Beijing’s African Summit: Why China Is Wooing the Dark Continent

Much of the world beyond North America was avidly watching the US mid-term elections, and no less here in China. The resounding victory by Democrats, which likely means an end to the aggressive, America Uber Alles policies of the Bush Administration and its far right neocon Praetorian Guard, was a shot heard around the world. Elation was universal from Peru to Northern China. Polls repeatedly showed George Bush the most disliked man on earth.

While American voters were finally giving President George Bush and his southern-fried Republican Party a richly-deserved, long-overdue drubbing, I was in northern China observing a nation that while rigidly authoritarian, is at least governed by capable, intelligent leaders as compared to the bungling politicians and crackpot ideologues that have run America onto the rocks.

Here in Beijing for my umpteenth visit since 1975, I’ve seen the future, and it still says, ‘made in China.’

This gigantic metropolis of 25 million seems destined to become the world’s new capitol city — provided China’s economy, still surging at over 10 per cent per annum, remains strong, and political stability continues. Beijing’s massive new skyscrapers, huge government blocks, broad, traffic-clogged avenues and miasma of smog and dust give it the look of an imperial capital in a science fiction film.

Last week, China staged a grandiose summit for 48 African leaders summoned to Beijing to receive $10 billion in aid from China’s new leader, President Hu Jintao.

Energy-voracious China now gets 30 per cent of its oil from Africa. Angola just passed Saudi Arabia as China’s leading oil supplier. China is bent on securing the lion’s share of Africa’s supplies of oil and other strategic resources. China-Africa trade surged 30 per cent to $50 billion in 2003.

China’s non-interference policy means its trade and aid come without strings, a major plus for authoritarian African regimes. At least China is not hypocritical. While Washington boycotts Sudan and Zimbabwe over human rights, it cosies up to other major rights violators like Egypt, Morocco, Algeria and Tunisia.

The summit was a lavish spectacle, with convoys of bigwigs in armoured limousines racing down the avenues, dancers, drummers, acrobats, small armies of tough security details, and regiments of China’s feared paramilitary police, the ramrod erect Wujing, scowling at everyone. Algeria’s secret police — who enjoy torturing victims with electric drills and blow torches — took first prize for looking sinister.

This week, China announced a Q3 trade surplus of $102 billion. Beijing’s monetary reserves have finally topped $1 trillion, surpassing the former cash king, Japan. Much of China’s reserves remain in US dollars. Beijing continues to finance America’s spending binge by lending it billions, and keeping the reserves it acquires in dollars, though their value is under increasing pressure as the US dollar weakens.

China’s mammoth trade surplus, and a rising flood of foreign investment, is swamping the nation’s banks with cash. This, in turn, has fuelled indiscriminate speculative investments, particularly in real estate, and a gold rush frenzy that often obscures China’s solid economic development.

This flood of hot money poses a serious danger. Indiscriminate investment leads to overproduction, which then causes a deflationary crisis that could end in financial meltdown. Japan experienced similar phenomena in the 1990’s.

China’s government has been struggling without much success to restrain this investment dragon. Beijing refuses, however, to allow its controlled, seriously undervalued currency, the yuan, to float, as its trade partners demand.

The undervalued yuan has given China its huge surplus, the motor of growth that has pulled the nation out of poverty. China still needs to deal with hundreds of millions of struggling farmers, state industry workers, and unemployed. So it refuses to allow the yuan to inch up by more than 5 per cent per annum. If the yuan were allowed to float, warn Chinese bankers, people would rush to convert yuan to dollars, causing a dire financial crisis.

Anyway, argue Chinese officials, why should China pay the price by revaluing the yuan for America’s profligacy in refusing to save and running huge government deficits?

America’s Treasury is printing too much money in order to keep America’s debt-ridden economy growing. Since 60 per cent of all US dollars end up abroad, the Bush Administration’s reckless spending and over-stimulative monetary policies have caused a dangerous worldwide cash flood and serious imbalances in the global economy. US Republicans would do well to take pointers on capitalism from China’s Communists who have certainly beaten the western devils at their own game.