Tuesday, December 18, 2012

Chinese Mining Investment in Peru in Comparative Perspective

Amos Irwin (Fletcher School) and Kevin Gallagher (Boston University) have a new working paper exploring Chinese mining investment in Peru. These researchers are painstaking and methodical, and build up their findings with extensive fieldwork, interviews, and careful gleaning of news reports. Their earlier research on Chinese finance in Latin America (published at the Inter-American Dialogue, where Sinologist/Latin Americanist Margaret Myers is leading the China and Latin America program) is a model of careful scholarship, so it's a pleasure to see them venturing into a new area. Here's the abstract of the new study:
Chinese investment in Latin America has exploded in recent years, leading observers to worry that Chinese companies may transplant poor labor and environmental practices to the region. In this Discussion Paper, GDAE’s Amos Irwin and Kevin P. Gallagher evaluate the economic, environmental and social impacts of Chinese mining in Latin America and compare that performance to other major foreign and domestic firms in the same sector. Based on new quantitative inspection data from Peru, the researchers find that the Chinese company Shougang Hierro Peru has not performed significantly worse
than its foreign or domestic counterparts. In fact, a US-based firm has been among the most egregious violators of Peruvian and global standards as of late.
Chinese investment in the region is so recent that only one mining company has been operating long enough to assess its impact. Shougang Hierro Peru has been widely denounced for its environmental and social record, which has been decried in the literature as far worse than that of comparable foreign-owned companies. Much of this literature blames a “culture clash,” concluding that Chinese companies operate irresponsibly in Latin America because they are predisposed to poor labor and environmental standards.
Using new government data and historical archives, Irwin and Gallagher find that while Shougang performed poorly on many indicators, when compared to other foreign and domestic mining companies its poor performance has not stood out in recent years. Rather, the Peruvian government has continually failed to force mining companies to comply with their investment commitments, respect government and global standards, or negotiate with their unions.
They conclude that the Shougang case study does not necessarily determine that future Chinese mining companies will be more likely to bring poor environmental or labor practices to Latin America than other foreign and domestic competitors. High social and environmental costs are endemic to mining in Latin America. Consistent with the broader literature on the subject, this study shows that nation-states like Peru cannot count on foreign or domestic firms to self-regulate. To truly maximize the benefits from
natural resource extraction, and to mitigate the risks, nations need to stiffly regulate, monitor and discipline firms operating in the sector—regardless of the firm's origin.
I'm not sure that we have a comparable (published) comparative study of mining investment in Africa, although the Human Rights Watch study in Zambia that I've blogged on came close.  I hope this study will help stimulate researchers working on similar China-Africa issues.

Thursday, December 13, 2012

Is China Really Building 100 Dams in Africa?

I've just seen a short article on the website of the Oxford University China-Africa Network stating that Beijing is involved in "more than 100 dams" in Africa.


Here's what the author, Dr. Harry Verhoeven, says: 
"Beijing especially is using its formidable technical expertise in hydro-infrastructure and immense foreign reserves to resurrect dam-building overseas: in half of all African countries, from the Sudanese desert and the Ethiopian lowlands to the rivers of Algeria and Gabon, Chinese engineers are involved in the planning, heightening and building of more than 100 dams. The tens of billions of US dollars and thousands of megawatts involved in these projects have so far remained off the radar in the China-Africa debate, but are possibly more consequential for the future of the African continent than the exports of oil, copper and other valuable resources."(emphasis added)
Verhoeven cites a 2009 publication as his source for this statement: Michael Kugelman (ed.), Land Grab? The Race for the World's Farmland. Washington DC: Woodrow Wilson Center for Scholars, 2009. Verhoeven doesn't provide a page number, but I searched through this online publication for "dams" and "100" and found nothing relevant to this claim. Sources aside, this claim is problematic for several reasons.

It's true that there has been a resurgence of interest in building hydropower dams in Africa, and that Chinese banks and construction companies are part of this. (This interest has not been "off the radar" however. I wrote about it in The Dragon's Gift. Peter Bosshard at International Rivers has been following this trend and wrote about it for Pambazuka.)

International Rivers recently produced the 2nd edition of a report on Chinese interest in dam building. It is probably their database of media reports that is the ultimate source for this statement. Yet International Rivers has also been prone to exaggeration on this issue. I found this with the spin that accompanied their earlier report on Chinese "dam building".

In 2010, International Rivers released a list of (only) 25 dam projects that were said to have Chinese involvement, in Africa, as of 2008 (map to right).  Although the map and list implied that these were current and active cases, this is what I found (and blogged here on January 28, 2011), on looking into each case: 
  1. Four were Chinese foreign aid projects, usually quite small, completed between 1982 and 1996.
  2. Three involved repairs or expansions of hydropower plants (i.e. new turbines, etc.), not dams. 
  3. Ten appear at the present moment to have been MOUs or expressions of interest that went nowhere
  4. Three seemed to have construction contracts signed recently & appeared to have financing lined up, but hadn't started construction & so could still fall apart (Ethiopia-Neshi; Togo-Adjarala
  5. As of January 2011 only 6 of the listed projects were dams currently under construction or completed recently (Ethiopia-Tekeze; Ghana-Bui; Congo-Imboulou; Sudan-Merowe; Botswana-Dikgatlhong; Gabon-Grand Poubara).
It does no service to our understanding of this important issue to create yet another stylized picture that appears to be way out of proportion to the reality. 

