Increased China-Africa Trade Raises Questions

Growing trade between China and Africa is raising new questions, analysts say, about economic competition and opportunity on the continent. According to the African Development Bank, China-Africa commerce comprises more than 10 percent of Africa's overall trade.

A recent report by the African Development Bank says African trade with China has steadily grown, while the continent's imports and exports with other markets have mostly declined.

The bank's research director, Leonce Ndikumana, says this was particularly important during the latest economic downturn in the United States and Europe.

"What we have seen is that when there is a shock to the economies in these regions, Africa gets hit straight in its face," said Ndikumana. "And diversifying the destination of its exports and the origin of its foreign capital inflows is a good thing for African countries."

China imports mainly oil and other natural resources from Africa, while the continent buys equipment, machinery and inexpensive consumer goods from China.

Some economists are worried that such trade could stifle the development of manufacturing sectors in Africa, while also increasing what often is called the resource curse. The phrase refers to the paradox that many African regions have highly sought after natural resources, but often experience repeated political violence and extreme poverty.

The senior policy manager for extractive industries at Oxfam America, Ian Gary, says he hopes Chinese companies are aware of the problem.

"Whether you are a Chinese company or a Western company, as we have seen in places like the Niger Delta, you will come into problems with local grievances, conflicts with local communities," said Gary. "And so I think you will see that Chinese companies will have the same type of learning curve and hopefully will more quickly look at ways that they can support an environment that leads to sustainable development."

But the research director at the African Development Bank, Leonce Ndikumana, says Chinese companies have been more inclined than Western firms to invest in infrastructure such as roads and stadiums in recent years.

He says whatever the challenges, China's interests in Africa will benefit Africans.

"The only way African countries can reduce poverty is by increasing growth and sustaining growth," said Ndikumana. "So to the extent that the increased trade with China and the increased investment from China to Africa is contributing to growth, this is good news for African countries."



But Oxfam America's Ian Gary points out that Chinese companies receive help from their government to win contracts in Africa.

"Chinese companies are often closely tied to the government and can look at sort of packaged deals and incentives, for example, infrastructure for resource type swaps and other types of incentives, that are not on the table for many of the Western companies," noted Gary.

Other economists say they hope Chinese investors will partner with African entrepreneurs to grow their countries' economies in ways that will benefit more people. They also say they would like to see Africa expand its economic ties with other parts of the world.

Other countries showing increased interest in Africa include Brazil and South Korea. Non-oil sectors that are attracting more attention from foreign businesses include agriculture and customer services.