Author Topic: The Dragon's Gift (Read 2370 times)

islander · « **on:** October 26, 2016, 06:26:19 AM »

The Dragon's Gift, By Deborah Brautigam

Reviewed by Ian Birrell

The Chinese invasion of Africa is, for many people, a simple morality tale with an obvious villain. For the past decade, Beijing has poured money into the continent, doing deals with despots, dictators and democrats alike in its quest to plunder natural resources to fuel relentless growth. Human rights concerns are brushed aside, the environment wrecked, local businesses crushed, and corruption is endemic. And in the process China has propped up some of the world's most loathsome regimes and fanned some of the bloodiest conflicts.

Linkback: https://tubagbohol.mikeligalig.com/index.php?topic=83087.0

islander · « **Reply #1 on:** October 26, 2016, 06:27:38 AM »

This is the picture of rampant neo-colonialism taken as gospel by many in the West. But the truth is rather different, which explains why some of Africa's more visionary leaders embrace the Chinese advances. Now comes a timely book by American academic Deborah Brautigam, an observer of Africa and Asia for three decades, which uses personal experiences combined with powerful research to puncture myths and fears that cloud understanding of one of the most important geopolitical shifts since the fall of the Berlin Wall.

Linkback: https://tubagbohol.mikeligalig.com/index.php?topic=83087.0

islander · « **Reply #2 on:** October 26, 2016, 06:28:12 AM »

Take Angola, which as Brautigam writes is one of the prime exhibits in the chorus of condemnation against China. Cursed with natural resources, it was crippled for more than 40 years as a proxy battleground for the Cold War, emerging with wrecked infrastructure, huge debts and a deeply corrupt government. The International Monetary Fund demanded that it clean up its act and start accounting for swelling oil revenues, when the Chinese supposedly muscled in with a massive no-strings-attached aid deal, defeating the fight for transparency and provoking international outrage.

Linkback: https://tubagbohol.mikeligalig.com/index.php?topic=83087.0

islander · « **Reply #3 on:** October 26, 2016, 06:28:44 AM »

The reality is more prosaic. China offered a low-interest loan, not aid, with payment guaranteed from oil revenues. And the money had to be spent rebuilding a shattered nation that had seen 300 bridges bombed and fields littered with landmines. It was a risky deal, but it offered hope that some of Angola's riches might be translated into development for the first time.

Sure enough, roads were rebuilt and schools erected. Meanwhile, Western banks gave loans without demanding transparency, charged higher interest rates and even exported Angolan oil, ensuring that cash continued to flow into politicians' coffers.

Linkback: https://tubagbohol.mikeligalig.com/index.php?topic=83087.0

islander · « **Reply #4 on:** October 26, 2016, 06:29:28 AM »

The Chinese involvement in Angola counters claims they are just plundering Africa's wealth, only building infrastructure in order to ferry out natural resources. Angola's oil is deep offshore, but China has built hospitals, schools, irrigation systems and roads inland. Indeed, unlike Western donors, who tend to have their favoured nations, China has given aid to every country in sub-Saharan Africa - except those nations supporting Taiwan, with whom it has engaged in something of a bidding war across the continent.

The case of Angola demonstrates two themes that emerge clearly from this important book. First, the endless hypocrisy of the West as it watches the long march of the Chinese through Africa. The critics, often woefully ill-informed, ignore the West's own history of exploitation, encouraging corruption and supporting unsavoury regimes. Even after 60 years of Western aid, there remains a reluctance to accept its failure to promote development or tackle poverty.

Linkback: https://tubagbohol.mikeligalig.com/index.php?topic=83087.0

islander · « **Reply #5 on:** October 26, 2016, 06:30:49 AM »

Secondly, there is fascinating insight into the way China methodically evolves its policies, moulding them to experiences, listening to criticism and never scared to experiment in the pursuit of its long-term goals. As Deng Xiaoping said in his dig at Mao's great leap, if you are crossing a river it is best to keep your feet on the bottom and feel the stones.

