Academic journal article The South East Asian Journal of Management

Chinese Economic Activities in Sub Saharan Africa: A Substitute for Europe?

Academic journal article The South East Asian Journal of Management

Chinese Economic Activities in Sub Saharan Africa: A Substitute for Europe?

Article excerpt

Introduction

The economic activities between China and Africa have increased substantially over the past decades. And while the Western critics are skeptical about this new South- South alliance, the African public remains positive about the Chinese presence in the Sub Saharan region. Additionally, the economic ties with China have some positive outcomes for the African continent. This article surveys the trade, investment and aid links of China and Europe with Sub Saharan Africa. It will aim to explain the consequences for the European continent of China's economic ties with African oilexporting and non- oil-exporting countries. Most importantly this paper attempts to detect a possible substitution effect of European economical ties with Africa that are displaced by new Sino-African relationships.

Literature Review

The Sino-African and EU-Africa relationships in literature

The economic ties between China and the Sub Saharan African region have been rapidly expanding over the last decades. China's search for oil, other commodities and new export markets has resulted in a tightened Sino-African relationship. The "Chinese investment boom" on the African continent has not remained unnoticed. But while many authors describe the outcomes of the South-South alliance for China and the involved African countries, they leave out the consequences of this partnership for third parties like Europe. Because China's interest in Africa is mainly driven by its hunger for natural resources this could lead to energy scarcity and diminishing trade for other African partners like Europe or the United States. Goldstein, et al. (2006) describe the Chinese and Indian quest for oil and their role on commodity and energy markets. In their report for the Development Centre of the Organization for Economic Cooperation and Development (OECD), Goldstein et al. (2006) propose better informed policies and strategies to maximize the net benefits for the African countries that cooperate with China and India. Jenkins and Edwards (2004) also examine the effect of Chinese and Indian trade on Africa without discussing possible consequences for other African trade partners.

While Jenkins and Edwards focus on the Chinese perspective, Wang (2007) discusses the driving forces behind the Sino-African relation and focuses on the changing private and public sectors of China. In his article, he states that the Chinese private sector is becoming more important and influential. According to Wang (2007), commercial activities such as trade and investments now drive the Sino- African economic relationship instead of official development aid.

The most recent important and extensive research on the development of the relationship between China and the Sub Saharan Africa region is written by Broadman's (2007), who describes the growing economic ties of China and India with Sub Saharan Africa. He stresses that China's commerce with Africa is not solely about natural resources but the new South-South trade between China and Africa can present a great opportunity for the African continent to integrate into the global economy. Broadman also focuses on multiple Sino-African economic relationships such as trade, foreign direct investments and loans. He addresses the difficulties and problems of the commercial relationships between China and Africa and then suggests several reforms for all countries that are involved to eliminate these problems and to create a strong and competitive African market.

However, Broadman's research does not include the consequences of the growing relationships between China, India and Africa for third parties. The World Bank study gives a detailed description of the economic ties and possible reforms for China, India and the Sub Saharan African countries but it fails to explain the effects of the Sino-African relationship for other African partners like the United States or Europe.

This article intends to fill the research gap by investigating the effects of the growing Sino-African relationships for Africa's traditional trade partner: the European Union. …

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