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.

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.

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]

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.

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,

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...

"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.

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.

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!

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.

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?

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.

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.

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.

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?

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.

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.  

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.

China in Africa Blog Wins Danwei Award

Today I was informed that this blog, China in Africa: the Real Story, won a Danwei Model Worker Awards 2012. What's that, you might ask? Apparently it's "a list of the best specialist websites, blogs and online sources of information about China." Danwei is "a website and research firm that tracks Chinese media and Internet."

Thanks, Danwei, and a hat tip to Jan Berris at the National Committee for US China Relations, for letting me know.

Does China Use Aid to Support Investment?

I address this question in the latest issue of East Asia Forum, 4, 2 (April - June 2012). Published by Australia National University in Canberra, the EAF was released at a very interesting (but unfortunately closed) conference at Columbia University/Business School on Monday this week, focused on the political and economic impact of China's overseas direct investment (ODI or OFDI).

For a link to the public forum that evening, including short talks by some participants and a keynote by Jeffrey Sachs, click here. Although Sachs is no expert on Chinese overseas investment, he is a passionate advocate for the earth. It's good to be passionate, and it's pretty rare for academics ...

"When China Met Africa" at Center for Global Development

The Center for Global Development presents a Global Development Matters Movie Night with
When China Met Africa
Wednesday, June 20, 2012 5:00pm–6:30pm **Light refreshments provided** Featuring Nick Francis Co-Writer, -Producer and -Director, "When China Met Africa" Co-Founder, Speak-it With Discussant Deborah Brautigam Senior Research Fellow, International Food Policy Research Institute Professor, School of International Service, American University (on leave 2011-2012) Hosted By Vijaya Ramachandran Senior Fellow, Center for Global Development Click to RSVP LOCATION Center for Global Development Third Floor 1800 Massachusetts Avenue, NW Washington, DC 20036 METRO Dupont Circle (Red line)   Please bring photo identification   CONTACT events@cgdev.org 202-416-4000 CGD is pleased to announce the first screening of its annual summer film series, Global Development Matters. The 2012 series will commence on June 20 with a screening of "When China Met Africa." The film portrays the expanding footprint of a rising global power through the stories of three characters: Zambia’s trade minister, Felix Mutati; a Chinese farm-owner; and a project manager for a Chinese multinational company. The film explores the daily dependency and friction between the characters and points to a radically different future, not just for Africa, but also for the world. Nick Francis and his brother, Marc Francis, are award-winning filmmakers and the co-founders of the London based film company, 'Speak-it.' Their work deconstructs contemporary global issues into relevant and engaging stories for international audiences. Their first feature film "Black Gold", a story about one man’s struggle to save 74,000 coffee farmers from bankruptcy, was released to critical acclaim worldwide changing the way millions of people and companies think about coffee. "When China Met Africa" is their most recent film. Deborah Brautigam is an expert in China-Africa relations and author of the book, The Dragon's Gift: The Real Story of China in Africa.

Chinese Thinking on Taxation and African Infrastructure

On Friday last week while I was in Nairobi at a World Bank event on China and fragile states, The Star (Nairobi) published an insightful article by Chinese engineers Su Wu and Kou Yang. I've noted in The Dragon's Gift how China's policy banks have followed the "request-based" financing model made famous by Japan. This article shows how Chinese companies are trying to educate Africans about ways in which they can afford to have [more Chinese companies] build their infrastructure. I especially like this because it combines my two interests: China/Africa, and Taxation and State-Building.  A hat tip to Paul S. Rogers.

"Kenya: Here Is How to Build Costly Infrastructure," The Star (Nairobi) By Su Wu and Kou Yang*, 25 May, 2012.

Most of African countries are under developed and unable to afford the construction of infrastructures. Therefore, the establishment of a proper taxation system that will enable the collection of adequate capital for infrastructure is naturally a subject quite valuable for studying.
The importance of a good infrastructure in development cannot be over-emphasized. However developing such an infrastructure requires huge sums of money. Building for instance the 1412km road from Lamu Port of Kenya to South Sudan, requires about $ 2.118 billion.

