The Aim of the Paper
The aim of the paper was to find out the reasons behind the China-Africa infrastructural investment.
Establishing the Drivers
In order to establish the drivers, the researcher conducted an exploratory research examining what previous scholars had instituted using research objectives and questions. Secondary data thus became the main sources information.
Motive Behind China-Africa Relations
From the critical review, the study found out that the motive behind the relations is to establish cooperation as well as to exploit natural resources within countries which are naturally endowed with the economic resources. The study finally recommended an evaluation of priorities in both regions to ensure mutual benefit among the trading partners.
Introduction
As from 2000, Chinese emerged as the largest Africa trading partner. The lending and direct investment in Africa has increased rapidly. The result of the partnership is increased growth and poverty alleviation. The per capita growth grew from 0.6 percent in the 1990s to 2.8 percent in the 2000s. Different scholars with different dimensions have offered the reason for the drastic increment. The paper thus in the current chapter serves to outline the background of the study, problem statement as well as the objectives and purpose of the research. The section also includes the justification and the research questions to assist in answering the research topic.
Background
The researcher’s motive to conduct a review into the incentives behind China’s investment in infrastructure in Africa developed from a review of articles and books published recently. There has been more negative evaluation than good reasons behind the move to invest in Africa and with a specific focus on infrastructure. China as a nation has a high potential for construction prowess. From the print media to television news, several opinions have been offered to justify the Chinese entry into Africa’s infrastructural aid. There are those who opine that the move is meant to exploit the poor continent while others believe it is a form of neocolonialism (Behar 2008; Walsh 2006; Bräutigam 2011, p. 207; BBC 2010). The belief that China’s involvement is meant to spearhead their slogan of “peaceful development” as envisaged in their development goals has been cited as the possible reason for participation in such infrastructural improvement (Breslin 2010). Their recent rise into the second largest economic power has been attributed to the rush to Africa which is considered an untapped market in a bid to sustain its economic growth and development.
The fact that the natural resources needed primarily in China have been sourced in Africa is reason enough to lay the infrastructural development for ease of access (Behar 2008). The involvement thus according to the articles is meant to benefit her in her quest to maintain stable economic development and growth. The statistic has shown that China is the largest exporter and the largest Africa’s trading partner. The number of bilateral relationships has drastically increased from 2000. China’s policy for the African counties from 2006 reiterated the need to establish mutual trust, benefits, solidarity, equality, and economic cooperation. The entry of China into Africa has been described differently, and in instances, she has been described as the “all-weathered- friend” (Large 2010, p. 89; Kapembwa 2011, p. 9) implying that for better or worse the relationship is not ending anytime soon. It is both evidence that the partnerships, as well as the desire for resources, are on the rise.
Problem Statement
The existence of divergence views on the rationale behind China’s entry into Africa‘s infrastructural development project is one of the motivating factors that have pushed the researcher to establish the truth. The fact that China does not only offer infrastructural development often complicates the views offered in the print media, books, and other sources. Understanding the reasons requires a critical review of the studies that have been done to ascertain the correct position. Whether it is political, economical or any other reason, the infrastructural development engagement of the Chinese government is a real issue worth investigating to set the record straight. Without proper understanding, there is no doubt that all sorts of explanations given are malicious and based on propaganda.
Purpose and Objectives
The paper aims at outlining the reasons for China’s involvement in Africa’s infrastructural development. The main objectives of the study are thus to;
I. Ascertain Incentives behind China´s Foreign Aid Investments
II. Elucidate China’s Investment policy in Africa
III. Establish the history of China’s investment in Africa
Research Questions
The study adopts four main research questions that will be critical in providing information essential for the current topic of the study
i. What is the motive behind China’s huge investment in Africa’s Infrastructure?
ii. What is the impact of Chinese aid and financial development on the dynamics in Africa?
iii. Where are key Chinese Infrastructural Investment Areas in Africa and why?
iv. Is the relationship built on cooperation or exploitation of the African continent?
The Rationale of the Study
The research aims at providing conclusive and accurate information regarding the infrastructural development investment in Africa with a particular focus on the Chinese foreign investment aid. The information gathered will be critical in understanding the motive behind China-Africa relations and whether it is worth engaging.
