The Impacts of China's Foreign Investment on Africa Society

The Impacts of Chinese Foreign Investment to the African Economy

I. Introduction
Ever since the last 10 years of 20th century, with trend of global economy integration and cooperation, the significance of African countries’ economies has became irreplaceable in the global economic stages. In the past two decades, The African continent is no longer known only by its abundant natural resources, but also the increasingly sophisticated environment for foreign investment and the very potential markets that are full of opportunities and needs. These factors have attracted more and more foreign investors to expand their investment scales and varieties. As one of these investors, China, with the blooming development of its economy to be the new emerging global power, has built a strong economic relationship with African countries and moved it into a new stage where both pros and cons exist from the prospective of African society. (Alessi)
China’s growing economic capacity in the past few decades can only be described as phenomenal; it turns China from an underdeveloped country that suffered from poverty into one of the largest economic bodies worldwide. With such outcome, China recently shifts its focus to secure long-term economic development, which consequently involves gaining more energy supplies and utilizing advantageous international trades to sustain its rapid growth of national GDP. As a result, the Chinese investors approach to the African markets. While sharing the pie with the US, Japan, and Europeans certainly brings huge benefits to China, it also brought the criticism from international society; these criticism mainly focus on the excessively exploitative practices in the African energy market and aggressive business engagements in many manufacturing industries. Some of these are particularly criticized for ethical problems and failure to assure human rights, also the whole foreign investing action of Chinese government is questioned and challenged for its noninterference policy in the affairs of African government. (Alessi)
This paper will present the current situation of the investment and trading relationship between China and African countries; also it will investigate and analyze such relationship from a comparative perspective. By presenting the findings from both political and social aspects, the paper will follow with arguing that the root of these problems is that China’s actions are initiated by self-interested plan and its long-term strategic game, which lead to the conclusions that the negative influences are inevitable side-effects.

II. Literature review
i. Positive effects
While the questions have to be answered about the negative influences China has brought, there are many advantages that African society gained from its engagement with China.
Firstly, from the political perspective, the engagement between China and the African countries gives both parties the leverage they need in dealing with the western society. According to Renard in his scholar journal “China’s Trade and FDI in Africa”, The China-Africa trading relation first starts in the post colonial period. The bonding was established based on mutual interest of African countries and China government. After the People’s Republic of China become independent since 1949, the Chinese government has been exploring and extending its influence in other developing countries in order to reinforce its international influence and status in the United Nations. It becomes very obvious that one efficient way to achieve that is financially support the governments of African countries that are newly independent or try to break away from its former colonial country. On the other hand, many African countries were seeking supports to help them against the colonies at time. One example will be the economic and technical cooperation agreement China signed with Guinea in the year after Guinea reached its independence. In this deal, China provided an interest free loan of $20 million; as a consequence, Guinea became the first African country to establish diplomatic relationship with China in the year of 1960. Another case would be that China was the first country that recognized Mali’s independence, and in the following year, China sent a huge amount trade mission to Mali. In this sense, not only Mali, but many other newly independent African countries looked to China as an alternative to domination by the former colonial. (Renard)
Secondly, China 's emergence onto the global stage has initiated a catalyst in the demand and supply chain of the global economy which has effectively rendered countries in the developing world, especially the Sub-Saharan African, to undertake essential structural reforms and transformations. This can be backed by the fact that Chinese government not only interest in the natural resources, but also invest for the long term. Many of the investment actions that China executed help to expand Africa’s permanent capacity in the mining and petroleum sectors. More specifically, to serve the general extractive industries and manufacturing capacities, China constructs or refurbished roads and railways. China also created export processing zones, supplies equipment, and built up national industrial bases. All the fore mentioning actions can contribute to the fundamentals of a developing country’s economic built-up. It is reasonable to partially credit China’s aid and investment that never have the economics in Sub-Saharan Africa grown so rapidly in the last decade, and Chinese purchases and direct expenditures could lift key African countries out of poverty. (Rotberg)
Last but not least, China has served as a development model for Africa and an alternative source of trade and finance from Africa’s traditional development partners. In the last decade, Chinese aid and other forms of economic engagement were sharply on the rise in Africa. In 2004 there were 674 Chinese companies in Africa operating and investing in sectors ranging from natural resources to telecommunication and manufacturing. At present it is estimated that this number has increased to about 900 Chinese enterprises in the same sectors as well as construction and health care. (Naidu) China was on a track to become the African continent 's largest trading partner, outpacing Great Britain and the United States.