Setting aside such a huge amount of money from the national budget will surely result in a big deficit and unfavourable effect on the economy. So it is wise to apply [for a] loan for the construction with expected profits of the road as mortgage.

China Africa Development Fund Not Attractive Enough in China

China Africa Development Fund, the equity investment arm established by China Development Bank and launched at the 2006 Beijing Summit of the Forum on China Africa Cooperation, has failed in its effort to raise $2 billion on the capital markets. Instead, says a story published by China's vigorous economics newspaper Caixin, the state will arrange a second injection of foreign exchange:   "The fund’s parent, China Development Bank (CDB), arranged the US$ 2 billion worth of eight- to 10-year loans at bargain interest rates after CADF’s cash injection plan, some two years in the making, won State Council approval in March."

Chinese private funds and investors were not tempted by the potentially high returns on offer in Africa. And they were put off by the CADF's mission of holding shares for at least five years and potentially longer, to give projects a chance to mature. Caixin's analysis reinforces some of my points about China following the Japan path. Here's Caixin again:

"Nevertheless, economists say CADF’s initiative underscores China’s shift from exporting products to exporting capital – a path Japan followed in the 1980s after coordinating government and commercial agencies to promote overseas development."

One mistake in the article. An anecdote said to be about Libya is actually about Liberia (below). This interesting story illustrates the independence of state-owned companies. They couldn't be compelled to take over a politically important project. But it also shows something unfortunate about CADF: apparently, it could be compelled.

"A private company from China had signed a US$ 2.6 billion contract with the government of Libya [Liberia] for a mining project. But the Chinese side couldn’t fulfill its obligations, so it put the project up for sale. At the time, state-owned steel companies were unwilling to get involved partly due to perceived risks of doing business in Africa. CADF assumed 85 percent of the project and negotiated a settlement with the Libyan [Liberian] government, making the project more appealing to potential Chinese buyers. Later, Wuhan Iron and Steel Group bought a 60 percent stake."

See the original story on China-Wire.org, a great website that aggregates stories on China themes. 

University of Nairobi Public Lecture

I will be speaking at the University of Nairobi Thursday afternoon May 24, 2012, on "China and Africa in the 21st Century," from 3:30 to 5:00 pm. The lecture will be co-hosted by the Institute of Diplomacy and International Relations, the Africa Research and Resources Forum, and the World Bank's Global Center on Conflict, Security, and Development. The lecture will be followed by a debate on China's role in Africa.

Location: University of Nairobi, Education Building, ED 213, 2nd Floor.

Update, Thursday, May 24: great turnout at the lecture, but not enough time for all those waving hands to be called on by the moderator, Professor Michael Chege. Let's see how many students find this blog and ask their questions here, as I invited them to do!

Podcast of Interview at AmCham Beijing

I spoke at the American Chamber of Commerce during my quick trip to Beijing recently. Great fun to see old friends like Dwight Nordstrom, with whom I started Chinese classes in 1979 in the Yale in China program then at Hong Kong's Chinese University. He's now an active industrialist with factories in Beijing and elsewhere. Here's a link to the podcast of an interview that AmCham did with me after the talk.

"Zombie" Chinese Land Grabs in Africa Rise Again in New Database!

Sigh.

How durable is a bad news report? How many lives does a zombie have?

How often are we going to find hugely expensive efforts to collect and "verify" land grab "data" that include verification methodologies where one NGO collection of news media stories serves to validate the cases collected by another NGO?

Last week, the new Land Matrix "land grab" database was released at a big World Bank conference on land. The Land Matrix project is "an international partnership involving five major European research centres and 40 civil society and research groups from around the world." On paper, they have a strong methodology and very strict criteria about projects that are to be included. But in practice, they seem to violate their own rules routinely, at least when it comes to Chinese "projects" in Africa.