Limitation of the Study
The study is limited to the amount of literature already presented to the public through the secondary sources. The validity and reliability of data obtained thus heavily dependent on the effectiveness and efficiency of the methodological procedures followed in the past studies.
In the literature review chapter, the concept of foreign aid and investment will be established. Understanding what other scholars have discovered in the topic becomes the primary purpose of the literature review. The theoretical debates and the points of difference in the form of a concept are outrightly discussed in the chapter. A critical analysis of the history of China-Africa becomes another point of focus to draw contact findings. The motives behind China’s investment in Africa and specific areas are also discussed. The use of case study analysis is briefly described to help in the understanding of the situations.
History of China’s Foreign Aid in Africa
Many scholars have studied the history of China’s foreign aid in the African continent. One essential research is by Mohan and Kale (2007, p. 7) that shows that the interaction between China and Africa began long ago. It is over 500 years since Africa and China established a political and economic relationship. The sudden increase in cooperation in the last two decades is thought to be a result of a shift in the Chinese foreign policy, geopolitical and world economy. Another study by Mohan and Kale, (2007, p.8) established three phases of African contact; the first phase is between 1850 and 1950 and the period was mainly trade-related in a plantation, railway construction, and mining. The second phase is thought to be between 1960 and1980 and the nature of interaction was primarily political. The foreign aid was used to challenge the influence of superpowers to control “south-south relation” (Shenkar 1994, p. 9). The last phase is from 1990 to date where the relationship has been attributed to constant movement of China’s firms to Africa in areas of mining, construction, and oil extraction as motivated by the government. Another scholar Muekalia, (2004, p. 6) noted that Bandung conference of 1955 spearheaded the China-Africa relationship. During the said meeting, China undertook to support the African nations by uniting them against the superpowers. Military, economic and technical supports were offered. China-Africa Cooperation Forum adopted the similar tactics in 2000 where 44 African countries and other ministers were present. During the meeting, the members agreed to cooperate on matters relating to natural resources, education, energy, investment, debt relief and cancellation and multilateral issues (Muekalia 2004, p. 10). Anshan (2007, p. 69) also supported the view and expounded on the areas of cooperation to include medical, public health and training.
According to Anshan (2007), the Chinese foreign aid system, unlike the western aid system, is not concentrated around financial transfer, policy framework, and institutionalization. The international aid from China is divided into three main categories mainly concessional loans, interest-free loans, and grants. The grants are primarily issued in the case of social welfare and cover medium and small sized projects such as water supply projects, hospital, and school constructions. The main aim of grants thus is to enhance human development and could also be issued to assist in cases of emergency humanitarian crisis. The assistance can be in kind as well as technical cooperation. Countries with relatively good economic conditions are targeted with the interest-free loans. Such funds are to be used in projects that are aimed at improving people’s lives as well as in the construction of public facilities. As for concessional loans, they are mainly issued to cover productive projects such as the large and medium scale infrastructural projects aimed at benefiting the economic and social sector.
Furthermore, the concessional loans are issued to cover construction of various electrical products, construction of plants as well as for technical services. The repayment period is between 15- 20 years with an annual interest rate of 2-3%. The Chinese require that a minimum of 50 percent of the loan be used in Chinese services and materials (Bräutigam 2009, p. 135). The foreign aid additionally are offered to cover a variety of services such as debt relief, emergency humanitarian aid, a voluntary program, human resource development, provision of goods and materials, sending of the medical team as well as completion of projects. The foreign aid is mainly invested into the projects and does not offer money directly (Bräutigam 2009, p. 142; Lancaster 2007, p. 4)
Research has shown that over the years, China has witnessed a transformation of its foreign aid policy ranging from being a donor to a recipient. Between 2000 and 2011, for instance, the total financial commitment to Africa totaled to $73 billion (Strange, Parks, Tierney, Fuchs, and Dreher 2013, p. 21). There has been an exponential growth in China’s trade investment in the 21st century. The foreign direct investment inflows rose from a mere $75 million in 2000 to an enormous figure of $3.2 billion in 2014. The type of cooperation has seen an average annual trade growth of 30 percent between Africa and China over the last 15 years. The trade between the two blocs stood at $180 billion in 2015 (MOFCOM 2015, p. 19; UN Comtrade 2016). With the evidenced involvement in Africa, the Chinese foreign aid to Africa still raises questions regarding its impact and what the policy stands for.
