Conventional wisdom about China's role in Africa is that the world's most populous country is a "rogue donor" seeking to plunder African oil and minerals in exchange for foreign aid. Deborah Brautigam, an international development professor at American University in Washington, D.C., who has studied the relationship between China and Africa for decades, finds that this assessment doesn't hold true.
Brautigam's 2010 book, The Dragon's Gift: The Real Story of China in Africa (China in Africa), concludes that China's development and business interests in African nations may be a healthier economic partnership than traditional western aid models. She spoke with Revenue Watch in March 2011.
How does the western conception of China's role in Africa as the "new colonist" differs from what your research found?
There's an assumption that the Chinese are only in Africa to grab resources or land that will then not be available to others. The Chinese are interested in resources in Africa, where resources remain are much more untapped than in other parts of the world, but its interest is a lot bigger.
They see a huge infrastructure deficit, and they've developed some models in which they can almost swap resources for infrastructure. There's also interest in manufacturing, investment, in trade of all kinds. China's interested in Africa as a business location.
Another thing the west often assumes is that the Chinese are offering aid to get access to resources. That's not what I've seen at all. They offer official development assistance much more for political reasons, to ensure diplomatic ties. They also have large export credits and commercial loans, including the commodity-secured infrastructure credit model. That might look like aid to someone who's not paying close attention, and it is developmental, but it's not foreign aid offered in exchange for resources.
Your impression is that China does a better job as aid and investment partners than the West.
It's hard to give a blanket critique of western organizations because there are so many different things being done. But overall there's an assumption that African countries are places to be pitied, places of chaos that we can rescue. China doesn't see that at all. It sees countries that are ripe for investment, countries where they can do business deals. I think that's actually a healthier way to approach a lot of the development needs in Africa.
No country has developed as a result of foreign aid. It can make a positive contribution, and even China has received foreign aid from various donors. But no one would say that China developed because of it. China developed because its government was developmental. They put the right incentives in place for investment to happen and for jobs to be created. That's what African governments need to do, too.
You've written that China sees some African countries as younger versions of itself.
There is an idea that resource rich countries with developmental leadership can use their resources to leverage financing from abroad. That's what the Chinese did in the late ‘70s. So some in China feel that these same kinds of relationships could be developmental in some African countries. They see that they can play a role and they can benefit from it. This is not altruism.
China's foreign investment is much more significant than its foreign aid. Is this a new, more effective way to wield foreign influence?
I don't think it's looking to wield political influence or influence governments to adopt certain policies. It won't be using conditionality to get African governments to do things.
There are two different ways that they approach this. One is that in countries that are getting their policies right, they're investing in a lot of different areas. South Africa has pretty good policies, and Chinese investment there has been pretty vigorous in a lot of different areas.
In the resource-rich countries that are not run very well, China is offering infrastructure loans that can be secured with natural resources. There they see some of the infrastructure basics can be put in place, and repaid out of natural resources, but they're not going to be investing hugely in a place like the DRC, which is not very stable, in areas outside of natural resources. They're hardly going to set up a computer chip factory in the DRC.
Talk about the need to distinguish between Chinese government and Chinese companies. How have the two been conflated?
I think there's a widespread myth of "China, Inc." There's an assumption that any company that has China in the title, or that's located in China or Hong Kong or Macau, is controlled by the central government, which is far from the truth. Over the past few years there's been less and less of a direct government role in company decision-making. Today we're seeing the fruit of that, which is much more independent companies that in many ways are acting like multinationals from other countries. There's certainly influence and guidance and incentives, but the direct pulling of the strings by Beijing is not something we're seeing.
What impact does that have on countries negotiating natural resource contracts?
There's the case of China Union in Liberia. This was an unknown entity that, because of its name, the Liberian government regarded as a credible actor and accepted its bid on a very large iron ore project. The bid included a generous signing bonus, and the Liberian government expected to use that revenue in their budget for the following year. But the company couldn't come up with the money, because it turned out the company was basically a post office box in Hong Kong. The Liberians believed that this was an official Chinese company. In reality it wasn't a state-owned firm at all.