A colleague who attended the launch told me that "China" was named as the biggest "land grabber" worldwide. He knows my work on this, so he raised an eyebrow, and so did I when he told me. (Were any other eyebrows raised? I don't know.)

I understand there is a lot of Chinese land investment in Asia, especially in Cambodia and Laos. I don't know the Asia cases, but when the database was made public, I checked the China-Africa cases in the online database, which supposedly only lists the cases that have passed their "robust" fact-checking process (which apparently involves checking to see if another NGO has published a link to a media report on an alleged case).  I was interested to see which "Zombie Chinese projects" (i.e. dead projects, or projects that in fact never had any life to them at all!) are in their database as confirmed. Here is a sample:

(1) ZTE oil palm project 2.8 million hectares in DRC The project was discussed but never finalized, land was never allocated, the project -- which was almost certainly a maximum of 100,000 ha -- was never this large -- and has been dead in the water for years.

(2) ABSA Biofuels 30,200 ha in Ethiopia. Huh? This proposed joint venture is not "Chinese" but South African-Chinese-Ethiopian, and was listed in an Ethiopian database in 2008 as in the "pre-implementation" phase. It has never been implemented.

(3) Malibya 100,000 irrigated rice project in Mali. This is identified as Chinese/Libyan investors. In fact, it is only Libyan. They hired a Chinese contractor to develop the irrigation. It is not a Chinese investment.

(4) Uganda 40,500 ha Heibei [sic] multipurpose project. This project, "Hanhe Uganda Hebei Farm," is a reality, but the figure of 40,500 ha is a wild hope for the future, not an actual concession. Today, the Hebei entrepreneur, Qiu Lijun, is cultivating vegetables and mushrooms on 173 ha, with an initial capital of 9.9 million RMB (a bit more than $1.5 million). A 2010 article on a Hebei website in China provided a figure of 8097 ha (20,000 acres) for the project, but it isn't clear if this is an actual land concession or a plan. In late 2011, he spoke about plans of expanding to 17,333 hectares (260,000 mu) 'in the near future'. *

(5) Zimbabawe 101,170 ha irrigated maize project. I've written about this countless times. It was a construction contract given to a Chinese company by the Zimbabwe government, not a Chinese investment. They were not paid. They went home. The land never ended up being developed. This all happened almost ten years ago, in 2003 for Pete's sake!

So, another pretty awful collection of so-called "data", with strong media attention that will give yet another round of life to these Zombie Stories. For more from me on this topic, search this blog under "Land Grab".

A hat tip to Poul Wisborg (and to Duncan Green at Oxfam for circulating the link).

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*My analysis of the Uganda case was revised on June 18, 2012.

Are the Chinese the Worst? A Comparative ILO Study in Zambia

In all the heat over the Human Rights Watch study of a Chinese mining company in Zambia, I may have missed discussions of a 2010 study by the ILO (authored by Chrispin Radoka Matenga) that actually compared companies in Zambia's copper belt: "The Impact of the Global Financial and Economic Crisis on Job Losses and Conditions of Work in the Mining Sector in Zambia." 

This paper has data on employment, accidents, and so on across the mines. According to the study: "Comparing these [accident] figures with the total number of employees for each mine in Table 3 and 4 above, NFCA [the Chinese copper company] has the highest accident rate for all the mines in the country" (p. 12).

A Zambian official said: “Safety records for most companies have drastically gone down, with most companies recording slightly higher levels of accidents. For example, the Chinese have the worst safety record. In some of these mines, you find the boss himself is going underground with flipflops”.

Conditions of work are bad in a number of non-Chinese mines, especially for contract workers:

"For example, Bresmar Investment Limited, a contractor company with Kansanshi Mine in Solwezi, has reduced wages for its workers from K3,600 per hour to K2,900.40 per hour. These workers toil for 12 hours a day for seven (7) continuous days and rest for four (4) days."

