In Africa, China Expands Aid Priorities

This year, China celebrated milestones that reflect its dichotomous position in the international community as both a fast-developing economy and an emerging donor. World Bank President Robert Zoellick traveled to Beijing in September to commemorate three decades of the bank’s assistance to China, and a month later, the Chinese government hosted African officials for the 10th anniversary of the Forum on China-Africa Cooperation. >> World Bank Chief Defends China Assistance FOCAC, according to its website, embodies South-South cooperation. It aims to serve as a platform for consultation and a mechanism for economic cooperation between China and the biggest beneficiary of its aid, Africa. According to a Chinese diplomat, some African leaders want to use the forum as a way to strengthen bilateral ties between their countries and China. But the Asian country stands by the collective nature of its dialogue with Africa through FOCAC. “We suggest that [the] African Union should send ambassadors or set up its office in Beijing, just like [the] Arab League, like [the] European Union,” Zhan Shu, Chinese ambassador at the Ministry of Foreign Affairs’ Department of African Affairs, told Devex. Deborah Brautigam, professor at the American University’s School of International Service and author of “The Dragon’s Gift: The Real Story of China in Africa,” said FOCAC is “very political” and “mainly about public relations.” “I don’t think the forum is changing the relationships, except that it is giving China a much higher profile and doing it across the continent. They never used to do that before — to have a forum or a mechanism for having a kind of engagement with all of the countries with which they have diplomatic ties, all together in one place,” she said. The Chinese government uses the forum to announce new financing instruments and aid pledges, which for Africa have long focused on priority sectors such as infrastructure, agriculture and manufacturing. Expanding priorities Zhan explained China’s interest in these three sectors. “[We work] mainly on the infrastructures or on [in what we call] processing industry,” he said. “For instance, my father helped to beautify textile mills in 1960 and 1970 and some of them are still working. But now we are thinking – maybe from our own experiences – that, first of all, we should help [Africa] with the food security.” He noted that infrastructure is particularly vital to Africa’s integration, adding that some African countries are “too small” to construct roads. “And if you cannot build the roads, you will remain very poor,” he said. A February 2009 report by the U.S. Congressional Research Service validates the status of infrastructure as a priority area for China’s aid. It said infrastructure and public works “constitute the most common form of aid” that China provides to Africa and Southeast Asia. Beyond infrastructure, China’s aid in the coming years will focus on eight other sectors, outlined by Chinese Premier Wen Jiabao at the 4th FOCAC ministerial conference in Egypt in November 2009: - Climate change: Support 100 clean energy projects covering solar power, biogas and small hydropower. - Science and technology: Launch a China-Africa science and technology partnership, including 100 joint demonstration projects on scientific and technological research and host 100 African postdoctoral fellows to conduct scientific research in China. - Finance: Provide $10 billion in concessional loans to African countries, $1 billion in special loan for small and medium-sized African companies, and debt relief to heavily indebted poor African nations. - Trade: Adopt a zero-tariff policy for 95 percent of products from least developed African nations with diplomatic ties with China, starting with 60 percent in 2010. - Agriculture and food security: Build more agricultural technology demonstration centers to grow the total to 20, deploy 50 agricultural technology teams in Africa, and train 2,000 agricultural technology personnel in Africa. - Health: Supply medical equipment and anti-malaria materials worth 500 million Chinese yuan renminbi ($75 million) to 30 hospitals and 30 malaria prevention and treatment centers built by China, and train 3,000 African doctors and nurses. - Human resources and education: Construct 50 China-Africa “friendship” schools, train 1,500 school principals and teachers in African countries, increase Chinese government scholarships to Africa to 5,500 by 2012, and train 20,000 African experts in various fields through 2012. - Culture: Launch a China-Africa joint research and exchange program for scholars and think tanks with the view of increasing exchanges in development experience and rendering intellectual support for designing better cooperation policies