Sino-African trade: Modern-day Brobdingnag and flying geese

The flying geese model is a well-known phenomenon in East Asia. In Japan, particularly, it’s widely accepted to be the only theory that can explain the historical correlation between industrialization of Japan and the other economies in East Asia. It is a V-shaped succession of geese with the first goose always exercising a leadership role. Authored by pre-war Japanese economist Kaname Akamatsu, the idea is that Japan's rapid growth and industrial superiority after World War II triggered and enriched the rise of the East Asian and South-East Asian latecomer economies. As Japan continuously developed, the technological spill overs and transfers helped the rest to flock behind, one after the other.

As the scale of trade between China and Africa rapidly expanded during the last two decades, there came out the open question of whether Sino-African trade can fit in the flying geese model. Although no one would argue that China is not the modern-day Brobdingnag (Jonathan Swift’s imaginary land of giants) of the Global South, there is a considerable room for challenging the argument that countries in Africa will be the flying geese. Due to the plethora of endogenous and exogenous variables that should be considered to conduct meaningful analyses on the available data and draw reliable conclusions; and because of the greater chance of omitted-variables-bias, there has never been anything more contentious to economists than such issues since the Tower of Babel. Nonetheless understanding the depth and width of Sino-African trade relations, the political climate, and business environment are helpful instruments that allow us visualize the current state of affairs, future trends, as well as the underlying political, social, and economic implications. In a nutshell, by evaluating the available data of those activities that are taking place at the intersection of the growth of China and the economic development of Africa, one can view the trajectories of the thirsty -for resources- dragon and the hungry -for industrialization- flying geese.

Trade between China and Africa is mainly driven by China's insatiable demand for -in addition to other resources- energy security and Africa's eagerness to use its natural resources as a vehicle for sustainable development. Whether (as usual with traditional old trade partners: the West) Africa is again on the short end of the stick or not can be determined by the distance it cuts towards a manufacturing-driven economy (as a direct result of trade with China) relative to the magnitude of natural resources it gives up on the way.

Although China had a considerable presence in the continent of Africa with huge experience in the infrastructure development sector since the formation of the state of the People's Republic of China, trade between the two sides did not gain much weight until 1990s when it suddenly increased by about 700%, leaving economic analysts and forecasters perplexed. And after the foundation of the Forum on China Africa Cooperation (FOCAC) in October 2000, trade has actually gone over the roof, making China Africa's largest trading partner. In 2012, Sino-African trade volume exceeded $200 billion. The figure is expected to double by 2015.

Generally, the Western media portrays a neocolonial picture of China 'ambushing' Africa's oil and mineral resources. Most of the arguments to that end, however, lack any substantiated, informed, or statistical evidence. As labour costs started to rise in China, and as the Chinese government provides generous incentives to the Chinese enterprises that choose to secure presence in Africa, many mixed size companies from diverse sectors are moving to the continent. An IMF study in 2011 showed that mining only accounted for 29% of Chinese outbound foreign direct investment (FDI) towards Africa.

Taking a look at the current development stage of China itself would be of help to make the necessary adjustments to the lens through which one sees the issues in regard to Sino-African trade relations. The ever-increasing expansion of the Chinese economy resulted in a dramatic change of the living standards of the Chinese people. This increased the demand for more refined and diversified products and services in the new, but Brobdignagian, consumer-led markets. In addition to the Chinese government's assumption of a no-tariff policy to many products imported from 31 African countries since 2005, the continent enjoys a huge potential comparative advantage to fill the demands of Chinese consumers in sectors like agriculture and food security.

With only 9% of the world's arable land, China is assigned to feed 20% of the world population. In contrast, Africa has to feed 15% of the world population with a quarter of its arable land. Massive urbanization is also further shrinking the size of China's arable land which is already below the 120 million hectares ‘redline’ for domestic agricultural sustainability and only one sixth (per capita) of that of the United States of America. China is already importing over 80% of popular agricultural products like soybean. With a population that is even increasingly gaining both in number and wealth, China is looking out for Africa to supplement the 240 million cows and 24 billion chickens digested locally each year. If you think that those are not adequate grounds on which to arrange some sort of economic marriage between the duo, then perhaps that's why I would write this article a little further before I conclude.

According to World Bank, Africa sits on top of 60% of the entire world's uncultivated land and enjoys more arable land than any other continent. Yet, Africa accommodates over 30 million internally displaced people surviving amid devastating hunger. And, according to Save the Children, over 200 million poor children in African cities are at ‘risk of exploitation’ and ‘disease’. Majority of parents send undernourished children to schools every day. In addition to other factors, technological under-equipment is a main curse blocking the way of Africa's disentanglement from the poverty trap. Less than 5% of Africa's cultivated land is irrigated while a tractor prepares only 10% of cropped land. Nonetheless, more than 65% of the labor force is consumed by agriculture. Those workers are improvising the little available tools and are looking forward to anyone interested in partnership.

China has the technological know-how and the desire for a long-term partnership. Albeit China's work in Africa was mainly in the infrastructure, it is already transferring agricultural technological expertise. Up to 14 Chinese government-funded agricultural technology demonstration centers are currently transferring knowledge to the locals throughout the continent. Also, over 3000 Chinese agricultural experts are helping in the development of the sector. Clearly, China is motivated by more than gaining short-term oil supplies from Africa.

While western Countries seemed to be resting on their laurels lately, China has been changing the dynamics on the ground in many developing countries, especially in Sub-Saharan Africa, evangelizing the notion of South-South solidarity and development and growth cooperation. Although the effect of Sino-African trade relations is already huge in extent, the implications of the current path of developments are further staggering. Having demonstrated the superior capacity to haul 600 million of its citizens out of destitution into a world class standard of living and promising future, the Chinese development model is attentively and profoundly contemplated all over the world, very particularly in the wanna-be-China Sub-Saharan Africa.

Thanks to trade with China, many African countries have already launched development plans with clear road maps that will ‘transform them into newly industrializing middle income’ countries by 2030. From Kenya in the east, to Niger in the west, Africa is in a haste, for a modernization that comes fast, but sticks to long last. However, although those plans will have to stand the test of time, Sino-African trade is so far providing many Africans with, not only the ability to eat to obesity (sort of the situation in the West) but also ship loaded baskets to Brobdingnagian markets.

* Zaki Harare is an MAIS candidate at the University of Concordia, Irvine School of Business and Professional Studies. His areas of research include: the impact of aid in developing countries, the Chinese model of trade with Africa, ending poverty, and CSR. He can be reached at [email protected]

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