From Sandton to Shanghai

(An old symbol of China’s bygone colonial legacy nestled in the bamboo mountain retreat of Moganshan near Shanghai. Picture: Julian Hewitt)

The Chinese economy is still on track to overtake the USA economy in real GDP terms in less than 2 decades Is this the ominous decline of the American empire and rise of the new Chinese global order?

I think not. It’s a question of Empire v Economy and is often easy to get swayed by the latter as the overriding measure of global worth. Empire v Economy is really a hardware v software debate or putting it even more bluntly, it is a question of ideology v stuff.

The real issue at stake is not so much country X v country Y , but really a battle of ideologies. At a trade issue, China can command considerably sway over USA policy and decision makers and even the throngs of Wall Mart consumers directly impacted. Here China has strong elements of leverage over (for example) the USA in terms of a significant trade deficit, artificially strong currency and rising American consumer credit built up on cheap Chinese imports.

Of course, if you do favour the Economy argument, then it is worth keeping in mind the other side of the GDP debate. By the year 2030, China’s GDP capita is predicted to reach the 1990 level of Western Europe and Japan. Given China’s population size and the complexity this brings, it is close to inconceivable for China to ever lead the way on this front.

In my mind, the recent clash of interests over Tibet scratched the surface of one very interesting dimension. While China can have strong sway on a country to country basis, its power and influence over a more united West seems very adolescent in comparison. In many ways, China was at a loss how to actively engage with the West - apart from marshaling statements of support from emerging economy friends and filling page upon page of propaganda in local Chinese newspapers.

So in my view, whether or not China’s economy eclipses the USA economy in 2027 misses the point. It is all about Empire. Let us assume that the USA is an empire. There is some debate about this but a quick glance at the USA’s military presence around the world shows there is some fire behind the smoke. Before the USA it was the term of the British Empire and so on.

The reality is that both the USA and UK are really part of a broader Western Empire whose democratic, social, educational, legal, capitalistic and of course religious nature all drew strongly from Christian influences. That is to say that over the last half a millennium, while individual countries in the West have experienced rising and falling fortunes, a vast economic entity has all arisen out of shared common values.

It is important to create this broader distinction, because there is a time in the future that ideologies will come into play when people really start to analyse the nature of Chinese software that it brings to the global stage and ideological lines will be drawn not between country v country parameters but on a broader Western Empire v China context.

Africa’s New Colonialists

Julian Hewitt
Published 5 April 2008

“India and China have become Africa’s new colonialists,” declared respected international financier, George Soros, during a Reuters interview earlier this year. More recently, the Economist ran with a cover story titled “The new colonialists”, which detailed China’s huge appetite for acquiring global resources.

The real question is whether there is any fire behind this talk of “colonialist” smoke.

While Beijing has gone to great efforts to play down any comparison with Africa’s former colonial masters, this tag will probably not be far from the surface of the Africa-China debate as China’s substantial financial and political investment on the continent starts to show dividends.

One only needs to take a look at recent trade and investment numbers between China and Africa to tell that something significant has happened within a really short space of time.

China’s bilateral trade with Africa has gone from a negligible $12-million in 1956 to $73,6-billion in 2007, making China Africa’s third-largest trading partner in the process. Forecasts predict that this figure will surpass $100-billion by 2010.

Further signs have been profound. Last year was a watershed year for Chinese investment into Africa. Firstly, a $9-billion financial and infrastructural package was signed with the mineral-rich Democratic Republic of Congo. This would be China’s single biggest country-to-country investment to date.

Then, a few months later, China’s largest bank, ICBC, bought a 20% equity stake in Standard Bank for $5,5-billion — which, at the time, was one of both Africa and China’s largest transactions and clearly signalled the fact that the Chinese powers that be were embarking on a holistic investment approach to Africa.

However, to really get a sense of China’s unfolding relationship with Africa and whether it warrants “colonialist” warning bells going off, it is worth unpacking the key drivers that have given rise to the present situation.

Firstly, the timing perspective is important to comprehend. When China emerged on the global scene through its “Go-Out Strategy” in 1991, it saw Africa from another viewpoint to the basket case of poverty, corruption and violence that Africa had largely been written off as by the rest of the world.

The continent that China saw was one that was emerging from decades of post-colonial chaos to a period of increased socio-political stability. Most importantly, though, Africa was also home to the world’s largest untapped oil and raw materials that China so desperately needed to meet its vast industrialisation requirements.

With the most accessible and economically viable natural resources already sewn up by the developed world, China had few other places to turn to.

Secondly, it is important to keep in mind that China’s foreign policy has been virtually unwavering from its stand of “non-interference” in an external country’s domestic issues. This stance distances China from the traditional definition of colonialism that involves political, territorial control. The flipside, though, is that China is not morally selective about which regimes it has dealt with.

There is, however, a definite political element to China’s African relations. Most Chinese companies that have invested in Africa are still state-owned and are pursuing national resource mandates. To a large degree, China’s heavy government to government involvement has been essential in limiting the risks of investing in some of Africa’s most unstable countries such as Sudan and the Democratic Republic of Congo.

But it is probably the scale of Chinese commercial infrastructure in Africa that should be the biggest cause for colonial unease. China is building almost 5 000km of rail network to connect mines with harbours, while also investing heavily in port facilities in many African countries along the Indian and Atlantic seaboard.

Furthermore, Chinese sources are already projecting that 40% of its oil and gas imports will originate from Africa, and countries such as Sudan, Nigeria and Angola have all seen heavy investment in oil-related infrastructure.

Over time, it is logical to assume that as China’s economic interests in Africa deepen, so too should its political impetus. This is where the lines with neocolonialism get blurred.

Nevertheless, China’s current ambitions clearly do not involve the same institutionalisation of political and economic jurisdiction that countries such as Britain, France, Belgium and Portugal exerted in days gone by.

To its credit, China has been ultra cautious about ensuring it projects a relationship of equals with its African partners. While it is definitely the chief instigator in China-Africa affairs, keep in mind that it was not too long ago when China itself was at the receiving end of colonialism’s darker side.

No nation in the world can truly claim to be void of self-interested tendencies and this is very much how China’s relationship with Africa should be described. Painting China with broad colonial brush strokes does not accurately assess its current role on the continent.

Still, a note of caution is needed. When Mao Zedong was once asked what he thought of the French Revolution, he famously responded: “It’s too early to tell.” In a similar vein, maybe the same can be said for the merits of China’s relationship with Africa.