china and africa
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CHINA AND AFRICA: THINK AGAIN
Professor Deborah BrautigamSchool of Advanced International Studies, Johns Hopkins UniversityWashington, DC
A BIT ALARMING…
1984: Liberia
1984: Liberia
“…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:
THREE WAVES& FOUR MYTHS
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?
China’s UN Peacekeepers
2. BUSINESS
TRADE
Trade: Exports to Africa, China(US Bil $)
2000 2001 2002 2003 2004 2005 2006 2007 2008 2009 20100
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20
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60
70
Trade: Exports to Africa, China vs. US (US Bil $)
Bar: ChinaLine: USA
2000 2001 2002 2003 2004 2005 2006 2007 2008 2009 20100
10
20
30
40
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60
70
Trade: Imports from Africa, China (US Bil $)
2000 2001 2002 2003 2004 2005 2006 2007 2008 2009 20100
20
40
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Trade: Imports from Africa, China vs. US (US Bil $)
Bar: ChinaLine: USA
2000 2001 2002 2003 2004 2005 2006 2007 2008 2009 20100
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40
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80
100
120
INFRASTRUCTURE CONTRACTS
Chinese infrastructure contracts, Africa (Turnover: US bil $)
2003 2004 2005 2006 2007 2008 2009 20100
5
10
15
20
25
30
35
40
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
Construction/Infrastructure
Fiber-Optic Networks Wind Farms & Telecoms
FOREIGN DIRECT INVESTMENT (FDI)
2003 2004 2005 2006 2007 2008 2009 2010 20110
1020304050607080
Chinese Global FDI Outflows (US $ bn)
How Much to Africa?
Diversity of Investments
CHINA’S LARGEST INVESTMENT IN AFRICA?$5.4 billion for 20% of South Africa’s Standard Bank (2008)
FOUR MYTHS OF CHINESE ENGAGEMENT
MYTH 1. “CHINESE AID IS HUGE”
Africa: Official Development Assistance (ODA) 2008 (US$ 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$
Export Credits Compared:Major Export Credit Agencies, 2007
0
5
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China Exim US Exim JBIC EGCD
$ B
il
Guarantees
Buyer's Credits
Seller's
Credits
Export Credit
Insurance
Guarantees
Guarantees
Loans
Overseas
Investment
InsuranceSupplier
Credit
InsuranceCredits
MYTH 2. “CHINA USES AID TO GET ACCESS TO NATURAL RESOURCES”
Chinese Aid Agreements 1960-2007
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Sudan* 1958 ◘ ◘ ● ◘ ● ● ◘ ● ◘ ● ◘ ◘ ◘ ● ● ◘ ● ◘ ● ● ● ◘ ● ●Guinea 1959 ◘ ● ◘ ● ● ◘ ● ◘ ◘ ◘ ● ● ● ● ● ● ● ● ● ● ● ◘ ● ◘ ◘ ◘ ◘ ◘ ◘ ◘ ◘ ●Ghana 1960 ◘ ● ● ● ◘ ● ● ● ● ● ● ● ● ● ◘ ◘ ◘ ● ◘ ◘ ◘ ●Mali 1960 ◘ ● ◘ ● ◘ ◘ ◘ ● ◘ ● ● ● ● ● ● ● ● ● ● ● ◘ ◘ ● ● ● ◘ ◘ ● ● ◘ ●Somalia 1960 ◘ ● ◘ ● ● ◘ ◘ ◘ ● ● ◘ ● ●Tanzania 1961 ◘ ◘ ◘ ◘ ◘ ● ● ● ● ● ◘ ◘ ● ● ◘ ◘ ◘ ● ◘ ◘ ◘ ◘ ◘ ◘ ◘ ◘ ◘ ◘ ● ◘ ●Uganda 