The Roles of Aid in Politics Putting China in Perspective

China’s aid to Africa has a long history. In the early 1960s, the first overviews of the subject³² displayed the same surprise that we see today, though sometimes for different reasons. After decades of turmoil, China was a poor country, where the excesses of the Great Leap Forward caused a famine and millions of deaths in the late 1950s. It was much poorer than the Maghreb countries with which it signed its first aid agreements and than Sub-Saharan Africa, to which it started providing aid in 1960. China, just emerging from the embargo caused by the Korean War, exported very little. Its aid to Africa was greater than its trade with Africa, and it made no investments. Today, trade with Africa is larger than aid and investment. In February 2007, President Hu Jintao announced that trade between China and Africa would amount to 100 billion US$ in 2010 and, thanks to the surge in raw material prices, bilateral trade has exceeded this objective in 2008. This trade may diminish in value as prices have tumbled, but nevertheless China will probably become the largest trade partner of Africa, and one could expect that this will be followed by more investment and that investment will outstrip aid.

At the 2005 Gleneagles summit, the G8 countries gave a commitment to double their aid to Africa, and China made the same promise in Beijing in November 2006. Three years later, it appears that OECD countries are not on track to meet their targets. As they are confronted with the severest crisis since 1929, OECD countries would need to make unprecedented budgetary efforts to reach their objective since debt cancellations, which account for nearly half of the aid, come to an end. While OECD will not achieve their target, China will probably encounter less difficulty in achieving its objective, even though China may experience a hard landing in 2009.

The fall of raw material prices will directly impact trade relations between China and Africa.³³ Nevertheless, as China will continue to grow and OECD economies will contract, the share of China in African exports will increase in volume while in value it will diminish. Thus the bilateral trade may intensify at a lower level. The world recession has not changed the Chinese view on the strategic importance of Africa. Economic and social problems in China have not prevented Hu Jintao from undertaking a fourth trip in Africa in February where he visited Mali, Senegal, Tanzania and Mauritius. His choice illustrates a sense of continuity (Zhou En Lai visited Mali and Tanzania in the sixties) and by choosing to visit countries that are not primary commodities exporters, he showed that Chinese interest goes beyond the procurement of raw materials. Chinese are preparing for the next Sino-African summit to be held in Cairo in November 2009, and, on this occasion, Beijing will promise to double its aid to Africa between 2009 and 2012. Thus at the end of the present decade, China will eventually be the largest donor to Africa.

China emphasizes the fact that its relations with Africa are distinct and substantively different from those of the West. Nevertheless, the nature of its trade relations with Africa is North-South and this may lead Beijing to adopt Western practices instead of maintaining a friendship between most unequal equals.³⁴ Will China position itself as an alternative to the OECD or will Western efforts aimed at socializing China as a “responsible” power in Africa influence currently prevailing standards (Alden, 2008)? There is clearly a debate in China between those who think that European aid to Africa has failed and that there is nothing to be learned from the DAC countries’ experience and those who take a less black-and-white view both of the Western experience and of the overall results of Chinese aid to Africa. The probable outcome is a trend towards convergence between Chinese and Western practice. World Bank and bilateral donors are discussing MOU with ExIm banks and some have started to cooperate in joint projects with China. This trend will benefit from changes in Chinese practices. On the issue of social and environmental responsibility, for example, an official of the People’s Congress stated in January 2007 that Chinese firms could face sanctions if they committed abuses abroad. In March 2007, the National Development and Reform Commission (NDRC) removed Sudan from the latest list of countries with preferred trade status and China will no longer provide financial incentives to Chinese firms investing in Sudan (Gill et al., 2007).

The pace of convergence will depend on the quality of the dialogue established between China and the traditional donors. Chinese embassies have already begun to attend donor round-tables. This dialogue could be improved if all parties made their objectives clear. The Chinese are accused of having a hidden agenda in their “march to Africa” and of assisting African countries only to better strip them of their resources, whereas Western aid is held to be directed exclusively to the well-being of the people. The Chinese make the same criticism in return. If China has an agenda in Africa, so do the United States and European Union, whether that agenda concerns security of supply or migration. Acknowledging these agendas and discussing them would be a first step towards dialogue and cooperation.

Chan-Fishel, Michelle (2007), “Environmental Impact: More of the Same?” in Manji, F. & Marks, S. (eds.), African Perspectives on China in Africa, Oxford: Fahamu.

While conventional wisdom posits that Chinese multinationals treat their workers and the environment more poorly than their Western counterparts, not enough research has been done to actually prove this hypothesis. What is clear, however, is that Chinese companies are quickly generating the same kinds of environmental damage and community opposition that Western companies have spawned around the world.

