ABSTRACT

This study has undertaken an empirical assessment of the implication of China's accession into the W.T.O for Sub Saharan Africa. It was motivated by the increasing debate about the Sino-African relationship over the past decade and what inherently underlies china's increasing interest. Is it in the genuine interest of china to form a new south-south partnership with the emerging African continent, or a calculated attempt to re-ignite the structure of Neo-imperialism? As some policy observers would suggest, maybe it is simply the hunger of china for natural resources that continues to motivate its increasing interest in Africa. This study investigates these interesting debates and the specific channels through which the impact of china manifests on Sub Saharan Africa. In achieving our broad objectives, we adopt the case study approach by presenting the case of Angola and South Africa. Using the competitive-complimentarity framework, it was found that china plays a positive role in Africa, but its competitive force is unduly exerting a tremendous influence on SSA small businesses and especially the manufacturing sector.

CHAPTER ONE

1.0 INTRODUCTION

For China, the world's 7th largest and most populous economy, November 2001 was to a much interesting extent its Eureka moment when it made a giant leap into the much quested aura of free market regime by becoming a member of the world trade organisation (WTO). Although she had embarked on market liberalization policies since the 1970's however, membership into the W.T.O. was a compelling window to standardise its trade principles and practices in accordance with those of other free market economies and international rules. According to UNCTAD (2002), “the WTO is seen as a “significant frontier of globalization” that will allow China to “become a respectable member in the open international economic system,” enabling it to enjoy equal trading treatment and to take part in formulating trade regulations”

The implication of this great milestone although is remarkable for the global market system and China itself. However, for (S.S.A.) Sub-Saharan Africa, the accession of china into the W.T.O. marked a new era of economic milieu for the fact that, conventionally, the western powers were the countries with substantial interest in trade, aid and economic partnership and unfortunately due to recent challenges facing those individual nations, the attention given to SSA has been fast declining. Thus, the last ten years have brought china closer to the need of African countries. As observers would note; this increasing role does single-handedly invalidates the growing marginalization of Africa by the much traditional European and American powers (Mandy, 2005).

In contrast to the western powers, by offering aid without preconditions, China has presented an attractive alternative to conditional Western aid, debt cancellation and a boom in Sino-African trade while gaining valuable diplomatic support to defend its international interests. While the continuous engagement of china with SSA has continued to spawn important policy implications for growth and investment distribution, there are growing concerns about its adverse effects on key developmental areas such as manufacturing, inward foreign direct investments, production and other key sectors. While in fact it's much pronounced benefits on commodity boom for African countries is ambiguous since this is inextricably linked with erratic exchange rates and institutional corruption. The aim of this study thus is to contribute to literature on the implication of china's accession into the WTO for Sub-Saharan African countries. This study assesses both its positive impacts and the negative implication on trade, manufacturing and FDI, while it also explores the underlying factors behind the growing quest of china into SSA. In order to achieve these aims; this research has identified a number objectives which will form the spectacular focus of this study and inform its scopes and direction.

1.1 Research Aims and Objectives

The overarching aim of this study was to critically explore the impact of china's accession into the WTO on SSA countries and assess the specific channels through which this impact manifests. A research aim is defined as a broad statement of purpose of the research and what it sets to achieve, while objectives are a set of specific goals in streamlining a research and the use of resources to perform the research. The objectives further help in identifying the research questions in addition to the research methodology that can be employed to successfully embark on the research.

Objectives:

  1. Identify andanalysethe specific vector channels through which the impacts of China's accession into the WTO are transmitted to SSA countries.
  2. Examine the overall impact of China's accession into the WTO on Sub-Saharan SSA countries
  3. To Investigate the primary drivers of china's increasing interest in SSA
  4. Conduct a case study analysis of two SSA countries to broadly understand the extensive influence of china on SSA

1.2 Motivation

Since the last ten years, policy observers have noted that china and sub-Saharan Africa have become more cordial such that Beijing's interaction with Africa has significantly increased and as such spawned impressive growth rates in bilateral trade. This relationship has been flanked by the establishment of the Chinese-African Chamber of Commerce in 2005. In addition, china and SSA have entered into over 18 different bilateral investment agreements since its accession, (UNCTAD, 2004). Increasing interest of china in Africa has also been shown in the fact that approximately about 700 Chinese firms with an investment of over £1 billion have engaged with SSA over the last ten years, (Bejing Times, 16. December, 2003).

To further attest to the growing relationship (Besada et al, 2008) shows that Trade between Africa and China grew from over £7 billion to £60 billion between 2000 and 2007, with SSA accounting for £5 billion and £50 billion between these periods. Equally, Chinese FDI stock in Africa has grown from £35 million in 1990 to over £1.5 billion in 2006. This translates to about to a 30% growth in annual trade and investment since the late 1990s between Africa and China. However, in spite of this growing and impressive development, there is an increasing consensus amongst policy makers in SSA that key sectors of the economy have been declining since the engagement of china. These sectors usually include the manufacturing, the textile industry, productive sectors and a couple of sub-financial sectors.

Notwithstanding this negative implication and seeming future threat, china's engagement with SSA have been growing exponentially and by 2010, China is forecast to be the Number one trading partner of SSA, ahead of US, France, UK and other traditional trading partners. This study brings imperative issues concerning this threat and other negative implications to the fore and examines the policy gaps of SSA countries and how the new Sino-African bilateral relationship may spell doom for the economy of SSA in the long-term. In the same vein, it has been noted by many political economists that, in spite of china's improved trade partnership with Africa. SSA still records the lowest inward of FDI compared to other regions of the world. Therefore, this study also seeks to investigate one imperative question: What are the factors behind the growing Sino-African trade boom? By understanding whether this increasing bilateral trade agreements are motivated by genuine interest of China or not, we can understand and establish the broad challenges and problems underlying the increasing relationship of china with SSA, therefore the objectives of this study can be met.

1.3 Research Problem

Africa's quest for a more cordial relationship with china is grounded in its depth of poverty and its genuine need for foreign direct investment as an incentive to accelerate economic development and consolidate recent democratization efforts. However, the increasing interest of china in Africa is debatable and in fact has been the focus of various policy and research studies over the past recent years. The possibility, or rather the certainty, that the biggest economy of the 21st Century will not be a ‘Western' laissez-faire democratic state serves to alter orthodox international relations theories that has emanated since the culmination of the World War II through the ascendancy of the US in global affairs. China's contemporary affair with Africa are not historically restrained to the post-Cold War era, but are more dynamic and influential to international politics than ever and indicate a new setting in-the-making for South- South cooperation.

