Chinese-African-Western Relations

According to China's Ministry of Commerce (MOFCOM), China's direct investment in Africa rose by 87 percent to $1.1 billion during the first three quarters of 2011 compared to the same period of 2010. Likewise, trade between China and Africa last year topped $122 billion in the first three quarters of last year, an amount roughly equal to total two-way trade for all 2010 and making it the region's most important trading partner, overtaking the United States. However, before China's strategic prioritization of the continent at the turn of the century, Africa was previously largely subject to and still remains influenced by Western powers in the continent's quest for modernity, embodied by the United States' sustained engagement with the region. China's renewed attention in the region over the past decade is undoubtedly shifting the triangle of Chinese-African-Western relations.

The land of opportunity

The African continent presents a large market potential given the continent's population of more than 1 billion, growing per capita income and natural resources. For China specifically, its well-documented ambitions to internationalize its currency, the yuan, pass through Africa, with Nigeria thus far taking the lead by holding some of its reserves in yuan. Some countries in Africa such as Zimbabwe, both officially and unofficially, have long relied on the U.S. dollar as a currency, which also remains the preferred currency among many merchants. U.S. officials are getting increasingly weary of the number of governments in Africa finding favor with China's path of development, and are concerned Chinese firms are slowly gaining an edge over U.S. competitors. This trend, they argue, reflects Beijing's strategic ambitions for the continent. And although the new African Union headquarters is a symbol of tightening ties with Africa, Chinese officials have been quick to point out that "it's not China versus America. It's whatever helps the Ethiopians." In the end, the reality is that the United States ability to retain its influence in global affairs largely rests within the borders of Africa.

More competition, more opportunities

How will the future look like with China's ever-growing influence in the region? The fact is there is plenty of room for all three parties to coexist. In fact, the World Bank previously declared, "Africa could be on the brink of an economic takeoff, much like China was 30 years ago." Moreover, the African people stand to benefit the most, as increased competition and communication between all parties will open up previously unattainable development opportunities and alternatives. With increased levels of internationalization, industrialization and normalization, in the region, and more resources being devoted by a greater number of parties into Africa's future, the continent's prospects indeed look bright.

The ChinAfrica Econometer is produced by The Beijing Axis, a cross-border business bridge to/from China in four principal areas: Commodities, Capital, Procurement, & Strategy.

For more information, please contact: Barry van Wyk, barryvanwyk@thebeijingaxis.com

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