The Hindu Business Line : Africa is big game for China

Six centuries after a Chinese armada made its first forays into Africa, China is pouring billions of dollars of capital and private investment into the dark continent, motivated by the need for markets and resources, mainly oil. India, on the contrary, has no perspective on Africa — certainly not one that can use its growing forex reserves to extend its sphere of influence, says ASHOAK UPADHYAY.

In 15th century China, a Ming emperor with global ambitions sponsored seven naval missions across the "Western ocean", the present-day Indian Ocean, to regions as far apart as Sumatra in the east, the Persian Gulf up north, India, Ceylon and, Africa. In 1403, Admiral Zheng He, favoured courtier of Emperor Yongle, devout Muslim and able seaman led his first mission to establish a Chinese presence, control piracy, trade porcelain, silk and Islam for exotic animals like the zebra that he took back to the imperial zoo. He was able to do this with a fleet of 62 "Treasure ships", each 600 feet long, accompanied by 190 smaller ships, manned by thousands of sailors, doctors and soldiers, a scale that Queen Isabella in far off Spain was never to match when she blessed Christopher Columbus in 1492 to reach the fabled Indies.

Sometime before 1435 and the first forays of Portugese navigators across the Straits of Gibraltar to the West African coast, Admiral Zheng made his last and longest voyage down the coast of East Africa to the "Mozambique Channel", within spitting distance of the Cape of Good Hope, trading, fighting pirates, charting unknown waters. He died and was supposedly buried, as was the custom, at sea.

Zheng's death seemed to confirm the waning interest at the Imperial court for naval voyages and, within a short period, China had turned inward-looking and lost its art of large shipbuilding and even the nautical charts that Zheng had meticulously created on his various voyages. It is tempting to wonder what Lisbon might have been called had the Imperial Chinese with technological brilliance, diplomacy, gunpowder and the printed word sailed up the Atlantic Ocean.

Investing in Africa

Six centuries later, China has moved into Africa with capital and private investment on a scale that Admiral Zheng would have approved. In the five years to 2005, Sino-African trade has increased four times, from a little under $10 billion to $40 billion; the Chinese are sanguine that it will double in four years.

While the rest of the world ignores it or atones for the past by sending it aid, China has put Africa at the centre of its grand design for markets and resources. According to some estimates, China set up more than 800 enterprises involving an investment of $11 billion by the end of September 2006. Chinese entrepreneurs cannot wait to get into Africa, especially after Premier Wen Jiabao promised to launch a $5-billion China-Africa Development Fund.

In Beijing last year, African leaders were participants at a summit of the Forum for China-Africa Cooperation, where both the President, Mr Hu Jintao, and Premier Wen were present. The Chinese pledged eight new measures to enhance cooperation, some of which included a $3-billion loan on easy terms, $2 billion in buyers' credit, and China's favourite Special Trading Zones.

That summit came on the heels of a phenomenal jump in Sino-African trade of 39 per cent in the first ten months of 2005 on the back of huge oil imports and an average merchandise trade of around $16 billion, each way. In the same period, Chinese firms invested more than $175 million across the African continent, mostly in oil and infrastructure.

India's participation in the continent, by contrast, appears both short-sighted, paltry and driven by firm-specific considerations, though its ties go back as long as the ones Admiral Zheng tried to build on the basis of naval power and diplomacy. True to that tradition of merchant trading, Indian firms moved to specific, developed countries of Africa, notably South Africa, Kenya, Egypt and Nigeria.

Indian companies have, in recent times, sought investment opportunities in hotels, automobiles and construction; the most favoured destination is, of course, South Africa, which is to host the Football World Cup spectacle in 2010. China, on the other hand, is everywhere — from Cameroon to Senegal and from the Sub-Saharan nations to the poorest country on the east coast. As of now, only 20 per cent of its investments are in South Africa. Unlike Indian investments, the Chinese are in for the long haul with a vision that inspires both policy and firm-level commitments.

Of course, India too has had its conclaves for Africa. Last November, the CII organised the second such meeting with delegates from 35 African countries, at which projects worth $17 billion were discussed. This was an improvement on the previous jamboree, where $5-billion worth of joint partnerships was discussed. It is not clear how many partnerships have been forged but any number would add to the $11-billion trade between the two countries. That may seem close to China's $16 billion but India's trade has grown at just 25 per cent annually, compared with China's 39 per cent in just ten months of 2005.

Different perspectives

Historically, both India and China have aspired for a presence in Africa. All through the 1970s and the 1980s India's refinance banks offered buyers' credit for specific exports and commitments from Africa. The RITES (Rail India Technical and Economic Services) of the Indian Railways has had a stellar innings in Sudan, Egypt and other countries belonging to the Non-Aligned Movement.

But Indian investments in that period were still not a patch on the scale that China and the erstwhile Soviet Union pumped in during the Cold War, with massive investments in social and physical infrastructure, apart from aid. Once the Cold War was over, China seemed to withdraw and Africa became nobody's child, with a permanent tag of disease, starvation and misappropriated aid.

Since the 1990s China has returned, motivated this time not by ideology but by the need for markets and resources, most notably oil, and driven by its vast reserves of trillion dollars and rising. So far, its biggest catch in what economists call "resource-seeking" is a 45 per cent stake in Nigeria's largest oil and gas reserves field in the Niger delta. While the Chinese state-owned CNOOC will add this basin of 500 square miles to its list of new fields in Indonesia and Australia, India's ONGC has to rest content with investing $6 billion to build power plants and railroads in return for stakes in oil fields.

On a fast pace

Clearly, mainland China's pace of investments is searing, with Taiwan following and India a far third. The scale of investments and the support levels in the form of loans on easy terms, and buyers' credit is unmatched by any other country and has the US and Europe worried. But China has a trillion dollars it needs to spend to keep its currency competitive and retain its export advantage. But more important than the scale of operations by the two fastest growing nations in the world, is the different perspectives that set India and China apart.

For China, the African continent is not just a market for Chinese goods but a rich source of the most important commodity; today, China is the second largest buyer of oil after the US, and Africa is a great place to get it. Africa is also a nice place to extend spheres of influence since the US spends all its time and energy on worsening the mess in West Asia.

India has no perspective on Africa — at any rate, not one that can use its growing forex reserves and global ambitions of industry to extend its own sphere of influence. The idea of Africa as a dark continent condemned to deprivation is shared both by industry, which seeks profits, if at all, in developed regions, and policymakers training their sights on Tokyo, Washington and Rio de Janeiro. In their market- and resource-seeking endeavours in Africa, the Chinese are pioneers creating opportunities. Indians, like worshippers of established success, simply want to move along with them.

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