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Herbert B. Ferguson-Augustus
UNIVERSITY OF MINNESOTA: TWIN CITIES
2015
W R I T 3 5 6 2 : T E C H N I C A L W R I T I N G
走...
1
Abstract
Development aid has failed in Sub Saharan Africa. Of its forty-seven nations, only eight
– Angola, Swaziland, B...
2
Table of Contents
Table of Contents........................................................................................
3
List of Figures
Figure A - Chinese FDI and ODA to Africa...................................................................
4
Acronyms and Abbreviations
AfDB African Development Bank Group
BRICS the Association of Brazil, China, India, Russia and...
5
Background
Development Aid or ODA is complex. Encompassing grants, concessional and zero-
interest loans, technical assi...
6
development projects benefitting the poor (Carothers 35). Consequently, the DAC prioritized
poverty reduction through th...
7
Section 1: Introduction
Although the amount varies, all but four Sub Saharan African states – Chad, Burkina
Faso, the Ga...
8
Section 2: Methodology
The methodology employed in this report can be broken down into its quantitative and
qualitative ...
9
0
20
40
60
80
100
120
Australia
Austria
Belgium
Canada
Denmark
EuropeanUnion
Finland
France
Germany
Ireland
Italy
Japan
...
10
Section 3: Results
To detach the Chinese aid system from China’s economic context towards Sub Saharan
African would be ...
11
India, while in 2008 it started building the Bui hydroelectric dam in Ghana, pictured in figure F
(Moyo 103). This prac...
12
3.2 Understanding Reality: China’s Economic Context
China’s foreign policy permits a decentralized approach to disbursi...
13
MOFCOM perceive Africa as prim for agricultural intensification and extensification, for the
purpose of satiating China...
14
extension of its development strategy to which governmental agencies like MOFCOM and
Eximbank are subservient. All acto...
15
in said market will maintain its current growth figures (Alden and Hughes 565). Hence, China
uses a request-based syste...
16
establish them in foreign markets. Conversely, China employs ODA to incentivize banking with
Chinese commercial and pol...
17
3.4.1 The State Council
The supreme governing body of China, on which the Chinese president sits as chair,
consists of ...
18
the departments of international economic cooperation housed in every other
ministry and municipal government, for spec...
19
loans and concessional loans with MOFCOM’s oversight, the Eximbank exists to promote
Chinese exports as well as SOEs an...
20
Having detailed the structure of Chinese aid system and the foreign policies in which that
system functions, this repor...
21
The project evaluation process further incentivizes the specialization of ODA projects to
the local context of the reci...
22
organization undertaking the project directly as opposed to incorporating the recipient country’s
government as a middl...
23
China ODA Investment by Country
In Billions (USD)
$66 Million to build two
agriculture schools in
ANGOLA
$94 Million bu...
24
Section 4: Discussion
The results section of this report served to map out the motivations, methods and
structure of th...
25
these studies, consider both the country’s environmental and institutional conditions as well as
their positions within...
26
(Mohan and Lampert 98). This practice mitigates the problem of asymmetric information
between donor and recipient, as M...
27
that have thus far limited the extent of these activities and resource extraction by Chinese firms
can take place as a ...
28
4.1.3 South Africa
South Africa is unlike most other recipients of Chinese ODA in several ways. Chinese
firms compete w...
29
Africa has, as a consequence of these sub-state actors, the largest Chinese diaspora in Africa,
creating an effective l...
30
from partners in China (Mohan and Lampert 101). African firms do this because these products
well adapted to Nigeria un...
31
4.1.5 Ethiopia
Sharing many of the characteristics of the Angolan and Mozambican experiences with
Chinese development a...
32
rejects conditionality, it nonetheless aspires to reach the human development goals outlined by
western donors and the ...
33
4.2 Catalysts of Industrialization: Chinese ODA across economic sectors
The previous section explored China’s motivatio...
34
The story is however not that simple. Transportation and energy projects take up the most
ODA funding because they cost...
35
time there have been accusations of a lack of accountability in aid providers, of an inequitable
provision of aid and t...
36
public eye given common interests. These statistics allude to how the structure and motivations
of Chinese aid system a...
37
counterparts, which is opposite perception of most other countries survey; additionally, thirty
percent of Zambian resp...
38
Chinese ODA spent
Per Economic Sector
Infrastructure
Services and
Education
Public Health
Financial
Assistance
Agricult...
39
Section 5: Conclusion
The objective of this report was to create road map by which African policy makers and
administra...
40
development aid projects. The Mozambican case demonstrates how nontraditional donors china
will employ ODA to secure tr...
41
References
Annotated Bibliography
Brautigam, Deborah. The Dragon's Gift: The Real Story of China in Africa. Oxford: Oxf...
