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China-Africa and an Economic Transformation$

Arkebe Oqubay and Justin Yifu Lin

Print publication date: 2019

Print ISBN-13: 9780198830504

Published to Oxford Scholarship Online: June 2019

DOI: 10.1093/oso/9780198830504.001.0001

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(p.ix) Preface

(p.ix) Preface

China-Africa and an Economic Transformation
Arkebe Oqubay, Justin Yifu Lin
Oxford University Press

With China–Africa economic ties having entered a new phase, it is important to review the past twenty-five years and assess key economic policies and strategies that will shape future China and Africa ties. China’s economic rebalancing as it prepares to enter the ‘fourth industrial revolution’, the recently launched Belt and Road initiative (BRI), and new policy directions announced during FOCAC VII in September 2018 present both opportunities and challenges for African countries. Similarly, the Africa of 2018 is significantly different economically from Africa in 2000 when the first FOCAC was launched. Because of a combination of internal economic reforms and an evolving global economic environment, more than eighteen African countries registered positive economic growth for a decade. This growth was sustained for a shorter episode and the growth has been uneven across the continent. Most African countries have not sufficiently diversified their economy and that growth has not sufficiently translated to structural changes. Furthermore, Africa–China economic ties and outcomes have been uneven across African countries.

Since the first FOCAC summit in 2000, China–Africa economic ties have grown by leaps and bounds. Besides the impressive growth in two-way trade between China and Africa, Chinese investment in the productive sectors of many African economies has played a catalytic role in raising productivity in many sectors—although uneven across African countries. China’s role in the development and financing of critical African infrastructure—transport, electricity, and logistics—has been critical in addressing key binding constraints that had long held back the continent’s economic potential.

Equally important has been the demonstration effect of China’s own development experience to African countries. In this regard, the role played by the Chinese state in guiding the market, and the willingness of the state to intervene and experiment with heterodox policies to generate economic growth, compete in global markets, and reduce poverty in the process has been significant. Heavy investment in vital infrastructure, targeted supports to exporting sectors, active FDI promotion, education, and research and development were complemented by flexible policies designed to enhance competitiveness of local enterprises through technological retooling, the (p.x) retraining of workers, and progressive deregulation of the market. The lessons from China—policy ownership and strategic planning—increasingly inform national development strategies in many African countries.

As China transits to a ‘knowledge-based economy’ in the new phase of globalization, it faces many rebalancing challenges that could potentially open up, or alternatively diminish new opportunities for African countries. As one of the top sources of outward FDI and as the world’s largest trading and manufacturing nation, China’s rise can benefit African countries if they are prepared to take a strategic approach in their dealings with China. For example, pending relocation of China’s labour-intensive manufacturing could potentially help generate millions of jobs for African youth, and rising consumption by the growing Chinese middle class of luxury agricultural products could increase African exports of these products to China, thus unleashing the productive potential of African farmers.

The relationship between China and Africa is in its early stages and it is too early to arrive at any conclusion as to whether this relationship is necessarily good or bad. Yet, there is an ‘exaggerated’ perception of China’s power in Africa in the mainstream media. In fact, there is no Chinese exceptionalism when it comes to Africa. China is not the sole player in Africa and it is subject to the same political gravity as other external actors dealing with Africa. There is, hence, a danger in making too broad generalizations about China’s role in Africa. There is an urgent need for more detailed research both on individual African countries and at the level of value chains to trace the real economic impact of China on Africa’s development. Equally important is the need to be cautious about the over-exuberance of some African leaders about the replicability of the Chinese model. While the example of China is appealing, there is a need for realism on the part of Africans if the trends in the evolving global order are to be correctly read and policies formulated accordingly.