A glimpse of China’s policies towards Africa

China’s policies towards Africa

China’s engagement with Africa continues to soar and light the way based on sound policies meant to sustain the good relationship and drive Africa’s development agenda. Through close contact and collaboration through the Forum on China-Africa Cooperation (FOCAC), China has devised policies that are responsive to Africa’s needs and in consensus with the African leadership. China has continually pledged to work with African countries to promote the all-round development of China-Africa friendly cooperation and strong ties and make an exemplary relationship centered on mutually beneficial cooperation. 

On December 4 and 5 2015, during the FOCAC Summit, Chinese president Xi Jinping in Johannesburg asserted that "Chinese and Africans will remain good friends, partners and brothers forever," and stressed that China will continue to uphold the guidelines of its Africa policy, sincerity, real results, affinity and good faith  and a balanced approach to common principles and interests.

 During the forum, China went above and beyond its tradition of doubling financing commitment to Africa at each FOCAC meeting and tripled it this time. China pledged to invest a total of $60 billion. China had consistently doubled its financing pledges toward Africa at previous FOCAC meetings from $5 billion in 2006, to $10 billion in 2009, and to $20 billion in 2012. 

China has consistently implemented its pledges since the establishment of the Forum. At the summit, Xi proposed 10 overarching plans for Sino-Africa cooperation, covering almost all aspects of their economic ties: industry, agriculture, infrastructure, environment, trade facilitation, poverty alleviation, and public health. 

The overall direction fits in the readjustment of China’s Africa policy since the inauguration of President Xi. “Industrial capacity cooperation” and “strategic complementarity” have become the two keywords for China’s economic aspiration in Africa. Under China’s own economic restructuring and Africa’s aspiration for industrialization, modernization, and urbanization, China is keen on shifting its labour-intensive industries to Africa. Such industrial capacity cooperation is to be complemented by the export of China’s excess capacity to support African infrastructure projects and capacity building through technical assistance, vocational training, and fellowship programs. 

China intends to implement 10 cooperation plans with Africa in the next three years which are aimed at addressing three issues holding back Africa's development, namely inadequate infrastructure, lack of professional and skilled personnel and funding shortage. The 10 cooperation plans include a China-Africa cooperative plan for agricultural modernization, noting that China is to provide 1 billion yuan (US$156 million) of emergent food aid to the African countries hit by El Nino, increase its assistance to Africa to launch hundreds of projects on poverty alleviation named "Happy Life" and relevant plans focusing on women and children,  exemption of  debts arising from the outstanding intergovernmental interest free loans due by the end of 2015 owed by relevant least developed countries in Africa, providing training and educational opportunities to Africa to help solve the continent's talent shortage, implementing a comprehensive strategic cooperative partnership,  pooling US$5 billion this year in its equity investment fund for investment in Africa. These plans aim at addressing three bottleneck issues holding back Africa's development, namely inadequate infrastructure, lack of professional and skilled personnel and a funding shortage. 

These are excepts from the speeches and statements from the Chinese president and Chinese diplomats during and after the FOCAC summit in Johannesburg South Africa.

Chinese Loans offer the best alternative for Kenya

There’s a raging debate on whether the loans Kenya has secured from China are good for us and whether they are comparatively better than loans secured from the West. On the part of the anti-Chinese loans to Kenya part of the divide, the stratagem seems to be a largely fallacious attempt to paint a good image of lenders from the West.

The propensity to the West has conveniently led to the ignorance of Kenya’s debt history, which was predominantly from the West. History proves that loans from the Bretton Woods Institutions were expensive, ineffective and a tool of political manipulation while facts in the recent past suggest that loans from China; and specifically from the Exim Bank of China are cheaper due to the amicable policies towards Africa by the Chinese government.

Besides creating dependence, most of the Bretton Woods loans are too low to enable any meaningful progress. Many are also mainly destined to non-productive ventures such as democratic governance, policy reforms or humanitarian aid. Indeed, critics have coined the term “humanitarian alibi” to describe how humanitarian assistance is used by Europe and America to appear that they have been doing something when, in actual fact, they have not brought about any meaningful change in economically promising countries like Kenya.

In the book, Confessions of an Economic Hit Man, John Perkins exposes how deceptive foreign development assistance from the West has been. He chronicles how the West deploys experts to convince developing countries to accept loans that do not contribute to development and which they have no capacity to pay. Consequently, such countries are forced to default which places them at the mercy of the lenders. This could be one of the reasons why Kenya had not implemented any large infrastructure project before going East.

The Chinese approach is seen a “win-win principle” in that aid is given only if it contributes to China’s own national interests as well as those of the recipient country. In addition, we cannot begrudge the Chinese for wanting to benefit from the loans they give us. What we need to do is to ensure that we negotiate with them so that they can subcontract our own engineering firms and local road contractors even as we build our own capacity to international standards.

