When China Rules the World (55 page)

In 2001 China officially launched its ‘Going Global’ strategy, which was primarily intended to foster a closer relationship with commodity-producing countries and thereby secure the raw materials the country urgently required for its economic growth. The effects of this policy have been dramatic. In the space of less than a decade, China has forged close ties with many countries in Africa and Latin America, and to a lesser extent the Middle East. The West, understandably, is most interested in and concerned about how China directly impinges upon it, but in fact China’s changing relationship with the developing world is of rather greater import in China’s emergence as a nascent global power. China’s overseas investment increased by more than five times between 2000 and 2005, reaching $11.3 billion, and has continued to rise sharply, with East Asia the most important destination (accounting for over half in 2004), and Latin America, Africa and the Middle East of growing importance.
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In 2000 President Hu Jintao toured Brazil, Argentina, Chile and Cuba, paving the way for a series of deals which have resulted in much closer economic links. Brazil now exports large quantities of iron ore, soya beans, cotton, timber and zinc to China, Argentina supplies large quantities of soya, Chile is exporting growing quantities of copper, and Venezuela and China have concluded an agreement for the long-term supply of oil.
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Until the global downturn in 2008 they were all enjoying a boom on the back of rising commodity prices consequent upon Chinese demand.
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By 2010, China could become Latin America’s second largest trading partner: China, in short, is beginning to make its presence felt in the US’s own backyard.
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By far the most dramatic example of China’s Going Global strategy, however, is Africa.

The attraction of Africa for China is obvious: it needs a vast range of raw materials to fuel its economic growth. In 2003 China accounted for 7% of the world’s consumption of crude oil, 25% of aluminium, 27% of steel products, 30% of iron ore, 31% of coal and 40% of cement.
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As I discussed in Chapter 6, China is very poorly endowed with natural resources and as a consequence has no choice but to look abroad. Africa, on the other hand, is extremely richly endowed with raw materials, and recent discoveries of oil and natural gas have only added to this. Unlike the Middle East, moreover, which continues to receive enormous American attention, Africa has, in recent years, been relatively neglected, having remained of marginal concern to the US.
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In 2006 the new relationship between Africa and China was publicly consummated, with Hu Jintao’s tour of African capitals followed in November by heads of state and dignitaries from forty-eight African countries attending the largest summit ever held in Beijing.
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The Chinese premier Wen Jiabo proposed that trade between China and Africa should double between 2005 and 2010. The Chinese made a range of other undertakings including doubling its 2006 assistance by 2009; establishing a China-Africa development fund of $5 billion to encourage Chinese companies to invest in Africa and provide support for them; increasing from 190 to over 440 the number of export items to China in receipt of zero-tariff treatment from the least developed countries in Africa; providing $3 billion of preferential loans and $2 billion of preferential buyer’s credits to Africa over the next three years; cancelling debt in the form of all the interest-free government loans that matured at the end of 2005 owed by the most heavily indebted and least developed African countries; and over the next three years training 15,000 African professionals, sending 100 agricultural experts to Africa, building 30 hospitals and 100 rural schools, and increasing the number of Chinese government scholarships to African students from 2,000 per year to 4,000 per annum by 2009. At the conference major deals were signed, including for the development of an aluminium plant in Egypt, a new copper project in Zambia and a mining contract with South Africa.
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Oil now accounts for over half of African exports to China,
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with Angola having replaced Saudi Arabia as the country’s largest single oil provider, supplying 15 per cent of all its oil imports.
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China has oil interests in Algeria, Angola, Chad, Sudan, Equatorial Guinea, Congo and Nigeria, including substantial exploration rights, notably in Angola, Sudan and Nigeria. Sudan exports half of its oil to China, representing 5 per cent of the latter’s total oil needs.
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Already over 31 per cent of all China’s oil imports come from Africa and that is set to rise with the purchase of significant stakes in Nigeria’s delta region.
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Over the past decade, China’s imports in all the major primary commodity categories, except ores and metals, grew much more rapidly from Africa than from the rest of the world. Africa now accounts for a massive 20 per cent of China’s total timber imports.
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China has overtaken the UK to become Africa’s third most important trading partner after the United States and France, though Africa still accounts for only 3 per cent of total Chinese trade.
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While the value of US-Africa trade in 2006 was $71.1 billion, China-Africa trade is rapidly closing the gap at $50.5 billion.
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With 800 China-financed projects, valued at around $1.25 billion in 2005 - before the 2006 conference - Chinese investment in Africa still accounts for only around 1 per cent of total foreign investments in Africa, but future projections suggest that China will very soon become one of the three top investors in the continent after France and the UK.
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It seems only a matter of time before China becomes Africa’s largest trading partner and its biggest source of foreign investment, probably by a wide margin, though India may one day emerge as a serious competitor.