Brautigam says the Chinese strategy, based upon models tested at home during its own phenomenal growth, was designed to meet three challenges. First, to tap into Africa's natural wealth since Chinese growth was outpacing its own resources. Second, to reassure other developing nations that while China was a rising power, it was a responsible power â€“ while also heading off the challenge of Taiwan. And third, to create new markets for its fledgling multinational companies.

Linkback: https://tubagbohol.mikeligalig.com/index.php?topic=83087.0

islander · « **Reply #6 on:** October 26, 2016, 06:31:36 AM »

The template was set with the first involvement in Africa, which came in Guinea after the French were told to leave in 1959. An interest-free loan led to the building of factories, paddy fields, a plantation, a cinema and a conference centre. Seven years later, there were an estimated 3,000 Chinese aid workers, including 34 medical experts. Unlike Western aid workers, they live in similar style to the locals. "How can you reduce poverty but live in a five-star hotel?" asks one Chinese expert pointedly.

By the late 1980s, as Western companies pulled out of what was being branded as "the failed continent" and aid for infrastructure dried up, Beijing saw only a land of opportunity. The West failed to notice the Chinese teams managing state-owned factories, building bridges and repairing irrigation systems. Markets across the continent began selling textiles and metal bowls made in China. Their methods were rigorous. When Liberia asked China to rehabilitate a sugar-cane factory and plantation, it expected a rapid and positive response. Instead, a 50-man unit was sent over for a feasibility study, concluding that the project would need an annual Â£2m subsidy and telling Liberia to find better projects.

Linkback: https://tubagbohol.mikeligalig.com/index.php?topic=83087.0

islander · « **Reply #7 on:** October 26, 2016, 06:33:33 AM »

Over the past decade, the links between China and Africa have solidified, with considerable political capital invested on both sides. But with perhaps 750,000 Chinese moving to Africa in this time, tensions have grown, with local politicians whipping up resentment.

Some concerns are justified â€“ there is clear evidence of Chinese companies importing the low standards common in their homeland, of violating minimum wage laws and destroying the environment. And even this author has qualms over Chinese firms taking over large tracts of agricultural land, although she is too forgiving of China in other areas, such as its support for Robert Mugabe in Zimbabwe.

Linkback: https://tubagbohol.mikeligalig.com/index.php?topic=83087.0

islander · « **Reply #8 on:** October 26, 2016, 06:34:28 AM »

Others concerns are less clear-cut: for example, she points to research in Ethiopia which found that, following trade liberalisation, Chinese firms seized 80 per cent of the shoe market and put local firms out of business. Several years later, however, the leather sector was booming and surviving shoe firms had sharpened up and were competing effectively.

Brautigam also makes a strong case that, while there are worries over the number of Chinese working in Africa, especially at more senior levels, Chinese staff levels decrease over time and local employment is boosted.

Linkback: https://tubagbohol.mikeligalig.com/index.php?topic=83087.0

islander · « **Reply #9 on:** October 26, 2016, 06:38:37 AM »

The author concludes that China's embrace of Africa is strategic, long-term and still evolving â€“ and that it is up to Africa's leaders to shape the relationship to serve their own ends. The West, she says, should admit the shortcomings of its own approach and learn from the way the Chinese use investment, trade and technology as levers for development. There is little doubt that while the dragon's gifts are cloaked in ambiguity, we would do well to stop believing in myths and start engaging with the reality of a rapidly-changing world order.

Linkback: https://tubagbohol.mikeligalig.com/index.php?topic=83087.0

islander · « **Reply #10 on:** October 26, 2016, 06:39:04 AM »

Testbed for Chinese influence: Angola

Angola, a focus for Chinese investment in Africa, was subject to Portuguese power after the 16th-century founding of Luanda (left). It became a Portuguese colony from 1655 and an overseas province from 1951. Anti-colonial insurgency began in 1961, and independence came in 1975. But almost 30 years of sporadic civil war between the ruling MPLA and its UNITA-FNLA rivals killed more than a million and displaced a third of the population. It ended with rebel leader Jonas Savimbi's death in 2002.

http://www.independent.co.uk/

Linkback: https://tubagbohol.mikeligalig.com/index.php?topic=83087.0

islander · « **Reply #11 on:** October 26, 2016, 07:52:51 AM »

OP-ED

Chinaâ€™s Aid to Africa: Monster or Messiah?

