In the past few years, China’s global financial power and its presence in African economic activities have increased tremendously.
Thanks to the global financial crisis, China has managed to buy valuable assets in Africa and other parts of the world cheaply.
One reason African leaders like their Chinese counterparts is that they are not inclined to advise Africans on how they should govern themselves, but China always outwits Africa on economic matters.
Moreover, if Chinese Premier Wen Jiaobao’s closing remarks at the National People’s Congress in Beijing last weekend are any guide, China will not remain reticent if it believes any country’s economic behaviour is offensive.
Apart from warning that the global economy risked plunging into a double-dip recession due to high unemployment in developed economies and sovereign debt problems, he reminded the world that China faces some uncertainties.
Alluding to recent pressure from the US and other places for the revaluation of the Chinese currency, the Yuan, Premier Wen told the National People’s Congress that he saw no reason for revaluation in the face of an uncertain world economic outlook.
The Chinese government has effectively pegged the Yuan at about 6.83 per cent US dollar since July 2008 to help its exporters.
If this policy continues, it is possible the US might consider imposing tariffs on Chinese imports.
The danger is that tariffs could compel China to aggressively sell US government debt, thereby complicating the situation for the whole world.
The Chinese Premier suggested at the weekend that the US needed to reduce its cost base in order to help itself become more competitive.
He also indicated that the US had created friction with the Chinese in trade talks by engaging with Tibet’s spiritual leader, the Dalai Lama.
It is estimated that China’s economic growth is likely to be around 8 per cent, and the government is tightening credit to ensure that inflation remains at about four per cent.
While the global economic focus may be on US-China trade relations, Beijing is increasing its economic presence in Africa at a brisk pace, but some of its activities are opaque.
For example, in recent months, a relatively unknown Chinese company has emerged in the race for African mineral resources.
In October and November last year, the China International Fund and its satellites in Hong Kong and Singapore signed construction and resource agreements worth $US8 billion in Zimbabwe and $US7 billion in Guinea.
The mining and infrastructure deal in Guinea enables the fund to jointly develop the country’s mining, oil, gas and infrastructure sectors, and to be the first and strategic shareholder with its government in a national mining company.
However, it is not clear where the fund obtains its money from.
For this reason, there has been speculation that the fund has links with China’s intelligence agencies or the People’s Liberation Army.
The new Guinean leaders said last month they would review the opaque $US7 billion deal, but it would be surprising if they came up with anything to render the deal more transparent.
African countries should strengthen economic relations with China, but if they do not have advisers who understand Chinese negotiating tactics, they will gain little from the exchange.
Prof Makinda teaches at Murdoch University in Australia.
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