China insistently advocates, with grand reverberation, that its considered affairs with African economies has stemmed from a common history and is hinged on bilateral understanding and fairness in manners that thoroughly ensures fair-play and capable of improving the well-being of Africans. The EU, US and a range of critical observers, voice opposition concerns about the intention of China in Africa. Washington however has viewed the presence of china in Africa as a long term blockade to its natural resource acquisition and a threat to its strategic ability to get natural energy supplies and remain the world's most influential and powerful nation. In addition to these concerns, there are more worries that the risk-adverse keenness of China to parley with corrupt African governments can undercut democratic reforms and conflict resolution on the continent.

Whose claims are legitimate, and how can the truth be determined? Should the neo-realist supposition which is grounded in empirical positivism be relied upon in coming to terms with the corrupt leaders of Africa but making legitimate trade that truly spurs economic development but undermine political reform? Or, should we rely on neo-liberals theories who's well grounded postulation provides a combination of free-market experience, albeit with a little self-interest. Or do we simply find alternative epistemologies that will provide an expanded collection of truth possibilities about Sino-African relationship? This study theoretically explores these extant perspectives and seeks to bridge existing gaps in literature within the context of the current study.

The Non-Aligned movement gave meaning to the concept of south-south cooperation as a concerted effort by developing states (often newly independent) to avoid being sucked into the dichotomy of the Cold War power struggle. (Murray, 2008)

1.4 Research Questions

The research question for this study was inspired by the definition of (Rea and Parker, 2005) who had defined research question as a question or set of questions that can aid in bringing out evidence based facts which provide answers to a research problem. As Rea and Parker further suggested, it not only provide answers to a research problem but also helps in the development process of new research ideas that can go a long way in providing further evidences to the existing theories and also help to develop new theories (Rea and Parker, 2005). These questions are developed from the research aim and problems and helps to define and identify the research methodology that will is pertinent in conducting the research. The different research questions that will governs the present study include the following.

1.4.1 Primary Research Question

What are the inherent economic implications of China's increasing engagement with Sub-Saharan Africa?

1.4.2 Secondary research questions

  1. What are the channels through which the impact of china's accession into the W.T.O transmits into SSA countries?
  2. What specific sector does the Sino-African relationship play the highest positive role?
  3. What are the adverse effects of foreign direct investment inflow into SSA from China?
  4. Is there a significant relationship between economic development and Chinese investment in SSA countries?

1.5 Limitations to this research

There is a considerable dearth of research into the impact of china's accession into the WTO on Sub-Saharan Africa. This according to Jenkins and Peters (2006) is possibly because studies in this area is still at an early stage and there still a number of key areas within this subject where current knowledge is limited. More so, academic interest in studying the impact of China on Africa has been lopsided since the few extant research have tended to focus on some African countries and on particular sectors. Thus, the researcher has devised a method of employing studies that attends to the issue of China and developing countries in general to draw critical lessons for this present study. Also, the outcome of this study either positive or negative may not be generalizable because Sub-Saharan Africa which is the major focus of this study has different economic conditions from other sub-regions of the world.

1.6 Research Background

There is mounting evidence to suggest that while Sub-Saharan African economies are keen economic winners on one hand. They are stern economic losers on the other, from Angola, to Nigeria, South Africa, Burkina Faso, Benin Republic and the little African country of Sao-tome and Principe. SSA countries have been reaping the enormous gains of commodity boom over the past ten years, from Copper to tin, timber, oil, gas, gold and diamond. In fact China's demands for these commodities have in many instances not been met and thus it's growing interest for more and more imports. Stevens and Kennan (2005) noted that economies who are endowed with natural resources (minerals) demanded by china, such economies will continuously record an exponential growth in their export and consequently earn more money. While countries that produce what china produces like (textiles) will see a huge decline in exports and consequently earn less money. This argument from both perspectives points to the SSA example: while on one hand, individual countries in Sub-Saharan Africa have enjoyed huge financial gains from commodity exports. On the other, these huge gains are in turn used to purchase manufactured goods from china, thus, killing the local industries and genuine small scale manufacturers. This idea was further explicated by Stevens and Kennan (2006) in their examination of the impact of China on developing economies by proposing a method which was subsequently termed as the typology of “winners” and “losers” by (Goldein et al, 2006). “Winners” are those economies for which the number of sectors recording trade gains associated with lower costs of imports or higher prices for exports is greater than the number of sectors incurring losses due to increased competition from China in third markets or higher import prices resulting from higher Chinese demand for a given product. (The reverse is true for the “losers”.) Regarding the winners, Stevens and Kennan assess the gains from trade (due to China) to check whether the gains arise primarily from lower import costs, from greater export revenue, or from both; and conclude that all the SSA countries (except South Africa) gain primarily from lower import costs. Other empirical studies e.g, ((Razmi, 2006; Qureshi and Wan's, 2006) have sought to explore the phenomenon of lower import costs and interestingly, their results shows that SSA countries have indeed enjoyed importing more imports from china due to the lower import costs involved and even if SSA countries do not import from china, their local industries will not be as competitive as it should be because of stiff competition from china.

1.7 Research Structure

Following the first chapter where the objectives and research problems have been rightly identified, the subsequent chapters are ordered in the following chronological arrangement. Chapter 2 is the review of literature where the extant perspectives of previous findings and researches were critically considered and assessed. This was followed by the researcher's conceptual framework of the specific vector channels through which the impact of china manifests on SSA and theoretical perspectives on the Sino-African relationship. As with all of the chapters, this chapter rounds off with a summary of the main ideas highlighted in the body of the work. And followed by Chapter 3, which is the research methodology where research approach, strategy and data collection methods were discussed and explained. In this chapter, the researcher provided an introduction of the case study approach and the “direct-indirect impact framework” of measuring the impact of china on SSA, this methodological framework is novel and has been recently devised by Kaplinsky et al (2006) in their Sino-African study. The data collection methods which encompass both primary and secondary techniques were also explained in this chapter with the appropriate justification for their adoption. This leads to Chapter 4, where the case of both Nigeria and South Africa, the two countries under study are explore, following a brief review of their relationship with china since 2001, the chapter later considered the impact of china on the countries, using the direct-indirect impact framework, this was followed by a sector aggregate and discussion of the impact.

The last chapter is the conclusive chapter where the researcher considers the implications of the result for SSA countries. It is imperative to state here that the implications of the results were not limited to the countries studied, (Nigeria and South Africa) but all SSA countries, since the two countries were used as representative countries to understand the inherent effects of china's relationship.

