Masaryk university faculty of social studies
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- 4.5 Perception of Chinese Engagement in Africa
- 5 Ghana Case Study
- 5.2 Trade
- 5.2.1 Imports
- 5.2.2 Exports
- 5.2.3 Analysis of Trade
4.4 Chinese MotivationsScholars (Alden 2007, 8; Taylor 2006, 940; Beri 2007, 301; Franks and Ribet 2009, 129; Thompson 2007, 46) suggest that China is attracted by the vast amount of natural resources in Africa. China invests mostly in fuels and extraction of ores (Fung and Garcia Herrero 2012, 5). Furthermore, findings of 2008 WB report indicate that in 2008 China invested 70% of the total capital into Angola, Nigeria, Ethiopia and Sudan. Excluding Ethiopia, the three countries are China’s top African exporters of oil (Zhao 2011). The report also shows that 80% of the total African exports to China consist of petroleum. A second group of scholars (Mohan and Power 2008, 10; Jackson 2012, 198; Brautigam 2010a, 178) stresses that the Chinese economic strategy and motivations are not limited to acquisition of resources. Supplementary motivations include new export market for Chinese commodities, business opportunities and promotion of the South-South dialogue. With regards to diplomatic grounds, the support from African states in the matter of acquiring the permanent seat in the UN Security Council also plays a significant role (Burke 2007, 324). African countries perceive China as a new political and economic model and an alternative trade and an investment partner (Obiorah 2007, 44; Brautigam 2010a, 187). The Chinese development model3 is a welcome alternative to the Western model. China-Africa relations are more equal than with the traditional Western partners and African countries appreciate the non-intervention policy (Alden 2007, 8). China does not set any political conditions to African governments in case they intend to sign an economic contract. China-Africa partnership lacks moralising rhetoric and the difference between donors and recipients fades away (Mohan and Power 2008, 5; Caniglia 2011 178). 4.5 Perception of Chinese Engagement in AfricaThe Chinese engagement in Africa stirs up critical discussion within the Western media, civil society, international and non-governmental organisations. Chinese support of the Khartoum government4 during the Darfur crisis and the FOCAC Third Ministerial Conference prompted Western media to pay more attention to the Chinese involvement in Africa. China is accused of neo-colonialism and corruption of the Western rules and of the political system (Zheng 2010, 274; Naidu 2007, 284; Campbell 2007, 133). This phenomenon is termed as the twenty-first century Scramble for Africa and refers to the Chinese interest in raw resources and disinterest in Africa’s development (Chan-Fishel 2007, 140). China was reprehended for its support to DRC, Zimbabwe and Sudan and has been repeatedly accused of human rights abuse, destruction of the natural environment and exploitation of Africa’s resources (Condon 2012, 11; Obiorah 2007, 47; Manji and Marks 2007, 7). In general, Chinese involvement in Africa is welcomed by the African governments (Rocha 2007, 15). African criticism is directed at the low employment ratio of local workers in Chinese projects. The African society is alarmed at the relations of China with Sudan, violations of human and environmental rights, dumping of low-quality Chinese products and the upsurge of Chinese entrepreneurs (Karumbidza 2007, 99; Kuada 2007, 87; Obiorah 2007, 48-50; Reilly and Na 2007, 141). 5 Ghana Case Study5.1 China-Ghana Bilateral RelationsThe political relations between the two countries were established in 1960 and strengthened by mutual affectionate relationships between Kwame Nkrumah and Zhou Enlai. Nkrumah gave significant support to China in the matter of recognition of the PRC, Indo-China conflict and Sino-Soviet clash (Idun-Arkhurst 2008, 4; MFA 2011). In 1964, Ghana received a loan of $22.4 million. After political coup in 1966 and overthrow of Nkrumah, newly appointed government suspended bilateral relations (Fernando 2007, 364). In 1971, along with other African countries, Ghana voted for the representation of China in the UN. In 1972, the new government restored the political relations (Idun-Arkhurst 2008, 5). Between 1972 and 