Saturday, April 30, 2016

China-Zimbabwe Conflict Heats Up

Photo credit: xinhuanet.com
Great analysis by SAIS Ph.D. student Yun Sun, non-resident analyst at Brookings: "China’s pains over Zimbabwe’s indigenization plan,"April 26, 2016.

The announcement that Zimbabwe would require 51 percent indigenous ownership for all foreign investments was made some time ago, and since then, the issue has been debated in the courts and policy circles. As I noted in a 2014 story in this blog: "China: Exempt from Zimbabwe's Indigenization Policy?" many believed that Chinese companies were exempt but this was never the case, as I pointed out then, and as we are seeing now.

One Chinese company, Tian Ze, active in the tobacco sector working with local black tobacco farmers, was exempted from the requirement due to its extensive involvement in propping up the local farming effort.

Yun Sun makes another important observation:
Zimbabwe’s indigenization is yet another case of China’s lack of preparedness toward local sovereign risks and a lesson in how to operate in less developed, authoritarian countries with poor investment environment. 
I would add to this that Zimbabwe (like Sudan/South Sudan) remains an important case where we continue to clearly see multiple examples of diplomatic efforts aimed at changing/influencing domestic policies (and politics). As these cases suggest, just what "non-interference in internal affairs" means continues to change, and Africa may be where we can see this most clearly.  

Friday, April 29, 2016

The Economist on our New China-Africa Loan Data

Our new China Africa Research Initiative (CARI) data on Chinese loans in Africa was featured in an article in The Economist today. I'm pleased that they featured our findings that China Eximbank is not (as widely believed) a bigger lender to Africa than the World Bank:

In 2011 Fitch, a rating agency, reported that over the previous decade the China Export-Import Bank had lent more than the World Bank to sub-Saharan Africa*. In fact, say the CARI team, the World Bank has been the bigger lender every year in the past decade bar two, although Chinese lending is catching up.

The graph above shows our data for lending by both banks to all of Africa (north and sub-Saharan). If you only focus on SSA, World Bank figures drop below China Eximbank in 2008 and 2013.

We will be reporting more highlights from our data in subsequent posts.

Tuesday, April 26, 2016

Surprises from our CARI Working Paper on Chinese Manufacturing Investment in Nigeria

photo credit: Irene Sun
The SAIS China Africa Research Initiative (CARI) has published a new working paper on Chinese Manufacturing Investment in Nigeria: "Learning from China? Manufacturing Investment, and Technology Transfer in Nigeria." This paper builds on our Center for Economic Policy Research grant, "The Role of Asian Investment in Manufacturing in Catalyzing Economic Development in Africa," which is intended to study linkages and FDI spillovers from Asian/Chinese investment in four countries: Nigeria, Ghana, Tanzania and Ethiopia.

We gathered data from 20 Chinese and 21 Nigerian manufacturers, looking for linkages between Chinese and Nigerian firms and institutions. Our research in Nigeria found some surprising things:

Private firms. Most of the factory investors we interviewed were private investors or single entrepreneurs without state support; most have relocated directly from the coastal regions of the mainland such as Zhejiang, Shandong and Jiangsu.

Political backing from Nigerians. Instrumental actors such as the former governor of Ogun State, Daniel Gbenga, a staunch advocate of Chinese investment in Nigeria, played a role in attracting Chinese FDI, telling one of the authors: "the Ogun-Guangdong FTZ (Free Trade Zone) is my baby."

Local distributors, not Chinese shops. Nearly all Chinese factories in Nigeria relied on local distributors for their goods. According to Hong Kong businessmen with longtime investments in Nigeria, there is an "unwritten rule that Chinese business stops at the factory door," at which point local distributors take over.

No investment in supplier upgrading. None of the Chinese factories we interviewed had actively invested in upgrading the technology or skills of their local suppliers. Chinese firms still import the majority of their raw materials from China; only low-value and bulky materials such as rock for ceramics, scrap metal, and wood for furniture are purchased locally. Many entrepreneurs complained about the poor quality of local materials.

Learning is happening. The Chinese firms we sampled employ over 80 percent of their workforce locally. In Calabar, the Baoyao steel mill uses ship wreckages as raw material. This requires a higher level of technical ability; as such, its welders have become renowned for their skill and speed. "It's like we opened a school!" said Mr. Zhang.

A growing role of "agent suppliers," Chinese traders and businessmen living in Nigeria whose business it is to serve as middlemen between Nigerian manufacturing firms (generally in the south-east) and Chinese suppliers. They arrange contacts between factories in China that specialize in the required area and often earn commissions.

Training Nigerians in China. The Nigerian manufacturers had robust linkages to Chinese equipment suppliers, their "technical partners," who sent engineers and technicians to install machinery and train Nigerians. Some Nigerian firms have also sent staff for training in China.

The mystery of Yumei solved: The only intentional experiment of industrial clustering appears to have been the so-called Yuemei Fabric Industrial Zone (YFIZ), which Shen (2013) discusses as a successful case of a private industrial estate. Shen reported that twenty firms had invested in the zone, which was said to have been built by a Zhejiang company, Yuemei. We actually visited the so-called Yuemei cluster in Calabar, which was renting space in the Calabar Free Trade Zone. The Zone operators reported that only two firms ever came to invest in this cluster: Mawa, which specialized in textile dying and printing, and Jinmei, which specialized in embroidery. Both were evicted in early 2014.

