AFRICA’S DEBT TO CHINA IS COMPLICATED

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By Edward Mwango

SOUTH Africa, just like Zambia, is increasingly enjoying bilateral relations with China.

South Africa, a leading economy on the African continent, and China, the largest developing country in the world, have forged a unique partnership.

Operating at bilateral, continental and multilateral levels, the governments are actively striving to realise the comprehensive strategic partnership envisaged in 2010.

China has increasingly become an important economic player in Africa. Chinese investments in Africa span across many sectors and are not confined to Chinese government and large state-owned companies. Several private Chinese companies have also invested heavily in Africa. For example, Huawei, a Chinese leading global telecom services provider, has invested a total of USD1.5 billion and employs 4000 workers in Africa.

In Zambia, President Edgar Lungu recently responded to critics on the China-Zambia relations saying the two countries’ engagement was on mutual terms.

Officially opening the third session of the 12th National Assembly, President Lungu said no amount of propaganda would distort Zambia’s relationship with China.

President Lungu said that Zambia’s right to choose friends should be respected by everyone.

‘Our friendship with China is mutual and no amount of propaganda will jeopardise it…we respect our friendship with China, EU and everyone else,” he said.

President Lungu added: “We are proud of our relationship with China, our friendship with China is mutual.”

He also urged Zambians to ignore anti-China sentiments that were being bandied around.

His South African counterpart, Cyril Ramaphosa believes that Africa’s relations with China has entered a golden age.

In a recent interview with Reuters, Mr Ramaphosa described the Forum on China-Africa Cooperation as successful.

“In many ways, it was historic and it was actually an important step. The relationship between China and Africa has now entered a golden age, a true age of deep cooperation”, Mr Ramaphosa said.

He said the Cooperation should make it possible to balance the trade structures of both parties, adding that the Chinese market was more open to Africa.

He also said African countries wanted more inclusive projects for its people.

“China is open, but not only open, it wants to open up access to its market for value-added products from Africa’‘, he added.

Many countries feel that with China, we have a significant partner, not only there to steal and plunder the resources of the African continent, but a partner that wants to help its partners achieve higher levels of industrialization “, he said.

The South African President debunked assertions that Chinese investments and assistance to Africa was a kind of ‘’ new colonialism’‘.

“I refute and debunk this notion, which is propagated by people who are envious and jealous of this relationship, which would be a “new colonialism”. There is no “new colonialism”, it is a relationship deeply rooted in history, “he said.

Recently, the South African Head of State was quoted by local media as saying the nation should adopt a “South Africa first” approach in order to reduce high levels of unemployment.

This was in an attempt to distance himself from US President Donald Trump’s “America first”.

“This is the time to put South Africa first, in a special way, not in an arrogant way.” he said.

According to African Development Bank Group, China’s trade with Africa has also grown steadily during the past decade reaching USD160 billion in 2011 from just USD9 billion in 2000.

China’s share in Africa’s total trade has been phenomenal, rising to 13% from 3% a decade ago.

The growth in China’s interest in Africa has been driven by the appetite for Africa’s natural resources to sustain its rapid growth. Currently, China imports one third of its oil from Africa, and some of its investments are tied to resource extraction. For instance, Angola has bartered its oil resources for infrastructure development. Nonetheless, Chinese interests in the region go beyond oil and other raw materials.

Africa’s resource-driven growth may be hampered by drastic shift in factors affecting the Chinese economy. These factors include geopolitical issues, the slowdown of the Chinese economy and idiosyncratic risks.

A recently released Chinese policy document highlighted the country’s plan to strengthen the relationship with Africa: large in scale, broad in scope and deeper in levels. This expansionary policy has raised concerns among Africa’s traditional western partners.

For instance, recently the USA accused China of ‘securing oil at the sources’. China’s relationship with African regimes perceived as undemocratic has specially been the major source of this criticism.

For instance, Chinese commitments in Sudan and Zimbabwe are among the most controversial. The Sino-African partnership should therefore be fully explained in order to assuage growing concerns by western scholars and officials.

Accordingly, Africa has benefited from the Chinese economic boom through increased trade and investment, mainly in natural resource sectors.

Thus, Africa is particularly vulnerable to economic shocks hitting the Chinese economy. Recent estimates by the IMF indicate that China’s GDP growth is projected to slow to 8.2% and 8.8% in 2012 and 2013, respectively from an average of more than 9% over the past three decades.

Since Chinese economic ties with Africa are largely resource based, a fall in China’s demand for Africa’s commodities could create tensions in the current account and fiscal positions of these countries.

Despite the obstacles and the associated potential risks of China’s engagement with Africa, Sino-Africa partnerships can play an important role in fostering growth and development of African economies.

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