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19ColombiaInternacional 75, enero a junio de 2012: 19-47
China y frica: un espejo distante para Amrica Latina1
Chris Alden
London School of Economics and Political Science
RESUMEN
La proundidad y la orma del posicionamiento chino en rica estn bien establecidas en el sectorde los recursos naturales y se reejan en las relaciones comerciales, la inversin y la diplomaciachina en la regin. De la mano de la creciente diversidad de actores chinos presentes en elcontinente que va desde empresas estatales hasta microempresarios, la creciente presencia chinaen rica da luces sobre las dinmicas que tambin se evidencian en otras regiones en desarrolloricas en recursos naturales como Amrica Latina. Este artculo examina el rol de China en rica
en detalle, con particular nasis en Sudrica, y reexiona sobre cmo estas experiencias podranreejar tendencias emergentes en las relaciones chino-latinoamericanas.
PALABRAS CLAVE
China-frica poltica exterior china comercio e inversin chinos recursos africanos polticaexterior sudaricana
China and Africa: A Distant Mirror of Latin America
ABSTRACT
The depth and orm o Chinas engagement with Arica is well-established in the resource sectorand reected in its trade, investment and diplomacy towards the region. Coupled with the growingdiversity o Chinese actors present in the continent - which ranges rom state-owned enterprisesto small-scale entrepreneurs - the expanding Chinese presence in Arica provides insights into thedynamics that are evident in other resource-rich developing regions such as Latin America. Thisarticle examines in detail Chinas role in Arica, with particular emphasis on South Arica, andconsiders how these experiences might reect emerging trends in Chinese-Latin American relations.
KEYWORDS
China-Africa Chinese foreign policy Chinese trade and investment African resources SouthArican oreign policy
1 This paper is based on a presentation delivered at the conerence Las relaciones polticasentre China y Amrica Latina, Universidad de los Andes, Bogot, September 22, 2010.
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Chris Alden, PhD, is Co-Head o the Arica International Aairs Programme
at LSE IDEAS. Dr Alden is a Reader in International Relations at the LSE.
Digital Object Identifcationhttp://dx.doi.org/10.7440/colombint75.2012.02
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21ColombiaInternacional 75, enero a junio de 2012: 19-47
China and Africa:A Distant Mirrorof Latin America
Chris AldenLondon School of Economics and Political Science
INTRODUCTION
Te rise o China, rom stalwart o revolution in the 1950s to global eco-
nomic and political actor in the last decade, is one o the dening eatures o
the 21st Century. Te initial praise o the leading industrialized economies othe North or Chinas gradualist shit to a market economy has evolved into
a chorus bemoaning its impact on their trade competitiveness and growing
concern as they are upstaged internationally by Beijing. Tese developments
are most clearly visible in Arica, a once-orgotten continent that had been
languishing on the margins o the international agenda since the ending o
the Cold War. Chinas orthright engagement with the Arican continent,
built upon its historical support or independence struggles and, increasingly,
on the economic power wielded by Beijing, has helped re-ignite continental
economies through new investment and trade opportunities as well as restor-
ing Arican political agency within the international system.
Latin America is a developing region that shares some undamental
characteristics with Arica. However, it retains distinctive eatures in crucial
aspects o its historical, economic and political position both as a region and
within the international system. It is itsel increasingly the object o Chinese
interests. Since the late 1990s, the growing trade and investment linkages be-tween China and Latin America have assumed greater importance and have
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China and Africa: A Distant Mirror of Latin America
COLINT 75, enero a junio de 2012: 19-47
been the object o overt activism by the Chinese government. In particular,
the contemporary trade and investment patterns between China and Latin
America, driven in the rst instance by the resource-seeking conduct o
Chinese rms, seem to replicate the trade and investment patterns that have
developed between China and Arica. Tis suggests that there are parallels
to be ound in Aricas own experience o decades o engagement with China,
with its drive or resources and markets, its orms o diplomatic activism and
the prolieration o Chinese actors in the region. Tese experiences can oer
insights into the process currently occurring in the Latin American region,
and also highlight some important dierences.Tis article examines Chinas engagement with continental Arica 2 as a
mirror or Latin America. Tat is to say, it examines the Arican experience
with China as a vehicle or understanding key eatures o Chinese policy to-
wards developing regions as a whole, including an analysis o the role played
by an increasingly diverse set o Chinese actors in shaping the implementa-
tion o policy. It does not detail the Latin American case, but does make some
general analytical observations concerning possible parallels.
First, the article examines the sources o Chinese engagement with Arica;second, the prolieration o Chinese actors on the Arican continent; third,
the Forum or China-Arica Cooperation (FOCAC) process, the diplomatic
cornerstone o the relationship; and ourth, the particular case o Chinese-
South Arican relations. Te article concludes with an assessment o the new
trends in the relationship.
1. THE SOURCES OF CHINESE ENGAGEMENT WITH AFRICA
Since the onset o economic reorm in 1978, China has had an unmatched
record o sustained growth that has transormed key sectors o its economy,
and converted it into the leading site or manuacturing and production in
the global economy. o maintain the high levels o domestic output that are
considered crucial not only or the Chinese economy but or overall social
2 Chinese institutions do not ollow the distinction between sub-Saharan Arica andNorth Arica, hence the use o continental Arica in this article.
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Chris Alden
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and political stability, the economy requires critical energy, mineral and
others resources rom abroad.3 Te promulgation o the governments going
out strategy, whereby ultimately over a hundred restructured state-owned
enterprises were given the legal and administrative means, preerential
access to nance, and diplomatic support necessary to break into markets
outside China, has been the main policy response to this need. Given that,
in the atermath o the global nancial crisis in 2008, China has become the
worlds largest holder o capital, with over US$2.4 trillion in oreign reserves,
it was, in retrospect, a airly straight orward task to carve out a position
in the energy and strategic minerals markets in the capital-starved Aricanenvironment. Concurrently, the willingness o the Chinese government to
provide a whole package o inducements alongside a range o leasing or sup-
ply agreements designed to meet elite-dened needs (ranging rom presiden-
tial palaces to large-scale inrastructure projects), has proved to be crucial
to securing deals in Arica.4 Underlying this approach is a highly publicized
provision whereby the Chinese government orswears any interest in the
domestic aairs o Arican governments, in direct contrast to the European
Union (EU) or the United States (US), both o which have selectively appliedconditions to their development assistance programmers and even to some
investments. In parallel with this state-led drive or resources abroad is a
search or new markets aimed at expanding the investment and trade op-
portunities or Chinese rms, though the relatively small size o the Arican
market imposes some constraints on Chinese ambitions. Finally, there is a
diplomatic imperative, tied to the decades o competition between Beijing
and the aiwanese government in aipei over ocial recognition, within
which countries in Arica are particular targets.
a. Resource Security
Chinas position within Aricas resource sector has surged in the last
decade and a hal, rom that o a marginal player to a holder o signicant
3 See, or instance, Downs (2004, 21-41); Soares de Oliveira (2008, 83-109).4 For urther details, see Alden (2007, 11-36).
