Africa and China Sharing Paths of Common Development
The pace and scale of China’s growth since the adoption of the reform and opening-up policy is one of the most significant and most widely discussed development stories of the century. At the same time, the tragedy of growing poverty on the African continent despite its vast reserves of resources has been one of the most frustrating problems in recent history. However, since the establishment of the Forum on China-Africa Cooperation in 2000 and increased South-South cooperation, real GDP growth in Africa has risen by 4.9 percent annually from 2000 to 2008 and continued to rise at a similar pace with more robust growth in certain African countries in recent years.
Similar Struggles and Effects of Investment
Before examining the spillover effects of China’s development on the African continent, it is wise to revisit the development journeys undertaken by both China and Africa over the last four decades.
When Deng Xiaoping, the chief architect of China’s reform and opening up, began the push for economic development, the poverty rate in China stood much higher than the majority of countries on the African continent. While China’s per capita GDP measured merely US$156 in 1978, in the 40 years that followed, and with the influence of the reform and opening-up policy, China’s GDP grew at an annual average rate of 9.5 percent to reach US$8,827. Most significantly, this rapid growth lifted more than 700 million people out of poverty in China alone, slashing the country’s poverty rate from nearly 90 percent in 1981 to under two percent in less than four decades. Meanwhile, the growth performance in Africa in the period from 1974 to the mid-1990s was negative, reaching -1.5 percent in 1990. As a consequence, hundreds of millions of African people—almost half of the continent’s population—were forced into conditions of extreme poverty. In 1970, one in 10 poor people in the world lived in Africa, but by the year 2000, the number rose to one in two, as the number of extremely poor people on the continent increased from 140 million in 1975 to 360 million in 2000.
As numerous academic investigations indicate, investment was likely a defining factor in the disparity in growth between China and Africa. During the same period of time, the two economies developed in almost completely opposite directions. Thanks to the reform and opening-up policy, China allowed increased foreign direct investment (FDI) in productive and manufacturing sectors since 1978 that proved to be a crucial means to kickstart rapid development in a wide range of areas and sectors, especially hard and soft infrastructure, with positive spillover effects on human capital in terms of higher education and health levels nationwide. Meanwhile, the investment rate in Africa since 1975 declined by 8.5 percent, having negative impact on growth and especially poor performance in crucial determinants of human capital, education and health on the continent. To this day, despite vast inflows of aid initiatives targeting these sectors specifically, most African governments still lack the basic resources and expertise to effectively tackle many crucial issues, remaining highly dependent on outside assistance, as evidenced by the most recent outbreak of Ebola in West Africa.
The fact that China’s development occurred in a country that is home to a fifth of the world’s population has had major implications for the global economy. The reform implemented a series of measures aimed at easing the process of “opening up,” which meant exactly what the name implied: creating stronger links between China and the rest of the world through trade. And since the establishment of the Forum on China-Africa Cooperation, Africa has been seeing an increasingly large share of the benefits reaped by China’s development and growth. China has been the continent’s largest trading partner for the past nine years consecutively. Since more than two thirds of Chinese investment in Africa is in hard infrastructure, Chinese investment and aid on the continent are not only changing its face with visible improvements in infrastructure but also lighting up African countries. Two decades ago, the most common routes of travel between cities in Africa were long and dangerous dirt roads that were easily affected by rains and floods. Now, newly paved highways and high-speed trains link cities and countries across the continent, cutting the cost of travel and boosting connectivity and trade. At the same time, investment in clean energy production such as solar plants is creating affordable and sustainable options for energy. These factors, combined with a relative increase in security and political stability on the continent, are transforming it into one of the world’s most attractive destinations for investment.
Human Capital Creating Growth
As many developing countries in Africa look to China in awe of the miraculous results achieved in such a short span of time, the recurring question is how a country transformed its fate so successfully. Although China’s development can be attributed to numerous intertwining factors, significant investment in health and education services since the beginning of the reform agenda is one of the most important factors leading to the results witnessed today. While China was able to generate significant income through attracting FDI and participating in world trade, the improving quality of life for its people and the increased strength of its demographic advantage of skilled, healthy labor are powering both national and global growth.
Investment in human capital has been pivotal in the success of China’s reform and opening-up policy that leads to unprecedented socio-economic growth in a nation that has a population near Africa’s 54 nations. In my opinion, this should be the most important lesson African countries learn from China’s experience. At the same time, development of Africa’s human capital should be the core of China-Africa cooperation over the next two decades.
Education is one of the most important factors fueling innovation and development. If the African continent is to ever escape the reputation of least-developed continent with the poorest population in the world despite impressive reserves of natural and demographic resources, countries on the continent must learn from China’s experience and optimize investments in health and education to create conditions for a vibrant innovative society that can contribute to national and global growth. As such, African governments are urged to encourage research and study development models of different nations including China to draft a development strategy that best suits their individual circumstances.
Dr. Hodan Osman Abdir is executive director of the Center for East African Studies at Institute of African Studies at Zhejiang Normal University.