Chinese Investment in Africa

How African Countries Can Position Themselves to Benefit from China's Foray into Africa

David N. Abdulai

• Publisher: Routledge
• Year: 2016
• Print ISBN: 9781472480217
• eBook ISBN: 9781317166986
• Edition: 1
• Topic: Commerce
• Subtopic: Déontologie des affaires

China leads the world when it comes to investment and influence on the African continent. The extent of Chinese investment in Africa is well known and much has been written about China's foray into Africa. However, most of the available material has approached this issue by looking at China as the 'New Colonialist' – more interested in Africa's vast natural resources than working in partnership for sustained development. Whilst China's interest in Africa's resources is evident, it is just half of the story.

China's foray into Africa goes beyond its appetite for natural resources and into the realm of geo-politics and international political economics. For example, China is all too aware of how it can cultivate Africa's support on global issues at the United Nations and at other international fora. Breaking free from the binary arguments and analysis which characterize this topic, Professor Abdulai presents a refreshing perspective that China's foray into Africa can produce win–win outcomes for China and Africa – if Africans really know what they want from China.

Hitherto, each African country has tended to engage China with an individual bucket list; acting in isolation and not as part of a wider continent (indeed Africa and the African Union does not yet have a coordinated policy towards China). For Africa to be able to do that it needs to know where China is coming from, the factors that contributed to its awakening and success, and the benefits and possible pitfalls of this foray, in order to better position itself for a win–win engagement with China.

This book will be a valuable read for policy makers, think-tanks and students of Africa-China studies programmes alike.

1 The Sleeping Giant has Awoken

China’s New Great Leap Forward

1.1 Introduction

Any effort at understanding China’s current engagement with Africa, and indeed its current foray into and investment in Africa, require delving deep into its background and the history of where China came from to where it currently is today. For African countries, the benefit of understanding this history will help them position themselves well in their current engagement with China. In this book, this history will start with the era of Mao Tse-Tung (also known as Mao Zedong). This is because it is when modern political and economic relations between China and Africa began.

This relationship started in 1950, when China signed official bilateral trade agreements with Algeria, Egypt, Guinea, Somalia, Morocco and Sudan. To strengthen these relations, Mao sent Zhou Enlai on a ten-country tour of Africa between December 1963 and January 1964. Hence, any talk about current Chinese investment or engagement with Africa will not be complete without mentioning the effort of Mao Tse-Tung in this respect. When it comes to China, it can be argued that the awakening of China and its growth to its current state can be attributed partly to Mao. His failed policies, which resulted in the death of over 20 million Chinese due to starvation during the “Great Leap Forward” era, made China opt for a better economic system, market socialism, in the 1970s, under the leadership of Deng Xiaoping. This section of the book will therefore look at who Mao Tse-Tung is, how he ascended to power, his failed policies, and their impact on the rise of today’s China, linking that to its current engagement with Africa. The section will also look at the rise of Deng Xiaoping and how his prudent policies set the foundation for the growth of modern-day China (Dillion, 2015).

One of Mao’s famous quotes in his Little Red Book reads, “It is well known that when you do anything, unless you understand its actual circumstances, its nature and its relations to other things, you will not know the laws governing it, or know how to do it or be able to do it well” (Mao, 1936). The irony of this statement is that China’s Great Leap Forward effort under Mao did not follow the leader’s own wisdom. The consequences were obvious – millions of Chinese peasants died of starvation, and the effort was a total failure. In this book, this event, China’s Great Leap Forward, sets the stage for us to be able to look back at the China of yesterday to see the sorry state that it was in – a far cry from what it is today – and how that informs China’s rise. Fast forward to another era and a quote by another Chinese leader, Deng Xiaoping, from his pragmatic speech delivered at the Third Plenum of the 11th Central Committee of the CCP held in December 1978: “It doesn’t matter if it is a black cat or a white cat, as long as it can catch mice it’s a good cat” (Xiaoping, 1962). This observation by Deng captures his pragmatic approach to the development of China, devoid of dogma and ideology, which has helped to usher the country from the sad chapter of Mao’s era to its current trajectory of prosperity and growth. This latter chapter in China’s developmental trajectory is regarded by this author as China’s “new” Great Leap Forward. It is a contrast with the Great Leap Forward era under Mao, where his failed economic policies resulted in the death from hunger of over 20 million Chinese (Xun, 2012). The contrast can also be seen with China’s current prosperity, which has made it one of the top economies in the world and a country to be reckoned with in global affairs.

