Author: Lauren Johnston, Sinograduate

On his inaugural trip to Africa as China’s Premier in May 2014, Li Keqiang laid down the principles for the future of China–Africa relations. Li’s itinerary included Ethiopia, Nigeria, Angola and Kenya. While reports of mega-deals dominated the headlines — a US$10 billion increase in Chinese credit lines for Africa, a US$2 billion infrastructure agreement, and the promise of Chinese trains and planes for the continent — it was Li’s emphasis on ‘innovative and pragmatic cooperation’ that was telling of a new phase in China–Africa relations.

Increasingly distant from its 2001 label as the ‘hopeless continent’, Africa now has average annual growth of around five per cent. And China is very much a part of Africa’s growth story. Today, China is the continent’s largest trading partner, with plans to double trade levels and provide US$1 trillion investment financing to the continent by 2020. The internationalisation of China’s economy has hitched the nation’s future to many African nations, especially those rich in resources.

But this rapid expansion of China–Africa economic ties has not been without contention. China’s use of African primary resources for its domestic manufacturing is reminiscent of colonialism. Chinese investment data — though lumpy across countries and time — also shows that oil and mineral resource exporters have received the lion’s share of China’s investments in Africa. As former South African President Thabo Mbeki noted in 2007, ‘If Africa continues to just export raw materials to China while importing Chinese manufactured goods, the African continent could be condemned to underdevelopment’.

Studying Africa’s supply of resources rather than China’s demand, puts Africa and not China at the centre of this international dynamic — but this hardly changes the story. Gravity modelling of China’s imports from 1995–2009 shows that on average China ‘over-imported’ (imported above the predicted level) from resource-rich Africa, but it ‘under-imported’ from resource-poor states. China also disproportionately selected resource-rich countries, including Zambia and Nigeria, to host its inaugural special economic zones in Africa.

Since the highest density of ‘least developed countries’ (LDC) fall in the resource-rich category, resource-rich Africa also most qualify for China’s LDC preferential trade agreements. Nigeria’s Central Bank Governor Sanusi Lamido wrote a critical op-ed in the Financial Times in 2013 saying Africa should ‘recognise that China — like the US, Russia, Britain, Brazil and the rest — is in Africa not for African interests but its own. Romance must be replaced by hard-nosed economic thinking’.

In his inaugural speech as Premier in Africa, at the Chinese-built African Union headquarters in Addis Ababa, Li was in step with former Chinese Premiers while remarkably newly opening channels through which to address criticisms of China in Africa. On visits to Africa in 1963–4 and 1982 former Premiers Zhou Enlai and Zhao Ziyang launched the ‘Eight Principles of Self-reliance’ and ‘Four Principles on Economic and Technical Cooperation’. Writing in China Security in 2007, Li Anshan, head of African Studies at Peking University, noted that China’s policies on Africa may change but the underlying principles do not. From China’s point of view, principles are the cornerstone of politics.

In his own speech in Africa Premier Li laid out four principles for further deepening China–Africa cooperation: ‘sincerity and equality; solidarity and mutual trust; jointly pursuing inclusive development; and innovative pragmatic cooperation’. To traditional and relatively static principles including ‘equality’ and ‘solidarity’ that is, Premier Li has added ‘innovative pragmatic cooperation’ as a crucial element to deepening China’s relationship with Africa. His language creates opportunities to reconcile the Nigerian-led call for ‘hard-nosed practical policy-making’ with the historical principles of China–Africa relations as laid out by former premiers Zhou and Zhao. This principle calls to mind China’s own process of experimental reforms.

Having linked old and new principles of China’s relationship with the wider continent at the African Union, Li’s visit took a bilateral focus. In Ethiopia, discussions were easy — President Mulatu Teshome is a fluent speaker of Mandarin Chinese, and like Li, an alumnus of Peking University. Li quickly sought to demonstrate how ‘innovative pragmatic cooperation’ might work — while also drawing attention to bilateral ties outside the resource sector — by visiting the Huajian Group’s emerging shoe-manufacturing hub outside Addis Ababa.

Huajian is in the early phases of taking advantage of Ethiopia’s abundant labour, historic expertise in leather, LDC trade preferences, and geographic proximity to high-income markets in Europe and North America. If successful, the much-cited Huajian story will be a formidable example of mutual development: mixing Chinese investment and African manufacturing exports. Huajian plans to spend US$2 billion over the next decade to achieve that goal. Another project seeking to emulate this business model is a joint venture in Nigeria between Sinotrucks and the Dangote Group, founded by Africa’s richest man Aliko Dangote.

From shoes to trucks, Premier Li’s trip signalled that China is pursuing its outbound economic goals while working with Africa to upgrade its economic structure. Together, these dynamics may be changing the relatively static high-, middle- and low-income divisions of the 20th century world economy. Leading China-in-Africa scholar Deborah Brautigam called Chinese industrial zones in Africa ‘Africa’s Shenzhen’. She refers to the role played by the southern Chinese city as a test-bed for economic reform.

Thirty years after reforms began, Shenzhen is one of China’s wealthiest and modern cities. If that domestic story is replicated in and by Africa in tandem with China’s outbound investment, it could be as good a time to learn Swahili, Amharic or Yoruba as Mandarin. At least that will depend on how successfully the new principle of ‘innovative pragmatic cooperation’ is applied.

Lauren Johnston is the Founder and CEO of Sinograduate.She has worked in economic policy and research at the World Bank, World Economic Forum, EIU and for the governments of Sierra Leone and Guyana, and holds a PhD in Economics from Peking University.

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Premier Li calls for ‘innovative and pragmatic cooperation’ in Africa