1980, Chinese economic and technical assistance totalled only $9 million (Frontani and McCracken 2012, 277) and from the early 1980s, Chinese ODA was rather insignificant. Nonetheless, in 1983 Ghana signed a $390 million contract with the Chinese government regarding various infrastructure and construction projects (Mohan 2010, 3). As a consequence of diplomatic support of the repression at Tiananmen Square in 1989, Ghana was granted $2.4 million for the reconstruction of the National Theatre (Idun-Arkhurst 2008, 5). The political instability in Ghana ended after the 1992 presidential elections in which Jerry Rawlings returned the country to multiparty democratic politics. The ‘Go Out’ Policy, launched by China in 1999, resulted in increased investments in Ghana (Mohan 2010, 3) and the establishment of FOCAC fostered the mutual cooperation. 5.2 TradeThe first agreement of free circulation of goods with China was signed in 1971 by Senegal and enabled Ghana to import low-cost Chinese commodities. Since the accession of Ghana to WTO in 1995, the import procedures have been facilitated and Chinese commodities found to be more economical than that of the traditional partners (Marfaing and Thiel 2011, 8). About 90% of Ghana’s gross domestic product (GDP) is made up by commodity exports to Europe and the US (ACET 2009, 5). However, China has become Ghana’s second largest importer since 2004 (WTO 2013). Ghana is dependent on exports of cocoa, gold and timber. In 2006, during the visit of Chinese Premier Wen Jiabao to Ghana, a Joint Communiqué and six economic agreements were signed which totalled to $66 million (Idun-Arkhurst 2008, 4; Taipei Times 2006). At the occasion of 2006 Beijing Summit, China committed to cooperate in the trade, investment, agriculture and infrastructure. An agreement was drafted obliging China to open its market further to African goods (Tsikata et al. 2008, 5). China’s relations with Ghana are directed by the 2006 China’s African Policy and the 2011 China’s Foreign Aid White Paper (GAO 2013, 21). Ghana’s imports and exports are directed by the Imports and Exports Act of 1995. Non-traditional commodities are not limited by any requirements, unlike the traditional commodities which include wildlife, timber, precious minerals, fresh fish and antiques. The cocoa and gold exports undergo exchange controls effectuated by central bank. The gold exports are negotiated between the Government and companies (UNCTAD 2003, 35). 5.2.1 ImportsAs can be seen in Figure 4, the imports of Chinese goods to Ghana have been steadily rising. From the initial amount of $219 million in 2000, they increased to $2.06 billion in 2011. Figure 4 – Ghanaian Imports from China (million USD) Source: WTO The top three countries from which Ghana imports are shown in Figure 5. When compared to the total amount of the imports from the EU, the Chinese exports are less remarkable. Ghana imported the largest value of goods from the EU during 2000-2011. The value of the imports from China increased from $219 million in 2000 to $2.06 billion in 2011. During this period, the total value of imports from EU grew 4 times, the total value imports from China 9 times, while the value of American imports 14 times. Since 2004, China has been the second largest exporter of goods to Ghana. Figure 5 – Top 3 Exporters to Ghana (million USD) Source: WTO Figure 6 reveals that in 2011, almost half of the total imports comprised of machineries. The chemical products constituted 15% of the total exports, followed by metals and metal articles at 11%. Textile and footwear, ceramics products and glass occupied both 5%. Food contributed with 4% and cotton and paper articles 2%. The remaining 9% included plastics, rubber, furniture, timber, arms and pharmaceutical products. Figure 6 - Chinese Imports into Ghana in 2011, Breakdown by Type Source: ITC 5.2.2 ExportsThe Ghanaian exports to China increased from $28 million in 2000 to $258 million in 2011. The period was characterized by growth irregularities. From 2000 to 2005, the exports increased from $28 million to $42 million. From 2006 to 2011, the value of exports augmented from $39 million to $258 million. The highest exports were in 2011, when Ghana started to export the crude oil. Figure 7 - Ghanaian Exports to China (2000-2011) (million