If you write about Chinese involvement in building dams in Africa, why not spend a little time and effort to dig into these cases and come up with numbers that you can stand behind?  Remember what Steven Mufson and John Pomfret, former Washington Post Beijing bureau chief, wrote on February 28, 2010: “inflating the challenge from China could be just as dangerous as underestimating it.” I got that quotation from International Rivers, by the way, and send them a tip of the hat.

Note: This blog posting was slightly revised on January 8, 2012. I removed some snarky language that unfairly generalized about advocacy NGOs. I am impressed by the new work being done at International Rivers and their efforts to push for accuracy.  Anyone reading this blog should also see the comments section for a robust response and explanation from the author, Dr. Harry Verhoeven, who stepped up to the plate to provide more information about his research, and from Peter Bosshard at International Rivers.

Friday, November 30, 2012

Whatever Happened to These Chinese Agricultural Investments?

I'm at the 2012 African Studies Association Annual Meetings in Philadelphia, where I'm going to present a work-in-progress on Chinese "land grabs" (or not) in Africa, on Saturday. Leaving aside the importance of the issue for African smallholders and subsistence farmers, it's a fascinating project for a researcher. It's also very hard to get good, up-to-date information. This summer I hope to do additional fieldwork on this issue. But summer is a long time away. I thought it might be helpful to see if any readers are already "in the field" or recently returned, and if the blog could post updates from the field. Feel free to email me with information. Here are a few of the projects and puzzles that are still unsolved.

(1) Malibya investment in Mali. This project hit the headlines in 2008 or so, when it was revealed that the government of Mali had offered 100,000 ha in the Office du Niger to a subsidiary of the Libyan sovereign wealth fund, Libyan African Investment Portfolio. Here's a link to the "Convention" signed between Mali and Libya. Subsequently, the project, Malibya, contracted with a Chinese construction company, China, China Geo-engineering Construction Company Group (CGCOC).  CGCOC mainly does construction, but it does some construction under a BOO or BOT model (CGCOC calls this "investment and operation"; others would say "Build, Own, Operate" or "Build, Operate, Transfer").

There is no hint I could see that CGCOC is an investor in the Malibya project. But another Chinese company, the agribusiness firm Yuan Longping High Tech (HLHT), was also involved in the project. Most reports said that YLHT was supplying expertise and seeds. Yet a Chinese language report, on another of China Geo-engineering's websites, said that YLHT had set up a joint venture with 30% ownership:


So far, I haven't found anything else. The project is clearly underway. But who are the investors, Libyans? Chinese and Libyans? If Chinese, which firm(s)? Does Mali have any equity, given their huge contribution of land? If you have information on this project, please share it.

[updates to come]

Sunday, November 25, 2012

China and Mauritania: Whatever Happened to the Railway?

In 2007 and 2008, many of us read in the Western and Chinese media that a Chinese-Sudanese joint venture was going to build a railway to Mauritania's phosphate deposits in the border town of Kaedi, and that China Eximbank had agreed to finance 70 percent of the $686 million project.

This project was listed in the World Bank's 2008 study of Chinese infrastructure projects in Africa, Building Bridges, and has been assumed by many to be ongoing.

I was more skeptical about this project, as there was no further word about it after 2008. I didn't include it in my 2010 book, The Dragon's Gift. But I always wondered what had happened.

Now we know, and the answer is: nothing.

In an April 2012 article, "Phosphate of Bofal: Dream or Reality?", a Mauritanian journalist, Ahmed Yahya Kowri, solves the puzzle. He writes that he'd been hearing about the potential of this "famous" project since he was a schoolboy in the 1970s. The idea that the Chinese would finance a railway was a more recent part of the dream.

Now, Kowri writes, an Indian company is actually mining the phosphate. While Kowri applauds the realization of the long-promised mining venture, he also writes that there are problems: the Indians are bringing in a lot of Indian workers and managers, they are not respecting the environment or the communities, or "law in general," and they are putting a lot of pressure on the government to get exemptions and special facilities. People are made to work 12 to 14 hours a day, and the labor inspector is nowhere to be seen.

What's interesting about this, to China-Africa watchers? A few things.

(1) First, it shows how important it is to be skeptical that an agreement is actually a project. Always follow up on any signed agreement. They come with many different levels of concreteness, varying from a simple MOU (which merely means, "let's continue talking about it"), to "Protocols" to "Contracts" and "Conventions". I am always skeptical until I see work actually beginning (and even then it can still all fall apart, as we have seen many, many times).

(2) Second, we often hear that the Chinese are the "worst" investors in Africa, with regard to the environment, social relations, labor practices. Perhaps a more useful way to see it is that emerging market investors are not going to have the corporate social responsibility ethos or knowledge of those from wealthier industrialized countries. As the complaints concerning the Indian investor suggests, this probably has nothing to do with being a democracy or not, and all to do with being a developing country, with developing country standards. 

Photo: A Mauritanian herds camels near the ancient desert town of Chinguetti, 500km (300 miles) north-east of the capital Nouakchott. Photograph: Finbarr O'Reilly/Reuters.