CHAPTER TWO

LITERATURE REVIEW

2.0 INTRODUCTION

Existing literature gives a fair amount of information about the magnitude and effects of trade between China and SSA. It tells us, for example, that trade between China and SSA has increased rapidly, especially since 2001. Available databases can be mined to tell us what is traded and by whom. The literature, however, is less clear about how that trade actually affects Africa. What countries benefit and in what sectors? Who is losing out, and why? It is also clear that trade is not the only form of interaction between China and Africa, and that other interactions may also generate positive or negative impacts. The aim of this chapter is to identify and explore other vector channels through which the impact of Beijing's interaction with Sub-Saharan Africa manifests. Following this identification is a conceptual framework formulated by the researcher in order to deeply understand the inherent research issues.

2.1 PREVIOUS RESEARCH

The accession of china into the WTO and its rise as a great economic power-house is one of the defining events of the 21st century. Consequently, there has been a rising surge of literature studying its impact on various factors. But notwithstanding this great landmark there is a relative dearth of systematic research on the Sino-African relationship impact especially relating to china's accession into the WTO (Geda, 2006). Notable exceptions of this trend are the IMF qualitative research of (Wang 2006) which finds that Africa's needs for trade, road and rail networks including foreign direct investment are the prominent factors drawing the continuous interest of china. Another study by World Bank (2007) examined the limitations and policy restraints for increasing Sino-African trade and investment. Since these two prominent studies, more and more studies have been investigating how china's engagement affects Africa in one way or the other. The study of Minson (2008) conducts a comprehensive analysis of the advantages that Africa can anticipate from China's superior trade engagement and finds that, while the advantages are liable to be modest, the predilections have been considerately adapted to African export capabilities. Another study of Eichengreen et al(2008) analysed the competitive issue between China and some African countries using a gravity model. Their results indicate that countries at different level of development are affected very differently. Whereas an increase in China's output positively affects the exports of high-income African countries. However, it negatively affects those of the less-developed countries in the East African region. In another study Stevens (2005) identified possible winners and losers among African countries as China becomes more prominent in world trade; he found that while African countries are winning on one hand, they are losing on the other. Jenkins and Edwards (2006) examine the direct and indirect trade impact of China and India on sub-Saharan Africa. They found that owing to increased trade with Africa, FDI inward has increased considerably. Albeit, capital flight diminishes the increasing FDI. Using the "revealed competitive advantage indices" for exports and imports. Shafaeddin (2002) studied the impact of china's accession into the WTO on exports of developing countries. He found that china's accession into the WTO will increasingly give its industries a better domestic value leading to more competitive advantage over other exporters and this could be a threat to the local industries of those developing economies. In a more recent study of China and Africa; Taylor (2004) revealed that there is practically no way around the conclusion that China's massive return to Africa presents a harmful political development that more or less certainly does not contribute to economic prosperity, peace and democracy (Tull, 2006). In 2008 another study exploring the growing relationship between China and Africa observed that “A key factor underlying China's recent rapid expansion in Africa is Beijing's desire to gain secure access to supplies of oil, gas, and key minerals. As a late entrant to the global oil market, Africa perhaps represents the last major sources of oil reserves that are not primarily managed by major Western energy companies, and hence available for Chinese corporations to invest in, and ultimately resulting in partial control” (Besada et al, 2008). Other studies (e.g. Geda, 2006; Wang, 200; Kaplinsky, 2007) have argued that China's growing interest in Africa is based on Africa's need for china and Beijing's partnership over the last years with Africa have spawned tremendous economic growth and as such the impact of China on Africa has been positive. Following the increasing argument about China's impact on Africa and the Sub-Saharan continent, a number of studies have sought to study the specific channels through which these impacts are transmitted. (Kaplinsky, McCormick and Morris, 2006) studied the impact in four vector areas; Aid flows, trade flows, FDI flows, technology transfer and integration. Other recent studies have also explored specific vector areas through which the impact of China's accession into the WTO manifests on SSA using GDP growth, income distribution, competition, diversification and many others. (Geda, 2006; Tull, 2006; Goldstein et al, 2006; Palley, 2003)

2.2 ASSESING THE IMPACT OF CHINA ON SUB-SAHARAN AFRICA

As aforementioned, there is a growing body of evidence in literature to suggest that the Sino-African relationship is manifesting through different specific channels .Within each of these channels, it is possible for the Sino-SSA relationship to either be competitive or complementary (Geda, 2006; Kaplinsky et al, 2008). Looking at the trade channel, for instance, China may provide SSA with appropriate capital goods and cheap consumer products and SSA may in turn provide China with the commodities it requires to fuel its continued economic expansion. Both economies gain from this relationship. On the other hand, China's export of consumer goods to SSA may displace local producers leading to competitive impacts on workers and entrepreneurs in these sectors. (Kaplinsky et al, 2006)

The impact of these relationships on Africa has been both significant and positive. Growth rates have been elevated, with a positive impact on poverty alleviation. These flows provide substantial and largely untied development finance for Africa (in contrast to present conditional OECD flows). The continent may therefore present only a small part of a rapidly changing global economic structure in which China is centrally involved, but for Africa this will likely prove to be of high significance (Besada et al, 2008).

What lies behind this development are a number of factors and motivated by china's need to secure natural resources to sustain its economic boom at home. More so there are little doubts that natural resources are at the core of China's economic interests in Africa and also China's share in the increase in global demand for some mineral resources such as aluminum, Nickel, copper and mostly oil consumption (Besada et al, 2008). This increasing development also reflects a high-level Chinese decision to contribute to South-South cooperation via mutually beneficial commercial relationships with the African continent. But at the same time, it also reflects commercial decisions made by individual Chinese enterprises (ibid). One claim that is supporting this theory is that Chinese firms have been successful in delivering comparable infrastructure projects at prices in the range of 25 percent and 50 percent less than those which other foreign investors charge.

The china's increasing interest in Africa comes at the period when sizeable new discoveries of oil have been made on the continent, particularly in Sao Tome´ and Principe and Chad also when Africa's largest producers, Angola and Nigeria, are planning to double their production within the ten (10) years (Nwebo, 2008).

Regardless of the projections that with the discovery of oil in most African states and the believe that the new discoveries could bring African's oil output to 7 million barrels a day within the next 10-15 years, Africa's contribution to China's oil imports is already significant. For example, in 2004, Africa's share of Chinese overall oil imports reached 28.7% up from 25.2% in 2003 and this shows an improvement in trade relations between china and Africa mostly from china's most African oils supplier, Angola which exported 117 million barrels of oil to China in 2004, a 60% increase from the2003 exports. According to Ajah (2008) it is with the recent Sino-African relations being championed by china that drive most Africa's leaders to welcome china trade relations with open arms. This is achieved by the china capability of offering to their African counterparts a mix of political and economic incentives which the Chinese government is using to drive home the message that increased the Sino-African cooperation which will inevitably result in a ‘win-win situation ' for both sides Ajah (2008).