An overview of African Infrastructure Investment by China Compared to Rest of the World
The World Bank record as from 2008 has shown that China has financed infrastructures in over 35 countries in Africa. The report further indicated that Africa has been lagging behind when it comes to development due to poor infrastructure (Foster et al. 2008, p. 19).
When China first released its first white paper in April 2011 on foreign aid distribution, there was enough proof that Africa was its largest beneficiary. Africa indeed has been valued by China and the table below shows the distribution in the year 2009.
Based on the above distribution table, there is enough evidence that Africa is highly valued by the Chinese government and that is why it received the highest foreign aid in 2009. Africa has 45.7% of the foreign aid followed by Asia at 32.8%, Latin America is at 12.7 %, and Oceanic is at 4% while the remaining region accounted for 4%.
Based on the Chinese information, in terms of sector distribution, it is evidenced that China puts more emphasis on the infrastructure in all developing countries. About 61% of the total foreign aid goes to infrastructure.
Ideological difference on China’s Foreign Aid and Investment in Africa
The fact that the Chinese government has worked towards the promotion of integration of investment and aid through established bilateral agreements instead of joining established frameworks such as ODA has cast lots of doubt on the primary purpose of the foreign aid than what has been achieved by such programs. Critiques often associate the move to acting independently as a selfish move to put its own economic and political interests above the recipients’ economic development priorities (Naím 20O7, p. 95). The move often has been described by scholars as “rogue aid” as it is regularly viewed as bail by the critics. Other scholars, however, have different opinions and believe that there is no justification for the fraudulent claim or exaggerations (Dreher and Fuchs 2015, p. 988). China is thought not to have developed a coherent and consistent strategy of aid and investment integration but rather is a profit motivated firm that uses different aid schemes to launch and implement their investment projects. The methodological approach adopted by Chinese regarding foreign aid and investment has challenged the laid down procedures by the ODA regarding tied aid. With its increased role in infrastructural investment in Africa, China is in no doubt exposed to the structural vulnerability. The stability of the recipient country thus determines the success rate in the trading country. The Chinese government’s attention to the recipient country has always elicited the view of “strings attached” to the foreign aid policy (Strange, Parks, Tierney, Fuchs, and Dreher 2013, p. 35). The increasing eminence of China’s bank finance, exports credit, and aid continues to elicit both concern and enthusiasm within the development circles. The critics often argue that the strategy has posed a great challenge to the norms that offer a guideline to the international aid. Some proponents, however, believe that the rise and methodology adopted by the Chinese government will offer leverage to nations that have in the past possessed conditionality-based aid. Even as the debate continues, there is little information presented to justify the claims and counterclaims. UK’s Financial Times has attributed the entry of China into the foreign aid as instrumental to the smooth and peaceful economic take-off. The ideology is anchored on the idea that finding one’s development would require starting from an actual situation (Keping, 2006). Zhang (2007, p. 17) suggests that the rise of China in the international foreign aid has given hope to other nations to become powerful based on their capacity and strengths. The effectiveness and experience of China’s aid policy have also been explained using the “China threat theory.” The involvement in Africa has caused an interruption of social stability and economic development in the African countries. Stephanie (2004, p. 9) on the other hand believe that the Chinese entry in Africa has led to impairment of America’s all-time effort and strategy of promoting democracy.
Wilson (2006) on the contrary believed that the desire to promote neo-colonialism caused Chinese entry into the African market. From the assertion, the Chinese aid to Africa is thus aimed at plundering the resources within the continent. The author, therefore, attributes the move as a strategic tool aimed at meeting the demand for domestic raw materials such as non-ferrous metal and oil needed in its industry. The next assertion derived from Wilson (2006) is to flood the African market with cheap goods and services. The low-cost products from the Chinese market have impinged on the success, and most of the local companies in Africa have become bankrupt thus leading to unemployment.