This prosperity has seen China develop with an average growth rate of about 10 percent for the last 20 years and of late a growth rate around 9.7 percent. However, recent Chinese growth rates have not been impressive (see Figure 1.1). But the previous impressive growth rate has enabled the country to move over 300 million people, a significant majority of its population, out of poverty in a rather short time. Although the country still faces the challenge of a good majority of its population still living in poverty, particularly in its hinterlands; this is a far cry from the millions who died of starvation during the period of the Great Leap Forward under Mao Tse-Tung. Even though much still needs to be done, the achievements of China so far in this arena cannot be ignored. This chapter will start by looking at two significant incidents during the era of Mao Tse-Tung specifically during the time of his Great Leap Forward initiative and also Mao’s Cultural Revolution and its contribution to China’s underdevelopment and ironically, its development as well.

Figure 1.1 Chinese Real GDP Growth, 1979–2015 (percent).

Source: Based on Chinese GDP data Compiled by Author.

The chapter will continue by looking at Deng Xiaoping’s era and how it was a remarkable change from Mao’s. It will also examine Deng’s opening-up policy and will link that to the ushering in of what I think is China’s “new” Great Leap Forward era, an era characterised by the opening up of China, the liberalisation of its economy, the forging of diplomatic relations with other countries, its joining of the World Trade Organization (WTO), and the reform of the country’s institutions as well as the witnessing of a period of rapid growth and development, amongst other things. It is also this growth of China that has contributed to its companies venturing abroad. The venturing of Chinese companies abroad sets the stage for us to look at China’s current foray into Africa in the subsequent chapters of this book. This background, it is hoped, will help African policy makers and leaders to some understand China and how to deal with the Chinese as they currently invest in Africa.

1.2 Mao Tse-Tung and China’s Great Leap Forward

Any attempt to write about the socio-political and economic development of modern-day China will be incomplete without referring to Mao Tse-Tung (Mao Zedong). This book is no exception. Mao is regarded as the principal founder of the People’s Republic of China (PRC), and his name is synonymous with Maoism, his political philosophy, which is more of an ideology based on Mao Zedong’s thought. Its focus was on China’s peasantry as a revolutionary force. Mao believed that if the peasantry were well mobilised, they could become a positive force for change and could undertake a “people’s war.” It was also under Mao’s rule that two significant events in the history of China took place, the Great Leap Forward concept and the Cultural Revolution (Kissinger, 1979 [2011]). The impact of each of these events on the socio-economic and political history of China and the Chinese psyche could go on in perpetuity because of the indelible and devastative impact they had on the Chinese people. But this could also be looked at from the viewpoint that the negative impact of these policies made the Chinese people look for alternative options that they felt were better than Mao’s; that would lead to their socio-economic development.

Mao was born into a peasant family on December 26, 1893, in a village called Shaoshan in Hunan Province. In 1819 he graduated from Changsa teacher training college and, after a brief stint in the national army, he went to work at Beijing University as a library assistant. It was while working at Beijing University that Mao was reported to have been converted to Marxism by Li Ta-chao, the head of the library; and Chen Tu-shui, a professor of literature at the same university. In 1921, Mao found the Chinese Communist Party (CCP) in Shanghai, which allied in 1923 with Koumintang, (the Nationalist Party) to fight against feuding local warlords. In 1925, Mao concentrated all his efforts on rural China in organising the peasantry, a move that eventually made him break away from the mainstream Communist party after Koumintang forces put down a peasant uprising known as the “Autumn Harvest.” The organisation of the peasants was to eventually sow the seeds of his rise to power in the 1930s and 1940s. Fast forward to 1949 when Peking (Beijing) fell to Mao and Chiang Kai-Shek was forced to withdraw to Formosa (Taiwan). This allowed Mao to declare the establishment of the People’s Republic of China on October 1, 1949.

At the age of 56, Mao became chairman of the CCP with Chou-En-Lai, Lin Piao and Liu Shao-chi helping him to carry out his ideological work. In the early years when Mao was at the helm of the CCP, dissenters were executed or sent to prison or for re-education (brainwashing). At first, Mao modelled his socialist society on that of the former Soviet Union. He later developed a Chinese alternative to that of the Soviets, which reflected the diverse Chinese populations, his experience with peasants and socialist society, and his disdain for bureaucracy. Mao’s alternative model tried to integrate intellectuals with peasant guerrilla leaders as an economic and social strategy.

This concept was referred to by Mao as “mass-line” leadership. Stalin, the Soviet leader at that time, condemned Mao for this alternative model, and by 1956, Mao reacted and made public his policies. One of these was his “let a hundred flowers bloom” proclamation. His intent here was to encourage criticism of the bureaucracy by intellectuals. He miscalculated, thinking these criticisms would be minor. When they were not, he launched an “antirightist” campaign and crushed this group. He labelled those intellectuals who disagreed with him and spoke up as “rightist” and jailed, killed or exiled most of them. Those that remained were forced to align with his thinking or had to go underground. But one of the policies that Mao will be most remembered for is the Great Leap Forward (GLF) initiative (Abdulai, 2007).

