Chinese ‘aid’ in Africa

China’s increased engagement with Africa has excited much concern, mainly from those powers that have held long-standing positions of authority over Africa. These commentaries tend to posit crude geopolitical standpoints that impede critical, empirically-informed analysis.Beyond crude geopolitics

First, there is the tendency to focus on the exceptional cases of ‘bad’ engagement, largely as a way of portraying China in a poor light, and extrapolating to the entire continent. This is not to say that China’s relations with African states are only positive, but rather that the situation is complex and requires fine-grained analysis. An outcome of these homogenising approaches is that African voices are muted, which repeats the age-old assumption that Africans lack meaningful agency. The corollary is how is African agency reflected in engagements with Asia?

Second, China too is not homogenous and so we need to avoid reading everything as some singular strategy by the Chinese state. We have to disaggregate China in terms of its motives, interests and actors. In many cases relationships between developing countries and China are unbalanced, so it is important to look beyond the rhetoric and get a clearer picture of where the relative gains and losses of engagement with China lie.

Third, the outcomes of China’s involvement in Africa will primarily be shaped by how Chinese capital and parts of the Chinese state intertwine with fractions of capital and political blocs within Africa. Having said this, we need to situate China-Africa relations in terms of the global economy and thereby not overplay China’s role. And, as this Forum shows, China is not the only country making in-roads into Africa in order to secure resources.

Taking these concerns as research questions for our field study of Angola and Ghana we found contrasting political ramifications.

The hybrid politics of extroversion
In the case that follows of Chinese involvement in Angola we see a complex and shifting institutional arrangement which works within the state but also exceeds it in important ways. Angola emerged from civil war with a shattered economy and infrastructure and so was a blank slate for investors. Chinese businesses have proven adept at servicing post-conflict economies and soon arrived in Angola. The Angolan Government created its own reconstruction ‘cabinet’ – the GRN- which is answerable to the President’s Office and effectively bypasses accountability mechanisms. It is through this agency that the Chinese state and larger investors do their business. On the Chinese side there is a group of companies operating out of offices in Hong Kong. These companies are both private and linked to the Chinese state and work directly with this enclave in the Angolan state in a way that totally marginalises any sense of democratic debate or transparency.

This is not ‘aid’ in any conventional sense. In many cases it is unclear how money has been spent in the projects that have resulted from bilateral co-operation as the funds are often tracked so far off the books that they do not appear in any budgets whilst the bidding process for the lucrative contracts themselves has been opaque. For example, the World Bank has estimated that some $8 billion of China Investment Fund (CIF) loans to Angola have not been made public. The Angola case points to this particular ‘China-Africa’ relationship being organised through inter-elite brokerage and an insulation of the state from popular forces. Indeed the CIF-GRN could be seen as a hybrid institution that sits within the state apparatus but is only connected to selected and clandestine elements within the state.

Beyond ‘aid’
Western governments worry that the Angola model is being replicated across Africa – Ghana has just secured oil-backed infrastructure loans – and undoes all their hard work towards accountability and transparency. They worry, quite rightly, about rents from commodity sales not being channelled into societal needs or windfall profits simply deferring the need to restructure the economy. There are also concerns that African states are not using these new sources of finance ‘appropriately’ in accordance with the aid harmonisation agenda.

In terms of donor harmonisation Ghana has been a leading light, but has played a shrewd game of agreeing to donors demands while also backsliding to fit in with domestic concerns. One area of contention, associated with the market-friendly New Patriotic Party that governed for most of the 2000s, was around wealth creation as a development goal which required infrastructure and productive investment. The OECD/DAC donors were more interested in social protection, but the NPP used the US Millennium Challenge Account to pursue those areas of the budget it deemed important. And the Chinese are another source of funding which supports these agendas and comes without the restrictive conditions of the DAC.

Invitations to join Ghana’s Joint Assistance Strategy were rejected by the Chinese suggesting they are wary of throwing themselves in with the 17 ‘established’ donors, although they often attended meetings as observers. Since the turn of the millennium China’s engagement with Ghana was through focused projects, but in 2008 offshore oil was discovered. Estimates of revenue are difficult to determine due to untransparent contracts and uncertainties over the price of oil, but the World Bank has calculated around $20 billion over 20 years¹.

Importantly, with the discovery of oil Asian deals have stepped up in scale with a potential US$10 billion housing deal with Korea’s STX Group being paid for with future oil revenues. The negotiations were opaque and accusations have been circulating regarding corruption. Moreover local realtors and building contractors have opposed the deal for the damage it will do since the Koreans would tie the finance to extensive use of Korean contractors. As yet the final signing of the contract has been postponed for ‘technical reasons’. Even more recently in mid-September 2010 the Chinese have announced a US$15 billion fund for oil-related infrastructure development which was negotiated at the highest levels². This signals the changing power balance in African development relations and the established donors in Ghana are already expressing concern.

African agency
Like its Washington predecessor the idea of a ‘Beijing consensus’ implies a unidirectional flow of policy and finance from an emerging centre of global control. While political imbalances between world powers and African states have been a feature of the past three centuries, it is unhelpful for understanding Africa’s Asian engagement if we overlook African agency. Here we have focused on the state – or parts of it – but much more needs to be done on understanding these evolving processes as well as the role of non-state Africans actors in mediating these outcomes.

 ²  http://www.independent.co.uk/news/world/africa/annexed-by-china-ndash-for-good-or-ill-2095450.html