In assessing the impact of china on SSA, various studies have employed several empirical measures. However, prominent amongst this is the method devised by Kaplinsky (2008) who integrated a three vector channel of this impact into one synthetic framework; called the complementary-competitive and direct-indirect impacts. As shown in the next table this framework shows that complementarity and competitiveness is easily understood. By contrast the distinction between the direct and indirect impacts is less obvious, and its significance is less widely recognized. The direct impacts are relatively simple and clear. Both complementary and competitive impacts occur as a result of direct bilateral relations between China and SSA. These impacts can be measured, by charting the direct trade flows between China and SSA, breaking these down by sectors and countries, and over time. The indirect impacts occur as a result of China's relations with third countries, working their way indirectly through to SSA. Staying with the trade example, China's demand for commodities may raise their prices at a global level, and even though a country like Ethiopia does not export animal feed to China (a direct relationship), it sells animal feeds into a global market in which prices have been raised by China's growing imports (indirect impact). As we shall see below, and particularly in the case of trade, the indirect impacts of China on SSA are sometimes much more substantial than the direct impacts. However, almost all of the analysis of the impact of China on SSA focuses on direct, bilateral relations, and hence tends to miss some important issues.

Since this study is focusing on other vector channels as the one seen above, it might be pertinent therefore to have a specific framework in analyzing the impact china on SSA. Thus, the need for the next section

2.3 CONCEPTUAL FRAMEWORK

This conceptual model shows the four conceptualized vector channels through which the impact of china transmits on SSA. Theoretical explanation is further given in support of each of these vectors channels.

2.3.1 TRADE CHANNEL

There is evidence to suggest that trade between China and SSA since 2001 is a small percentage of each region's total trade. However, its rapid growth suggests that the trade channel is a momentous source of impact (Kaplinsky et al, 2008). The volumes of Trade more than quintupled from over £5 billion in 2002 to over £25 billion in 2005 and more than £30 billion as at 2006 (ibid). The basis for China's rising trade links with SSA has been its particular impressive growth since its accession into the WTO. One of the main features of this growth has been its deepening trade orientation, with the trade-GDP ratio in excess of 70 percent, well above the “norm” for large countries. Within this, China has become a major exporter of manufactures and a significant importer of commodities (Zafar, 2007).

In 1990, SSA's total imports from China were less than 1.1% of its imports from industrialized economies, but by 2006, it had risen to over 8 %. In the same vein, SSA exports to China were less than 1% of its total exports to industrialized economies, but by 2006 the proportion had risen to eleven percent. However, Since 2002 after china joined the WTO, imports from China have been expanding more slowly than exports, allowing SSA's trade balance with China to turn from negative to positive ( Kaplinsky et al, 2008)

For some SSA economies, the importance of China as a direct destination of exports grew particularly rapidly. In the case of oil, for example, exports to China account for between 86 and 100 percent of all oil exports for Angola, Sudan, Nigeria, and Congo. A similar picture is true for the DRC, which sends 99.6 percent of its basic metal exports to China. On the import side, only seven SSA countries source a significant share of their total imports from China. Sudan, which has growing and policy-related energy links with China stands out, with 14.2 percent of its imports coming from China, followed by Ghana and Tanzania (9.1 percent), Nigeria (7.1 percent), Ethiopia and Kenya (6.4 percent) and Uganda (5.1 percent) (Jenkins and Edwards, 2005). Almost all of these imports were manufactured products. With that historic picture as background, we look forward to areas of potential bilateral trade between China and SSA. The World Bank, using its own “Trade Complementarity Index”, concluded that on the basis of existing economic specialization, the potential for future bilateral trade growth with China was not strong, but could become so if China's growing demand for commodities were to be sustained (World Bank 2004a). This evidence on the direct trade links between China and SSA, suggests that on the export side SSA gains from China's demand for commodities, and on the import side, it gains cheap and appropriate consumer and capital goods. Outside of textiles, timber and cotton (see below), there appears to be little trade between China and SSA in intermediate goods and little incorporation of China and SSA into coordinated global value chains. Jenkins and Edwards (2006) argue that most of these imports into SSA have substituted for imports from outside of SSA, with the possible exception of Ethiopia and Nigeria, suggesting little displacement of domestic production and few negative impacts on employment and local production. These conclusions suggest a synergistic link between SSA and China and help to explain the high sense of optimism which prevails in some circles in SSA on the potential opportunities opened for SSA by China's rapid trade expansion.

2.3.2 EXPORT CHANNEL

Positive impact for SSA is sufficiently provided in the literature assessing the export links between china and Sub-Saharan Africa. However, unlike this present study, most authors have assessed this vector as an indirect trade channel. Several studies has however, attempted to explore the impact of this indirect trade channel. For example, the study of (Kaplinsky and Santos-Paulino 2006) investigated the similarity between china and SSA exports (Jenkins and Edwards 2006) classified losers and winners and from exports with China, The losers are those economies which export products which China exports or import products which China imports (Stevens and Kennan (2006). All these empirical investigations have provided constructive insights into the export impacts of China's trade on SSA. Kaplinsky, McCormick and Morris (2008) noted however that, the fact is apparent that only a small amount of engagement exists between China and SSA in intermediate products thus, it appears that there exists little Sino-African integration in coordinated global value chains. More so, owing to the reason that most if not all of the previous analysis have been conducted at fairly high levels of trade aggregation they have tended to impede the severity of China's indirect trade impact on SSA exports. Thus, it is better if the real impacts are examined sectorally or through particular products (Kaplinsky, McCormick and Morris, 2008). As is substantially proven in extant literature, the major exports from SSA in recent years has been oil and natural resources including clothing and textile in the export manufacturing sector, possibly as a result of china's hunger for more natural resources to fuel its impressive growth and principally as a result of USA's AGOA Project in SSA which has helped to promote exports in more recent years.

Each of this graphs show how china's trade has grown over the years, figure 10 shows the share of exports to china by particular natural resources while figure 12 shows how the exports of Africa has grown notably since 2001 at the inception of China into the WTO. Figure 12, shows that Sino-SSA trade, although is increasing growing, but is relatively small in the global perspective: 16% of total African exports is accounted for by china (19 percent of exports from SSA) in 2006, a proportion well less than that of the U.S.A and the E.U. The graph also shows that while U.S.A. and the E.U have persistently contributed significantly to the growth of Africa's export, China is playing a fast catch.

2.3.3 FDI CHANNEL

FDI is one of the numerous and notable channels through which many extant researchers have assessed the impact of China on SSA. Interestingly, this channel has proven positive for SSA from the perspective of many studies. See e.g. (Kaplinsky, McCormick and Morris, 2008; Zafar, 2007; World Bank, 2007). This is so because FDI inward into SSA has apparently increased considerably in the last 10 years since china's accession into the WTO.

