china and africa: think again - carleton.ca
TRANSCRIPT
CHINA AND AFRICA:
THINK AGAIN
Professor Deborah Brautigam
School of Advanced International Studies,
Johns Hopkins University
Washington, DC
A BIT ALARMING…
“…ONCE UPON A TIME…”
--- Financial Times
CHINA DOES PRESENT A
CHALLENGE
MAJOR AFRICAN
CONCERNS:
BUT PERHAPS THE BIGGEST
CHALLENGE:
Africa is rich.
We haven’t figured out a way to link
Africa’s riches to its development. The
Chinese are actively trying to do just this.
CHINESE
AMBASSADOR IN
NIGER:
CHINA AND AFRICA:
THE FIRST WAVE
1st Wave
CHINA AND AFRICA:
THE SECOND WAVE
East Wind Blows in Africa: 1950s & 1960s
China vs. USSR vs. USA
CHINA AND AFRICA:
THE THIRD WAVE
CHINESE LEADERS
Visits to Africa, 1995-2009
Premier Li Peng
1995, 1997
President Jiang Zemin
1996, 1999, 2000, 2002
Premier Zhu Rongji
2002
Premier Wen Jiabao
2003, 2006
President Hu Jintao
2004, 2006, 2007, 2009
South Africa
Namibia Zimbabwe
Botswana
Mozambique
Zambia Angola
Tanzania
D R Congo Kenya
Congo
Gabon
Uganda
Somalia
Ethiopia
Sudan
Egypt Libya
Tunisia
Morocco Republic
Chad
Niger
Mali
Mauritania
Western Sahara
Central Af. Republic Cameroon
Nigeria
Burkina Faso
Swaziland
Lesotho
Burundi
Rwanda
Equatorial Guinea Sao Tome and Principe
Malawi
Djibouti
Cote D’Ivoire
Ghana
Togo
Benin
Liberia
Sierra Leone
Guinea
Guinea-Bissau
Gambia
Senegal
Mauritius
Seychelles
Madagascar
Cape Verde
Eritrea
Algeria
WHAT ARE THE DRIVERS OF
CHINESE ENGAGEMENT IN
AFRICA TODAY?
2. BUSINESS
TRADE
Trade: Exports to Africa, China (US Bil $)
0
10
20
30
40
50
60
70
2000 2001 2002 2003 2004 2005 2006 2007 2008 2009 2010
Trade: Exports to Africa, China vs. US (US Bil $)
Bar: China
Line: USA
0
10
20
30
40
50
60
70
2000 2001 2002 2003 2004 2005 2006 2007 2008 2009 2010
Trade: Imports from Africa, China (US Bil $)
0
20
40
60
80
100
120
2000 2001 2002 2003 2004 2005 2006 2007 2008 2009 2010
Trade: Imports from Africa, China vs.
US (US Bil $) Bar: China
Line: USA
0
20
40
60
80
100
120
2000 2001 2002 2003 2004 2005 2006 2007 2008 2009 2010
INFRASTRUCTURE
CONTRACTS
Chinese infrastructure contracts, Africa (Turnover: US bil $)
0
5
10
15
20
25
30
35
40
2003 2004 2005 2006 2007 2008 2009 2010
Who is Financing Chinese Contracts?
• World Bank and African Development Bank
• Bilateral Donors
• African Governments
• Private Businesses (Chinese and non-
Chinese)
• Chinese Government (20%)
Construction/Infrastructure
FOREIGN DIRECT
INVESTMENT (FDI)
How Much
to Africa?
Chinese FDI to Africa, % of Global FDI
0
10
20
30
40
50
60
70
80
2003 2004 2005 2006 2007 2008 2009 2010
Challenges
2009 Sinopec buys Addax Petroleum for $7.2 bn.
Addax is “Swiss”, but assets in Nigeria, Gabon, Cameroon,
Iraq
CHINA’S LARGEST
INVESTMENT IN AFRICA?
$5.4 billion for 20% of South Africa’s Standard
Bank (2008)
THREE MYTHS OF
CHINESE ENGAGEMENT
MYTH 1. “CHINESE AID IS HUGE”
Africa: Official Development Assistance (ODA)
2008 (US$ bn)
USA, 7.2
EC, 6
World Bank, 4.1
France, 3.4
Germany, 2.7
UK, 2.6
Japan, 1.6
China, 1.2
Source: OECD-DAC Statistics. *Chinese figure is author’s estimate.
In billion US$
0
5
10
15
20
25
30
35
40
45
2002 2003 2004 2005 2006 2007 2008 2009 2010 2011
$ billion
China Eximbank
(Annual Disbursements, 2002-2011)
Export Seller's Credits
Export Buyer's Credits
Letters of
Guarantee
What about China’s Huge Commodity-
backed Infrastructure Credits?
• Ghana, Angola, DRC
• Widely misunderstood as “aid”
• Market-rate line of tied export buyer’s credit
• Secured by exports (Japanese model)
• “Not subsidized and not concessional”
Angola: Two Oil-Backed Lines of Credit
(2004)
Amount Interest
rate
Maturity Grace
Period
China
Eximbank
$2.0 bil LIBOR
plus 1.5
12 years Until end
of each
project
Standard
Chartered
Consortium
$2.35 bil LIBOR
plus 2.5
5-7 years none
China Eximbank (2004-2007)
• Ag. Machinery & equipment $22m
• 4 Irrigation systems $93m
• Rebuild Luanda’s electrical grid: $45m
• Water treatment system repair in 3 provincial cities: $21m
• 5 ag. training institutions
• 6 polytechnical colleges
• 5 secondary schools $26m
• Kifangondo-Caxito road: $211m
• 86 ambulances
• 6 provincial health centers
• Rehabilitate 7 regional hospitals
• … etc. etc.
Standard Chartered’s Loan Financed…
? ?
RISKS AND BENEFITS?
MYTH 2. “CHINA IS LEADING THE
GREAT LAND GRAB IN AFRICA”
MYTH 3: “CHINA, INC.”
DRC EXAMPLE
Contrasts
The West Believes: • Countries need aid, good governance to develop
• Our aid is driven by altruism
• Conditionality can improve governance
• Africa needs to be saved.
The Chinese Believe: • Countries need investment, infrastructure to develop
• Aid is about diplomacy, soft power
• Governance improves slowly, as economy develops
• Africa is very interesting for business
Contrasts
What shocks us:
China can build a
presidential
palace in Sudan
and pay for it
from aid budget
What shocks
them: Western
experts live in 5
star hotels & rich
overseas lifestyle,
paid out of the aid
budget
Why is China Different?
Foreign policy framework
Core ideas about development and gov.
Experience as a developing country
East Asian developmental state
Blog: chinaafricarealstory.com