Some scholars have described the move to invest in infrastructure as tied aid aimed at benefiting the Chinese government. Despite the call to abort the tied aid, it has frequently been used by China to benefit their interest. According to the Paris Declaration of 2001, the aid donors were urged to ensure that the partner countries’ have their systems, priorities, and procedures aligned to assist in strengthening the capacities. The reason behind the call for an abolition of tied aid is because it can increase the cost of goods and services (Clay, Geddes, and Natali 2009, p. 5). Even as Chinese adopts the strategy, it has been criticized for favoring the donor country instead of allowing the natural pattern of trade. The tactic also creates a state of a monopoly of power especially to the donor firms because of political connections. The exporting firms in the donor countries may use the tied aid as a subsidy thus violating the world trade organizations rules (Chimia and Arrowsmith 2009, p. 708)
Critical Review of the Motives of Chinese Aid Policy
China has justified her overseas involvement in the economic activities with development goals. The main aim thus is to enhance the sustainable economic development of the developing countries and to reduce poverty. There exist three dimensions on why China engages in the foreign aid. One of the perspectives asserts that the primary purpose is the desire to secure strategic resources. The second reason is for a diplomatic purpose (Lum, Fischer, Gomez-Granger, and Leland 2009, p. 9). According to Reilly (2013, p. 17), China is an emerging superpower, it has the desire to challenge the established international aid frameworks and provide an alternative. The second dimension reveals that China aid policy has always created a deviation from established aid model as put forward by the OECD and thus has not worked towards challenging the international aid policies (Bräutigam 2009, p. 140). The third dimension depicts China as having no coherent aid strategy that is well crafted out and implemented (Varrall 2015).
There has been contestation regarding the policy to the extent that many diplomats view it as an instrument to foster its influence in the international arena and enhance cooperation with selected countries. Commercial agendas, on the other hand, believe that the Chinese aid policy is instrumental in assisting businesses to internationalize thus expanding investment and exports. From the three perspectives, it is important to highlight and note that the Chinese aid pattern constitutes a mixture of investment and aid. Identifying the boundary between the foreign direct investment and aid is not possible. For example, out of the $60 billion development assistance pledge to Africa in 2015, only $5 billion has been classified by OECD as meeting the ODA requirement as it should be in the form of interest-free loans and grants. The other $55billion was expected to flow in the form of export credits and loans (Robertson and Benabdallah 2016, p. 2) Motives
Based on the preceding research and with particular focus on China’s aid policy, the motives that can be evaluated as, access to the abundant natural resources. Alden (2005, p.147) suggested that China initiated the agreement to have its one-China policy recognized. Furthermore, Alden listed four factors that have contributed to the development which include forging a strategic partnership, need for energy, symbolic diplomacy and new market and investment. Konings (2007, p.341), on the other hand, concluded that the China-Africa cooperation is based on the collaboration and China’s one policy. Zweig and Jianhai (2005, p.26) however assert that the policy is spearheaded by China’s domestic strategy which includes the desire to access energy resources and also its expected need to create an export market for the communication, agro-processing, services and light manufacturing.
Case Studies Review and Analysis for Selected Countries
Case1: Tanzania and Zambia
China began its association with the two countries long ago. The notable infrastructural development occurred between 1970 and 1975. The two nations are thought to be among Chinese oldest partners in Africa. China undertook construction of a railway from Tanzania to Zambia approximated to be 2000 kilometers (Bräutigam 2009, p. 150). During the said construction, 300 bridges and 10-kilometer tunnels were included. Since then, the two countries have enjoyed massive transport accessibility. The cooperation thus created economic growth and development as goods, services, as well as human labor, was easily movable (Foster et al., 2008). The construction of the mega project created employment in Zambia, Tanzania as well as for the Chinese citizens. Thousands of Africans were employed, and over 16,000 skilled Chinese laborers were incorporated (Brautigam 2009, p.149). The construction of the railway has spearheaded the development in other regions within the two nations and in particular, Rufiji paper mill and Kidatu power plant. A critical look at the project demonstrates that a backward and forward linkage was created as the trains needed the power to run on.