Thursday, April 14, 2016

Join me in launching a NEW database of China's Africa loans

In 2009, I published The Dragon’s Gift: The Real Story of China in Africa. And in 2010, I wrote my first post on my blog, China in Africa: The Real Story. Since then, I have continued searching for and telling you the “real story”: what China is really doing in Africa, instead of rumors of what it might do. In 2014, I launched the China-Africa Research Initiative at Johns Hopkins SAIS to continue busting myths and getting the facts right. And at SAIS-CARI, I have made tracking down Chinese loans to Africa our main research project, after years of doing it on my own.

Now, I am proud to be launching SAIS-CARI’s NEW database of Chinese loans to Africa. Next week at SAIS in Washington, Thursday, April 21, 10:30 to 1:30 at Policy Roundtable: How Chinese Money is Transforming Africa: It’s Not What You Think, we will unveil our exclusive insights into Chinese loan finance. SAIS-CARI’s core team of 14 researchers has been collecting, cleaning, and analyzing China’s Africa loans, and now we are providing our work to the public for the first time. In coming months, we will expand ways for the public to engage with our database. But for next week, we will explore some surprising insights: 


  • Who gets the Lion's share of the Dragon's loans?  Angola received 25% of all Chinese loans to Africa between 2000 and 2015, almost all of them backed by Angolan oil.
  • Bloomberg and Fitch, take note: Did China Eximbank really lend more than the World Bank in Africa? SAIS-CARI data shows cumulative 2001 to 2010 China Eximbank loan to Africa amount to only US$27.2 billion, not your figure of US$67.2 billion. The World Bank is still a larger lender than China Eximbank.
  • What do Chinese loans pay for in Africa? Transportation. Between 2000 and 2014, transportation received the largest share: US$23.6 billion worth.
  • What are the biggest Chinese loan-financed infrastructure projects in Africa? No. 1: Kenya's Mombasa-Nairobi Standard Gauge Railway Phase I, funded by US$3.6 billion worth of Chinese loans; No.2: Ethiopia's Addis-Djibouti Railway, funded at US$2.5 billion. Both were signed in 2013.

I hope you will join us next week in understanding how Chinese money is actually impacting the African continent. Please make sure to RSVP in advance.

Tuesday, April 12, 2016

April 18-22: China-Africa Week at SAIS

The China-Africa Research Initiative (CARI) at the Johns Hopkins School of Advanced International Studies (SAIS) is hosting a week of events with diplomats, practitioners, and academics to discuss today's most dynamic China-Africa issues. All events are free and open to the public. Complimentary food/refreshments served at each event.

RSVP today before spots are gone!

Visit "Upcoming Events" on our website or our Facebook events page for more information. You can also click on the RSVP links below.


MONDAY, APRIL 18:
Policy Roundtable: What is China Really Doing in Rural Africa?


China has made agriculture one of the core pillars in its African engagement, yet this emphasis on agriculture is often misunderstood. This SAIS-CARI policy roundtable features a conversation with five SAIS-CARI visiting scholars fresh from doing fieldwork on Chinese agricultural aid and investment in Tanzania, Mozambique, and Uganda. Panelists will engage in critical reflections on the strategic drivers (if any), challenges, and impact of aid and investment projects in the respective countries. How could USAID’s nascent efforts to cooperate with China’s Ministry of Commerce on agriculture be shaped by a more detailed understanding of Chinese experience in Africa?

RSVP: http://bit.ly/23fA2vv


TUESDAY, APRIL 19:
Film Screenings: When China Met Africa and China Remix


When China Met AfricaThrough the intimate portrayal of individuals engaged on the ground in the China-Africa relationship, the expanding footprint of a rising global power is laid bare - pointing to a radically different future, not just for Africa, but also for the world.

China Remix
The city of Guangzhou is home to China's largest community of African immigrants. This documentary explores the city’s burgeoning African entertainment industry through the lives of three African hip-hop artists trying to find success in the face of China’s challenging labor and immigration laws.

RSVP: http://bit.ly/1S09tC9


THURSDAY, APRIL 21:
Policy Roundtable: Chinese Loans to Africa: What’s the Real Deal?


Rumors abound about China’s loan program in Africa. Where, why, and how are Chinese banks financing African development? How do resource-secured loan packages work? What conditions do Chinese banks place on their loans? Are African countries risking a new debt crisis? Join us for answers to these and other questions, as SAIS-CARI launches its new database of Chinese loans to Africa (2000 to 2014).

RSVP: http://bit.ly/1PWROa1


FRIDAY, APRIL 22:
China-Africa Happy Hour


Join the China Africa Research Initiative at Johns Hopkins SAIS, Cowries and Rice, and Washington DC’s China-Africa enthusiasts for an evening of good drinks and conversation. We will be giving away a signed copy of Will Africa Feed China? by Deborah Brautigam.

