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World
Competition in Africa?
China and India both aim to exchange resources and boost development
By Yu Lintao | NO. 1 JANUARY 7, 2016

 

Visitors attend the China-Africa Equipment Manufacturing Industry Exhibition in Johannesburg, South Africa, on December 4, 2015 (WANG XIANG)

China and India, two emerging economies looking to obtain materials and resources required for the continued infrastructure and commercial development of their own countries, are investing heavily in Africa. Yet the large focus of diplomatic efforts and financial resources by the two most populous countries on Earth has also inspired rumors that the two are competing in Africa, and that the continent is a stage on which a new rivalry is being played out.

When it comes to African policy, are China and India rivals? Are their interests in competition with one another? One cannot say there is no competition between the two countries when they interact with African nations, but calling it a rivalry would be an overstatement.

Since the beginning of the 21st century, Africa's trade volume with China and India has witnessed staggering growth. Sino-African bilateral trade has surged from approximately $10 billion in 2000 to $220 billion in 2014, with China replacing the United States in 2009 as the largest trading partner of African countries. During the same period, trade between India and Africa has increased from $3 billion to $72 billion. China and India made tremendous investments in African countries and have launched a series of aid projects designed to speed up local economic expansion.

In order to promote bilateral relations, China and India respectively established cooperation forum mechanisms with Africa in 2000 and 2008. The third India-Africa Forum Summit (IAFS) held in New Delhi in late October 2015 was followed by the Johannesburg Summit of the Sixth Forum on China-Africa Cooperation (FOCAC) just over one month later. The two Asian giants undertake numerous trade and investment missions with African countries under the framework of such forums.

At the IAFS, India promised to increase its investment in Africa and announced $10 billion in concessional loans, with $600 million in direct aid for African countries, efforts which will further advance their ties.

While speaking at last December's FOCAC summit, Chinese President Xi Jinping took the opportunity to announce an aid package for African countries worth $60 billion, which includes a mix of debt relief, grants, loans, and a China-Africa industrial cooperation fund. This is in addition to the previously-announced commitment by the Chinese to provide the African Union $100 million in military assistance for peacekeeping missions over the next five years.

Respective advantages 

For each pair, China and Africa, India and Africa, and even China and India, such an engagement contributes to economic expansion and helps to promote shared interests. In terms of investment and trade, China's engagement with Africa at present far outweighs that of India's. But their economic activities are complementary to one another, which is good for the balanced development of the African continent.

So how do China and India's relations with Africa differ and complement each other?

China's economic activities on the African continent focus more on manufacturing and construction projects, which have long been a bottleneck for economic growth and social progress. China's policy of encouraging industrial capacity cooperation with Africa is promising for most African countries which have not yet formed an integrated industrial system, but can benefit from the interest of Chinese business leaders who are eager to build plants in Africa.

In this area, China has a set of favorable conditions such as technology, experience and financing that it can bring to the table. In the past three years, China has helped build over 100 large infrastructure projects involving electricity, food processing, irrigation, and mining for more than 50 African countries.

The year 2015 also witnessed the signing of the Memorandum of Understanding (MOU) between China and the African Union for the enhancement of industrialization infrastructure and the improvement of Africa's transportation system including high-speed railways, expressways and aviation networks. Such efforts are expected to bring about fundamental reductions in the speed of transporting materials both in and from country to country, which will in turn boost production and reduce costs.

So, is India losing out to China in the resource-rich continent? The answer is probably no. India is making inroads in certain emerging industrial areas that far outpace those of China, though the overall size and breadth of its economic activities in Africa is no match for China's robust ties with the continent.

The country's pharmaceuticals companies, software firms and back-office outsourcing firms are quickly expanding market share in sectors where Chinese enterprises are relatively inexperienced and less competitive. Indian officials are also keen to remind certain African countries of their common historical past in their struggles against colonization in the hope of winning the people over before making business headways.

Room for all 

The huge demand from the world's most populous countries--China and India--for resources and raw materials will continue to be a driving force for Africa's development.

Africa also has needs that are being met by countries other than China and India, in regards to aid, investment and trade. The two Asian countries are clearly not the only players in Africa, yet both of their market shares continue to grow as they provide attractive offers to African policy makers and business leaders.

Though for some former colonial powers, or at least a handful of powerful media outlets in these countries, the increased engagement of other emerging economies in Africa is portrayed as a threat to their entrenched political and economic interests.

Scholars from both China and India note that the world is large enough to accommodate the growing ambitions of all countries, and is certainly big enough for the two countries to achieve common development and cooperation.

In previous joint statements, China and India encouraged enterprises from their own countries to collaborate their efforts in Africa. There is also a precedent for practical cooperation in Africa between the two countries. Since 2004, the Chinese National Petroleum Corp. and India's Oil and Natural Gas Corp. have been working on a joint venture to explore oil reserves in Sudan, the first country on the African continent where major oil companies from India and China have established cooperation. Such concerted efforts have since taken place in other parts of the world, such as Colombia, Iran, and Peru.

Perhaps most importantly, cooperation between China and India benefits Africa at large. African countries should not feel like they have to take sides, as both China's and India's engagement can provide tangible benefits for the African people.

As for China and India, they can only positively influence their own development and that of the African continent if they avoid aggressive competition and learn from one another.

Copyedited by Mara Lee Durrell

Comments to yulintao@bjreview.com

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