According to Morris (2009):

“As China began to emerge in the international global scene, its outward FDI flows remained small; equivalent to just $916m. In 2000, not much higher than the $830m registered in 1990. However, post 2000; FDI outflows have been rising, reaching $17.8bn in 2006. The flows are expected to continue to increase and to reach $72bn by 2011 (EIU, 2007)

According to Kaplinsky, McCormick and Morris (2008) there literally exists little or no FDI inflow from china into SSA before the 1990's. Then from less than £15 million per annum for Africa as a whole, FDI from china climbed to over £200 million in 2002 and reached over £1 billion in 2008 (Zafar, 2007). According to UNCTAD (2007) this growth represents higher FDI inflow into SSA than anywhere in the world. More so, it is a notable FDI stock comparatively with inflow from Europe and America particularly because it has come from fully or in some measure state owned corporations who have more access to very low-cost capital, and hence can operate with much longer time-horizons. In comparison with western FDI that comes from privately owned enterprises or investors and are bound by short term and focused entirely on profit maximization. The Chinese investments are either openly or unreservedly associated to accomplishing long term strategic objectives, frequently those which are focused on access to natural resources, and are closely bundled with Chinese aid.

According to UNCTAD (2007) most FDI from china usually come in the variety of equity joint ventures with local business partners of SSA or state and national government agencies,

The most recent and apparent instances are those of the big energy and transport investment in Angola, Nigeria, Zimbabwe, Sudan and Mali amongst many. Other area of Chinese interest spawning FDI growth is the import of oil, manufacturing and investment in other local businesses. China have also made Investments valued at $757m in Sudanese Oil and $2.7bn in Nigerian oilfields in the past few years (Africa Frontier Advisory March, 2008) Another report by UNCTAD (2006) approximated that slightly over 700 Chinese firms were operating in Africa as at 2006, including three of its first eight overseas economic and trade cooperation zones in Africa located in Nigeria, Mauritius and Zambia (UNCTAD, 2007b). The first Sino-African Business Conference in 2003 in Ethiopia resulted in commitments to 20 projects with a total value of $680m, although there are no reports of the extent to which these commitments resulted in actual investment flows (Broadman, 2007). According to Cook and Lam (2009), the total outflow for 2007 was US$26.51 billion, an increase of 25.3% over 2006 and a massive 828% increase over 2003. Chin's FDI outflows to Africa increased almost 5-fold in 2006-7 (from US$520m to US$1574m), compared to a 32.7% increase in 2005-6. They accounted for 5.94% of Chin's total outflows in 2007, compared to only 2.62% in 2003. Approximately 3% of China's FDI stocks are in Africa, compared to over 70% in Asia. For Africa, FDI from China constitutes a still small but rising share, growing from roughly 0.5% of total FDI to Africa in 2003 to 2.97% in 2007.

The World Bank (2004) observed that in spite of the usual picture of china as a resource hunger and raw material driven investor in SSA. The stack reality is that almost 48% of amount invested in SSA since the 1980's till 2001 was in the productive and manufacturing sector. Slightly over (18%) of investments went into services and construction business. Agriculture (7.1%), Resource development accounts for just over one quarter of the investments, slightly over (27 %), though and other (.9%) claimed the balance. Although, this figures has slightly increased, (ibid). According to UNCTAD (2007), by 2005, china's investment had grown into 48 African nations.

Table 5: Distribution of China's Outward FDI Stock in Africa, 1990, 2005 (%)

Country

1990

Country

2005

Zaire

18

Sudan

22

Nigeria

15

Algeria

11

Mauritius

14

Zambia

10

Guinea Bissau

9

South Africa

7

Zambia

7

Nigeria

6

Gabon

6

Tanzania

4

Rwanda

6

Kenya

4

Zimbabwe

6

Madagascar

3

Egypt

4

Guinea

3

Tanzania

4

Zimbabwe

3

Madagascar

4

Others

27

Central African Republic

3

Sierra Leone

2

Libya

2

Consistent with many empirical perspectives, Kaplinsky, McCormick and Morris (2008) also suggest that the increasing account of FDI into SSA is due to its involvement four major economic areas: Although, this study will be looking at only two of these areas, the first and second as they tend to have more significant impact on FDI

  1. Increasing investments in the energy and resource sectors
  2. Participation in infrastructural projects
  3. Integration to production systems globally
  4. Small scale entrepreneurial investments

3.2.1 Investments in the energy and resource sectors

Owing to the increasing energy quest of china to fuel its own economic growth, internationally-oriented national oil companies of china (INOCs) have been increasingly stumping their interest in SSA countries because of Africa's abundance of natural energy resources. As Hodel (2008) noted: “Chinese INOCs have reacted to broader Chinese insecurity regarding access to global energy supplies by developing upstream extraction facilities, forming joint-partnerships, and securing rights to fields throughout sub-Saharan Africa. Although national security concerns factor into to these deals, Chinese INOCs also pursue their own commercial benefit by competing with each other and against the privately financed international oil companies for foreign rights and future profits”. The Chinese National Petroleum Corporation, (CNPC) the firm in charge of china's oil and gas management have been recently involved in the establishment of one of Africa's biggest Biodiesel plant in Zimbabwe. More so, it has been investing substantially in the oil industries of Nigeria, Sudan and Angola. On the other hand, the Chinese National Offshore Oil Corporation (CNOOC) which is one of China's (INOC) have been playing an active role in the facilitation of oil and gas investment in Africa by China.

According to IMF (2007) Africa supplies over one third of China's energy demand for oil and crude oil as at 2007 from its position as a supplier of less than 10% of energy supplies before 1999. It is a substantial investor in Nigeria where it has been given entrée to oil blocs as part of an incentive to construct a 1,000 megawatt hydroelectric power plant. Another Chinese firm, called Sinopec, is a significant investor in the exploration of oil in Sudan.

3.2.2 Participation in infrastructural projects

Another significant channel through which Beijing's FDI inflow into Africa manifests is through increasing investment in infrastructural projects which range from long kilometre road networks to construction of dams, stadia, presidential palaces, markets and multi-unit housing schemes. More lately, Chinese companies have started to include food projects with their infrastructural investments; an example is the (£6 million) soya processing plant in Malawi, prawn production (£8, million), a huge shopping hub and industrial warehousing units in Malawi. This increasing involvement of china in infrastructural projects is channels through which China's FDI flows in to SSA.

