Rising China and Africa's development: oil
Rising China and Africa's development: oil

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Rising China and Africa's development: oil

Session 1: The rise of China and resource demand

Introduction

Since around 1990 China’s growth has seen the country transform itself. Watch the following video with course author and OU academic Giles Mohan.

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Transcript: Video 1

GILES MOHAN
This course is all about how Africa can get the most out of the natural resources that it produces. In this case, we're really looking at oil and what linkages you can develop from that oil that can benefit Africa's growth. So when people think about China coming to Africa, there's a lot of debate about whether it's a good thing or a bad thing. It's quite polarised, I guess, in terms of whether it's a good thing or a bad thing. So on the kind of positive side, people say, well, what the Chinese bring is new sources of investment. They bring new money for Africa. They create the demand for African goods. So one of the things we've seen, for example, in those countries which do export raw materials is that the prices of those materials have gone up because of the demand from China. So this means theoretically more revenue for those countries. So that's kind of a good thing. Other people say, well, it's not such a good thing. What the Chinese are doing is essentially coming in. They're taking those resources and not putting a lot back. They bring some of their own labour with them. They repatriate the profits, et cetera, et cetera. So it's either- some people see it as a good thing. It's different from what the West has done for 200 years in Africa. Some people will say, well, it's just the same as you know, Just because they're Chinese doesn't mean they're any different from what the West has done. So it's a kind of polarised position, and what we want to do with our own research and this course is going to ask that question, is to what extent is this delivering benefits for Africa?
End transcript: Video 1
Video 1
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Described image
Figure 1 The Chinese economy is often depicted in comic ways as a challenge to US global hegemony

The data is impressive as the graphs (Figures 2a–d) in this PDF [Tip: hold Ctrl and click a link to open it in a new tab. (Hide tip)]   show.

The data reveals that China’s economy has been growing steadily since the mid-1980s following the implementation of wide-ranging reforms from the late 1970s. These changes resulted in growing gross domestic product (or GDP) which is the total value created within the economy.

Figure 2c shows China’s GDP was quite flat from 1960 to around 1990 but then started to rise dramatically. Alongside this growth, from the early 1990s the incidence of poverty hugely declined, which suggests that much of this economic growth spread throughout the economy. These improvements in well-being also translated into dramatic improvements in life expectancy. In 1960 life expectancy stood at just 44 years whereas in 2017 it was around 77 years.

These economic and social improvements were allied to major changes in lifestyle, one of the most notable being a move away from people living predominantly in rural areas and a rapid rise in the ratio of Chinese people living in cities. Figure 2d shows that in the 1960s and 1970s around 17 per cent of China’s population was urbanised but it started to rise from the early 1980s and now stands at around 60 per cent. Changes in lifestyle and industrial shifts also resulted in increased energy consumption which Figure 2b reveals experienced an almost five-fold increase between 1971 and 2015.

These so-called ‘development indicators’ tell us a story of economic growth and reduced poverty, structural shifts in China’s economy, massive changes in the way people live, and growing pressures on energy and resources. What fuelled this and what are the wider implications of this transformation that is still unfolding?

This short course examines these huge shifts in China’s economy and society, but focuses on what they mean for the rest of the world, particularly the countries of the global South that produce the natural resources which feed this growth.

Box 1 The global South

The term ‘global South’ started to emerge in the late 1960s. Although a contested and controversial term that is tied to concepts such as the ‘Third World’, the global South is commonly held to refer to ‘to countries classified by the World Bank as low or middle income that are located in Africa, Asia, Oceania, Latin America and the Caribbean’ (Clarke, 2018). In other words, developing nations.

China is a very powerful and increasingly wealthy country with many large international companies based there. When these Chinese firms do business with countries in sub-Saharan Africa and elsewhere in the global South they come to this as a country which has only recently, as the graphs showed, broken away from underdevelopment. China is still considered a developing country according to global growth indicators set by international financial institutions such as the World Bank and World Trade Organisation. As of June 2018, China’s nominal GDP growth was $9,782 and the World Bank considers countries with a per capita income of less than $12,275 as developing (CEIC Data, 2018). China also comes as a nation that was also colonised by Western powers in the nineteenth and twentieth centuries. Despite having the world’s second largest economy, China is still considered a developing nation and, as such, they promote a discourse of ‘South–South’ cooperation and ‘mutual benefit’ between fellow developing countries and distance these relationships from the supposedly more damaging ones linked to Western interventions. So, the first question this course addresses is:

Does China’s international engagement spell increased cooperation between developing countries for mutual benefit?

The countries that Chinese officials and firms deal with in the global South are often much less powerful and have smaller economies than China, and so there is the potential for these relationships to not be cooperative but, rather, profoundly unequal. And the real goal of these relationships between China and the global South is about economic benefits for China in the shape of access to raw materials or as markets for Chinese goods and services. So, the opposing question the course probes is:

Are Chinese practices expoitative, signalling a new phase of neo-colonialism?

In addressing these questions this free course will help you to:

  • understand China’s economic transformation and its implications for the supply of natural resources (Sessions 1 and 5)
  • appreciate how Chinese policies and institutions have both guided and responded to these changes, particularly around China’s internationalisation in search of natural resources (Sessions 1 and 4)
  • understand the growth and development of Chinese national oil companies (Sessions 1 and 4)
  • understand the place of Africa in China’s resource geopolitics (Sessions 2 and 4)
  • appreciate the role of African politics and institutions in shaping how Chinese investments in oil play out (Session 2)
  • assess the wider impacts of Chinese oil engagement on African growth and development (Sessions 3 and 5)
  • appreciate the complex policy choices available to African governments in managing their oil (Sessions 2, 3 and 5).
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