China in africa: a new model of international development?
By Deborah Brautigam
Once upon a time, a very large, poor, but resource-rich country emerging from a period of intense conflict decided to focus on development. “We need to modernize our infrastructure,” they said. “We need to develop our power plants.” And soon they were visited from a wealthy Asian country that was already a major consumer of their oil. This Asian country said to them: “We’ll make you a bargain. We’ll give you a line of credit worth $10 billion and you can use that credit to improve your infrastructure and power plants. You can import technologies from us, and our companies can help you develop your mines.”
Now many people in the poor country were very concerned about this offer. It was quite controversial and the negotiations went on for several years. But eventually they agreed, and the work began.
Now you probably have some idea of which countries I’m referring to. China is one of the countries. But China was the large, poor country with oil, and the wealthy Asian country was Japan. The time was the 1970s when China was just emerging from the Cultural Revolution. When the controversial negotiations began, Mao was still in power, but they were concluded under Deng Xiaoping.
I tell you that story because it shows how East Asians think about development partnerships. Japan’s outreach to China was not foreign aid. It was a commercial loan put together by the Japanese government alongside a consortium of banks with the intent of benefitting Japan. But even as the deal would benefit Japan, it would benefit China as well.
At the time, the Chinese were hungry for modernization, but they didn’t have the technology or the capital to make it happen. No international bank would lend to them, they had no credit rating, and they were Communist. But Japan was willing to take the risk because they saw profit and potential. They knew that the more China developed, the more they could do business there.
This is the essence of the mutual benefit approach the Chinese are taking in Africa. It’s not about aid. It is a different set of relationships.
On hearing of one major Chinese deal in the Democratic Republic of the Congo, an editor at the Financial Times wrote, “Beijing has thrown down its most direct challenge yet to the West’s architecture for aiding Africa’s development.” The project valued about $9 billion and involved building infrastructure. Moreover, the Chinese would help set up a mine whose profits would then repay the infrastructure loans.
That’s not to say that China’s emergence in Africa doesn’t come without challenges. It does. There are opportunities, but there are challenges as well.
To start, the arms trade is a problem. Chinese companies that once were under the Ministry of Defense have been detached and are now out to make a profit. If they can sell arms to two countries that want to fight each other, they will. And they did with Eritrea and Ethiopia. They’ll also sell largely unregulated arms into any conflict in Africa.
The second area is in environmental protection. Many governments in Africa are trying to conserve their resources. Timber, hard woods, fish along the coasts, abalone in South Africa, elephant ivory, and rhinoceros horn, for example. At the same time, because the Chinese do not have a well-developed sense of conservation, there is a big market in China for all of these products. And again, this activity isn’t well regulated.
Finally, the Chinese government will engage with any government in Africa that will grant them diplomatic ties. This means that they can undermine Western diplomatic pressures such as sanctions or other tactics. Sudan is perhaps the best example, where for many years Chinese diplomatic engagement was directly counter to Western goals, which I think were right in that case.
But I think the biggest challenge is this: That Africa is rich, and we in the West have not figured out how to link Africa’s riches to its development.
Make no mistake; the West is very interested in African resources. We’ve been investing there all along. But our interest in profitable investments and our interest in African development seem to be totally separate. There is nothing in between to link them together except for a few social corporate responsibility initiatives.
But the Chinese are actively trying to link Africa’s resource wealth with its development. They are not doing it because they are benevolent. They are doing it for the same reason that Japan invested in China in the mid 1970s--because it made sense. African companies are capital poor and have enormous needs. If they can secure a loan with payments from an export stream funneling into an escrow account then they can borrow more. Then, of course, they can invest that in infrastructure that will be built by Chinese companies. That’s the benefit for the Chinese. That’s why the loan.
The Chinese ambassador in Niger put it very well when he told the Financial Times in 2010, “[Niger] 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.” And as a matter of fact, the reason why their earnings were so low was because French companies had locked in a low price for that uranium. The Chinese offer African countries other options.
So what are the drivers of Chinese engagement in Africa today? Natural resources of course are important, but there are a few other things:
Strategic diplomacy. Taiwan, Tibet, and votes in the U.N. For the Chinese, Africa represents 54 votes or 54 possible coalition partners for initiatives they might want to pursue in the World Trade Organization on a multilateral basis. As a result, a lot of Chinese aid is directed to this kind of strategic diplomacy.
Business is also important and the primary interest. We know that Chinese trade is very large in terms of Chinese inflows, but African trade is not very big. It’s only about 4% of China’s global trade. But for Africa the engagement is much larger. China is Africa’s largest trading partner. It’s well over $120 billion a year in two-way trade.
Also, in 2010 Chinese companies recorded $35 billion in revenues from infrastructure contracts across the continent. Now a lot of that activity was in North Africa; nevertheless, this is a huge amount of business, which fits very neatly into African needs. The World Bank estimates that African governments should be spending about $90 billion a year on infrastructure. They are spending far less than that, but much of the spending they are doing, the Chinese are carrying out.
To conclude, Beijing’s approach to Africa is fundamentally different than the Wests’. One of China’s five core foreign policy principles is that relations between countries should be based on mutual benefit. And therefore, the concept of altruism and foreign aid is not one that’s consonant with how they think about international relations. For them, it should be much more of a partnership, not one-way transfers.
They also believe in non-intervention in the internal affairs of other countries. They are very uncomfortable with trying to change politics or impose conditions. They don’t know what other countries need to develop, and they don’t offer recipes. China approaches Africa saying: You tell us what kind of assistance you want, and we’ll go in that direction. But that’s not how we approach development in the West. We say: We know what you need to do, and you should do it, and we’ll put conditions on you until you do.
The Chinese also think differently regarding development and governance. Despite China’s communist regime, they are doing fairly well economically. Consequently, they don’t think countries need to be democratic to develop. They believe development starts with infrastructure. There is a saying in China: “If you want to become prosperous, first build a road.”
Finally, China thinks like an East Asian developmental state. They use numerous instruments to generate different outcomes, whereas the United States mainly uses aid. All of this to say, China’s approach offers lessons for engaging with Africa, but these lessons must be tempered with the apparent challenges that China faces on the continent.
This article was adapted from a talk Dr. Brautigam gave at Sagamore Institute on April 26, 2013.
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