USD) Source: UN Comtrade The pie chart below shows the percentage breakdown of Ghanaian exports to China. The mineral fuels made up 45% of the total Ghanaian exports in 2011. The ores made up 16%, as well as cocoa and timber. The vehicles and food contributed with 4% and 3% respectively. The remaining commodities made only 1% and included plastics, rubber and cotton. Figure 8 - Ghanaian Exports to China in 2011 Breakdown by Type Source: ITC 5.2.3 Analysis of TradeAfter evaluating the findings of the Figures 6 and 8, interesting results appear. In 2011, the Ghanaian primary export commodities constituted 95%, while the Chinese value-added export commodities only 26% (ITC 2013). This confirmed the presumption that China-Ghana trade is based on the North-South model (Idun-Arkhurst 2008, 12). One of the economic mechanisms of neo-colonialism is the obligation to purchase manufactured goods in exchange of raw materials (Sappor 2009). Although the North-South model favours China and can result in Ghana trapping itself in the cycle of underdevelopment, it cannot be concluded that such composition of trade is a mechanism of neo-colonialism. Firstly, no officially published agreement proves Ghanaian commitment to import manufactured goods and secondly, it is possible that Ghana does not have potential to produce value-added goods of superior quality. ‘China’s tariff escalation on imports of raw hides, oil seeds and cocoa beans is the most critical challenge confronting China-Ghana trade relations’ (ACET 2009, 7). The tariff policy disparity between the two countries is negative, as China puts prominent tariff and nontariff barriers on Ghanaian agricultural exports. Junbo (2007) deems that China-Africa relations are based on reciprocal benefits, but Chinese trade tariffs show that the relation favours China. It is also in compliance with statement of Zhong (2011, 45) who claims that inequality is the essence of neo-colonialism. The trade deficit increased from $191 million in 2000 to $1.8 billion in 2011. Several studies confirm the same findings (ACET 2009, 4; Mohan 2010, 2; Tsikata et al. 2008, 23). The huge deficit is partly caused by low export prices of Ghanaian primary resources. ACET (2009, 23) argues that low prices of Ghanaian exports persist due to non-passing of the Competition Bill. Haag (2011, 10) points out that the control of the prices by one country is a neo-colonial mechanism. Nevertheless, publicly accessible trade agreements do not indicate the establishment of prices. The commodity imports from China have positive effects on the low-income Ghanaian population which gains access to new commercial services and goods, consequently improves the living standard and contributes to the employment of Ghanaian rural men, students and children (ACET 2009, 7; Tsikata et al. 2008, 23). Several studies reveal that the Ghanaian traders supply the Ghanaian market with sub-standard Chinese commodities (Frimpong 2012, 58; Liu 2010, 197). Marfaing and Thiel (2011) refute that the commodity influx would be a neo-colonial mechanism. Further analysis indicates that Ghanaian retailers are not threatened by Chinese competition but by Chinese traders who could surrogate them in low-cost commodity imports from Asia (Broadman 2007, 180). Junbo (2007) asserts that China does not represent a neo-colonial power and that African governments are strong enough to stop the Chinese destruction of national economies. However, the Chinese textile imports which grew from $32 million in 2003 to $100 million in 2011 result in loss of jobs and revenues, underdevelopment of the Ghanaian textile industry and closure of Ghanaian textile companies (Idun-Arkhurst 2008, 14; ICT 2013). Positive outcomes of China-Ghana trade cooperation are creation of jobs, competition for local industries and inexpensive imports. Negative outcomes include trade deficit, Chinese tariffs on Ghanaian exports, underdevelopment of textile industry and the maintenance of the North-South trade model. While the Chinese exports of value-added commodities foster Chinese industrialisation, the exports of primary commodities do not contribute to the development of Ghanaian industry (ACET 2009, 1; Frimpong 2012, 58). Download 289.25 Kb. Share with your friends:
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