DEPARTMENT OF DEVELOPMENT STUDIES
DVA4801
DEVELOPMENT DEBATES AND ISSUES
CRITICALLY DISCUSS CHINA’S IMPACT IN THE GLOBAL POLITICAL
ECONOMY AND HOW THIS AFFECTS AFRICA’S DEVELOPMENT.
INTRODUCTION
In recent years, China’s economic presence in Africa has led to a heated debate,
some of it well-informed and some of it not, about the nature of Chinese involvement
and its implications for the continent. The debate is partially motivated by the rapid
growth of China’s economic presence in Africa: for example, Chinese investment in
Africa grew from USD 210 million in 2000 to 3.17 billion in 2011.Aid is an important
policy instrument for China among its various engagements with Africa, and indeed
Africa has been a top recipient of Chinese aid: by the end of 2009 it had received
45.7 percent of the RMB 256.29 billion cumulative foreign aid of China. This aid to
Africa has raised many questions, such as its composition, its goal and nature.
China’s own policy actively contributes to the confusion between development
finance and aid. The Chinese government encourages its agencies and commercial
entities to “closely mix and combine foreign aid, direct investment, service contracts,
labor cooperation, foreign trade and export.” The goal is to maximize feasibility and
flexibility of Chinese projects to meet local realities in the recipient country, but it also
makes it difficult to capture which portion of the financing is – or should be –
categorized as aid. One rather convincing theory is that the Chinese government in
effect pays for the difference between the interest rates of concessional loans
provided to Africa and comparable commercial loans. Therefore, only the small
difference in interest rates could qualify as Chinese aid.
CHINA’S RISE AND DEVELOPMENT
As much as any other single development, China’s rise over the past two decades
has remade the landscape of global politics. Beginning with its entry into the World
,Trade Organization in December 2001, China rapidly transformed its economy from
a low-cost “factory to the world” to a global leader in advanced technologies. Along
the way, it has transformed global supply chains, but also international diplomacy,
leveraging its success to become the primary trading and development partner for
emerging economies across Asia, Africa and Latin America.
But Beijing’s emergence as a global power has also created tensions. Early
expectations that China’s integration into the global economy would lead to
liberalization at home and moderation abroad have proven overly optimistic,
especially since President Xi Jinping rose to power in 2012 (Alden, 2017). Instead, Xi
has overseen a domestic crackdown on dissent, in order to shore up and expand the
Chinese Communist Party’s control over every aspect of Chinese society. Needed
economic reforms have been put on the backburner, while unfair trade practices,
such as forced technology transfers and other restrictions for foreign corporations
operating in China, have resulted in a trade war with the U.S. and increasing
criticism from Europe?
Meanwhile, China’s “quiet rise” has given way to more vocal expressions of great
power aspirations and a more assertive international posture, particularly with regard
to China’s territorial disputes in the South China Sea. Combined with Beijing’s
military modernization program, which has put Asia, as well as the United States, on
notice that China’s economic power will have geopolitical implications.The COVID-19
pandemic initially opened up opportunities for Beijing to expand its influence, but has
since called into question both China’s credibility as a responsible stakeholder and
the future of the supply chains that have fueled its economic success story.
All of these trends are now likely to gather momentum now that Xi has been
reappointed to a third term as Communist Party chairman, breaking the two-term
precedent set during China’s reform and opening period. But as he concentrates
power into his own hands, Xi also assumes greater responsibility for China’s
successes—and its failures. With challenges piling up, there is no guarantee that
China’s rise won’t lose steam, due to outside pressure from Beijing’s competition
with Washington or mistakes and unforced errors of its own. And the recent protests
across China, which led to the abandonment of Xi’s draconian “zero COVID”
, policies, served as a reminder that despite his and the CCP’s grip on power, they are
still ultimately accountable to the Chinese people.
In addition to securing Africa’s natural resources, China’s capital flows into Africa
also create business opportunities for Chinese service contractors, such as
construction companies. According to Chinese analysts, Africa is China’s second-
largest supplier of service contracts, and “when we provide Africa assistance of RMB
1 billion, we will get service contracts worth USD 1 billion (RMB 6 billion) from
Africa.”In exchange for most Chinese financial aid to Africa, Beijing requires that
infrastructure construction and other contracts favor Chinese service providers: 70
percent of them go to “approved,” mostly state-owned, Chinese companies, and the
rest are open to local firms, many of which are also joint ventures with Chinese
groups.In this sense, China’s financing to Africa, including aid, creates business for
Chinese companies and employment opportunities for Chinese laborers, a critical
goal of Beijing’s Going Out strategy (Balaam, and Dillman, 2018).
OBJECTIVES OF CHINA IN AFRICA
Before evaluating China’s various activities in Africa, it is paramount to identify what
exactly the nation’s mission is in regard to this developing continent. Of course,
China cannot be compressed into one actor. Indeed, the Chinese government,
State-owned enterprises, Private Chinese companies, Chinese embassies, and the
Chinese people in Africa in general, can be seen to exercise different motives at
different times, while their interests often correspond (Benabdallah, 2018). Key
objectives of China in Africa include gaining the supply of raw materials, creating a
market for Chinese products, securing land for agriculture, funneling Chinese
migration, gaining diplomatic support from Africa, providing a development model not
stemming from the West, and finally cementing its status as a superstar .Africa has
lacked bargaining power throughout its history; exploitative relationships havecaused
imbalances that continue to haunt it today. The China-Africa Cooperation Forum was
established in 2000, and issues of technical assistance, trade, investment, peace,
security, and aid stemming from China have been aligned with goals of the African
Union, a platform in which Africa hopes to promote healthy international relationships
and promote sound development strategies .While China may be a communist
country denying capitalistic world-views, its free-market economy has benefitted it
DVA4801
DEVELOPMENT DEBATES AND ISSUES
CRITICALLY DISCUSS CHINA’S IMPACT IN THE GLOBAL POLITICAL
ECONOMY AND HOW THIS AFFECTS AFRICA’S DEVELOPMENT.
