China boosts African economies, offering a 'second opportunity'

With $55 billion in trade with Africa last year, China has quickly inched past France ($47 billion) to become the continent's second-largest bilateral trading partner, after the US ($91 billion), according to the International Monetary Fund. Martyn Davies, head of the Center for China Studies at South Africa's Stellenbosch University, estimates that within five years, China will be the continent's No. 1 trading partner.

Last November, when leaders from 48 African countries attended the Beijing summit of the Forum on China-African Cooperation, Beijing announced it would double both its investment and aid to the continent. Soon after, during his 12-day, eight-nation African tour in February (his third such visit in as many years) President Hu Jintao began making good on this promise – dispensing billions of dollars worth of debt relief and announcing discounted loans and new investments.

In Sudan alone Mr. Hu cheerily waved away $80 million dollars in debt. He made the announcement while visiting the controversial new hydroelectric plant in Meroe – financed by the Chinese to the cost of $1.8 billion.

Hundreds of Chinese companies – many state-owned – are marching in the footsteps of their leaders, snatching up incentives and operating in 49 African countries (of which 25 are totally exempt from export tariffs).

The Chinese public is not far behind, with 24 African countries are now approved by Beijing as destinations for Chinese holidaymakers.

And Africans know which way the wind is blowing: Universities from Namibia to Uganda are opening Chinese language departments. The continent's three Confucius Institutes – promoting Chinese language and culture – in South Africa, Kenya, and Rwanda are so popular that a dozen more are scheduled to be opened next year. Schoolchildren from Khartoum to Cape Town are learning to say ni hao (which means "hello" in Mandarin).

Meanwhile, as commodity prices on the continent rise, so does the much needed cash flow into segments of the economy – and so do African incomes.

Sub-Saharan Africa's gross domestic product growth rate was negative in the 1970s and '80s – but, since the '90s has consistently been above 5 percent. The Sudanese growth rate is particularly impressive; a whopping 13 percent this year, say government forecasts.

Still, say some observers, the availability of cheaper Chinese products can be a mixed blessing.

In Lesotho, South Africa, and Ghana the arrival of Chinese cloth in traditional African patterns has forced some textile plants to close. In Zambia, the main opposition party has accused China of dumping inexpensive goods and bankrupting Zambian traders.

But by and large, argues Harry Broadman, a World Bank economic adviser on Africa, who recently completed a study on Chinese and Indian firms in Africa, "The Chinese are filling a market need that would simply not be filled otherwise."

Chinese manufacturers, he notes, are creating needed economies of scale, pushing African firms to be more competitive, and increasingly partnering with them. Lately, they've starting processing more goods on the continent.

"If the Africans can be proactive, through domestic reforms and flexible labor markets, they can empower themselves, use their collective leverage, and use the investments coming in for their benefit," says Mr. Broadman. "This is a second opportunity for Africa."

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