Wednesday, November 21, 2012

A Chinese Farm in Africa

One of the most popular guest posts I've hosted here on the blog was Lila Buckley's "Eating Bitter to Taste Sweetness". Now Lila has written a short update of her continued research on Chinese agricultural engagement, on the website of her employer, the International Institute of Environment and Development (IIED). As can be expected, it's good.

In A Chinese Farm in Africa, Lila reports on her follow up meetings in China, with "Chen", one of the Chinese posted to Senegal in her original research visit, in 2010. Chen
 ... and 14 other Chinese agronomists had spent two years on two separate sites as part of an ongoing collaboration between the Chinese and Senegalese government to promote development of Senegal’s agriculture sector.
But the programme was wrought with difficulties—communication barriers, lack of trust on both sides, project design flaws— that left both the Chinese and their Senegalese collaborators frustrated much of the time. It was a difficult two years for Chen—his first time outside of China, working in an unwelcoming environment, far from his family.
Fluent in Chinese and French, interested in participant observation anthropological methodologies, Lila was an ideal researcher to shed light on the lived experience of Chinese aid workers in Africa. This new posting continues in the careful, well-researched and well-written mode established by Lila's guest post and master's thesis. Back in China, Chen says:
"Here in Hubei farmers appreciate our help, but in reality we can’t have a big impact. In Senegal, a small change in watering technique or soil management can increase yields dramatically, so I can reach more people and work more effectively. It wouldn’t take very much to develop a strong African agricultural sector.” ...
 I especially like one of Lila's final comments, which is confirmed by my own experience.
This is the logic of China’s increasing support of Africa’s agriculture:  introduce Chinese farming techniques to Africa, not to feed China per se, but to increase global food supply in general.
Photo: Chen showing Lila Buckley his innovative method for growing potatoes in straw nests. Credit: Simon Lim

Tuesday, November 20, 2012

China, the UK, and Africa: Tripartite Cooperation?

Every few months, I have another meeting with a donor agency or an NGO that is interested in developing joint activities with China, in Africa.

It's not easy, I tell them. The World Bank has had an MOU with China Eximbank since 2007 and has still to develop a single joint project. The UK has been trying since perhaps 2006 to do something with a Chinese partner in Africa.

Now, it seems the British may have finally gotten close to the promised land of tripartite cooperation. Jin Zhu at China Daily reported from the second Africa-Britain-China Conference on Agriculture and Fisheries in Beijing on Monday, November 12, that the UK is going to put up the money ($15.9 million) while the Chinese will contribute experts. "[t]he program will facilitate the transfer of agricultural technology to low-income countries in Africa and Asia. Pilot projects will be first established in Malawi and Uganda."

I'll be following this to track what transpires. Several key people in DFID have worked hard and patiently, for years, to make this happen. We'll see whether it results in anything very useful.

hat tip to China Africa News
photo: Ploughing a field in Shangdong province, eastern China. Photograph: Wu Hong/EPA

Monday, November 12, 2012

Guest Post: A Blind Date in Namibia

Most of this blog is about the political and economic side of China in Africa. But in many ways, it's the cultural side that fascinates people. Below, a guest blog post from Irene Sun on her "blind date" experience in Namibia:

In 2008, I was a teacher in a public secondary school in rural Namibia. For those of you who aren’t familiar with it, Namibia is twice the size of California, but it only has two million people (by contrast, New York City alone has 8 million people). Namibia is sparsely populated, and it took some effort to secure the essentials of life when the nearest grocery store and bank was an hour away by car.

Given these circumstances, I cultivated sources for any foods that weren’t maize or mahangu (the local grain staple). I brought food back when I had reason to go to Windhoek, the capital, and I befriended a couple with a garden in my town. But there was one peculiar network I took particular pleasure in discovering: the Chinese food network. All over Namibia, Chinese entrepreneurs had opened shops selling cheap goods imported from China. I had gone into one of these so-called ‘China shops’ in my area out of curiosity, and after some initial surprise at meeting a Chinese woman from America, the manager of the shop offered to have his workers who regularly deliver goods from Windhoek bring along some Chinese groceries for me as well. I was Chinese food-starved, so this was an amazing lifeline: fresh Chinese vegetables trucked from the capital, 12 hours away by car!

Over the next few months, I picked up my share of groceries every other week. During one visit, the China shop owner told me that he was going to have a celebration in honor of a friend visiting from Windhoek and asked if I wanted to join. Having little else to do on the weekends, I agreed.

On the day of the celebration, I showed up at the appointed China shop to find my shop owner there with his friend. The three of us drank local beer and expensive, rare tea that the friend had brought back from China. Afterwards, we headed to another China shop, where lower-level Chinese workers were busy preparing a feast. They had cleared out one room of the shop and installed two large round folding tables. In the back, young Chinese men labored over chopping boards and woks and sent out a steady stream of dishes that eventually covered the table. It was hands-down the best meal I had in my year in Namibia, and certainly the most impressive. There was every type of meat: beef, goat, chicken, fish, pork, and duck, the latter two of which Namibians don’t commonly eat. There were fresh Chinese vegetables trucked in from Windhoek 12 hours away and baijiu liquor from China. And to this day, I still have no idea how they procured the fresh prawns, as we were in a landlocked part of the country that was a 16-hour drive from the ocean.