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China and Africa: A Distant Mirror of Latin America
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interests in oil leases rom Angola to Sudan and mining concessions rom the
Democratic Republic o the Congo (DRC) to South Arica. Its two-way trade
with Arica, which reached US$127 billion in 2010, is overwhelmingly based
on the extraction o oil, strategic minerals and a ew other raw materials,
which are exchanged or manuactured goods.5 Refecting these trends, in
1993 China went rom a leading Asian oil exporter to, a ew years later, the
second largest world consumer (2003) and third global importer o oil (2004).
Tis evolution alone justies the reallocation o energy security to the core
o Beijings oreign policy ormulation6 since, as David Zweig and Bi Jianhai
point out, not only is Chinas continued economic growth dependent on se-curing the supply o resources but so too is its social stability and, ultimately,
the survival o the Communist Party o China (CPC).
Despite eaturing among the major oil producers (with 4.8% share o
worlds production)7 and coming second only to the US in renery capacity
and output (8.5% and 8.7% respectively),8 China is able to provide or less
than hal o its domestic oil needs.9 Additionally, China accounted or 9.3%
o worlds oil consumption in 2007 (still lagging ar behind the worlds major
oil consumer, the US, which consumes 24%) and 10.2% o total oil imports(third ater the US, which has a 33.9% share, and Japan with 12.5%).10 Chinas
oil consumption has doubled in the last decade and according to OPEC its
oil demand will show the worlds astest growth rate in the coming decades,
5 See Pinaud et al. (2006).
6 For a detailed account on the emergence o energy security as the major driver oChinas Foreign Policy see: Zweig and Jianhai (2005).
7 China is the fth largest producer ater Saudi Arabia and the Russian Federation (bothwith 12.6%), USA (8%) and Iran (5.4%). Data taken rom BP. 2008. Review of WorldEnergy, http://www.bp.com/productlanding.do?categoryId=6929&contentId=7044622, p. 9.
8 US refnery capacity and output share are 20% o total, over twice Chinas share. Datarom BP (2008, 18).
9 According to BP, in 2007 China produced 3,7 million b/d and consumed 8,2 million b/d.
In BP (2008, 9 and 11).10 BP (2008, 11).
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doubling again by 2030 when it is expected to consume over 15 million b/d.11
China itsel is currently responsible or 30% o global oil demand growth.12
Although China became a net oil importer in 1993 it was not until the
new century that energy security became a question o central political im-
portance. Although other energy sources such as coal, natural gas, nuclear
energy, hydropower, and alternative uels are important to this debate, oil
is Chinas principal concern since it represents its largest external reliance.
As Erica Downs points out, i the question in the 1990s was whether Beijing
would have the nancial means to secure the oil supply it needed, in the
2000s the issue became i there would be enough oil available on the inter-national market to supply China (Downs 2006 15). Furthermore, concerns
about growing instability in the Middle East encouraged a diversication
strategy which, because o the inherent complementarities, switly placed
Arica high in Beijings list o new suppliers. Uneasiness about the matter
among the political elite has continued to grow in recent years as illustrated
by the creation o the Energy Leading Group in 2005 (a coordination body
headed by premier Wen Jiabao), the publication o a White Paper on Energy
(Chinas Energy Conditions and Policies)13 in December 2007 and the WhitePaper on Diplomacy (July 2008) whose rst chapter is on Te issue o energy
security during the period o high oil prices (Hsiao 2008).
In order to sustain its economic growth, China also became externally
dependent on other sectors o the extractive industry, urther justiying its
growing economic interaction with the Arican continent in the new century.
Over the past decade China has surpassed the US to become the worlds lead-
ing consumer o most base metals. Chinese demand has been growing at a
rate over 10% a year since 1990, having intensied in recent years (Brett and
Ericsson 2006, 22) and has become the major driver behind the soaring prices
o metals in the international market. China is the worlds largest consumer
11 OPEC (2009, 46), http://www.opec.org/library/world%20oil%20outlook/WorldOilOutlook08.htm.
12 OPEC (2009, 47).13 Available online at: http://www.china.org.cn/english/environment/236955.htm
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China and Africa: A Distant Mirror of Latin America
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and producer o aluminium, iron ore, lead and zinc and is a signicant actor
in all other mineral markets.
Finally, ood security itsel is becoming an area o great concern or China.
Te years o rapid economic development have, or the rst time in decades,
exposed China to the vagaries o supply and to market constraints in agri-
cultural commodities. In terms o overall agricultural imports, China is the
Asian regions leading consumer, importing 44% o the worlds soybeans, 35%
o cotton, 20% o palm oil and 2.5% o rice, with Japanese, Indian and South
Korean demand trailing in its wake. Consumption patterns in China have
changed dramatically since the gradualist introduction o market capitalism,and Chinese total caloric intake (2,258 calories in 2003, o which 423 was
meat) has risen to levels equivalent to the US (2,736 calories in 2003, o which
446 was meat). Rising domestic demand might have been expected to open
up opportunities to expand local agricultural production. But Chinas physi-
cal constraints despite its geographical size, it has only 7% o the worlds
arable land and the act that rapid industrialization and its accompanying
urbanization have removed tens o thousands o hectares o ertile land rom
productive activity. Te result has been a steady rise in ood imports which,combined with Chinese (and Indian) energy needs, has pushed ood prices
up world-wide. For China in particular, the ear that infation and dwindling
supplies might contribute to the periodic waves o domestic unrest that had
begun to gather orce was underscored in a report issued by the State Council
on ood security in 2005, the rst year China had been obliged to import
large quantities o ood since the CPC took over. In response, the National
Development Reorm Committee produced a 20 year Food Security Strategy
whose preliminary ndings were released in November 2008. According
to the strategy, ood security would be guaranteed rst and oremost by
maintaining 125 million hectares o arable land under production in order to
ensure 95% sel-suciency in grains.14 One outcome o this rising concern
was that the government initiated a search or external supplies intended to
14 Cited by Kelley (2009, 94).
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oset the expected shortalls, echoing to some extent the drive to seek out
energy and strategic minerals that had begun in the early 1990s.
