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Jake Dexter

Asian Political Economy

Dr. Jayantha Jayman

December, 2010

China and India in Africa

In the wake of the global financial crisis that began in late 2008, the importance of

instituting counter-hegemonic economic policies has never been so clear. The dominant ideology

of neo-liberal guided globalization has recently manifested into Chinese and Indian leadership in

Africa. While some may argue their relationship with Africa is a direct result of globalization

their economic entanglement varies from dominant rhetoric and now rivals post cold war US led

hegemony.

It is clear that while the Chinese and Indian presence in Africa has recently grown

immensely, both nations are not new to the African continent. Throughout the Cold War, China

attempted to distinguish itself from the West, as a means to appeal to the developing world.

“Accordingly, the aim was to provide diplomatic and technical support to oppressed people in

the South who were struggling against common ills, such as imperialism, and for the common

goals of overcoming poverty and underdevelopment.”1 By separating themselves from the West,

the Chinese were able to appeal as a nation providing mutual respect amongst Africans.

During this time, the Chinese also understood the importance of securing international

recognition as a legitimate player amongst emerging global powers. They saw African state

support as a means to accomplish this goal. To gain support Chinese foreign policy towards

Africa stressed the significance of solidarity and friendship rather than supporting the Western

1
Haifang in “The Rise of China and India in Africa, 53.
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language of poverty reduction and democratization. As a result of these initiatives, China

witnessed significant political gains throughout the 1960’s and early 1970’s.

By 1971, China had finally secured a seat at the United Nations with the support of

twenty-six African states. Also, the number of African countries recognizing Taiwan dropped as

those recognizing China began to grow. Equally as important was the leadership of Deng

Xiaoping, who replaced Mao Zedong, and led China into a new era of world politics. This

culminated with the establishment of formal diplomatic relations with the United States in 1979. 2

Although the US understood the ideological differences they had with the Chinese, they were

willing to overlook them in the pursuit of cheap imports. As for the Chinese, they were (and still

are) simply expanding markets for their cheap exports.

Once China had used African support as leverage into the U.N. and cemented relations

with the United States, a different motivation was uncovered. The latter portion of the 20th

century became defined by modernization and economic reform. Integration into the global

economy became necessary for rising powers, and the Chinese at this point could be

characterized as such. At this time, the principles of Sino-African relations were structured

around equality, mutual benefit, pursuing practical results, and seeking common development.

This was a drastic difference in comparison to the “cross-cultural experiences” that marked

Chinese foreign policy in Africa during previous decades. While Haifang argues that policies of

the 80’s and 90’s were consistently mutually beneficial, the nature of the relationship was

extremely uneven, and there was clear evidence as to why the Chinese were coming under such

international criticism.

Simultaneously, African nations were opening their doors to foreign economic influence,

via foreign firms and foreign direct investment (FDI). The role of the state proved less important
2
Ibid, 56
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than the influence of the market during this time. Market forces, during trade liberalization and

privatization (under the eyes of the IMF/World Bank of course), dictated a large portion of

African economics. This created a perfect opportunity for China, with its state dominated

approach, to pursue economic hegemony in the region; a task that has only become rivaled by

India.

Although India’s path to Africa occurred somewhat differently, there was one significant

similarity. Both China and India, attempted to appeal to African states based on anti-colonialist

rhetoric. Following 1947, and India’s independence, their first Prime Minister, Jawaharlal

Nehru became one of the world’s leading voices against imperialism, colonialism,

neocolonialism, racism, and all forms of foreign aggression, occupation, domination,

interference of hegemony – ideals that mirrored the views and aspirations of the newly

independent countries of Asia and Africa. 3 With Nehru’s leadership, it became apparent that

both China and India had an ideological affiliation with China. India demonstrated their

commitment to defending these similarities on multiple occasions. Specifically, India was

involved with several UN peacekeeping missions mostly in the Congo, beginning in the 1960’s.