Yun Sun
February 7, 2014

In recent years, Chinaâ€™s economic presence in Africa has led to a heated debate, some of it well-informed and some of it not, about the nature of Chinese involvement and its implications for the continent. The debate is partially motivated by the rapid growth of Chinaâ€™s economic presence in Africa: for example, Chinese investment in Africa grew from USD 210 million in 2000 to 3.17 billion in 2011. Aid is an important policy instrument for China among its various engagements with Africa, and indeed Africa has been a top recipient of Chinese aid: by the end of 2009 it had received 45.7 percent of the RMB 256.29 billion cumulative foreign aid of China. This aid to Africa has raised many questions, such as its composition, its goal and nature.

Linkback: https://tubagbohol.mikeligalig.com/index.php?topic=83087.0

islander · « **Reply #12 on:** October 26, 2016, 07:55:53 AM »

What constitutes Chinaâ€™s aid?

Officially, China provides eight types of foreign aid: complete projects, goods and materials, technical cooperation, human resource development cooperation, medical assistance, emergency humanitarian aid, volunteer programs, and debt relief. Chinaâ€™s aid to Africa covers a wide array of fields, such as agriculture, education, transportation, energy, communications, and health. According to Chinese scholars, since 1956, China has provided almost 900 aid projects to African countries, including assistance supporting textile factories, hydropower stations, stadiums, hospitals, and schools.

Linkback: https://tubagbohol.mikeligalig.com/index.php?topic=83087.0

islander · « **Reply #13 on:** October 26, 2016, 07:58:29 AM »

Official development assistance is defined by the Organisation for Economic Co-operation and Development (OECD) as concessional funding given to developing countries and to multilateral institutions primarily for the purpose of promoting welfare and economic development in the recipient country. China is not a member of OECD and does not follow its definition or practice on development aid. The bulk of Chinese financing in Africa falls under the category of development finance, but not aid. This fact is privately acknowledged by Chinese government analysts, although Chinese literature constantly blurs the distinction between the two categories.

Linkback: https://tubagbohol.mikeligalig.com/index.php?topic=83087.0

islander · « **Reply #14 on:** October 26, 2016, 08:01:58 AM »

The TAZARA Railway links the Tanzanian port of Dar es Salaam with the town of Kapiri Mposhi in Zambia. The railway is 1,860 km in length and was built as a turnkey project financed and executed by China. Construction began in 1970 and was completed in 1975. Construction costs were about $500 million. RICHARD STUPART / FOR CHINA DAILY

The billions of dollars that China commits to Africa are repayable, long-term loans. From 2009 to 2012, China provided USD 10 billion in financing to Africa in the form of â€œconcessional loans.â€[5] During Chinese President Xi Jinpingâ€™s first overseas trip to Africa in March 2013, he doubled this commitment to USD 20 billion from 2013 to 2015.[6] The head sovereign risk analyst of Export-Import Bank of China announced in November 2013 that by 2025, China will have provided Africa with USD 1 trillion in financing, including direct investment, soft loans and commercial loans.

Linkback: https://tubagbohol.mikeligalig.com/index.php?topic=83087.0

islander · « **Reply #15 on:** October 26, 2016, 08:05:39 AM »

Chinaâ€™s own policy actively contributes to the confusion between development finance and aid. The Chinese government encourages its agencies and commercial entities to â€œclosely mix and combine foreign aid, direct investment, service contracts, labor cooperation, foreign trade and export.â€ The goal is to maximize feasibility and flexibility of Chinese projects to meet local realities in the recipient country, but it also makes it difficult to capture which portion of the financing is â€“ or should be â€“ categorized as aid. One rather convincing theory is that the Chinese government in effect pays for the difference between the interest rates of concessional loans provided to Africa and comparable commercial loans. Therefore, only the small difference in interest rates could qualify as Chinese aid.

