The Role of Africa in the US-China Relationship: Will Africa exacerbate the 'Cold War'?
Written by Prathit Singh
Research Associate at Law & Order
Disclaimer: Please note that the views expressed below represent the opinions of the article's author. The following does not necessarily represent the views of Law & Order.
In the middle of a global pandemic, the power tussle between the two superpowers— the United States of America and China — has been tightening over time. The fight for supremacy has now moved beyond a trade war and expanded to a display of military power in the South China Sea and politicization of the origins of the novel coronavirus. Another direction where this struggle for power is possibly heading is the exertion of geopolitical and economic hegemony over the third world. Considering this fact, it is likely that the next ground of tensions between the United States and China can be Africa. African countries are close trading partners with both the United States and China. However, if the ‘cold’ battle between China and the United States sets foot in Africa, a major geopolitical change can follow in the region. There is thus a need to analyze the persistent relations between the USA and China vis-a-vis Africa.
The Banner over Africa— Red or Star-Spangled?
The significance of Africa lies in its economic possessions. The subcontinent possesses some of the largest deposits of natural resources in the world, ranging from fuel, oil, gas, rare metals, non-ferrous and ferrous metals, to timber, fresh water, agricultural land, and fast growing population. Strangely, it did not garner much attention in the post-World War II global order as it should have except at the times of deliberations on decolonization and self-determination, apartheid, and UN Peacekeeping. Though during the Cold War, Africa became a focal point of difference between the two superpowers— the United States of America and the USSR became overtly interested in pushing their own ideology in Africa (Shodhganga). However, over a large course during the Cold War and even thereafter, the United States did not have a very firm and continued presence in the African Subcontinent. China on the other hand is an old friend of Africa. The modern relations between China and Africa can be traced back to the Bandung Conference held in Indonesia in 1955 (Uchehara, 2009). Ever since China has been a chief trading and economic partner for many African countries. Chinese trade involvement in Africa rose from USD2.38 billion in 1997 to USD104.95 billion in 2018 (China Africa Research Initiative, n.d.). On the contrary, the US economic presence in Africa is not as prominent as that of China. US exports amounted to USD11.39 billion in 1997 which rose to USD26.06 billion in 2018 (United States Census Bureau, n.d.).
The primary reason why China is a bigger hit in terms of trade and exports in Africa is that the US exports are “dominated by high-end services, including travel, business services, and charges for use of intellectual property; technology-intensive industrial machinery; vehicles; and agricultural products.” However, the demand for high-end services and industrial machinery is still nascent in the African markets (Hendrix, 2020). On the other hand, Chinese manufacturers have come to dominate global markets for low-cost consumer electronics like televisions and cellular phones, domestic appliances, and apparel—precisely the type of products for which demand has surged across Africa over the last two decades (Young, 2012).
While this may lead one to infer that there is yet no ‘zero-sum game’ between the United States and China in Africa (Hendrix, 2020), the hegemonic aspect of it must not be ignored, considering economic supremacy is a root cause for the tussle between the United States and China.
Furthermore, Chinese trade relations in Africa show a mutual engagement. While China exports its cheap consumer products to African markets, it draws out most of Africa’s natural resources. Data by the Observatory of Economic Complexity shows that as of 2017 as much as 95% of Sudan’s natural resources were exported to China while countries like Angola, Gambia, and Eritrea exported more than 50% of their natural resources (Dahir, 2019). While this mutual trade agreement might serve as a binder between the parties, it certainly poses a challenge to African countries, especially in the face of a slump in prices of oil and natural resources. High commitments of return in the form of oil and other natural resources and frequent slumps in prices of such resources have repeatedly left the resource-rich African countries with very little resources for their own use, deducting their ability to raise direct cash as was the case with Angola in 2016 when it was left with very little revenue drawn from oil after heavy debt repayment using its oil resources (Reuters, 2016).
The United States on the other hand follows a very principled and limited basis of trade, institutionalized through the African Growth and Opportunity Act which facilitates duty-free import of products to ‘eligible’ Sub-Saharan Africa countries (Williams, 2015). This ‘eligibility’ is based on respect for human rights, poverty reduction efforts and other economic and political factors. This approach has further restricted the US economic presence in Africa while China has sought an active engagement with countries in Africa, irrespective of their human rights record and corruption such as Sudan, Zimbabwe, Democratic Republic of Congo, etc. (Oniwide, 2017). Another sector where China has been actively involved unlike the United States is infrastructure development in African Countries. In lieu of its Belt and Road Initiative and for enhancing connectivity between China and Africa, massive fiscal aid is given to African countries by China.
Chinese aid which consists of grants, zero-interest loans, debt relief, and concessional loans is mostly perceived as development projects to produce quick and tangible results that enable China to gain political influence in African countries (Oniwide, 2017).
The financial support from Chinese banks like the ‘Chinese Import-Export Bank’ has also promoted infrastructure development. China has also established commercial and investment hubs called Special Economic Zones (SEZ), "which provide―infrastructure corridors that link African producers and markets in China" (Shinn & Eisenman, 2012). This kind of engagement has also benefited African countries in building a strong infrastructure through rail routes, roads, and ports, while at the same time escaping IMF and World Bank regulations for repayments by engaging with China bilaterally (Oniwide, 2017).
Challenges Due to the Pandemic
Out of all its engagements in Africa, China has widely been recognized as Africa’s largest bilateral creditor. Amidst the COVID-19 Pandemic, the United States and China again competed in Africa for providing assistance. However, the pandemic has brought to the forefront of African countries the unexpected side of borrowing from China. The pandemic which rapidly swept through the African Subcontinent disclosed an urgent need for African countries to reallocate resources towards the health of citizens while trying to minimize the negative economic outcome of the pandemic in the face of a double crisis of health and economy (Kuo, 2020). But at the same time, countries are forced to reallocate resources to repay loans at a time when such resources are urgently needed for health infrastructure and economic protection. In the face of such a crisis, China tried to extend a limited helping hand towards Africa by implementing the G20 Debt Service Suspension Initiative, thus temporarily suspending the debt repayment (Kuo, 2020). However, this suspension has only been announced by China on interest-free loans which constitutes a small share of China’s total debt portfolio. What is needed to be done for other kinds of loans remains unknown.
The United States has vocally called Chinese assistance in Africa as ‘empty promises’ (US Department of State, n.d.) while there has been wide speculation if China will use the so-called ‘debt-trap diplomacy’ to gain strategic assets in Africa and control strategic ports besides building military bases.
While something of this magnitude is less likely to occur, African nations will definitely have a tough time dealing with Chinese debts as China has had a reputation of giving relief but not forgiving debts easily (Brautigom, 2020).
The use of ‘debt-trap diplomacy’ by China to gain a strategic foothold is not something the world is completely unknown. Not long ago, in 2017, upon its inability to pay back loans for building the Magampura Mahindra Rajapaksa Port, Sri Lanka decided to hand over the port to China at a 99-year lease (The Hindu, 2017).
China has been financing such ports throughout Africa and it cannot be impossible for China to make a similar demand upon defaulting on loans by African countries. If this happens, the US strategic presence in Africa will be inevitable, setting grounds for a proper cold war with active strategic assets, military establishments, and global politics based on alignment with power blocs.
Whether it’s easy or tough, China’s strategy for debt repayment in Africa remains unknown yet but at the same time, China’s policy in the region remains extremely crucial for shaping the future of Africa and the global order.
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