Unlike lenders from the West, the Chinese government has explicitly stated in policy that it does not interfere with the internal affairs of the recipient countries and that it “fully respects their right (of such countries) to independently choose their own paths and models of development.” We need to remember the havoc caused to our economic mainstays after we agreed to adhere to the structural adjustment programmes imposed by the IMF and the World Bank in late 1980s. This must be a constant reminder of Kenya’s debt history and the best alternative offered by the Chinese.

Our debt-GDP ratio is not as bad as we are persuaded to believe. We are at par with our peers in the continent and there’s nothing wrong in surpassing prudential loan limits in the short run; the real danger is when it is breached on a long-term basis. Indeed, even the IMF acknowledges that it is practically difficult to pin-point what constitutes a prudent amount of public debt.

A high Debt-GDP ratio is not necessarily a sign of bad economic management Anis Chowdhury and Iyanatul Islam in Is there an optimal debt-to-GDP ratio?; rubbish the claim that high public debt causes lower growth saying that this is “not grounded in robust empirical evidence.” What is important is to ensure the loans go to fund productive ventures. There’s little doubt, even amongst the naysayers that the development of large infrastructure projects is likely to promote more economic growth.

It is therefore prudent to bear in mind that there are no quick fixes to reduction in debt ratio. Indeed, IMF reports show that bringing debt-GDP ratios to sustainable levels requires unprecedented and long-term measures. It therefore means that for Kenya to reduce its debt burden, then it needs to expand economic growth –which is what the implementation of large infrastructure projects are meant to achieve. 

This Article has also been published on the following platforms

http://www.the-star.co.ke/news/2016/04/19/china-loans-our-best-bet_c1332003

http://www.mediamaxnetwork.co.ke/people-daily/214266/why-chinese-loans-offer-best-alternative-for-kenya/

http://www.capitalfm.co.ke/eblog/2016/04/15/chinese-loans-offer-best-alternative-kenya/

China’s role in South-South cooperation

China is the fastest growing economy in the world by all means at the moment. One positive thing about the Chinese people is the understanding that at one particular point in history, they were not doing well. They experienced challenges and now that they are in a position to help other move up the ladder, they are willing to do it in order to impact positively on the lives of many other people across continents.

While addressing a high level roundtable on South-South Cooperation at UN headquarters in New York, President Xi Jinping announced China’s participation in a massive 600 new projects that are geared to helping the developing countries on trade and poverty reduction. It is in this discussion the Chinese president took the opportunity to stress the commitment of his nation to South-South cooperation. He said that China remained as committed as ever to this cooperation.

In a well-orchestrated plan spread out over a period of five years, in its effort to reduce poverty, China would initiate 100 new projects that would tackle this cancer. To promote agriculture China would initiate 100 projects. A further 100 projects will be established to promote trade. China is committed to preservation and conservation of the environment in order to tackle the glaring problems occasioned by climatic change. As such another 100 projects dealing with ecological preservation and climatic change will be set up. On health development, China will initiate projects that will see construction and development of 100 new hospitals and clinics. To promote education and intellectual development, 100 schools and vocational training centers will also be set up.

To show its commitment to South –South Cooperation, China will also set up a South –South Cooperation and Development Academy to aid in training half a million technical personnel from developing countries. In addition to this, it will offer $2 million in assistance to World Health Organization.

Xi added that there will be more deliberate communication and exchanges with developed countries and a greater participation of businesses and the private sector to build multi-tiered partnerships and help in creating a community of shared interests among various stakeholders.

The President emphasized on the need of the South-South Cooperation to deliver practical results and take the approach of result orientation rather than just empty talk. He pointed out that projects should yield tangible results that create better, economic, social and environmental impacts for the benefit of the general public.

UN Secretary –General Ban Ki-moon, a co-host of the roundtable with China took his time to sincerely thank China for its support and commitment to nations of the global south. He said, “All this Support will go a long way to address the needs of the poor and the most vulnerable and contribute political momentum for the success of the climatic negotiations in Paris in December. “He further added that as the UN tried to implement the 2030 sustainable-development agenda, it would be paramount to widely share the effective policies and practices that China and other fast-growing economies in the global south are employing.

In terms of contributions, China contributes more than $4 Billion of aid towards South- South Cooperation on a yearly basis.Erstwhile to the high level roundtable Gyan Chandra Acharya, undersecretary-general at the UN and a representative of the least developed countries confirmed that China is an example of a developing country that was able to transform its economy and lift millions of its people out of poverty thus setting a mark for many other nations. Gyan further stated that it was possible to change the narrative of the world that focuses on the myriad of challenges and the big issues facing a certain country. To him you should look at the possibilities. People can achieve success if there is global collaboration and cooperation. To Gyan China had demonstrated this aspect.

 

Xi said that China as a developing country is aiming at enhancing solidarity and cooperation with other developing countries in order to create an unshakable foundation of China’s foreign relations. He added that the country would share with developing countries more development opportunities.

“The profound friendship between the Chinese people and people of other developing countries are our most valuable asset. We will as always promote our development along with the common development of all developing countries, align our efforts to realize the Chinese dream with the endeavors by other developing countries to attain their dreams for a better life for their people and pursue common progress of all developing countries. China will never waver on this commitment, not under any circumstance.” Xi said.