As the headquarters of the African Union, the AU Conference Center cost $200 million and was totally funded by the Chinese government. It is the largest aid project by China in Africa since the TAZARA railway. The main building is 99.9 meters tall and is the tallest building in Addis Ababa, Ethiopia. PHOTO/XINHUA

Linkback: https://tubagbohol.mikeligalig.com/index.php?topic=83087.0

islander · « **Reply #16 on:** October 26, 2016, 08:11:56 AM »

Who does Chinaâ€™s aid serve?

Despite Chinese leadersâ€™ claim that Chinaâ€™s assistance to Africa is totally selfless and altruistic, the reality is far more complex.[9] Chinaâ€™s policy toward Africa is pragmatic, and aid has been a useful policy instrument since the early days of Peopleâ€™s Republic of China.

Located in northern Sudan on the Nile River, the Merowe Dam is the largest contemporary hydropower project in Africa, which contains a reservoir of 20 percent of the Nile's annual flow. It is largest foreign project the Chinese industry has ever participated in, and construction was finished in 2009. PHOTO/XINHUA

Linkback: https://tubagbohol.mikeligalig.com/index.php?topic=83087.0

islander · « **Reply #17 on:** October 26, 2016, 08:14:50 AM »

During the Cold War, foreign aid an important political tool that China used to gain Africaâ€™s diplomatic recognition and to compete with the United States and the Soviet Union for Africaâ€™s support. Between 1963 and 1964, Zhou Enlai visited 10 African countries and announced the well-known â€œEight Principles of Foreign Economic and Technological Assistance.â€[10] These aid principles were designed to compete simultaneously with the â€œimperialistsâ€ (the United States) and the â€œrevisionistsâ€ (the Soviet Union) for Africaâ€™s approval and support.

The Zimpeto Stadium is a multi-use stadium in Zimpeto, Mozambique, which was inaugurated on April 23, 2011. It is mainly used for soccer and was the main stadium for the 2011 All-Africa Games. It has a capacity of 42,000 spectators. The stadium was built with funds from the Chinese government. PHOTO/XINHUA

Linkback: https://tubagbohol.mikeligalig.com/index.php?topic=83087.0

islander · « **Reply #18 on:** October 26, 2016, 08:21:13 AM »

These efforts were enhanced during the Cultural Revolution under the influence of a radical revolutionary ideology, motivating China to provide large amounts of foreign aid to Africa despite its own domestic economic difficulties. One famous example was the Tanzania-Zambia Railway built between 1970 and 1975, for which China provided a zero-interest loan of RMB 980 million. By the mid-1980s, Chinaâ€™s generous assistance had opened the door to diplomatic recognition with 44 African countries.

The Grand Theatre in Dakar was constructed from 2008-2011 by China National Complete Plant Import Export Corporation as a gift. The six-story, 1800 seat theatre was built at a cost of 16 billion CFA francs ($34 million), of which China paid 14 billion CFA francs and Senegal contributed the rest. PHOTO/XINHUA

Linkback: https://tubagbohol.mikeligalig.com/index.php?topic=83087.0

islander · « **Reply #19 on:** October 26, 2016, 10:47:06 PM »

Since the beginning of Chinaâ€™s reform and opening up, especially after 2000, Africa has become an increasingly important economic partner for China. Africa enjoys rich natural resources and market potential, and urgently needs infrastructure and development finance to stimulate economic growth. Chinese development finance, combined with the aid, aims at not only benefiting the local recipient countries, but also China itself. For example, Chinaâ€™s â€œtied aidâ€ for infrastructure usually favors Chinese companies (especially state-owned enterprises), while its loans are in many cases backed by African natural resources.