42
Additional References
Addison, Tony, George Mavrotas, and Mark Mcgillivray. "Development Assistance and
Development Fin...
43
Moyo, Dambisa. Dead Aid: Why Aid Is Not Working and How There Is a Better Way for Africa.
New York: Farrar, Straus and ...
Appendix A - Glossary of Terms
Zou Chuqu: China's Aid System in Africa
Zou Chuqu: China's Aid System in Africa
Zou Chuqu: China's Aid System in Africa
Zou Chuqu: China's Aid System in Africa
Zou Chuqu: China's Aid System in Africa
Zou Chuqu: China's Aid System in Africa
Zou Chuqu: China's Aid System in Africa
Zou Chuqu: China's Aid System in Africa
Zou Chuqu: China's Aid System in Africa
Zou Chuqu: China's Aid System in Africa
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Zou Chuqu: China's Aid System in Africa

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As a part of a communications course at the University of Minnesota, Herbert B. Ferguson-Augustus researched the Chinese aid system in Africa. Specifically, he researched the distribution of aid disbursements across the continent, African perspectives on Chinese foreign aid and case studies on Chinese aid policy in Ghana, Angola, South Africa, Nigeria and Ethiopia. The full report on these findings can be found here.

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Zou Chuqu: China's Aid System in Africa

  1. 1. Herbert B. Ferguson-Augustus UNIVERSITY OF MINNESOTA: TWIN CITIES 2015 W R I T 3 5 6 2 : T E C H N I C A L W R I T I N G 走出去 Zou Chuqu Statistics, Perspectives and Recommendations On the Chinese Aid System in Africa Herbert B. Ferguson-Augustus
  2. 2. 1 Abstract Development aid has failed in Sub Saharan Africa. Of its forty-seven nations, only eight – Angola, Swaziland, Botswana, South Africa, Namibia, Mauritius, Equatorial Guinea and Seychelles have achieved middle-income status or higher. In 2010, 48.5 percent of people living in the region were in poverty or extreme poverty. This comes in spite of rich countries, primarily the member states of the Organization of Economic Cooperation and Development or OECD, transferring more than $1 trillion in foreign aid to Sub Saharan Africa, since the 1940s (Moyo 28). Development aid and its conventional forms of delivery by OECD member states – the United States, the United Kingdom, France, Japan and Germany being the largest donors, face growing criticism in face growing scrutiny on this aid’s effectiveness. This contrasts a changing international aid regime, where the proliferation of nontraditional donors has challenged the OECD conventions on delivering and disbursing ODA. Of these donors, the Chinese aid regime is the most striking alternative. With its average disbursement of development aid to Sub Saharan Africa averaging $59.8 million per project compared to $1.3 million average per project disbursement from the OECD member states, China has become one of Africa’s largest donors (AidData.org). China rejects conditionality as determining factor for selecting aid recipients, couples development aid, official investments and foreign direct investment to stimulate long-term development and utilizes a myriad of substrate actors to provide ODA and administer development aid project. It seeks long term profitability for Chinese firms operating there in a way that compliments China’s own economic development. China’s economic agenda contrasts the political agenda of its OECD equivalents. African leaders, both on the community and national level, therefore face an ever diversify international aid regime, characterized by the prevalence of nontraditional donors like China. Consequently, these leaders have to develop a new set of tools and practices when negotiating for aid from these actors. This report serves as a guide to one of these nontraditional donors, China. It provides a breakdown of the Chinese aid system in Sub Saharan Africa. It explains the motivations of that system, the methods by which it disburses development aid and the experiences of several African states with this system. On these findings, it makes general recommendations on how African leader might maximize the benefit of Chinese development aid in their state. The purpose of this report is thus to address the deficit in information on non- traditional donors and provide a road map for navigating the new aid landscape.
