Taming The ‘Dark Continent’ China’s Blank Cheque Diplomacy vs. India’s Reluctant Partnership in Africa & Latin America

Geographer Sir Francis Galton perhaps saw it right. In 1873 he proposed to the British Crown an ‘Africa for the Chinese’ thesis calling for a new method to tame and colonise the ‘Dark Continent’. He supported Chinese settlements in Africa as part of Great Britain’s national policy so that they “would multiply and their descendents would supplant the inferior Negro race.” Despite the racist overtones, many in Africa would say Galton’s vision may be coming true partly. Nothing less than a Chinese invasion of Africa is under way. Beijing has not just committed huge funds to Africa; it has settled 750,000 Chinese in the continent over the past decade.

The phenomenal success of China has seen Beijing’s economic interests and investments fanning out across not only nearby Southeast Asia but distant Africa and Latin America as well. From railways and airports to gambling resorts for extravagant feasting and revelry, China is transforming Africa, if not as yet Latin America. There is a sense of unease in many quarters that China’s rise and its scale of economic engagements may disturb the calm of global waters.

As far as Africa and Latin America are concerned, China’s rise has brought both opportunity and challenge for them. A World Bank study puts it mildly, while China’s success “is looked upon with admiration, there is also concern about the effects” of this engagement. Concern is an understatement; fear is the right word.

At a summit in July 2012 with 50 African leaders, China pledged $20bn in credit for Africa over the next three years. This figure is double the amount Beijing pledged in 2009. Today China is Africa’s largest trading partner. Last year, China’s trade with Africa reached a staggering figure of $166 billion. Africa is an important source of raw materials to feed China’s economic boom and a market for cheap Chinese products.

Observers maintain Beijing is turning a blind eye to corruption and Chinese firms have committed labour abuses in Zimbabwe, Zambia and elsewhere. There are questions about China’s poor record in terms of environmental protection and cultural issues as well. South African President Jacob Zuma has finally spoken. He said much to the consternation of Chinese leaders that the current pattern of increasing commerce between Africa and China is unsustainable in the long run.

It is no secret that the red flag is flying all over Africa today. China seems to be taking over Africa signing lucrative deals to buy all that Africa could possibly sell—oil, gold, platinum and other minerals. Chinese investors insist on using their own labour force and can be seen shopping in their own expensive boutiques and sending their children to private schools. More than a thousand miles of China-built railroads across the continent are carrying goods whose final destination is China. According to one estimate, China is taking up to 70 per cent of all timber from Africa. China doesn’t need the sword and the cross to colonise Africa as the Western powers did.

Last year US Secretary of State Hillary Clinton warned Africa that China was embarking on “new colonialism”. But many in Africa see China as a successful growth model. They argue China has the money to import Africa’s resources and to help and build Africa’s urgent need for infrastructure. China’s strategy is clear. It has signed bilateral agreements with more than 30 countries. A China-Africa Development Fund has already been created to invest in African equities. China is also promoting economic and trade zones in Zambia, Nigeria, Ethiopia and Mauritius where companies can establish manufacturing and trading operations.

But there is another side to the scramble. There is a myth about Chinese forays into Africa being all about commodities. Majorities of Chinese traders who came to Africa in recent years had failed in China’s hyper-competitive job market. They have been accused of cheating Africans. Botswana has introduced legislation restricting their activities. Others will follow suit. Many Chinese are heard saying “we carry our hearts in our hands.”

There is another country whose footprints are visible in Africa and Latin America and that is India. It too has started loosening its purse strings. India has realised that Africa will soon be a major growth pole of the world. Hence Prime Minister Manmohan Singh’s announcement of $5 billion aid to Africa in May last year during the second India-Africa Summit in Addis Ababa.

Apart from development aid, India said it would spend $700m to build institutions and establish training programmes and $300m to develop the Ethio-Djibouti Railway. Other initiatives include plans for an India-Africa virtual university and more than 22,000 higher education scholarships for African students. New Delhi also decided to contribute $2m to the African Union Mission in Somalia. India has begun doling out aid and investment in every sphere of Africa’s development from centres of excellence to disaster management which contrasts with China’s $126bn ties that have been largely about commercial and infrastructure investment.

How is this engagement of “Chindia” in Latin America? It is thanks to China’s growing presence that Latin America has begun to blip on Indian radar. India-Brazil engagement has made rapid strides but as far as the Latin American and Caribbean region are concerned, India seems to be a reluctant partner.

The Inter-American Development Bank has come out with a study under the title India: Latin America’s Next Big Thing? It says: “True, bilateral trade and investment have yet to acquire a critical mass and India has yet to become a major competitor in world markets for goods. However, any cursory analysis of the complementarity between the two economies shows that the potential for massive bilateral trade is there; not unlike that which the region has been experiencing with China.”

What is, however, encouraging is what the IDB further says, “In the past, Latin America and India were rarely at the table when major decisions were made. Now they are often seated side-by-side, shaping global negotiations on topics ranging from trade to climate change. We are starting to see what the century of Asia will look like and Latin America cannot afford to be absent.”

The impact of the rise of “Chindia” on Africa and Latin America may change the rules of the game and terms of engagement. However, what China can do, India can’t as democracy. Experience suggests that countries and regions benefitting from China’s engagement breathe a little easy if India is also around. This is the advantage that India can’t afford to miss.

India’s economic presence in Latin America is more modest than China’s. Currently, India represents about 1 per cent of Latin America’s overall trade whereas China’s share is around 10 per cent. But Indian companies have begun to make significant investments in software, pharmaceuticals, business software and natural resources. Chinese investments have been overwhelmingly concentrated in mining and oil.

In Africa, China’s investments in oil and mining have brought accusations from some quarters that it has created neo-colonial enclaves. But in Latin America, a more developed region, China is one of many foreign investors. The rise of China prompted much gloom in Latin America a decade ago. Today, since Latin American economies are doing well, no one is saying there is dragon in their backyard. But will tomorrow be different?

India’s reluctant partnership with Africa and Latin America is no match for China’s blank cheque policy. India has neither the desire nor the money to match China. And yet, the fact remains that China’s aggressive policy has prompted India to press the accelerator. India’s trade with Latin America and the Caribbean is quite limited in relative terms. It is still hovering around $25 billion though it may reach $ 50 billion by 2014. In contrast, China’s trade with Latin America jumped 31.5 per cent over 2010 to reach $241.5 billion in 2011.

India needs to learn from China. Chinese leaders regularly undertake week-long visits to Latin America covering 4-5 countries. Last June Chinese Premier Wen Jiabao visited Brazil, Uruguay, Argentina and Chile. The same month President Hu Jintao was in Mexico on a bilateral visit. In July 2012, Cuban President was in China. Last year besides Vice-President Xi Jinping’s visits to Cuba, Uruguay and Chile, a China-Latin America business summit in Peru saw the participation of 400 Chinese officials and business people. In fact, in 2001, President Jiang Zemin undertook a 13-day trip to Latin America. Way back in 1968, Indira Gandhi had undertaken a 10-day trip to Latin America. Today Indian leaders seem to have no time for Latin America. As many as 15 Latin American countries have their embassies in India while India has only 10 in the region.

The Indian elephant has no chance to catch up with the Chinese dragon. There have been many false dawns in the past about India-Latin America ties turning a corner but India is yet to become ‘Latin America’s next big thing’ IDB’s prognostications notwithstanding. Good foreign policy requires imagination and prudence but also boldness and some risk-taking. Time has come to say, ‘Latin America, here we come.’

By Ash Narain Roy

(The author is Director, Institute of Social Sciences, New Delhi)

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