b. The Arican Resource Bounty
Against this backdrop, Arica has assumed a critical role in Chinas search
or resource security. Te Arican continent possesses a generous endowment
o natural resources, especially hydrocarbons, minerals and timber, which
remain mostly untapped as a result o decades o political instability, poor in-
rastructure and lack o investment. However, Chinese orays into this sector
had to take into account the prevailing dominance o established interests,primarily the US, France and the UK, all o which reproduced a pattern o
investment that replicated colonial-era divisions reracted through the poli-
tics o the Cold War. With the end o the bipolar confict, economic interests
rapidly took center stage, and the geographical spheres o infuence which
had shaped energy investment gave way to direct competition between, or
instance, French and American interests in West Arica.15 Other major pow-
ers like Germany and Japan were attracted to the region, but their interests
never challenged the established American and French companies. Amongthe most prominent new-comers are Asian states (China, India, Malaysia and
Singapore) and Middle Eastern countries (Saudi Arabia, and Kuwait). Tis
scenario has prepared the ground or growing competition or economic and
political infuence in the continent in uture decades. Tis is particularly as-
tounding given that less than a decade ago Arica was suering rom a sharp
decline in interest rom its traditional Western partners.
In world-regional terms Arica possesses the third largest oil reserves
with an estimated 9.5% o known global deposits in 2007, behind the
Middle East (61%) and North America (11.6%) and ahead o South and
Central America (8.5%). Noteworthy is the act that Arica boasts the astest
growth rate in known oil reserves, which have doubled during the past two
decades (BP 2009, 6). In sub-regional terms, North Arica and Sub-Saharan
Arica each account or hal o the continents known reserves. Libya (35%),
15 For a detailed analysis see: Schraeder (2000, 395-419).
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China and Africa: A Distant Mirror of Latin America
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Nigeria (31%), Algeria (10%), and Angola (8%) possess the largest reserves.
In terms o production, Arica occupies ourth place, with a 12.5% share o
the world total, with Nigeria as the main Arican oil producer (25%), ol-
lowed by Algeria (21%), Libya (20%) and Angola (18%).16 In recent years the
production o the Northern Arican countries has shown signs o stabiliza-
tion while the Sub-Saharan Arican countries have expanded their share.
For instance, Angola has registered the astest growth rate in production
during the past decade, having overtaken Nigeria as Sub-Saharan Aricas
major oil producer in mid-2008.17
Aricas endowment in non-uel minerals urther complements the at-tractiveness o this picture, in which South Arica appears as a prize since
it sits on one o the worlds richest mineral beds. South Arica produces a
range o minerals. It is the leading producer o platinum (80% o total produc-
tion and 90% o world reserves) and manganese (holding over 75% o world
reserves) and the second largest gold producer (overtaken by Australia in
2007). Moreover, South Arica is a major coal producer and has developed the
worlds leading technology in converting coal to synuels, introducing new
possibilities or the coal-rich Chinese state. Recognition o this has led to ajoint venture between two Chinese rms and the South Arican parastatal,
Sasol (though the deal which was actually suspended in 2011). By way o con-
trast, ollowing decades o neglect and internecine confict, the DRCs min-
eral wealth is notoriously unexploited. Even so, the DRC is the worlds leading
cobalt producer (36%) possessing hal o the worlds known reserves, and the
largest diamond producer (33% o total world production). With South Arica
and Botswana it accounts or over hal o global diamond mining output and
60% o known deposits.18 Other Arican countries that possess signicant
reserves o minerals and which have attracted Chinese interest are Gabon
16 Data adapted rom BP (2009, 8).
17 Although Angolas production has been increasing exponentially, this situation is
partly due to increasing unrest in Nigerian southern oil felds.18 All fgures are or 2007 and are based on data in: USGS (2008).
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(manganese), Zambia (copper and iron ore), Zimbabwe (platinum) and Angola
(diamonds, copper and iron ore).
Finally, Arican agriculture and orestry resources remain underdevel-
oped. According to the FAO, only 14% o Aricas total 184 million hectares o
available land is under cultivation, with 93% o that dependent upon rainall;
urthermore, ertilizer usage is low.19 Arican agriculture, which continues to
serve as a mainstay o employment in most countries in the continent, su-
ers rom low productivity, chronic under-investment and diculties in ac-
cessing potential export markets. o be sure, the environmental constraints
on agriculture in much o the continent are considerable, though viewed roma Chinese perspective, the impediments aced are amiliar. Private Chinese
armers have already set up arms in Uganda, South Arica and Zambia (23
in the latter case) (Spieldoch and Murphy 2009, 42). while bigger agricultural
rms are engaged in negotiations with Arican governments to lease larger
tracts o land or productive purposes. Tere are also hundreds o thousands
o square kilometerss o virgin orest in parts o tropical Arica that have
inspired small and medium sized Chinese, Tai and Malaysian companies
to set up logging operations both legal and illegal across the continent.Building on these economic complementarities there has been a dramatic
surge in trade. Recent fows illustrate the impressive complementarities
that uphold this thriving relationship. Between 1995 and 2000 commercial
exchange more than doubled rom US$4 billion to US$10 billion, and qua-
drupled over the ollowing ve years (to US$ 42 billion in 2005), surpassing
US$106 billion in 200820 - a year earlier than the 2010 target established by
Hu Jintao during the FOCAC III summit in Beijing in 2006. Even with the
inevitable downturn that came in the wake o the global nancial crisis o
2008, trade soon regained its momentum, reaching US$127 billion in 2010.
