1. CHANGING CHINA, CHANGING AFRICA: FUTURE CONTOURS OF AN EMERGING RELATIONSHIP Peter Draper South African Institute of International Affairs (presenter) Martyn Davies and Hannah Edinger Frontier Advisory

2. OVERVIEW Background China in Africa: Current Frame China’s Economic Rebalancing – Implications for Africa Broader Considerations

3. Background Moving beyond the current frame Key driver: Chinese economic rebalancing

4. China in Africa: Current Frame Politics/security FOCAC Conflict zones and human rights Non-interference Economics State capitalism (SOEs; policy banks; ODA) Resources Trade structure NB: ‘Deindustrialization’ concerns SEZs and their development impacts

5. China in Africa: Current Frame Social Corporate social responsibility Labour practices Environmental impacts Culture Formal engagements (eg Confucius institutes) Informal/community (eg Chinese traders)

6. China’s Economic Rebalancing – Implications for Africa Chinese drivers Increased domestic cost structure Concerns over resource-intensive manufacturing Major problems in the financial sector Emphasis on new sectors (services) Domestic competition

7. China’s Economic Rebalancing – Implications for Africa Implications for Africa Increased outward FDI from China Changing composition of OFDI towards middle-sized private firms Role of SOEs will probably decline, relatively Therefore less emphasis on resource acquisition, relatively And relatively declining emphasis on role of policy banks/finance

8. China’s Economic Rebalancing – Implications for Africa Is Africa the ‘final frontier’ for export-oriented manufacturing FDI? Will take time, perhaps a long time Enduring Chinese advantages Broader Asian advantages African challenges But consider the ‘flying geese’ paradigm In relation to some emerging African advantages, particularly demographic

9. African Population growth dynamics 9 Rapid growth and urbanization, mostly from low bases, holds out the ‘middle class’ proposition Mostly a west and east African phenomenon

10. China’s Economic Rebalancing – Implications for Africa The most likely to benefit are those that: Grasp the governance reform nettle Are favoured by geography and resource endowments Welcome FDI by MNCs Chinese SEZs could be a key policy tool to faciitate this process

11. Broader Considerations Smarter Chinese diplomacy towards Africa will be required to service diversified footprints Commercial (project oriented): targeting new sectors working more with the Chinese private sector Economic (rules of the game): Greater emphasis on good governance in order to secure Chinese commercial interests Promoting trade liberalization Securing investments through BITs

12. Broader Considerations Politics, society and culture Policy of non-interference could become increasingly strained Increasing contact with emerging African middle classes will require greater attention to human rights agendas, corporate social responsibility, labour rights, and the environment