Over the course of this feast, it dawned on me that this was essentially a blind date. The night had been prepared for the shop owner to set me up with his friend. He had been careful to seat us next to each other at the round table, and most of the baijiu toasts were crafted to show off his friend’s accomplishments. To be fair, his story was impressive. He had arrived in Namibia at age 17 after having dropped out of high school in China. At that point, he was only barely literate in Chinese and knew no English, Oshiwambo, or Afrikaans at all. His only friend who came with him to Namibia lasted 2 days and then headed back to China. From these humble beginnings, he worked his way up the China shop chain and after a few years, owned several dozen China shops himself. He then sold them and started a security firm providing armed guards to various businesses all over Namibia. This had grown to a firm employing 500 people, and now, wealthy and in his late 20s, he was ready to find a wife. But there were few Chinese women in Namibia, and hence his China shopkeeper friend had thought of me.

I was not interested in a husband, so I attempted to resist their offers for me to stay in town that night. After dinner, I insisted on going back to my small town an hour away, and they insisted that they escort me back. Chinese people are difficult to refuse when they truly insist on something, and these Chinese in Namibia were no exception. So I found myself in the passenger seat of the Chinese wife-seeker’s car, a black BMW. I learned during the ride that this was in fact his fourth black BMW. He had purchased the first one before he knew how to drive. Unsurprisingly, he promptly wrecked it. (In the fight between the BMW and the cow, both lost.) The next two BMWs had followed a similar fate before he mastered the art of driving – a fact that I wished I knew before I had stepped into BMW #4.

They dropped me off at my house, and after that, despite some searching inquiries, I didn’t go on a second date. The whole experience did leave a lingering impression on me though, of the toughness, the grit, and the sheer ingenuity of Chinese entrepreneurs in Africa. In a strange land, they were living large.

So ladies, if you’re Chinese and looking for a husband and an adventure, Namibia just might be a good place to look!

Tuesday, October 30, 2012

New Low for South African Reporting on Chinese Immigrants

Here come the Chinese...
Kevin Bloom and Richard Poplak writing in the Daily Maverick, "Chinese shopkeeper cover story a new low for South African Journalism," deftly deconstruct the cover story in Noseweek, yet another piece of "yellow journalism" about Chinese immigration into southern Africa. Here's the lead for the Daily Maverick story, describing the Noseweek piece: "a humid conspiracy theory wrapped in the guise of journalism, and when it isn't racist and xenophobic, it's plain wrong."

One of the main themes of the Noseweek story is that the mom & pop Chinese shops one can easily find in many parts of South Africa are part of a giant plan, rendering them pieces of one huge "chain store". Anyone who has actually interviewed Chinese traders (as I and many others have, including Bloom and Poplak) would realize that this is so silly that it would be laughable if it wasn't deliberately intended to arouse xenophobic fears.

I'm really glad to see an uptick in the fact-checking coming from the continent. Wonder when we'll start seeing something similar coming out of China?

A hat tip to Sven Grimm at the Centre for Chinese Studies, Stellenbosch University.

Sunday, October 28, 2012

China to Build West African Coastal Highway?

In the mid-1980s, I traveled with a friend by bush plane, bush taxi, canoes, and by foot along the coast of Liberia from Monrovia to Abidjan in Cote d'Ivoire. Anyone going along that same route today would probably have to use the same means: there is no continuous coastal road around the bulge of West Africa. In many places (see map) there is no road at all, and one walks, and fords the brown rivers by ferry or canoe.

About five years ago, I listed to a Chinese bank official tell me that his bank wanted to build a road around the coast of West Africa. The colonialist never built it: such a road makes no sense for trade or grabbing natural resources. Output from mines or forests usually goes from the interior out to the closest port, not along the coast.  But it makes sense in terms of getting from A to B. Think of the great Highway One along the east coast of America (being inundated by Hurricane Sandy, as I write).

I never heard about this road plan again ... until tonight, when Google alerts brought me this story from Ventures' Oluwabusayo Sotunde:
China signed an agreement on infrastructural development and economic cooperation with the Economic Community of West African States (ECOWAS) on Thursday in Abuja, Nigeria. The pact which was signed by the Vice Minister, Ministry of Commerce of the People’s Republic of China, Li Jinzao, involves China building a [2000 km] trans-West African highway (which will go through nine states).
This is the fabled coastal highway. Will it happen? As with any of these projects: follow the money. This would be hugely complicated, with nine countries responsible for repayment of any finance. Perhaps it will be tendered as a private-public partnership, with tolls. That's the Chinese model.

Sunday, October 21, 2012

China-Africa Oil Ties: How Different from the US?

An updated report from the Council on Foreign Relations on China-Africa Oil Ties makes several statements that made it past reviewers (and that reflect conventional wisdom):

Quoting journalist Howard French, the report says that "unlike the West, China 'has declined to tell African governments how they should run their countries, or to make its investments contingent on government reform'."  And quoting Fanie Herman and Tsai Ming-Yen, the report says: "The U.S. focuses on humanitarianism, good governance, and democratization of petroleum-producing states in their oil diplomacy approach," unlike China.

