China’s trade policies in Africa: a multidimensional process

By Víctor González Descarga

Geopolitics: Sub-Saharan Africa

Blanquerna-Ramon Llull University
School of Communications and International Relations
Master’s Degree in International Relations
25 February 2018
1. A key player in Africa

Economic ties between China and the African continent have deepened since the beginning of the
21st century. In 2009, China surpassed the United States as Africa’s largest trade partner (Albert
2017). A closer look at data published by the China Africa Research Initiative (SAIS-CARI) shows
that in 1992 China’s exports to Africa amounted to 1,23 billion US$, whereas imports totaled 0,49
billion US$. By 2016, both China’s exports to Africa (88,01 billion US$) and imports from the
continent (39,96 billion US$) had experienced an exponential growth.

Even though Sino-African trade relations have not fully recovered from the impact of the 2009
financial crisis, Chinese exports to Africa have remained steady. Weak commodity prices since
2014, though, have lowered the value of African exports to China. In 2013, these figures amounted
to 116,25 billion US$. In sharp contrast with that, two years later they had decreased to 38,81
billion US$. China-Africa bilateral trade relations are characterized by inequality.

In 2016, the largest exporter to China from Africa was Angola, followed by South Africa and the
Republic of Congo. In the same period, South Africa was the largest buyer of Chinese goods,
followed by Egypt and Nigeria (SAIS-CARI). According to Yun Sun (2014, p.7), in terms of
composition, “China’s imports form Africa primarily focus on energy and natural resources”. Yun
Sun highlights the fact that in 2011 “more than 80 percent of China’s $93.2 billion in imports from
Africa consisted of crude oil, raw materials and resources”. In addition, he points out that China has
become the second-largest supplier of crude oil for China, the top ones being Sudan and Angola.
China exports to the African continent manufactured products such as machineries, textiles, and
electronics (Yun Sun 2014, p.7). In the second part of this article we will analyze in detail the
Africa-China pattern of trade and Africa’s involvement in global value chains.

In order to understand China’s commercial engagement with Africa, it is important to bear in mind
the role played in this transformation by Chinese investment policies with regard to the African
continent. Although the media often portrays China’s involvement as ubiquitous and overwhelming,
according to David Dollar (2016, p. 28-44) the total stock of Chinese foreign direct investment in
Africa is significant enough to contribute to economic growth but at the same time represents less
than 5% of FDI on the continent. China complements its African financing strategy with other
instruments such as “concessional loans, commercial loans, and regular and preferential export

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buyer’s credits” (Yun Sun 2014, p. 7-8). Most of these financial policies are used to fund
infrastructure projects.

After scrutinizing the Africa-China pattern of trade and Africa’s involvement in global value chains,
in the next part of this article we will outline a historical overview of China’s engagement with
Africa. Then we will move on to the current situation, focusing our attention on Chinese trade
policies and policymaking in commercial affairs. Finally, we will explain which are the
consequences of Chinese engagement in the African continent in political, economic, security, and
social terms.

2. China’s trade policies in the continent

Africa and China have become natural trading partners for the past 20 years. China is a resource-
poor country if we take into account its population. By contrast, the African continent boasts huge
energy and mineral reserves. As China’s growth model has become extremely resource-intensive in
recent years, Africa’s abundance of natural resources and China’s economic needs have created the
incentives for mutually beneficial trade.

Natural resources, though, are not evenly distributed among African countries. Africa is a
geographically heterogeneous continent. Dollar (2016, p. 20) divides the states of Sub-Saharan
Africa into four groups: energy exporters (7 countries), other resource-abundant exporters (15
countries), resource-poor coastal countries (15 countries), and resource-poor landlocked countries
(7 countries). These differences are key to understand Africa’s position in the global economy.

According to Dollar (2016, p. 21-22), firstly the oil exporters have not increased its exports in
relative terms to the GDP, which have fluctuated between 30 and 35 percent of the national output
since the mid-1990s. However, there has been a shift in the destination of those exports, with the
market share of the advanced economies of Western Europe and the United States declining and that
of China rising significantly. Secondly, the so-called other resource-abundant exporters have
doubled exports during this period. China’s growing demand for copper, iron, zinc, gold, and other
minerals explains this pattern. Finally, both coastal and landlocked resource-poor countries’
integration into the global economy has not increased from the mid-1990s. The former exported
about 20 percent of its GDP throughout this period, whereas for the latter export volumes amounted
to only about 10 percent of the GDP.

