U.S. Secretary of State Hillary Clinton returned from a seven-nation tour of Africa last week, leaving controversy in her wake over veiled references to China’s engagement on the continent being self interested and value-subtracting. For all that this may sometimes be the case, U.S. engagement in the region is hardly driven primarily by the noblest of humanitarian interests and if Africa is to move from charity to economic partnership, it will be hard to do without engaging the world’s fastest growing economy—something Clinton should understand from looking at America’s own balance sheet.
Clinton rounded off her travels by attending the funeral of Ghana’s President John Atta Mills, who died in office last month. The orderly transfer of power after his death is the kind of democratic stability that the Secretary of State’s visit was meant to promote. But Clinton’s tour had clear economic motives as well. She was accompanied by a large business delegation, including representatives of Boeing (BA) and General Electric (GE), and she highlighted trade and investment links between the U.S. and the region. That fits a broader realignment of U.S. engagement in Africa toward economic partnership, including the administration’s “Doing Business in Africa” campaign designed to encourage U.S. foreign direct investment in the continent and a proposal for a U.S.-East African Community trade and investment partnership.
The part of the trip that generated the most heat straddled both issues. In remarks in Senegal, Clinton suggested that the U.S. wanted a partnership with Africa “that adds value, rather than subtracts it” and suggested America would “stand up for democracy … even when it might be easier to look the other way and keep the resources flowing.” That was widely interpreted as a swipe at China—not least by the Chinese themselves. The official Xinhua news agency fired back at Clinton’s “cheap shots” and suggested she was either “ignorant of the facts on the ground or chose to disregard them.”
China has made serious inroads on the continent. It is now the largest exporter to the region—shipping three times as much to Africa than does the United States. From 2004 to 2010, China made loans to at least seven African countries worth a total of $14 billion, with payments backed by resource flows. China committed to over $5 billion in infrastructure projects in Nigeria alone (PDF) from 2001 to 2007. And at a summit in July, President Hu Jintao pledged $20 billion in credits to the region over the next three years for development projects, doubling the amount offered at a similar conference three years ago. About 14 percent of China’s outward investment flows to Africa, where it goes to a range of sectors; about 22 percent of it goes to manufacturing and 29 percent to mining, for example.
There are concerns with China’s engagement. Its companies were pumping oil out of Sudan long after the country’s leader faced an arrest warrant from the International Criminal Court for crimes against humanity. There are frequent complaints that Chinese companies bribe their way into deals and construct shoddy infrastructure. They bring in as much as 20 percent of the workforce required on projects from home.
But U.S. companies hardly have the reputation of virtuous paragons on the continent. Think Exxon Mobil (XOM)—happily pumping oil out of Equatorial Guinea despite the fact that President/dictator Obiang’s son faces a French arrest warrant for corruption, embezzlement, and money laundering. And the U.S. government, for all the elegant rhetoric, is happy to support less-than-pleasant regimes on the continent as well. Ethiopia, a country classified as ‘Not Free’ by human rights NGO Freedom House, got a new African Union headquarters building in Addis Ababa from China, but it also got $675 million in USAID assistance in 2011.
And the U.S. itself is quite happy to team up with China. It imports more goods from China than from any other country, just the same as Africa. Both run a trade deficit with the East Asian giant, so it is hardly surprising they also share a liking for Chinese financing. Indeed, America hasn’t been at all shy about taking loans from China—the mainland holds more than $1 trillion of U.S. treasury securities, making it the largest foreign holder. Whichever side of the Atlantic you live on, it is hard to avoid engaging with the world’s largest creditor, largest exporter, and second-largest importer (PDF). That’s especially the case if you are trying to move from a relationship based on aid dependency to one based on trade and investment.
So the Secretary of State’s warning on Chinese engagement in Africa is a combination of “trust me, we’re different, even though we sometimes act the same” combined with “do what I say, not what we do.” Even though there might be elements of truth in Clinton’s words, that probably doesn’t make it a particularly compelling argument. African leaders would doubtless be more impressed by the U.S. government lifting restrictions on overseas investment and export support for projects that might cost even a single American a job—even if they create many more new ones in the U.S.
That would show that the administration really is committed to a partnership with the continent—one that adds value.