China's New Safari into African Development
DEVELOPMENTS
Walking the streets of Nairobi, Kenya, many visitors would be shocked by the changing social composition of this bustling capital. A colony of Great Britain until 1963, Kenya has recently opened Chinese schools, restaurants, and direct flights to China in order to capitalize on the nearly 50,000 ethnic Chinese in the country (other sources claim less). This statistic is not only isolated to Kenya. According to Xinhua, China's official news agency, as many as 750,000 Chinese are working and living in Africa.
China’s increasing foreign direct investment to Africa over the last four years helps explain this migration. While China claims that its financial information is a state secret, the United States Congressional Research Service postulates that China has given nearly 18 billion dollars in aid to Africa in 2007 alone – mainly in the infrastructure and natural resource extraction industries.
Beyond the increase in Chinese workers, such growing influence has also raised criticism. Many analysts note that China’s aid lacks transparency, does not promote democratic ideals, and is self-serving in China’s dominion over natural resources. But with the current global and economic climate, many African countries are more than eager to forge closer bonds with China and are equally fervent in their dismissal of Western concerns.
BACKGROUND
On November 4, 2006, President Hu Jintao of China held a Summit in Beijing on China-Africa Cooperation. At this conference, President Hu highlighted several steps in the development of stronger relations between the two regions. China promised to: double its 2006 assistance to Africa by 2009; provide $3 billion of preferential loans and $2 billion of preferential buyer’s credits to Africa; set up a China-Africa development fund which will reach $5 billion to encourage Chinese companies to invest in Africa; build a conference center for the African Union; and cancel certain types of debt for qualifying countries.
China has kept secret the details of its aid and investment policies, but some information is available. The Chinese rarely provide aid with the preconditions set by many Western countries – such as human rights protection, anti-corruption measures, political reform, or strong economic management. The Chinese invest in infrastructure and natural resource extraction more than Western countries do. Chinese aid also comes in the form of concessional loans, with low or no interest rates attached. One of the few preconditions set by China is that the African countries must recognize a “One China” policy.
However, much about Chinese aid remains unknown. For instance, no figures are available to establish how quickly it is growing, whether it is only invested in countries with large oil and diamond deposits, how the aid is managed once the country receives it, or how aid is even calculated. Experts have hypothesized that China may not be aware of its own statistics, since the aid comes from several different ministries and China may not be able to calculate its labor costs in Africa.
Regardless of this lack of transparency, two emerging views have surfaced regarding China’s involvement in African development. Some have been critical of China’s aid to Africa, comparing it to giving “skin and muscle without a skeleton to hang it on.” One fundamental critique is that China’s aid is not invested in supporting a democratic system of governance. Some worry that China’s motivation is fuelled by its interests in oil, without regarding whether the country is rogue or corrupt. For example, reports indicate that China is investing millions into Kenya’s ports, roads, and railways so it could better transport oil from Sudan and Uganda. However, according to sources, Kenya’s railway system is highly corrupt and China has not provided for supervision over the funds.
Other criticism involves China’s lack of transparency regarding its aid and lack of cooperation with global institutions. Without transparency, the International Monetary Fund (IMF) must guess the amount of money being given – which may impact its decisions to provide future aid to the region. Finally, some developed nations worry that these African countries are becoming indebted again. The IMF and other countries have cancelled their loans and provided aid to African countries to reduce their deficits, but now these same nations are accepting Chinese loans and increasing their deficits as a result.
Nevertheless, many have praised China’s efforts in African investments. Some African governments praise the lack of conditions placed on their loans and are pleased that the loans support crucial infrastructure. While many donor countries have been in recession and are likely to reduce assistance in 2010, China’s aid has increased by 77% in 2009. Further, while Chinese projects often employ Chinese nationals from abroad, new jobs are still being created in these countries for African nationals. Finally, China claims it has helped finance nearly 900 projects, half of which are related to humanitarian issues. It also helped train more than 30,000 people and sent approximately 17,000 medical staff to Africa.
ANALYSIS
Africa has the opportunity to maximize the benefits of its economic partnership with China, but China must ensure that its relationship with African countries is mutually beneficial.
According to the IMF, increasing China’s disclosure about aid flows would help African countries harmonize donor activities and provide other lending institutions with vital information that can shape their future activities in the region.
If the IMF and World Bank are going to respond to China’s growing presence in Africa, they must do so immediately while China is still developing its African foreign policy. For instance, they should provide China a bigger role in their institutions and help them construct a cohesive, effective aid model. If done successfully, China and the West can form a more collaborative partnership, where China’s aid could supplement other donor assistance.
China has proven its skills in constructing infrastructure and training African nationals – now it must combine its strengths with other donors’ to encourage the development of democratic systems and anti-corruption measures in these countries. If both sides can find a way to cooperate with each other and open lines of communication, then Africa can have the “skin and muscle” and “skeleton” to build a more functional body.
D. Marko Cimbaljevich is an attorney in Washington, D.C. He graduated magna cum laude from the Catholic University of America – Columbus School of Law, where he served on the school’s International Arbitration Moot Court Team and as Note & Comment Editor of the Catholic University Law Review.