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Since we’re in the country of Hans Christian Andersen, we’ll start with a story: “Once Upon a Time” PowerPoint PPT Presentation

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Since we’re in the country of Hans Christian Andersen, we’ll start with a story: “Once Upon a Time”. Chinese engineers & architect quarters, parliament building renovation, West Africa.

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Since we’re in the country of Hans Christian Andersen, we’ll start with a story: “Once Upon a Time”

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Since we’re in the country of Hans Christian Andersen, we’ll start with a story:

“Once Upon a Time”

Chinese engineers & architect quarters, parliament building renovation, West Africa

“Beijing has thrown down its most direct challenge yet to the West’s architecture for aiding Africa’s development.”

--- Financial Times

“China in Africa” as Represented in the West (and South Africa)

  • “New Colonialists” – The Economist

  • “Rogue Donors … toxic aid” – Foreign Policy

  • “Leading the land grab” – Mail & Guardian

  • “Billions in Aid for Sudan & Zimbabwe”

  • “Bring in all their own workers”

  • “China gives aid to get access to resources”

  • “Dragon with a Heart of Darkness”

Internet Dreams

  • Media stories + lack of research =>

  • Robust internet representation solidifies into an unquestioned conventional wisdom

  • Emma Mawdsley’s great article “Fu Manchu versus Dr. Livingston in the Dark Continent”

A Bit Alarming…

  • Much of this did not reflect what I knew

  • China 1979, Sub-Saharan Africa 1983

  • “Doing Well by Doing Good” 1983

  • Chinese Aid and African Development St. Martin’s Press, 1998

  • 2007-2009 research

  • South Africa, Zimbabwe, Mozambique, Sierra Leone, Tanzania, Zambia, Nigeria, Mauritius, Egypt, Liberia, The Gambia

China Does Present a Challenge

  • Poor environmental & social standards

  • Chinese companies probably more willing to pay bribes

  • Low wages and safety standards

  • Chinese immigrants & traders

  • Willing to partner with any government granting Beijing diplomatic ties

But perhaps the biggest challenge:

Western aid has not been very successful in raising standards of living or stimulating structural transformation in Africa

Our aid has been systematically de-linked from investment, manufacturing, job-creation

The West’s Two Images of Africa

  • Aid community & citizens: Poverty, chaos, war, HIV-AIDs, starving children, fragile states

  • Businesses: Angolan oil, Congo’s minerals, Zimbabwe’s diamonds, Niger’s uranium, Liberia’s timber

We haven’t figured out a way to link Africa’s riches to its development. The Chinese are actively trying to do just this.

  • They’ve looked at our record: not so hard to beat

  • Remember Japan & China in 1978

  • Chinese ambassador in Niger: “This country has already seen uranium extraction for nearly 40 years … But when one sees that the direct revenues from uranium are more or less equivalent to those derived from the export of onions each year, there’s a problem.”

  • West: aid (ODA) de-linked from investment, trade

  • China: a different model, mostly not aid/ODA

  • Chinese government funds (“economic cooperation”) => investment, trade

Context for Understanding China

  • China is a developing country

  • Run by the Communist Party

  • But not “China Inc.”

  • China is changing rapidly

  • China’s aid/ODA is primarily political

Akira Kurosawa’s Rashomon

Myth 1: China is a “New Donor

Aid Agreements: 1960-2007

Why is this Important?

  • Not just the Tan-Zam Railway

  • Why is this important? Credibility

  • Experiments to make aid & “economic cooperation” sustainable

  • Today’s engagement is the result

    • Overseas economic zones

    • Agri-businesses running 20 projects

    • Resource-backed infrastructure loans

    • $5 billion equity fund for Chinese investment

“Our cooperation with Africa today, as well as aid, has shifted from direct financial assistance to the output of development experience.”

Mr. Fung, Deputy General Manager of Tianjin TEDA Investment Holding, Egypt Suez Economic and Trade Cooperation Park, October 16, 2008

Myth 2: Chinese Aid is Huge

Some Western Reports on China’s African Aid

  • World Bank “$44 billion” since 1956

  • Foreign Policy “$9 billion for just one project”

  • US Congressional Research Service:

    • 2006 “$9 billion”

    • 2007 “$17.9 billion”

Source: Brautigam, The Dragon’s Gift, 2009

China-Africa trade

2006: $ 55.5 billion

2008: $ 108 billion

Construction & labor service revenues

2002: $1.2 billion

2005: $12.6 billion

2008: $20 billion

Chinese Business is Huge

Myth 3: Chinese Bring in All Their Own Workers

Researchers’ Evidence:

  • Sierra Leone 1983

    • 600 local/105 Chinese: hydropower project

    • 300 local/100 Chinese: stadium

  • Across Africa: average 20% Chinese, 80% African

  • Wide variance:

    • Angola 45% Chinese, 55% Angolan

    • Tanzania 90% Tanzanian, 10% Chinese

  • Why differences?

    • Local capacity, enforcement, time

  • Zambia Chambishi Mine 2005

Myth 4: China gives aid to get access to resources

Chinese Aid/ODA

  • Distribution is Primarily Political

  • Broad and even distribution

    • Zero-interest loans, grants

    • Donations-in-kind

  • Debt relief mainly to HIPCs: 32 in Africa

    • With diplomatic ties

    • Not for Egypt, Mauritius, Pakistan, Zimbabwe

    • Yes for Equatorial Guinea, Kenya, Lesotho, Angola (non-HIPC)

What about China’s Huge Resource-backed Infrastructure Credits & Loans?

  • Market-rate line of export buyer’s credit

  • Non-transparent

  • Tied to Chinese goods & services

  • “Request based”

  • Secured by resources

Angola: Oil-Backed Line of Credit Terms (2004)

Angola: 33 Projects for $1b (2004-2007)

  • Ag. Machinery & equipment $22m

  • 4 Irrigation systems $93m

  • Luanda’s electricity system: $45m

  • Water treatment system repair in 3 provincial cities: $21m

  • 5 agricultural training institutions

  • 6 polytechnical colleges

  • 5 secondary schools: $26m

  • Kifangondo-Caxito road: $211m

  • 86 ambulances

  • 6 provincial health centers

  • Rehabilitate 7 regional hospitals … etc. etc.

Resource-Backed Infrastructure Loans as “Agency of Restraint”

  • Less likely to be embezzled: no cash

    • “with China, you never see that money”

  • Translates natural resource exports directly into development infrastructure

  • Doesn’t wait for governance to improve

    • Angola after the end of the civil war

DAC: “aid/ODA”

--includes debt relief

--loans: full value

What shocks us: China can build a presidential palace in Sudan and call this “aid”

China: “aid/ODA”

--doesn’t include debt relief

--loans: only the subsidy

What shocks them: Western experts live in 5 star hotels & overseas lifestyle

DAC & China

It’s not just the minerals

  • Nigerian Official

  • China’s other interests

    • Exports: $50 billion market

    • Construction contracts: $40 billion signed ’08

    • National Champions: Huawei, ZTE, Nuctech

    • Largest single investment so far?

Why is China Different?

  • Foreign policy framework

  • Core ideas about development

  • Experience as recipient of aid & loans

  • East Asian developmental state

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