INTRODUCTION
In recent years, China’s economic presence in Africa has led to a heated debate,
some of it well-informed and some of it not, about the nature of Chinese involvement
and its implications for the continent. The debate is partially motivated by the rapid
growth of China’s economic presence in Africa: for example, Chinese investment in
Africa grew from USD 210 million in 2000 to 3.17 billion in 2011.Aid is an important
policy instrument for China among its various engagements with Africa, and indeed
Africa has been a top recipient of Chinese aid: by the end of 2009 it had received
45.7 percent of the RMB 256.29 billion cumulative foreign aid of China. This aid to
Africa has raised many questions, such as its composition, its goal and nature.
China’s own policy actively contributes to the confusion between development
finance and aid. The Chinese government encourages its agencies and commercial
entities to “closely mix and combine foreign aid, direct investment, service contracts,
labor cooperation, foreign trade and export.” The goal is to maximize feasibility and
flexibility of Chinese projects to meet local realities in the recipient country, but it also
makes it difficult to capture which portion of the financing is – or should be –
categorized as aid. One rather convincing theory is that the Chinese government in
effect pays for the difference between the interest rates of concessional loans
provided to Africa and comparable commercial loans. Therefore, only the small
difference in interest rates could qualify as Chinese aid.
CHINA’S RISE AND DEVELOPMENT
As much as any other single development, China’s rise over the past two decades
has remade the landscape of global politics. Beginning with its entry into the World
,Trade Organization in December 2001, China rapidly transformed its economy from
a low-cost “factory to the world” to a global leader in advanced technologies. Along
the way, it has transformed global supply chains, but also international diplomacy,
leveraging its success to become the primary trading and development partner for
emerging economies across Asia, Africa and Latin America.
But Beijing’s emergence as a global power has also created tensions. Early
expectations that China’s integration into the global economy would lead to
liberalization at home and moderation abroad have proven overly optimistic,
especially since President Xi Jinping rose to power in 2012 (Alden, 2017). Instead, Xi
has overseen a domestic crackdown on dissent, in order to shore up and expand the
Chinese Communist Party’s control over every aspect of Chinese society. Needed
economic reforms have been put on the backburner, while unfair trade practices,
such as forced technology transfers and other restrictions for foreign corporations
operating in China, have resulted in a trade war with the U.S. and increasing
criticism from Europe?
Meanwhile, China’s “quiet rise” has given way to more vocal expressions of great
power aspirations and a more assertive international posture, particularly with regard
to China’s territorial disputes in the South China Sea. Combined with Beijing’s
military modernization program, which has put Asia, as well as the United States, on
notice that China’s economic power will have geopolitical implications.The COVID-19
pandemic initially opened up opportunities for Beijing to expand its influence, but has
since called into question both China’s credibility as a responsible stakeholder and
the future of the supply chains that have fueled its economic success story.
All of these trends are now likely to gather momentum now that Xi has been
reappointed to a third term as Communist Party chairman, breaking the two-term
precedent set during China’s reform and opening period. But as he concentrates
power into his own hands, Xi also assumes greater responsibility for China’s
successes—and its failures. With challenges piling up, there is no guarantee that
China’s rise won’t lose steam, due to outside pressure from Beijing’s competition
with Washington or mistakes and unforced errors of its own. And the recent protests
across China, which led to the abandonment of Xi’s draconian “zero COVID”
, policies, served as a reminder that despite his and the CCP’s grip on power, they are
still ultimately accountable to the Chinese people.
In addition to securing Africa’s natural resources, China’s capital flows into Africa
also create business opportunities for Chinese service contractors, such as
construction companies. According to Chinese analysts, Africa is China’s second-
largest supplier of service contracts, and “when we provide Africa assistance of RMB
1 billion, we will get service contracts worth USD 1 billion (RMB 6 billion) from
Africa.”In exchange for most Chinese financial aid to Africa, Beijing requires that
infrastructure construction and other contracts favor Chinese service providers: 70
percent of them go to “approved,” mostly state-owned, Chinese companies, and the
rest are open to local firms, many of which are also joint ventures with Chinese
groups.In this sense, China’s financing to Africa, including aid, creates business for
Chinese companies and employment opportunities for Chinese laborers, a critical
goal of Beijing’s Going Out strategy (Balaam, and Dillman, 2018).
OBJECTIVES OF CHINA IN AFRICA
Before evaluating China’s various activities in Africa, it is paramount to identify what
exactly the nation’s mission is in regard to this developing continent. Of course,
China cannot be compressed into one actor. Indeed, the Chinese government,
State-owned enterprises, Private Chinese companies, Chinese embassies, and the
Chinese people in Africa in general, can be seen to exercise different motives at
different times, while their interests often correspond (Benabdallah, 2018). Key
objectives of China in Africa include gaining the supply of raw materials, creating a
market for Chinese products, securing land for agriculture, funneling Chinese
migration, gaining diplomatic support from Africa, providing a development model not
stemming from the West, and finally cementing its status as a superstar .Africa has
lacked bargaining power throughout its history; exploitative relationships havecaused
imbalances that continue to haunt it today. The China-Africa Cooperation Forum was
established in 2000, and issues of technical assistance, trade, investment, peace,
security, and aid stemming from China have been aligned with goals of the African
Union, a platform in which Africa hopes to promote healthy international relationships
and promote sound development strategies .While China may be a communist
country denying capitalistic world-views, its free-market economy has benefitted it