RSVP: http://bit.ly/23fAudg

Friday, April 1, 2016

Guest Post: Chinese engagement in African Ag Not What it Seems

Ian Scoones, University of Sussex

In December 2015, Chinese President Xi Jinping flew into South Africa for the Forum on China-Africa Co-operation with great fanfare. There were lots of announcements about prospective investments across Africa. Agriculture featured prominently. But what is the real story of China in Africa on the ground, beyond the hype?

As Deborah Brautigam’s investigative research has so effectively shown, the assumptions about China’s role in Africa are often not borne out in reality. The level of investment and linked aid flows are much lower than the high numbers sometimes touted; the numbers of imported Chinese workers are much lower than often suggested; the areas of land “grabbed” for investment are small compared to the vast areas identified by some.

And, as Brautigam’s recent book shows, Africa will not be feeding China or China feeding Africa anytime soon.

Reality on the ground


We set about finding out what was happening on the ground. Working with African, Chinese and European colleagues, our team investigated Chinese engagements in agriculture in four countries – Ethiopia, Ghana, Mozambique and Zimbabwe. All have featured prominently as priorities for Chinese investment and aid.

Our just-completed project is reported in a new open access special issue of the journal World Development. So what exactly has been going on?

This proved surprisingly difficult to find out. The data on land acquisition, investment flows and aid projects is limited and confusing. It often doesn’t add up. Ghost projects are listed that never happened, and others are missed out.

Our original idea of doing a simple geomapping exercise based on available data was quickly abandoned. Instead, we had to triangulate between multiple sources to find out what was happening where.

Certainly there is a great deal going on, and the Chinese presence in Africa is important. The Chinese role in agriculture – in terms of business investment, technology transfer, demonstration efforts, training and more – is growing, and shaping perceptions.

We chose cases across the four countries to investigate in more detail. The studies aimed to explore the detail of investments, technology projects, training and development encounters more generally.
The central question we asked was: is China reshaping African agriculture?

No singular ‘Chinese model’


The Chinese Agricultural Technology Development Centres are flagship investments. There are now 23 across Africa, funded in their first phase by the Chinese Ministry of Commerce under their aid program. They are run mostly by companies, and are linked to a commercial model for training and technology demonstration and sale.

As Xiuli Xu and colleagues show, the centres’ performance very much depends on who is running them. Different provincial companies have very different characteristics, demonstrating that there is no singular “Chinese model” of development, or state-business partnership.

We also explored a number of cases of business investments in agriculture, primarily led by Chinese state-owned enterprises. Chinese development efforts mix aid with commerce, linking both provincial and central state involvement with different businesses.

For example, as Jing Gu and colleagues explain, in Xai Xai in Mozambique, the Wanbao agricultural development company from Hubei province took over 20,000 hectares on a state farm to farm rice, and develop a contract farming arrangement with surrounding farms.

It has not been easy. There have been a number of changes in company leads, disputes with local communities, and shifting alliances with local elites, as Kojo Amanor and Sergio Chichava set out.
The training of government officials is an important aspect of the Chinese engagement in Africa. More than 10,000 are trained in numerous courses in China each year, many in agriculture. This far exceeds any training initiative of any western aid programme.

Henry Tugendhat and Dawit Alemu explored the impacts of these courses, participating in training in China, and interviewing officials who had returned home to Ghana and Zimbabwe. While there have not been many immediate impacts, the longer-term building of relationships and the exertion of “soft power” diplomacy is important.

The role of informal Chinese migrants


Chinese migrants supply specialist foods to burgeoning expatriate populations.
Reuters/Noor Khamis
Perhaps the most far-reaching but least understood dimension of Chinese involvement in African agriculture is the growing number of informal migrants getting involved in the agri-food sector, from farming to processing to retail to restaurants.
Seth Cook and colleagues investigated this in Ethiopia and Ghana. They discovered a range of activities: relatively few farmers, but growing investment in supplying specialist Chinese foods to burgeoning expatriate Chinese populations.

Those involved are very often migrants who came as part of Chinese government contracts, and have since established business connections and stayed, encouraging others to join them from China.
Through our work, we were able to gain a snapshot of the early stages of Chinese engagement in African agriculture. Our results show successes as well as failures. But Chinese engagement is certainly not yet at the scale sometimes assumed.

In the longer term, activities may accelerate as more opportunities open up. But China is also changing. As its economy restructures to a “new normal”, there are different demands. Food will certainly remain one, but this is not likely to come from Africa.

As a new global power, China will want to maintain business, aid and diplomatic relations with Africa, and sustaining relationships will be important. China plays the long game, and our studies were observing just the opening stages.

The Conversation
Ian Scoones, Professorial Fellow, Institute of Development Studies, University of Sussex
This article was originally published on The Conversation. Read the original article.

Tuesday, March 29, 2016

Sinohydro and Human Rights in Honduras

On March 3, 2016, Berta Cáceres, the award-winning Honduran environmentalist who led the activism against the controversial Agua Zarca hydropower project in Honduras was murdered in her home. Chinese engineering giant Sinohydro pulled out of the controversial project in August 2013.

