THE PRESENCE OF CHINA AND INDIA IN AFRICA: An Economic Perspective

China and India occupy prominent positions on the international stage and in the economic and financial system. The two countries belong to the most evident and robust strategic partnership in the Global South , cooperating in various areas of common interest: the BRICS bloc, also composed of other middle powers such as Brazil, South Africa, and Russia. Despite a long and extensive cooperation agenda, the two countries have historical rivalries despite their significant participation in the global economy. The two powers are increasingly vying for a greater presence on the Asian continent and enjoy the status of regional powers. China, in East and Southeast Asia, and India, in South Asia, have increased their levels of direct investment in their neighboring countries, financing infrastructure projects, which increasingly increases the corporate presence of their respective countries in these countries and territories. Currently, both countries are among the three largest economies in the world. Measuring their gross domestic products by purchasing power parity, China ranks first and India third. They also have the largest populations in the world and an emerging middle class with ample purchasing power and enormous production capacity that has led to countless studies on them.

The presence of these two emerging powers in Africa is not limited to the recent century; on the contrary, it dates back long before African countries became independent, effectively supporting liberation movements during the decolonization period, guided by the Bandung principles. [1] The economic dependence and neocolonial relations that African countries have contracted in the post-Cold War era open up a wide range of possibilities for countries like India and China, as well as other emerging powers, to reconfigure and invest in a more satisfactory economic diplomacy to meet their needs. However, the African continent possesses enormous market peculiarities that attract any investor and national economic partner: first, because it is an inexhaustible source of hydrocarbons, minerals, and water resources; second, because it has emerging markets, similar to those of China and India, such as an economically active population seeking professionalization in the services provided; and third, because it has a relatively young population that embraces new economic, technological, and cultural dynamics. [2]

The African continent has a range of sectors that lack investment, especially those that are structural and fundamental to any economic growth: infrastructure, which will enable these countries to increasingly internationalize their products efficiently, without relying on other nations, many of which are foreign to the continent. An extremely important point is the modification of economic relations with the two emerging powers, so as to avoid becoming a monodependence, a challenge that both nations will have to face, or in some way already face. This demystifies the idea that new relations with African countries are detached from core-periphery models or resource extraction, in exchange for low-value-added, second-use, or low-quality products—the so-called " made in China" or "made in India" models. [3]

India and China base their cooperation on the five Bandung principles, [4] according to which the preservation of the sovereignty and independence of states, as well as diplomatic freedom, peaceful coexistence, and the right to mutual and individual defense, must prevail in the international system. In economic matters, South-South cooperation has been disintegrating among states, as have forms of economic relations based on the center-periphery primacy, in which the North-Central, with an immeasurable balance of payments surplus and capital accumulation, dominates the peripheral South, using it for resource extraction, cheap labor, and as a consumer market. All of this is fueled by mercantilist theory . Colonialism and the policies of the great Western powers gave China and India free access to the African continent with a different image of themselves, because they are countries that were under European colonial rule, in the case of India, and suffered reprisals from realpolitik. of the great powers, in this case China. The second reason is related to the adoption of a soft power relationship between the two countries, in which many African countries have adopted economic and political models that are in force in these emerging powers. Furthermore, a system of public consultations in the economic sphere has been established in several agreements between China and India.

The world's division between donors and recipients plunged the African continent into a broad dependence gap, due to the Bretton Woods institutions , created in 1944, and the creation of the DAC , which would later become part of the OECD . At this time, China and India were experiencing crucial moments in their histories. India, in 1947, was in the process of decolonization, and China, in 1949, proclaimed its triumph over the Nationalist Party, inaugurating the People's Republic of China. African countries underwent deflationary structural adjustments under the watchful eye of the IMF, [2] forcing the crisis-ridden African continent to adopt mandatory neoliberal policies, such as tax and fiscal reductions, budget cuts, austerity measures, and price increases for products, especially commodities , which often reduced these countries' incomes. This policy was also adopted by European countries in the face of the poorest African countries, especially in West and Central Africa. [5]

The two countries' cooperation on the African continent has taken different proportions in terms of investment institutions and initiatives, determining the success and expansion of the investment network. On the one hand, China, with state-owned companies and state-owned banks, with lines of credit and direct investment, in addition to foreign aid programs, has a more private forum and private banks. [2] China's greater success is directly linked to policies and institutional reforms that seek market expansion and internationalization, contrary to popular belief regarding Chinese state intervention and economic policies. However, India has significantly expanded its private companies through chambers of commerce and summits to coordinate cooperation on economic matters.

Soft power has allowed the two countries to deepen their economic relations, based on the logic of peaceful ascension and respect for states and their sovereign organizations. Countries like China, India, and Vietnam have become models adopted by African countries to incorporate their policies in specific sectors, enabling the transfer of technology, labor, infrastructure, and models for accelerating economic growth. It is important to mention that these Chinese and African initiatives and projects enable the internationalization of the currency between the two countries and the African continent. [6] With these projects, China and India, with their enormous economic foundation, have the primacy to participate in the global economic system.