How could Africa be China’s China?

The People’s republic of China or as their people call it, “The Red Dragon” has become the manufacturing hub for many international companies in recent times. This is mainly due to availability of a huge workforce at a cheap rate. This in turn reduces the cost of production and helps the companies to earn higher profits.

Now, you might be thinking that if China is the manufacturing hub for foreign companies then why would China be interested in African nations? You see, the country is running out of its potentiality to grow by double digits. This is because China is moving from Industrializing to Industrialized. Africa on the other hand is one of the least developed areas of the world and this lack of development makes the faster growth quite easy.

The first step towards development is resource exploitation. Every country requires some form of technology to start its industries and that requires money. We all know, it takes money to make money. Well, China has money. Thus, by investing in mining and farming industries China can profit off its growth and boost its own businesses. But, Africa has another resource which is abundant as in China. We are talking about labor. It might seem strange that China being the place, which many of the countries use as their manufacturing hub, is searching for labor source elsewhere. Well, China is doing exactly that.

You see, China is the victim of its own success. Economic development from the manufacturing sector has boosted a large segment of the society into the middle class. This has increase the labor cost in China. This is not a bad news but China has shifted from a low-skilled to a medium-skilled labor force due to the improved education there. But, to have a comparative advantage over other nations the increase in skill would mean increase in cost of labor which increases the cost of production as well. This makes Africa as a whole a prime target to set up these manufacturing operations of China.

The USA and China roughly trade the same every year (roughly around $4 trillion). In 2016, China traded around $128 billion worth of goods with African nations. This is thrice the value of goods that USA traded with African nations ($48 billion worth of goods). In 2017, China opened up its first unique military base Djibouti. This exerted more of Chinese influence over the Western influence among the African nations. But the whole idea of setting up of power structure over the less developed areas to use the resources and the labor force might resonate to what colonialism was. The European ideas of expansion in the 15th to 20th century is quite similar to China’s idea.

In 2015, China alone loaned $12 billion to the African countries. That’s not a huge amount but it is helping to gain a huge influence over the continent. Chinese government does not have to force the nations to not recognize Taiwan. It was observed that in the 80s and the 90s whichever country recognized Taiwan as a separate country received lesser infrastructure projects that the ones who voted against it.

This essentially showed the political influence and the strategy of China over the African nations in those days. But now, the private industries are taking hold the African nations. It is estimated that around 9000 Chinese businesses in Africa are being privately owned by Chinese state-run companies. These companies are making money in Africa. Chinese government has helped to kick-start the industrialization process in Africa. But now that is towards completion, economic forces are taking over the initiative to move forward the growth of African nations.  

Much of the Western nations are ignoring the prospects and the promises of doing business in Africa. They ignore that business in Africa is as profitable as business in China at the time when the period of high growth began in China. Right now Africa is becoming the source of labour and resources for China. Students in Africa can now go for higher education and further studies in China. They get scholarships and a better standard of living which in turn benefits China with its growth. And so, until the Western nations do not pay attention to this, Africa will continue inching its path towards being China’s China.

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7 thoughts on “How could Africa be China’s China?

  1. Pingback: Another Trade War or is it just a historical dispute? | The Antique Economist

  2. I had heard of China investing in developing nations but was not aware of the reasons. Is it not true that it did something similar with Eastern European nations? I might be wrong.
    Thanks for sharing your knowledge. It was interesting to read the reasons and what the future could like with China and Africa coming together.

    Liked by 1 person

    • Yup China has done the same in some of the Eastern European nations! The first one being Montenegro! Thank you so much for the time! Do check out my other posts too! I am sure you will enjoy reading them! 😊

      Liked by 1 person

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