African leaders put their case as finance ministers from the world’s 20 richest countries met in London, ahead of next month’s G20 summit on the global economic downturn. British premier Gordon Brown took the opportunity to promote himself as Africa’s friend within the G20. But in a first-ever joint communique on the eve of the meeting, Brazil China Russia and India called for reform of the global financial institutions to give a greater voice to emerging economies and provide better regulation of the financial system in future.

As a leading UN economist argued that China could lead the world out of slump, all the signs last week were that Chinese investment in Africa was continuing unabated. So was concern by campaigners at the possible environmental and social impact of some Chinese deals and debate over the impact of Chinese traders and migrants. But there were also signs of continuing efforts by larger Chinese corporations to attend to their image. Meanwhile, the annual meeting of China’s parliament provided an occasion for an insight into future policy trends and thinking by China’s rulers.

As the dust settled on President Hu Jintao’s four nation African visit, a sense of relative normality returned to the Africa-China debate. A few residual commentaries and debates continue to make media headlines and blog sites around the interpretation of President Hu’s Africa visit and . But attention has now shifted to a more a significant diplomatic visit, namely Hilary Clinton’s first official engagement and visit to Asia as US Secretary of State.

As discussed in earlier editions of the China-Africa-Watch, Mrs Clinton’s visit to China has been characterized by all kinds of expectations, not least that the Obama administration would continue with its tough trade talk against China, in keeping with the new President’s election stance. Even Washington hawks and Clinton opponents expected her to stick to her guns in pushing China on its human rights record as she did during her election campaign.

But, it was Mrs Clinton who did a 360 degree turn and caught most off-guard with her comment that while Washington ‘would press China on long-standing US concerns over human rights such as its rule over Tibet…’.‘form a pragmatic partnership with Beijing on the financial crisis and climate change’.

By making her first diplomatic trip to Asia and China in particular, the new Secretary of State was sending a clear signal about her priorities. But where does Africa fit in all of this?

As the US and China begin to define their pragmatic but symbiotic relationship, how does President Hu’s talk of forging a new Africa-China consensus take into consideration this thawing of relations between Washington and Beijing? Perhaps, it is too early to draw conclusions, but for African scholars and commentators the issue is that any change to the engagement between Beijing and Washington does have important implications for how Africa engages with each of them.

This is especially relevant since the global financial crisis was the backdrop of President Hu’s African visit with the underlying message about strengthening partnership and cooperation during times of adversity.

Some might fear that America could be a rival to Africa for China’s attention and affection. But American-China relations are based on a real economic interrelationship whose health is also key to Africa’s hopes of mitigating the worst of the economic storms. In particular President Obama depends for his economic stimulus package on China’s willingness to continue to lend the USA money.

As the Financial Times reported on 22 February; ‘The level of Chinese demand for US Treasury paper could play a crucial role in determining the interest rates the US government has to pay for its rapidly growing debt pile.
‘In the past year, Chinese investors – mainly its central bank – have become the biggest foreign holders of US Treasuries, increasing their holdings 15 per cent last year to nearly $700bn (€545bn, £485bn).
‘Foreign investors now own about $3,000bn of US Treasuries, or more than half of the amount publicly available. Whether Chinese buying continues to increase this year at the same pace could be an important factor in the outlook for the Treasury market.

‘In turn, the level of demand from China depends on the health of the US economy. The fewer Chinese goods Americans buy, the fewer dollars China will have to invest in dollar-denominated assets’

So much as economic reality forced Hilary Clinton to moderate her election campaign line on China’s human rights issues, so China has little laternative but to continue to buy US Treasury bonds to enable Obama’s rescue package – although mounting opinion in China is asking if the money would notbe better spent at home.

This ambivalence was pungently expressed by Luo Ping, a senior Chinese banking official, at a recent conference; ‘“US Treasuries are the safe haven; it is the only option,” said Mr Luo. “Once you start issuing $1-$2 trillion ... we know the dollar is going to depreciate, so we hate you guys, but there is nothing much we can do.”

If this China-America marriage of convenience lasts long enough to pull the global economy out of recession, then Africa along with the rest of the world economy will feel the benefit of a shorter-lived downturn. But many expect that once the global economy recovers, China will be looking for alternatives to the dollar, and to reforms in the global financial architecture.
This could be to Africa’s benefit, if her leaders know or can be pushed and pressured into knowing, how to make the best of the opportunities.
But in forging a new consensus with Africa, China should also reflect on how Africa’s newest Diaspora in China is affected by the global financial meltdown.

As Chinese traders and merchant families have to find new ways of keeping the Chinese dream alive, similarly African traders in China are finding it harder to maintain their business activity, not least due to the increased pressures of ‘dared to think and act’. But African traders are also making the same trek to China with the same intentions and ambitions. Therefore, if the ‘financial crisis breeds new opportunities’ for China’s private firms and traders in increasing investment into Africa, then the traffic should certainly not be only one way. The official rhetoric of ‘win-win partnerships’, may sometimes appear to be contradicted by realities on the ground.

* Stephen Marks is research associate and Sanusha Naidu is research director of Fahamu’s China in Africa programme

* Please send comments to [email protected] or comment online at http://www.pambazuka.org/.

President Hu Jintao’s Friendship and Cooperation visit to Africa ended on a high note. With more than US$380 million loans and grant agreements signed during the whistle-stop visit to Mali, Senegal, Tanzania and Mauritius, President Hu put to rest any speculation or confusion regarding Beijing’s long-term strategy in Africa and reaffirmed its economic assistance during times of financial uncertainty and crisis. But the real significance of this visit was the keynote speech President Hu delivered in Tanzania entitled .

Stephen Marks and Sanusha Naidui look at China’s response and the impact on Africa. It’s early days so far in the Obama Presidency but there continue to be worrying indications of US-China friction on trade. If co-operation did break down it would be bad news for Africa. But there are encouraging signs that a lot of the noise may be posturing. There are also good reasons to believe that China’s African commitment will not suffer, and may even be stepped up as a result of the global crisis. But the reasons for African vigilance on the ground will also continue.

Stephen Marks and Sanusha Naidu look at the the global effects of the recently announced $586bn programme of investment in infrastructure and social welfare amounting to seven percent of GDP in each of the next two years.