Saturday, 8 October 2011

Africa and the Chinese Question [3]

"We shall [here] define PROGRESS as the increasing CONTROL of the environment by LIFE." - from The Lessons of History by Will & Ariel Durant 

A simple inference from previous parts of this work is that China has made relatively consistent progress over the last couple of decades. Historically high global commodity1 prices lend credence to this fact. Africa, a rich haven of raw materials, has 'witnessed' her trade volume with China increase by more than 20% from $91billion in 2009 to $110billion in 20102. Turning the searchlight on Australia, a developed country, rich in commodities but running a substantially diversified economy, we see another resource-rich nation with high economic activities similar to that between China and Africa; between 2010 and 2011, Australian exports (with iron-ore constituting a great proportion) to China represented 33.05% of all merchandise exports to east Asia3. The value of exports to east Asia in monetary terms is put at more than A$170billion (around US$166billion) by the Department of Foreign Affairs and Trade of the Australian government. The high economic growth in China continues to demand ever more resources to fuel and encourage her staggering growth rates. I explain this further with the chart4 below:

The graph shows the relationship between two sets of data; China's GDP growth rate from 1999 to 2010 and the average yearly Commodity Metals Price Index for the same period. The green line represents the Commodity Metals Prices Index while the red line represents China's GDP growth rate. Immediately apparent is the steady, almost proportional growth of both data sets. A considerable depreciation in the price index (-7.8%) is observed between 2007 and 2008 when correspondingly China's growth momentum lost 4.6 percentage points. This was during the credit crisis. The calculated correlation is 63.85%, which I consider to be relatively high using the growth data of a single country.  

However, it is important to look though the screen of increased trade volumes and GDP to some other "less-news-making" data. The Human Development Index (HDI) serves a useful purpose in this regard. The question of its bias and inadequacy is an argument for another day. Australia has continued to remain in the top five of the HDI trend data while many African societies have continued to remain at the bottom. It is general knowledge that Africa has continued to grapple with the concept of a resource curse; the ability to convert her  favourable demographic status and raw materials to social prosperity has not been exploited (or is absent?). In Africa, we find that it has become commonplace to resist any comparison with the developed world (like Australia), but I ask, against what or who shall we compare ourselves? I see no point in belabouring the problems of Africa; my objective for this work is purely advisory. The thirteenth chapter of Will and Ariel Durant's book, The Lessons of History, bears the title, "Is Progress Real?". That question is blowing in the wind.

As is usual and normal for any entity, China will tend to tread a path of least resistance in her journey to sustained economic glory. More importantly, the necessary back-up structures and frameworks of redundancy will be created to guarantee that China is not stopped in her steps - why should China be stopped? With this in mind, I am constrained to infer that Africa's trade volume with China can only increase, as Africa (discounting all neo-imperialistic reasoning and general paranoia) presents little or no policy resistance to any malign trade conditions between herself and China. The events that have transpired in Zambia recently present a strong case study. China's growth has demanded more copper than ever before. Zambia happens to be a nation with one of the largest, export-grade copper deposits. The Chinese thinking in establishing a copper mining plant in the Zambian Copper-belt region is analogous to a multinational that decides to cut costs by procuring a commodity at the source of extraction, in the process bypassing the vagaries of the international commodities market.  All other (proclaimed) incentives such as GDP growth for the local economy, community development and social elevation are secondary. Of course that is understandable. China must grow. I resist the temptation of deliberating on the issue of the mine workers' demands and the ensuing political issues because I believe that the springboard of any mutual Afro-Chinese economic interplay must transcend the levels of an employee-employer relationship. 

However what is clear from the foregoing is that China's mission in Africa is one that is justified by the simple theory of natural selection. China must survive. Her ideological foundations must thrive and evolve. If Africa must play at a respectable level of international trade and negotiation, then as a matter of unequal priority, she must substantially improve her "Gross Intellectual Product". Africa will have to define a new index for collective progress and relate to China and the rest of the world based on that definition. Africa has survived for too long on instinct. Instinct has its place in human relations but when complex, human systems have been thought through and designed, instinct may become an individual's (or a people's) undoing. be continued

1 A commodity is a physical product such as grain (like wheat) or metal (like aluminium) which can be exchanged for a similar product and investors can buy and sell as a means of speculation and hedge against future risk through a futures exchange. 
2 Source: Standard Chartered
Source: data computed with inputs from the Department of Foreign Affairs and Trade of the Australian Government. 
4 Chart was plotted with China's GDP growth rate inputs from The World Bank Group and historical Commodity Metal Price Index inputs from The International Monetary Fund. 

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