MANUFACTURING CHANNEL

Although, it is indisputable that manufacturing is one of the vector channels through which china's impact manifests on SSA since its accession into the WTO. However, In contrast to other vector channels where extensive evidence exists, there is considerable insufficiency of evidence as to determine whether this impact have been negative or positive. Consequently, localised data and evidence of this impact have been adopted by the researcher in unmasking the real fact on china's impact on SSA. A recent evidence by the (ECA) East African Community study (2009) reveals that the degree to which substandard goods (particularly from china) have flooded almost every nook and cranny of Uganda is exerting undue pressure on local firms and leading to their immature closure. According to their examples; The Kenyan music and film industry is at the verge of collapse due to piracy, influenced by Chinese manufacturers of CD's estimated to be over 90%.

According to the report: excerpts;

“Ten manufacturing firms in Burundi closed down in the past three years because of counterfeiting. Both Burundi and Zanzibar have no more indigenous manufacturing sectors left as a result of the flooding of their markets by fake products. Even multinationals are hit by the vice. Microsoft estimates that 80% of all software installations in the region are pirated, resulting in a loss of $100m annually”.

The ECA report further shows that more recently as a result of direct competition of Chinese goods, The East African business atmosphere has been swamped with a mass of fake and substandard goods, making the district becoming unappealing to potential investors and genuine firms. In addition to this, since china'sexport growth has been usually linked with lesser manufacturing prices. For most countries, as in SSA, lower prices intensify local competition but also exert undue influence on local manufacturing firms who do not have the competitive advantage as that of china. More evidence are increasingly emerging that china's engagement with Africa, is killing the manufacturing sector in various ways while the textile and apparel production sector is one of the most notable channels. In South Africa, over 400,000 textile workers have lost their jobs since the last four years due to influx of Chinese manufactured textiles which are often cheaper and more accessible.

Another local evidence from Ghana reveals that:

“Save for the (ATL), Akosombo Textile Limited, Which is totally functioning. Previously known manufacturer's names in the textile industry like; Printex and the Ghana Textile Print (GTP) have all gone into administration. For the few ones existing; their weaving and spinning sections have been outsourced to China, as a result of Cheap Imports from China. Even as the Chinese materials are not as long-lasting as those made locally, they not surprisingly, sell far below the prices of Chinese made textiles. As a result, many local retailers such as Printex, ATL and others have neglected locally made textiles and now dealing in Wax Prints made in China, which has a relative price and profit advantage.

The same negative evidence has emerged from Nigeria which used to have the largest textile industry in SSA and third in the whole of Africa till late 1990's. In Nigeria currently, over 80% of the textile manufacturing companies have shut down and over 500,000 jobs have been lost over the past 8 years since the increased relationship with china particularly since 2001 when china became a member of the WTO. The lesson thus far, therefore holds that SSA manufacturing sectors have been seriously wounded owing to china's exports of finished goods into SSA. Another lesson that could also be taken from this trend is that the huge FDI into SSA from china could also be escaping back to china through the means of china's exports into SSA.

THEORETICAL FRAMEWORK AND PERSPECTIVES

Several theories have been employed in the literature assessing china's impact on SSA. The post positivist theory holds that whatever phenomena that we currently experience is the goal of the knowledge that is held, therefore pointing to the possible fact that the current impact of china on SSA whether negative or positive is what it is meant to be because it is what we can measure. The Eclectic theory postulates that for FDI to take place, three factors must be present; firm-specific advantages, internalisation advantages and location-specific advantages. Therefore pointing to some perspectives that china's involvement in SSA is driven by the advantages it derives, such as oil and natural resources, and also driven by the investment needs of SSA including its specific advantage of natural resources. Although, the theory suggests that the absence of any one of these will prevent FDI from taking place, but since FDI takes place in many SSA countries it can possibly be argued that this exception does not apply to SSA since all this factors are present. The core and periphery theory believes that there are two different types of nations- the 'core' and the 'periphery.' The former includes main world powers and the countries that make-up much of universal planet. The latter are those nations that are not getting the advantages of globalization and global development. This theory suggests that as prosperity increases globally, the bulk of that development is harvested by a 'core' region of affluent nations in spite of their smaller relative population to those in the 'periphery' state that are ignored. This theory again shows that china possibly harvests the bulk of its relationship with SSA being the core and SSA being the periphery. The Neoclassical theory, by its own distinction, considers the process of trade as a path to increasing growth for the economies involved, which also means that the consequential economic growth is beneficial for everyone (Pareto optimal) even if the advantages are not constantly shared equally. While it is true that trade can generate a positive boost in wealth in a world of global capital, wealth gain is in no way automatically distributed evenly between trading partners. In opposition to the neoclassical and neoliberal theories, the Marxist philosophy postulates that, capitalism the main offspring of neoclassical theory is essentially conflicting in its creation of two principal classes—the capitalists who own the means of production and the grassroots who must offer their skills or labour to live. Thus, the Marxist theory believes that increase in wealth in one point is intrinsically a simultaneous accumulation of misery at the opposite point. Therefore, one could rely on the Marxist believe that within the two economies under study, china enjoys much of the wealth on one pole while Africa suffers the misery at the other pole. Following the Marxist thought is the dependency theory which has been extended into the field of international trade and development by dependency theorists. The premise of dependency theory is that the interdependent relations between two or more economies take the form of dependence when some countries (i.e., dominant nations) can expand and be self-sustaining while other (dependent) countries can do so only as a reflection of this expansion, which may affect their immediate development either positively or negatively (Dos Santos, 1970). According to Milo's (2007) development and underdevelopment represent the two differing poles of one and the same process: development of some nations (i.e., the imperialist countries) assumes, or even triggers, the underdevelopment of the dependent economies which are under the subject of imperialist operation through international trade (Jean-Claude 2007). Most predominantly, given that many developing countries currently do not have inter-country market-place, their nations rests mostly on the economies of better societies, which in turn gives the better economies more control over the relatively disadvantaged ones. Another precept of dependency theory, proven by the Prebisch-Singer hypothesis, claims the constant decline in the net trade conditions of business between manufacturing and principal goods is based on the supposition that the comparative price between primary products to manufactured products should drop in the long-run (Singer, 1950; Prebisch, 1950;). With respect to the above, Vernengo (2004) suggests that at the core of the dependency link between the centre and periphery is the incapability of the latter to emerge with a self-governing and vibrant development of scientific ad technological novelty. Consequently, centre nations manage and direct technology and the schemes for producing it, once more putting technology at centre stage. Unfortunately FDI's cannot resolve this dilemma, since it results only to partial diffusion of technology and not to the practice of innovation itself.

CHAPTER SUMMARY

This chapter has reviewed extant literature on the possible channels through which the impact of china's accession into the WTO transmits into SSA. Following the lessons from literature, the author built a conceptual framework which was inspired by the broad ‘knowledge and perspectives earlier reviewed. The principle and raison d' etre, underlying each of the vectors in the conceptual framework was explained with appropriate justifications from literature, following this was a brief highlight from theoretical perspectives in order to hypothetically support the arguments earlier made in the course of the review.