Case 2; Chinese Investments in Angola
The country is thought to have received the second highest investment in the continent after Nigeria. Coincidentally, Angola is one of the largest oil producers and thus the Chinese government is thought to have been attracted to its oil. Although the relationship began in the 1970s when the Chinese government supported them in the war against the colonialists, the tie is thought have grown even better in the 2000s. The commercial relationship has been spearheaded by the motive to obtain the oil needed for the sustainability of her economy. The government of China as at 2004 had offered Angola 2 billion US dollars to assist in the reconstruction of the nation in a bid to obtain oil. The subsequent loans to Angola to improve the infrastructure have enabled Chinese government to pursue its interest and secure more oil at favorable terms (Haroz 2011, p. 13). There is no doubt that the trade involving loan and oil for the infrastructural development between the nations was evidenced until 2007. The relationship is thus thought to have assisted in the development processes for the African country while satisfying Chinese access to the oil barrels. Haroz concludes by asserting that the type of partnership between the Chinese government and the Angolan government is one that has the interest of both parties and thus calls it a win-win situation that is often replicated in other African countries. In the year 2006, the bilateral trade had increased to 12 billion. Sautman and Hairong (2007, p.76) believed that the relationship between China and Africa largely developed due to the migration, aid policy and “Beijing consensus.” The “Beijing consensus” uses a different approach towards development that involves politics and global power balance. The ideology is based on the fact that it values the international relations and political concept of peaceful co-existence, consensus, and multilateralism (Ramos 2004, p. 8; Wenping 2007, p. 24).
Case 3: China and Mali
Before the 1980s, the relationship between China and Mali was driven by a need for foreign policies. The foreign aids eventually were transformed into commercial ones. The Mali sugar represents the conversion of foreign aid to investment projects. In 1961, China developed two sugar plantations and committed an aid of $16 million upon request by the government. The conversions enabled China to possess an interest in the business through which it sought to establish a long-term presence. In the 1990s, Chinese firms were directly investing in Mali with the aim of creating expensive foreign aid asset. Such companies included “Light Industrial Corporation for Foreign and Technical Cooperation” and China 11(Bräutigam 2011, p. 212).
Theories of International Relation
Understanding international relations requires critical review of past studies. The motive of China-Africa cooperation can thus be understood through examination of various schools of thoughts. Realism theorem has been useful in understanding the behavior of multiple countries. Based on the Hobbes, Machiavelli, and Thucydides’ analyses, three tenets of the throes have been identified. Statisms as identified believe that the main actors in an international politics are nation states- an idea that contrasts the liberal theories of international relation. Liberalists believe that international institutions and non-state actors play a vital role in the international relation. Survival provides that an international system is under anarchy governance and thus international politics is purely a competition for power among the self-interest states (Chandler 2010, p. 43). The self-help tenet provides that each state must rely on itself for the survival and that relying on another cannot guarantee any assistance. From the realism point of view, any state must be rational and autonomous in search of self-interest. In the quest for self-interests, a state will try to amass resources.
The relationship between states thus depends on the power level. The political, economic and military capabilities thus assist in determining power. Structural realism tends to enhance and develop the realism. Explanation of a state behavior can only be done through a structure is known as anarchy and capability distribution (Chandler 2010, p. 44). Liberalists believe that primary determinant of behavior is preference and not capability. State preference often depends on the type of government, culture and economic system. The interactions among states depend on both “low politics” and “high politics” namely economic, cultural, security and politics through individuals, organizations or commercial firms (Chandler 2010, p. 90). Therefore, there exist several opportunities that warrant cooperation and broad view of power. Constructivism theory is yet another theory that can help in understanding the China-Africa relation. According to the theory, international politics depend on collective values, persuasive ideas, social identities, and culture. International relation thus according to the theory is considered a social relation. It is critical to note that constructivism primarily focuses on how ideas shape international system. Marxist theory, on the other hand, focuses on material and economic aspect and by so doing rejects the realist or liberal idea of cooperation or conflict among the states (Chandler 2010, p. 47). The theory assists in understanding the relationship between China and Africa and the reasons behind the cooperation.
Methodology
The section focuses on how the actual study was conducted. The chapter presents a detailed discussion of the methods of data collection, the research design as well as the data analysis techniques applied in the study. The methodology also outlines the type of data and the actual process of data collection. The section additionally justifies the research design employed and the ethical concerns in the study.
Research Design
The study is based on exploratory research which adopts a qualitative method of research and analysis to answer the question on China-Africa infrastructural investment.
