IntroductionChina’s increased presence in the Africancontinent has been of interest to many, and is considered to be a crucialplayer in Africa’s political and economic development. Indeed, Chineseinvestment skyrocketed in the past decades. In 2005, the volume of Chinese aidamounted to $800 million, which increased to a commitment of $10 billionbetween 2009 and 2012.
In terms of infrastructure, Chinese investmentsincreased seven-fold from $1 billion in only three years during the 2003-2006period (Ayodele & Sotola, 2014). The main drivers behind this increasedinvolvement include diplomatic, energy-related, and market-seeking reasons.However, the interests of China in Africa have been heavily debated. On the onehand, advocates of the Chinese model of investment argue that it has broughtgrowth to African economies, and has provided its citizens with affordablegoods. On the other hand, critiques believe that China’s non-interferencepolicy with recipient countries is damaging good governance and the rule of lawby increasing the leverage of African autocratic leaders (Broich & Szirmai,2014). Thus, the aim of this paper is to assess the key motivations behindChina’s increased involvement in Africa, and to discuss its implications foreconomic and institutional development. The remainder of the paper is structuredas follows.
Section 2 reviews the key drivers of Chinese investment in Africaneconomies, and contrast its approaches with the Western model. Section 3assesses the implications for economic and political development while consideringboth advocate and opponent views of Chinese involvement. Section 4 offers concludingremarks. 2. Motivationsand Approaches of China’s presence in Africaa.
Driversof Chinese InvestmentOne of the main goals of China in itsinvolvement in Africa is a diplomatic one. Indeed, China is seeking Africa’ssupport for its “One China Policy”, and the absence of ties with Taiwan is apre-requisite in order to receive Chinese aid (Broich, 2017). Furthermore, Africangovernments which receive Chinese investments are then more likely to providepolitical support to China in the United Nations General Assembly and othermajor institutions (Strüver, 2016). AidData determines that for every 10percent increase in voting support within the United Nations, Chinese aid isincreased by 86 percent on average (Manero, 2017). As a result, Africancountries have proved their support to China’s foreign policy matters on multipleoccasions. For instance, in 2016, Kenya deported 50 Taiwanese nationals toChina (Mareno, 2017). In addition, by establishing its presence in Africa,China aims to demonstrate its global power and its ability to compete on theworld stage, along with European countries and the United States (Ayodele , 2014).
This strategy has been heavily criticized by Western observers,and sometimes characterized as an effort to promote non-democratic politicalregimes on a global scale. Another crucial interest of China is therich natural resource endowment of Africa. The rapid growth of the Chinesemanufacturing sector has led to an increased demand for oil, gas, preciousmetals, aluminum, copper, and iron ore, all of which are abundant in Africa. Asa result, a large share of Chinese financing in Africa relates to securing itsnatural resources (Ayodele & Sotola, 2014). Using the so-called “AngolaModel”, China provides low-interest loans to nations depending on commodities.Oil and mineral resources and thus used as collateral for the loan.
These typesof loans are welcomed by African countries, as most of them experiencedifficulties obtaining funding due to low credit ratings (Sun, 2014). The African population is a potentiallyimportant market for Chinese goods. Previously, many industries were excludedfrom the market as African economies were under monopolies and heavy protectionfrom competition. When these economies liberalized, it opened the door for newplayers to enter the market, including Chinese firms. As the Chinese economyrelies on manufacturing sectors, the African continent provides a new anddependable market (Ayodele & Sotola, 2014). Furthermore, Chinese low-costmanufacturing products such as electronics and textile are heavily welcomed byprice-sensitive African countries (Broich, 2017).
Finally, China is currently promoting its”One Belt One Road” initiative, which calls for spending billions of dollars ininfrastructure investment in countries along the Silk Road, linking China toEurope (The Economist, 2017). Africa is of crucial importance to this project,as the Maritime Silk Road will go past the coast of East Africa, where Chinahas invested in several ports. Hence, countries such as Egypt, Ethiopia andSudan have an important strategic stake in the completion of the initiative.
