Two views on the prospects of President Xi Jinping's Belt and Road Initiative in the development of trade in Africa
 Two views emerge each from a western perspective on the value and prospects of China's Belt and Road Initiative in Africa.
The first is from Dylan Yachyshen, a young researcher publishing in Philadelphia's Foreign Policy Research Institute's website, saying there is much for West to fear in China's Belt and Road Initiative. The other is from the more seasoned Minxin Pei, who lectures at Claremont McKenna College near Los Angeles, who says in his article in Japan's Nikkei Asian Review, that China's signature foreign policy initiative is now a spent force - a "flop".
The apprehensive Mr Yachyshen sees events unfolding in Africa much in the way they did more than century ago in the great power competition for what became known to history as the "Scramble for Africa". That initiative was launched at German chancellor Otto von Bismarck's Berlin Conference of 1884-85, when 15 western powers agreed to coordinate “commercial activity” in Africa. Said Mr Yachyshen: "Sadly, striking parallels exist between the Scramble for Africa and states vying for power in the continent today."
Taking a different view, Mr Minxin writes: "The unravelling of China's Africa project should not come as a surprise. Beijing's strategy has been based on flawed assumptions and executed at the wrong moment."
Chinese leaders see Africa mainly as a source of natural resources, he said. China's fast-paced growth since the early 1990s has generated a voracious demand for oil and subsoil minerals, and Africa appeared a perfect fit since dominant multinationals had a weak hold on the continent and Beijing could easily outbid them to gain equity stakes in mines and oils.
Mr Minxin said that for unknown reasons, the Chinese government believed that, as an equity holder and creditor, it could better ensure access to critical raw materials there. As a result, China has opened its cheque book and has become the most active nontraditional lender in Africa.
According to the China Africa Research Initiative at Johns Hopkins University, China loaned US$152 billion to 49 African countries between 2000 and 2018. The World Bank estimates that, as of 2017, the value of China's loans to sub-Saharan African countries was $64 billion, or more than 60 per cent of the stock of bilateral debt.
Besides showering Africa with credit, China has bet big on direct investments, mainly through its state-owned enterprises (SOE). Between 2008 and 2018, Chinese FDI in Africa rose from $7.8 billion to $46 billion, according to official data.
The more wary Mr Yachyshen traces China’s African development policy to the 2004 "Angola Model”, or first principle, that is, granting loans to underdeveloped, resource-rich states, which backed the loan with its endowment of natural resources.
The second principle entailed multiple Chinese SOEs undertaking ambitious infrastructure projects ranging from railways, including the $3.2 billion Mombasa railway in Kenya, to dams, such as the $1 billion Soubre mega-dam in Cote d’Ivoire.
Chinese main interest in Africa lies in resource-rich Zambia, Angola, Algeria, Nigeria and the Democratic Republic of the Congo, among others. In Zambia, Chinese firms bought copper mines to strike rich veins and, by 2018, Zambia had used public assets, including the international airport, to back $6.4 billion of Chinese debt. Then, in 2019, Zambia mandated mandarin learning for grades 8-12, making it the fourth African state to do so.
China has also used the infrastructure vacuum in Angola, a function of its civil war, to demonstrate its lending resolve, giving $42 billion of oil-backed loans to Angola over 17 years. In 2004, China extended a $2 billion line of credit to Angola in return for 10,000 barrels of oil a day for 17 years, the brainchild of the Angola Model. In another energy-rich state, Algeria, Chinese companies have committed to a $6 billion phosphate exploration lease while reigniting talk of a trans-Maghreb railway and seeking to become Algeria’s largest arms dealer.
In Nigeria, Chinese oil companies have secured oil blocs in the Gulf of Guinea and have signed at least two multibillion-dollar railway development deals in the past 10 years. The Chinese Export-Import Bank financed at least $5 billion of these projects after Nigeria could not pay, a prime example of China’s “debt-trap diplomacy” that gives China massive leverage over African states. Grabbing resources in the DRC, in 2007, the Chinese Ex-Im Bank loaned the DRC $6 billion in return for 10.6 million tons of copper and mining exploration rights. These rights paved the way for a $2.9 billion copper and cobalt project undertaken by a Chinese SOE in 2008.
"China's commercial activities in Africa, such as investments, infrastructure projects and bank lending, have long attracted scrutiny and criticism. Critics have accused Beijing of practicing a new form of economic colonialism to gain control of the continent's valuable natural resources by luring unsuspecting African nations into so-called debt traps," Mr Minxin writes.
"While this perspective dominates the narrative about Beijing's economic ties with Africa, it likely exaggerates Chinese strategic foresight and overlooks the pitfalls of China's big bet on the continent," he writes.
Even the crown jewel of China's economic engagement with Africa, the trillion-dollar Belt and Road Initiative, is at risk, he said. The coronavirus dealt a body blow to the Chinese economy, with its economic output falling 6.8 per cent in the first quarter.
It is doubtful that Beijing will have the resources to fund President Xi's signature global policy initiative much longer. One telltale sign is the absence of references in the communiques of recent Politburo meetings of the Chinese Communist Party to Belt and Road as a priority.
Between 2008 and 2018, Chinese FDI in Africa rose from $7.8 billion to $46 billion, according to official data. On paper, China may seem to have got its money's worth. Merchandise trade between China and Africa rose from $107 billion to $204 billion in 2018, based on data provided by the Chinese government.
But the question is whether China could have expanded its trade with Africa and maintained its access to raw materials without committing nearly $200 billion in bilateral loans and FDI in a distant continent full of political and economic risks.
In all likelihood, China might not have paid more for the same raw materials had it chosen to purchase them on the open market, he said.
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"Beijing's hope that direct or semi-direct control of resources would provide greater security is illusory," said Mr Minxin. "For one thing, once China extended the credit or made the direct investments in mines, oil fields or roads, it was at the mercy of the recipients, Africa's national governments and political elites. China has no power to prevent the nationalisation of its investments or defaults on its loans."
China's gamble in Africa also flopped thanks to bad timing, he writes. "Its foray into the continent coincided with the peak of the most recent commodity supercycle, skyrocketing prices of raw materials, and this time driven by Chinese demand. As a result, Chinese companies paid top price for assets that lost value after the collapse in commodity prices," said Mr Minxin.
Comparing and contrasting these two opposing views of China's role in Africa, one is compelled to factor in other conditions, some of which are immutable while some are changing. The reaction to the Wuhan flu will have a far more devastating impact than the flu itself it now appears. The Hong Kong flu of 1969 killed as many Americans but there were no extreme measures in place, no lockdowns or school closings.
Should political conditions in China change, they well might end the hostility Chinese policies have generated in recent years. Should that happen then the Belt and Road Initiative may well become the benign Mr FixIt of global infrastructure it was first conceived to be and not a latter-day stab a neo-colonialism as many fear it has become. |