ii. Negative effects
However, while the future of Africa-China engagement looks bright, there are many concerns and criticisms underlying. Although China is not necessarily competing with the other major trading partners of Africa, which is European, United States, and Japan, the hostile from these parties has been sensed for a long while. From Brautigam’s opinions expressed in her book “The dragon 's gift : the real story of China in Africa”, the western observers, media, and politicians tend to lock onto a few issues, which each of these issues is being endlessly quoted and backed up from each other: China’s financial aid and military support hurt the efforts to promote democracy and human right, and make corruption worse; China’s private businesses’ invasion disrupt the rules and regulations on African economic markets and threaten the local business and African people’s sustainable living. (Brautigam)
First of all, the most obvious problem that exist on the surface of this whole Chinese-Africa economic relation is the Chinese private cooperation that have taken over a large portion of local business, especially in textile, retailing, and electronic industries. As more African countries open their market to China hoping to receive more investments to enlarge their economic capacity, the private business come along with the inflow. They move the factories over to take advantage of the low labor cost and to avoid the gradually strict environment regulations in China, while importing the advantageous manufactures from China to share the markets. (Brautigam) An example will be the importation of Chinese textile products that had a knock down effect on the local fabric industry. The local business are mostly small-scale family owned shop, which could not stand the flood of cheaper and better quality fabric from China. Therefore, the negative effects of the Chinese imports enhanced resentment of Chinese firms by the locals. (Hu)
Secondly, regarding the political issue, the effects that China had on some African countries’ democracy progress are concerned. China’s relationship with the countries of Africa may strictly not qualify as that of a neocolonialist nature, there are critical problems in the way it deals with local populations that alienates them and generates resentment. (Hu) Due to the Non-interference policy China set, China’s trading business has, in some way, indirectly supported dictatorial regimes that overly repress its people. This is especially true when considering those countries that China sold military weapons and equipment to as part of the many bonding deals to establish diplomatic connections. (Rotberg)
In addition to the macro-level issue, another problem that caused the African society’s discontentment, which is also related to the non-interference policy, is the Chinese private cooperation in Africa. China has failed to encourage, or mandate, Chinese firms working in Africa to fairly conduct their business. (Hu) From the local Africans’ perspective, the Chinese firms should not excessively taking advantage of the difference in labor cost, and they should hire more local people for technical positions to maintain China’s international credibility of helping developing countries for building the fundamental structure of economy. (Naidu) In terms of human rights, many criticisms point out that the Chinese factories in Africa should improve the working conditions and respect the local laws to help preventing the already severe situation of corruptions. (Hu)
Set aside the economic and ethical issues China’s investments have caused, the aid packages China grated to the corrupt African authorities with “no strings attached” has helped the oppressive dictatorial regimes to subvert and survive Western efforts to initiate political reform, which extends to a serious political problem in an international context. In the article “Chinese Investment in Africa: A Dangerous Game” written by Raymond Hu, it says “While Western nations have attempted to pass a UN arms embargo on the Sudanese government to stop the genocide in Darfur, China has sold $24 million worth of arms and $57 million worth of vehicles and equipment to Sudan. In Zimbabwe, Western sanctions to bring about reform were likewise undermined by China’s support to President Robert Mugabe’s regime in the form of $200 million worth of military vehicles and equipment.” (Hu)

III. Findings
As stated in the Introduction part, in this section, we will further investigate the causation and motivation of problems that exist in the China-Africa relations.
It is inevitable that, when the deal has both the governments’ interest aligned, there is very limited consideration to the people and to the moral issue even if the mutual interests are established upon controversial project or investment. As of the political perspective, Dr. Sanusha Naidu has a very insightful summary and opinion expressed in the published “China–African relations: A new impulse in a changing continental landscape”, which I quote: “Symbolic diplomacy plays a significant role in China 's contemporary African relations and must be seen as a continuation from the past. Crudely put, it can be interpreted as a new form of dollar diplomacy where investments in public infrastructure projects are seen as vital in developing closer relations with African governments and strengthening trade ties.” (Naidu)
It is understandable that China has been deepening its involvement in Africa’s natural resource sectors. Like said in the article “Expanding China-Africa Oil Ties” written by Alessi and Hanson, which I paraphrase; for a huge economic capacity like China has, it takes endless raw materials to sustain its rapid grow. From this point of view, China has a very clear strategic purpose on Africa continent. (Alessi) The diversified social components in Sub-Saharan African countries makes it very difficult to maintain a appropriate distanced relationship with, which Chinese government has achieved by showing respect and maturity when building connections. (Rotberg)
Therefore, as long as the starting point of a foreign investment is not charity work, there will always be conflict between the people and investor, especially for countries in Africa continent that are highly heterogeneous.