I would have expected better than this in a report coming from the Council on Foreign Relations. Is the US oil diplomacy approach really focused on good governance and democratization in Equatorial Guinea, Angola, or Saudi Arabia? I don't think so. Have Western companies like ExxonMobil, Freeport McMoRan, American Tobacco, etc., made their natural resource investments in Nigeria, Chad, the DRC, or Zimbabwe contingent on governance reform? Again, I don't think so.

The VOA reported on Secretary of State Hillary Clinton's recent trip to Africa, saying:
Clinton kicked off her trip with a speech in Dakar by saying the U.S. will seek out business opportunities but not at the expense of democracy and human rights.  'The United States will stand up for democracy and universal human rights even when it might be easier or more profitable to look the other way, to keep the resources flowing. Not every partner makes that choice, but we do and we will,' she said.
Below is a photo of our president and his first lady smiling with the President of Equatorial Guinea and his first lady. The dictatorial government of Equatorial Guinea is a serial human rights abuser, but it's oil rich, and US companies are the beneficiaries. These are the real choices we're making.

We're more likely to have a solid basis for understanding Chinese engagement in Africa if we in the West stop assuming that we're the good guys, that our oil diplomacy is pure, that our companies wouldn't think of investing in a non-democratic country ... "unlike China".

[updated November 4, 2012]

Monday, October 15, 2012

Chinese Aid and Cooperation: Media Coverage

A Finnish student's master's thesis on bias in media coverage of Chinese aid and cooperation finds that media coverage (unsurprisingly) from China was overwhelmingly positive, that from the West overwhelmingly negative, and that from Africa, on balance, neutral. The dissertation starts with the observation that Western beliefs about Chinese aid and cooperation have real consequences:
This was demonstrated when Finland announced at the beginning of 2012 that it would revalue its development co-operation starting from March. Development Co-operation Minister Heidi Hautala indicated that human rights were to become the new main focus of Finland’s aid. The reason for this shift was announced to be the increased involvement of China and other rising donors in development aid practices. The newspaper Helsingin Sanomat (HS 2012) reported that China, which according to widely held beliefs tends to neglect human rights, has a growing effect on Africa and therefore, the rest of the world should be more concentrated on balancing against this neglect and improving the human rights facet of aid. This means that the perceptions about Chinese aid, no matter how close to or far away from the truth they are, are actually influencing the decisions other countries are making regarding their foreign assistance policies.
The author is Kitta Hirvensaloor. For more, continue here.

Thursday, October 11, 2012

China's Role in Sudan-South Sudan Oil Diplomacy

In an interview with Foreign Affairs, Alex de Waal summarizes the Chinese role in the recent agreement between the two Sudans on resuming oil exports:
China has taken a very simple position with regard to both parties, which is that it wants to see oil production and export resumed by a fair agreement as soon as possible, and it has pressed both parties to negotiate seriously under the facilitation of the African Union. It has shown no interest in any other solution than utilizing the existing infrastructure, which was built by the Chinese for this purpose. So it has played a low-key but very consistent and firm role.
I agree with de Waal. As I have noted before, China has engaged in an unprecedented "shuttle diplomacy" in Sudan. At the same time, Beijing's diplomatic dance at the United Nations has been fairly nuanced. After first resisting US-led efforts to pass a Security Council resolution with teeth (i.e. threats with sanctions) to stop the growing violence between the Sudan and South Sudan, Beijing joined the other SC members in a unanimous resolution threatening sanctions, at the request of the African Union. The contrast with Beijing's response to regional efforts by the Arab League regarding the Syria crisis is interesting (and would make a useful research paper).

For a bit more background on this, see the Think Africa article by James Green,

Friday, September 21, 2012

Fiction and Fact: Chinese Land Grabs in Africa

A chapter I wrote while I was at IFPRI, "Chinese Engagement in African Agriculture: Fiction and Fact," has been published in the Handbook on Land and Water Grabs in Africa (Routledge, 2012). Parts of the chapter are available on Google Books.

In this chapter I contrast the widespread belief that the Chinese are aggressively scooping up land in Africa with the reality of very sparse investment. I'm working on a longer version of this paper that investigates in detail each case that has circulated around the media. Fascinating!

One of my favorites so far is an alleged US$2 bn "Chinese" deal to produce rice in Nigeria circulated in an AERC paper on China and Nigeria. About two minutes of digging into this story revealed that the deal was in fact 2 bn NAIRA (about US$12.7 million) and the company, Vee Tee Group, was Indian, not Chinese...

Thursday, September 20, 2012

"In Africa, It's Business as Usual for China"

My invited commentary on the New York Times "Room for Debate" page today, September 20, 2012.

Here was the debate: A Human Rights Watch report recently linked Rwanda to war crimes in Congo, a disturbing mark against a nation that has been held up as an African success story. While Rwanda’s president, Paul Kagame, has improved the country’s economy and kept it stable in the wake of a brutal civil war, he has also been accused of being repressive and autocratic. 

It’s not just Rwanda: The late prime minister of Ethiopia, Meles Zenawi, was praised by the West, but under his regime, journalism has been a dangerous pursuit.

How should an influential country like the United States navigate relationships with authoritarian regimes that have improved living standards in their nations, like Kagame did in Rwanda and Zenawi did in Ethiopia?