For communities adversely affected by these mega-projects (regardless of the corporate sponsor), the question is: first, do they give their free, prior and informed consent to the investment? If the answer is ‘yes’ then the challenge becomes, ‘How can communities and governments negotiate with the sponsor to receive the best deal possible, in terms of economic benefits sharing, human rights, sustained livelihoods, environmental quality, and cultural and community integrity?’

Evaluated this way it is evident that in some cases, what private companies can provide through ‘corporate social responsibility’ – e.g. health clinics that may or may not be furnished with medicines, books for local schools – pales in comparison with the deals that Chinese state-owned companies can offer (e.g. debt relief, concessional lending).

Furthermore, African leaders and policy makers are faced with additional question when it comes to Chinese investment: Is the Chinese model of development, which admittedly has been characterised by spectacular economic growth, worth emulating? Based on the unlimited extraction of natural resources, ultra low-wage manufacturing, and the export of cheap goods (due especially to ‘throwaway’ societies in the West), this paradigm – which is in essence one of corporate globalisation, not of China alone – is simply not sustainable.

This low-price development model actually comes at a very high cost – to societies, both inside and outside China, as well as to the environment. The untold story of China’s rapid economic growth is one characterised by vast levels of income disparity, unfair treatment of workers and lost livelihoods, especially in the rural areas. These problems are so acute that they threaten political stability. Environmental problems are similarly acute: breathing the air in China’s most polluted cities is the equivalent of smoking two packets of cigarettes a day. On an international level, meanwhile, the effects of corporate globalisation (particularly Western consumption) are leading to the destruction of the ecological support systems on which all life depends.

It is tempting for African leaders to simply want to play Western and Chinese extraction companies off against each other in an effort to ‘get a better deal’, and doggedly follow China’s path of economic growth. Indeed, it is important for them to carefully conceive extraction projects in order to secure the best possible deal for their people. But ultimately, it will be important to realise that this low-price/high-cost economic model will not work: not for Africa, nor for China, nor for the rest of the world.

Cheng, Joseph Y. S. and Shi, Huanggao (2009), “China’s African Policy in the Post-Cold War Era,” in Journal of Contemporary Asia, Vol. 39, No. 1, pp. 87-115.

Multipolarity has become a significant goal of China’s foreign policy in the post-Cold War era. Chinese leaders have adopted this as a long-term objective; and, given the dominant position of the USA, China strives to maintain good relations with America, avoiding any sharp deterioration in the bilateral relationship. The Chinese government has established various strategic partnerships with other major powers, emphasising the promotion of common interests, while abandoning the Maoist united front strategy (Cheng and Zhang, 2002). Meanwhile, China seeks to maintain a peaceful international environment and concentrate on its modernization programme, while building its comprehensive national power. In many ways, China has been pursuing a modernisation diplomacy in the era of economic reforms and opening to the outside world since the end of 1978 (Cheng, 1989); and developed countries play a more important role than developing countries in terms of markets as well as sources of investment, advanced management and technology, and so on. Ideology and revolution – the main Maoist objectives – now have a limited role in this modernisation diplomacy.

Sanctions from Western governments in the aftermath of the Tiananmen protests and violent crackdown reminded Chinese leaders of the significance of the Third World, especially African countries. This was reinforced by the depreciation of China’s strategic weight in the eyes of the Western world, with the disappearance of the “strategic triangle” in the context of the break up of the Soviet Union and the dramatic changes in Eastern Europe. Diplomatic support from the African countries has thus become indispensable when China comes under criticisms for its human rights record in international organisations, and when it chooses to exert pressure on Taiwan. The cultivation of a network of friendly supporters on the African continent therefore becomes a significant task in China’s diplomacy. The strategic cooperation relationship with Egypt, the strategic partnerships with Nigeria and South Africa, and the Forum on China-Africa Co-operation are landmarks in the building of this network.

As China’s economy continues its impressive growth, it wants to expand its markets and secure reliable supplies of resources in support of its economic development. Resource diplomacy, therefore, becomes a prominent feature of its modernisation diplomacy. China’s rising economic status also means that it has more resources at its disposal to ensure success in its African policy. In turn, many African countries perceive political and economic ties with China to be an important asset, which strengthens their international bargaining power, especially with Western governments. These new features of Sino-African ties have attracted the attention of the Bush administration and the international media. Their criticisms are against the Chinese authorities’ intention to present China as a responsible major power in the international community and to enhance its soft power in the Third World, while neglecting co-operation and co-ordination with Western governments in its approach to Africa.