CHAPTER THREE

METHODOLOGY

3.0 INTRODUCTION

Following the review of extant literature and critical understanding of the underlying factors behind the Sino-African relationship in the preceding chapter, the aim of this chapter is to discuss the methodology adopted by the researcher in assessing china's impact on SSA, as well as justify the research approach, strategy and data collection methods that have been rightly employed. Furthermore, since the aim of this study is to contribute to literature by its own distinction, it consequently adopts a slightly different method from the few notable studies existing on Sino-African relationship. As has been noted by several prior studies, one of the limitations in understanding the impact of china on SSA is because of the fact that there exist very little systematic and specific case studies looking at the individual impact of china. Thus, in response to this limitation, this study employs a systematic case study approach in addition to the complementary-competitive and direct-indirect impacts first used by Kaplinsky, McCormick and Morris (2006) in their seminal work of Sino-African relationship.

3.1 Research Purposes

There are several purposes of conducting a research, but according to Yin (1994) these purposes can be divided into three common ways: Namely, explanatory, descriptive and exploratory. According to Yin's suggestion, an exploratory research is the context where the researcher confronts a novel theme in which modest or no sufficient research has been conducted and when it becomes complex to evidently give account of the research problems challenges. The exploratory research is also premised on appropriately formulating and identifying precise problems and is usually articulated as the hypothesis. Since, this there are no problems confronted in identifying the research problems in this research, it is therefore not an exploratory research (Yin, 1994, 2004). Explanatory research on the other hand is performed by giving response to research questions using extant theoretical knowledge and empirical evidence. From these answers the research develops the hypotheses that are empirically operationalized and functions as a suggestion on the relation between two phenomena (Patel and Tebelius, 1987). For a research to be explanatory it focuses on causal relationships, effects, and explanations showing which cause creates which effects (Yin 1994). Since this study has a different objective different from the explanatory research purpose, it cannot be considered as an explanatory approach, thus, the last approach will be used as the main approach of the present research. The Descriptive research examines the main grounds of a phenomena or particular experience. They provide the particularities regarding the significance and character of an experience accurately according to how they emerge at the original time of the event Bolton, Kannan & Bramlett (2000). Descriptive research can include preceding or existent relationships as is recommended when searching data, often secondary in order to describe aspects of clearly defined structured problems. Zikmund (1994)

3.2 Research Approach

A research approach is the scheming and design of the research where the researcher objectively states the modes and techniques that will be adopted during the research process (Collis and Hussey, 2003). The appropriate approach could be construed from the context and concept of the research. (Saunders et al, 2007). Particularly because it is within that setting that the researcher chooses the method that would be relevant in filtering out data that will be of benefit in achieving the states objectives. However, there are two main approaches that can be used for a research, the first is the quantitative approach also well-known as (deductive approach) and the second is the qualitative approach also referred to as the (inductive approach) (Collis and Hussey 2003; Saunders et al 2007). According to Saunders et al (2007) the former approach is more appropriately linked with scientific research and predominantly applies objective measurement and numerical analysis of data to illuminate the grounds of changes in social experience (Ary, Jacobs & Razavieh, 1996). The latter on the other hand, is more inclined towards the attainment of better understanding of the inherent research context or the meaning that is often attached to events. With respect to the two approaches, the qualitative method otherwise referred to as inductive has been employed for this study. Although, the present study is somewhat related to a scientific research, therefore the quantitative method could have been employed, however, qualitative approach will be more valid in understanding the particular implications of the phenomena currently under investigation. The Qualitative approach proffers an extensive description as it occurs on at the particular time and in the original setting, it endeavours to be non-controlling method of the groups' behaviours. The initial phase of the approach is to provide explanation of its suitability for the exploration of an event and also to organize the research around the logical and theoretical perspectives. The theories which determine designs which are indispensable to all qualitative study were characterized as five various postulations by Creswell (1999) “The multiple nature of reality, (i.e.) the close relationship of the researcher to what is being researched, the value-laden phase of inquiry, (i.e.) the individual approach to narrating the phenomenon and the emerging inductive method of the process”. In qualitative design, the investigator or researcher is the major (subjective) instrument. Whether the researcher's existence is incessant and thorough, (as in lasting ethnographies), or whether comparatively short but individual, (as in in-depth interviews), the researcher goes into the lives of the respondents or partakers (Creswell, 1999).

3.3 Research Strategy:

This research has adopted two strategies in order to answer the research questions, first is the competitive-complementary framework of Kaplinsky, McCormick and Morris (2006) and the popular case study research method. The competitive-complimentary framework is also known as the direct or indirect impact. According to the proponents of the framework, within each of these channels is the possibility of either complementary or competitive impact or both. This method was first used by Kaplinsky and colleagues in 2006, to assess the impact of China on SSA. They suggest that in the case of the trade channel, for instance, China may offer SSA sufficient capital products and low-priced goods, while SSA may present China with the natural resources it requires to fuel its continued socio-economic development. In this way, the two regions benefit from this connection. On the contrary, consumer goods export from china may dislodge local manufacturer, thus resulting in competitive impacts on entrepreneurs and workers in these sectors and the related.

The authors further propose that by far, the dissimilarity between complementarity and competitiveness can be better understood. By distinction, the difference between the direct and indirect impacts is less understandable, while its importance is not generally easy to predict. As they further suggest, the direct impacts are comparatively straightforward and comprehensible. By charting the direct trade flows between China and SSA, breaking this down by sectors and countries, and over time the direct impacts can be understood. The indirect impacts are less obvious and occur as a result of China's relations with third-countries, working their way indirectly through to SSA. Staying For example, in the case of trade, China's demand for commodities may amplify its prices at an international altitude, and even though a state like Zimbabwe do not offer vegetables to China thus causing (a direct impact), it sells vegetables into a international marketplace in which prices have been raised by China's growing imports (indirect impact). Since the introduction of this framework by Kaplinsky et al, an increasing number of studies have been adopting the same method in their study of China and other regions of the world.

By adopting this method, the researcher determines the impact of china on SSA since its accession into the WTO, by identifying the particular impact of china as to whether it is competitive or complimentary. This method was augmented by the case study research which presents the case of each region under study.

The case study research approach focuses on studying the dynamics occurring within single settings.” According to Yin (2003) case study research is frequently of a qualitative nature: A limited amount of cases involving, be it, events, teams, organizations, or others incidents investigated intensively often by means of interviews or observation, in order to depict a comprehensive photo of qualitative particularities. Yin, also suggest that a case study can either study single or multiple and cases can either be investigated in a longitudinal setting to discover and describe changes within cases over time or in a comparative setting to discover and explain differences between cases. The present research has adopted a multiple case study in a longitudinal pattern, since the aim was to describe the changes in SSA over time since its relationship with china.

