Post on 16-Mar-2020
CHINA AND AFRICA: THINK AGAIN
Professor Deborah Brautigam School of Advanced International Studies, Johns Hopkins University Washington, DC
A BIT ALARMING…
“…ONCE UPON A TIME…”
--- Financial Times
CHINA DOES PRESENT A CHALLENGE
MAJOR AFRICAN CONCERNS:
BUT PERHAPS THE BIGGEST CHALLENGE:
Africa is rich. We haven’t figured out a way to link Africa’s riches to its development. The Chinese are actively trying to do just this.
CHINESE AMBASSADOR IN NIGER:
CHINA AND AFRICA: THE FIRST WAVE
1st Wave
CHINA AND AFRICA: THE SECOND WAVE
East Wind Blows in Africa: 1950s & 1960s
China vs. USSR vs. USA
CHINA AND AFRICA: THE THIRD WAVE
CHINESE LEADERS Visits to Africa, 1995-2009
Premier Li Peng 1995, 1997
President Jiang Zemin 1996, 1999, 2000, 2002
Premier Zhu Rongji 2002
Premier Wen Jiabao 2003, 2006
President Hu Jintao 2004, 2006, 2007, 2009
South Africa
Namibia Zimbabwe
Botswana
Mozambique
Zambia Angola
Tanzania
D R Congo Kenya
Congo
Gabon
Uganda
Somalia
Ethiopia
Sudan
Egypt Libya
Tunisia
Morocco Republic
Chad
Niger
Mali
Mauritania
Western Sahara
Central Af. Republic Cameroon
Nigeria
Burkina Faso
Swaziland
Lesotho
Burundi
Rwanda
Equatorial Guinea Sao Tome and Principe
Malawi
Djibouti
Cote D’Ivoire
Ghana
Togo
Benin
Liberia
Sierra Leone
Guinea
Guinea-Bissau
Gambia
Senegal
Mauritius
Seychelles
Madagascar
Cape Verde
Eritrea
Algeria
WHAT ARE THE DRIVERS OF CHINESE ENGAGEMENT IN AFRICA TODAY?
2. BUSINESS
TRADE
Trade: Exports to Africa, China (US Bil $)
0
10
20
30
40
50
60
70
2000 2001 2002 2003 2004 2005 2006 2007 2008 2009 2010
Trade: Exports to Africa, China vs. US (US Bil $)
Bar: China Line: USA
0
10
20
30
40
50
60
70
2000 2001 2002 2003 2004 2005 2006 2007 2008 2009 2010
Trade: Imports from Africa, China (US Bil $)
0
20
40
60
80
100
120
2000 2001 2002 2003 2004 2005 2006 2007 2008 2009 2010
Trade: Imports from Africa, China vs. US (US Bil $)
Bar: China Line: USA
0
20
40
60
80
100
120
2000 2001 2002 2003 2004 2005 2006 2007 2008 2009 2010
INFRASTRUCTURE CONTRACTS
Chinese infrastructure contracts, Africa (Turnover: US bil $)
0
5
10
15
20
25
30
35
40
2003 2004 2005 2006 2007 2008 2009 2010
Who is Financing Chinese Contracts?
•World Bank and African Development Bank •Bilateral Donors •African Governments •Private Businesses (Chinese and non-Chinese) •Chinese Government (20%)
Construction/Infrastructure
FOREIGN DIRECT INVESTMENT (FDI)
How Much to Africa?
Chinese FDI to Africa, % of Global FDI
0
10
20
30
40
50
60
70
80
2003 2004 2005 2006 2007 2008 2009 2010
Challenges 2009 Sinopec buys Addax Petroleum for $7.2 bn. Addax is “Swiss”, but assets in Nigeria, Gabon, Cameroon, Iraq
CHINA’S LARGEST INVESTMENT IN AFRICA? $5.4 billion for 20% of South Africa’s Standard Bank (2008)
THREE MYTHS OF CHINESE ENGAGEMENT
MYTH 1. “CHINESE AID IS HUGE”
Africa: Official Development Assistance (ODA) 2008 (US$ bn)
USA, 7.2
EC, 6
World Bank, 4.1
France, 3.4
Germany, 2.7
UK, 2.6
Japan, 1.6China, 1.2
Source: OECD-DAC Statistics. *Chinese figure is author’s estimate.
In billion US$
0
5
10
15
20
25
30
35
40
45
2002 2003 2004 2005 2006 2007 2008 2009 2010 2011
$ billion
China Eximbank (Annual Disbursements, 2002-2011)
Export Seller's Credits
Export Buyer's Credits
Letters of Guarantee
What about China’s Huge Commodity-backed Infrastructure Credits? • Ghana, Angola, DRC • Widely misunderstood as “aid” • Market-rate line of tied export buyer’s credit • Secured by exports (Japanese model) • “Not subsidized and not concessional”
Angola: Two Oil-Backed Lines of Credit (2004)
Amount Interest rate
Maturity Grace Period
China Eximbank
$2.0 bil LIBOR plus 1.5
12 years Until end of each project
Standard Chartered Consortium
$2.35 bil LIBOR plus 2.5
5-7 years none
China Eximbank (2004-2007)
• Ag. Machinery & equipment $22m
• 4 Irrigation systems $93m • Rebuild Luanda’s
electrical grid: $45m • Water treatment system
repair in 3 provincial cities: $21m
• 5 ag. 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.
Standard Chartered’s Loan Financed…
? ?
RISKS AND BENEFITS?
MYTH 2. “CHINA IS LEADING THE GREAT LAND GRAB IN AFRICA”
MYTH 3: “CHINA, INC.”
DRC EXAMPLE
Contrasts The West Believes: • Countries need aid, good governance to develop • Our aid is driven by altruism • Conditionality can improve governance • Africa needs to be saved.
The Chinese Believe: • Countries need investment, infrastructure to develop • Aid is about diplomacy, soft power • Governance improves slowly, as economy develops • Africa is very interesting for business
Contrasts
What shocks us: China can build a presidential palace in Sudan and pay for it from aid budget
What shocks them: Western experts live in 5 star hotels & rich overseas lifestyle, paid out of the aid budget
Why is China Different? Foreign policy framework Core ideas about development and gov. Experience as a developing country East Asian developmental state
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