China and Japan in Africa: competitive spillover
6 February 2014
by Charlotte Mathews
AFTER Japanese prime minister Shinzo Abe’s recent Africa visit, a renewed exchange of insults broke out over the policies Tokyo and Beijing follow towards investment on the continent. Frontier Advisory CEO Martyn Davies says this was almost to be expected, but that the rivalry did not indicate a policy shift toward Africa, where the two countries have pursued different strategies.
China and Japan are heavily dependent on trade with each other but they also have a long history of enmity. In recent memory this is traceable to Japan’s occupation of China in the early part of the past century, the 1937 Nanjing massacre of an estimated 250000-300000 Chinese after the city was taken by the Japanese during the second Sino-Japanese war, and wartime atrocities by Japan, including forced prostitution of Chinese women.
Lately, ill-feeling has resurfaced over the ownership of the East China islands, which Japan calls Senkaku and China calls Diaoyu. Japan has declared them to be Japanese and China is now stepping up naval and aerial patrols around the area.
According to The Guardian, it is not only the strategic positioning of these islands but also the presence of large natural gas deposits in the area that make them important.
In addition, Japan has in recent years accused China of withholding vital rare earth materials, which are in short supply and needed for electronics manufacture. And in late December Abe visited a controversial war memorial in Tokyo, the Yasukuni shrine — where 14 war criminals from World War 2 are commemorated, among others — in what was seen as an unrepentant gesture. Afterwards, China said Abe would not be welcome in China.
The New York Times reported in mid-January, after Abe’s visit to Africa, that there was an exchange of words between the two countries over their Africa policy.
While in Mozambique, Abe said Japan would not just extract resources from Africa but create jobs. Abe’s spokesman told the BBC that Japan wouldn’t provide beautiful houses and ministerial buildings but “really aid the human capital of Africa”. The Japanese delegation also said China merely constructed infrastructure on the continent.
In response, the Chinese foreign ministry called Abe’s comments “unprofessional and ridiculous” and the head of China’s African affairs department said China was sincere, “unlike some countries”, adding that “without infrastructure, how can Africa develop?”According to a BBC report, Beijing also accused Tokyo of courting African support for a seat on the UN Security Council.
The Chinese presence in Africa has been growing over the past decade. In South Africa, Chinese investment is evident in banking and in platinum and gold mining, while elsewhere in Africa it has big investments in oil through Sinopec in Angola and CNOOC in Nigeria.
In 2006, the China-Africa Development Fund was established with about US$5bn available to encourage Chinese companies to invest on the continent. But Africa is not China’s biggest investment destination. According to a mid-2012 briefing paper from the Association for International Affairs, an independent think-tank based in the Czech Republic, Africa represented only 0,3% of China’s total foreign direct investment in 2010, down from 9,8% in 2008.
Japan has been a longtime investor in South Africa and the rest of Africa, where it has a high-profile presence with automotive brands like Toyota and Nissan and a stake in mining projects like Ivanhoe Mines’ Platreef. In June last year, on a visit to Japan, President Jacob Zuma said there were about 112 Japanese companies in South Africa employing 200000 people.
During his visit last month, Abe announced Japan would fund a R1,8bn gas-fired electricity generation plant in Mozambique and lend Mozambique R7bn over five years. He also pledged R3bn in aid for conflict areas and natural disasters in Africa.
Davies says that as both China and Japan are strategic competitors in Asia, it was almost to be expected that this rivalry would now be playing out in Africa, where their respective presence and roles on the continent are being compared and contrasted.
“Beyond the rhetoric, I wouldn’t say there is a policy shift from either Asian country in Africa. But their approaches have differed.
“While many Japanese corporate trading houses have been in Africa for over half a decade, it is China’s more recent, and not to mention confident, engagement that attracts all the attention.
“But recognised Japanese global brands -the likes of Toyota, Nissan, Sony, Panasonic — have a long head start on Chinese consumer brands, which are some way from establishing such a market beachhead.
“Chinese firms with their ambitious market expansion strategies, however, are perhaps the next ‘Koreans’, and will present rising competition to the established Japanese and Korean firms,” Davies says.
Financial Mail