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China to kick start consumer revolution in Africa

China's economic might in Africa can develop the continent's consumption markets and reap the reward

Africa is on the move. Over the last decade the sub-Saharan region grew at a rate not seen since the 1960s, improving on the 1 per cent growth for much of the intervening period to more than 5 per cent a year. Of course, this is not as good as China's progress. The country which started the decade as the world's seventh largest economy (excluding Hong Kong) is poised to overtake Japan and become second only to the US because its annual average growth has been running at over 10 per cent.

But there is no question that the change in both countries' fortunes is linked. By buying up vast quantities of oil and other commodities like copper, iron ore and diamonds, China has been key to Africa's development as well as its own.

In many respects it will be business as usual for China in Africa during the next decade. It will continue to make deals (often at the expense of Western companies) for the raw materials for its many refineries and factories. It will also maintain investment in a significant number of infrastructure projects like bridges, roads and airports as well as providing soft loans for its trading partners.

But the most important new element in China's relationship with Africa is that it now has an eye on one of the world's largest untapped markets of around one billion people for its consumer products and services.

Attempting to outflank Western and other companies who have ignored the business potential in Africa, dubbed 'the failed continent' by foreign investors in the 1980s, is a clever move. But will the strategy succeed? I think it can because despite some concerns about the quality of some exports, a growing number of Chinese companies have now acquired the minimum level of technological expertise to supply a range of goods and services to African markets at prices far below those available from companies operating in the advanced economies of North America, Europe and the Pacific Rim.

China also has the potential and capacity to stimulate economic demand in Africa through engaging more with areas under its influence, effectively all sub-Saharan countries except for the very small number which recognise Taiwan, by hiring labour and sourcing more locally than it has done up to now.

Such a strategy would not only strengthen economic and political ties but would also have a significant multiplier effect creating large pools of young, relatively affluent consumers very keen to try out the latest gadgets and services. It is worth noting, for example, that Africa is the world's fastest-growing market for mobile phones with subscriptions increasing from just 5 per cent of the population in 2003 to over 30 per cent today.

Many of the consumer items available in advanced countries are already made by Chinese companies although unfortunately for them they don't own the intellectual property rights.

Furthermore, the economic and political power that comes from owning and controlling the distribution of global brands, which is underpinned by a formidable capacity in design, technology and service delivery, should not be underestimated. This explains all the fuss made about the extensive counterfeiting and piracy carried out by Chinese operators.

Manufacturing in the US and other advanced economies may well be in long-term decline but the strength of brands as diverse as Apple, Coca-Cola, eBay, Gillette, Gucci, Intel, Nike, Nintendo and Toyota continues to climb and makes the global economy go round.

The Chinese authorities have been well aware of this problem for its economy for some time now and this is why they have flown in a small army of US and European marketing experts to help their companies develop their own range of branded products and services.

But this kind of knowledge transfer has not been nearly as straightforward as the Chinese once thought because the brand and design expertise to be found in cities like Atlanta, Florence, London, Paris, Santa Clara, Seattle and Tokyo has been built up incrementally over many decades, knowledge which is geographically bounded for the most part because it is embedded in specific trading systems.

This explains why the Chinese are now very keen to buy global brands, which may be deemed superfluous to requirements by some Western companies still feeling the effects of the credit crunch, but retain sufficient value and prestige to make them appear very good long-term investments for China.

It is undoubtedly this logic that lies behind last month's $1.8 billion bid by Geely, the largest independent vehicle manufacturer in China, for Ford's Swedish carmaker Volvo. Significantly, the deal has the backing of the Chinese government who have defined the auto industry as a key sector of its economy.

Volvo, which has a workforce of around 20,000, two-thirds of which is based in Sweden, has been promised by senior Geely executives that it will be well-positioned to access the Chinese and other new markets.

Assuming the deal is finalised in May it looks like Volvo, which has built up an enviable reputation for the safety and sturdiness of its vehicles, as well as more recently for its oil-electric hybrid technology, will not only be visible in increasing numbers on Chinese roads but African ones as well.

However, it will be the appearance of new, cheaper cars from Geely using Volvo's technology but without the Volvo brand that will undoubtedly come on stream a few years later that will herald the real Chinese-led consumer revolution in Africa.