In view of the substantial resources spent in support of Beijing’s African policy, the Chinese leadership, China’s foreign policy think-tanks and the official media tend to present Africa as a lucrative market and an important source of badly needed raw materials. African countries are also depicted as reliable political and economic partners. In fact, however, a large part of the continent still suffers from domestic instability, poverty, AIDS, rampant corruption and a range of other developmental problems, so optimism regarding Africa’s peace and development in the near future may be misplaced. Many small African countries have been switching diplomatic recognition between Taipei and Beijing, playing the two off against each other for economic assistance, and so they are obviously not reliable political partners. Regime changes take place often in some African countries, too. Hence, setbacks for China’s African policy will not be surprising.

Chinese leaders would like to avoid engaging in open and ongoing diplomatic and strategic confrontation with the USA and the European Union in Africa, but they certainly want to push for multipolarity and to ensure a reliable supply of resources from Africa in support of domestic economic development. Whether China can achieve this balance remains a fundamental dilemma of its African policy, which exacerbates the risks of its foreign policy and commercial initiatives in Africa.

Cornelissen, Scarlett and Taylor, Ian (2000), “The Political Economy of China and Japan’s Relationship with Africa: A Comparative Perspective,” in The Pacific Review, Vol. 13, No. 4, pp. 615-633.

Though both China and Japan’s primary focus is naturally on the East Asian region, both countries in the 1990s conducted a relatively active African policy. For both, Africa is a strategic ally, albeit in different means, and to the attainment of different policy objectives.

By vigorously supporting the theme of non-interference in domestic affairs and promoting a cultural relativist notion of human rights, China has been able to secure its own position in the international system and, at the same time, appeal to African elites mindful of the West’s pressure on their own governments. In addition, China’s emphasis on economic linkages with Africa has appealed to those elites who have consciously embraced the dictates of the hegemonic neoliberal model. By offering itself up as a possible model of a country that has moved from a command economy to that of a market-driven one (however incomplete), China has further been able to project itself on the continent. As a result, China maintains its commercial and political links with Africa as a tool by which Beijing hopes to foster economic interaction and by which China may have a reserve pool of friends and sympathizers from which it can draw moral and political support from within in the international system. In an attempt to offset the West’s position vis-à-vis China and promote its own independence (despite the negative effects globalization has had and continues to have on any notion of ‘real’ sovereignty), Beijing has and will continue to seek improved relations with non-Western powers. Africa has not been a exception to this policy and this is likely to continue.

Japan’s involvement in Africa has distinctly different bases to these of China, but notably cognate ends. Where Japan fostered selective commercial and aid linkages with viable African recipients in the early post-independence era, its entanglements with the continent have become broad-ranging in the contemporary era. It has also become decidedly more political. As Japan’s application of its ODA Charter shows, the country is more willing to utilize aid as an overt diplomatic instrument. This is no new feature of Japan’s aid-giving in Africa; indeed Japan’s earlier aid programme in the continent was extensively (though subtly) built on diplomatic ties. What is different is that the ODA Charter is seen as a more legitimate instrument of diplomatic coercion, as the principles which it enshrines – human rights, democratization, military non-proliferation – are (supposedly) ‘universal’.

But this is also where the discrepancy in Japan’s policy towards Africa is evident: by being a prominent power in Africa, the continent does provide Japan with a means to heighten is international political prestige. Japan thus keenly takes the lead in multilateral fora on African economic and political development. It does so, however, through an odd juxtaposition of purported (Western) universal principles, and Asian paths of growth. If one considers that Japan’s dual posing as a developed and a non-Western power has increased its appeal in the continent, one could construe that this policy aims towards a similar end as Japan’s earlier multilateral diplomacy in Africa – to service its UN ambitions. To this extent, Japan’s political agenda in Africa converges with that of China. To amplify supplication for this agenda Japan thus invokes a widely diffused aid programme. However, Japan is also driving a more concentrated economic cooperation programme in Africa, zoning in on Southern Africa. Whilst, as in the case of China, these linkages are essentially commercial and ‘apolitical’, these ironically dovetail with the explicit political and economic agendas of both in the continent. The fact that this is, as we have noted, encumbered with inconsistencies makes it uncertain whether China and Japan’s enhanced involvement in Africa in the 1990s will as a consequence contribute to the true placing of Africa as a participant in the international system, or help to foster the entrenchment of the continent as a spectator.

Dalhe Huse, Martine and Muyakwa, Stephen L. (2008), China in Africa: Lending, Policy Space and Governance, Norwegian Campaign for Debt Cancellation, Norwegian Council for Africa.

