Africa is the New China: How One Belt One Road Unlocks Cheap Labor

In 2017, it was estimated that more than 10,000 Chinese firms were operating in Africa. China will be investing a total of $60 billion in various nations across the continent, mostly in loans and infrastructure programs like coal plants and electrical facilities. A third of all new power plants in sub-Saharan Africa were built by China. Massive buildings funded by China define the skylines of African cities. Financial aid has raised to the point that some are worried Africa will be unable to develop industry and infrastructure on its own. But why is China concerning itself so heavily with Africa’s economic development? Is it purely out of benevolence, or does something more sinister lay behind the curtains?

These investments by China are likely a direct result of its One Belt One Road initiative (OBOR), an attempt by the nation to fill in the cracks of the hegemonic pillar left by President Trump’s anti-globalization policies and posture itself as a world leader. By investing billions in infrastructure across the globe and creating what some have referred to as a “new silk road,” China hopes to display its commitment towards world leadership while simultaneously bolstering its soft power among developing nations. With this program, estimated to eventually total $2 trillion in expenses, China hopes to show that it is the country most committed to globalization in an increasingly interconnected world. Another factor that has certainly influenced China is the double-edged sword of rising wages. As their economy expands rapidly, wages skyrocket, improving the average worker’s quality of life yet simultaneously raising manufacturing prices to the point that the nation’s production costs are easily undermined by poorer nations in the region. Simply put, “Made in China” is not as cheap as it used to be, and investors are moving on. China now finds itself at the point that many contemporary developing nations have reached – after opening to exports and building wealth through manufacturing cheap products through the utilization of unskilled labor, a transition must be made to the relatively high-skill manufacturing of advanced technological devices or towards the service sector. Now that Africa is in the position that China once was – high in labor, but scarce in capital – Beijing may aim to utilize the continent for low-cost manufacturing. Chinese assistance in industrialization may expedite the economic transition of the continent, which has struggled to fully utilize its raw material endowments.

Arms deals between China and Africa are also worth observing. Chinese weapons exports to the continent have doubled over the past 5 years, with most deals targeting specific nation. While the majority of China’s arms trade is still with their close neighbors, this attempt to build more intimate relations with the African continent can likely be connected to America’s role as the premier arms supplier for the rest of the world.

Regardless of their intentions, it is certain that China’s intervention has not been viewed as wholly benevolent by those it has affected. In Zambia, over 100 protestors were arrested by police in demonstrations against rising Chinese influence in the nation. Some Chinese shops in the area were even looted in response to alleged favoritism by the government. These protests were primarily in response to rumors that the Zambian government was planning to sell government-owned companies responsible for providing important public infrastructure in order to manage the debt it has incurred from Chinese loans. The nation’s debt has surpassed the ceiling placed by the government and is now approaching 60% of the GDP, mostly due to extreme borrowing and underwhelming economic performance. The situation is even worse in Djibouti, where 80% of the nation’s public debt is owned by China. Some have accused President Xi’s administration of engaging in debt-trap diplomacy – a strategy in which a lender nation loans large sums to a nation under the assumption or hope that the project will flounder, leaving the debtor nation with no option but to make concessions in the form of either territory or government-owned companies, a strategy China has utilized in the past in order to solidify control over the South China Sea. Meanwhile, in Kenya, a Chinese company given the privilege of building and managing a multi-billion dollar railway was revealed as having established a systematic racial divide among their employees, with native Kenyan workers forced to sit at separate tables and prohibited from using Chinese bathrooms on the train. The operation instructions on the train are written exclusively in Mandarin, meaning troubleshooting is impossible without assistance from Chinese workers. The Chinese also receive preferential treatment in hiring and advancement, with promotions being granted in weeks that Kenyans go for years without receiving. Kenyan workers believe that this reveals China’s true intentions – they have no intention to transfer professional skills to the nations they are targeting with their investments, and instead wish to keep themselves relevant abroad for as long as possible.

As Chinese investment in Africa increases, the response from the rest of the world will be worth watching. It is quite possible that the rise in nationalist sentiment seen in target nations will translate into political movements that will shut down further investment and push Africa more towards self-reliance or import-substitution industrialization. Although President Trump recently approved an investment plan meant to parry Chinese financial gains in Africa, it may be too little, too late, especially as a Chinese foothold has already been established and African nations get the impression that their home has been turned into little more than a battleground for competing powers. Whatever the true intentions of the rising asian power, it is certain that they are reaping the benefits of being associated with massive aid programs, and see it as their next step on the road to becoming the hegemon.

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