Additionally, Sudan’s first parliamentary elections occurred under the guidance of Sukumar Sen,

the Chief Election Commissioner of India.4

Like the Chinese, early Indian involvement shifted during the 1990’s from political

engagement to economic. These focused on attracting investment and expanding trade with

Africa. As a result, trade that equaled US$967 million in 1991 grew to US$30 billion by

2007/08.Trade between African countries and India also doesn’t travel in just one direction.

Mauritius has emerged as the largest African investor in India. Another joint-venture is the

3
Sanjukta Banerji Bhattacharya in “The Rise of China and India in Africa,” 65.
4
Ibid, 67
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construction of Mumbai’s international airport. This massive reconstruction was a million dollar

joint-project between India’s GVK Group and the Airport Company of South Africa.5

Additionally, India accounts for 90 percent of the world’s export of cut and polished diamonds

and therefore is maintaining close ties with Africa’s main diamond production such as Angola,

Botswana, Congo, and South Africa. Other examples of Indian resource extraction include

African oil, specifically in regions such as Nigeria, Sudan, and the Gulf of Guinea.

Regionally, Indian investment in Africa has been pushed by China’s aggressive economic

policies. While both countries were motivated in Africa for political purposes they have

transitioned to increased investment and bi-lateral trade. However, China’s investment has

surpassed India’s by a wide margin. China’s bi-lateral trade is approximately US$ 70 billion

more than that of India’s. Additionally, China has invested US$ 5.6 billion more than India

within the African continent. This huge disparity is a result of several factors. The Chinese

employed a state-driven model has resulted in an explosion of FDI and promoting an African

infrastructure structured primarily on promoting further business.

A primary accelerating factor in the FDI taking place in Africa, from China, was the “Go

Out” policy. While the starting point for emerging Chinese FDI abroad was the political reforms

of the 1970’s, the explosion we have witnessed in the past ten years began with Go Out. The

policy aimed to reduce any ‘red tape’ which entitled some Chinese firms to certain tax

incentives, cheap loans, and various subsidies. Such measures were more easily facilitated by

the State run ownership structures.

State Owned Enterprises (SOE’s) have proven far more aggressive than the investment

from India, which is primarily driven by the private sector. One example of this occurred in 2004

when Indian Oil and Natural Gas Corporation (ONGC) failed to receive a bid for oil exploitation
5
Ibid, 71
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in Angola. “…Shell, former license partner of British Petroleum (BP), has agreed to sell its state

to ONGC, the Chinese, in their first involvement in the Angolan oil industry, have sidelined

ONGC by offering double what it has offered.6 The Chinese state, therefore uses its political and

financial means to create conditions for globalization that favor China. Indian private sector

operators are struggling to catch up with China but lack the economic and political support the

Chinese SOE’s enjoy:”. This is evidence that the Chinese state sees their transnational companies

as vehicles for consolidating their geopolitical position in the region while ensuring their access

to natural resources.

While it is clear that the Chinese model has been more successful in terms of numerical

growth, the Indian’s are making progress, just not as extreme. Ventures between African and

Indian firms have shown significant progress in recent years. Since 2004 there have been five

India-Africa Project Partnership Conclaves. These events connected 483 African delegates with

318 Indian counter-parts to investigate the progress that had already been made between private

Indian firms, and their respective projects within Africa. The Conclaves also made sure to

address the future needs of both the African states, as well as the firms. The areas where there

was, and still is, both African and Indian business interests were agriculture, transportation

infrastructure, health care, pharmaceuticals, and education, just to name a few. 7

Within both India and Africa, food security is an extremely important issue; both

societies have been and more or less still are agrarian in nature. Therefore we see a significant

portion of India’s expanding investments occurring in the agricultural sector. Private Indian

firms have made an attempt to modernize agriculture throughout West Africa, primarily in

