As Washington tightens noose on China, World’s second largest economy has found a willing ally no less a whole continent of Africa as recipient of its contracting manufacturing sector.
Goods making their way to Africa on regular basis are said to be worth $4.9 billion with major counties being Bostwana, Kenya, Nigeria, Ghana, Somalia, Uganda among others.
Records from the Chinese Chambers of Commerce show ship loads of goods leave for Africa everyday.
The protracted war trade with the US has forced China to step up its “easy money” strategy with Africa, where unconditional loans are given to the poorest continent in the world while plundering its resources and dumbing inferior goods.
China-African trade is worth over $220 billion with Nigeria, South Africa and Egypt its biggest trade partners.
But any trade between all African countries are being undermined by burgeoning debts being heaped on Africa, and manufactured goods being pumped to the continent with reckless abandon.
And there have been warnings and worrying signs especially as the ‘giant’ one is now trapped under this dangerous relationship with China – Nigeria.
Nigeria continues to look into China as aid from the US and Europe dry up due to resurgent of poor human rights actions and opaque budgetary process and dark accountability as corruption gets more mentions than anything else in the current administration.
President Muhammadu Buhari promised to tackle corruption from the root but analysts have accused the president of not only condoning corruption but rather watering it and allowing new better ones to germinate, accusation he has rejected saying it was greater than he had envisaged.
Nigeria’s debt to China stands at a chagrin $5 billion between 2015 – 2018 alone.
and the government wants to collect more.
In the main, the major concern is Chinese rapacious dumping of her abandoned goods, as international markets shrink, in Africa, that is causing fear that trade and debt colonisation would start another round of colonialism.
According to a Development economist and Makerere University lecturer at the School of Economics and Management, Mr Fred Muhumuza, China is dumping its products very cheaply into the Ugandan and other African markets to try and consolidate what it has lost in USA market.
“China is going to be looking for markets outside the United States more aggressively than ever.
“This will have negative impact on our local products and manufacturing sector since we may not have the capacity for trade protectionism here as the USA,” he said
An executive from the Hong Kong-based Standard Chartered Bank, speaking to Reuters, Carmen Ling, who is the Managing Director and Global Head of RMB Solutions said, “China is likely to boost imports from African countries as it seeks new sources of commodities in the wake of a trade war with the United States.”
While China would aggressively seek for raw materials, the goods end up in Africa.
“We believe that countries like Kenya and Nigeria will benefit because China will look to import more from Africa; some agricultural products from Kenya, some oil products from Nigeria,” Ling said.
But the issue is far beyond dumping goods, according to the US government.
In Africa, US Secretary of State, Mike Pompeo warned African states against China’s influence in the continent, saying Chinese investment “feeds corruption and undermines the rule of law”.
But fears of such inferior goods like clothing, electronics, fabric and more that make their way across Africa that are worrying the continent.
Purses, dresses, and suits displayed in the neighborhood’s many mall show increasing sign of seizing a huge vacuum in a continent that manufactures nothing.
In Kenya heavily indebted to China such that some of its state owned enterprises are managed by Beijing, there’s a little China there.
Called Eastleigh, or “little Mogadishu” as the area is known for its number of Somali residents, owes much of its wealth to the trade of mass produced goods from China. Sales of Chinese goods make up almost all of Eastleigh’s 2.9 billion Kenya shillings (about $28 million) in turnover a year, according to the Eastleigh Business District Association’s reports obtained by Daily Mail.
“Ninety percent of these items are coming from China. We rely more and more on China,” says Omar Hussein, general secretary of the Eastleigh Business District Association.
In South Africa, according to the Africa Report, South Africa runs a massive trade deficit of US$8.5bn (2018) with China, with imports almost twice as high as exports. The 2019 reports would be worse experts say following the trade war with the US.
Also, similar to the rest of Africa, South Africa’s exports to China consist mainly of low value-added commodities and raw materials, whilst its imports are mainly finished goods from African raw materials.
Just like the rest of the continent, South Africa get double pneumonia when the dragon (China) sneezes.
The World Bank has calculated that a 1 percentage point reduction in China’s growth, results in a 0.37 percentage point decline in South Africa’s GDP over a 2-year horizon.
That’s the entrapment that has taken place as China carefully uses Forum on China-Africa Cooperation (FOCAC) to rule over the continent since formation in 2000.
At the 7th FOCAC summit in 2018, China pledged US$60bn to Africa in loans, export credits and grants in Beijing, despite major concerns about Africa’s rising debt and the inability of some countries to repay its loans. This follows a US$60bn pledge at the 2015 summit.
These pledges and continues pledges experts say are ways to “colonize Africa in economic strategy not political.”
Take two african countries of Kenya and Djibouti for instance. China holds 72% of Kenya’s bilateral debt, and 77% of Djibouti’s debt, after completing large projects in both countries, according to the Africa Report.
At the launch of the African Continental Free Trade Area (AfCFTA), China hailed it, saying, “The launch of the AfCFTA breaks new grounds for China-Africa cooperation,” according to Geng Shuang, a spokesperson for the Chinese minister of foreign affairs.
AfCFTA critics argue that inexpensive Chinese products will “invade” the African market, damaging local manufacturers’ business. And reports by Daily Mail show Chinese goods have taken over shops and empty places under and on pedestrian bridges across the continent.
Experts say there has to be better intra-African trade and excessive appetite for Chinese loans must be cut while lowering tariff to placate Beijing must be seriously considered. Beyond this, the continent must begin to produce more of what the people consume than relying on China through unfair trade deals.