Connect to share and comment

Opinion: China's in Africa for business, not aid

New book makes provocative argument about Beijing's push into Africa.

Another common criticism of these so-called aid-for-infrastructure projects is that they distort global commodity markets by taking supply off those markets. Research shows, however, that Chinese companies are not transporting Angolan oil for China. Instead, they’re selling it on the global market. The same goes for minerals extracted from Zambia.

In fact, the phrase “aid-for-infrastructure” is itself a misnomer. Many of the projects described as aid in the media and by analysts are actually investments, or a mixture of aid and investment. For instance, the infamous $2 billion loan package that was extended to Angola by China Eximbank in 2004 was for infrastructure, but the package was not “aid.” As Brautigam uncovers in her book, the loans were made at commercial rates. A multibillion package for the Democratic Republic of Congo is also primarily commercial; there is just one $50 million zero-interest loan.

Some of the misconceptions about Chinese engagement in Africa have arisen from the difficulty in obtaining official aid figures from the Chinese government, and some confusion has stemmed from the complicated nature of the loan packages that China offers via the China Eximbank.

Chinese aid to Africa falls into three categories: The Ministry of Finance’s budget for foreign assistance to Africa; China Eximbank’s concessional loan program; and debt relief. Brautigam estimates that in 2007, these three sources totaled roughly $1.4 billion, a fraction of the U.S., EU and World Bank commitments of $7.6 billion, $5.4 billion, and $6.9 billion, respectively, for that year.

Most reports of Chinese aid amounts have been higher than Brautigam’s estimates; she excludes financing from China Eximbank that is offered to African countries at commercial rates.

The media can be forgiven for some of these misconceptions; deadlines make it difficult to clarify all the intricacies of a loan package or investment deal. There is little excuse, however, for economists and international affairs analysts, who have borrowed figures from newspaper or magazine stories to include in World Bank and IMF reports, for instance. Of course, these inflated numbers confirm already held beliefs about the nature of Chinese engagement with Africa. To dispel these myths once and for all, "The Dragon’s Gift" is a must read.

The prevailing narrative about China in Africa says more about Western fears and anxieties about China than it does about the true nature of China’s engagement with Africa.

While the West continues worrying, China Eximbank is extending loans, Chinese businesses are winning contracts to build infrastructure, and all the while, the word “aid” is hardly mentioned. In the West, where “aid reform” has become a catchphrase, perhaps it’s time to think about an “aid” strategy that looks more like the business-minded strategy of China.

http://www.globalpost.com/dispatch/africa/100625/opinion-chinas-africa-business-not-aid