U.S. vs. China In Africa: A Message To President Obama And Premier Li Keqiang

The U.S. and China will not be truly competing in many of the African markets and sectors in which they are operational. They may in reality undertake far more official collaborative approaches and drop the political aggressive rhetoric, which, regardless, economic agents usually are not following in sensible phrases.

The political rhetoric utilized by the U.S. and China to distinguish their respective financial insurance policies toward Africa is misaligned with the precise strategy, investments and operations governmental businesses and corporations from those same nations develop on the bottom. The conduct of “real economic agents” in Africa, equivalent to companies, follows much more closely notions and rules of complementarity, synchronization, comparative advantages, market niches and market segmentation, than principles of competition, market shares and rivalry. While official discourse about the presence of those two international locations in Africa has been inflamed with political intrigue and a competitive perspective, economic agents’ actual behavior shows a a lot broader propensity for collaboration. Will the aggressive paradigm in geo-strategic politics hold Africa again once again?

“We don’t look to Africa merely for its pure assets. We acknowledge Africa for its greatest resource which is its people and its skills and its potential,” President Obama acknowledged throughout the US-Africa Leaders Summit held in the White House in August. The President continued: “We don’t merely wish to extract minerals from the ground for our growth. We would like to build partnerships that create jobs and alternative for all our peoples, that unleash the next period of African growth.” Although not express, this was an obvious jab at China. Equally, from the other side of the world, earlier this yr, the official information company Xinhua quoted China’s Premier Li Keqiang as saying in an equally obvious jab on the west: “I want to assure our African friends in all seriousness that China will never pursue a colonialist path like some countries did, or allow colonialism, which belongs to the previous, to reappear in Africa.”

It’s surprising how inconceivable it is for therefore many policymakers and market analysts that the logic of worldwide relations may not be a zero-sum recreation. With sufficient info-processing capabilities about others’ previous behavior and correct institutional options in place, such as the likelihood for gains and for repeated interactions with each other, the pay-offs from cooperation and reciprocal altruism are larger. The character of such institutional features assist explains why competitors is the predominant “behavior” between basic types of biological and social organization the place modern communication and information technologies are usually not available.

Looking on the presence of U.S. and China in Africa from a aggressive lens makes very little sense and, worse, it is not constructive – not for African improvement and not for the economic enlargement aspirations of the U.S. and China. A quick comparative analysis between the U.S. and China, by way of development help to, and direct investment in, imports from and exports to Africa, helps illustrate how a lot certainly firms and government companies are prepared to collaborate. Nevertheless, high politicians with quick access to various forms of communication for dissemination of their ideologies want to makes us all imagine in any other case.

Development Assistance
Africa is obviously not one single entity; it is more than 50 totally different nations and both the U.S. and China have been focusing their work in numerous geographic places. The African nations benefiting most from U.S. official development help (ODA) in 2011-2012 had been Kenya, Ethiopia, Tanzania and South Africa. For the same interval, in response to AidData, Senegal, Burundi, Sierra Leone, Congo, Zambia, Namibia were the largest recipients of Chinese language support. In response to the identical supply, during 2000-2011 the top three recipients of Chinese language support were Ghana, Nigeria and the Sudan (together with South Sudan).

Whereas the majority of Chinese assist from the past decade went towards transportation and storage tools, energy generation and provide, communications, and upgrades to mining tasks, for the U.S., the sectors of focus have been very completely different. Storage Tank Series The top five priorities for the U.S. in 2012 were: inhabitants/training/reproductive packages, health, agriculture, meals assist/safety, transportation and storage.

Apparently enough, the U.S. and China are usually not even competing for his or her least necessary priorities for Africa. Ladies, education and meals assist rank as some of the bottom priorities for Chinese donors. For the U.S., the bottom priorities are fishing, forestry, mineral resources and mining, and development. This appears to be an entire inversion of priorities. I might then name it complementarity; not competition!

Finding #1: U.S. and China’s high recipients of improvement assistance don’t coincide.

Finding #2: Transportation and storage equipment is the one sector the place U.S. and China’s high pursuits coincide in terms of improvement assistance.

