As the dust settled on President Hu Jintao’s four nation African visit, a sense of relative normality returned to the Africa-China debate. A few residual commentaries and debates continue to make media headlines and blog sites around the interpretation of President Hu’s Africa visit and . But attention has now shifted to a more a significant diplomatic visit, namely Hilary Clinton’s first official engagement and visit to Asia as US Secretary of State.
As discussed in earlier editions of the China-Africa-Watch, Mrs Clinton’s visit to China has been characterized by all kinds of expectations, not least that the Obama administration would continue with its tough trade talk against China, in keeping with the new President’s election stance. Even Washington hawks and Clinton opponents expected her to stick to her guns in pushing China on its human rights record as she did during her election campaign.
But, it was Mrs Clinton who did a 360 degree turn and caught most off-guard with her comment that while Washington ‘would press China on long-standing US concerns over human rights such as its rule over Tibet…’.‘form a pragmatic partnership with Beijing on the financial crisis and climate change’.
By making her first diplomatic trip to Asia and China in particular, the new Secretary of State was sending a clear signal about her priorities. But where does Africa fit in all of this?
As the US and China begin to define their pragmatic but symbiotic relationship, how does President Hu’s talk of forging a new Africa-China consensus take into consideration this thawing of relations between Washington and Beijing? Perhaps, it is too early to draw conclusions, but for African scholars and commentators the issue is that any change to the engagement between Beijing and Washington does have important implications for how Africa engages with each of them.
This is especially relevant since the global financial crisis was the backdrop of President Hu’s African visit with the underlying message about strengthening partnership and cooperation during times of adversity.
Some might fear that America could be a rival to Africa for China’s attention and affection. But American-China relations are based on a real economic interrelationship whose health is also key to Africa’s hopes of mitigating the worst of the economic storms. In particular President Obama depends for his economic stimulus package on China’s willingness to continue to lend the USA money.
As the Financial Times reported on 22 February; ‘The level of Chinese demand for US Treasury paper could play a crucial role in determining the interest rates the US government has to pay for its rapidly growing debt pile.
‘In the past year, Chinese investors – mainly its central bank – have become the biggest foreign holders of US Treasuries, increasing their holdings 15 per cent last year to nearly $700bn (€545bn, £485bn).
‘Foreign investors now own about $3,000bn of US Treasuries, or more than half of the amount publicly available. Whether Chinese buying continues to increase this year at the same pace could be an important factor in the outlook for the Treasury market.
‘In turn, the level of demand from China depends on the health of the US economy. The fewer Chinese goods Americans buy, the fewer dollars China will have to invest in dollar-denominated assets’
So much as economic reality forced Hilary Clinton to moderate her election campaign line on China’s human rights issues, so China has little laternative but to continue to buy US Treasury bonds to enable Obama’s rescue package – although mounting opinion in China is asking if the money would notbe better spent at home.
This ambivalence was pungently expressed by Luo Ping, a senior Chinese banking official, at a recent conference; ‘“US Treasuries are the safe haven; it is the only option,” said Mr Luo. “Once you start issuing $1-$2 trillion ... we know the dollar is going to depreciate, so we hate you guys, but there is nothing much we can do.”
If this China-America marriage of convenience lasts long enough to pull the global economy out of recession, then Africa along with the rest of the world economy will feel the benefit of a shorter-lived downturn. But many expect that once the global economy recovers, China will be looking for alternatives to the dollar, and to reforms in the global financial architecture.
This could be to Africa’s benefit, if her leaders know or can be pushed and pressured into knowing, how to make the best of the opportunities.
But in forging a new consensus with Africa, China should also reflect on how Africa’s newest Diaspora in China is affected by the global financial meltdown.
As Chinese traders and merchant families have to find new ways of keeping the Chinese dream alive, similarly African traders in China are finding it harder to maintain their business activity, not least due to the increased pressures of ‘dared to think and act’. But African traders are also making the same trek to China with the same intentions and ambitions. Therefore, if the ‘financial crisis breeds new opportunities’ for China’s private firms and traders in increasing investment into Africa, then the traffic should certainly not be only one way. The official rhetoric of ‘win-win partnerships’, may sometimes appear to be contradicted by realities on the ground.
* Stephen Marks is research associate and Sanusha Naidu is research director of Fahamu’s China in Africa programme
* Please send comments to [email protected] or comment online at http://www.pambazuka.org/.