The GLF initiative was rolled out in 1957 and it was an attempt by Mao to substitute a bureaucratic system for a cellular one. It was his effort to rapidly transform China from an agrarian economy into a rapid and industrialised and collectivised communist economy. The GLF initiative was a system modelled on that of the Paris Commune of 1871, a system of local communes that were autonomous. It was thus Mao’s aim with this initiative to make Chinese communes autonomous in their development and enable them to work on projects with a common ideology as the unifying force. Others regarded the GLF initiative as Mao’s deliberate attempt to break away from the Soviet model of socialism by developing a Chinese version that he had thought about during his years in Shaanxi. But also it emanated from the bad blood that had evolved between Mao and the Soviet leadership. This strengthened his resolve to see through this vision. The kind of Chinese socialism that Mao was advocating was one that placed importance on moral and material incentives. Thus, it encouraged the people to leap into the lower stage of communism. This leap, it was hoped, would help China overtake the West in industrial and agricultural development within a few years.

Under this initiative, rural communes were to practice self-reliance as the fundamental principle. The family played a limited role, and collective farms were merged into larger units. Since all Chinese were to engage zealously in physical labour to transform their country, Communist Party cadres were no exception to this rule. Backyard furnaces were developed and metal pans and pots as well as other utensils were collected to make steel to develop tools. Communes were to grow their own food. Even though such initiatives could be regarded as a great idea, they flopped, with serious consequences. For example, as it pertains to agriculture, chaos ensued, and this was heightened by poor weather and a poor harvest, with most of the communal leaders, who were afraid to disappoint Mao, falsifying the amount of grain produced. Thus, the great downfall of the initiative was due to lies. Community leaders lied about an abundant harvest, which was not the case.

Furthermore, Mao, who was rather stubborn and arrogant, refused to see or hear talk from anyone about the failure of his initiatives. Hence, nobody dared to give him any such news. The consequence was one of the greatest famines in history. It led to the death of about 14–20 million Chinese between 1960 and 1962 (Xun, 2012; Dikötter, 2010). This failure was a blow to the CCP and led to the forced retirement of Mao; he was subsequently relegated to the “second line” in the decision-making hierarchy in the CCP, with Liu-Shaoqi and Deng Xiaoping taking charge. But Lui and Deng’s leadership did not last long, as we will find out later (Abdulai, 2007).

1.3 Mao Tse Tung and the Cultural Revolution

Those who counted Mao out when he was forced to retire were mistaken. He found a way to come out of “retirement” to launch the Great Proletarian Cultural Revolution (1966–69). The Cultural Revolution was Mao’s attempt to give Chinese youth a taste of revolutionary struggle, for he felt that the old Communist Party members were corrupted and infected with Soviet-style revisionism, a style he tried to break away from much earlier when he fell out with the Soviet Union. Some saw the Cultural Revolution as a shrewd way devised by Mao to claw his way back to power, restore his name and seek revenge on his enemies for his humiliation. Jiang Qing, Mao’s wife, was known to have relentlessly egged her husband on to reclaim power using the Cultural Revolution as the tool. The target of the Cultural Revolution was the “Four Olds.” These were old customs, old habits, old culture and old ways of thinking. Some believed that the idea of the “Four Olds” was a clever way for Mao to get rid of his enemies but disguised them in a brilliant ideological way as an effort to remove “bourgeois” and “intellectual” influences and the exploiting class whom he felt were a threat to the Chinese revolution. Mao, who was a consummate strategist, knew that by labelling his enemies as “bourgeois” or as “enemies” of the revolution, it was easy to eliminate them. It is akin to the proverbial “giving a dog a bad name to hang it.”

The movement spread to Beijing from Shanghai and in the process consumed some of the top cadres of the CCP, such as Luo Ruiqing, and also saw the purging of Deng Xiaoping. The youth who were now mobilised by Mao into the Red Guards attacked and almost destroyed the party establishment. Mao then brilliantly executed his strategy by stepping in to stop the chaos created by the Red Guards, using the army to restore order and to consolidate his power. During this era of the Cult...

Table of contents

• Cover
• Half-Title
• Title
• Copyright
• Contents
• List of Figures
• List of Tables
• Preface
• Acronyms and Abbreviations
• Introduction
• 1 The Sleeping Giant has Awoken: China’s New Great Leap Forward
• 2 Some of the Factors that Contributed to China’s Awakening
• 3 China’s Entry into the World Trade Organisation (WTO)
• 4 Why is China Interested in Africa?
• 5 China’s Foray into Africa: The Benefits
• 6 China’s Foray into Africa: The Criticisms
• 7 Africa and Millions of Chinese Migrants
• 8 How African Countries Can Position Themselves to Benefit from China’s Foray into Africa
• 9 China’s Foray into Africa: Impact on Interests of External Players?
• 10 China and Africa: The Way Forward and Prospects for the Future
• Conclusion: China and Africa: Looking Backward to Move Forward
• Bibliography
• Internet Resources
• Index