|PNG dormitory under construction (G. Smith photo credit)|
In a short piece called "Are Chinese loans always a bad thing?" (the very title shows what a balanced analyst is up against in Australia!) Smith gives the inside story of a concessional loan arranged via a Chinese construction company to build a dormitory at a South Pacific university, and how university students protected the Chinese workers during the riots, because it was their dormitory being built. Smith's paper also notes the "request-based" aid system for concessional loans that I discuss in The Dragon's Gift, showing in detail how it worked in this case:
Whether it is a grant or a loan affects local control and ownership. With a grant, local partners have little leverage. As a University administrator explained, '(t)he difference is that this is a loan. Even if it is a soft loan, we're still going to pay them back. So it's really the government of PNG paying for it. We're in total control of it.'
My thesis that Chinese infrastructure companies in the Pacific, not aid agencies in Beijing, are driving aid requires more substantiation. Yet for those with even a passing familiarity with China's polity, it is a no-brainer. The Chinese central government lacks full agency and control within its own borders; why would it enjoy it outside of them?
This lack of control can lead to better outcomes for Pacific nations. In the case of the dormitory project, the tail wagged the dog. GDFC [a Chinese construction firm] successfully lobbied Exim Bank in Shanghai. The contractor, rather than the lending agency, penned the initial loan agreement. Remarkably, the university and the lead architect in PNG were able to push back, persuading Exim Bank to accept their terms for the design and supervision of the project, because they were competitive on price, and arrived at the negotiating table with plans and standards to hand.In a March 2012 article in the Journal of Pacific History (available free for two weeks only) mainly on Chinese reactions to the anti-Asian riots in the South Pacific, Smith argues:
When China does appear in the literature, analysis is rarely nuanced or informed by original sources. This is evidenced by the titles of many articles, where China appears as an anthropomorphised ‘clumsy panda’ or as the ‘dragon in the Pacific’, lurking in the background, secretively disbursing aid, corrupting weak and passive Pacific governments, and engaging in an endless cloak-and-dagger game for diplomatic recognition with its arch nemesis, Taiwan.One by one, Smith punctures a host of myths and fictions that dominate some of the coverage of Chinese activities in the region. He then analyzes Chinese reactions (via interviews and the blogosphere) to the Port Moresby riots. It's useful and interesting, and China-Africa watchers will benefit from the comparative perspective.
A hat tip to Ekawati Liu.