Question of the Week: China in Africa Part II

Is Chinese aid and investment a positive force for development in Africa?

This is the second Question of the Week post about Chinese involvement in Africa. Last week, we focused on China’s South-South philosophy and issues involved in measuring its aid and investment. This week, we examine the contentious debate on whether China’s aid benefits Africa and its people—or simply China itself.

It is clear that Chinese involvement in Africa benefits China, providing the country with natural resources, construction contracts, new markets for goods, and more. The key question is whether Chinese involvement benefits African citizens at the same time.

The Chinese government is well known for its “no strings attached” aid policies—its willingness to deal with regimes without trying to change their governance through conditional aid, even in the case of serious human rights abuses. “…Chinese loans are often negotiated in secret, come without conventional expectations attached, and are offered to countries where Western money fears to tread, usually with good reason,” explains Evan Feigenbaum of the Paulson Institute. These regimes, of course, may squander aid money, either through inefficient development projects or on other priorities altogether. McKinsey executives Steve Davis and Jonathan Woetzel contend that “the Chinese approach to aid and investment presupposes that an effective public sector exists in the recipient country,” a problematic assumption that is not always true.

Chinese political priorities appear to play an important role in the country’s foreign aid and investment. “As in the case of most other major donors, Chinese aid to Africa is driven largely by strategic and political objectives,” assert David Shinn and Joshua Eisenman in their book China and Africa: A Century of Engagement. “Chinese aid, in turn, helps to strengthen the position of African governments. This may explain why China emphasizes, among other projects, the construction of government buildings, presidential palaces, parliaments, police headquarters, military facilities, political party offices, and public stadiums. Such a policy does not constitute conditionality, but it is a reminder to the ruling elite that China is helping to keep them in power.” Shinn and Eisenman also note the importance that China places on African support for Chinese interests with regard to Taiwan. As they explain, “support for the One China Principle is Beijing’s foremost requirement for collaboration and diplomatic recognition. Many African nations see affirmation of Beijing’s sovereignty over Taiwan as a necessary part of their diplomacy with China, an easy concession that costs them nothing but can pay dividends.”

As for the effects of Chinese aid to Africa (and Chinese commercial ventures on the continent, which are often closely related), an April 2011 Economist article features a litany of concerns about Chinese projects: a new road in Zambia that was washed away by rains, a hospital in Angola that was closed due to poor construction, and crude oil spills created by a Chinese state company in Sudan. Beyond some negative outcomes, other evidence suggests that Chinese aid is often a way for China to employ its own citizens and companies, garner diplomatic support, and extract much-needed natural resources from recipient countries. The Chinese government “requires that foreign aid contracts be awarded to Chinese contractors it picks through a closed door bidding process in Beijing,” a process that can leave African aid recipients or borrowers with inflated construction costs and without the option of employing local contractors, according to the New York Times.

In a 2009 paper, scholars Chris Alden and Ana Christina Alves highlight concerns over China’s environmental impact and labor practices in Africa.  They note that “China has proved to be sensitive to African and international pressure,” but that “policy shifts in Beijing do not necessarily translate into tangible changes at the bottom of the chain”–that is, among Chinese companies and agencies working on the ground in Africa. Hence the need, in their view, for better regulation of all countries’ companies and agencies operating on the continent.

To some African leaders, Chinese aid is a vital and appreciated source of funding and assistance. “Most of our [African] countries cannot access the markets to borrow. We are forced to turn to sources of concessional financing, which are now very, very limited,” said Togo’s Minister of Finance Adji Oteh Aya at a World Bank-IMF conference last year. China is an important such source. Ngata Ngoulou, an official from Chad who also attended the conference, described how Chad was building a Chinese-supported oil refinery, a project he thought that “traditional partners…would have discouraged.”

Even outside of aid per se, Chinese commerce arguably has important development outcomes for Africa. “[China’s] involvement has helped Africa perhaps more than any nation has helped Africa in any ten-year period directly and indirectly,” said Stephen Hayes, president and CEO of the Corporate Council on Africa, in testimony before a subcommittee of the Senate Committee on Foreign Relations. Hayes argued that “infrastructure has expanded in many countries thanks to Chinese investment and political interests,” that “increased competition for strategic minerals has driven up the price of commodities and raised national incomes for many African countries,” and more. Economist and author Dambisa Moyo also argued in a recent op-ed that China’s involvement in Africa “… has spawned much-needed trade and investment and created a large market for African exports—a huge benefit for a continent seeking rapid economic growth.” However, some wonder how much growth China has really produced in Africa.  Responding to Moyo, Oxford Analytica senior analyst Jolyon Ford argued that Moyo’s piece failed “to interrogate some rather basic questions that go beyond headline investment and trade figures in the China-in-Africa story.” Ford also questioned the inclusiveness of recent economic growth, the true state of local job creation, capital flight as compared to incoming investment, and more.

The evolution of Zambian President Michael Sata’s attitude toward China highlights the economic benefit that some leaders believe Chinese investment offers. After Zambia’s 2006 presidential election, which Sata lost, he “…railed against the ‘poor paying’ Chinese as ‘infesters’ [a wordplay on ’investors’] and further raised the stakes by promising to cut ties with China and embrace Taiwanese business,” according to an IRIN News report. But in a significant reversal after his 2011 presidential victory, Sata declared to a meeting with a Chinese delegation this March that “[Chinese] investment has benefited both Zambia and China. Therefore, every expansion in investment should be for the mutual benefit of the two countries and its people …I would encourage you to bring more Chinese investors to invest in various areas of investment in the country especially mineral exploration. We would also like you to get involved in agriculture, textile[s], and many other sectors.”

What Do You Think?

This is the second Question of the Week post about Chinese involvement in Africa. Last week, the Development Channel reviewed the South-South philosophy underlying Chinese aid and the issues involved in measuring it. Please let us know what you think about China’s involvement on the continent. Does it lead to positive outcomes or do its drawbacks unnecessarily impede development? Are the costs to Africa too high? Are its critics unjustified? Use the Comments section below, and check back for a new Question of the Week post next week.