China Africa News

  China in Africa, USAID, Summer Seminar Series, 22/07/2009

 

Presenters:

*1 His Excellency, Mr. Ombeni Sefue, Tanzanian Ambassador to the United States

*2 Dr. David Dollar, Recently made Treasury Representative in Beijing.

*3 Dr. Deborah Brautigam, American University

 

 

*1 Mr. Ombeni Sefue opened the discussion by describing China’s role in Tanzania. His position was strongly in support of the Chinese role in Tanzania and in Africa, suggesting that a negative media campaign rather than empirical evidence was responsible for China’s poor reputation on the continent. Some of the points raised were:

• The relationship between China and Tanzania pre-dates China’s recent appetite for oil and minerals.
• In 2007 the share of oil from the African continent enjoyed by China was just 12%. The US and the EU accounted for 31% each.
• Advising African nations to be wary of relations with China is unhelpful in an emerging geopolitics where every country must engage China.
• Western powers are not the drivers of good governance in Africa, Good governance must be an African process and therefore China has no recourse to threaten it.
• Despite the financial crisis China has kept its aid pledges to Africa and has pursues a policy including number of high level visits designed to show respect and courtesy.
• The countries share history, notably China’s help of Tanzania in their liberation struggle against hostile colonial and apartheid powers, when no one else would.
• Despite criticism of Chinese workmanship in infrastructural and commercial projects, in Mr. Sefue’s experience it has been at least as good as western efforts.
• Counterfeit goods traded in Africa are just as much the fault of unscrupulous African importers as their Chinese counterparts. The Tanzanian government’s policy of destroying counterfeit goods is fully supported by Beijing.
• The FOCAC summits, which allow African leaders direct access to Chinese policy makers and top level officials, have no equivalent in the US and display a greater sensitivity and respect for African needs.

 

*2 Dr. David Dollar’s presentation asked that African leaders pay attention to Chinese policy as well as methods in order to replicate their successes. He cited toll roads as a particularly interesting example of China’s tactics for rapidly developing the infrastructure of the nation.

• The Chinese and African economies are complementary. China has a relative per capita paucity in its natural resources while Africa requires the experience and skills China has gained in dragging millions out of poverty.
• Chinese construction companies have enormous experience producing high quality infrastructure at low cost over the past decade.
• African leaders were surprised to learn that in communist China, tolls were higher than anywhere else in the world in relative terms, as government sought to recoup the costs of highway construction in order to reinvest in further resources.
• Industrial power is also subject to high tariffs in China.
• China even sold one express way on the stock market with investors buying a stake in future toll earnings.
• Although the recession seriously affected China’s performance the economies of China and Africa remain complementary. In fact the economic crisis is likely to accelerate engagement as the internal opportunities for investment may not reappear for a number of years. He suggested that investors would likely look to Africa as an alternative.
• However the enormous Macroeconomic imbalances that China maintains with the rest of the world are unlikely to be absorbed by Africa and Latin America alone as they simply lack the scale to cope with that volume.

 

*3 Dr. Deborah Brautigam who was one of the first academics to begin writing on the China Africa relationship was the next to speak. She again highlighted the good work that China was doing on the continent pointing out where criticism was unwarranted while conceding that in social and environmental terms China still has a lot to do.

• There is much confusion in understanding what constitutes aid and what constitutes economic cooperation, partly due to differing definitions in the West and China.
• Chinese include military help and some economic cooperation as aid, while they exclude scholarships and debt relief.
• China has largely shunned conditionality on its loan agreements but this is often the case with western bank loans as well. The $2bn loan to Angola by the Exim bank was criticized heavily as it had no governance conditions and was only pegged to infrastructure development by Chinese firms.
• However a consortium lead by Standard Chartered gave a similar loan a matter of months later of $2.3bn with no conditions and a percentage point higher interest, over the libor rate.
• Despite much being made of them Chinese resource backed loans are actually very uncommon. Only five or six across Africa.
• Chinese debt forgiveness is a much less complicated process requiring less hoop jumping from African countries.
• IMF and WB are largely concerned with Chinese loans as they stipulate preferred lender status meaning they are paid off first. This has previously been a normative but not a codified privilege of IMF and WB loans.
• China sees Africa as an opportunity rather than as a millstone and this attitude permeates much of their dealings with the continent.