winner-take-all-cover-fs8 We have all heard strange stories about China’s presence in Africa. From the New AU’s- African Union– headquarter to a collapsing hospital in Angola. For instance, I am thinking of this story I read on New African – The biggest-selling panAfrican magazine in Englishthat Chinese expatriates were eating the stray cats and dogs of the neighbourhood. Frankly, why is this kind of story reported anyway? Is this some kind of character assassination? Or worse sabotage by you know who ? To compound the matter, last year I saw a lot of ads sponsored by the government of China on TV and magazines. Apparently, they were trying to rebrand China. Very confusing Indeed!

The major question here I think is: What is China exactly doing in Africa? What does it mean for us Africans? And for the world? Luckily, my favourite economist decides to write a book and answers these very important questions.

The Truth of the matter is that the reasons for China’s presence in Africa are far from obvious. There are a lot of contradictory reports and articles in the news. However, China is on a shopping spree and Africa with its huge reserves of commodities (oil, water, land, gas, gold,minerals…) is an obvious “shopping center” literally.

But first, as usual, a word about the author.

About the author

Dambisa Moyo is an international economist and author. She shot to stardom after she wrote “Dead Aid”, where she argues that Aid is actually nefast to the development of Africa. Her argument is based on the idea that throughout history no nation has developed on aid only. She advocated for more foreign direct investment and trade. This point here links directly to her attitude toward China. Indeed, Ms Moyo is a pro-China advocate. On a recent event I attend she said “…Chinese are our friends…” but more on this later.

Dambisa Moyo is a Zambian-born economist who authored 3 books:

  • Dead Aid: Why Aid is Not Working and How There is a Better Way For Africa (2009)
  • How the West Was Lost: Fifty Years of Economic Folly – And the Stark Choices that Lie Ahead (2011)
  • Winner Take All: China’s Race for Resources and What It Means for the World (June (2012).

Dr Moyo holds a Doctorate (D.Phil.) in Economics from Oxford University, an (M.P.A.) from Harvard University’s a (M.B.A.) in Finance and a (B.S.) in Chemistry from the American University in Washington D.C. Subsequently, she worked for the World Bank as a Consultant and at Goldman Sachs as an economist in the global macroeconomics team on the debt capital markets sector.

A “Winner Take all” market

According to Investopedia, a market where the Winner take all is a market in which the best performers are able to capture a very large share of the rewards, and the remaining competitors are left with very little. The main argument of this book is that the commodity market is a winner take all type of market and China is extraordinarily well-positioned to capture a very large share. It is indeed very worrisome, not because it’s China, but because we know with certainty that nothing good come out of a monopoly situation.

Winner take all is divided in two major parts: The first part discusses China’s rush for resources and the second part discussed the implication for the world. The focus of this book is not Africa per se but rather China and it huge needs for resources. Since Africa is a main supplier in the global commodities markets, Africa’s commodities situation is covered in great details.

China Rush for resources

In this first part, the author introduces us to the reasons why China is so hungry for commodities. China has been growing at a double digits rate these last years and it is set to grow at around 8% in 2013. With these phenomenal rates, China’s middle class is increasing and is demanding standard of living close to those of the West. Basically, it means more cars, homes, roads, food, water, oil…After the drivers of the world commodity demand are explored, each major resource  – Land, water, oil, gas and minerals – is covered extensively . For each resource, the supply and the demand side are analyzed but the author constantly keeps China and it need of that resources in perspective. For an economic book, it is absolutely easy to understand and arguments are supported by a lot of statistics  and graphs. The main argument is that natural resources are finite and that, at the extraction levels the world is going, we are heading for a war of some sort that nobody except China is ready for. China is planning for the time of scarcity. This claim is supported by a lot statistics on the actual commodities markets and the fact that new reserves discoveries are  much rarer now and not easily accessible.The author also discusses the fact that new technologies have delayed the day of reckoning.

I really enjoy the first part, it was full of surprising facts and quite fascinating. I really appreciate the fact that the author stayed objective, even though she is pro-China. She nevertheless took the time to explore the pros and cons of each issue.

What does it means for the world

This is the best part of the book and the most important chapter of this book is chap 8: The Geopolitics of All. All the questions I mentioned in the beginning of this post are answered in this very chapter. In chap 5&6, Dr Moyo explores the mechanics of the commodities markets and how China’s actions is distorting markets prices. I think she did a great job of keeping things simple and easily  understandable.

Now back to chap 8, here are my reflections on some of the points discussed in the book:

  • Is China trying to implement some sort of Neo-colonialism in Africa?

In 2011, the then US secretary of State, Ms Hilary Clinton said that :

…Africa must beware of “New Colonialism…We saw during colonial times how easy it was to come in,take out natural resources, pay off leaders and leave…(P 155-156)

Dr Moyo answers to these insinuation is to revisit the unequal colonial arrangement. Simply going by the logic of colonialism – religious conversion, use of military force, handpicked local leadership – China is not showing signs of using any of these stratagems. I tend to agree with her. Indeed, Dr Moyo said:

 …China appears wholly disinterested in assuming sovereign responsibility or in shaping the social and political infrastructure of the host nations…(P 157) …If anything, China should be criticized for being too disinterested ..

  • Is an army of Chinese labourer descending on Africa or is it another myth?

Dr Moyo said:

Deploying Chinese labor throughout the world is a central part of China’s resource strategy Large numbers of Chinese workers usually follow the global flow of capital…(P158)…Overseas posting bring down the official unemployment rate at home…

  • Is it true that Chinese companies don’t hire local staff?

She said:

…the veracity of these claims varies from country to country…

She proceed to give examples based on statistics:

In Zambia , 15 locals have been hired for 1 Chinese , in Angola it was 1 for 1, in Sudan it was 3 for 1, in Mozambique 2 for 1…

Why is it the case? Various reasons are given:Lack of skilled workers, different type of projects per country requiring more or less skilled workers, country that experienced civil war…

  • Is it true that Chinese workers in Africa are prisoners on work-release programs? 

…No sources, evidences, or specifics to support such claims were provided…(P161)… these claims was dismissed as nonsense by the government of China(P162)…

  • What of the Labor Abuses? A lot of nasty stories abound?

Dr Moyo said:

These claims are worth investigating….but…although the charges abound, the evidence are sketchy….the reporting on this subject has exhibit a predilection for too much fiction and not enough fact…(P163)…according to the Economist ,part of the problem is misconceptions…

Also, Dr Moyo stresses that contrary to common belief, local population are not against China’s presence in Africa. (this is according to a Pew survey conducted in 2007). Five years on , she said that we don’t have any reasons to believe that things have changed.

  • When will China start to throw its weight around? When exactly is the tipping point?

By asking this question,  Dr Moyo is reminding us that China is now a military power. What if an African country try to deny China access to a resource it wants?

…for a large country with a rapidly growing military prowess, the exercise of soft power can often become less charming once request are refused…(P173)

I absolutely recommend you this book. Even if it takes you forever to finish it, I think it is worth it.

Did you read this book? What did you think?