IV. Conclusion
By analyzing the pros and cons presented above, it will still be difficult to give a binary answer of whether the China-African relation is simply good or bad. However, let us not forget that the purpose of business engaging is self-interested. From such perspective, it becomes reasonable to conclude that China 's efforts in Africa, from building infrastructure to forgiving billions in debt to providing medical support, are for building goodwill for later investment opportunities or stockpiling international support for contentious political issues. "China is playing a long game for oil and other raw materials in Africa and securing allies who will vote for it in the United Nations." (Alessi) And it will be naive to expect China to genuinely act out of developing the economy and society; and in terms of the private businesses who do not even care about the long term strategic relationship, as long as they are not cracking the bottom line of moral code, they will continue operate on the edge of legal responsibility and tend to maximize their profit.
The only question that should be asked is, how will China’s strategic game affect African countries in long-term? Will it still be beneficial for African countries to continue this seemingly win-win relationship with China? This question can only be answered by considering the different diversification and economic structure of individual country, which will make it far beyond this paper’s range. However, we can almost certain that the situation will be lasting for a considerable amount of time as China’s engagement did significantly contribute to the rapid and constant rise of the GDP in many African countries. Work Cited
Alessi, C., & Hanson, S. (2012, February). Expanding China-Africa Oil Ties. . In COUNCILS on FOREIGN RELATIONS. Retrieved April 14, 2013, from http://www.cfr.org/china/expanding-china-africa-oil-ties/p9557
Brautigam, D. (2009). The dragon 's gift: the real story of China in Africa (pp. 10-22; 22-43; 105-131; 273-299). New York, NY: Oxford University Press.
Hu, R. (2011, March 16). Chinese Investment in Africa: A Dangerous Game. In American Foreign Policy Princeton. Retrieved April 13, 2013, from http://afpprinceton.com/2011/03/chinese-investment-in-africa-a-dangerous-game/
Naidu, S. (2008, October). China–African relations: A new impulse in a changing continental landscape. Futures, 40(8), 748-761. Doi: http://dx.doi.org/10.1016/j.futures.2008.02.007
Rotberg, R. (Ed.). (2008). China into Africa : Trade, Aid, and Influence (5th ed., Vol. 27, pp. 1-21; 87-109; 250-272). Washinton, DC: Brookings Institution Press. Retrieved April 13, 2013, from . http://site.ebrary.com.proxy1.cl.msu.edu/lib/michstate/docDetail.action
Renard, M. F. (2011, May). China’s Trade and FDI in Africa. , Series N° 126, African Development Bank, Tunis, Tunisia. Retrieved April 12, 2013, from http://www.afdb.org/fileadmin/uploads/afdb/Documents/Publications/Working%20126.pdf

Cited: Alessi, C., & Hanson, S. (2012, February). Expanding China-Africa Oil Ties. . In COUNCILS on FOREIGN RELATIONS. Retrieved April 14, 2013, from http://www.cfr.org/china/expanding-china-africa-oil-ties/p9557 Brautigam, D. (2009). The dragon 's gift: the real story of China in Africa (pp. 10-22; 22-43; 105-131; 273-299). New York, NY: Oxford University Press. Hu, R. (2011, March 16). Chinese Investment in Africa: A Dangerous Game. In American Foreign Policy Princeton. Retrieved April 13, 2013, from http://afpprinceton.com/2011/03/chinese-investment-in-africa-a-dangerous-game/ Naidu, S. (2008, October). China–African relations: A new impulse in a changing continental landscape. Futures, 40(8), 748-761. Doi: http://dx.doi.org/10.1016/j.futures.2008.02.007 Rotberg, R. (Ed.). (2008). China into Africa : Trade, Aid, and Influence (5th ed., Vol. 27, pp. 1-21; 87-109; 250-272). Washinton, DC: Brookings Institution Press. Retrieved April 13, 2013, from . http://site.ebrary.com.proxy1.cl.msu.edu/lib/michstate/docDetail.action Renard, M. F. (2011, May). China’s Trade and FDI in Africa. , Series N° 126, African Development Bank, Tunis, Tunisia. Retrieved April 12, 2013, from http://www.afdb.org/fileadmin/uploads/afdb/Documents/Publications/Working%20126.pdf