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, 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?