19 Jacque Diou, Director General o Food and Agriculture Organization, 19 June 2008,www.allarica.com.
20 Figures according to data o the Chinese Ministry o Commerce available at http://eng-lish.mocom.gov.cn/article/statistic/ie/200802/20080205371690.html and WTO Data in:http://www.wto.org/english/res_e/statis_e/its2006_e/appendix_e/a14.xls
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South Aricas leading bank, Standard Bank, has orecast growth to an ex-
traordinary $300 billion by 2015.21
At the same time, the onset o the worlds worst economic crisis since
the Great Depression has challenged the new-ound certainties o Chinese
engagement in Arica. Some analysts are already declaring that the with-
drawal o dozens o Chinese rms rom the mining sector and Beijings push
to re-open negotiations on the purported US$9 billion investment package
in the DRC are signs that the high water mark o China-Arica economic ties
has been reached. Te proposed loan to the DRC has itsel been the subject
o intense criticism by Western donors and the IMF, who were able to pres-sure Kinshasa and Beijing to revise it downwards to US$6 billion in February
2009.22 Te pessimistic interpretation is, however, misplaced: Chinas involve-
ment in Arica remains a priority, albeit one which is subject to changing
international and domestic economic circumstances as well as the emergence
o a reconsideration o risk in selected Arican environments.
c. New Markets and Diplomacy
Tough resource security impulses are at the oreront o the contempo-rary push into Arica, with Chinas energy sector State Owned Enterprises
(SOEs) taking the lead, the desire to benet rom commercial opportunities
by expanding trade into Arican markets has also played an important role.
In part, the policy o using Chinese nance to support Chinese construction
rms building inrastructure in Arica represents a concerted strategy o
risk mitigation and, concurrently, provides incentives or domestic rms
to go out and seek opportunities abroad. Indeed, survey data suggests
that once established in the Arican market, Chinese rms anticipated
that they will secure urther contracts. (Davies and Corkin 2007, 246). Te
over-supply o inrastructure rms and labor within China itsel provided
an additional rationale or this expansion into new markets. Te appeal or
21 Chinas investment in Arica to increase to $50 billion by 2015, bank says, Bloomberg(22 February 2011), www.bloomberg.com/news/2011-02-22/chin-s-investment -inarica-
to-increase-to-50 -billion-by-2015-bank-says.html22 Cited in Lokongo (2009), www.pambazuka.org
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Arican governments o the approach, despite the concerns around the use
o Chinese labor voiced in some circles, was that these were turkey opera-
tions that placed ew demands on the Arican recipients and produced in
short order a relatively inexpensive and unctioning road or railroad sys-
tem, bridge or dam (Fletcher 2010, 7).
Another driver is the need o Chinese manuacturing rms to nd new
outlets or their products, especially those at the low end o the consumer
market, which, - losing avor domestically and with little appeal in sophisti-
cated Western markets - contributed to a surge in two-way trade (Broadman
2007). With manuacturing accounting or 32% o Chinas GDP and 89% o itsmerchandise exports by 2005, and with the exacerbating actor o rising labor
costs in Southeast China, the importance o opening up new opportunities
abroad was paramount (Biacuana et al. 2009, 10). At a dierent level, a new
wave o Chinese migrants to Arica has opened up wholesale and retail shops
across the continent, bringing low cost goods to the Arican consumer and
contributing to a boom in the purchase o items such as bicycles, radios and
watches that were once out o the reach o the majority o the population.23
More traditional diplomatic concerns also infuenced the Chinese moveinto Arica. Tese included the longstanding competition with aiwan or
diplomatic recognition. aiwan had been successul over the years in retain-
ing or winning recognition rom a number o Arican states (Rawnsley 2000).
Beijings drive to isolate aipei internationally meant that it actively sought to
provide inducements or Arican governments to reconsider their links with
aiwan. Finally, as pressure increased on China to play a more activist role on
the global stage, the need to seek out partnerships with like-minded states
became imperative. Aricas position as a riendly environment or Beijing was
underscored by the unwillingness o Arican countries to join in the Western
sanctions campaign that ollowed in the wake o iananmen Square, and
its support or China in international orums as varied as the International
Olympic Committee (where Arican votes helped secure Beijings hosting
o the 2008 Olympics) and the UN Human Rights Commission. Sharing a
23 See, or instance, Dittigen (2010); Yoon (2009); Dobler (2008).
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COLINT 75, enero a junio de 2012: 19-47
common view on sovereignty and human rights though one that was argu-
ably in the process o changing as a result o developments in the Arican
Union and the emergence o the Responsibility to Protect enabled China to
work in tandem on many issues with the largest regional voting bloc in the
UN (cited in Chris Alden 2007, 16). o address these complex diplomatic ends,
the Chinese Ministry o Foreign Aairs established the multilateral Forum
or China-Arica Cooperation in 2000.
2. THE CHINESE IN AFRICA: FROM STATE OWNED ENTERPRISES TO RETAIL
SHOPKEEPERS
It is important to capture the diversity o Chinas engagement in Arica
i the complex and sometimes contradictory reactions that its presence
inspires across the continent are to be understood. Ranging rom global
parastatals like CNOOC to thousands o retails shops, the Chinese have
made inroads in the economic lie o ordinary Aricans in an extraor-
dinarily short period o time. Moreover, the rapidity with which these
Chinese actors adapt to changing circumstances in Arica to an extent
itsel a product o the ast pace o change in China continually challengesassumptions about their standing in Arica.
At the sharp end o Chinas engagement in Arica are a host o SOEs
which have sought to gain access to resources and markets ormerly domi-
nated by Western and South Arican rms. Using a package o high-prole
diplomatic and substantive nancial incentives, these SOEs have been able
to secure leases or oil exploration in Angola, Sudan and Nigeria as well as
deals or access to strategic minerals in countries such as Gabon, the DRC
and Zimbabwe. According to one study, the proximity o the top management
o these SOEs to leading party ocials aords certain strategic SOEs vital
political connections and a measure o input into oreign policy decisions per-
taining to their particular business interests (Jakobson and Know 2010, 26).
