Tuesday, 8 December 2015

Reviewing The Sino-Africa Economic Relationship

In the 21st century, two significant economic happenstances are bound to occur. Firstly, the reality that the Red Dragon will eventually be the world’s leading economic power and magnet is taking shape a bit rapidly. Secondly, the actuality that Africa will be a key player in the world’s politico-economic front is no longer something that can be deemed as a fantasy. It is slowly building up albeit a myriad of challenges that are bred internally within the continent and transmitted externally from the developed nations.

The emergence of China as an economic powerhouse in the world is one of the fascinating economic stories in the globe because her growth and development has followed a trajectory that was once thought of as economically non-friendly. This trajectory has been common among most of the East Asian nations and the Asian Tigers whereby at the time of their economic take-off and subsequent economic stabilization, democracy has been practiced selectively with so much relativism and less absolutism. 

As a consequence of her economic transmogrification, China in her bid to topple the United States of America as the world’s superpower economically, she has been able to engineer some development funds in the form of financial aid and assistance to various countries in Africa. This is one way in which the Chinese are using to make their presence felt on the African continent in the name of fostering the economic cooperation between China and Africa.

Last week, there was a conference known as the Forum on China-Africa Cooperation held in South Africa and attended by African leaders and the Chinese president, Xi Jinping. In this economic forum, the Red Dragon pledged the following: to inject $60 billion for financing development projects, to cancel the existing debts that have zero interest rates and to boost agriculture through the development of a 3-year strategic plan. 

The afore-mentioned economic pledges are clothes of the same colour but have a different texture of fabric. Why? Because they are all financial aids, broken down into several specifics. With the external financial aid and assistance comes the bone of contention; do the developing countries especially in Africa need the external financial aid? This has been and it is still a subject that is subject to intellectual treatise depending on the school of thought that one belongs to and which economic development ideology and philosophy that one subscribes to.

I belong to a school of thought that fashions and advocates for an internally-induced economic growth and development that is firmly anchored on the internally-first and externally-last model. Concomitantly with this school of thought, I strongly cherish the economic ideology and philosophy which emphasizes that robust economic growth and development in any given country or region is an absolute process whose occurrence is pegged on the initiative taken by the indigenous people. In other words, I abhor the enthymeme that developing countries need external funding to accelerate their rate of economic growth and development.

One of the sweeteners that China offers in their economic cooperation with the African nations is the principle of non-interference in political matters and internal affairs of these countries. This is an economic revolutionary idea that has proselytized many African political leaders to join the bandwagon of the Chinese mandarins. In any case, who wants to be given loans that are subject to conditionalites that threaten the socio-political reorganization of a country the way the traditional funders from the Western world have done for ages? This is a blind-folding process.

How can you give loans and development aid to countries that are suffering from the vagaries of institutional malaise. China’s endearment to Africa is largely to superimpose its perceived superpower oneirism over the USA. If indeed the mandarins have the need to transform Africa then they should do away with this laid-back approach and demand for the establishment of effective institutions that promote economic development. I have no problem whatsoever with the authoritative regimes as long as they propagate zero-tolerance against corruption, improve people’s living standards and respect human rights. The corrupt in China are sentenced to death and a similar approach can be replicated in Africa among countries that have economic cooperation with her. 

The emergence and resurgence of the Red Dragon as the world’s second largest economy ostensibly assumed the internally-induced trajectory of growth and development especially after the death of Mao Zedong, popularly known as the Chairman. Chairman Mao was the proponent of the Great Leap Forward and the subsequent Cultural Revolution that originally were meant to breed prosperity in China but largely led to a tatterdemalion economy. His death was thus a critical juncture that enhanced a spirit for the need of economic renewal to better the lives of the Chinese people.

The economic syndrome that most African nations are suffering from is similar to that which afflicted China especially in the 1960s and 1970s. Hence, two leading economists, Prof. Loren Brandt of the University of Toronto and Prof. Thomas G. Rowski of the University of Pittsburgh identified three sources of productivity stagnation and rampant inefficiency that characterized China’s planned economy before its adoption of the mixed economic model. One, the prevalence of noneconomic policy objectives. Secondly, weak institutions and thirdly poor incentives. One funny thing is that these three factors are embedded in the economic systems of majority of the African countries which seem to have adopted a mixed economic model. This is the contradiction; these factors were seen in the pre-developed China that thrived on a planned economy and they are vibrant in a pre-developed Africa that has adopted a mixed economy.

For China to ensure that African nations play catch-up to economic growth and development, the Chinese need to preach the gospel of economic restructuring that is based on strong institutions and effective incentivization. In any case, the Chinese are propagating foolhardy economics by giving finances to most countries that are victims of weak institutions and poor incentives. 

The Sino-Africa economic cooperation is set to be victimized by two issues; China’s slowing economy and the use of Chinese firms and labor especially when carrying out the infrastructural development projects. Acute economic dependence cultivates a ground that is prone to intense exogenous shocks. The slackening of the Chinese economy implies that the economic growth rates of the African countries will be wholly jeopardized. The resolve by the Chinese to use their own firms and labor is an economic manacle that is bound to stagnate the development of Africa’s firms and human capital.

The above two have an implication that Africa’s economic prosperity is held at ransom by the Chinese. If China was to employ the services of the African firms and labor, then this capacity-building approach could enhance an African-driven economic approach. However, the use of Chinese firms and labor is a strategy meant to enhance Africa’s economic dependence on China for eternity. For Africa to emerge as a new economic frontier, it is upon Africans to own this dream and reduce the reliance on external aid. Even China’s economic development was partly due to the withdrawal of the East Bloc technical aid.

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