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UPDATED: February 1, 2009 NO. 5 FEB. 5, 2009
China-Driven Development
As China pours billions into Africa, other countries are trying to keep up
By EDWARD FRIEDMAN
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Europeans and Americans cannot do what Chinese are doing. Coming from richer countries, they insist on better living conditions and bigger profit margins. While Chinese may cluster in Chinatowns and spark a racist backlash, they work harder in harsher circumstances. They accept smaller margins. Their numbers are also infinitely greater than the handful of Euro-Americans moving to Africa. Backed by a government with a seemingly bottomless pool of foreign exchange and a serious commitment to succeeding in Africa, China's energies can transform the continent. The subsidies, cheap money and assistance to business in Africa from the Chinese Government will have a huge impact because of the efforts of hard working, globally mobile, entrepreneurial Chinese.

In the Chinese version of the Japanese flying geese project, experts believe African nations can benefit from playing a role in a world economy largely structured by an Asian motor. India, Malaysia and Japan are all also increasingly active in Africa in order to compete with China.

Grasping the Chinese opportunity

The post-Mao regime has unleashed a new globalizing dynamism. A transformed Africa could be the consequence of integrating into the East Asian development process. But not all in Africa will benefit equally.

After all, late Philippine President Ferdinand Marcos frittered away the Japanese opportunity during his presidency from 1965 to 1986. Myanmar, Cambodia, Viet Nam and Laos long kept East Asian market dynamism out of their countries. The key to success is openness to grasping the opportunity. A key is what each African country does. The goal should be to plug into Chinese dynamism, make money, and then re-invest in human capital so that the nation can continually move up a value-added ladder. The onus is on the host government to get its house in order. The big question is: Which African governments will initially take advantage of the opportunities inherent in China's rise? Which will be willing to join the flock of flying geese and benefit from intra-Asian rivalries, which are also creating new opportunities for Africa in very large ways? Only a few may grab the opportunity and benefit at first. But success will attract emulators.

Experts see China less as a model and more as a catalyst for development. Without the political will to enter into the Chinese endeavor, however, African governments cannot succeed.

Some analysts argue that few African governments are set up so as to be able to take advantage of the China-structured opportunity. No matter how much money China pours into Africa, whether the money is from the Chinese state or from Chinese society, these observers find, the wealth will be frittered away and flee from Africa. There are already instances of billions disappearing. The outcome could then be that China will get the energy it needs to continue its rapid rise but, at the end of the process, in Nigeria, the Republic of the Congo, Angola and similar countries, nations will stagnate, populations will grow and the people will no longer have precious and scarce resources to use to rise out of poverty.

In this view, China's defeat of European good governance conditionality in the name of non-interference, a slogan attractive to African nationalists, will unintentionally, yet inevitably, defeat development in Africa. Critics worry that Chinese policies are strengthening corrupt national leaders who will enrich themselves but not invest in the education, health and infrastructure that would allow the general citizenry to keep rising. China's rise, in the view of many well-informed analysts, cannot transform Africa. I respect the knowledge and skepticism on which such negative projections are based. They create a virtually hegemonic discourse.

But surely it can no longer be seriously argued that the rise in commodity prices brought on by Chinese spending is bad for African nations with commodities to export, except, of course, from an environmental perspective. The tens of billions in investment that China is pouring into Africa are prodding Russia, India, Japan and even Europe to try to match it. This is very good for Africa. With so many huge wealth opportunities suddenly available, and so much more in the offing, however much is wasted or is serving only elites, the extraordinary wealth and dynamism of the Chinese-initiated entrepreneurial frenzy will most likely transform large sectors of Africa.

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