1962 ◘ ● ◘ ● ◘ ◘ ◘ ● ◘ ◘ ● ◘ ● ● ◘ ◘ ●Kenya 1963 ◘ ◘ ◘ ● ● ◘ ● ◘ ● ● ◘ ◘ ● ◘ ◘ ◘ ◘ ◘ ◘ ●Benin 1964 ◘ ● ● ● ● ● ● ● ● ● ◘ ◘ ● ◘ ◘ ◘ ◘ ●Burundi 1964 ● ◘ ● ● ● ● ● ● ◘ ● ◘ ◘ ◘ ◘ ◘ ◘ ◘ ◘ ●C.Afr. Rep. 1964 ● ◘ ● ● ◘ ● ● ● ◘ ◘ ◘ ◘ ◘ ● ◘ ◘ ●Congo-B 1964 ◘ ◘ ◘ ● ◘ ◘ ● ◘ ● ● ◘ ● ● ◘ ◘ ◘ ◘ ◘ ◘ ◘ ●Zambia 1964 ◘ ◘ ● ◘ ● ● ● ● ● ● ◘ ● ◘ ● ● ◘ ● ◘ ● ◘ ● ◘ ◘ ◘ ● ● ◘Mauritania 1965 ◘ ● ◘ ● ◘ ◘ ● ◘ ● ● ● ● ● ● ◘ ◘ ◘ ● ● ◘ ●E. Guinea 1970 ◘ ◘ ● ◘ ● ● ● ● ● ◘ ● ● ● ◘ ● ◘ ●Ethiopia 1970 ◘ ◘ ● ◘ ● ◘ ◘ ◘ ◘ ◘ ◘ ◘ ● ● ◘ ◘ ◘ ◘ ● ◘ ● ●Cameroon 1971 ◘ ◘ ◘ ● ● ◘ ● ● ● ◘ ● ● ● ● ◘ ◘ ◘ ● ◘ ◘ ◘Nigeria 1971 ◘ ◘ ◘ ◘ ◘ ◘ ◘ ●Rwanda 1971 ◘ ◘ ◘ ● ● ● ● ◘ ◘ ◘ ◘ ◘ ◘ ◘ ◘Senegal 1971 ◘ ● ● ● ◘ ◘ ● ● ● ● ● ● ● ◘ ●Sierra Leone 1971 ◘ ● ● ◘ ◘ ◘ ● ● ◘ ◘ ● ◘ ◘ ◘ ◘ ◘ ◘ ● ◘ ●Chad 1972 ◘ ◘ ● ● ● ● ◘ ◘D. R Congo 1972 ◘ ● ● ● ● ● ● ◘ ◘ ◘ ● ◘ ◘ ◘ ◘ ● ●Madagascar 1972 ● ● ◘ ◘ ● ● ● ◘ ● ● ● ◘ ◘ ◘ ● ● ◘ ◘ ◘ ◘ ◘ ◘ ◘ ● ●Mauritius 1972 ◘ ● ◘ ● ◘ ● ◘ ● ● ● ◘ ● ● ◘ ◘ ◘ ◘Togo 1972 ◘ ◘ ● ● ● ● ● ● ● ● ● ◘ ◘ ◘ ◘ ◘ ◘ ◘ ◘ ●B. Faso 1973 ◘ ● ◘ ◘ ● ◘ ● ◘ ● ◘ ◘G.Bissau 1974 ◘ ◘ ● ● ● ◘ ◘ ◘ ◘ ● ● ◘ ●Gabon 1974 ◘ ◘ ◘ ● ● ● ◘ ● ● ◘ ● ● ◘ ● ● ◘ ● ◘Gambia 1974 ◘ ● ● ● ● ●Niger 1974 ● ◘ ● ◘ ● ● ◘ ● ◘ ● ◘ ◘ ◘ ◘ ● ◘ ● ◘ ◘Botswana 1975 ◘ ● ● ● ● ◘ ◘ ◘ ◘ ● ● ● ◘ ● ● ● ● ◘ ●Comoros 1975 ◘ ● ◘ ◘ ◘ ◘ ◘ ◘ ◘ ◘ ◘ ● ●Mozambique 1975 ◘ ◘ ● ◘ ● ● ◘ ◘ ◘ ● ◘ ◘ ◘ ◘ ◘ ◘ ● ●S.Tome/Pricp. 1975 ◘ ● ● ● ◘ ● ●Cape Verde 1976 ◘ ● ● ● ● ● ◘ ● ◘ ◘ ◘ ● ◘ ◘ ◘ ●Seychelles 1976 ● ◘ ◘ ● ◘ ◘ ● ◘ ● ● ◘ ◘ ◘ ● ● ●Liberia 1977 ◘ ◘ ● ◘ ● ● ◘ ● ◘ ◘ ●Djibouti 1979 ◘ ● ◘ ◘ ◘ ● ● ◘ ◘ ◘ ◘ ● ◘ ◘ ◘ ●Zimbabwe 1980 ◘ ◘ ◘ ◘ ◘ ● ◘ ◘ ● ● ◘ ◘ ● ◘ ◘ ◘ ●Angola 1983 ◘ ● ◘ ● ● ● ● ◘ ◘ ◘ ◘ ◘ ◘ ◘Cote d'Ivoire 1983 ● ● ● ● ● ◘ ◘ ● ◘ ◘ ● ● ●Lesotho 1983 ◘ ● ◘ ● ● ◘ ◘ ◘ ◘ ◘ ◘ ◘ ◘Namibia 1990 ◘ ◘ ◘ ● ◘ ● ● ◘ ● ●Eritrea 1993 ● ● ◘ ◘ ◘ ◘ ◘ ● ●S.Africa 1998 ● ◘ ◘Malawi 2008Swaziland
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 CharteredConsortium
$2.35 bil LIBOR plus 2.5
5-7 years none
Standard Chartered’s Loan Financed…
? ?
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:
$211m• 86 ambulances• 6 provincial health centers• Rehabilitate 7 regional
hospitals • … etc. etc.
RISKS AND BENEFITS?
MYTH 3. “CHINA IS LEADING THE GREAT LAND GRAB IN AFRICA”
Outward FDI Flows by Industry ($ bn)
2005 2006 2007 2008 2009 20100
2
4
6
8
10
12
14
16
Agriculture
Mining
Manufacturing
MYTH 4: “CHINA, INC.”
Contrasts
The West Believes: • Countries need aid, good governance to develop• Our aid is driven by altruism• Conditionality is good for governance• Africa needs to be saved. Not for business
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
Typical foreign engineers & experts housing in Africa
Chinese Western
Why is China Different?
• Foreign policy framework• Core ideas about development and govt.• Experience as a developing country• East Asian developmental state
Blog: chinaafricarealstory.com