  3. 3. 2 Table of Contents Table of Contents............................................................................................................................ 2 List of Figures................................................................................................................................. 3 Acronyms and Abbreviations ......................................................................................................... 4 Background..................................................................................................................................... 5 Section 1: Introduction.................................................................................................................... 7 Section 2: Methodology.................................................................................................................. 8 Section 3: Results.......................................................................................................................... 10 3.1 Sino-African Economic Engagement: A Reflection of China’s Foreign policy................. 10 3.2 Understanding Reality: China’s Economic Context ........................................................... 12 3.3 Flying Geese and Zou Chuqu: China’s Development Strategy ......................................... 13 3.4 Economics first, Politics later: The players in china’s aid system...................................... 16 3.4.1 The State Council ......................................................................................................... 17 3.4.2 The Ministry of Commerce (MOFCOM)..................................................................... 17 3.4.3 The Ministry of Foreign Affairs (MFA)....................................................................... 18 3.4.4 The Ministry of Finance (MOF)................................................................................... 18 3.4.5 The National Health and Family Planning Commission (NHFPC) The Ministry of Agriculture (MOA) and Education (MOE) ........................................................................... 18 3.4.6 The Export Import Bank of China (Eximbank)............................................................ 18 3.5 The Aid Process with Chinese Characteristics.................................................................... 19 Section 4: Discussion.................................................................................................................... 24 4.1 Case Studies: Where is Chinese Development Aid Going?................................................ 24 4.1.1 Angola .......................................................................................................................... 25 4.1.2 Mozambique................................................................................................................. 26 4.1.3 South Africa.................................................................................................................. 28 4.1.4 Nigeria .......................................................................................................................... 29 4.1.5 Ethiopia......................................................................................................................... 31 4.1.6 Summary of Case Studies............................................................................................. 32 4.2 Catalysts of Industrialization: Chinese ODA across economic sectors .............................. 33 4.3 In the Public Eye: How the African public perceives the Chinese Aid System.................. 34 Section 5: Conclusion ................................................................................................................... 39 References..................................................................................................................................... 41 Appendix A – Glossary of Terms Appendix B – Data Sets
  4. 4. 3 List of Figures Figure A - Chinese FDI and ODA to Africa................................................................................... 9 Figure B - ODA to Africa by Donor............................................................................................... 9 Figure C - Chinese export to and imports from Africa,.................................................................. 9 Figure D - Organization Chart for the Chinese Aid System......................................................... 16 Figure E - Process Map for Chinese Aid Requests....................................................................... 19 Figure F - Geochart for the distribution of Chinese aid in Africa ................................................ 23 Figure G - Survey of African citizens on Chinese Aid policies ................................................... 38 Figure H - Number of Chinese ODA project by Economic Sector .............................................. 38 Figure I - Chinese ODA to Africa by Economic Sector ............................................................... 38
  5. 5. 4 Acronyms and Abbreviations AfDB African Development Bank Group BRICS the Association of Brazil, China, India, Russia and South Africa CADF China-Africa Development Fund CAR Central African Republic CBRC China’s Bank Regulatory Commission CDB China Development Bank Complant Executive Bureau of Complant in the Ministry of Commerce DAC Development Assistance Committee DFA Department of Foreign Aid DFI Development Finance Institutions DFEC Department of International Economic Cooperation DRC Democratic Republic of Congo Eximbank the Import Export Bank of China FDI Foreign Direct Investment FOCAC Forum on China-Africa Cooperation IMF International Monetary Fund MFA China’s Ministry of Foreign Affairs MNC Multi National Corporations MOA China’s Ministry of Agriculture MOF China’s Ministry of Finance MOFCOM China’s Ministry of Commerce NATO North Atlantic Treaty Organization NGO Nongovernmental Organization ODA Official Development Assistance OECD Organization for Economic Cooperation and Development OOF Other Official Flows SOE State Owned Enterprises UAE United Arab Emirates
  6. 6. 5 Background Development Aid or ODA is complex. Encompassing grants, concessional and zero- interest loans, technical assistance programs, scholarships as well as debt relief, it is a form of foreign assistance given by a country or private party to a developing country for the purpose of social, economic, cultural or political development (Moyo 9). It can be given bilaterally or multilaterally through international financial institutions, like the IMF or World Bank. Differentiating it from humanitarian aid, ODA is intended to address the underlying conditions that cause poverty (Moyo 8). Although private parties like corporations, non-profits or SOEs can give aid, governments are technically its only providers. To be considered as such, ODA must:  be undertaken by official agencies, bodies or local governments;  have the objective to stimulate economic development and improve the welfare of beneficiaries in the developing country receiving said assistance;  be given on concessional terms - if a loan, having a 25% grant element. This criteria has formed the bases of OECD ODA policy and thus the international aid regime until