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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.

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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.

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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.

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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 £2m subsidy and telling Liberia to find better projects.

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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.

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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/

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What constitutes China’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. China’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.



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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 “concessional loans.”[5] During Chinese President Xi Jinping’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.

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Who does China’s aid serve?

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

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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, China’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

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Much Chinese financing to Africa is associated with securing the continent’s natural resources. Using what is sometimes characterized as the “Angola Model,” 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 available—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

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In addition to securing Africa’s natural resources, China’s capital flows into Africa also create business opportunities for Chinese service contractors, such as construction companies. According to Chinese analysts, Africa is China’s second-largest supplier of service contracts, and “when we provide Africa assistance of RMB 1 billion, we will get service contracts worth USD 1 billion (RMB 6 billion) from Africa.” 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 “approved,” 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, China’s financing to Africa, including aid, creates business for Chinese companies and employment opportunities for Chinese laborers, a critical goal of Beijing’s Going Out strategy.



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This polarization reveals the two sides of the same coin. On the positive side, China’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 “tied aid” is linked to the profitability of Chinese companies, it becomes questionable whether China would prioritize Africa’s interests or its own.



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However, trade promoters such as the Ministry of Commerce have rather opposite perspective. In their view, foreign aid serves China’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 China’s top economic interest is Africa’s natural resources, aid decisions are inevitably skewed toward resource-rich countries while others receive less favorable consideration.



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The intention of China’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 Africa’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 Beijing’s “one China” policy, of China’s agenda at multilateral forums, and of China as a “responsible stakeholder.”  In this sense, China’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

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