Saturday, March 30, 2013

China in Africa: Really Rubbery Numbers

An article in the South China Morning Post "Rubbery Numbers Add Up to Big Role for China in Africa," (March 29, 2013) illustrates the pitfalls of journalists relying on "experts" who parrot the conventional wisdom but don't really know what's going on. Here are three examples:

According to "expert" #1:
the cumulative Chinese investment in sub-Saharan Africa totals US$220 billion.
I hope the reporter simply got this quote wrong. It's actually quite close to the figure for China-Africa trade for 2012. But FDI?! 

The Chinese official figures are around $16 billion for cumulative investment in Africa. This is certainly an underestimate, but the real figure is nowhere near $220 billion! Even the figures provided by Derek Scissors' China Investment Tracker at Heritage, who tracks the value of all deals at $100 million and above (i.e. the expected value, not the actual investment flows), has a value of about $40 billion. It's silly figures like this that continue to create a distorted image of a frighteningly enormous dragon hoovering up resources across the continent.

Then we hear from "expert" #2: "There had been anti-China sentiment in African countries like Zambia, because of the Chinese workers brought in for large construction projects."

Yes, there was anti-China sentiment in Zambia, but it was largely over labor and safety standards in Chinese mines (Zambian workers were protesting this) and the presence of Chinese traders. It was not about Chinese workers brought in for construction projects, because most of the workers on those projects are Zambian. The film "When China Met Africa" illustrates those conflicts beautifully.

The SCMP article ends with this quotation from "expert" #3:
"The problem for China is it prefers to cultivate relationships with African leaders who kowtow like deferential courtiers. When the people in these countries feel left out and vote out their disconnected leaders, what will China have?"
It's a good sound-bite. But what evidence do we actually have that "China" prefers to cultivate relationships like this? And what evidence do we have that regime change away from governments friendly to the Chinese leads to losses for "China" or its businesses? 

I'm not sure how we should measure the cultivation of relationships in Africa: frequency of visits by top leaders? Size of economic engagement? From frequency of visits, the top countries are Egypt, Tanzania, South Africa and Morocco -- they've each had four visits from China's top leaders (president or premier) since 1995. From the economic data, it looks as though China's largest economic relationships in Africa are with Angola, South Africa, and Algeria. These don't strike me as countries led by China's "deferential courtiers". 

And contrary to the assumption in this quotation, when governments viewed as friendly to the Chinese have been voted (or thrown) out, the Chinese do not seem to experience business losses. Zambia, Ghana, Niger, and Guinea are all good examples of this. On the other hand, the Chinese have had huge losses in Libya, but they had a very sour relationship with Gadaffi, so this doesn't fit the assumption either. Reporting that confirms prejudices rather than investigating the reality of a situation does no service to our understanding of this complex relationship.


Anonymous said...

Please provide your contact information if you want the correct data feeds on China investments. I hate arrogant people posing as "professors". Also get off your backside and start looking at China's oil investments in Africa (exploration related rather than market deals, you will soon discover that the numbers are well above the bubble. I profess no love for China's methods, but I positively hate sanctimonious chest thumping by people who do not understand what they are criticizing.

AC said...

Are you hoping to divert attention from another bad hair day? I provided the numbers ($220b) to the reporter-- with the unpublished comment that at least 30% and as much as 40% of Africa's continental assets are listed outside of Africa then redomiciled according to the host markets ( LME, AIM, TSX, ASX) Etc.). If you are not too lazy check TSX, for example. Our figures include China's oil and gas investments which presently make up about 70% of the figures. They include some known investment under $100m which are in fact a larger part of resource investments than the >$100m figures used in the Heritage Tracker. Please wake up and call in a stylist: there are actually people outside the US, and outside US "think tanks" who also keep track of this information and know what is going on. We have been running our numbers for 6 years. We do not suggest that data from China is correct -- far from it; we know they fudge the numbers-- but bellowing like a hysterical banshee may impress a few ignorant "followers" and lazy grad students. It does not impress people who know how to count. CNOOC and CRCC lost (combined) $18b in Libya during the uprising, as a further example. By your statement they lost about 30% of their entire capital investment in one market alone? Make silly comments if you feel like it, but why not take a math class before you do?

Deborah Brautigam said...

@AC -- I do hope you are not really Anthony Desir, the source of the numbers provided to the reporter. But whoever you are, your figure of $18 billion lost in Libya is an excellent example of the kind of mistakes people often make when they aren't careful. As I have written in a series of posts on China and Libya, there was very little Chinese OFDI in Libya. See, for example,
Yes, some Chinese firms had exploration concessions, but none were producing oil. CNOOC and CRCC had very large pipeline construction, railway, and other infrastructure projects that were commissioned (and paid) by others -- mainly the Libyan government. That's where the $18 billion figure came from. It was not capital investment, but the value of contracts. Thanks for the nice comments on my hair.

Unknown said...

Hah, The more fierce the debate the clearer the truth.

Unknown said...

Hello Deborah,I am writing an article about China's aid to africa,but in your book《dragon's gift》,you estimated that China's ODA to Afirca in 2007 is 1.4billion dollar, while The amount should reach almost $2.5 billion by 2009. so, in 2009, Is the ODA figure in accordance with your estimate?

Anonymous said...

Hi Deborah, re topics for research re:China's short-term training programs. I went to one of these sessions with some colleagues (we each went to different 3 week seminars.
To answer your question, its a PR exercise to expose developing countries to China (many dont really know enough about China beyond what we hear from the press and its usually poor) and to expose China to developing countries (Africa?) because many have never seen a black African live before and the reactions are mixed.
Also, me and my colleagues compared the content (of the different seminars we attended) and found that over all, the intro to china and chinese culture were the focus, the lessons differed but it was mostly a pr exercise, a good one albeit.