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As for Africa’s imports, by 2013 China became the largest source of imports ($45 billion) to the
continent. China’s exports consist primarily of manufactured products such as textiles, electronics,
and machinery. Due to their economic structure and lack of robust governance institutions, “about
two thirds of Sub-Saharan economies fall below the average value-chain position for developing
countries” (Dollar 2016, p. 24). As a consequence, the declining terms of trade for primary
products, on which African economies largely rely, benefit China disproportionately, at least in
relation to the African continent.

2.1. The evolution of China’s approach to Africa

Since 1949, political interests have been the anchor of the People’s Republic of China’s relationship
with Africa. In the bipolar Cold War international system, China perceived the nonaligned position
of most African countries between the US and the Soviet Union blocs as conductive to China’s
interests because both China and decolonizing African countries were recent victims of imperialism
(Yun Sun 2014, p. 3). During the 1960s, increasing efforts by Washington and Moscow to engage
Africa, as well as China’s disputes with the Soviet Union, made Beijing reexamine its foreign
policy agenda towards Africa. The aim was to use foreign aid to Africa as an instrument to advance
China’s political interests. Throughout the Cultural Revolution (1966-1976), “China provided large
amounts of foreign aid to Africa, despite China’s own domestic economic difficulties” (Yun Sun
2014, p. 4). The most ambitious of such projects was the Tanzania-Zambia Railway, for which
China supplied a zero-interest loan of 988 million yuan. Financial support for African countries
helped China curb the international isolation imposed by the two world powers and strength the
communist regime’s political legitimacy. China still relies on diplomatic support and cooperation
from African countries on a wide array of issues in the international arena.

However, Yun Sun (2014 p. 5-6) and Timothy Heath (2016) point out that China has elevated
economic considerations to a much higher level in its domestic and foreign policy agenda since the
beginning of the reform and opening-up period, started by Deng Xiaoping in 1978. As Yun Sun puts
it, “the focus of China’s foreign policy shifted to supporting domestic economic development”,
resulting in “the gradual adjustment of China’s priorities for its Africa policy from extracting
political favors to ‘mutually beneficial economic cooperation’, and from providing assistance to
promoting ‘service contracts, investment, and trade’”.

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China’s Going Out policy, which was endorsed by the Politburo of the Communist Party in 2000 as
a national strategy, has put economic considerations at the forefront of Beijing’s foreign policy. The
implementation of this strategy has substantially increased China’s economic ties with the African
continent. According to Yun Sun (2014 p. 6-7), Africa “fits perfectly in China’s Going Out strategy
for several reasons”.

First of all, because it facilitates access to Africa’s rich energy, minerals, and raw materials reserves,
the exhaustion of which in China has become a growing constraint on the country’s economic
development. Secondly, because it provides incentives for Chinese companies to invest in a
continent with a lot of market potential. As Yun Sun puts it (2014 p. 6), “by relocating low-skilled
jobs and labor-intensive industries to Africa, China seeks more capital-intensive, high-tech
industries and jobs to improve its own development model and quality”. Finally, because it
encourages China’s enterprises to invest in Africa. Much of Chinese financing is associated with
securing Africa’s natural resources and creating business opportunities for Chinese service
contractors. On the one hand, using commodity-backed loans, China makes financing relatively
available for resource-rich African countries in exchange for oil and/or minerals. On the other hand,
Chinese also provides financial assistance to African countries through so-called tied aid, which
requires that infrastructure construction and other contracts favors Chinese service providers.
According to Yun Sun (2014 p. 8), 70 percent of these loans go to Chinese, state-owned companies,
whereas the rest are open to local firms, “many of which are also joint ventures with Chinese
groups”.

