Advertise on Bizcommunity

Subscribe to industry newsletters

Saving Africa from China: The road to prosperity for the DRC

In the midst of a US-China trade war, there is a glowing opportunity for both economic and humanitarian intervention in Africa where a US partnership is highly sought.
The world is on edge as the threat of a trade war between the United States of America and the People’s Republic of China is imminent. Despite the lack of insulting tweets towards Xi Jinping, tariffs on goods, an expanded presence in the South China Sea, and shifts in foreign policy indicate that President Trump means business. Making America Great Again at home also means a shift in American involvement where China spends its money. A recent Chinese deal in the Democratic Republic of Congo might hold the key to leveling the playing field on the African continent- and asserting dominance at the midpoint between the two world superpowers is a step in the right direction.

How did China get to Africa?

Communist leader Mao Zedong had a vision to level the poor and agrarian China of the 1950s with the rest of the world. The all-hands-on-deck approach worked in theory, propelling the country to a level where they could compete with the rising West in technology and fortune. By the late 1990s, the economic plan of the Chinese government pushed its investors to “get out” – investing much of the country’s public and private funds in international capital endeavors. China was able to offer money, cheap labor, and a willingness to go where no investments had gone before in an exchange for an insurmountable debt that would leave the recipients of funds crippled for generations to come.

Big country, big spending

To date, China is Africa’s largest foreign investor with over 10,000 Chinese companies across the continent and over $220b in foreign investment. Located in the Heart of Africa, the DRC was the perfect site for the next influx of big Chinese money. As the country is very central with water and subsequent shipping access, the DRC was attractive regarding interests on the continent as well as attractive to a wide variety of international actors. In 2012, the Chinese invested $6b USD in an unprecedented financing bid to rebuild the country’s infrastructure.

Trouble in the DRC

The southern province of Katanga, very rich in natural resources and minerals, is the home for a sinister deal in the cobalt and copper industries. While the Chinese invest in private companies and public infrastructure, the interest they demand is not in money, but in resources. This “infrastructure for minerals” deal effectively allows China to control the price and output of necessary natural resources - ranging in industries from iPhone batteries to F-35 jet engines – for an undisclosed and presumably long amount of time.

From a purely humanitarian perspective, the influx of Chinese FDIs in any country are not in the best interests of the local populations. Dubbed “The Shanghai Effect,” increasing African exports to China lowers the labor conditions of places in Africa. Essentially, domestic labor regulations are not a concern for Chinese companies, as they are run similarly to the abhorrent working standards in Shanghai. When the majority of job opportunities in these countries comes from foreign Chinese firms, the drop in labor standards correlates accordingly.

Past colonial exploitation of various African nations by the United States has left a bad taste in the mouths of many African leaders. Many African nations feel like their hands are tied with immeasurable debt and are playing a failing game of catch up with the rest of the developed world. However, the DRC’s president Joseph Kabila has made it apparent that a partnership with the US is at the top of his list. After successfully meeting with President Obama, Kabila will have better luck in securing a meaningful US-DRC alliance with Donald Trump. The supporters of American foreign interests - security and economy included - will give the Chinese presence in the DRC a run for its money. The United States has been a beacon for hope, democracy and freedom. The DRC is offering America an alliance with the chance to forward foreign economic interests in the face of Chinese threats.

About the author

Sanjay is a regular contributor for www.healthynewage.com who cares about the environment and how it is impacted by industrial activity. He shares well-researched and informed opinions with others and wants to make the world a better place by promoting green energy.

Monetary Library's press office

Monetary Library
If you are looking for business or financial advice you are at the right place! Monetary Library's team is following up the everyday trends and we hope you find the information here useful for your needs.
Comment

Related

News