For developmentally-minded Arican leaders, the attractiveness o Chinese
support or inrastructure development, an area neglected by traditional
Western donors in recent decades, is rooted in the visible and immediate
impact transportation and communication provision has on enhancing theeconomic potential in their respective countries and improving livelihoods
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within aected communities. Tese resources or inrastructure deals, oten
involving billions o dollars worth o low interest concessional loans rom
the China Export Import Bank, have been carried out or the most part by
Chinese construction rms whose use o Chinese contracted laborers and
even basic supplies has been criticized in some Arican circles.
Moreover, the overall competitiveness o Chinese rms has meant that,
once exposed to the Arican environment, they have been able to capture a
growing portion o the open tenders or inrastructure projects. According
to one study, Chinese construction rms have succeeded in recent years in
winning 30% o the combined value o inrastructure contracts tendered bythe Arican Development Bank and World Bank (Foster et al. 2007, 5-6). Tis
trend is evident in the conduct o Chinese inrastructure and engineering
rms operating in Arica as early as 1988 where, in countries like Liberia,
or example, the China State Construction Engineering Corporation was
able to stay on and win contracts rom the Liberian government to reno-
vate the local hospital (Brautigam 1998, 214). Contemporary examples o
Chinese construction rms that have entered Arican markets via a Chinese
nanced-project beore winning public tenders abound. Furthermore, astheir personal contracts are completed, an undetermined number o Chinese
laborers brought in to work on these construction projects has stayed on in
Arica to seek out employment opportunities, joining the swell o migrants
opening small businesses.
Indeed, while Chinese SOEs capture the attention o the international
media, there is an equivalent drive by small and medium enterprises
(SMEs) into the continent which is just as prevalent and is arguably having
as much o an impact as the aspiring multinationals. Many o the medium-
sized companies are drawn rom the ranks o the reormed SOE sector,
which has been undergoing a painul restructuring process that has cut it
back rom 300,000 to 150,000 rms over the last decade (CSIS/IIE 2006, 23-
24).24 In some cases, these businesses were motivated by a desire on the part
24 At a cost o 25 million unemployed, this sector having ormerly employed 80% o allo Chinese workers.
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o a relatively large Chinese company to establish oreign subsidiaries so
as to guarantee access to Western markets should protectionism take root
(Hong and Sun 2006, 624). For many smaller businesses, the motivation, as
noted above, has been to make use o Chinas competitive advantage rela-
tive to Arican and other oreign companies, based on their control o rela-
tively advanced technologies and cost-eective production (Hong and Sun
2006, 625). Tis market-seeking impulse is borne out in surveys conducted
with 80 Chinese SMEs working in Arica, which ranked gaining access to
the continents markets as their top priority (Gu 2009, 570-585). Analysts
suggest that over 20,000 Chinese SMEs are operating on the continent,increasingly ocused on middle income countries (Gu 2009, 570-585).
At the same time, the poor conduct o some Chinese rms operating in
Arica has threatened to tarnish the overall reputation o the country. For
instance, the willingness o a number o Chinese mining companies based in
Katanga province, DRC, to ignore basic health and saety regulations, local
labor laws and even industry environmental standards has brought down a
rain o criticism.25 Te act that the collapse in commodity prices in late 2008
caused many o these companies to pull out o the DRC only highlights theiropportunistic and exploitative character. In Zambia, which many Chinese
consider an exemplary Arican partner, the poor practices o a leading
Chinese mining rm resulted in a furry o accidental deaths in 2006 and,
more recently, the shooting o Arican laborers by Chinese managers during
a labor dispute. Tese practices have led the political opposition to use anti-
Chinese eeling as a mobilization strategy in election campaigns.
Finally, the growing trend o Chinese migration in parts o Arica has not
passed unnoticed in communities unaccustomed to hosting oreigners rom
outside the continent. Much o the Chinese immigration has been undocu-
mented, leading to wild speculation as to the numbers o settlers, a situa-
tion urther compounded by the Arican tendency to identiy all non-Indian
Asians as Chinese. Within the continents leading destination or migrants,
25 China lets child workers die digging in Congo mines or copper, Bloomberg.com.Accessed 23/7/08.
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South Arica, the Chinese community has surged rom 80,000 in the 1980s
to an estimated 350,000 in 2006, though Beijing claims that the total num-
ber o migrants in Arica is only 750,000 (though other estimates are higher)
(Yoon 2009, 3). Concurrently, the evident lack o nancial means and the low
skills base o many o the migrants have raised concerns amongst educated
Aricans and small business owners alike. Te prolieration o Chinese retail
shops in urban and rural communities, introducing low-cost consumer goods
to Arican markets or the rst time, is nonetheless driving Aricans out o
the retail trade and spurring resentment in these circles.
In short, during the last decade and a hal, the Chinese presence in Aricahas been marked by diversity in composition and depth, deying the easy
stereotypes that have accompanied many portrayals in the Western and even
the Arican media. Tis spectrum o Chinese actors has been matched by
changing approaches to Arica at the highest governmental levels in Beijing
and, more prosaically, by individual migration strategies. Aricas resources
may have instigated Chinese interest in Arica, but it is clear that Chinas ties
with the continent are increasingly set to be anchored by an expanding cast
o characters and by changing relationships.
3. THE DIPLOMATIC CORNERSTONE OF THE RELATIONSHIP:
THE FOCAC PROCESS
A special dimension o Chinas engagement with the Arican continent
has been the ounding o a regionally-tailored multilateral platorm, the
Forum or China-Arica Cooperation (FOCAC). Tis ormal structure pro-
vides a public setting to celebrate the achievements o the relationship,
an opportunity to ormulate a rat o economic targets aimed at ostering
mutual development interests and recalibrating policies to achieve them,
and to endorse common perspectives on global issues. However, while this
public diplomacy is multilateral in nature, the substance o the economic ties
(notably aid and investment agreements) continues to be rooted in bilateral
relations between China and individual Arican states.
