Wednesday, July 8, 2015

China, Debt and Human Rights

Photo:  C. Chappat / Biblioteca de la ONU en Ginebra
Not long ago I received an email about a visit to Beijing being planned for Juan Pablo Bohoslavsky, the United Nation's Human Rights Council's independent expert on debt and human rights. It unfortunately got buried in my inbox as I was finalizing the new book and then heading off to Ethiopia for a conference and some research. Now I see that he has completed his trip to China. His report will be finalized soon.

A story in the Voice of America website, "UN fears Rights Violations in China-Backed Projects" suggested that the UNHRC was concerned because their research suggested some patterns in Chinese finance. 
Investigations by the UNHCHR [sic] show Chinese companies and financing institutions have little concern about human rights violations surrounding projects promoted and financed by them across different countries, including some in Africa.
This concerns the United Nations because Chinese institutions and companies are funding more projects globally than the World Bank, the U.N.’s independent expert on finance and human rights said at a press conference Monday in Beijing.
Whenever I see claims about what China is doing abroad, I'm curious about the evidence. I looked on the website of the UNHCR to see if they had published their investigations and found a stack of interesting studies here. What a great resource. Systematic research on these issues is clearly growing, with environmental issues receiving the bulk of the attention.

Do Chinese institutions and companies fund more projects globally than the World Bank? "Funding" has a lot of meanings. Since the special expert's mandate is to consider debt, we can focus on loan-financed projects. Let's look at Ethiopia, since they are one of the largest clients of both the World Bank and Chinese banks. The table below is drawn from the Debt Management office at the Ethiopian Ministry of Finance and Economic Development. It compares Chinese official debt disbursements with World Bank (IDA) disbursements, over the last five fiscal years. All figures are in millions of USD.

         2009/10     2010/11     2011/12     2012/13     2013/14

IDA         525            394            551            773            851
China      169            299            372             743         1324

Source: Ethiopia Ministry of Finance and Economic Development

Commentary:   Disbursements allow us to see the figures that are actually in play, rather than commitments that might not come to pass. The Chinese figures here probably do not include disbursements of several very large supplier-financed, non-government guaranteed credits to the Ethiopia Telecoms Corporation from Huawei and ZTE for telecoms projects. Commitments made to future projects and funds disbursed after mid-2014 (for example on the Addis-Djibouti Railway) are also not included.

Without accounting for inflation, the World Bank had disbursed $3094 million in loan credits since 2009, while the Chinese government has disbursed $2907 in official lending -- but their growth rate is a lot steeper. So if there are higher levels of official finance from the World Bank side, this is likely to change very soon.

What about numbers of projects financed by each? The World Bank's website says that they have financed 25 projects in Ethiopia between 2009 and 2014 (this does not include "additional financing" for existing projects). According to the Ethiopians, since 2009 there have been 21 separate loan-financed projects from China, including those financed by suppliers' credits. So, more projects financed by World Bank credits than by Chinese loans. I expect this to continue, as the Chinese have very limited manpower to develop projects: hence, fewer but larger projects.

And human rights? It is ironic that the focus on human rights and debt at the UNHRC has its origin in concerns about "the effects of structural adjustment and economic reform policies and foreign debt on the full enjoyment of all human rights, particularly economic, social and cultural rights."  The World Bank, of course, was often criticized for its role on these issues (along with the IMF). It is a sign of how things have changed that the World Bank is now seen as more progressive and helpful, while the new bankers in town -- Chinese bankers -- are seen as the new threat.

Note: This story was updated on July 14 after I received the Independent Expert's statement.


Raymond said...

Maybe, if you had replied to his email, he would have had this viewpoint before even starting with his investigation/research? But it comes late, in response to the report, and is probably too late to enrich the investigation.

Deborah Brautigam said...

Ah yes, alas this is true. I wish I had unlimited time to answer every email on time.

Kai said...

Sounds like you need an assistant.

Anonymous said...

I saw by chance this morning your blog about this trip to China which was in my view a little bit informed on the not extremely balanced reporting of VoA on Mr. Bohoslavsky visit.... Not sure whether this type of rather low quality reporting by VoA on the visit of the Independent Expert has something to do with the lobbying the US did so far, asking various countries not to participate in the AIIB using as well human rights arguments, while at the same time I am not aware that the US administration is pressing very strong for better safeguard procedures at the World Bank where these procedures are currently under review. I think there is a concern in the human rights community that there is a race to the bottom which would not be helpful for protecting human rights, labour standards and environmental standards in multi-lateral lending institutions.

Deborah Brautigam said...

The comment above arrived by email and I am sharing it (anonymously) to add to the discussion.

Anonymous said...

I too find it particularly ironic that the UNHRC’s current focus on human rights and debt stems from a “20/20” that hindsight has afforded them. I am a doctoral researcher focusing particularly on the human rights dimension of Sino-African relations and for what it’s worth I view this latest UNHRC investigation – though partially valid – as forming part of the ‘China Threat’ narrative. Of course the World Bank is one of the top Donors of the UNHCR - so this in itself starts me off with a fairly unbalanced taste in my mouth. I think the issue of the social impact/human rights impact of Chinese lending is one which requires a conceptual understanding of human rights in its broadest sense. To assume that human rights is completely absent from consideration in Chinese lending is just that – an assumption; and an assumption based on a very particular conception of what we ‘conceive’ human rights implementation should look like (Of course there is room for improvement and I do not discount the evidence of human rights abuses). We need to interrogate and disaggregate what precisely is meant by human rights centred development or lending. The West conceives of this as primarily enforceable through conditionality (political conditionality mostly), however such conditionality does not always give way to reaping the essential goals of human rights and/or social justice. I do not believe Chinese finance has one homogenous grand strategy pertaining to these issues (even though Bohoslavsky suggests a 'pattern') – to approach the issue as such is therefore fundamentally problematic. Moreover, human rights encompass a broad range of collective/emancipatory and developmental goals that are not only reducible to individual claimable rights but can also be viewed as collective/national rights. A divergence of conceptions is therefore perhaps at work. However such a divergence does not imply that one conception should override or discount the other – in fact they can be quite complementary, if harnessed carefully. It seems the UNHRC views such divergence as the one being an outright dismissal of ‘human rights’ considerations instead of an opportunity for improvement/self-reflection and/or collaboration.

Deborah Brautigam said...

@Anonymous: I think his end of mission statement incorporated many of your concerns and it would be helpful for your research to read it: .
And I don't think the World Bank funds the UNHRC, does it? Data on funding is available here: The main donors are European. Even the US gives very little (voluntarily) although we support their budget via UN general contributions.

Anonymous said...

@Deborah: Thanks for the useful link. I stand corrected re the WB and the UNHRC, I was thinking of the UNHCR - all the acronyms tend to overcrowd my head at times, so thank you for pointing that out!