3.4 Data Collection

Both the primary and secondary data methods were adopted for this study, the primary data collection include content analysis of newspapers, abstracts from primary research findings and interviews. Primarily a content analysis of newspapers from the two chosen SSA countries were obtained from newspaper archives online while 6 different interviews were conducted with members of the manufacturing association this two countries. The countries chosen for this study were South Africa and Angola because since, 2007, Angola particularly accounts for approximately 25% of total two-way trade between SSA and China. More so, Angola was China's largest trading partner in the entire African region accounting for about 21 percent of trade since 2006. South Africa was the second largest trading partner between 2006 and 2008, accounting for 18% in2006 and 16% in 2008.

The interview was designed to ask questions about each country's relationship with China and how it is believed to have affected the manufacturing and production sector since 2001. Three interviews were conducted all in all with the appropriate representatives of the manufacturer association in each country. Some of the interviews were conducted using Skype, while the remainder were done via email.

Secondary Method

Following the primary data collection, was a secondary method used in gathering relevant data concerning the present research. Secondary sources include current Sino-Africa journals, IMF and World Bank statistics, information from Sino-African websites and academic reports. The researcher also relied on secondary sources from the two chambers of commerce of the countries under study. This source although, came from the primary sources but have been previously produced hence is categorized as secondary.

CHAPTER SUMMARY

This chapter has indentified and discussed the strategies and approach that has been adopted in providing answer to the current research questions. It has provided a rationale for the methods employed and explained the data collection techniques. As aforementioned, it has adopted the direct and indirect method of Kaplinsky to determine the implication of china's relationship with SSA. The following chapter deeply explains the nature of this impact and its overall implication for policy makers in the SA countries.

CHAPTER FOUR

CASE STUDY, ANALYSIS AND FINDINGS

4.0 INTRODUCTION

As established in the preceding chapter, this study uses the direct-indirect impact framework to assess the impact of china on SSA. This was achieved using the case study of Angola ad South Africa as a representative of SSA countries. Consequently, this chapter first looks at the individual cases of each of these two countries in terms of their trade and exports to and from china and then subsequently discusses the competitive-complimentary impact. It is imperative to state at this juncture that, this chapter was guided by the research questions and the conceptual framework of the preceding chapter.

4.1 TRADE, EXPORTS, FDI AND MANUFACTURING: The Case of Angola and South Africa.

According to several recent findings, chief of the limitations towards the critical understanding of the impact of china on Africa is that of the lack of existence of systematic research on specific African examples that can then be generalized towards understanding the underlying issues; (see e.g. Kaplinsky et al, 2006, UNCTAD, 2002). Thus, the case study in this research in some ways bridge research gap, but most importantly, gives the reader a better understanding of the real background of the Sino-African relationship and Impact.

4.1.1 The South African Case.

The Sino-South African engagement has emerged fast since its inception in the early 1990s when the two economies commenced direct commercial trade relationship. Bilateral trade volume was estimated at US$14 million 1991 and in 1997 over US$1. 5 billion. Since the accession of China into the W.T.O in 2001, more diplomatic ties have been established between the both countries, making trade rise to over US$2. 58. billion as at 2002. Of this total, China's imports amounted to approximately, US$1.269 billion and exports US$1.311 billion. For the first half of 2008, the bilateral trade volume reached US$1.67 billion. As at the end of 2002, Chinese firms had invested over US$160 million in real terms in about 97 capital projects in various industries like, textiles, agriculture, mining plus banking and telecommunications in South Africa, while South African enterprises had invested in 206 projects in China. According to one of the respondents who was interviewed:

“South Africa has profoundly benefited from China immensely and china has equally benefited from china in so many ways, the only challenge is to balance this benefits so that, we don't in some ways, re-modernise the era of Neo-economic apartheid”.

The two countries have signed a series of government agreements on protection of investments, trade, economic and technical cooperation, avoidance of double taxation, civil air transport, maritime transport and etc. With the Sectoral Committee on Economy and Trade under the Bi-National Commission serving as a contact channel, the government departments of the two countries in charge of economic cooperation and trade have stayed in close consultations on matters concerning China-South Africa cooperation in WTO, protection of intellectual property rights and the New Partnership for Africa's Development as well as specific issues relating to the bilateral economic cooperation and trade.

On the FDI front, South Africa is one of the largest receivers of Chinese FDI in SSA, although the table below shows that Sudan and Nigeria received more FDI than South Africa since 2003, the FDI in the case of these two countries have been driven predominantly by oil exports to China. FDI in the case of South Africa however, is truly reflective of consumer products, mixed with commodity exports.

In the case of Sino-South-African relationship, since South Africa exports as much goods to China leaving a small trade balance between China and South African trade; it can be argued that the impact of china on South Africa is complimentary and not competitive more so because the types of goods exported into South Africa by china differs from the particular types of products which South Africa locally manufactures, although an exception is that of textile and apparel...where the South-African relationship is increasing proofing negative, the impact of China have even been more felt by South Africa over the past 10 years since the textile export of china have grown by over 40% S.S.C.C (2010)

Table 2: Significance of Chinese FDI in key sectors in 20 SSA economies

Country

Oil/gas

Mining

Agriculture

Services

Retail

Physical infrastructure

Manufacturing

Economies where Chinese FDI plays a significant role

Angola

X

Telecoms

Small traders

Construction, Infrastructure

Ethiopia

X

Telecoms, Electricity, Water

Small traders

Construction

Garments, Shoes/leather

Ghana

Poultry

Small traders, Import/export

Garments, Shoes/leather

Madagascar

Sugar

Financial, Telecoms

Small traders, Import/export

Garments, general spread

Nigeria

X

Telecoms, Technical services

Small traders

Construction, infrastructure,

Agro-processing

Mauritius

Small traders, Import/export

Textiles, Garments, General spread

Sudan

X

X

Small traders

Zambia

X

Cotton,

Construction

Agro-processing

Economies where Chinese FDI plays a moderately significant role

Congo - Brazzaville

Health, Telecoms

Energy, Construction

Kenya

X

Coffee

Small traders, Import/export

Garments, Shoes, General spread

Mali

Cotton

Electricity, Water

Construction, Infrastructure

Food processing

S. Africa

Financial

Small traders

Constructions, infrastructure,

Electronic goods

Uganda

X

Cotton,

Telecoms, Electricity

Small traders

Construction, infrastructure,

Agro-processing General spread

Economies where Chinese FDI plays a relatively insignificant role

Cameroon

X

Rice, Timber, Fish

Small traders

Construction, Infrastructure

Chad

Cote d'Ivoire

Gambia

Guinea

Namibia

Small traders

Construction

Tanzania

Cotton

Construction