6
Fantu Cheru, Cyril Obi in “The Rise of China and India in Africa” 3.
7
Renu Modi in “The Rise of China and India in Africa” 122.
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Senegal and Nigeria, as well as Ethiopia. Many of these projects involve supplying technologies,

such as diesel engines, water pumps, and other essential components of irrigation.8

One of the most important elements of Indian investment in Africa is the Export-Import

Bank of India. By offering lines of credit to institutions and agencies within Africa it was much

easier to finance various projects. “EXIM Bank has extended sixty-six lines of credit totally

US$2.25 billion in forty-seven African countries.” 9 Some of the bank’s primary projects have

been loans for cement plants in the DRC, energy projects in Ethiopia, Mali, and Mozambique, as

well as the establishment of sugar industries to countries such as Angola, Burkina Faso, Chad,

Gambia, Ghana, Ethiopia, Lesotho, Mali, Niger, and Senegal. Without the provision of credit,

via the EXIM bank, there would be significantly less economic development within Africa,

which would inevitably deteriorate from India’s relationship with Africa as a whole.

The last element, influencing India’s presence in Africa is the significance of the Indian

Diaspora throughout all of the African continent. The cross-cultural experiences between Indians

and Africans that resulted in the development and strengthening of social and cultural bonds

between both peoples. Essentially, it is the large Indian trading class has internal knowledge of

Africa and its residents, an advantage that the Chinese lack.

As of now, both the Chinese and Indian model appear beneficial for African states, at a

basic level. What remains to be examined are the ramifications for each, for both the Asian and

African actors, but for global hegemons as well. Many scholars understand the relationship

between the Chinese and Africa as one that is neocolonial in nature. Economic gain is clearly

their primary priority. Their apprehension to send UN peacekeeping troops to regions of Sudan

devastated by genocide is one blatant example of their agenda. By nature, their state run

8
Ibid, 126
9
Ibid, 122
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institutions are designed to encourage the success and expansion of TNC’s. The arrangement

between both actors is one strictly of material engagement.

While China receives much attention for the exploitative nature of their business in

Africa, investigation of Indian involvement is lacking. In part, this is based on differences of firm

ownership, but also because India has only recently increased its economic involvement. A

potentially less apparent difference between the two scenarios is rooted in perceptions of the

Indian state. India is understood as a thriving democracy with extensive variation and character,

whereas China is perceived as a monolithic communist force. For these reasons the true nature of

Indian economic relationships in Africa has been ignored from calculation or extensive scrutiny.

What remains to be seen is how both China and India deal with African unity,

regionalism, and leadership. Seeing as the African Union was formed only some eight years ago,

there is little doubt the organization remains in its infancy. The notion of a unified Africa is

exceptionally difficult to comprehend, considering the continent in many respects could not be

more heterogeneous. Ironically enough, I argue that where Africans must come together is their

shared history; it is here many commonalities can be found, one of which is colonialism. The

Chinese and Indians understood this, maybe better than African leaders themselves.

Disappointingly it is apparent that the relationship between China/India in Africa does

have neocolonial tendencies, and these economic arrangements only make cooperation amongst

independent African states more difficult. In short, current economic relationships do not

promote independence, they only promote investment. In coming years, as China and India only

increase their grip on African states I see two factors becoming ever more important. First, is

leadership from within the African Continent. Leaders that understand the ramifications of

practices such as large scale export extraction with new Asian business partners; Have an
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comprehensive understanding that Chinese and Indian plans are in fact long term. It is difficult to

engage in a long term approach for many African countries that have immediate and short term

issues that need to be addressed, but at some point a transition must take place, so each actor is

experiencing mutual long term benefits. While internal African leadership remains important, it

is essential that power and influence is applied externally as well. This must come from an

extremely powerful nation that is motivated both economically and politically. Which state

decides it is in their interests to provide such leadership within such a complex system remains to

be seen.
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Works Cited

Cheru, Fantu. Rise of China and India in Africa. Uppsala, Sweden: London, 2010. Print.