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Self interest, and hedging the bets

China’s interest in Africa is driven by various agendas. The difficulty in explaining the motive, cause or fault in Chinese investment lies in the complicated structure of Chinese involvement at the national, state, military and private level. China’s lack of transparency over its actions adds to this confusion, but a point of clarity can be found in one all encompassing motive. Self interest.

Often self interest is cited as a negative aspect of Chinese engagement with Africa, but in reality what separates China’s apparently dangerous policy, from traditional partners, is whose self interest is being followed. While Beijing has become more aware of the negative impacts of some of its policies on the continent, at other levels Chinese actors often ignore the repercussions.

The damaging episodes in China’s engagement with Africa have most often been perpetrated by privateers, military dealers and local state officials, especially in recent years. For Beijing the concern is China, and the desire is for secure and quiet relations which strengthen the countries position both domestically through resource security, and internationally through support.

The same differentiation could fairly be drawn between the UK state’s and its larger registered companies’ interests in Africa, which are carefully vetted and regulated, and Mark Thatcher’s engagement in Equatorial Guinea. Although Mark Thatcher is clearly politically connected and British, his self interest does not extend to protecting the interests of the UK state. Likewise the CIF is closely involved with individuals and institutions of the Chinese state, but its self interest is very different to that of Beijing, which has more long term goals.

The implication here is that the ultimate power in deriving benefit from these relationships lies in two places. First in the domestic government’s ability to drive a hard bargain with international actors, and second in the overlapping self interest which exists between native government and the international actor. The first is essentially good governance, and the second the Win-Win relationship.

Good governance has been the zeitgeist in development policy for the past few years for obvious reasons. In order for a country to develop it is vital that it protects its people and their interests. Issues arise where fragile politics, and weak accountability allow officials to act in personal rather than national self interest.  Mwesiga Baregu of St Augustine University generated articles in the Tanzanian press this week calling for a fair deal in this new relationship. He argues that what is required is value added production and technical gains, in exchange for the vital raw materials the country and the continent are providing.

To some extent this is offered through Win-Win. In the news this week FOCAC report that Chinese hybrid millet could be successful in reducing food insecurity in Africa, while in previous blogs I have argued that China’s SEZs and movement of low tech manufacturing industries could be very well suited to African needs. Further to this Beijing’s need for resources drives policies requiring employment of domestic labourers in major projects, and ever more serious attempts to dampen the counterfeit goods trade were announced this week. However the fundamental variable in Africa’s development will be the ability of governments to drive a hard bargain and demand the right things, from all international suitors.

Chinese interests are ever more involved in the Ghanaian economy, especially concerning the new Jubilee oil fields which started major production earlier this year. CNOOC has pursued a long courtship of Tullow and Kosmos in the country, while other Chinese state interests have pledged funds for road and rail infrastructure, and small privateers have reopened forgotten mines [see full list of stories]. This week Kosmos announced a further rebuff to Chinese efforts. The scenario here in which Chinese interests have to prove their worth in full competition is in stark contrast to the scenario CIF usually face in weak polities where they often have the only offering.

It is important to reiterate here that China’s involvement in Africa is not an alternative to Western involvement, but is additional, in a continent which has suffered consistent underinvestment. I refer here to this week’s article in Bizcommunity which calls for a multilateral approach from Africa’s governments. Western press seem determined to evoke a Cold War style battle between China and the West in Africa, but the true winners in the emerging political economy will be those who leverage competing self interest most successfully. The winning formula will include all actors on their merits.

 

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