The report findings show that Chinese lending is generally welcome in Africa. The loans that China provides often contribute to financing infrastructure and other projects that African countries need. However, it is of concern that China is lending to countries that already have large debts outstanding. It is not the lending per se that is problematic, since it seems that China’s lending occurs in resource rich countries. What makes China a risk to debt sustain­ability in poor countries is the lack of transparency in loan contraction processes. Loan contracts between China and African countries are not open to public scrutiny. This leaves a lot of power in the hands of a few African leaders. As our case study from Zambia shows, loan contracts are often made at the highest political level, and because of the lack of transparency, the agreements are not available to parliament, civil society or media.

The lack of transparency makes it difficult to assess how much debt is being contracted and on what terms. It also increases the risk that funds will not be used for the intended purposes and might turn out to be cases of illegitimate debt in the future. The report concludes that in order to prevent irresponsible loan contraction, there is a need for responsible lending prac­tices to be put in place.

The report also aims to show that China’s presence as a lender in Africa provides an alterna­tive to the traditional donors within the development paradigm. China’s non-interference pol­icy implies that China does not have any conditions attached to loans apart from the require­ment to support the one-China principle and to reject the legitimacy of Taiwan as a country. Traditional donors on the other hand, have applied conditionality aiming to change African countries’ economic policy. Following the recent debt relief initiatives, traditional creditors such as the World Bank and the IMF have less resources to draw on, and their leverage in Afri­can countries is diminishing as countries have benefited from debt relief and graduated from debt relief programs monitored by these institutions. The presence of new lenders, includ­ing China as an alternative on the creditor arena, is also increasing the leverage that African countries have when dealing with traditional creditors. In many countries policy space has increased as a result of China’s presence as an alternative to creditors that apply policy condi­tionality.

While the non-interference policy might be positively affecting countries because it opens up policy space, it also has negative consequences. China seems to be less concerned with hu­man rights standards and environmental safeguards than other creditors. China’s presence in states that oppress the population is also very controversial, and China has been criticised for playing the role of a bystander in contexts where the international community have urged Beijing to use its leverage to influence oppressive regimes to improve their conduct.

Although it is too soon to conclude, so far it would seem that China is likely to have a nega­tive impact on debt sustainability and perhaps contribute to debt crisis in countries where governance is week. Lack of transparency and accountability to the inhabitants does not seem to stand in the way of Chinese lending if a country is able to use natural resources as collat­eral for loans. The development of responsible financing and framework for implementation of such is therefore paramount to ensure the rights of future generations to freedom from vicious circles of indebtedness.

Recent Chinese lending underlines the urgent need to establish internationally recognised legal standards for responsible lending. The need for transparency, accountability and inclu­siveness in loan contraction processes should be recognised by international society. Our case study from Zambia concludes that the Zambian public should have a right to know about and question borrowing, from new and old lenders, before loan agreements are signed. It also recommends that oversight and watchdog institutions such as the parliament, the auditor-gen­eral and the attorney general must have clear mandatory authority over the loan contraction process.

Davies, Martyn, Edinger, Hannah, Tay, Nastasya and Naidu, Sanusha (2008), How China Delivers Development Assistance to Africa, Centre for Chinese Studies, University of Stellenbosch.

The Centre for Chinese Studies at Stellenbosch University embarked on this research project to gather information and gain insight into China’s aid policies vis-à-vis Africa. The research is intended to inform both Chinese and traditional donor efforts toward the continent.

China’s “new foray” into Africa is attracting much international attention and contentious debate. China is seemingly engaging Africa on new terms – terms that are not shaped by traditional powers, nor perhaps even by Africans themselves. It represents a new approach to the continent that the authors have termed China’s “coalition engagements” in Africa – a collaborative state-business approach to foreign policy. China’s foreign aid forms an integral component of this paradigm.

Chinese foreign policy towards Africa at the turn of the century underwent a dramatic shift. As “China Inc.” started to internationalise after 1998, Africa became a strategic focus for Chinese outward-bound companies, especially in the extractive industries. Beijing accorded Africa renewed importance. This resulted in the conceptualisation and creation of a new vehicle, the Forum for China-Africa Cooperation (FOCAC) housed within the Ministry of Foreign Affairs, to coordinate Chinese foreign policy objectives toward Africa.

Through FOCAC, China’s Ministries of Foreign Affairs and Commerce are starting to align their respective responsibilities toward more effective coordination and implementation of a Chinese foreign and aid policy toward Africa. This attempt at formulating a coherent foreign policy between two government departments is playing out in Africa but this joint departmental coordination is being made more difficult by the dramatic increase in aid spending by Beijing.