Te origins o the FOCAC process are to be ound in a variety o con-
verging actors. As noted above, the economic context o Chinas going outstrategy was signicant, bringing with it a need or key resources which
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Arica could readily supply. Politically, there was a renewed push to counter
aiwans so-called dollar diplomacy on the continent, which, by the early
1990s, had succeeded in winning back ocial recognition rom a number
o Arican states. Tis corresponded to the broader aim o revitalizing dip-
lomatic ties with the developing world in the wake o iananmen Square
and the accompanying Western opprobrium and sanctions. However, the
specic shape o Chinese engagement in the orm o a large multilat-
eral regional coordination mechanism apparently derived rom a desire to
emulate Japans ICAD process which, as interpreted by the CPCs Central
Committee, had ound what was deemed to be a successul way o respond-ing to Arican requests or changes to aid policy (Jin 2010, 13). Te initia-
tive was taken against the backdrop o the longstanding Franco-Arican
Summit process and a new US-led approach that culminated in a ministerial
conerence on Arica in 1999 and a widely touted visit to the continent by
US President Bill Clinton the previous year.
It was during a 1996 trip to Arica that Chinese President Jiang Zemin
promoted the idea o establishing the Forum. Te Arican ambassadors in
Beijing served, along with their Chinese counterparts, on what was initiallyan ad hoc unit within the Chinese Ministry o Foreign Aairs, as a de acto
secretariat or organizing the rst FOCAC ministerial meeting held in Beijing
in 2000. Te agenda was decidedly mixed, resulting in the inclusion in the
nal declaration o a commitment to increasing trade, strengthening devel-
opment co-operation through the expansion o Chinese credit acilities, and
monitoring and reducing the fow o Chinese small arms.
Te second FOCAC ministerial meeting took place in December 2003 in
Addis Ababa and produced a rm commitment to increase two-way trade
to US$30 billion by the next FOCAC meeting, orgiving the debt owed
by 31 Arican countries and combating hegemony in international a-
airs. It was, however, FOCAC III held in Beijing in November 2006 and
designated a summit by the Chinese and Aricans in recognition o the
participation o high-ranking political leaders that attracted the atten-
tion o the world by bringing together the largest number ever o Arican
leaders in a summit outside the continent. Indeed, in that same year arange o additional developments indicated the rising importance o the
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continent to China, namely the issuing o the rst ever White Paper on
Chinas Arica Policy (January 2006) and the visits by Chinese leaders,
Hu Jintao and Wen Jiabao in April and June 2006 respectively. Te nal
declaration o FOCAC III called or an increase in trade to US$100 billion
by the next ministerial meeting as well as commitments to reduce taris
on 440 items produced by Aricas least developed countries, the creation
o a US$5 billion investment und and numerous small grant and training
programmers. More recently, FOCAC IV, held in Egypt in 2009, included
a commitment to a US$10 billion package o concessional loans, commit-
ments to raise Arican agricultural productivity, reduce or eliminate taribarriers or Aricas poorest countries, build hospitals and schools, initiate
or expand training programmers in human development, provide or 100
clean energy projects and increase support or peace and security.
What is striking about the contents o the FOCAC IV declaration is
the degree to which, building upon the previous three meetings, the pro-
cess refects a growing and deliberately constructed convergence between
Arican development needs and Chinese economic interests. For instance,
in agriculture a sector where it has long been recognized that, despitethe act China has provided technical assistance since the 1960s, there has
been a lack o investment in Aricas comparative advantages - the Chinese
propose to introduce new techniques, seed varieties and training program-
mers derived rom their own experience raising agricultural productivity.26
o acilitate this process, the Chinese government is rolling out an addi-
tional ten agricultural training centers across the continent in countries
like Mozambique, Zimbabwe and Senegal. Coupled to this are additional
nancial means aimed at providing nancial support or commercial enter-
prises. Raising Aricas agricultural productivity will not only dramatically
enhance the livelihoods o rural communities in Arica through improve-
ments in income generation and employment, but will potentially address
a growing problem o ood security in China itsel.
26 For an overview o Chinese technical assistance in agricultural sector in Arica, seeBrautigam (1998).
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Another example is the targeting o Aricas SMEs or development and
growth through a US$1 billion special und. Moreover, signaling that it un-
derstands that a ocus on the supply side is not enough to make real develop-
ment gains, Beijing has agreed to scrap taris on 95% o all products rom
Aricas less developed countries. Tis decision to open up Chinas market
to Arican commerce has the potential, when linked with the support or
Arican business, to set in motion a virtuous cycle o development. Tis re-
direction o Arican capabilities towards accessing the Chinese market could
lay the oundation or a more balanced long term trading relationship than
has been the case so ar. At the same time, it bears mentioning that it couldend up like the US Arican Growth and Opportunity Act (AGOA), which gave
preerential access to the American market in sectors like clothing but that
contributed to a surge not so much in Arican as Asia-based investment.
Aricans will have to be nimble investors to make the most out o what seem
to be the genuinely generous terms on oer. Indeed, they may even nd that
they are competing with the growing Chinese communities in their midst,
whose proven entrepreneurial acumen and understanding o the Chinese
domestic market has uelled Chinas own economic transormation.Moreover, the diversity o Chinese actors in Arica contrasts with the as-
sumption that the notion o Chinese-Arican relations implies the presence
o just two unitary entities, and poses a dilemma in structuring and manag-
ing the relationship. Tis was once shaped and led rom above by Chinese and
Arican political elites and involved the steady diusion o economic power
to semi-autonomous SOEs, provincial authorities and a sometimes rapacious
prot-seeking private sector. Te latter has introduced a diversity o interests
and practices that are as oten at odds with Chinese oreign policy aims as
they are in harmony with them. Te actions o murky investment houses
like the China International Fund and the state-owned national oil company,
Sonangol a joint venture that eectively marries Hong Kong-based nance
to Angolan political ambitions and which has sought to secure a huge stake
in the illegal military regime in Guinea raises troubling questions about the
long term impact o Chinas role in the continent. Operating on the margins
o respectability, these organizations are capable o damaging the positive
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intentions on display at FOCAC IV in their unwavering pursuit o prot and
willul distain or Arican sensibilities (as was the case in Guinea).