The Chinese government, after appeals by Liberia, stepped in to try to arrange some official financing for this deal, and the government was able to bring in the China-Africa Development Fund.
Have there been any policy reactions to that in China or efforts to reign in irresponsible companies?
I would imagine that the Chinese government is thinking that these things will happen as you get companies to engage in the market and you create conditions where individual entrepreneurs can set up firms. I don't think they have any idea that they can control this at all.
What they can do is try to encourage legitimate and respectable companies. Those are the ones that get the incentives from the government. This case in Liberia is a step back because the Chinese government probably should have let this deal collapse. What it's doing is rewarding bad behavior by stepping in to rescue the deal.
How do Chinese companies compare to firms elsewhere on transparency issues?
My understanding is that western companies don't like to reveal payments to governments, fly-by-night companies don't like to reveal payments, and Chinese companies don't like to reveal payments. Are the Chinese worse at this? Probably. Because they haven't been under pressure to become more transparent over the years.
Have you seen an evolution of behavior toward more openness?
I have seen an evolution, but it's quite gradual. I think Chinese embassies are the ones that are revealing more information now. We're not getting things like the interest rate on loans from them. Those things we're not getting from anyone, though. And I'm really surprised at how much more information is coming out of the Chinese government through the Ministry of Foreign Affairs.
For the state-owned companies, some of their subsidiaries are being listed in stock exchanges, and they have an understanding about reputational risks. They have a real incentive to try to develop more of a reputation for being good players. I was speaking with someone at the International Finance Corporation [the investment arm of the World Bank group] about this, who said they're getting strong demand from the Chinese government about training in corporate social responsibility, because they understand the reputational risk. They don't want their subsidiaries to come under advocacy attack for following non-recommended practices.
What about the new anti-corruption policy the Chinese government issued in July 2010?
What we've seen is you can have legislation, but it has to have enforcement mechanisms. Enforcement can vary depending on the people that are in charge. In China they've passed legislation, but whether there's real political buy-in to this hasn't yet been proven.
What about China's role, through government or companies, in countries with records of human rights abuses?
The Chinese have a non-interference policy which provides them with cover. It's a very deeply-held stance to not interfere in the affairs with other countries. But it's also convenient for them, because they can then engage in places like Sudan and Zimbabwe and Iran. This hasn't changed in a large way, but it's changing in small ways. I think we can see this in terms of public criticism from Chinese diplomats in the case of both Zimbabwe and Sudan. These are things that would never have happened before. But they're very far from doing things like unilaterally imposing sanctions or having political conditionality in their development finance, which we do all the time.
Another thing we can see is that the Chinese are more likely to go along with sanctions if they are imposed by the UN. We just saw that happen in Libya: when the Security Council voted on economic sanctions and an arms embargo, the Chinese went along. When they voted to authorize a no-flyover zone and military interventions, the Chinese abstained, but didn't veto the proposal. Now, of course, they're speaking out against military incursions into Libya. It's not because they have financial interests in Libyan oil, but they're concerned about setting a precedent that could then be used against China.
Are there any entry points for EITI?
My recommendation would be to include the Chinese companies along with the other companies that EITI is targeting, to try to show how this kind of activity can be beneficial for everybody—all of the things transparency activists been doing with other companies that are active in resource exploitation in weak states. The same kinds of arguments apply, but you're starting at the beginning with EITI and the Chinese companies; they don't have that kind of track record of pressure or understanding.
But I think there are some encouraging signs. Your own organization sponsored a study in Gabon (pdf) that found that when EITI was explained to Chinese companies active in the resource sector, there was quite a bit of positive movement on the part of the companies. No one had really approached them on it before. That suggests they're not just closing the door on these kinds of discussions.
LEARN MORE
- China in Africa: The Real Story (chinaafricarealstory.com)
- LIBERIA: Scrutinizing China-Union's Landmark Iron Ore Agreement
- Resource Center: Chinese Companies in the Extractive Industries of Gabon & the DRC: Perceptions of Transparency (pdf)
- Analysis of China in Africa Reveals Some Familiar Challenges
- Research on China's Energy Policy and Activities in Africa
- Resource Center: Angola and China--A Pragmatic Partnership