Direct Investment
In line with Reuters, quoting a White House official final August in the course of the Africa-Business Discussion board, the $14 billion in new U.S. investments will give attention to industries like banking, building, info technology and clean vitality. For China, the main areas of funding are natural resource extraction, finance, infrastructure, energy technology, textiles, and house appliances (be aware: mining includes oil and natural gasoline extraction in accordance with China’s industry classification standard).

The main recipients of China’s direct funding between 2001-2012 were South Africa, Nigeria, Zambia, Congo, and Zimbabwe. For a similar interval, the primary recipients of U.S. direct funding were Nigeria, South Africa, Mauritius, Angola and Ghana.

Discovering #three: Only two of the highest five recipients of direct funding by the U.S. and China coincide (South Africa and Nigeria). The diploma of coincidence is greater between the U.S. and the European Union (EU).

Finding #4: Only two of the top four sectors benefiting from U.S. and Chinese funding coincide (Banking/Finance and Construction/Infrastructure).

Market Share
On a continental scale, China dwarfs the size of the U.S. market share in Africa. In accordance with Mthuli Ncube, Chief Economist at the African Growth Bank Group, Chinese language companies accounted for forty% of the corporate contracts signed in Africa in 2010 towards the 2% for U.S. corporations. In 2009 China had already surpassed the U.S. as Africa’s largest trading companion.

Finding #5: Respective market shares are so disproportionate that the notion of present of competing forces on the ground is solely unfounded.

The top U.S. export markets in sub-Saharan Africa for 2013 have been South Africa, Nigeria, Angola, Ghana, and Togo. For China, the highest exports markets in 2011 were South Africa, Angola, Congo, Tanzania, and Kenya.

oil And Gas ProductionU.S. exported mostly machinery, vehicles, mineral fuel (oil), aircraft and cereals (wheat and rice). China exported mostly machinery and electrical items (ex: affordable cell phones, telecom equipment, computer systems and televisions), textiles, transportation tools, metals, plastic, rubber and chemicals.

Discovering #6: Only two of the top five U.S. and China’s export markets coincide (South Africa and Angola).

Discovering #7: Only two of the top five U.S. and China’s curiosity by way of export sectors coincide (Equipment and Autos/Transportation).

China’s high import markets from sub-Saharan Africa in 2011 were South Africa and Angola, followed by Congo, Mauritania, the Sudan (together with South Sudan), and Zambia. The top U.S. import suppliers from sub-Saharan Africa for 2013 had been Nigeria, Angola, South Africa, and Chad.

The five largest import categories in 2013 for the U.S. have been mineral fuel (crude), treasured stones (platinum and diamonds), vehicles, cocoa, and ores, slag, ash (titanium, chromium, and uranium). Nonetheless, in keeping with the U.S. Energy Info Administration (EIA), the U.S. crude imports from Africa are down 90% since 2010. China’s primary imports from Africa are petroleum, agricultural products, minerals, metals, stone and glass and wooden.

Discovering #8: Only two of the top 5 U.S. and China’s import markets coincide (South Africa and Angola).

Finding #9: Metals and Stones appears to be the only clear sector of coincidence between high U.S. and China’s curiosity when it comes to import sectors.

Nine most important findings! So now what?
What a paradox it is that to battle international frequent evils, such as terrorism, prime politicians search for alliances and to, presumably, develop the common good they compete!

The patterns summarized in these nine findings appear much more aligned with ideas of complementarity, synchronization, comparative advantages, market niches and market segmentation than with open competitors and market shares and rivalry between companies and improvement businesses. Furthermore, if the political discourse was not so based mostly on intrigue and unreal competitive notions, governments could undertake those markets and sectors the place interests coincide to design and test new collaborative approaches for growth in Africa.

President Obama and Premier Li Keqiang: you do not have to be so aggressive because you’re not truly competing. A more formal collaborative approach could be in your mutual interest.

The aggressive paradigm might, as soon as again, hold Africa again. Robert Wright’s Nonzero story of history shows how “growth of non-zero-sumness” has been the paramount dynamic characteristic of humankind’s journey from bands to tribes, to chiefdoms to kingdoms, to states, and to structures of regional and world governance.