The government of the People’s Republic of China has a broad and, at times, vague definition of what constitutes foreign aid. While there may be gradual alignment of Chinese aid with the OECD-DAC’s definition of the constitution of “aid” over the medium term, some unique components of China’s approach will remain. The monitoring of its aid commitments and their implementation is proving difficult, even for the Ministry of Commerce, as well as government think-tanks.

China’s approach has been one of mutual respect, also awarding small African countries with relatively little economic or political significance, with aid and investment support. However, it is likely that resource-rich countries such as Angola, Sudan, Nigeria and Zambia, as well as more politically strategic countries, such as South Africa, Ethiopia and Egypt, are priority countries in China’s broader African engagement.

Figures on China’s aid disbursements to Africa remain vague. In absence of a central aid agency, the lack of general time series data on aid flows and the non-transparent nature of Chinese loans complicate the process of defining, calculating and monitoring China’s development assistance to the continent.

The Chinese Government delivers bilateral aid in terms of grants, interest-free loans and concessional loans and the aid policy formulation process for these is outlined and discussed in this report. China EXIM Bank, one of China’s three policy banks and the sole provider of concessional financing, had financed over 300 projects in Africa by mid-2007, constituting almost 40 percent of its loan book. The Bank’s lending practices are often linked to China’s foreign aid policy providing concessional loans mostly to infrastructure development. The recent MOU between China EXIM Bank and the World Bank holds out the promise of donor collaboration between both institutions in African infrastructure programmes of which the first potential project for cooperation is said to the Mphanda Nkuwa Dam in Mozambique.

Extending financing on commercial terms is China Development Bank. The Bank, in May 2007, was designated to manage the $5 billion China-Africa Development Fund announced at the FOCAC 2006 Summit. Even though it is termed a “development” fund, it has been put in place to finance the market entry of Chinese firms into the African economy.

Part of China’s strategic industrial plan toward Africa is to establish five preferential trade and industrial zones for Chinese business entry in Africa. Located in Zambia, Mauritius, Egypt, Nigeria, and possibly Tanzania, this initiative emanated from the Beijing Action Plan announced at FOCAC 2006. A financing and infrastructure component of these zones will be categorized as foreign aid by the Ministry of Commerce at the next FOCAC summit to be held in late 2009 in Cairo.

The research incorporated in-market visits to Ethiopia, Ghana and Zambia. In Ethiopia, China is providing assistance across various fields and has become an important development partner for the country. Whilst Chinese engagement in Ethiopia initially emerged in the construction sector, controlling 50-60 percent of road construction, China has made commercial inroads into the manufacturing industry.

Compared to Ethiopia, Ghana has been awarded several loan agreements across the construction and infrastructure sectors. The construction of the Bui Dam, financed by China EXIM Bank, is the single largest Chinese financial commitment to Ghana to date and will have a significant impact on the power generation capacity of the country.

In Zambia, Chinese companies have been involved in more than 35 aid projects in agriculture and infrastructure development. This has included the construction of the Government Complex and more recently the construction of the first Chinese Special Economic Zone in Africa, in the Chambishi copper belt.

While it is a challenging task to evaluate the aid policy and practice of the Chinese Government to Africa, the authors outline the main drivers of this process, with emphasis on South-South Cooperation, a focus on the intersection of the aid and commercial incentives, political drivers and Asian competition, as well as the issue of conditionality.

In conclusion, the authors provide recommendations to relevant stakeholders that are engaged in the aid process. Recommendations for African countries include developing a better understanding of the Chinese approach to aid; facilitating regional coordination; avoiding poor coordination which may lead to Chinese aid fatigue; avoiding the division of traditional and emerging donors; strengthening the African voice; improving the reporting mechanisms within recipient countries as well as aid monitoring; and improving debt reporting.

For the PRC Government, recommendations are structured around managing aid policy efficiently; cooperation with traditional donors; greater transparency in the aid system; broadening the FOCAC constituency; and engaging African institutions.

Traditional donors are encouraged to work towards constructive partnerships; to avoid political suspicion; as well as to coordinate and pursue dialogue around harmonisation to build a partnership for Africa to meet the MDGs.

The turn of the millennium marked the prioritisation of Africa in Chinese foreign policy thinking. The continent has not received attention from China to this extent since the 1970s. This strategic shift in international relations between China and Africa is attracting a great deal of interest and commentary. It is imperative that this engagement be channelled toward the development of Africa economies and societies. This, however, is as much the responsibility of Africans themselves as it is the Chinese.