 2007). Therefore, this allows the African countries to retain their sovereignty, without any interference from the external countries. This Day (2005) also reveals that many African countries like Chinese investment in the country because it does not impose neo-liberal reform package, as is the case with the World Bank. In addition, the Chinese aid comes with no pre-conditions attached, which enables SSA to initiate developments that western countries have failed to initiate. However, there has been growing concern over quality of certain Chinese good in the recent past (Ramos 2004). This has particularly been witnessed in the mobile phone industry, in which some of the phones that China exports to African countries are below standard (Tull 2006, P.460-461). This was evident when the government of Kenya switched off more than a million mobile phones from its network because of their quality. Over 90% of this phones happened to have been imported from china. This raises the question of quality of some of the Chinese goods, which is likely to affect the trade between China and SSA in the near future according to Wallis (2010). Conclusion It is no doubt that the presence of China has promoted trade and economic development that other western countries failed to bring to Africa. In fact, it is likely that China with become the principle investor in African countries in the near future in exchange for raw materials and oil. References Adisu, K., Sharkey, T., & Okoroafo, S.C. 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