I found out about this study via an April 8, 2012 posting by Research for Development at the Rural Modernity blog.

China's Health Aid in Africa: Same Old Problems

When I wrote my first book on Chinese aid to Africa in 1998, I documented how problems with language and local capacity led to difficulties in technology transfer with material goods -- although skill transfers ("learning by doing") were more successful.

Today Chinese journalist Beibei Yin sent me his newly published article in the Financial Times -- "Chinese donations: Tale of frustration that lies behind health aid to Africa."

Yin shows how little has changed. Chinese medical teams appear to be popular, but Chinese equipment and medicine donations are still coming with instructions only in Chinese. Training is inadequate (five days!), and, consequently, donated goods and machinery sit gathering dust until they expire -- a huge waste for China and for the recipient. This probably doesn't happen at the few places where Chinese doctors practice in revolving medical teams -- but the malaria centers built by the Chinese in an number of African countries do not have any Chinese staff or assistants.

Changing this would require a number of things to change:

• Chinese exports -- even if donations -- need to come with instruction manuals in English, French, Swalihi and other languages used by educated people in recipient countries. The Ministry of Commerce has been pushing Chinese companies to do this for years, why can't they get the aid donations to follow suit?

• The Chinese government could finance a Chinese expert (or a small team) who speaks the local language and could operate the machinery together with local technicians, for a year or so. This would allow learning by doing, while working out the kinks while a machine was still under some kind of warrantee.

Yin was not able to study a number of the malaria centers, but this is also an area ripe for student (and other) research. I saw how Ethiopia appears to have good plans for its agro-technical demonstration center, while Tanzania was not at all clear how they would use their "Chinese gift." How have the malaria centers fared across the various countries that have received them? What explains the outcomes.

Africa's Free Press Problem: Is China Causing It?

Source: Henry Hall's China Africa News

On April 15, 2012, the New York Times published an op-ed by Mohamed Keita on Africa's free press problem, arguing that press freedom was getting worse in Africa -- because of China.

Keita's piece makes a lot of good points. Investigative reporters have a very tough road in many parts of Africa and there are many examples of courage under impossibly tough conditions.

However, his opinion oversteps his evidence in linking increased Chinese economic activity in Africa with increased repression of the media.

Asking "Why this disturbing trend? (of media repression)" Keita points to (inter alia) "the influence of China, which surpassed the West as Africa’s largest trading partner in 2009."

As an example of this causal linkage, Keita wrote: "The volume of trade between Rwanda and China increased fivefold between 2005 and 2009. During the same period, the government has eviscerated virtually all critical press and opposition and has begun filtering Rwandan dissident news Web sites based abroad."

I had to bite my fingers to stop them from typing something snarky after this statistical analysis.
 
Keita actually does make a good point in his observation that with growing trade, "China has been deepening technical and media ties with African governments to counter the kind of critical press coverage that both parties demonize as neocolonialist."

Rather than training African reporters to be like Xinhua reporters, the Chinese goal in stepping up training and PR activities is to present a different picture of Chinese activities in Africa to counter the negative reporting eminating from "the West". Here's where Keita gets it right:  

"More than 200 African government press officers received Chinese training between 2004 and 2011 in order to produce what the Communist Party propaganda chief, Li Changchun, called “truthful” coverage of development fueled by China’s activities." (emphasis added).

It is easy to understand why both the Chinese and African governments might want a more balanced picture of their activities. Cambridge (UK) academic Emma Mawdsley has written the classic piece on negative media coverage of China in Africa, juxtaposed with positive reporting on the west's engagement: "Fu Manchu Versus Dr. Livingston on the Dark Continent? Representing China, Africa, and the West in British Broadsheet newspapers" Political Geography 27 (2008).