However, the Chinese infrastructure projects are not limited to ports andcoastal countries, and roads and railways are working their way through theinside of the continent (Breuer, 2017). As a result, China is heavily investingin infrastructure projects in many African countries. b. Approachand Comparison with Western InvestmentThe Chinese aid and investment systemsmarkedly differs from the Western model for two key reasons. First andforemost, China employs a “non-interference” policy towards the countries itinvests in. This means that aid is not conditional to factors such as goodgovernance, fiscal discipline, the rule of law, property rights and humanrights. The only exception to this policy is the condition that recipientcountries have no ties with Taiwan, and recognize the People’s Republic ofChina as the only legitimate government of China.
Historical examples haveshown that China suspended economic aid whenever a country recognized theTaipei government as representing China (Broich, 2015). By contrast, theWestern model of aid is typically characterized by conditionality on sets ofguidelines represented in the Washington Consensus or the European Consensus.Indeed, Western countries expect recipients of their aid to show records ofgood governance and rule of law in exchange for their support.
Furthermore,Western countries have been known to selectively target their aid to democraticcountries, so that resources will be used more efficiently and maximize totalsociety welfare. This particular characteristic of Chinese investments abroadis the key reason why Western countries are increasingly suspicious of China’spresence in Africa. The non-interference policy is believed to promoteauthoritarian political regimes on a global scale. As a result, many Africangovernments tend to welcome the Chinese model of aid, as it comes with very fewstrings attached compared with the Western model.
Secondly, the Chinese approach topromoting economic growth differs from the west in that it is associated withChina’s specific commercial interests, but also the ones of the recipientcountry. Hence, the aid projects are usually mutually beneficial, and projectsare designed to be in the interest of both nations. In contrast, the West isusually aiming at raising income and welfare in the recipient country.Generally, China tends to avoid lending money upfront to recipient countries.
Instead, Chinese construction and engineering companies provide jobs to Chineseand local workers, while being funded by Chinese banks (McKinnon, 2010). Furthermore, Chinese companies are willing toinvest where Western firms are less prone to, such as physical infrastructure,industry and agriculture, which are crucial to African development. Accordingto Ayodele & Sotola (2014), since the 1970s, the United State Agency forInternational Development (USAID) has not funded heavy infrastructure projectsin Africa. In addition, the World Bank and USAID drastically reduced supportfor agriculture in the 1990s, and the World Bank stopped supporting palm oilfarmers because of environmental pressures. Finally, while both the West andChina are heavily investing in resource related industries, the West tends toinvest more in services than China. Moreover, Chinese SMEs are rather characterizedby market-seeking FDI throughout Africa (Broich, 2014). 3. Implicationsfor Developmenta.
The OpposingViewAs previously mentioned, the West isincreasingly suspicious of China’s relations with Africa. A key reason for thatsuspicion is China’s non-interference policy with African government, whichtends to be perceived as a way to promote authoritarian regimes. As much of thecurrent Western aid in Africa focuses on improving governance and the rule oflaw, China’s presence could undermine the efforts of the West by providingauthoritarian leaders with more leverage to stay in power (Broich , 2014). For instance, when American and Canadian companies were forcedto leave Sudan as a result of their governments’ sanctions against the Sudaneseregime, Chinese companies stepped in to fill the gap. In response, the Westaccused China of supporting an authoritarian regime (Lammers, 2007). Accordingto Broich (2017), this situation is similar to the foreign aid game between theUnited States and the Soviet Union during the Cold War. Along these lines,while the US and the Soviet Union attempted to influence recipient countriesnot to switch to the rival ideology, China may be influencing African countriesnot to switch to democracy in the same manner. Although Broich (2017) does notfind a statistically significant relationship between the democracy level of arecipient country and Chinese development finance, many Western observers stillbelieve that the lack of conditionality of Chinese aid on governance standardsmay further strengthen poor rule of law, accountability, and human rights inAfrican countries, as it gives governments no incentives to improve, whilestill providing them with much needed aid.
The Chinese model of aid has also beenheavily criticized by the West as it is perceived to be overly advantageous toChina compared with recipient countries. These critiques even characterizeChina’s involvement with Africa as “neo-colonialism”. For instance,infrastructure programs funded by the Chinese government are mainly carried outby Chinese workers. As a result, local companies and workers are not given anopportunity to grow experience and capital, as these contracts are mainlybenefiting Chinese companies (Manero, 2017). Furthermore, there has beeninstances of human rights violations of local workers and local communities.For example, for the construction of the Kribi deep sea port in Cameroon, localhouses were pulled down and people had to relocate, complaining about weakcompensation (Breuer, 2017). In addition, Human Rights Watch (2011) released areview of treatments of Zambian workers in Chinese mines, revealing unsafeworking conditions, exploitative hours, and threats to those who complained.