Sinohydro explained their move in an official letter responding to a human rights group:
Following the official competition bidding process, we, Sinohydro Corporation Limited, signed the Contract Agreement on November 16th, 2012, with [Honduran private firm] DESA as the Employer for the construction of the Agua Zarca Dam Project. ... Right from the very beginning of our mobilization, it was noticed that there were serious interest conflicts between the Employer of the Project, i.e. DESA, and the local communities, which were treated as unpredictable and uncontrollable to the Contractor. Therefore, Sinohydro Corporation Limited instructed to suspend all the site performance and ongoing preparations, and demobilized all his manpower from the project site on July 15th 2013. On August 24th, 2013, the Contract Agreement between Sinohydro Corporation Limited and DESA was agreed officially to be terminated.
No one has yet been arrested, but suspicion is high that the project owner, Desarrollos Energéticos, S.A. (DESA), was involved.

Sinohydro's role on the project has been mis-reported. Even several years after Sinohydro left, the project was still being described as a "joint project" between Sinohydro and DESA -- but Sinohydro's role was limited to winning the tender for construction. (A German company, Voith Hydro (a joint venture between Voith and Siemens), was also involved, as was the World Bank's International Finance Corporation.)

Sinohydro should be commended for responding to human rights concerns and leaving the project -- yet the sequence of events leaves something to be desired. Sinohydro: much better to do your due diligence before signing the construction contract, and before mobilizing your team to the project site. Once that happens, you're already in bed with your partner. It's then hard to jump up and proclaim your innocence.

Saturday, March 19, 2016

China, Taiwan, and ... The Gambia

When I lived in The Gambia in 1984, the country had official relations with Beijing. Chinese aid workers had just completed the extensive agricultural project I was studying, while other aid teams were building four rural health clinics, a stadium, and a brick-making factory.

In 1996, after a military coup, Banjul broke relations with Beijing and established diplomatic ties with Taipei.

Then, in mid-November 2013, Banjul broke off relations with Taiwan. As the Wall Street Journal reported at the time: "Both Taipei and Beijing refuse to recognize any country that recognizes their rival, and any move by China to pursue diplomatic ties with the African nation would likely strain the bonds forged with Taipei after President Ma Ying-jeou (from the KMT party) took office in 2008 and improved relations with China."

Thus, for several years, nothing happened. Banjul had severed relations with Taipei but Beijing did not step in to embrace Banjul.

Why? Beginning in 2008, the low-key "dollar diplomacy" between Taipei and Beijing was suspended as relations between the CCP and its long-time rival KMT warmed (at least slightly). For a good analysis, see this article

Then, in January 2016, Taiwan elected an opposition DPP president, Tsai Ingwen. Now, it appears the truce is over.

photocredit: Xinhua.  Chinese Vice President Li Yuanchao, right, meets with Gambian Foreign Minister Neneh MacDouall-Gaye in Beijing

Friday, March 18, 2016

Railways and Gauges: China's Tanzania-Zambia Story

"The Chinese imported everything when they built the Tazara Railway in the 1970s," the European diplomat said. "They even used Chinese gauge and tracks. That railway doesn't link up to the other railways. Other countries getting Chinese-built railways better watch out."

Was this true? Chinese companies are building new railways in Kenya and Nigeria: should people in these countries be wary?

Not if we can believe Wikipedia. The on-line encyclopedia states that Tazara was not built to a Chinese railway gauge. China uses mainly standard gauge (1435 mm). Tazara was built using the Cape gauge (3 ft 6 inches) common across the former British colonies in Southern Africa. Zambia used Cape gauge in its railway system, but German-built lines in colonial Tanzania used a different gauge: 1000 mm (3 ft 3 3/8 inches).

That's why the railways don't link up. It's a problem constructed by competing colonial powers a century ago.

The railway currently being built by a Chinese company across Kenya is using standard gauge, but this wasn't a Chinese decision imposed on Kenya. (For more on Kenya's railway gauge debates, see this link.)

Friday, March 4, 2016

What Happened to China Development Bank's $3bn Loan to Ghana?

The Chinese-financed gas power plant (credit: Obrempong Yaw Ampofo)
The China Africa Research Initiative (CARI) just published a new policy brief by Thomas Chen analyzing the rise and fall of China Development Bank's large $3bn oil-secured loan facility in Ghana. Chen's brief traces the arc of this CDB loan facility, and the trouble it faced when the downturn in commodity prices, combined with a splurge in spending during an election year, made the Ghanaian authorities reconsider their warm embrace of the facility. 

This is a hugely helpful contribution to a fascinating case. Ghana's vibrant press has several times slammed the Chinese agreement: "Ghana Duped!" "Is China Defrauding Ghana?" What went on here? Read Chen's brief to find out.

One of the interesting and important technicalities that the Ghana case reinforces is this: a Framework Agreement is different from a Master Facility Agreement

A Framework Agreement simply sets out the agreed terms under which loans (or a loan facility) will be extended and repaid. In the case of Angola's credit lines with China Eximbank, as a Japanese study noted: 
26 November 2003: A “Framework Agreement” is signed between China’s Ministry of Foreign Trade and Economic Cooperation (MOFTEC) and the Angolan Ministry of Finance. This is the legal basis for the whole credit contracting process between the two states that was to follow in the period ahead. Very importantly, it was determined that the credit line could extend up to US$10 billion, until the end of the reconstruction period.
Importantly, a Framework Agreement is signed prior to any loan being committed. Ghana signed a Framework Agreement in September 2010 but this did not itself create any debt obligations. However, as Ghana found, the Master Facility Agreement signed in December 2011 did create a debt. Moreover Ghana needed to begin paying interest and substantial fees within weeks of the Facility being signed.

