Analysis and reflections
Top 10 Misconceptions about Chinese Investment in Africa (Codrin Arsene)Many people consider China to be Africas new best friend, discovered after years and years of searching. Is this really the case? What are the common misconceptions about Chinese Investment in Africa? How much of a win-win relationship is this? Who benefits most out of this deal? Find out here.
- China is helping Africa achieve its millennium development goals by investing in its infrastructure, economic markets and development projects. In fact, China is not really “investing.” Most of the “Chinese investment in Africa” is actually a very well-structured program of concessional loans. What does that mean? China has taken the World Bank’s place in lending money to Africa. The real investment actually accounts for less than 1% of China’s business in Africa.
- China is an equal partner who respects and assists African states in solving their problems. False, false, and false! More than 95% of all China’s programs in Africa have a clause that stipulates one breathtaking agreement: all infrastructure-related programs are required to have 70% Chinese contracted personnel. Only 30% of the people hired in these infrastructure programs are Africans. Last time I checked, equality means 50-50, not 70-30. Moreover, while the African governments choose where the infrastructure is needed, they have to pay back the money in natural resources, and are practically forced to give employment to thousands of Chinese instead of Africans.
- China has helped Africa develop in the last ten years by employing more and more Africans in business-related sectors. Firstly, it is true that the Chinese have helped decrease the unemployment rate in natural resource-related programs. However, more people are discovering the common knowledge that China is dumping its cheap products on African markets, forcing Africans out of business, as they cannot afford to sell goods at the prices listed by Chinese sellers.
- China will always help African leaders, including those with poor human rights records. China immediately distanced itself when the International Criminal Court indicted Slobodan Milosevic of crimes against humanity despite its previous promises of supporting the Serbian leader at all costs. In Africa, the Chinese government has already broken its promise of non-interference in the cases of Angola and Sudan when it “encouraged” leaders to change their policies with an eye towards fulfilling international trade agreements and ceasing the targeting of civilians. Moreover, China did not use its veto power to stop the ICC from investigating the crimes in Darfur.
- China will not try to take over Africa. They will not be intrusive and will always abide by local rules. An estimated 750,000 Chinese have settled in Africa over the past decade. Millions are on the way. Several clashes between police forces and Chinese co-nationals have already been registered throughout Africa. For the latest, click here.
- China cares deeply about most of the African states and will work closely with most of them in order to achieve their development-related targets. So why is that only four states get the bulk of the so-called “Chinese investment”? Nigeria, Angola, Ethiopia and Sudan have received 70% of the Chinese funds designated to Africa. What about the other 50 states? Are they just a “negligible minority?”
- China is not a promoting a new form of colonialism on the continent. They are building roads designed to help them take minerals out of Africa; Chinese are getting privileged, under-market prices for the commodities they are shipping out from Africa (oil, timber, coal, copper, coltan, etc.); they are creating segregated neighborhoods for Chinese people only: Chinatowns have sprung up throughout the continent just like the Apartheid era white farms; they are paying Africans very low salaries and often fire them when they try to object to working conditions (see the cases registered in Zambia, South Africa and Angola). All this considered, we still haven’t gotten to the “new” colonialism. All the above are replicas of the policies used by the white racists 50 years ago.
- China truly cares about environmental issues. True: The Chinese care about the environment in China. China’s strategy is based on protecting the country from further environmental damage, while obtaining resources from other parts of the world. That’s why, despite being able to get all the necessary timber for its internal market in China, the Chinese officials have signed contracts that will fulfill 70% of its imports from Africa. Environmentalists all over Africa have been signaling out other cases of severe environmental degradation caused by Chinese firms not respecting conservation laws. Currently, Chinese firms are wiping out whole forests throughout Gabon, Cameroon, Congo- Kinshasa, Equatorial Guinea and Liberia.
- By the power of example, China will stimulate economic growth, sustainable development and ultimately democracy and stability. China is the main investor in those countries that are led by autocratic leaders with dictatorial aspirations (the only exception is Nigeria, whose democratic record is actually improving). It is widely agreed that without Chinese intervention, which is supporting the autocratic governments to the extent that it lends up to 10-15% of their yearly national GDP (Sudan, Zimbabwe are the most notorious cases), these leaders would not have been able to hold power against the will of their people for so long. Most countries named in this article submit to this argument, Nigeria again being the exception.
- The South – South cooperation, started by China, is the best thing that ever happened to Africa, and it will help lift Africa from extreme poverty. China is the number one weapon supplier to Africa. From Ethiopia, Sudan, and Congo to Zimbabwe, Cameroon or Gabon, China is selling Africans the weapons that Africans will then use against their own peers. Alleviating extreme poverty means stopping wars. China gives weapons to both autocratic governments and, according to Amnesty International, to the guerrilla troops as well (the cases of the Democratic Republic of Congo and Uganda are standing out). Moreover, countries like Zimbabwe or Sudan, where people are most affected by extreme poverty, have received the harshest loan conditions possible. Quoting from one of my previous postings, these two states have the worst lending agreements “with the largest interest rate, the smallest grace period (only about .04 a year since 2002, while the average among the African countries is somewhere around 3 years), and by far the highest interest rate (around 6.1% while other countries, such as Ethiopia, get interest rates as low as 1%).”
As always, there are more examples to add. Objections or additional misconceptions are always welcomed.