A good downside analysis of China in Africa

ARTICLE: “China’s Trade With Africa Carries a Price Tag,” by Lydia Polgreen and Howard W. French, New York Times, 21 August 2007, p. A1.

A balanced piece that argues that while Chinese entry into Africa is obviously beneficial to Africans, it benefits China far more. Moreover, unless China moves beyond the opening gambits associated with classic mercantilist trade, Africans will quickly come to the conclusion that this interaction is not much better than the colonial ones that came before.

I’m convinced of this: China is there now primarily for raw materials and to create more markets for its lower end goods. That creates a great impulse but not a broad one. Blowback on that score in inevitable and already brewing. China will try to broaden its sales up the production chain and that will become a major bone of contention, a la Japanese auto manufacturers in America 20 years ago (you sell us stuff you should be making here with our workers). China will be forced to start locating some manufacturing in Africa to employ African workers. At first this will be a sop, but over time this will start the replication effect that Europe once laid on America and America once laid on Asia.

Moving in this direction will not be easy for China, but it will beat the growing blowback. In a generation’s time you’ll see ads in Africa that brag about FDI and local jobs created just like Honda and Toyota do in America today.