Tis situation also highlights one o the most notable gaps in the FOCAC
process, namely the role o actors ormally outside the state. While much
o the media attention ocused on what happened within the connes o
the ministerial discussions and the press conerences, the FOCAC Business
Forum met on the ringes o the event. Missing, however, was the once moot-
ed inclusion o a parallel Chinese-Arican civil society process. In Western
practice, the role o guardian o the underlying values o national oreign
policies is partially ullled by a vibrant and active civil society operatingboth in the West and in Arica. Unabashedly critical o the state and private
capital and undoubtedly the bane o authoritarian and, at times, democratic
governments alike these sometimes sel-appointed voices o the people
nonetheless play a tremendously important role in re-asserting the moral
purpose o oreign policy actions. Arican civil society varies in its depth
and policy impact across dierent countries. In Arica, China has seemingly
exported many eatures o its domestic setting (such as opaque business and
nancial practices), including the assumption o a weak civil society whoseboundaries o action are circumscribed to varying degrees by the state (Alden
and Hughes 2009, 13-34). It remains to be seen whether current arrange-
ments, which place the burden o responsibility to anticipate, manage and
ameliorate the conduct o a plethora o Chinese actors in Arica exclusively
on the party leadership and bureaucracy, will prove sucient.
4. CHINA AND SOUTH AFRICA
O all the Arican countries involved with China, South Aricas stand-
ing as a middle-level economy with a reasonable industrial base coupled
with underlying socio-economic divisions rooted in large income disparities
and historical policies o discrimination, provides a useul mirror or Latin
America. Te warm ocial ties between China and South Arica are based
in part on close political anities and growing economic engagement which
have placed China as South Aricas principal trading partner and a lead-
ing investor. At the same time, there are a number o areas where shared
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interests are less evident, especially in the eyes o some o South Aricas
businesses, trade unions and civil society actors.
Tough the incoming Arican National Congress (ANC) government un-
expectedly retained ocial diplomatic ties with aiwan (a holdover rom the
apartheid government) ater the rst democratic elections in 1994, and ollow-
ing two and a hal years o domestic debate, the South Arican government
nally announced its decision in November 1996 to switch allegiance in January
1998.27 Once South Arica had ocially recognized China it entered a new era
characterized by a re-orientation o its diplomacy and, increasingly, its economy
away rom a singular ocus on Europe and North America. Te establishment othe bi-national commission, subsequently reinorced in 2004 through the stra-
tegic partnership dialogue process and more recently, in 2010, a comprehensive
strategic partnership has ensured that there is regular government to govern-
ment contact at deputy/vice presidential and ministerial levels, a process that
acilitates close co-operation on areas o mutual concern. During its tenure as
a non-permanent member o the UN Security Council rom 2007-2009, South
Arican positions on matters like Darur, Zimbabwe and Myanmar/Burma mir-
rored those o the China and were a clear indication o the two governmentsshared outlook on the global system. Indeed, Pretorias prioritization o con-
cerns or sovereignty over human rights and democracy suggests that South
Aricas once-celebrated image as a liberal beacon is denitively waning. In their
attitudes to reorm o international institutions South Arica and China also
share a common view on the need to transorm the UN Security Council and the
international nancial institutions to better refect developing country interests
(though Beijing has been careul not to alienate other Arican aspirants to a per-
manent presence at the Security Council, by supporting the Arican Unions call
or a rotating seat). Te recent decision to grant South Arica a second term as
a non-permanent member o the UN Security Council is likely to reinorce this
trend. Furthermore, South Aricas aspiration to become a member o the cov-
eted BRIC-club (Brazil, Russia, India and China), has been endorsed by China,
despite the act that some observers argue that South Arica is too small (in
27 For a detailed account o that period, see Alden (2001, 119-138).
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terms o territory, population size and economic strength) and that its economic
growth alls ar short o the growth rates o the BRICs.
Tese close diplomatic ties have been matched by growing economic en-
gagement. With two-way trade rising rom US$800 million in 1998 to US$14.1
billion in 2009 converting China into South Aricas largest trading partner
- economic co-operation between the two countries is being realized at ever-
increasing rates (Gelb 2010, 1). Tat being said, South Arica has a negative
trade balance with China and the structure o its exports to China is largely
limited to minerals, agricultural goods and related products, whilst its imports
are dominated by low-end consumer goods - though this is slowly changing toinclude higher value-added products such as white and so-called brown goods.
At the same time, the once low levels o Chinese investment in South Arica are
nally catching up with the high-prole o South Arican investment in China.
Chinese FDI reached new heights with the announcement in November 2007
that the International Construction Bank o China (ICBC) would be purchasing
a 20% stake in South Aricas Standard Bank, worth US$5.6 billion. However,
although this deal pumped a massive amount o capital into the economy, it
cannot be considered to be the kind o investment that will directly promotejob creation (though the potential o the partnership to attract FDI to South
Arica and the rest o the continent, should not be underestimated). O smaller
monetary value, though with perhaps more long-term value to the economy,
especially in the area o job creation and skills development, is Chinese invest-
ment in the countrys mining and construction sectors (Gelb 2010, 8). Another
area o Chinese involvement in the South Arican economy is that o the pro-
vision o so-called sot loans, whose signicance lies in the announcement in
November 2010 that China would provide nancial support or the expansion
o South Aricas dormant nuclear capacity.
Tis development is complemented by signicant South Arican invest-
ment in China, which surpassed US$200 million in 2006. Leading the charge
are SAB-Miller, which owns 55 breweries in China; Sasol, which has a joint
venture with Ningxia and Shenhua CLC to develop coal-to-oil plants; and other
resource based companies such as Anglo-American and Kumba Resources.
Tese ventures have generally proved to be a nancial boom, with the mediagroup Naspers, or instance, growing 24% in 2009, led by the US$307 million
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prot (o total US$775 million annual earnings) generated by its China-based
internet platorm.28 SAB-Miller, which entered the Chinese market in 1994 by
investing in a joint venture CR Snow breweries now dominates the market
ahead o local and oreign breweries. With Chinese demand or oodstus
growing exponentially, the potential or urther development o commercial
links between South Arica and China is clear.
