U.S. Nervous About China’s Growing Footprint Across Africa
August 5, 2009 Leave a comment
China’s “no strings attached” financial assistance to developing countries in Africa and Asia has come under scrutiny during the recent high-level talks between Chinese and US leaders.
In this week’s (last week) Strategic and Economic Dialogue held in Washington, China has attempted to highlight its growing economic clout in a bid to push the United States on a range of thorny issues, such as the US budget deficit and trade barriers.
Few official media outlets reported that the United States delegates pressed Beijing on articulating clear guidelines for its growing aid to the developing world. China Business News only reported that the issue was raised between the two sides, but failed to furnish any other details.
During the bilateral talks held between July 27 and July 29, U.S. Secretary of State Hillary Clinton and Treasury Secretary Timothy Geithner both called upon China to increase cooperation with the US in assisting developing countries.
“It is a legitimate concern for the United States, and even more so for the European Union,” said Ding Xueliang, a social scientist at the Hong Kong University of Science and Technology. “The international community has paid a high price in the past for acting as financier to African countries where money was siphoned and crimes were committed so it wants to make sure that China does not go the same path.”
China’s increased lending to foreign governments since 2000 has come under the spotlight because of concerns about its impact on the environment and alleged human rights abuses committed by some recipient countries and some Chinese companies operating overseas.
China’s hunger for minerals has propelled it to offer a series of loans to heavily-indebted African countries, sparking off concerns among the World Bank and IMF that it may undermine the economic recovery of those countries. In the Democratic Republic of Congo, for instance, China sidelined all competitors in 2007 by granting a 5 billion USD loan to the government in exchange for copper, cobalt and timber.
Human rights activists accuse China of viewing developing countries, particularly in the continent of Africa, as proxy states, which can satiate its vast demands for natural resources and energy.
The official Xinhua press agency estimates there are at least 750,000 Chinese workers living and working in Africa. It reflects China’s burgeoning economic ties with Africa, which touched 107 billion USD in trade last year.
In 2006, China hosted a major summit with African leaders, which was attended by 48 heads of state. At the summit, China promised to double its assistance to the continent by 2009. Along with pledges of generous financial, commercial and military assistance to African countries, Beijing also wrote off about 1 billion USD in African debts.
More significantly, Chinese premier Wen Jiabao stressed that “Chinese assistance to Africa is sincere, unselfish and has no strings attached.”
The west has been caught off guard by the sheer scale and ease of Chinese loans flowing into the developing world.
“The issue figured on the agenda of U.S.-China talks for a reason,” said a Beijing-based western diplomat. “Just days before the talks opened Beijing announced that China-Africa Development Fund plans to raise 2 billion USD by November to expand business ties between Africa and China.”
The China-Africa Development, managed by one of China’s policy banks, China Development Bank, is the world’s largest equity fund aimed at Africa. In January 2008, it provided its first set of loans to Chinese companies working in Africa in the power and infrastructure sector.
China is building major new railroad lines in Nigeria and Angola, large dams in Sudan, and new roads and airports in several African countries. Chinese trade and investment has galvanised mineral production of manganese in South Africa, uranium in Niger and exploration of oil resources from Sudan to Angola..
Despite China’s heavy involvement as financier and builder in projects in developing countries, there exists no clear set of polices guiding Beijing’s lending practices. China Exim Bank and China Development Bank have environmental and social responsibility policies which highlight the importance of environmental evaluation of the projects seeking financing. Yet there is little in place for monitoring human rights issues and corruption.
To address these issues, Beijing has so far issued only ad-hoc rules concerning particular projects, says Ding Xueliang.
“The concept of being a ‘responsible big country’ is currently embraced by the policy think-tanks in China rather than administrators,” Ding said. “It will take a long, long time before China adopts lending rules similar to the developed world and its decisions would always be guided by the strategic importance of the countries seeking loans”.
The concluded U.S.-China Strategic and Economic Dialogue did not breach any new ground in nudging Beijing to observe international norms in its aid and change its “no strings” attached lending policies. Observers say the dialogue was an attempt to build mutual trust and open channels for information exchange