CHINA: “SOFT” AND “HARD” POWER IN AFRICA
The One Belt, One Road project also stresses Africa’s geostrategic and commodity rich significance. Africa is central as both a conduit and destination within this trade route. Recently, a campaign has emerged in China calling for the inclusion of Africa in the One Belt, One Road strategy, making it “One Belt, One Road, One Continent”. While the inclusion could surely bring more momentum to China’s economic cooperation with Africa, it does not resolve, and actually could amplify the existing problems in current Sino-African relations.
China’s investment in African resources is likely to increase further over the next decade. At the 2012 summit of the triennial Forum on China-Africa Cooperation (FOCAC), China offered $20 billion in loans to African countries, doubling its previous offer. As bilateral trade volumes have grown, Beijing will be expected to offer billions more at this year’s forum in South Africa, despite its domestic economy having cooled in recent months. China has become one of the main investors in sub-Saharan Africa, which boasts six of the 10 fastest-growing economies in the world, buying assets in developed markets and investing in infrastructure development. For example, a China-backed railroad in Kenya seeks to eventually link Mombasa with Nairobi and, further on, cities in South Sudan, the Democratic Republic of Congo, and Burundi.
Africa remains a priority for Chinese companies looking to invest, especially those with a strategic interest in metals and mining and related infrastructure. This is aligned with the macroeconomic long term view of China’s economic trajectory and vision of Beijing’s leaders.
Through infrastructure development, China could both foster the growth of African countries and transfer its labor-intensive industries to Africa. This general focus on infrastructure seems to be confirmed by the signing of a Memorandum of Understanding (MOU) between China and the African Union on January 27, 2015. The ambitious agreement plans to connect all 54 African countries through transportation infrastructure projects, including modern highways, airports, and high speed railways. While these developments are not officially a component of One Belt, One Road, many in China have begun to draw linkages between the two.
Cheap loans with secondary effects
Including Africa in the One Belt, One Road strategy is not seen as solving the long-standing questions in China’s economic relations with Africa. The plan does not address issues such as the controversial relationship between China’s infrastructure investment and its interests in African natural resources. Nor does it touch upon Chinese companies’ sometimes irresponsible investment behavior, especially in social and environmental regards. In fact, prominent Chinese experts have excluded the discussion of these issues in their analysis of China’s infrastructure development and industrial transfer to Africa. Moreover, people wonder whether Africa is capable of repaying Chinese loans, and, if so, how. In addition, the political risks and volatile investment environment in some African countries will inevitably affect the planning and implementation of Chinese projects. How China will address them is completely missing in its grand development strategy in Africa.
For the African states, China offers a source of both aid and investment, which is not immediately tied to governance reform or other political criteria. For China, the investment is most certainly a business decision, first and foremost. However, an important secondary issue for China is promoting its view of non-intervention in the sovereign affairs of other nations. Another benefit is the cheap terms that such investments bring. Especially when compared to commercial markets or institutions like the World Bank, Chinese financing deals provide access to funding at very attractive terms. Interest-free or low interest government loans are common, such as the $2 billion credit line at 1.5 percent for 17 years to Angola for oil exploration and the $2 billion subsidized loans to Ghana for oil and gas projects in 2010. However, the non-pecuniary costs of cheap Chinese loans are significant. The Chinese bring their own workers to construct these projects and expect to be given preference when it comes to being granted mining and other licenses in Africa. They also expect not to have to deal with regulations in the countries to which they provide infrastructure benefits.
Another issue has been building quality, many people being attracted by the cheap initial price and not realizing that cheap infrastructure, from a maintenance standpoint, is going to be very expensive over the long-term.
The social problems are also present, since the Chinese are often bringing their own labor, they’re buying their own food and don’t mix with the local population, which creates tension. This is in part due to a lack of coherence between official policy from Beijing and the actions of businesspeople and workers on the ground, as well as distrust between local Africans and Chinese émigrés.
While many Africans appreciated the apolitical terms under which African nations can conduct business with China, there are also growing complaints against the behavior of the Chinese in Africa. There have already been reports of Chinese investors abandoning investment projects in several Sub-Saharan Africa states, and infrastructure investment being slow to materialize.
Politicians in Botswana, for example, have pointed to problems with large building contracts awarded to Chinese companies. Some of the projects have already stalled, with the contractors running way behind schedule. Several other countries such as Zambia, Senegal, Namibia, Malawi, and Tanzania have reported problems with the Chinese. And China’s Prime Minister Li Keqiang himself has admitted in 2014 to “growing pains” in Sino-Africa ties, amid allegations by Africans of shoddy construction and a lack of respect for labor and other local laws.
In a recent book called “China’s Second Continent: How a Million Migrants Are Building a New Empire in Africa”, author Howard French, an American journalist who has lived and worked in Africa for the New York Times, suggests the existing cooperation benefits China much more than it does Africa and that China is just an imperialist power out to secure raw materials for its industries back home.
According to Howard French, the Chinese have a similar approach with that of the former colonists. They build ports so that they can send their goods to that country, and so that they can export from that country to their markets the things they need from that country. Another negative aspect is the fact that China is creating these very powerful feedback loops for its own victory, in fact cutting Africa and African countries out of the equation in terms of the benefits. Jobless Africans detest the fact that work that they should be doing is going to foreigners. But their hands seem to be tied and there is nothing or little they can do about this.
by EURASIA PRESS&NEWS