China pours Billions into African Infrastructure in Exchange for Lucrative Trade Agreements

Posted by PITHOCRATES - July 1st, 2012

Week in Review

China is pouring billions into Africa.  Apparently out of the goodness of their heart (see Track record by Andrew Moody and Zhong Nan posted 6/29/2012 on China Daily).

The relationship between China and Africa will come under the spotlight once again when leaders of up to 50 African nations will descend on Beijing in July for the Forum on China-Africa Cooperation…

China’s stock of overseas direct investment on the continent has increased eight-fold from $1.6 billion (1.3 billion euros) in 2005 to $13.04 billion at the end of 2010, the last year for which figures are available, according to China’s National Bureau of Statistics.

Trade has also seen a similar large increase with exports to Africa rising from $10.18 billion in 2003 to $59.95 billion in 2010.

In Africa itself the relationship is viewed as central. John Dramani Mahama, vice-president of Ghana, says dealing with China helps avoid the red tape linked to alternative sources of funding from the World Bank, the International Monetary Fund or various international aid agencies…

Meles says far from exploiting Africa, China was in the process of rescuing Africa from the so-called Washington Consensus of the past 30 years that dictated that the private sector was the best engine for development in Africa…

Only one dominant view of the China-Africa relationship seems to exist in the West – that it is an exploitative and neo-colonial one…

The retired diplomat also feels China offers a great role model for Africa in terms of showing what can be achieved with a commitment to develop.

“I can remember when Sanlitun (now the bustling entertainment district in Beijing) was just bush and Shenzhen was a small fishing port and now it is like Hong Kong. There is a feeling if they can do it, we can do it too,” he says…

[Samuel B.] Nagbe [assistant minister in the Ministry of Public Works in the capital Monrovia], however, says this also has drawbacks since there is a lack of competition when large infrastructure projects are offered for tender…

The overall relationship between China and Africa will remain a subject of debate. Philip Nyinguro, associate professor of political science and international relations at the University of Nairobi, argues the weak state of some African countries makes them vulnerable when they are cutting deals with any country, whether it is China or a Western power.

This doesn’t sound much different than the spread of the British Empire.  And British colonialism.  Only the colonies may not do as well under the Chinese than they did under the British.  For let us not forget that it was the British Empire that made Hong Kong the jewel it became.  Not the Chinese.

And that attack on the private sector?  The wealth that China is creating that allows them to invest in Africa came from the private sector.  Granted it’s not what the West would call the private sector.  It’s more state-capitalism.  However, it was the transition from communism to capitalism (at least towards capitalism) in the cities that ignited their economic ascent.  So, yes, even China must agree that the best engine for economic development must come from the private sector.  Because it’s what they used.  For the communists sure couldn’t make it happen.

There’s no such thing as a free lunch.  Clearly the Chinese want those African resources.  Just like the early mercantilist empires wanted colonies in foreign lands to feed raw materials to their economies.  The Dutch, Portuguese, Spanish, French and the British.  They’re just doing it a little differently.  By ‘crowding out’ all other foreign investment.  Who don’t ask any questions or place any conditions on their aid beyond the economics of their trade deals.  Giving them a presence in these African nations.  Who will expect favorable treatment in return for their generosity.  If not they can just pull it away.  And without a developing private sector these countries could return to where they were before the Chinese investments.  Or accept an expanding Chinese influence in their nations.  Just like a colony power.

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