A Lesson from the China-Africa Summit
The second China – Africa Summit has just ended in Beijing, a huge international event with almost 50 heads of state in attendance. “So”, a senior South African official asked me recently over dinner, “do you think the U.S. could convince 48 heads of state to come to Washington for a summit meeting?”
Hmm, interesting question. Even assuming we wanted to, I wonder if we would have the draw that China has these days. The PRC is the new kid on the block, with lots of cash to kick around and shiny new toys to share with others. By contrast, the U.S. is seen as a grumpy Uncle Sam, bogged down in a regional war, much more of a known quantity and less an object of curiosity than China.
But a broader question is this. What do the Africans think of the newly evolving Africa-China relationships? What do the Chinese think? What strategies are the various partners pursuing? There is a tendency in Washington to carry on this debate with Americans talking to Americans about China-Africa relations, reporting second or third hand the views of the other parties. This is beginning to change slightly as Brookings, CSIS and the Council on Foreign Relations have launched programs to reach out to Africans and Chinese.
Still, there is the risk that we haven’t learned to listen better. I know well what the Bush administration thinks about China – Africa relations. The State Department actually has a pretty balanced view of the issues, both the opportunities and the threats. Their officials have been consistent in Congressional testimony before the international affairs committees on the Hill, often pushing back at the more nativist worries of conservative congressmen and senators inclined to see a new USSR behind every PRC maneuver. The views are generally balanced and realistic, reluctant to cry crisis, recognizing we will have to start treating China the way we treat other big powers when we consider our own regional policies.
Less clear to anyone I talk to in Washington is the long range thinking of the Chinese. What do they think they are doing? And the Africans? What do the Nigerians, South Africans and Kenyans see over the horizon in their multiple relations with this fast growing economic and political power? What do they plan to do about it?
Fortunately, this is not a burning issue for the moment, with big momentous decisions to be quickly taken to protect American interest. But it does point to a continuing problem - we need to get in the habit of listening better. Not just through ‘public diplomacy’, but via traditional diplomacy as well. Not only government, but non-profits and private stakeholders need to improve their strategic listening.
Perhaps some clearer understanding of intentions will come out of the Sino-African summit meeting in Beijing. We should listen carefully to what was said there. It may tell us a lot about the interests of the parties. And it’s good practice for paying more attention to what all our global neighbors are thinking and saying and planning to do. It’s a good basis for future U.S. foreign policy.















This posting made me recall a recent conversation I had with a mid-level Chinese diplomat here in London. We had a frank discussion after an international relations lecture and I asked him whether China viewed the U.S. as an opportunity or a threat. He told me very clearly that the U.S. is an opportunity and the two countries benefit most from cooperation. He also said China's goals are not nearly as different or threatening as many think. Like any other country, it wants to be secure and it wants its economy to grow. Its path to these goals simply has a different origin.
At the risk of sounding naive, this did not seem so outrageous to me. It also made me wonder what our policies might look like if more policy makers approached China from a viewpoint that was less adversarial. Such balance does seem to be reflected in State Department thinking but less so in broader media and political forums.
That said, the lecture we both attended addressed whether traditional realist IR theories of power relations still applied in the context of a world with a single superpower. The majority of people there seemed to think that power still remained any nation's ultimate aspiration. Even if such notions continue to dominate, it still strikes me as useful to listen and consider otherwise.
November 6, 2006 9:49 AM | Reply | Permalink
Are the Chinese simply looking for a better investment for their dollars and euros than that provided by US treasury notes? Are the Africans simply looking for non-capitalist investment to escape the perpetual debt built-in to equity investment?
The Chinese have, to some extent, been loaning US consumers the money to buy Chinese manufacturing output through purchase of our deficit. But, facing a Democratic Congress which may be more mindfull of labor's concerns, the Chinese may be seeing a saturation point on that road in the future.