In the wake of China’s growth and the West’s continued stagnation, many developing countries now look to China for aid, investment and trade. United States officials have repeatedly warned Africans to be wary of China’s warm embrace. But might China’s way of engaging in countries like Rwanda and Ethiopia provide lessons for the U. S.?

Like many East Asians, the Chinese have old-fashioned ideas about development. “To end poverty, first build a road,” they say. Boost agriculture and manufacturing. Soak up low-skilled workers, then move up the value chain.
'To end poverty, first build a road,' the Chinese say.
Most of our allies developed in just this way, including Korea and Taiwan. Economic development and a growing middle class led to calls for accountability, transparency and greater freedoms. Yet as donors, the U.S. and many others in the West abandoned this recipe, without providing an effective game plan to take its place.

Take Rwanda, where aid from Western donors is now at risk because of several critical reports on Rwanda’s alleged secret support for a violent rebellion in nearby Congo. Seventy-five percent of U.S. aid to Rwanda goes to health, the bulk of it to HIV/Aids, with less than 10 percent supporting economic growth. We’re keeping more people alive, but we’re not doing much to provide jobs.

Asked whether China would join in the growing boycott, the Chinese ambassador to Rwanda demurred. His government planned to keep supporting the roads, agricultural and power projects that make up the bulk of its aid portfolio.

In authoritarian Ethiopia, the U.S. shipped in close to $450 million in surplus U.S. commodities last year: more than half of all our aid. Beijing gave a loan to build a toll road leading to the coast, and supported the construction of the Eastern Industrial Zone. In January, a Chinese company, Huajian, hired and trained 800 Ethiopians to make ladies shoes for the U.S. market. Six large Chinese firms have now invested in Ethiopia’s thriving leather products sector, but none from the U.S.

The U.S. can’t close its eyes to atrocities in Africa. Sanctions and threats will sometimes have their place. But we could do a lot more to help Africans build their own economic pathway to better governance.

Sunday, September 16, 2012

Chinese Finance Abuja Light Rail in Nigeria: At Last

Business Day, a leader in the Nigerian press, has published details about a US$1.1 bn set of loan agreements signed recently with China Eximbank. This information has all the hallmarks of accuracy, including information about the signatories of the agreements and, more importantly, their actual terms.

Several things are interesting about this for watchers of China-Africa finance.

First, $500 million will go to one of the projects, the Abuja light rail system, which is already 25 percent complete (by China Civil Engineering Construction Corporation, CCECC). According to one report, construction allegedly began in 2006. Chinese finance for the light rail has been under discussion at least since then. A 2008 World Bank study of Chinese involvement in African infrastructure, Building Bridges, listed the Abuja project in its list of "distressed" Chinese finance commitments more than four years ago. It's not clear whether there was ever a firm, signed  commitment to finance the Abuja project before now. In any case, no Chinese finance arrived. And the World Bank study also listed China Guangdong Xinguang International Group as the contractor, with the project's total costs at $2 bn (Chinese finance was said to cover half of that). This current project is expected to total $800 million. Are these the same project? If so, why the contractor switch?

Second, as Business Day notes, "the terms of the facility are concessional, with 20 years term and seven years grace at 2.5 percent [fixed] interest." China Eximbank can provide either concessional loans (you hui dai kuan) or preferential export buyer's credits (you hui mai fan xin dai) or regular export sellers or buyers credits (these are generally at LIBOR-plus a margin). These terms are a bit higher than recent concessional loans to some other countries, which tend to be at 2 percent, but the 20 year term reflects normal practice for the concessional loans. Preferential export credits tend to be shorter term (around 15 years). Since the preferential export credit office was merged with the concessional loan office several years ago, it's not clear how separate these instruments are in China Eximbank's practice. The subsidy for concessional loans comes from the foreign aid budget (and makes these loans parallel to ODA). The subsidy for preferential export credits comes from another budget (and as export credits, these loans would not qualify as ODA, no matter how concessional).

Nigerian readers: what's the back story here? 

A hat tip to CCS (the Stellenbosch-based Centre for Chinese Studies) Weekly China Briefing.

Friday, September 7, 2012

Dispelling the Myths of China's Presence in Africa

The Financial Times magazine "This is Africa" asked me to write an op-ed for their current issue. My short piece, "Dispelling the myths of China's presence in Africa" was published August 30, 2012. Still working on getting a more accurate picture out there. And there's lots of scope for that. When things calm down in my new position as Director of the International Development Program at Johns Hopkins/SAIS, I hope to post more -- still have things to say on the FOCAC meetings!

Tuesday, September 4, 2012

Chinese Moving into Canadian Oil

Chinese oil companies are moving into Canada ... amid a predictably polarized debate. An interesting and balanced view from the Vancouver Observer's Massoud Hayoun.

Articles like this emphasize that the Chinese only seem to want to import raw materials from Africa. That's what Japan wanted to import from China in the 1970s: oil and coal. It was the Chinese that then decided to transform their country from a raw material exporter into a producer of IPads and Nikes. Chinese companies will invest in manufacturing in Africa -- they're doing it already -- but as with any investor, they need the right business environment. Looking around, where would you invest? South Africa (where dozens of miners were recently killed by police in murderous riots)? Nigeria, oil rich, but which still hasn't solved its power problem? Ethiopia, land-locked and now in a political transition? In fact, multiple Chinese factories are operating in all of these countries. I'm not sure that we can say that about the US.

