My friend was visibly shaken. He had just learned that he had lost one of his clients to Chinese competitors. “it’s amazing,” he told me. “The Chinese have completely priced us out of the market. We can’t compete with what they’re able to offer.”
There’s nothing surprising about that, of course; manufacturing jobs are lost to China every day. But my friend is not in manufacturing. He works in foreign aid.
Moises Naim, editor of Foreign Policy magazine, has an op-ed in yesterday’s New York Times on the increasing amounts of aid being given by countries, such as China, at the expense of Western aid programs. He argues that such deals in the long-run hurt recipient nations.
In recent years, wealthy nondemocratic regimes have begun to undermine development policy through their own activist aid programs. Call it rogue aid. It is development assistance that is nondemocratic in origin and nontransparent in practice, and its effect is typically to stifle real progress while hurting ordinary citizens.
China is actively backing such deals throughout Africa; its financing of roads, electrical plants, ports and the like boomed from $700 million in 2003 to nearly $3 billion for each of the past two years. Indeed, it is a worldwide strategy. Beijing has agreed to expand Indonesia’s electrical grid in a matter of months. Too bad the deal calls for building several plants that use a highly polluting, coal-based Chinese technology. No international agency would have signed off on such an environmentally unfriendly deal.
In the Philippines, the Asian Development Bank, which lends money at low interest rates to poor countries, had agreed to finance Manila’s new aqueduct. It, too, was suddenly told that its money was no longer needed. China was offering cheaper rates, faster approval and fewer questions.
What’s behind this sudden Chinese drive to do good around the world? The three short answers are money, international politics and access to raw materials. China’s central bank has the world’s largest foreign exchange reserves, totaling $1.06 trillion. Beijing is increasingly leveraging this cash to ensure its access to raw materials and to advance China’s growing global influence. What better than a generous foreign-aid program to ensure the good will of a petro-power like Nigeria or a natural-resource-rich neighbor like Indonesia?
Chinese leaders argue that such aid, coming with ‘no strings attached’, represents a true form of aid, free of the neo-imperialist agenda of Western agencies and is protective of the sovereignty of states such as Sudan. In a speech on February 7 in Pretoria, South Africa, Hu said:
“For more than 100 years in China’s modern history, the Chinese people were subjected to colonial aggression and oppression by foreign powers and went through similar suffering and agony that the majority of African countries endured,” Hu said according to a transcript released by South African officials. He added: “China has never imposed its will or unequal practices on other countries and will never do so in the future.”
Ben Landy, in the fabulous new blog, China Redux, wrote about Hu’s speech:
Whether we believe it or not is a separate question…I’m inclined to agree that China will not likely develop into an imperial power. But the Hu Doctrine leaves a lot of wiggle room. What does it mean that China will not ‘impose its will’ on other countries? And what exactly are ‘unequal practices’? Isn’t undervaluing currency an unequal practice? What about severely restricting foreign investment in domestic markets? The list of nebulous practices could go on and on.
I suppose it also depends on your definition of an ‘imperial power.’ China’s actions on the African continent might not be ‘colonization,’ but they are far from benign. Over time, African nations like Zambia, Zimbabwe, and Sudan might find China’s help to be even “stringier” than Western aid and investment.
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UPDATE:
Commenters might wish to look at the NYT Op-Ed page for February 19, “Patron of African Misgovernment” as well as Ben Landy’s follow-up piece on the China Redux blog.
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Via CDT
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