Rumble in the jungle – Africa and China – (The Economist – April 23, 2011)

The Economist is one of the most globally respected English-language weekly news publications, focusing on international politics, business and opinion.

CHINA has a competitive advantage that is rare among economic powers investing in faraway developing countries: a lack of ancient hostility. In the past decade Chinese investors have been welcomed with open arms in places where Western colonial powers once misbehaved and their descendants sometimes still arouse suspicion.

Hundreds of thousands of Chinese have comfortably set up shop in Africa, bringing with them economic growth and useful technical skills. Their government, eager to loosen constraints on resources and industrial expansion at home, supports them with abundant loans. Africa now supplies 35% of China’s oil. Two-way trade grew by 39% last year.

China deserves credit for engaging a continent that desperately needs investment. Millions of Africans are using roads, schools and hospitals built by Chinese companies or financed with fees from resources they extracted. Not surprisingly, many African leaders have embraced the Chinese, especially when offered vast loans for infrastructure projects. By contrast, the leaders say, Western governments these days offer little more than lectures on good governance.

But the honeymoon is coming to an end (see article). Growing numbers of Africans are turning against the saviours from the East. They complain that Chinese companies destroy national parks in their hunt for resources and that they routinely disobey even rudimentary safety rules. Workers are killed in almost daily accidents. Some are shot by managers. Where China offers its companies preferential loans, African businesses struggle to compete. Roads and hospitals built by the Chinese are often faulty, not least because they bribe local officials and inspectors. Although corruption has long been a problem in Africa, people complain China is making it worse.

From welcome to backlash

This antipathy should worry the Chinese government. Granted, it is unlikely to lose access to resources controlled by friendly dictators who have benefited personally from China’s arrival. But its ambitions stretch far beyond securing resources. Chinese companies, private as well as publicly owned, are investing in farming, manufacturing and retailing. Many depend on co-operation with a wide array of increasingly unhappy locals. In Dar es Salaam, Tanzania’s commercial capital, Chinese are banned from selling in markets. In South Africa their factories face closure at the hands of enraged trade unions.

Moreover, China’s investments spread far beyond Africa. Stains on China’s reputation are harming its commercial plans elsewhere—and governments in other continents will be keener than African politicians have been to find reasons to put obstacles in China’s way. A Chinese construction firm had an ear-bashing when bidding for a Polish motorway contract, in part because an Angolan hospital the company had built fell apart within months of opening its doors.

For the rest of this article, please go to The Economist website: http://www.economist.com/node/18586678?story_id=18586678

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