China in Africa

Check out the eventcast with C-SPAN from our June 14 event with Dambisa Moyo here.
The past years have seen unprecedented Chinese economic expansion. Chinese firms, often state-owned, are investing more in Africa and the Arctic as a means of acquiring raw materials, improving technical skills, and gaining access to foreign markets. Is this a positive aspect of globalization or a negative outcome of China’s fast-growing economy?

On the one hand, this increase in investments in has led to a growth in developing economies. As one online commenter notes wryly, “Without China, Sudan would not even be an oil-producing country.” China is Africa’s biggest trading partner; however, there has been some backlash over cultural differences. Many have insisted that China needs to learn more about Africa before fully investing in the region or problems will inevitably occur. For example, the minimum wage and working conditions in many African countries are higher than in China – a difference which has caused friction between Chinese investors and African workers. The Economist states, “Chinese expatriates in Africa come from a rough-and-tumble, anything-goes business culture that cares little about rules and regulations. Local sensitivities are routinely ignored at home, and so abroad.”

There is also misunderstanding culturally, as Chinese workers interact with African workers. “Critics claim that China has acquired ownership of natural resources, although service contracts and other concessions are the norm. China is also often accused of bringing prison labor to Africa—locals assume the highly disciplined Chinese workers in identical boiler suits they see toiling day and night must be doing so under duress,” states The Economist. Though China will need to develop stronger, deeper ties with Africa to maintain access to natural resources to support China’s 1.3 billion people, many have noted that Africa’s population is due to overtake China’s by 2050.

China has also entered the race for resources in the Arctic, as a way to guarantee access to fuel and other resources into the coming decades. The Arctic is reported to have 13% of the world’s undiscovered oil and 30% of the world’s undiscovered natural gas. The melting ice around the polar region means more shipping and trade routes are accessible. China does not have a border on the Arctic Circle, and “there are tensions between some Arctic states over boundaries, which determine which countries have rights to resources within their exclusive economic zones, although these are more likely to be resolved through joint ventures than conflict. Similarly, China is likely to forge alliances with countries with Arctic territory to gain access to resources. One of its oil companies has already signed a deal with Russian interests for energy supplies,” reports The National. The Chinese have invested billions in drilling expeditions with Arctic nations to find the oil and natural gas reserves; they are not likely to back down gladly from these investments.

China’s increasing investments in Africa and the Arctic have been met with mixed results. Chinese investments have helped to increase local economies in developing nations, but state-owned Chinese firms have not been the most culturally aware when doing business in Africa and the Arctic. While this economic expansionist mindset is not new, should there be concern about China’s economic expansion, since many of these firms are run by the state? Dambisa Moyo, a leading economist and author on China’s race to resource acquirements, will be a guest speaker on June 14, 2012. Join our conversation. Learn more about our event here.

Blog post by Emily Phillips