2.2. Policy decision-making

Despite Africa’s growing importance in China’s foreign policy agenda, Africa issues “rarely reach
the highest level of foreign policy decision-making in the Chinese bureaucratic apparatus” (Yun Sun
2014 p. 1-2). Policy planning specific to Africa takes place mostly within several governmental
agencies. The Ministry of Foreign Affairs takes the lead on political issues, and the Ministry of
Commerce is responsible for economic issues. On security matters, such as naval escort missions on
the Mediterranean and evacuation missions, the Chinese military forces usually coordinates its
efforts with the Ministry of Foreign Affairs and the Ministry of Commerce. Although these
institutions are sufficiently autonomous to craft specific policies for implementation, the top
decision-makers have the authority to decide on the general strategic guidelines. In China, the
supreme decision-making power is monopolized by the Politburo Standing Committee, and more

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specifically by the Politburo’s designated officer for foreign affairs, who is advised by the director
of the Foreign Affairs Office of the Central Committee of the Chinese Communist Party. To sum up,
according to Yun Sun (2014 p. 19), China’s Africa policy is mostly made, coordinated and managed
at the working level, although decisions on strategically important issues are taken at the Foreign
Affairs Office or at the Politburo Standing Committee of the CCP.

2.3. Security and ideological implications of China’s expansion in Africa

China’s deepening integration into the global economy has made it necessary to foster and
consolidate a peaceful international environment. As Yun Sun remarks (2014 p. 9), “as China’s
economic activities and personnel presence expand rapidly on the continent, the physical security of
Chinese investments and nationals has become the top challenge for Beijing”. The main types of
security threats for Chinese nationals on the ground include criminal attacks such as robbery and
kidnapping, politically motivated aggressions as a retaliation for China’s cooperation with local
governments and/or the exploitation of local natural resources, violent conflicts due to labor
disputes and illegal activities by Chinese companies, attacks on Chinese vessels by Somali pirates,
and domestic political turmoil and regime changes. In short, China’s security interests in Africa are
mostly of a defensive nature.

China relies mostly on multilateral institutions (mostly the UN) and bilateral agreements with
supranational organizations such as the African Union to provide security protection to Chinese
assets and nationals. However, recent developments such as the opening of China’s first overseas
military base in Djibouti in August of 2017 (Calamur 2017) clearly signals a turning point. The
deployment of military forces on the ground or eventually the hiring of Chinese private security
firms pose a fundamental challenge to China’s high-regarded principle of noninterference in other
countries’ internal affairs.

As for the ideological implications of China’s expansion in Africa, the main aim of Beijing’s foreign
policy is to garner international support and domestic political legitimacy for the Chinese model,
which combines authoritarianism with economic capitalism. Increasing trade relations between
China and Africa and Beijing’s promotion of developmental policies throughout the continent do
not just aim at securing access to Africa’s natural resources or opening up new business
opportunities for Chinese companies. Economic expansion in Africa also serves China to exert its
influence on a global scale as a rising great power.

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3. Final remarks

As we have seen, since the establishment of the People’s Republic of China in 1949 up until the end
of the Cultural Revolution in 1976 China’s government approach to Africa was guided by political
considerations. In this context, financial aid was used as an instrument to break the international
isolation imposed on China by the two world powers.

The reform and opening up period put economic considerations at the forefront of China’s Africa
foreign policy. At the beginning of the 21 st century, the so-called Going Out policy increased
China’s economic ties with the continent by facilitating access to its natural resources, providing the
incentives for Chinese companies to invest in Africa, granting financial assistance, and promoting
infrastructure projects.

China’s growing economic activities and personnel presence in Africa have repoliticized Beijing’s
approach to the continent. The need to protect the existing economic interests and citizens overseas
from such threats as robbery, piracy, and political turmoil has given rise to a pressing question,
namely: how can China keep on upholding the principles of sovereignty, equality among states, and
noninterference in other countries’ internal affairs when Beijing has just opened its first overseas
military base in Djibouti?

We maintain that some means to tackle China’s security needs in Africa such as military
deployment on the ground could erode Beijing’s efforts to project an alternative normative
discourse on international relations based on the aforementioned principles. This, in turn, could
limit in the end China’s capacity to construct a consistent narrative on international norms. China’s
opening of its first military base in Djibouti may signal a change towards a more interventionist
foreign policy, further leveling its behavior to that of such great powers as the US.

Indeed, China has become a powerful force in Africa. As Deborah Brautigam puts it (2011 p. 7),
“their embrace of the continent is strategic, planned, long-term and still unfolding”. We could add

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that China’s rise in Africa, despite being centered around economic development, also involves an
ideological and a rising security perspective.

Finally, we have to admit that a more complete analysis of Chinese engagement with Africa should
take into account human rights matters. Due to the limited extension of this essay, we have had to
leave this issue aside.
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