Wednesday, February 13, 2013

USA and Chinese Engagement in Africa: GAO Study

A team at the US Government Accountability Office (GAO) has just released a long-awaited study comparing US and Chinese export financing (and development finance more broadly) in Africa, based on detailed case studies of three countries, Angola, Kenya, and Ghana.

I read it late last night and this morning. It is, quite simply, by far the best single analysis I have seen on China-Africa-US engagement in Africa. It is comprehensive, empirical, deep and broad, careful, and balanced. Readers of this blog will expect that I read it carefully. I did, and I'm almost surprised to find that I have nothing but applause for their work. A few highlights:
  • Evidence from our Department of Commerce point out that European firms, not Chinese, are our main competitors for host-country government contracts in the three countries covered by the study. 
  • Compared with the Chinese Eximbank, which supports its companies enthusiastically in the three case study countries, the U.S. Ex-Im has only provided a total of two loans to governments in the case study countries since 2001 (both to Ghana)
  • "Chinese firms are innovating and adapting quickly to local markets, such as in Kenya, where a Chinese firm in this [telecoms] sector has established one of Kenya’s largest training centers."
  • "Counterfeit goods and related products from China have adversely affected U.S. firms’ sales and reputation, especially in Kenya among our case-study countries."
  • "The Angolan government’s requirement that foreign firms take local firms as partners has posed some challenges for U.S. firms, while the Ghanaian and Kenyan governments’ strict requirements that foreign firms hire local workers have resulted in Chinese firms’ hiring more local workers for construction projects in these countries."
  • "China’s data also include data on the number of Chinese laborers in Africa and a few African countries, including Angola. The United States does not have comparable data on U.S. workers in Africa and in countries like Angola."
There is a lot more of interest in this study. The team first contacted me for an interview in April 2011, so they have been working on this for quite some time. Although I had some (infrequent) interaction with them, I admit that I approached the final report with some trepidation. I've seen some pretty awful "research" on China-Africa sponsored by other US government agencies, and error-filled studies done by researchers at the World Bank. But as citizens and taxpayers, we ought to be pleased by this careful account. I hope it gets the attention it deserves.



7 comments:

  1. This paper is a catastrophe. Everyone would be better served with a private sponsored study, which makes an effort to estimate Chinese numbers. What's the point of stating at repeating at every stage of the report, that the Chinese dont' have the numbers? There are no total in this papers, no numerical summaries. Complete waste of time.

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  2. I'm not sure @Anonymous and I read the same paper (including the second report with the three case studies). There are plenty of numbers that are not estimates, but real data. Methodical studies like this can tell us a great deal. Of course we need more of them.

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  3. we read the same paper. From which we can conclude what?

    Nothing.

    Do we have an overall estimate of American trade with Africa?
    Chinese trade with Africa?
    American aid, export credits, FDI?
    Chinese aid, export creidts, FDI?

    How can you measure China's Africa "footprint" without a comparative element? if the paper concludes that its the Europeans doing the competing, why provide no data on the Europeans? 43 tenders in which EU and US countries competed - what are the EU totals? What about Japan, Taiwan, India, and South Korea?

    If you were a policy maker, what could you possibly conclude from this paper other than Angola for some reason enjoys extreme Chine largess, but all lead oil firms are Western. Doesn't this spell potential instability if Chinese/US rivalry heats up?

    Looking at Kenya, Hutchinson Wampoa is a HK company with solid track record, and with Chinese largess in this country, suddenly teh CHinese are capable of competing with the US in a domain which the paper presents as "non-competitive". As a policy maker, this would make you worry about US Kenya policy.

    Ghana is almost irrelevant as a case study in this case.

    The subdued conclusion that China and America compete in largely different fields, seems hardly assuring. No attempts are made to explain the dynamics. No total picture is present, making it hard to infer what is Chinese foreign policy, what is merely the expansion of Chinese business, not to mention the need to distinguish HK companies from mainland.

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  4. This comment has been removed by the author.

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  5. [I accidentally deleted this comment on my i-phone and reproduce it here -- DB)
    @ Anonymous said: I have downloaded and read the report

    And yes, there are plenty of numbers

    While no one can be sure if those numbers are correct, there are numbers listed, nevertheless

    So I do not know what the "anon #1" was referring to, in his/her "complete waste of time" comment

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  6. @ Anonymous writes: "Everyone would be better served with a private sponsored study, which makes an effort to estimate Chinese numbers." I have to disagree with this. I know that's what I have done myself (and continue to do) but I have seen too many efforts by well-meaning but clueless people to "estimate" Chinese numbers that end up with "data" that is totally off the wall. Far better to start small, with real numbers, verified by African government officials. The data for Ghana and Kenya in this study is very good.

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  7. In their 2011/2012 celebration of their admission to the WTO and the UN, China gave glowing tributes to African countries who stood by them in the 1960'swhen China came out of the woods to join the global main stream. In those years China was treated as a pariah communist state and africans were even jailed for reading Mao Tse Tungs Little Red Book. For many years, the West was secretly investing in China but would not allow China to be admitted to world bodies such as WTO, IMF, UNCTAD etc. To court friendships with the International Community, China turned to countries like Tanzania, Uganda, Guinea etc. They built railways, hospitals etc and yet could not fully integrate due to language and cultural barriers. China's exports to Africa are cheap though often of lower quality than those from Germany or France. The US export to Africa in consumer goods is still very sparse and the exchange rates are prohibitive. China has a lot of resources now to invest in the third world countries. They should be encouraged.

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