China and India have become the most important economic partners of Africa and their footprints are growing by leaps and bounds, transforming Africa's international relations in a dramatic way. Although the overall impact of China and India's engagement in Africa has been positive in the short-term, partly as a result of higher returns from commodity exports fuelled by excessive demands from both countries, little research exists on the actual impact of China and India's growing involvement on Africa's economic transformation.
China and India are seeking many of the same goals in the African continent. Due to this there are a number of similarities in their foreign policy. Both use development assistance as means of facilitating trade and investment, as well as helping to secure access to resources. Whilst their project assistance is centered (to an extent) around different areas .China offers its expertise in infrastructure delivery whereas India’s aid programs are more designed around its own relative strengths in IT and services With an emphasis upon mutual respect and sovereignty articulated in both of their foreign policies, neither China nor India seeks to impose aid conditionality’s upon other countries. They have attempted to distance themselves from the formal terms of recipient and donor, and instead offer a significant degree of policy autonomy in their aid delivery. In this manner we are witnessing the rise of a new generation of donors that do not attempt to transform the societies they are investing in. They are instead looking at offering aid in a manner which improves the efficiency and sustainability of their own investments in the continent. By improving energy provision, infrastructure, transportation and IT services, these donors are making their investments in the continent more profitable, and more durable.
China and India’s success in infiltrating the continent can only be perceived through an understanding of traditional development assistance. Both China and India have been able to thrive in Africa as a result of liberalization reform policies imposed by the IFIs during the Structural Adjustment period of the 1980s. This has allowed China and India to penetrate African markets and resource sectors whilst increasing both their imports and exports with the continent exponentially. Furthermore, by contrasting their motives of solidarity, mutual-benefits and a fairer international trade system with a more negatively viewed West with neo-imperialist intentions China and India have been able to portray themselves in a positive light whilst validating their rhetoric of mutual gains, respect for sovereignty and equality between recipient and donor.
Tri-angular partnerships between Western donors and China and India have been trialed recently in the DRC combining China’s expertise in infrastructure provision with DFID’s assistance in helping the national government introduce important social and environmental safeguards.Tri-angular partnerships have also been utilized in the treatment of Malaria and HIV / AIDS, combining the relative expertise of India, DFID and The Clinton Foundation (Mitchell, 2011). Whilst the impact and effectiveness of these are yet to be realized, it signifies a productive move by both China and India to develop their development assistance beyond their own economic interests, and into more beneficial areas that promotes longer-term social, environmental and political development
Whether this is being done in order to counter Western and African criticism, or in order to make Chinese and Indian aid more productive for the recipient, it recognises that there is the possibility for traditional donors to engage in development assistance projects with non-DAC donors, even if they are not co-opted formally into the international development community.
Other progressive steps include China and India’s technical assistance programs. These are highly commended by the UNDP Special Unit for South-South Cooperation, and avoid problems commonly associated with traditional donor’s technical assistance programs. China and India’s assistance in these areas is regarded as highly applicable to the needs of developing countries, highly participatory and demand driven. Seeing as there is much overlap in regards to the countries that emerging donors and traditional donors deal with, a tri-angular approach that emphasizes their different strengths could be formulated, producing development programmes which are applicable and relevant to developing countries whilst maintaining effective standards for reforms.
Trade between China, India and Africa China and India’s growth trajectory has affected the world economy in two major ways.First, it has boosted prices of primary commodities and secondly, the two countries have become the factories of the world by making and exporting cheap consumer goods as well as services.This development replicates itself in the engagement by China and India with Africa. On the one hand, Africa exports raw materials such as oil, metals, diamonds and agricultural products to China and India, and on the other it imports consumer goods from the two countries.
The patterns of African import of Chinese and Indian products fit squarely within the logic of the global political economy. In the 1990s, as tariff protection wasbeing reduced in Africa and the lucrative location for business from the Europe and North America, rapidly became unsustainable, FDI to the continent started to change shape. Henley et al notes that at this point in time supplying many of these African markets through exports was becoming more attractive as liberalization began to drive down trade barriers” (2008:1).
Currently, India’s exports include manufactured goods, technology-based servicesand pharmaceuticals (Africa-Asia Confidential, AAC 2008). The low cost importsfrom Asia of pharmaceuticals have seen off much of existing local pharmaceuticalmanufacturing since these have no possibility of competing on price. Both complementary and competitive trade patterns can have either direct or indirect consequences. Direct consequences such as trade data and immediate job losses are easily quantified. Indirect effects are more difficult to measure, but have nonetheless important implications.
Exports from India or China can crowd out similar African products in third markets such as in Europe and the US while their dominance in regional markets of Asia would pose challenges for African suppliers to penetrate
A complementary indirect effect on the condition for African trade might be, for example, when global prices for commodities rise as a result of increased Chinese and Indian demand. This demand in turn generates greater revenues for resource rich African countries, but again this is short-term and based on a highly volatile international commodities market, as African countries experienced in the 1970s on the back of the oil shocks.
In macro-economic terms, Africa has thus benefited from the rising demand for exports to China and India. However, we know that revenues from extractive industries do not always translate into development for the masses of the population.Kaplinsky et al note that “the benefits of this resource boom will not follow automatically they need effective management” (2006:28). Riches in natural resources migh otherwise strengthen authoritarian tendencies and lead to instability or even civil war – the so called ‘resource curse’ (Beri 2005:373).
Solutions to the potential trade-related problems can be suggested from various points of view. China and India can be encouraged to take responsibility for the impact that their exports might have for Africa.