Finally, the overflow of cheap Chinese goods into African markets providesoverwhelming competition to local producers, who are unable to follow. b. TheAdvocate ViewAlthough the Chinese model of aid hasbeen heavily criticized, it does seem to provide results. The African continentdesperately needs investments in infrastructure, as its infrastructuralbackwardness is a key factor holding development back.
Infrastructure projectsfunded by Chinese development assistance have built needed roads, bridges,railways, schools, and hospitals in an attempt to close this gap (Manero,2017). Furthermore, China has contributed in developing Africa’s human capitalby providing trainings to many African professionals, and offered scholarshipsto study in Chinese universities for African students. In addition, machinery,electronic equipment and high-tech products have been heavily exported toAfrican countries, providing much needed access to new technologies (Ayodele& Sotola, 2014). Although these products may represent fierce competitionfor local producers, they are more suitable for African demand, and areaffordable to a large number of people. Furthermore, Chinese aid has providedrelief to many African government struggling with low credit ratings.
Accordingto Ayodele & Sotola (2014), Chinese concessional loans are subsidizedthrough aid budget, which allows for lower interest rates than for commercialloans. Moreover, China regularly engages in debt forgiveness for heavilyindebted countries. The authors further point out that China also offersadvantageous terms of trade to many African countries, and has exempted 440African products from Chinese tariffs. In addition, the high volume of tradebetween the two regions has largely contributed to a record economic growth of5.8 percent in 2007. We know that the West does not perceiveChinese aid in Africa in a positive light. But what about Africans themselves?According to the Afrobarometer (2017), 63 percent of respondents believe thatChina’s economic and political influence in their country was positive.
Whenasked what factors contributed to their positive image of China, respondentsmainly mentioned China’s investment in infrastructure (32 percent), and the lowcost of Chinese products (23 percent). However, many Africans (30 percent)still consider the United States as the most popular model for nationaldevelopment, followed by China (24 percent). In addition, the former colonialpowers are perceived as having the greatest influence (28 percent) comparedwith China (cited by 23 percent) and the United States (cited by 22 percent).Nonetheless, it seems that the “China way” of aid represents a welcomedalternative to the traditional model of aid advocated by the West. 4. Discussionand ConclusionThe aim of this paper was to investigatethe motivations behind China’s increased presence in Africa, and itsimplications for development. It appears as though the key drivers behindChinese aid in Africa are of diplomatic, natural resources related, andmarket-seeking nature.
In addition, the approaches used by the Chinese model ofaid markedly differ from those of the West, in that China employs anon-interference policy with the recipient countries. Moreover, the Chineseapproach to promote economic growth resides in the design of mutuallybeneficial contracts with the recipient countries. In contrast, the Westemploys a more “selfless” approach, aiming at raising per capita income. The question whether Chinese investmentis beneficial or harmful for the economic and political development of Africaneconomies is a heavily debated one. In my opinion, these are the two faces ofthe same coin, and this situation cannot easily be described as black or white.On the one hand, China does help spur African economic growth by heavilyinvesting in infrastructural projects, by offering favorable terms of trade,and by providing African citizens with low-costs products.
Furthermore, themajority of the African population perceive China’s economic and politicalinfluence in their countries as positive. As a result, the “China way” ofeconomic growth challenges the ideas of the Washington Consensus, by offering amodel of development that doesn’t necessarily require Westernization. On theother hand, these short-term benefit cannot substitute for the lack of stronginstitutions, property rights, and the rule of law in many African countries.Although evidence suggests that China does not seek to actively supportauthoritarian governments, its non-interference policy with recipient countriesmay undermine Western efforts to improve governance. Furthermore, authoritariangovernments receiving Chinese aid are offered the opportunity to stay in powerwithout the need to improve weak governance. As a result, African economieswill only enjoy sustained economic growth and political stability if theyimprove their institutions and rule of law, and provide their citizens withstronger property and political rights.