I had reason to do a quick survey of all manufacturers for a particular, and quite mundane, item the other day, keyed entryway doorknobs. The Chinese seem to be producing 86% of global output for that item. That did not surprise me. What did catch my eye is that they have idle plant capacity to triple output on 30 day notice. For that item, at least, the Chinese have tooling and plant investment far in excess of willing and able consumers.
So why not loan money to Africans so they can buy Chinese excess capacity door knobs, or anything else? That actually sounds smarter than buying US treasury notes when you consider that every buyer-seller transaction is a plus-plus rather than a zero-sum exchange.
Good post Ernest. Thanks!
November 7, 2006 12:16 AM | Reply | Permalink
All very good points. Wherever I go, I hear pretty much the same thing: most non-Chinese say that the only thing to fear about the "rise of China" is the American response to it. They are concerned about the moves Washington is making, not Beijing. But really the influence on Africa has been a Chinese Communist Party effort since the early 1960s if not before. Yes it has to do with old fashioned nation state coalition building, and about Africa's resources, but also Africa's economic potential - something largely ignored in the West. Africans may not just be future consumers of China's production but also producers of it. Some day in the future Chinese capital may relocate to Africa and find that African factory workers make a fraction of those in China.
"Where the bulk of the population cannot read, true democracy is impossible." -- Bertrand Russell
November 8, 2006 11:28 AM | Reply | Permalink
First, note that the buying of US Treasury notes helps maintain the Renminbi exchange rate, which is, indeed, part of selling door knobs and thousands of other goods.
Second, trade credit is not a win-win if the debt goes bad, since resources are required to produce those doorknobs, and if they have in effect been given away for free, there were more critical uses for those resources in China itself. This is why the sales of Chinese products are more normally financed in Africa by exploitation of natural resource wealth.
November 8, 2006 3:24 PM | Reply | Permalink
"trade credit is not a win-win if the debt goes bad"
Sort of. A wise lender NEVER wants to collect a debt, just the interest. But, that Treasury debt could go bad. Which is why China should be looking to diversify it's investment portfolio. I doubt they will actually invest in something like consumer loans for door knobs per se, but rather in infrastructure and institutional changes which will lead to increased consumption of such articles of manufacture. Just because Americans have given lip service to those kinds of investments while exploiting extractive assets from countries does not necessarily mean the Chinese will.
Gaining advantage or monopoly as a nation's (or region's) source of manufactured goods consumption can be far more important than gaining advantage to it's natural resources. Over a 300 year average Spain never controlled more than 15% of South America's commerce though it had a near monopoly on gold and silver extraction. England controlled 28% and the Dutch 37%. For example, in Brazil it was illegal to possess nails not made in Liverpool England for more than 20 years, the penalty, conscription into the army or slavery on a British owned sugar plantation. That was one of the ways England collected the interest on it's loan to finance Emperor Pedro II's genocidal Paraguayan War. Another example, insurance in Brazil was the monopoly of a particular insurance company in London for 40 years. The British made back 4 times that original war loan on that practice alone.
That's not to say that China's not looking for resources in a shrinking world. 50% of African land has ideal climate and soil for growing the jatropha plant, the most efficient source of biodiesel (1:10 BTU conversion rates). 12% of that land could produce 100% of what the U.S. now imports, 2% could outproduce Alaska's north slope. This is a mature technology, Indian Railways uses it to power locomotives. U.S. and Chinese climate prohibit commercial development of jatropha, but refineries are springing up all over Africa: Mozambique, South Africa, Egypt, etc. The corporate plantation methods to exploit this opportunity has no advantage over small independent farmers. Small independent farmers with income translates into consumption of, oh, maybe, keyed entry way door knobs.
November 8, 2006 11:26 PM | Reply | Permalink
Sort of. A wise lender NEVER wants to collect a debt, just the interest. But, that Treasury debt could go bad. Which is why China should be looking to diversify it's investment portfolio. I doubt they will actually invest in something like consumer loans for door knobs per se, but rather in infrastructure and institutional changes which will lead to increased consumption of such articles of manufacture.