And the fun continues. See the new report on "China's Global Media Image," launched by Renmin University and Sweden's 21st Century Frontiers (and spearheaded by Dennis Pamlin) which analyzed 100 major media magazine covers featuring China -- more than 60 percent clearly pictured China as a threat, and not open to dialogue.

While Keita rightly emphasizes many African governments' reluctance to hear criticism, it is also clear that Africa has long been presented to outside audiences as the dark continent of chaos, child soldiers, famine, etc.

It's not just 54 African governments that are tired of outsiders determining their global image. France is also tired of Anglo domination of the TV media, hence they've launched their own English media service: France 24. A perception of Western bias in coverage of the Middle East, Islam, etc., in part underpinned the launch of Al-Jazeera.

As a Chinese reporter put it, "Although they are geographically far apart, China and Africa have long learned about each other through Western media." Farooq Sulehria, a Pakistani writer added, "We largely view the world through the media. It is our window on the world. If we see the world through the eyes of the West, we will be siding with Tarzan instead of blacks without asking: what is Tarzan, a white man, doing in African jungles?"

IMO, this"media balancing" is far more important for the Chinese than any effort to get African reporters to modify or soften their reporting on African governments, as impled by Keita. In fact, with their reluctance to intervene in internal affairs of other countries, I would be surprised if the Chinese do training focused on anything to do with African journalists vis a vis their coverage of African governments). But who knows? He wasn't reporting. He was giving an opinion.

Instead of these general op-eds that are only, after all, opinions, wouldn't it be better to have some actual investigative reporting on this issue? What about doing an indepth study of the Chinese media training programs, or interviewing a random sample of the press officers and African journalists that have attended them?

For those who are interested, I have written about this topic earlier, in a piece "Comments on Winds from the East," a National Endowment for Democracy study. My comments were published at Pambazuka in January 2011.

The lonely world of Chinese Traders in Africa

Researcher (me) interviewing Chinese trader

The Brenthurst Foundation in South Africa has just published a sensitive, detailed and eye-opening study by Terence McNamee (with others) of more than 200 Chinese traders in several South African countries: "Africa in Their Words: A Study of Chinese Traders in South Africa, Lesotho, Botswana, Zambia and Angola." It's also beautifully written!

The study's main points match my own research and experience, particularly the bitter belief by nearly all small traders and "China shop" owners that the Chinese government does nothing for them. As a trader in the Kariakoo market in Dar Es Salaam told me: "The Chinese government helps the Tanzanians. It doesn't help me." Highly recommended.

I'm sorry the researchers apparently never saw the very good paper by my former student Rachel Laribee, who did similar research in South Africa with Chinese shop keepers, "The China Shop Phenomenon: Trade Supply within the Chinese Diaspora in South Africa." Rachel pointed out how competitive the different China shops were with each other, not just with African shops. There was no "China, Inc." in her study, either.

Another hat tip to Yoon Park.

Whatever Happened to the Chinese special economic zone in Algeria?

Jiangling Motors SUV ... but probably not in Algeria

En route home from speaking in Chapel Hill, I learned a bit more about one of the failed Chinese efforts to establish an overseas economic zone (in Algeria) in a new paper written by Chris Alden and Faten Aggad-Clerx for the African Development Bank.

(p. 10) "... in 2008 China and Algeria entered into an agreement to establish a second Chinese Special Economic Zone in North Africa, the Jiangling Economic and Trade Cooperation Zone, which was to be hosted in Mostaganem (western Algeria) with the focus on assembling cars. The agreement involved the Chinese Jiangling Motors Cooperation and Jiangxi Coal Corporation Group and their Algerian partner, Groupe Mazouz. The activities of the Jiangling Zone were expected to assemble 50000 units in the five years that would follow. The deal was welcomed as Algeria seeks to revive its automobile sector, which collapsed in the 1990s."

