Copyright Bloomberg Business Week
High Stakes in Africa: Can the U.S. Catch China?
To be attentive to history is to be on the lookout for pivotal moments, and in the geopolitics surrounding Africa, the 1990s stand out as a hugely pivotal time.
With the Cold War scarcely over, the West turned its attention away from the continent, largely defining its problems as humanitarian issues, which are traditionally the lowest station of foreign policy priorities. Western Europe, which had colonized Africa decades earlier, reoriented its focus to Eastern Europe, attracted by what it saw as large, capital-starved markets with well-educated workers who would nonetheless be satisfied being paid bargain-basement wages by the standards of that continent.
The U.S. took a different route. With a focus dominated by security, it invested its energy and treasure in a series of interventions in the greater Middle East, leading to a series of costly and inconclusive wars in the Islamic world.
In the 1990s, Chinaâ€™s economic reforms were just beginning to rev up, and the Peopleâ€™s Republic was able to survey the world with the fresh eyes that an emergence from a long period of relative isolation brings. The leadership understood that the good run the country had enjoyed since opening its economy to foreign investment in the 1980s could carry it only so far, and that to sustain growth, China had to hold its own in the global economy by finding new international markets. In 1996 the Chinese committed to a policy known simply as Going Out and selected Africa as a priority zone for expansion.
Many people who have focused on Chinaâ€™s burgeoning ties with Africa since then have made the easy mistake of believing the countryâ€™s strategy is mostly a natural resources play. Theyâ€™ve missed the big picture of why Africa has become so important to China and of why this is so relevant to the U.S. and other big, globalized economies that may now have to hustle to get into the Africa game.
Africaâ€™s resource wealth is certainly of huge importance to China, a manufacturing superpower that is urbanizing and building infrastructure on an unprecedented scale. Unlike Western powers, however, China sees raw materials as only one of the three pillars of its Africa strategy. The second pillar involves using Africa as a springboard to help Chinese businesses emerge as global players.
Over the past decade, Chinese companies have built bulging order books in Africa, cutting their teeth in a part of the world where Western competitors, when present at all, have not brought their A team. The Chinese astutely calculate that the wealth they accumulate in Africa and the lessons they learn will serve them well as they push into bigger, richer, and tougher markets. Examples of this strategy are particularly abundant in telecommunications, where companies such as Tecno (cell phones) andÂ ZTEÂ (000063:CH)Â (mobile phone infrastructure) have relied on Africa in part to launch themselves globally.
Boasting scores of already mature multinational corporations, Western countries would not be mistaken to think they had relatively little to learn from this aspect of Chinaâ€™s expansion into Africa. The third pillar of Beijingâ€™s strategy, though, could well become the game changer. Understanding that, for the remainder of the century, the bulk of global population growth will take place in Africa, China is making a long bet on the emergence of vibrant, high-consuming middle classes there, and with each year this wager is looking smarter and smarter.
Although at a glance Africa still looks overwhelmingly poor, itâ€™s recently become the fastest-growing region of the world, and its share of global gross domestic product has increased to 4.1 percent, from 3.4 percent in 2000â€”a trend that figures to accelerate. Africa already has a middle class larger than Indiaâ€™s, albeit a balkanized one. And as the economic emergence continues, it will benefit more and more from new technologies that will allow it to leapfrog communication and infrastructure hurdles.
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French is an associate professor at Columbia Universityâ€™s Graduate School of Journalism and the author ofÂ Chinaâ€™s Second Continent: How a Million Migrants Are Building a New Empire in Africa.