Dr Sean Carey is Research Fellow at the Centre for Research on Nationalism, Ethnicity and Multiculturalism (CRONEM) at Roehampton University

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The New Times: Brexit, globalisation, the crisis in Labour and the future of the left

With essays by David Miliband, Paul Mason, John Harris, Lisa Nandy, Vince Cable and more.

Once again the “new times” are associated with the ascendancy of the right. The financial crash of 2007-2008 – and the Great Recession and sovereign debt crises that were a consequence of it – were meant to have marked the end of an era of runaway “turbocapitalism”. It never came close to happening. The crash was a crisis of capitalism but not the crisis of capitalism. As Lenin observed, there is “no such thing as an absolutely hopeless situation” for capitalism, and so we discovered again. Instead, the greatest burden of the period of fiscal retrenchment that followed the crash was carried by the poorest in society, those most directly affected by austerity, and this in turn has contributed to a deepening distrust of elites and a wider crisis of governance.

Where are we now and in which direction are we heading?

Some of the contributors to this special issue believe that we have reached the end of the “neoliberal” era. I am more sceptical. In any event, the end of neoliberalism, however you define it, will not lead to a social-democratic revival: it looks as if, in many Western countries, we are entering an age in which centre-left parties cannot form ruling majorities, having leaked support to nationalists, populists and more radical alternatives.

Certainly the British Labour Party, riven by a war between its parliamentary representatives and much of its membership, is in a critical condition. At the same time, Jeremy Corbyn’s leadership has inspired a remarkable re-engagement with left-wing politics, even as his party slumps in the polls. His own views may seem frozen in time, but hundreds of thousands of people, many of them young graduates, have responded to his anti-austerity rhetoric, his candour and his shambolic, unspun style.

The EU referendum, in which as much as one-third of Labour supporters voted for Brexit, exposed another chasm in Labour – this time between educated metropolitan liberals and the more socially conservative white working class on whose loyalty the party has long depended. This no longer looks like a viable election-winning coalition, especially after the collapse of Labour in Scotland and the concomitant rise of nationalism in England.

In Marxism Today’s “New Times” issue of October 1988, Stuart Hall wrote: “The left seems not just displaced by Thatcherism, but disabled, flattened, becalmed by the very prospect of change; afraid of rooting itself in ‘the new’ and unable to make the leap of imagination required to engage the future.” Something similar could be said of the left today as it confronts Brexit, the disunities within the United Kingdom, and, in Theresa May, a prime minister who has indicated that she might be prepared to break with the orthodoxies of the past three decades.

The Labour leadership contest between Corbyn and Owen Smith was largely an exercise in nostalgia, both candidates seeking to revive policies that defined an era of mass production and working-class solidarity when Labour was strong. On matters such as immigration, digital disruption, the new gig economy or the power of networks, they had little to say. They proposed a politics of opposition – against austerity, against grammar schools. But what were they for? Neither man seemed capable of embracing the “leading edge of change” or of making the imaginative leap necessary to engage the future.

So is there a politics of the left that will allow us to ride with the currents of these turbulent “new times” and thus shape rather than be flattened by them? Over the next 34 pages 18 writers, offering many perspectives, attempt to answer this and related questions as they analyse the forces shaping a world in which power is shifting to the East, wars rage unchecked in the Middle East, refugees drown en masse in the Mediterranean, technology is outstripping our capacity to understand it, and globalisation begins to fragment.

— Jason Cowley, Editor 

Tom Kibasi on what the left fails to see

Philip Collins on why it's time for Labour to end its crisis

John Harris on why Labour is losing its heartland

Lisa Nandy on how Labour has been halted and hollowed out

David Runciman on networks and the digital revolution

John Gray on why the right, not the left, has grasped the new times

Mariana Mazzucato on why it's time for progressives to rethink capitalism

Robert Ford on why the left must reckon with the anger of those left behind

Ros Wynne-Jones on the people who need a Labour government most

Gary Gerstle on Corbyn, Sanders and the populist surge

Nick Pearce on why the left is haunted by the ghosts of the 1930s

Paul Mason on why the left must be ready to cause a commotion

Neal Lawson on what the new, 21st-century left needs now

Charles Leadbeater explains why we are all existentialists now

John Bew mourns the lost left

Marc Stears on why democracy is a long, hard, slow business

Vince Cable on how a financial crisis empowered the right

David Miliband on why the left needs to move forward, not back

This article first appeared in the 22 September 2016 issue of the New Statesman, The New Times