17 china and the developing world


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17 china and the developing world

  1. 1. Lecture 17: China and the developing world
  2. 2. 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
  3. 3. 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
  4. 4. 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
  5. 5. 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)
  6. 6. 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
  7. 7. 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
  8. 8. 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
  9. 9. 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
  10. 10. “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
  11. 11. 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
  12. 12. 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
  13. 13. 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
  14. 14. 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
  15. 15. 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
  16. 16. 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?