The Addis Ababa - Adama expressway, built at a cost of more than $709 million, will reduce average travel time of the 84km route from the current three hours to less than one hour. The sixlane highway is designed in accordance with Chinese standards, and the Chinese government provided concessionary loans. PHOTO/XINHUA

Linkback: https://tubagbohol.mikeligalig.com/index.php?topic=83087.0

islander · « **Reply #20 on:** October 26, 2016, 10:51:22 PM »

Much Chinese financing to Africa is associated with securing the continentâ€™s natural resources. Using what is sometimes characterized as the â€œAngola Model,â€ Chinas frequently provides low-interest loans to nations who rely on commodities, such as oil or mineral resources, as collateral. In these cases, the recipient nations usually suffer from low credit ratings and have great difficulty obtaining funding from the international financial market; China makes financing relatively availableâ€”with certain conditions.

As the largest airport in Mozambique, Maputo Airport was upgraded with concessionary loans from the Chinese government. The project includes two parts: the international terminal completed in 2010, and the domestic terminal in 2012. PHOTO/XINHUA

Linkback: https://tubagbohol.mikeligalig.com/index.php?topic=83087.0

islander · « **Reply #21 on:** October 26, 2016, 10:53:27 PM »

Though commodity-backed loans were not created by China â€“ leading Western banks were making such loans to African countries, including Angola and Ghana, before China Eximbank and Angola completed their first oil-backed loan in March 2004 â€“ but the Chinese built the model to scale and applied it using a systematic approach. In Angola in 2006, USD 4 billion in such loans probably helped Chinese oil companies win the exploitation rights to multiple oil blocks. In 2010, Sinopecâ€™s acquisition of a 50 percent stake in Block 18 coincided with the disbursement of the first tranche of Eximbank funding, and in 2005, Sinopecâ€™s acquisition of rights to Block 3/80 coincided with the announcement of a new USD 2 billion loan from China Eximbank to the Angolan government. In 2008, the China Railway Group used the same model to secure the mining rights to the Democratic Republic of Congoâ€™s copper and cobalt mines under the slogan â€œ(Infrastructure) projects for resources.â€ According to Debra Brautigam, a top expert on China-Africa relations, between 2004 and 2011, China reached similar unprecedented deals with at least seven resource-rich African countries, with a total volume of nearly USD 14 billion.

The Mali Hospital, built with Chinese aid, officially opened in September 2011, where China's medical aid team conducted the first heart operation in Mali. PHOTO/XINHUA

Linkback: https://tubagbohol.mikeligalig.com/index.php?topic=83087.0

islander · « **Reply #22 on:** October 26, 2016, 10:59:30 PM »

In addition to securing Africaâ€™s natural resources, Chinaâ€™s capital flows into Africa also create business opportunities for Chinese service contractors, such as construction companies. According to Chinese analysts, Africa is Chinaâ€™s second-largest supplier of service contracts, and â€œwhen we provide Africa assistance of RMB 1 billion, we will get service contracts worth USD 1 billion (RMB 6 billion) from Africa.â€ In exchange for most Chinese financial aid to Africa, Beijing requires that infrastructure construction and other contracts favor Chinese service providers: 70 percent of them go to â€œapproved,â€ mostly state-owned, Chinese companies, and the rest are open to local firms, many of which are also joint ventures with Chinese groups. In this sense, Chinaâ€™s financing to Africa, including aid, creates business for Chinese companies and employment opportunities for Chinese laborers, a critical goal of Beijingâ€™s Going Out strategy.

Linkback: https://tubagbohol.mikeligalig.com/index.php?topic=83087.0

islander · « **Reply #23 on:** October 26, 2016, 11:03:17 PM »

How to understand Chinese aid to Africa?

With a few exceptions, there is a strong tendency among observers to assert moral judgments in the assessment of Chinese aid and development finance to Africa: Chinaâ€™s activities are either â€œevilâ€ because they represent Chinaâ€™s selfish quest for natural resources and damage Africaâ€™s fragile efforts to improve governance and build a sustainable future; or they are â€œvirtuousâ€ because they contribute to a foundation for long-term economic development, through infrastructure projects and revenue creation.

