Lecture 17:China and the developing world

A “Beijing Consensus”?• First suggested by Joshua Cooper Ramo in

2004• Like the ‘Washington Consensus’ the

‘Beijing Consensus’ can now mean many different things. Some analysts prefer the term ‘China Model’

• It is usually regarded as involving:– Investment– Infrastructure loans– A ‘no-strings-attached’ approach

Consensus:‘Beijing’ versus ‘Washington’?

• For some, this Beijing Consensus offers developing countries wider possibilities

• The absence of conditionality: the Western insistence on structural reforms and good governance makes Chinese involvement seem more attractive to some developing countries

China and Africa:beginnings under Mao

• Modern Chinese involvement in Africa began in the late 1950s with the signing of trade agreements with newly independent countries

• Chinese specialists were involved in many agricultural initiatives in Africa in the 1960s

China’s Cold War strategies

• China’s motives during the Cold War were political and ideological

• The ‘One China’ policy – recipients of Chinese aid had to break off relations with Taiwan

• African votes in the General Assembly proved crucial in giving the PRC a seat on the Security Council in 1971 (Resolution 2758)

The Eight Principles

• In January 1964, the Chinese government declared the “Eight Principles for Economic Aid and Technical Assistance to Other Countries”

• These principles still inform development policy today

The Eight Principles• Equality and mutual benefit form the basis of Chinese aid• China respects sovereignty, never attaches conditions or asks for

privileges• China helps lighten the burden with interest-free or low-interest loans and

by extending repayment terms when necessary• The purpose of aid is to help countries become self-reliant• Projects that require less investment but yield quicker results are

favoured• China provides quality equipment and materials manufactured in China

at international market prices• China will help recipient countries master the techniques of any technical

assistance• Chinese experts will have the same standard of living as those of the

recipient country and are not allowed to make special demands

A new approach• Chinese investment in Africa has

escalated sharply since 2005• Chinese investment now reflects its

developmental priorities – securing resources and outlets for its manufactures

• However, China’s involvement in Africa is still only a small percentage of its overall foreign involvement

• China’s relations with Africa are consistent with its approach elsewhere

A new colonialism?

• “We saw that during colonial times, it is easy to come in, take out natural resources, pay off leaders and leave.”

• Hilary Clinton, US Secretary of State, June 2011

“no morals...”

• “China is a very aggressive and pernicious competitor with no morals. China is not in Africa for altruistic reasons. China is in Africa for China primarily.”

• Johnnie Carson, US Assistant Secretary of State for African Affairs, speaking in Lagos, 23 Feb 2010

Frequent criticisms

• China is carrying out a grab for resources (minerals and food)

• China’s ‘ask-no-questions’ approach allows corrupt and authoritarian regimes to stay in power

• Chinese investment is tied – recipients of Chinese loans must buy Chinese goods and services

• Chinese companies ignore health and safety issues

A resource grab?

• China is certainly interested in securing raw materials from Africa:

• Between 2004 and 2010, oil (64%) and iron ore and other metals (24%) accounted for nearly 90% of China’s imports from Africa, and the oil exporter Angola is China’s biggest trading partner in Africa

More than resources

• Despite China’s obvious interest in raw materials for its energy and manufacturing industries, China’s involvement in Africa is far more than a crude resource grab

• China pays world prices – above world prices in some cases – for the resources it acquires

• Chinese competition for resources often ensures that African states receive higher prices for their exports

Sinopec and Angola

• China’s state-owned oil company Sinopec paid a very high price for the right to drill in Angola’s oil fields

• Sinopec’s bids for the exploration blocks were 10 times higher than those from Exxon Mobil

Supporting corrupt regimes?

• China’s involvement in Africa avoids the conditionality typical of the World Bank and other western agencies of development

• This can act as a disincentive to carry out reforms

• The economic relationship with China undoubtedly strengthens the position of leaders like Sudan’s al-Bashir

Other criticisms

• Some of the criticisms on tied assistance and working conditions in Chinese-owned ventures have an element of truth (though there is much exaggeration)

• However: does the West have a pure record on such issues? Who has the right to lecture China on these matters?