Although Ghana's Ministry of Finance and Economic Planning was exceptionally transparent about the details of these agreements, few in Ghana seemed to have read the details published on MOFEP's website. Had they done so, they would not have been so "shocked, shocked" to learn that their government had signed a fairly normal commercial loan agreement.

I'd be interested in views from our Ghanian readers. What did you think about this loan facility?

Tuesday, February 23, 2016

Guest Post: In The Zone: An Insiders' View of Sino-African Investment in Special Economic Zones


The team at the Ogun Guangdong Free Trade Zone

The China Africa Research Initiative (CARI) at the Johns Hopkins School of Advanced International Studies (SAIS) connected two teams of SAIS International Development Program students to organizations in Africa for their 2015-2016 practicum course. In this guest post, the team of students who consulted for the Ogun-Guangdong Free Trade Zone in Nigeria reflect on their experience. Support for the practicum was provided by a grant from Carnegie Corporation of New York and the Starr Foundation.

By Andrew Caruso, Danielle Nesmith, Teresa Peterburs, Egle Vilkelyte


“When we ask locals where China is, they point down the road to the zone,” said John Xue, COO for the Ogun-Guandong Free Trade Zone in Igbesa, Nigeria. China’s presence in Africa is growing through a number of vehicles, not the least of which are sizeable investments in special economic zones across the continent. The use of special economic zones as conduits for global economic integration and growth is familiar for China, having pioneered the transformative change of SEZs on their own domestic economy for several decades. The application of the SEZ strategy to the African context, however, has produced mixed results by most accounts. As part of the International Development practicum program, an intrepid team of SAIS students spent two weeks inside the Ogun-Guandong Free Trade Zone (OGFTZ) to understand the political, social and economic implications of the China-Africa SEZ strategy.

The Ogun-Guandong Free Trade Zone partnership began in the mid 2000s between China’s Guandong province and Nigeria’s Ogun state government. Located roughly 30 kilometers outside of Lagos, the OGFTZ was positioned to take advantage of one of Africa’s largest and fastest growing economies. Yet, hampered by a number of infrastructure and management challenges, performance of the OGFTZ in its early years was disappointing, and through a series of transitions, a new management team took control of operations in 2012. Now, as the zone’s majority owner and operator, the privately-owned Zhongfu Management Company represents an outlier for Chinese investment in Africa away from state-owned-enterprises and toward private industry. The novelty of the zone’s management model is further underscored by its recent performance – the OGFTZ has rebounded from a potential shut-down to its current position as one of the country’s most successful zones. One customs official indicated that customs duties have increased nearly 1000-fold since the time of management transition from 500,000 NGN in annual customs duties to over 500 million NGN.

Monday, February 15, 2016

Chinese Mining Projects in Africa: Is it an Investment?

Image credit: Stratfor 2012
After doing research on Chinese aid, loans, and investment in Africa for decades, and publishing a book in November 2015 on Chinese agricultural investment (or not) in Africa (Will Africa Feed China?) I have a healthy skepticism about claims that a Chinese company (or bank) has actually made an investment (or loan).

I think one of the reasons there is so much breathless reporting on the scale of what "China" or Chinese companies are doing (for example, this image) is that many reporters (and researchers) are not experienced with the challenges of investment in Africa. And they often don't know much about the details of the lifecycle of loans, mining investments, and other areas of business.

Take mining for example. You might read, as I just did in a student's paper, a source that says that a Chinese company is making an $8 million (800万美元) investment in uranium in Zambia. But let's put this into perspective. Mining has a number of stages, and a long lifecycle. It can take 10 to 15 years just to get a mine into production. An $8 million investment can only cover some early prospecting cost or between 1 and 2 years of advanced exploration. As a Canadian website points out: "Very few discovered mineral deposits become producing mines. ... About 1 out of every 200 projects that reaches the discovery stage moves to development." Below, some helpful guidance on the stages of mining investment and why a pledge may not become a project.

(1) Prospecting and Exploration.  This involves mapping, surveying, sampling and normally lasts for 3 to 5 years in a given area and costs about $1.75 million per year.

(2) Discovery and Advanced Exploration. Channel sampling, drilling, etc. This costs about $5 million per year and it lasts from 5 to 15 years.

(3) Development and Construction. Actually building the mine, bringing in the mining machinery, and so on, takes at least 3 more years, and is the most costly stage, usually at least $1.5 billion.

(4) Operation and Production. Up to this point, the mine is all cost and no benefit. Now there is some production, but many costs are still involved.

(5) Reclamation. Shutting down and reclaiming a site at the end of a mining investment can take 2 to 10 years, and cost $150 million or more.

These are Canadian costs in Canada (Canada is one of the top investors in African mining, quite likely larger than China). Working in difficult conditions in many African countries might lead to higher costs. 

Tuesday, January 19, 2016

China-Africa Post-Doctoral Fellowship Opportunity



The China-Africa Research Initiative at Johns Hopkins School of Advanced International Studies (SAIS-CARI), directed by Professor Deborah Brautigam, will offer one post-doctoral research fellow position for a twelve-month period between July 2016 and June 2017.


