Thinking Long Term
China’s ongoing engagement with Africa is a major success story and constitutes an excellent example of development cooperation and interdependence toward common economic prosperity. The China-Africa trade relationship is important for China’s ongoing economic growth, while commodity exports to China provide a foundation for economic development across the African continent. A strong complementarity between China and Africa, grounded on respective stages of economic development, gives Africa a unique opportunity to export commodities to a rapidly expanding Chinese market. This complementarity has seen China-Africa trade grow from only $10 billion in 2000 to over $170 billion in 2017.
Besides the obvious economic benefits from closer China-Africa cooperation, the bilateral relationship is firmly grounded on a strong historical friendship. In addition, foreign direct investment (FDI) has played a major role in supporting and promoting economic development across the African continent, creating new jobs while contributing significantly to poverty reduction. China has been a key factor in this process, bringing capital and technology to Africa.
Growing Chinese investments in Africa benefit local economies and create new commercial opportunities in regional markets. China’s investments in mining, dams, road and rail systems, as well as infrastructure and telecommunications are immensely beneficial for Africa’s development. Chinese investments are at the same time promoting the establishment of small enterprises in Africa. The International Monetary Fund (IMF) estimates that Africa’s growth in recent years has been close to 6 percent, the highest in 30 years, due in large part to China’s growing investment, and China’s massive contribution to Africa’s infrastructure and economic development confirms that it is clearly Africa’s best development partner and economic ally.
South-South agenda
Besides the economic dimension, China and Africa are linked by a common objective to advance the South-South agenda. In this context, China and Africa are seeking a stronger voice for developing countries on the world stage and in international institutions such as the United Nations , World Trade Organization, IMF and the World Bank. China is seen as an African ally in the struggle to democratize international forums and reshape global development agendas. Thus, China and Africa share a common objective in seeking to reform the global governance toward a fair, just and equitable system.
Africa’s perception of China is shaped by China’s historical commitment to Africa’s freedom struggles, and thus a strong and enduring sentiment of liberation solidarity underpins the relationship. At the same time, China’s successful development model holds wide appeal in Africa where states are seeking to escape the poverty trap.
Practical suggestions
The new challenge for China, South Africa and Africa as a whole, is to strengthen this process and build a sustainable and longterm relationship with new major benefits for all sides. Identifying the precise programs and processes which will ensure a sustainable China-South Africa and China-Africa development partnership for the long term is the key task. As China and South Africa are celebrating 20 years of diplomatic friendship and solidarity this year, the debate has shifted toward a further broadening and strengthening of the relationship. In this context, a number of suggestions have emerged: South Africa has often been identified as a “gateway” for Chinese corporations wishing to access the continent, but rather, South Africa should advance itself as a “commercial hub” to provide a corporate headquarters for those Chinese companies. This would include providing quality office space, banking facilities, convention centers and investment conferences along with trade links and easy access to the rest of the continent.
South African President Cyril Ramaphosa has offered a new vision to bring FDI to the country to create jobs and build the economy. The historical record confirms the importance of FDI in China’s own remarkable economic development. South Africa is well positioned to attract FDI, but should do more to offer specific investment incentives to potential Chinese investors. Without specific, detailed and meaningful incentives, an acceleration of incoming FDI is unlikely.
The establishment of a dedicated special economic zone (SEZ) in South Africa, specifically to facilitate China’s corporate FDI, could contribute significantly toward boosting investment. The SEZ would require clear investment incentives, such as low taxes, availability of skilled labor, labor flexibility and good transport links. The immense success of China’s SEZs could be replicated in South Africa on a smaller scale.
At the continental level, the current debate focusses on how Africa can engage more effectively with China toward mutually beneficial outcomes. Arguably, the best strategy for Africa would be to concentrate on a “project approach.” Thus, at the Forum on China-Africa Cooperation and at bilateral meetings, African countries should focus on presenting detailed bankable projects with completed feasibility studies. China is ready to finance and implement construction projects across the continent, and this presents a remarkable opportunity for accelerated economic growth and prosperity.
The current China-Africa scholarly debate converges on the idea of establishing a possible China-Africa center, or an institute to advance academic research and knowledge exchange. However, to advance cooperation in a more practical and result-orien-tated way, perhaps a business center or an industrial cooperation institute would be more appropriate. Business consultants and bankers could be incorporated toward developing and proposing specific projects and programs, which would advance economic development. South Africa should take the lead in promoting the establishment of a China-Africa business-focused research center, linked to an established business school.
To advance a mutually beneficial development partnership, Africa as a continent should urgently seek to strengthen cooperation with China’s Belt and Road Initiative, with specific reference to South Africa. The initiative offers a unique opportunity for Africa to build strong connectivity with the Chinese market and to link the African continent more directly with global trade routes. It provides the next phase of globalization, offering South Africa and other Africa countries major new prospects for accelerated economic growth.
More innovative interaction
Promoting sustainable economic development will remain a key challenge for South Africa and other African governments over the next 10 years and beyond. The task for China, Africa, and South Africa in particular, is to enhance the current win-win relationship by strengthening various forms of cooperation, and developing new areas of innovative commercial interaction.
At the same time, a mechanism to measure the success of the China-South Africa interaction would be helpful in monitoring and advancing the process. In this context, the following could be accurately monitored to confirm results: levels of trade (with an emphasis on advancing balanced trade), new investments, jobs created, evidence of poverty reduction, new roads, railways and other construction, levels of corporate social investment and numbers of Chinese tourists visiting Africa.
A stronger China-Africa partnership would provide significant opportunity for mutually beneficial sustainable development. The promotion of enhanced economic development over the next decades can be met through a China-Africa joint venture based on a common vision, informed by the suggestions outlined above and by other proposals. Strengthening interaction and developing new avenues of cooperation would produce continued positive outcomes for China and African countries, especially South Africa.
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