Tang Xiaoyang and I found that the Algerian zone was cancelled after Algeria changed its laws on foreign investment to require Algerian ownership of at least 51% of a project. But this paper adds some new details and theories:

(p. 10) "Others have argued that the decision was influenced by ongoing negotiations between the Algerian government and the French car manufacturer, Renault, for the establishment of the Renault car-assembling factory in Algeria. Renault was said to be concerned that it would face  stiff competition from Chinese car manufacturers if they were to also produce in Algeria. (Renault eventually withdrew its offer and opened a factory in neighbouring Morocco). Subsequent interviews with Groupe Mazouz also indicated a concern over the quality of Chinese products given the high demands of the Algerian consumer and their attraction to anything produced by the West. Furthermore, as noted above, the Chinese companies and their Algerian partners have been involved in fraud cases further damaging the reputation of Chinese companies."

Another case perhaps of reputational risks sliding across sectors and companies.

It's good to see Chris Alden return to the China-Africa research field. A hat tip to Hayley Hermann via Yoon Park.

Chinese in the South Pacific: Echos of Africa

PNG dormitory under construction (G. Smith photo credit)

Today a former student sent me links to two interesting papers by an Australian Ph.D. student with Chinese language who is doing research on Chinese engagement in the South Pacific. Graeme Smith's take on the Chinese runs up against hardline Australian opinion, media coverage, and the conventional wisdom that seems to be -- if it can be possible -- even more negative than coverage in Europe and the U.S. regarding Africa. (For an example, see a series of articles by China correspondent Rowan Callick, including "China’s neo-colonial slavery in PNG", The Australian, 12 February 2007, and so on.)

In a short piece called "Are Chinese loans always a bad thing?" (the very title shows what a balanced analyst is up against in Australia!) Smith gives the inside story of a concessional loan arranged via a Chinese construction company to build a dormitory at a South Pacific university, and how university students protected the Chinese workers during the riots, because it was their dormitory being built. Smith's paper also notes the "request-based" aid system for concessional loans that I discuss in The Dragon's Gift, showing in detail how it worked in this case:

Whether it is a grant or a loan affects local control and ownership. With a grant, local partners have little leverage. As a University administrator explained, '(t)he difference is that this is a loan. Even if it is a soft loan, we're still going to pay them back. So it's really the government of PNG paying for it. We're in total control of it.'

My thesis that Chinese infrastructure companies in the Pacific, not aid agencies in Beijing, are driving aid requires more substantiation. Yet for those with even a passing familiarity with China's polity, it is a no-brainer. The Chinese central government lacks full agency and control within its own borders; why would it enjoy it outside of them?

This lack of control can lead to better outcomes for Pacific nations. In the case of the dormitory project, the tail wagged the dog. GDFC [a Chinese construction firm] successfully lobbied Exim Bank in Shanghai. The contractor, rather than the lending agency, penned the initial loan agreement. Remarkably, the university and the lead architect in PNG were able to push back, persuading Exim Bank to accept their terms for the design and supervision of the project, because they were competitive on price, and arrived at the negotiating table with plans and standards to hand.

In a March 2012 article in the Journal of Pacific History (available free for two weeks only) mainly on Chinese reactions to the anti-Asian riots in the South Pacific, Smith argues:

When China does appear in the literature, analysis is rarely nuanced or informed by original sources. This is evidenced by the titles of many articles, where China appears as an anthropomorphised ‘clumsy panda’ or as the ‘dragon in the Pacific’, lurking in the background, secretively disbursing aid, corrupting weak and passive Pacific governments, and engaging in an endless cloak-and-dagger game for diplomatic recognition with its arch nemesis, Taiwan.

One by one, Smith punctures a host of myths and fictions that dominate some of the coverage of Chinese activities in the region. He then analyzes Chinese reactions (via interviews and the blogosphere) to the Port Moresby riots. It's useful and interesting, and China-Africa watchers will benefit from the comparative perspective.

A hat tip to Ekawati Liu.

Links I Liked: Land Grabs, Etc.