Fellows will spend approximately half of their time on their own research projects, and half providing support to other CARI research projects. This support could include leading CARI research assistants in cleaning and analyzing data on Chinese finance and investment in Africa, organizing and implementing desk and field studies, drafting research papers and policy briefs, presenting at conferences, and assisting with outreach activities and communications as necessary.


An understanding of China’s overseas economic engagement (trade, investment, aid, loans, other forms of cooperation) is essential for this position.  Our preference is for candidates who have skills in econometrics but who have also conducted field research, preferably in Africa although we are open to comparative perspectives. Ability to read and do research in Chinese is essential. 


We seek a creative individual with the skills of a detective or an investigative journalist, an organized and cheerful perfectionist, a quick learner, and a diligent and tenacious worker who enjoys tracking down information and working in teams.


Candidates must have completed all Ph.D. training and have defended their dissertations or be scheduled to defend by the summer of 2016. They may not be more than five years beyond receipt of the Ph.D. at the start of the fellowship.


To apply, please provide the following to sais-cari@jhu.edu

  • Cover letter explaining your scholarly interest in China’s African engagement, and prospective or actual doctoral defense date;
  • Current C.V. including publications;
  • 2000-word description of the research project you would work on at SAIS, including its specific objectives, importance, and research design;
  • One writing sample;
  • Contact information for three references. Referees will be contacted directly by email with instructions for submitting a confidential recommendation on your behalf. Please ensure that you have requested permission in advance.

The deadline for this application is February 26, 2016We will contact your referees after that date. Rank and salary will be contingent on qualifications. Candidates will be notified by March 30, 2016 of the results of their application, while a formal offer will be made in April 2016. 


Please contact sais-cari@jhu.edu with any questions.

Monday, January 4, 2016

China in Africa: Five Myths

My (gated) op-ed published in Foreign Policy on December 4, 2015: 
Xi Jinping just announced billions of dollars worth of aid and financing for Africa. Here’s why the Chinese president is sure to be misunderstood.


JOHANNESBURG, South Africa — Santa Claus arrived early in South Africa — on a Chinese jet. This week, Chinese President Xi Jinping signed multiple business deals and brought offers of billions in new grants, loans, export credits, and investment funds as African leaders met for the sixth Forum on China-Africa Cooperation, a triennial extravaganza that showcases development and security issues of concern to Chinese and African leaders.
Not surprisingly, Xi’s second presidential visit to Africa, which also included a stop in Zimbabwe, has refocused attention on China’s expanded role on the continent. The story has dominated the airwaves and has been splashed across broadsheets around the world. But as is so often the case with China-in-Africa coverage, much of it should come with a warning label: Consume with a grain of salt. Here are five of the most dangerous — and persistent — myths about Chinese engagement in Africa that are reliably recycled by the press. first — and most damaging — myth is that China is in Africa only to extract natural resources. There is no question that the continent’s vast natural resource endowments are a big draw for Chinese firms — just as they are for Western oil and minerals giants like Shell, ExxonMobil, and Glencore. Yet even in oil-rich countries like Nigeria, this is far from the whole story. In 2014 alone, Chinese companies signed over $70 billion in construction contracts in Africa that will yield vital infrastructure, provide jobs, and boost the skill set of the local workforce.
Technology companies have also done much to accelerate local development. More than a decade ago, the Chinese telecom firm Huawei established its West African training school in the Nigerian capital, Abuja. Ever since, it has been honing the skills of local engineers who are rolling out the cell phone networks that underpin Africa’s telecommunications revolution. The story is the same in other sectors: Our China Africa Research Initiative team at Johns Hopkins University, which has sought to map Chinese engagement and analyze its impact, found Chinese factories in Nigeria employing Nigerians and producing building materials, light bulbs, ceramics, and steel from salvaged ships. As one Nigerian official told me in a 2009 interview, “The Chinese are trying to get involved in every sector of our economy.”

Monday, December 7, 2015

Chinese Investment in Africa: How Not To Mix Apples and ... Elephants

INFOGRAPHIC: China's total investment in AfricaToday the South China Morning Post published an "Infographic" with the title Chinese Investment in Africa (below). A colleague sent me a link, noting that the numbers looked odd, so I took a look. The data is mainly drawn from the American Enterprise Institute's China Investment Tracker. 

Two points about this data:

(1) It is NOT all FDI. Note the small print which says "Chinese investment and contracts in Africa. What these people have done, bless their souls, is to add the CIT's database on Chinese FDI projects with the database on Chinese engineering contracts. This is like adding apples with elephants. In 2014, Chinese companies signed engineering contracts in Africa valued at $70 billion. These are for things that they will build, like bridges or railways or airports. But this has no relationship with the FDI numbers. 

(2) The China Investment Tracker collects the projected value of FDI projects. This is OK for an acquisition, which is paid upfront, but for other FDI projects, which often begin on a pilot project basis, and may never get bigger, this can grossly overvalue the figures.

(3) The China Investment Tracker only collects information on projects valued at $100 million and above. This is going to skew toward natural resource investments which are more expensive, and is unlikely to pick up much if any manufacturing, which is usually less than this. So the sectoral breakdown will be distorted.