At the same time, the deepening o economic ties with China has raised
important questions as to the uneven impact o trade in certain sectors o
the South Arican economy with South Arican textile sales experiencing
sharp reductions while exports o agricultural products are soaring and hascreated challenges or both countries. Te emphasis o South Arica-China
trade has been on China securing minerals, agricultural goods and related
commodities while South Arica has absorbed imports o low-end consumer
goods. Additional rictions exist over the uneven balance o trade which
avors Chinese manuacturing. Chinese competitiveness is a phenomenon
which is raising concerns not only in certain circles in South Arica but
increasingly across the rest o the continent. While talk o a wholesale de-
industrialization o South Arica (and Arica) may be exaggerated, there are,nonetheless, very real ears that in some areas South Aricas hard ought
gains in manuacturing will all victim to the economic juggernaut that is
contemporary China. According to one study, the value o South Aricas
textile exports to the US has declined 54% since 2005 as a result o Chinese
competition, and approximately 60,000 jobs have been shed (Biacuana et al.
2009, 15). It is a measure o the sensitivity o trade relations and in particu-
lar the vocal criticism o China by the South Arican trade union movement
that the Chinese government agreed to impose unilateral restrictions on its
own textile and clothing exports in late 2006 in order to give South Aricas
manuacturers time to retool their operations in anticipation o a re-opening
o trade in this sector. Te restrictions were lited 18 months later (Alden
2007, 49). South Arican construction rms have also railed against Chinese
competition, especially in other countries in Arica. For the most part, tough
28 Financial Mail (Johannesburg), 8 July 2010.
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regulatory requirements and stringent labor laws have kept Chinese rms
out o the sector inside South Arica.
As noted above, another emerging area o concern is Chinese migration to
South Arica, with the burgeoning community estimated to number between
300,000 and 400,000, making the country the overwhelmingly preerred
destination or the Chinese in Arica. Tough studies are ew, both or South
Arica and other parts o the continent, many o the migrants have taken up
positions in small retail and wholesale shops, and, taking advantage o their
superior networks and connections with China, have been able to crowd out
some o the local shopkeepers.
29
Notwithstanding these issues, it is clear that relations between South Arica
and China are ast becoming the linchpin o a new invigorated orm o South-
South co-operation in Arica. Refecting this is the signing o the Comprehensive
Strategic Partnership Agreement in 2010 whose overarching aim is to orge a
more equitable relationship between the two countries. Featuring in this ar-
rangement are talks aimed at gaining long term access to South Arican resourc-
es in exchange or investment and greater market access or value-added and
beneciated products, greater Chinese investment in South Arican manuac-turing and provisions or technology transer and human capital development.
Finally, beyond these strictly economic depictions o interests, China
exercises a growing hold on the imagination o South Aricas elites. In
one respect, this is due to the phenomenal developmental successes it has
achieved over the last three and a hal decades. Tough conscious o the obvi-
ous dierences between the two countries, the South Arican government is
nonetheless eager to replicate this success. Another aspect o the Chinese ex-
perience that appeals directly to South Aricas governing party, the ANC, is
role o the Communist Party o China (CPC). Tis attraction is twoold. First,
Chinas track record on development and poverty reduction conrms the
South Arican elites belie in the possibilities inherent in a developmental
state, i.e. ecient state intervention in the economy, in eradicating poverty
and promoting growth and development. Concurrently, the ANC is enamored
29 See Yoon (2009).
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o the way in which the CPC has managed to liberalize its economy and im-
prove the lives o its huge population while, at the same time, maintaining
its grip on national political power. President Jacob Zumas public declaration
in May 2010 at the regional World Economic Forum that Arica cannot eat
democracy can be interpreted as sign o the saliency o both aspects o this
appeal or the South Arican elite.
CONCLUSION
Chinas emergence as a leading trade and investment partner o Arican na-
tions has had a number o impacts upon the continent which in turn are strong-ly suggestive o parallel implications or Latin America. From this comparative
perspective, Chinas economic engagement has revived the fagging ortunes o
Aricas resource-based economies, providing new investment and markets that
have contributed to the global commodity boom. Chinas interest in resources
has helped drive up prices while its ocus on inrastructure has brought about
a renewal o donor interest in nancing vital improvements in that neglected
sector. At the same time, the Chinese approach to nancing its expanding role
in the resource sector through the provision o hard inrastructure is, it couldbe argued, crucially dependent upon its very dearth in the target country. As
the South Arican case demonstrates, middle income countries like Brazil,
Argentina and Colombia, which have reasonably well-developed inrastructure,
existing expertise in the local business sector, strong labor unions and an es-
tablished regulatory environment, are likely to be less attractive investment
destinations. However, other Chinese actors notably those in the nancial
sector are drawn to these settings as they provide a stronger institutional
ramework which will support their pursuit o prots. Both these aspects o
Chinese engagement hold lessons or Latin American engagement with China.
In political terms, the Arican example suggests that China can provide a
welcome alternative to established sources o trade and investment, not the least
because it is less concerned with using the development process as an instrument
to impose normative transormations on target states and more interested in
pursuing mutual economic interests. Te revival o Arican economic ortunes has
had a direct impact on the international stature o Arican leaders, allowing themto challenge the certitudes that inormed the approach adopted by the OECD
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donor cartel. Te result is not, as some critics have eared, a shit away rom the
North but rather a diversication o development partnerships that at least in
those Arican countries with sound and committed political leadership oers
an unprecedented opportunity to use all means available to achieve development.
Change and adaptability remain the hallmarks o Chinese-Arican rela-
tions and, to the credit o the Chinese government, whose willingness to
revisit and revise specic initiatives in the light o experience on the ground,
give the relationship a dynamism lacking in many other trans-regional initia-
tives. Chinas experience in Arica has in many ways provided a short, sharp
lesson in how easy it is to break into the relatively neglected Arican marketsand, at the same time, how it might become increasingly dicult to secure
its interests over the long term. Chinas willingness to maintain its ocus
on building a long term economic relationship with the Arican continent,
despite obstacles encountered on the ground and more recently the adverse
global economic climate, should be closely observed by Latin Americans who
have long complained about the limited interests o traditional investors.
However, just as coming to terms with the diversity o Chinese actors and
their narrower, and oten sel-serving, interests is a challenge or Arica itis likely to pose similar challenges to Latin America as the region seeks to
ensure that its careully constructed relationship with China stays on course.
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