G8 summit

The G8 summit came and went last week and was a relatively low key affair. The meeting of ten of the most powerful economies in the world used to be an event of huge geopolitical significance. It is testament to the rise of countries such as China, India and Brazil that the G8 no longer maintains its importance, as more representative organisations such as the G20 take precedence. That is because a decision made by the G8 once represented world opinion, but now China’s permission must also be asked.

The protests and revolutions in North Africa earlier this year have been difficult for the Chinese to negotiate. China’s policy of non-interference in the affairs of sovereign nations was again challenged as eventually Beijing consented to the UN mandate to intervene in Libya. Beijing has been critical of a perceived overstepping of the UN mandate, but Russian President Medvedev’s decision at the G8 to call for Qaddafi to leave office creates a strong coalition for the USA and Europe.

Chinese non-interference is however more and more often contradicted. This week a Chinese General in Washington DC, Chen Bingde, suggested direct military attacks in Somalia to deal with the threat of pirates. Clearly where Chinese trade concerns are sufficiently affected Beijing is willing to call for the ultimate course of intervention.

Meanwhile the Chinese headline on Xinhua read, G8 summit tries to avoid self-indulgence. This headline chimes with the statement made alongside the Deauville Partnership which proposed $20bn of financial support for Egypt and Tunisia. The statement while announcing loans and grants in support of democratic transition took care to stipulate that it respected the sovereignty of the individual states. This statement seems a direct concession to the Beijing consensus.

Indeed one could argue that the Washington Consensus died with the G8, and that developing countries now face new hybrid world order including encouragement of industrial policy and a strong state, but in liberalised markets with eased regulation and an emphasis on Foreign Direct Investment. None of the most successful developing nations of the past few decades: China, Korea, Brazil, India, could be said to have developed via neo-liberal Western policy.

While much of the success in Africa has been down to increased investment in primary resources, the next phase of growth is likely to come through industries which bring about jobs for the rural and urban poor. These are likely to begin in basic manufacturing and small scale modernized agriculture. Last week’s blog explored China’s role in agricultural development, but its greater potential is in transferring manufacturing jobs.

Nevertheless China is not the only actor with power in this regard. One of the featured stories this week comes from US packaging firm Sealed Air which moved its manufacturing plants from China to Africa in 2000. While that early move has proved challenging, gradually improving infrastructure and education alongside rising wages and yuan value in China will act to improve Africa’s manufacturing competitiveness.

China’s rhetoric in Africa often centres of the need for respectful relations with Africans and their governments, which ties in with the non-interference narrative. Western commentators are quick to suggest that this position is merely an excuse to deal with corrupt or illegitimate political figures. However Western firms should also learn fromChina’s success here. Having been brutalised by Structural Adjustment, and patronised and hectored for decades, China’s respectful bargaining is undoubtedly attractive.

Ironically the perception that has been created in the West of Africa as a charity case may eventually work to its advantage. Africa has huge goodwill in the West meaning that African producers can use can use the origin of their products to their advantage. The reason for Sealed Air’s move to Africa is as much about sustainable development as profit. African producers must play every card they have.

POI

Arms to Mozambique: The headline this week on arms sales to Mozambique specifies non-lethal supplies. This suggests that either lethal supplies were ruled out for ethical reasons, or that the publisher of the article had some interest in specifying that China’s policy is changing.