Linkback: https://tubagbohol.mikeligalig.com/index.php?topic=83087.0

islander · « **Reply #24 on:** October 26, 2016, 11:05:13 PM »

This polarization reveals the two sides of the same coin. On the positive side, Chinaâ€™s aid and development financing fills a void left by the West and promotes the development of African countries. Many Chinese projects require large investment and long pay-back terms that traditional donors are reluctant to provide. On the other hand, however, these short-term benefits should not form a cover-up for the potential long-term negative consequences associated with neglecting issues of governance, fairness and sustainability. For example, when the â€œtied aidâ€ is linked to the profitability of Chinese companies, it becomes questionable whether China would prioritize Africaâ€™s interests or its own.

Linkback: https://tubagbohol.mikeligalig.com/index.php?topic=83087.0

islander · « **Reply #25 on:** October 26, 2016, 11:07:40 PM »

There is also an ongoing debate inside China about the goal and management of Chinese aid to Africa. For the foreign policy bureaucrats at the Ministry of Foreign Affairs, foreign aid is essentially a political instrument for China to strengthen bilateral ties and facilitate the development of African countries. In their view, political considerations should be the most important criteria in aid decision-making. Economic benefits associated with aid projects, such as profitability, resource extraction, or the acquisition service contracts for Chinese vendors, should only be secondary.

Linkback: https://tubagbohol.mikeligalig.com/index.php?topic=83087.0

islander · « **Reply #26 on:** October 26, 2016, 11:19:10 PM »

However, trade promoters such as the Ministry of Commerce have rather opposite perspective. In their view, foreign aid serves Chinaâ€™s overall national priority, which by definition is economic growth. Therefore, all aspects of aid decisions should reflect broad economic considerations. Under this logic, the inclination is to allocate the aid budget to countries that offer China the greatest number of commercial opportunities and benefits. Since Chinaâ€™s top economic interest is Africaâ€™s natural resources, aid decisions are inevitably skewed toward resource-rich countries while others receive less favorable consideration.

Linkback: https://tubagbohol.mikeligalig.com/index.php?topic=83087.0

islander · « **Reply #27 on:** October 26, 2016, 11:21:48 PM »

This practice is problematic in that many of the resource-rich African countries with which China works also suffer from serious political problems, such as authoritarianism, poor governance, and corruption. When the Ministry of Commerce pursues economic gains and associates aid projects with resource extraction, it uses aid packages to promote business relations. This directly contributes to the negative perception that China is pouring aid, funding, and infrastructure projects to prop up corrupt governments in exchange for natural resources. As many Chinese analysts observe, the Foreign Ministry in recent years has been fighting fiercely for the authority to manage Chinaâ€™s foreign aid projects, which are currently under the purview of the Ministry of Commerce.

Linkback: https://tubagbohol.mikeligalig.com/index.php?topic=83087.0

islander · « **Reply #28 on:** October 26, 2016, 11:25:50 PM »

The intention of Chinaâ€™s aid to Africa is benign but not altruistic. China does not seek to use aid to influence the domestic politics of African countries or dictate policies. Instead, it truly hopes to help Africa achieve better development while avoiding meddling with the internal affairs of African countries through conditional aid. But on the other hand, China is not helping Africa in exchange for nothing. Chinese projects create access to Africaâ€™s natural resources and local markets, business opportunities for Chinese companies and employment for Chinese labors. When Chinese officials emphasize that China also provides aid to countries that are not rich in natural resources to defuse international criticisms, they often forget to mention that China may have its eyes on other things which these countries can deliver, such as their support of Beijingâ€™s â€œone Chinaâ€ policy, of Chinaâ€™s agenda at multilateral forums, and of China as a â€œresponsible stakeholder.â€ In this sense, Chinaâ€™s comprehensive, multi-dimensional agenda of its aid to Africa defies any simplistic categorization.

https://www.brookings.edu/

The author, Yun Sun, is a Nonresident Fellow - Global Economy and Development, Africa Growth Initiative

Linkback: https://tubagbohol.mikeligalig.com/index.php?topic=83087.0