A H/T to Massoud Hayoun.

Monday, September 3, 2012

The Dragon's Gift: Chinese Translation Published

The Dragon's Gift has now been published in a Chinese translation, by Chinese Academy of Social Sciences press. The cover is a lot less interesting (and they never ran it by me) but CASS has done a lot better job generating buzz about the book than OUP ever did! I've been doing a lot of interviews in the Chinese press, last week and this. Most reporters want to know why on earth I started doing research on this topic as long ago as 1983.

The Dragon's Gift, in Chinese, is available at at 15% discount at China's Amazon.com, at Dang Dang, or direct from the publisher: Social Sciences Academic Press.

CASS has also translated work such as Chinese Politics: New Sources, Methods, and Field Strategies. Cambridge University Press, 2010, co-edited with Allen Carlson, Mary Gallagher, and Kenneth Lieberthal; James Holmes, Red Star over the Pacific: China’s Rise and the Challenge to U.S. Maritime Strategy (with Toshi Yoshihara).

Postscript: Some of the Chinese media stories in the usual places: Global Times (Sept. 2, 2012) People's Daily (Sept. 7, 2012), China Daily (Sept. 8, 2012), Changjiang Daily (Sept. 11, 2012) and a taped show aired on CCTV this weekend, I gather... well-orchestrated, but I wonder if any of the more independent media will cover it?

Wednesday, August 29, 2012

WP: "Chinese Weapons Flooding Africa"

Ugandan Soldier.          Photo credit Peter Doerrie
On Sunday, August 26, 2012 the Washington Post front-page stories included "Chinese Weapons Flooding Africa" with the subheadings "Arms Reach Areas Embargoed by U.N." and "Beijing Works to Thwart Inquiries into Violations."

The article states that Chinese companies are now a major presence at arms shows in Africa, and Chinese arms have been found in multiple war zones, although "there is no proof that China or its arms exporters have intentionally violated U.N. embargoes in any of these countries. But China has stood apart from other major arms exporters, including Russia, for its assertive challenge to U.N. authority, routinely refusing to co-operate with U.N. arms experts and flexing its diplomatic muscle to protect its allies and curtail investigations that may shed light on its own secretive arms industry."

As David Albright, president of the Institute for Science and International Security, said, "This is really a case of unbridled capitalism and I think the Chinese government is not even always aware of what these companies are doing." Somali pirates have been caught with Chinese made RPGs. Ammunition apparently made in China has been found in Sudan. Chinese diplomats have been "extremely sensitive" about arms investigations in conflict zones. US officials noted that "China was needlessly drawing attention to itself even though other countries such as Russia, Belarus and Ukraine were supplying Sudan with deadlier and more advanced weapons, including attack helicopters."

The data on Chinese small arms exports from the UN Comtrade is very clear. As in other areas, Chinese exports are booming. China's "going global" policy of increasing exports and taking over markets from other exporters is the force pushing this, although they still have a long way to go.Overall, the United States continues to be the world's top exporter of arms. According to the Congressional Research Service, US arms exports tripled in 2011, a total of $66.8 billion. Russia was second, with a paltry $4.8 billion. The US accounted for 78 percent of global arms sales.

For interesting background, see a thesis by Meredith Blank at the University of Michigan that includes case studies of Chinese arms exports to Niger and Iraq. Blank argues that revenues from arms sales do not explain the pattern of sales she identified. However, she compares these revenues to China's total military expenditure. In China's decentralized/privatized world, this is probably not the right way to see them. As we saw in the notorious Libya case, it appears that Chinese companies with their own balance sheets are "going global" and making arms export decisions and deals. While these exports would certainly have to be approved somewhere up the chain of command, the profits can stay with the company. This is incentive enough.

Beijing generally respects the UN. As research by Harvard professor Alastair Ian Johnston shows in his book Social States, Chinese diplomats were socialized into embracing arms control positions after joining regional and global arms control institutions. Its position on the Security Council gives it an extraordinary power for a developing country. Beijing needs to step up and do the right thing on UN investigations into arms transfers in conflict zones. 

For more on the arms transfer issue, see an earlier China Africa Real Story blog post.

Tuesday, August 28, 2012

African Attitudes Toward Chinese Migrants

Chinese migration expert Yoon Jung Park was interviewed by Radio Australia on her fieldwork surveying attitudes toward Chinese immigrants in southern Africa (South Africa, Namibia, Lesotho, and Zimbabwe). She also draws on colleagues' research in Zambia and Botswana. Park finds that while media coverage highlights problems and tensions, the actual attitudes of Africans varies across countries. In South Africa, consumers appreciate the greater range of goods available from Chinese traders. Her research in Zimbabwe also reflected this, and consumers emphasized that during the time of hyperinflation, Chinese shops were able to source affordable goods when others couldn't.

To read more, click here.

Monday, August 20, 2012

Kenyan Traders Protest Against Chinese Competitors

The proliferation of Chinese traders in African markets is one of the perinneal sore spots in China-Africa relations. This video highlights the recent protests in Nairobi where African traders fear and resent the competition. Consumers generally welcome the expansion of products at lower cost, but frequently complain about the low quality of cheap goods.