(4) It's also not the case that there is no Chinese FDI (or engineering contracts) in 8 African countries. There is a lot of Chinese manufacturing investment in Lesotho, for instance, and FDI also shows up in The Gambia and the Central African Republic. BTW: Somaliland may work better than the rest of Somalia, but as far as I know, it is not a country ...

h/t to Heiwai Tang

Friday, December 4, 2015

Highlights of Xi Jinping's Pledges at the Johannesburg China Africa Summit

Here in Johannesburg, on a stunning summer day, Chinese president Xi Jinping must be enjoying waves of warm feelings (and the relatively clean African air) following his "pledges" speech this morning. 

Here are some of my initial* reactions:

China will continue to support capacity building in Africa. This includes construction of an unspecified number of regional vocational training centers and "capacity-building colleges" that will offer vocational training and education to 200,000 Africans. The time frame for this was not stated but we can expect that this will be rolled out over the next six years: three years to get the construction started, and at least another three years to make them operational and establish programs. Shipping Chinese trainers to Africa has not gone over all that well in the past. Ethiopia had to bring in Germans to replace the Chinese instructors at its Chinese-built vo-tech college. Let's hope that someone in Beijing is thinking strategically about how to build up the African expertise for teaching all these students "how to fish."

China will support the construction of five "Jiao Tong" ("Jiao Tong" means "Communications") universities in Africa. Hmmmm. Will these be like the prestigious Shanghai Jiao Tong University, known for its quality research across a number of disciplines? At first I thought these might be efforts to steer the training of journalists in more China-friendly directions, but it seems that Jiao Tong is better translated as "transportation" -- as a reader pointed out below, in China Jiao Tong universities "are elite schools in training technicians, engineers, and scientists" ... not journalists. This will fit nicely with bringing the "One Belt, One Road" Initiative to Africa, training Africans in the higher technical skills (see my Foreign Policy piece for more on this).

China is continuing to emphasize a more "green" approach to Africa. One of the ten pledges states that "China will support Africa in bolstering its capacity for green, low-carbon and sustainable development and support Africa in launching 100 projects to develop clean energy, protect wildlife, promote environment-friendly agriculture and build smart cities." This follows on from the pledge made at the 2009 FOCAC in Egypt, that proposed "to establish a China-Africa partnership in addressing climate change ... enhance cooperation on satellite weather monitoring, development and utilization of new energy sources, prevention and control of desertification and urban environmental protection. We have decided to build 100 clean energy projects for Africa covering solar power, bio-gas and small hydro-power." As far as I know, no one outside of the Chinese government knows where those clean energy projects are located. I came across one proposal by accident: a Chinese sisal farm I visited in Tanzania was applying to this program to get funding for a biogas project out of its sisal waste. 

To fund these and other programs, China will provide $5 billion in grants and zero-interest loans, and $35 billion in a combination of preferential loans and [non-preferential] export credits and concessional foreign aid loans.  He also pledged to add another $5 billion to the China-Africa Development Fund (so it will now be expected to eventually reach $10 billion) and increase the China Development Bank-funded African Development Special SME (small and medium enterprise) Loans by another $5 billion (this was originally set up at $1 billion). Finally, he seemed to pledge to set up a new China-Africa Industrial Cooperation Fund with $10 billion. This emphasis on manufacturing is very welcome and something I expected, given all the discussion about Chinese offshoring lower cost manufacturing to Africa over the past several years.

China will cancel the overdue portion of interest-free loans provided to low income African countries. I expect a lot of reporters are going to get this wrong. I'm already seeing people calling this a broad debt cancellation for all Chinese loans to low-income countries. No, no, no! This refers only to a special category of "zero-interest" foreign aid loans. Since 2000, the Chinese have regularly cancelled overdue zero-interest loans that countries are unable (or simply unwilling) to pay.
  
The bottom line here is a pledge of $60 billion in various kinds of support (NOT ALL "AID"): $5 billion that is clearly official development assistance, $35 billion that is a mix of export credits (which may be commercial or subsidized) and concessional (subsidized foreign aid loans), and what seems to be an additional $5 billion in a credit line for SME finance. The CAD-Fund finance will be different: it's for equity investment. And although reports suggest that new China-Africa Cooperation Fund will be focused on manufacturing, it's not clear if it will provide grants, loans, or investment -- or merely be drawn on, by the Chinese, to pay for a variety of activities, like the Human Resources Development Fund for Africa established in 2000, which pays for training programs in China.

We can compare this with the specific 2006 pledges of $5 billion in preferential/ concessional loans, and a further $5 billion for the CAD-Fund: from $10 billion in financial commitments to $60 billion over just nine years.

Frankly, I did not expect to see this level of serious loan funding ($35 billion) -- although I don't think Xi Jinping put a specific timeline on any of these pledges, so it could take a while to roll them out. My sense is that a lot of countries are having trouble absorbing the Chinese loans on offer over the past three years. With lower prices for their exports, these loans will be harder to repay. Perhaps Chinese commodity forecasters see rosier numbers starting five years down the line, when the grace periods for the first loans will start to expire?

*revised slightly after seeing English copies of the speech.


Thursday, November 5, 2015

FT story on Chinese aid: bias or ignorance?