The Treasury debt cannot go bad in the way of a classic Latin American Debt Crisis, so long as the obligation is in terms of US dollars, since the US government is the monopoly issuer of US dollar fiat-currency.
However, there is an exchange rate risk on US$ holdings, so it is no surprise that the Chinese central bank switched from a US$ peg to a currency-basket peg in 2005. Although it is thought that the US$ makes up the bulk of the basket, that system makes it much easier to ease out of a US$ peg in the future without telegraphing the move.
At the moment, its the World Bank and IMF that have the position as the head of line creditors that the British held in Brasil in the 19th century. If the Chinese can take over that position, either on their own or in tandem with the Japanese, that may change the risks.
November 9, 2006 10:05 PM | Reply | Permalink
In case you you and your readers are interested in what Africans think about the recent China-Africa Summit, may I suggest that you visit Chippla's Weblog and read the Nov 4th post titled "China-Africa Summit". Here is the URL to that post by one of Africa's leading blog authors:
http://chippla.blogspot.com/2006/11/china-africa-summit.html
I have also written on the subject and have provided links to other Africa blog authors (people who write extensively about African news and issues) in my Nov 4th post titled "Beijing: The China-Africa Summit, Africa bloggers weigh-in". You can find my blog by doing a Google search for "Jewels in the Jungle" and find other Africa bloggers writing on the subject by doing a Google news search for China+Africa+Summit (click on the blogs button at the bottom of the search page). As you will note your post appears on Page 1 right alongside our own.
Harvard University's Global Voices Online is a great resource to learn what international blog authors are saying about the summit, including Chinese bloggers. One of Global Voices founders, Ethan Zuckerman, has also written about the subject at his blog My Heart's in Accra (see Nov 6th archives). We are all proud card-carrying members of the GVO community.
Your perspective Ernest and that of the two commentors so far is very much appreciated. I'll be sure to point that out in follow-on articles about this very important subject.
Bill (BRE), Germany
November 10, 2006 5:54 AM | Reply | Permalink
Bill-
Thanks for the good comments and the pointers to other blogs. And thanks for crossposting.
The great opportunity and great frustration of the blogosphere is how many global voices it could attract and sustain, and how limited many of the conversations really are. I look forward to visiting the sites you cite.
I wonder if the Africa Union or some of the Africa-based think tanks and research centers have put out anything on the C-A Connections?
Ernest
November 10, 2006 2:34 PM | Reply | Permalink
I guess what we are seeing is the 'regularization' of our understanding of China's relations with....everything and everybody. Touches on trade,investment, finance, foreign assistance and grand strategy. But not just grand strategy....
November 10, 2006 2:38 PM | Reply | Permalink
Ernest, I took some time out today to search for information on what the African Union leaders had to say about achievements gained during the China-Africa Summit 2006 as you suggested. What was astonishing was that the official AU website had practically nothing about the summit in their News section to date. See for yourself at www.africa-union.org
The FOCA website (Forum on China-Africa Cooperation) features two Xinhua News Agency articles about the conclusion of the summit which I have listed below:
Action plan adopted at China-Africa summit
http://english.focacsummit.org/2006-11/05/content_5167.htm
Beijing Summit adopts declaration
http://english.focacsummit.org/2006-11/05/content_5166.htm
South Africa and Egypt are two African countries that I know to have the equivalent of independent think-tanks. If I find something interesting down the road I will notify you here.
November 12, 2006 7:43 AM | Reply | Permalink
BRE-
Thanks for the update. One consequence of poverty and underdevelopment is that institutional and policy-advocacy resources are just as scarce as others, and probably more so. THat means that those of us interested in what those on the other side of the tracks are saying must work harder to learn.
November 18, 2006 9:19 AM | Reply | Permalink