Today I attended a conference on “South-South Cooperation and Global Trade: Bypassing the Hegemon?” – organized by GMU’s Center for Global Studies- at the Carnegie Endowment for International Peace, Washington D.C. The first two panels were pretty lame, at least for me because more political and cultural arguments were being discussed (which do not interest me, though they are significant in their own place)! The third panel was about the current state of global trade relations, especially the fledging Doha Round and its implications to the developing countries. This round was pretty interesting (may be because I am more interested in economics than in politics)...(interesting stuff from the third panel will appear as a separate blog topic)...
One particular speaker during the first panel made some interesting points about Chinese interest in Africa and Chinese strategy in controlling African resources through its financial grants/loans and coaxing foreign policy. Before proceeding further, I have to say that Mark Katz’s presentation on the Russian geo-economic vision and their intent in appearing “strong” in the international arena was also pretty good.
Joshua Eisenman argued that China follows three strategies in its dealing with Africa:
1) Bilateral asymmetry: China deals with each nation separately and tries to bring strategic policy coherence among the nations its deals with, however individual African nations are not able, or they do not have the ability, to comprehend long term strategic plan of Chinese interest on their soil. China is particularly concerned with securing economic resources in these countries and it engages through the Chinese Communist Party International Department. The long term vision and vested interest in securing resources from Africa gives China a strategic advantage over the African nations, which are unable to fathom the depth, scale, and scope of Chinese interest in the region.
2) Political resources: China does not care where and to what type of leaders its money goes as long as its interests are secured. China gave $42 million to Mugabe last week to make/renovate his palace. This is hardly been out in the news because secretive dealings, bribery and coaxing is high in China’s engagement with Africa. Additionally, China does not anymore care about ideology, i.e. trying to deal with domestic communist parties in the African countries. It deals with all political parties (party-party ties) to ensure that its economic and vital interests are secured. Since 1997-2006, China had 200 exchanges with the African political parties and it feted 60 African party chiefs in China itself. This is a strategy to morally, financially, and politically bind African leaders so that there is no objection at all to Chinese interests.
3) Financial resources: The whole aid world was shaken when China $15 billion aid to Africa during African-China conference in China last year. However, Joshua argues that it is not aid but an investment for profit. The total grants are specific and low and is incomparable to Western aid/grant. China is trying to bind African nations in financial debt because while it gives debt relief on one hand and it signs more interest-bearing loans, despite knowing that the poor African nations would default on its loans once they mature, in the other hand (one example is China gave debt relief of some $65 million and sanctioned $1.2 billion new loan to the same country). Importantly, the allotted money never go out of Chinese banks. For instance, China announced billions of dollars of aid to Angola, which never received the money. What the Chinese did was that it deposited a cheque in Angola’s name in its EXIM bank and for any new project to be executed in Angola, it transferred money to one of the predetermined five bidders for investment projects. Funds were in fact transferred from one bank to another in China itself. It never made its way to Angola, though infrastructure or whatever project was intended for was started or done. Meanwhile, Angola paid off China's loan from oil exports. This ensured that Chinese money stayed at home, it earned profit, and extremely vital oil flow was guaranteed for a long time.
What a shrewd strategy to dupe the African nations! The conditions for Chinese dealings with African countries are: employ Chinese firms and not recognizing Taiwan. The dragon is marching and widening its mouth slowly and steadily. Welcome to the Chinese Marshall Plan for Africa!