On October 29, Shawn Donnan at the Financial Times wrote a story, "China's aid splurge fails to bridge credibility gap in Africa," that betrayed a significant lack of understanding of how China’s overseas development finance operates.

The FT story summarized "Listening to Leaders," a new report from AidData that purported to measure the usefulness of policy advice offered by development partners in low and middle income countries (ahem: not just Africa).

Few policymakers … trust China’s advice,” Donnan writes. The press release from AidData seemed to seems to back this up:
The Listening to Leaders report also provides evidence that the popular narrative about China’s expanding soft power – in particular, the notion that the “Beijing Consensus” is rapidly eclipsing Western sources of influence in the developing world – is probably overblown. When asked to rate the usefulness of China’s policy advice, developing country leaders ranked China Development Bank, China Ex-IM Bank, and Chinese Embassies 75th, 59th, and 70th, respectively, out of 86 bilateral and multilateral development finance institutions
Whoa, Nelly! What did the AidData researchers really find? Actually reading the report and the appendices provides a different spin on this research.

China’s policy of non-interference makes Chinese officials reluctant to dispense any policy advice at all. Not providing advice is quite different from providing untrustworthy advice.

The survey included 6731 respondents.  Only 326 (less than 5%) were able to comment on the usefulness of any policy advice from the Chinese embassy, while only 102 (1.5%) had an opinion on the usefulness of any policy advice from China Ex-Im Bank, and 56 (less than 1 %) gave a grade to any policy advice from China Development Bank. This suggests that very little advice was being given. Compare this with 1486 who were able to rate advice from the World Bank, 1227 from UNDP, and 984 from USAID.

These are very small numbers on which to say "few policymakers ... trust China's advice." Rather, we should be reading: "few policymakers get advice from China."

Deep in the appendices of the study, we read that the Chinese appear to be giving substantive advice in just one policy domain:  trade -- which is not primarily an internal affair.

Here, the Chinese embassy was rated as #2 among development partners in the usefulness of its policy advice. And this advice helps explain why China-Africa trade rose from $10 billion in 2000 to $220 billion in 2014.

So why didn't we get a headline with this spin: policymakers give high ratings to Chinese advice on trade?

Tuesday, November 3, 2015

Don't Get Excited: China is not the new aid superpower

My op-ed at The Guardian Global Development Professionals Network: What does recent news that China is increasing support for developing countries mean for international aid?

Xi Jinping at the United Nations, September 2015
The international development community keeps rediscovering – and misunderstanding – China. The latest episode came in September, when Chinese president Xi Jinping gave a speech at the UN after the launch of the new sustainable development goals (SDGs).

Xi pledged to support the SDGs. Specifically, China would set up a $2bn fund to support south-south cooperation. China would also try to increase its investment (read: FDI) in the least developed countries to $12bn by 2030. Finally, his government would cancel some of the developing country debt owed to China.

The flush of media attention around these pledges suggested that they were something new and unprecedented. By giving assistance on this scale and forgiving debt, a BBC reporter wrote, China was (at last) willing to take on “more of the responsibilities that go with its status as an emerging superpower”. Others simply got it wrong. Many newspapers, including the New York Times and the Guardian wrote that China would “seek to increase the fund to $12bn by 2030”, which confused the assistance fund with the investment.

How soon we forget. Former president Hu Jintao pledged $10bn in preferential export buyer's credits and concessional loans at the 2005 conference on financing the earlier Millennium Development Goals (MDGs). Seeing Xi Jinping’s pledges in historical context helps us to see what is actually new, and what this means for our understanding of China’s rise.




Monday, October 26, 2015

RSVP Now: Oct. 29 Book Launch in DC


My new book, Will Africa Feed China?, is now available on Amazon or at Oxford University Press. You can read excerpts in All China Review and on Quartz.  

On Thursday, October 29th, 2015 I will be speaking about the book in a roundtable discussion at Johns Hopkins SAIS in Washington DC. Professor David Lampton, Director of the SAIS China Studies Program, will be moderating, and Dr. Amadou Sy, Director of the Africa Growth Initiative at the Brookings Institution, and Professor Ling Chen, Assistant Professor of International Political Economy at SAIS, will be discussants. RSVP here: https://www.eventbrite.com/e/will-africa-feed-china-tickets-18985231338
 
A Complete List of Scheduled Book Talks:
  • October 13 -- Princeton University 4:30-6pm
  • October 27 -- Harvard Club of New York 7:00-9pm (members only)
  • October 29 – Johns Hopkins SAIS 4:30-6pm
  • November 3 – Yale University, 4:30-6pm
  • November 13 – SOAS, London, 6-7:30pm
  • November 16 – Institute of Development Studies (IDS), Sussex, UK 1-2:30pm
  • December 9 – Harvard University Asia Center, 12:30pm-1:50pm
  • February 23 – Japan International Cooperation Agency (JICA), Tokyo, TBD


Will Africa Feed China?
Is China building a new empire in rural Africa? It seems a perfect match: the country with the largest population and the continent with the largest remaining reserves of arable land. Few topics are as emotionally charged as the belief that China is aggressively buying up huge tracts of prime African land to grow food to ship home. Will Africa Feed China? probes the myths and surprising realities behind the headlines.