between the two sides. Another sector considered strategic: telecommunications. China is funding a telecommunications project in Zambia, for instance, and has engaged local companies there, Niels Erik Krogh-Poulsen told Devex. The Danish professional has 40 years of experience in international, multilateral, bilateral and commercial finance institutions in Africa and Asia and in the telecommunication sector. Aid, trade and win-win strategy This expanded aid focus has failed to silence criticisms against China’s engagement with Africa. Some in the West have long accused China of giving aid to bring in business for its companies. The U.S. Congressional Research Service report says the desire for access to oil and minerals prompts China’s aid to Africa. It notes that nearly 70 percent of China’s infrastructure financing on the continent can be found in the oil-rich countries of Angola, Nigeria, Ethiopia and Sudan, which pay back their loans to China “with oil.” Brautigam does not completely agree. “I’ve never seen a case of foreign aid being used directly as part of a resource-swap, to get access to resources,” she said. “I know it is quietly believed, but there has never been any evidence or ‘smoking gun’ on this; there is no visible link that I can see between the provision of aid and Chinese companies gaining access to resources. The Chinese government gives aid to every country in Africa whether they have resources or not.” Brautigam ascribed the perception on China’s motivation in giving aid to large export credits that the Asian country provides to Africa. These credits, she stressed, are neither concessional nor even considered aid. She cited the cases of Sudan, Equatorial Guinea and Congo, all of which have taken out Chinese commercial lines of credit on a deferred payment basis. “This is a model some other countries like Japan have used in China in the past. It’s a model the West doesn’t really understand,” she added. “But when you look into it, as I have, you can see how it works. It’s interesting and useful, but it isn’t an instrument of foreign aid.” Krogh-Poulsen likens China’s quest for natural resources abroad to Britain’s colonization of Africa in the 19th century. “Chinese exporters also have their own small traders, their trading companies. They do that strategically,” he said. “In return for that, they give [Africans] projects on very generous terms. They loan, but they are very generous.” Chinese officials agree that trade plays a big part in China’s “win-win” development cooperation with Africa. At the United Nations Development Cooperation Forum in late June, Chinese Vice Minister of Commerce Yi Xiaozhun noted that his country has also always considered trade a key strategy for boosting development. China, he said, has established six economic and trade cooperation zones in Africa, and in Zambia alone, 13 Chinese manufacturing, mining and construction companies have invested $580 million, creating 6,000 local jobs. Overall, 1,600 Chinese companies had invested $7.8 billion in Africa by the end of 2008, Yi noted. In addition, China has made special arrangements to increase imports from the least-developed countries, a move that, Yi said, proved vital in strengthening these nations’ trade and national development capacities. He added that China has been the largest export market for least-developed countries since 2008, taking in more than 23 percent of these countries’ exports. “China believes that it is better to help host countries build long-term sustainability than to resort to short-term interventions and be overly dependent on foreign aid,” Yi said. “An integrated and holistic approach should therefore be adopted by incorporating trade, investment, technology transfer, capacity building and other elements into the development policies.” According to Brautigam, China’s aid-for-trade strategy is nothing different from what Western countries do and is tantamount to some of these donor nations’ tied aid policy. She said: “There are countries, like Italy, that have a high proportion of tied aid. The purpose of the tied aid is to support the export or the businesses from your country. OECD countries battled to try to reduce the tied aid, but [it persists] for food aid and technical assistance. So you find that in lot of countries, like my own [the U.S., where] food aid is tied. I think there are fewer differences in that area than we like to think.” Read more: - CHINA’S FOREIGN AID STRATEGY PART 1: Western Donors Embrace China for African Development - CHINA’S FOREIGN AID STRATEGY PART 2: China’s ‘Noninterference’ Approach to International Cooperation - CHINA’S FOREIGN AID STRATEGY PART 3: China Moves to Enhance Aid Transparency - CHINA’S FOREIGN AID STRATEGY PART 5: Partnership Opportunities in Chinese Development Cooperation