(1) A "Land Grabs in Africa" Study that Doesn't Target China.  Opening a recent paper on land grabs published by Earth Security, I expected to find the usual sentences about "China" leading the land grab in Africa. I was pleasantly surprised to find nothing of the sort. Instead, a balanced assessment of the risks and of the sources of risk:

"Key investors are private firms and governments from Europe, Africa, the Gulf States, and South and East Asia, and a growing base of institutional investors, sovereign wealth funds, and private wealth owners, generally in deals made with host governments."

One area missing: as the "database" on over 400 "land grabs" (or media stories) published by the NGO GRAIN on February 23, 2012, pointed out, a large number of American investors are also part of the picture.

China, the US, and Export Credits

I've just learned of a little-remarked result of Xi Jiping's February 2012 meeting with President Obama in Washington DC. As reported by Reuters, the US and China have agreed to open talks on setting rules and guidelines for officially supported export credits.

This small announcement is big news for China-Africa watchers. Right now, these rules and guidelines are mainly set by the OECD's working group on officially supported export credits ("aid for trade"). China, of course, is not a member, and thus is not bound by the OECD norms and rules. Any acceptable conclusion on these guidelines will have to involve more transparency by the Chinese. Transparent reporting is the heart of the Arrangement, the "gentlemen's agreement" that regulates export credit practices among OECD members. Of course the OECD does not require members to publish their individual export credit agreements to the world, just share them confidentially with the working group. But even getting annual figures broken down across regions or countries, would be a huge advance.

A hat tip to Richard Carey.

Inside Trade adds a bit more to this:

The agreement announced last week by the United States and China to pursue a common set of international guidelines on official export financing by 2014 is aimed at creating a new framework that would ultimately replace the export credit arrangement that currently exists between members of the Organization for Economic Cooperation and Development (OECD), according to a Treasury Department official.

A hat tip to Michal Makocki.

Related to the export credit talks is the release a few weeks ago of a General Accounting Office (GAO) comparative study of export financing practices, mainly focused on the G-7 (remember them?): "U.S Export Bank: Actions Needed to Promote Competitiveness and International Cooperation."

As part of this, the GAO revealed that the US Eximbank (Ex-Im):

• "financed 132 transactions totaling $812 million in 20 sub-Saharan African countries. Ex-Im dedicates two full-time employees to promoting exports to sub-Saharan Africa; others work part-time on the issue" (p. 21). 
• Between 2000 and 2010, China Eximbank's total export credit support grew from $4 billion to over $36 billion, while US Ex-Im's "financing increased from about $13 billion to $24.5 billion (p. 39)."  

We can assume that China Eximbank has more than two full time people working on boosting business in Africa!

"China Refused to Fund Agricultural Project in Sudan for Lack of Oil Collateral"

S

Sudanese farmers (c) Shelter for Life International

I've been writing academic papers about Chinese engagement (or lack thereof) in agriculture in Africa recently. Today I opened a link to a Sudan Tribune article with the (misleading) headline: "China Refused to Fund Agricultural Project in Sudan for Lack of Oil Collateral." The article is actually about a Qatar agricultural project -- on 250,000 acres -- that depends on a separate Chinese project to extend Sudan's electrical grid.

As the Sudanese leader -- who is avoiding arrest by the International Criminal Court in the Hague -- said, the Qatari agricultural project

...stalled due to China not following through on its funding for the project of extending the electric grid because the Chinese loan was in return for oil shipments which stopped after the secession of the South” the Sudanese leader said. “And so China stopped the financing [the project]” he added.

This is interesting because it is another example of how China Eximbank (almost certainly the lender) works in risky countries with poor or nonexistent credit ratings. The loan for the electricity project was secured with oil exports. When oil exports stopped, the loan disbursement stopped.

I'll also make a bet: somewhere, a journalist is going to read this as "China's" 250,000 acre agricultural project, not Qatar's!

h/t to the Centre for Chinese Studies, Stellenbosch