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PRC Economic Policy in Africa: “China, Inc.” vs. Active Private Sector Participation
 
PIIS086919080019755-7-1
DOI10.31857/S086919080019755-7
Publication type Article
Status Published
Authors
Andrei Volynskii 
Affiliation: Department of Contemporary East and Africa, Faculty of Oriental Studies and Social and Communication Sciences, Russian State University for the Humanities
Address: Russian Federation,
Anastasiia RIABCHUKOVA
Affiliation: Department of Modern East and Africa, Faculty of Oriental Studies and Social and Communication Sciences, Russian State University for the Humanities
Address: Russian Federation
Journal nameVostok. Afro-Aziatskie obshchestva: istoriia i sovremennost
EditionIssue 5
Pages89-96
Abstract

The growing Chinese influence on the African geopolitical landscape is probably one of the most significant variables in the region development. The driving force behind China's influence is still the ongoing intensification of trade and economic ties. The endless flow of Chinese investments in the economy of the states, initiatives to develop transport infrastructure - these are the processes that are primarily in the focus of attention. 

Among the studies of Chinese economic policy on the continent, the narrative of the Chinese government dominance in the processes of making decisions, coordinating investment flows and implementing major projects prevails. The image of "China, Inc." - a single actor that makes and implements its decisions through multiple organizational mechanisms - is familiar to modern Sinology and by default extends to the study of strategy in the African continent. On the other hand, it is impossible not to mention studies, on the contrary, which emphasize the wide participation of the Chinese private sector in the largest projects. However, while recognizing the broad participation of the PRC private sector in the implementation of the economic strategy in Africa, we cannot remove the issue of the decisive coordinating role of the PRC government.

Using a number of examples, we show when analyzing the degree of participation and freedom in the implementation of their own initiatives by private companies from the PRC, the key issue is the problem of determining the ultimate beneficiaries of the companies and their connection with the state institutions of the PRC.

KeywordsAfrica, China, trade and economic cooperation, investment, private sector of the economy
Received09.10.2022
Publication date30.10.2022
Number of characters20456
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Table of contents

PROBLEM STATEMENT
CHINESE PRIVATE SECTOR IN AFRICA: INDEPENDENT MARKET AGENTS OR...: STATISTICS
CHINESE PRIVATE SECTOR IN AFRICA: INDEPENDENT MARKET AGENTS OR...: CASE ANALYSIS
CONCLUSION
1

PROBLEM STATEMENT
2 The large-scale presence of China in the economic life of the African continent can hardly be considered unexpected. However annual statistical reports only confirm time after time that China has become a key foreign economic player on the continent. Thus, for the 12th year in a row, China remains the main trading partner of the African continent [China-Africa Economic..., 2021, p. 4]. China is the continent's largest bilateral official creditor, which, according to a study by The China Africa Project (CAP) in 2011–2016, was ahead of The World Bank in terms of loans issued to African countries [Acker, 2021].
3 The nature of Chinese credits and the features of the commodity structure of Chinese imports from the countries of the African continent altogether provoked discussions about the neocolonial nature of China's economic presence on the continent1]. The fact is that about 65% of Chinese loans to African countries go to projects in infrastructure, including significant part going into transport and logistics infrastructure, while funds received from international organizations and from traditional creditors of the continent (the United States, Western European states and Japan) are transferred to social projects [Usman, 2021]. At the same time, 61.9% of Chinese imports from Africa in 2020 were mineral resources, base metals and agricultural products [China-Africa Economic..., 2021, p. 12]. Infrastructure projects credited with funds from China are often implemented by Chinese companies. Thus, according to the calculations of the China-Africa Business Council (CABC), since 2007 Chinese companies accounted for 50% of the construction market on the continent, 6 of the 10 largest infrastructure projects were implemented by Chinese construction companies [Market Power…, 2021, p. 55]. At the same time, especially if we are talking about low-income borrowing countries, “principal repayments are often secured, either in the form of commodities (e.g. export proceeds of raw materials and agricultural products” [Horn et al., 2019, p. 21]. A similar situation of the sectoral structure is observed in Chinese foreign direct investment in Africa: at the end of 2020, 23.5% of Chinese FDI was invested in the extractive industry, another 29.64% was invested in the construction industry [China-Africa Economic..., 2021, p. 30]. A simple comparison of the listed facts is easy to fit into the scheme of the neocolonial narrative: the leader-state of global economic growth needs cheap resources, provides relatively affordable loans to exporting countries, the debt on which is secured by the same resources. 1. For an example of such study, see: [Salsabila et al., 2021
4 Despite the logical coherence of the narrative, we still tend to perceive the thesis of neocolonialism with doubt. From our point of view, it is based, apart from the political preferences of supporters of the neocolonial interpretation, on two premises that cannot be considered as axioms. Firstly, the thesis about the neocolonial nature of the Chinese presence is based on Eurocentric interpretations of the theory of world politics, which in their own way deprive the African continent of political subjectivity [Rapanyane, 2021]. Although the example of recent years shows that some Chinese projects in Africa, including those carried out at the level of state cooperation, face obstacles from the bureaucracies of African states [Hardin, Brautigam, 2021]. Secondly, the neocolonial interpretation assumes the description of China as a single internally homogeneous actor. The allegory of “China, Inc.” is popular: the system of Chinese state capitalism, coordinated by the party apparatus and practically excluding the possibility of independent decision-making for many market agents. This descriptive model is based on the researchers' confidence that the private sector of the Chinese economy, which exceeds the levels of small and medium-sized businesses in terms of volume, has “connected” investors among its investors. Through a multi-stage investment system through various legal entities, state and party structures ensure their presence in the capital of the private sector [Hsieh, 2021, p. 15–16]. In the context of foreign economic strategy, this means a close connection of Chinese state-business elites incorporated into transnational business communities with party structures [Graaff, 2020]. In other words, the “China, Inc.” model allows us to talk about the existence of the unified foreign economic strategy of the People's Republic of China in relation to the states of the African continent and leaves for various Chinese actors, including the corporate sector, the role of tools in the implementation of this strategy.
5 The hypothesis about the correctness of the “China, Inc.” model is constantly being tested for strength by both researchers and life itself. Thus, in [Tan, 2020], the question of disaggregating of “China, Inc.” in the intra-Chinese dimension is raised. Using the example of policy within the framework of WTO accession, the author shows that national and subnational governments demonstrate a different set of strategies within the framework of implementing WTO requirements. Erica Downs, using a closer example of the activities of Chinese corporations and state institutions in the field of importing raw materials from the relevant exporting countries, shows the inconsistency of Chinese agents in the foreign economic sphere, giving rise to a situation of “each soldier fighting his own war” [Downs, 2014]. Speaking about the disaggregation of “China, Inc.” in relation to the African context, it is necessary to refer to the study by Niall Duggan [Duggan, 2020]. He explores the issues of competition between various bureaucratic agents of China in Africa and comes to the conclusion that often the strategic vision of policy in different bureaucratic structures of China significantly diverges.

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