On the plus side: cheap Chinese cell phone have allowed Africans at the bottom of the pyramid to communicate in unexpectedly large numbers. On the negative side, counterfeit pharmaceuticals -- a regular phenomenon -- can exacerbate illness or fail to prevent death. This creates a climate of fear and distrust affecting all Chinese pharmaceutical exports. None of these products need to be sold by Chinese, of course. As I've noted in this blog, thousands of African traders visit Chinese cities and export directly from China to their home markets.

While some traders believe that their governments are required to accept Chinese immigrants or traders as a quid pro quo for aid, I have never seen any seen any evidence of an agreement to this effect. Some governments do allow Chinese construction companies to import a proportion of Chinese workers for a project. Some works may stay on as traders. Ultimately, decisions about local competition rest with African governments. In Ethiopia, for example, there are no Chinese retailers on the street.

A hat tip to Solange Chatelard.

Thursday, August 16, 2012

Chinese Roads in the DRC: Status?

A Danish reader, Jan Jensen, wrote with a question about the status of the Chinese infrastructure package in the DRC. A lot was pledged in the contract originally signed five years ago. This contract was substantially revised in the wake of pressure from the IMF and the West, concerned about the DRC's sovereign guarantees. I don't think the mine has yet begun to produce copper, but I haven't been following this project (and am too swamped with my job and house transitions to look into it now!). Jensen wrote that he had seen a BBC article several years ago about Chinese tarmacking of the 100 km road from the Zambian border to Lumumbashi, but hadn't seen much since then. Has anyone been following this?

Monday, August 6, 2012

China, Africa, FOCAC and Hillary Clinton

I have been offline for much of the past 20 days, first on vacation in the Vancouver area, Olympic Peninsula and the San Juan islands, then at our family "compound" in northern Maine. Heading back to the northern woods today for the rest of the week, after a family wedding in Falmouth. From the FOCAC meetings in Beijing July 19-20 to Hillary Clinton's visit to Africa, there's been a lot happening on the China-Africa front.

I will be posting soon on the Chinese pledge of $20 billion to Africa: what does this mean? I'll also be commenting on Secretary Clinton's comments on "China".

But now, back to the pines, the loons, the cool northern breezes, and a nearly full moon rising over Moosehead Lake.

Monday, July 9, 2012

South South Cooperation at the UN

On Thursday and Friday last week I attended the UN's Development Cooperation Forum, a biennial meeting held by the Economic and Social Council (ECOSOC) and focused on foreign aid and development cooperation. This year emphasized development cooperation partners from the South. A very interesting tension is developing at the institutional level. The rules for foreign aid and development cooperation have largely been set by the north (ever since the early demise of plans for the SUNFED in the 1950s). The OECD's Development Assistance Committee is the main locus of this rule-setting. The rise of China, India, and others -- few of whom are OECD members -- has some countries talking about the UNDCF taking on more of a rule-negotiation role. Like the WTO, which sets rules for trade, the UNDCF is a forum with more potential to be global than an organization within the OECD. To see my short introductory comments and other presentations at the UNDCF, click here.  

Sunday, July 1, 2012

Learning Chinese in Zambia

A growing number of students are producing really first rate field research on China in Africa. I recently read the M.A. thesis of Arwen Hoogenbosch, who is finishing his M.A. in Leiden. His thesis, "Made-in-China”: Chinese as a commodity and a socioeconomic resource in Chinese language schools in Zambia" makes fascinating reading.

Arwen spent several months doing "participant observation", enrolled in a Chinese language school in Zambia (which has both a Confucius Institute and a private-for-profit Chinese language school). He got to know his fellow students, and reports on their varied goals and hopes for learning Chinese. 

It's vividly written and full of interesting findings. For example, the story of "William":
... For most of his life, William and his siblings grew up on a Chinese operated farm. The Chinese farmer invested in the children and paid their tuition. The farmer also sent William to the Confucius Institute to learn Chinese. The Chinese employer can be seen as the family’s patron, which improved the cultural capital of the children. The Chinese employer also advised William to work at a Chinese restaurant to improve his Chinese. William’s social capital translated into cultural capital, by living with the Chinese farmer.
This kind of relationship is not what one would expect from watching "When China Met Africa" (which features a rather less sensitive farmer) and it reinforces a point we can't make too often: there is not one "China" in "Africa".

Then there is "Raymond":
In his work as a policeman he noticed that Chinese people in Zambia were increasingly coming into contact with law enforcement: “Often when they come to the office they cannot defend themselves because they do not speak English, but they have the right to hear what they have done wrong in a language they understand”. When he proposed to learn Chinese, his boss agreed and told him he could do a course in Chinese language during office hours.
Listening this deeply, and sharing these stories online, makes this a valuable piece of work. Thanks, Arwen.

Arwen's analysis of the motives for Zambians to study Chinese is thoughtful. Some thought it would advance their job prospects, although Arwen writes: "it appears that Chinese companies prefer Chinese skilled employees." I think there is a lot more potential for Africans who speak Chinese than perhaps Arwen does. I'm current in Ethiopia and seeing some fascinating examples of Chinese companies employing Ethiopians at a high management level. One firm's production manager is Ethiopian -- he runs the place (the Chinese owner also has factories in Somalia, Sudan, Mali, and several other African countries). More on that in a later blog post.