recently. Norms associated with why and how ODA should be disbursed has changed for the OECD continuously with each passing decade. The postwar environment of the 1940s shaped ODA as not only an instrument of international development but also foreign policy. Indeed, the Marshall plan, a series of loans made by the United States to the governments of Western Europe, to fund reconstruction formed was the first example of ODA (Moyo 11). The theory held that large scale investment in infrastructure and industry would trigger large scale industrialization, also called structural transformation in developing countries. Driving structural transformation in developing countries became a means by which the United States and Western Europe could deter the spread of communism, beginning first with the Marshall Plan (Carothers 22). These countries thus sought to harmonize their ODA policies to contain the spread of communism. Consequently the OECD and the Development Assistance Community or DAC formed in 1960, thereby establishing the International Aid Regime, to which Chinese aid policy will be compared. However, the proliferation of leftist regimes in the developing world in the 1960s challenged the efficacy of structural transformation. Moreover, the success of countries like China and Cuba in providing basic health services contrasted the failure of large scale
  7. 7. 6 development projects benefitting the poor (Carothers 35). Consequently, the DAC prioritized poverty reduction through the provision of basic services, emphasizing rural development in the 1970s. Lending to low income countries grew exponentially during this period. After the Oil crisis of 1972 and 1979, massive borrowing along with this policy by African governments drove the region into a debt crisis (Moyo 19). This crisis would precipitate structural adjustment. In the 1980s, an emphasis on neoliberalism as ideal driver of economic development grew with the rise of Thatcherism in the United Kingdom and Reaganism in the United States. prominent academics blamed the state-led development as the root cause of the debt crisis in Saharan Africa (Carothers 41). Consequently, the largest providers of development aid in the 1960s and 70s, the IMF and World Bank instituted conditionality as a key part of debt relief and more broadly, the provision of development aid. In return for debt cancellation and/or rescheduling as well as emergency funds to keep bankrupted African governments afloat, the IMF and World Banks demanded the imposition of austerity measures, the liberalization of trade and the mass privatization of SOEs (Moyo21). The International community referred to these measures as structural adjustment. The effect was however disastrous; unemployment and poverty levels spiking in the short term which in turn destabilized African states in the long run. The structural adjustment policies of the late 1980s were short lived. Their effects triggered social and political strife in its recipients, particularly in West Africa and the Great Lakes region. Therefore, in the 1990s, the DAC did again altered its development aid policy. Maintaining its commitment to conditionality as a requisite, the DAC prioritized democratization in addition to market oriented policies (Carothers 56). This helped triggered called third wave of democracy, where authoritarian regimes across the globe and in Africa democratized (Carothers 59). These objective in addition to safeguarding human rights in African countries, forms the bases of the international aid regime today and thus the conventions of ODA. The OECD, IMF and World Bank perpetuates these norms through their respective aid policies. There is no universally accepted definition of development aid, despite these norms, hence the complexity of the term. However, understanding the conventions of ODA, normalized by fifty years of development policy creates a point of comparison, when discussing the Chinese aid system. Moreover, this section provides a brief history of Sub Saharan experience with development aid, thereby contextualizing the African response to the Chinese aid system, which will be also explored later in this report.
  8. 8. 7 Section 1: Introduction Although the amount varies, all but four Sub Saharan African states – Chad, Burkina Faso, the Gambia as well as Sao Tomb and Princeps receive aid from China. As in the case with any donor, African leaders must understand the interworking of the Chinese aid system to optimize its benefit to their respective communities and nation. China is transforming the international aid regime through its aid policies. As pictured in Figure B, between 2000 to 2011 period, it was the fourth largest bilateral provider of ODA (aiddata.org). China differentiates itself from more traditional donors by bundling ODA with OOF, embracing a noninterventionist foreign policy that rejects conditionality and decentralizing its approach to aid delivery through a request based tender system (aiddata.org). Historically China aid system has had to compete with the more established OECD donor states and now other nontraditional donors, like Brazil and India. China formulated these policies to make itself more attractive to aid recipients. Its motivations for doing s, will be explored in detail later. As is the case with any donor, the goal of aid negotiations is to craft the most mutually beneficial agreement. Agreements with the Chinese government are no exception but China’s way of going about this process is extremely liberal, making it susceptible to manipulation by African and Chinese substrate actors. Helping African leaders leverage their respective countries diplomatic position, this report is intended to facilitate aid negotiations involving China by providing an overview of the Chinese aid system to African leadership. To that ends this report can be divided into two parts: The first being an examination of the structure and methods of the Chinese aid system and the second being an appreciation of African agency in negotiations for and the implementation of development aid projects. By this means, this report examines aid in Sino-African relations from both the African and the Chinese perspective. For simplicity purposes, this reports focuses almost exclusively on ODA but acknowledges that for China, ODA, OOF and FDI are inexorably linked. It then concludes by making recommendation on how Sino-African relations in this area could be optimized. The primary objective in writing this report is to address the deficit in information on Sino-African aid relations as well as highlight the role nontraditional donors play in African development. By this means, it seeks to broaden appreciation of alternative methods for delivering aid, which is done in the hopes that greater transparency and mutual understanding in the international aid regime will boost aid effectiveness in the region.
  9. 9. 8 Section 2: Methodology The methodology employed in this report can be broken down into its quantitative and qualitative parts. The quantitative portion focuses on gathering data on the distribution of Chinese aid in the region by country and by economic sector. Conversely, the qualitative portion attempts to explain this data by examining China’s motivations, foreign policy and methods for disbursing ODA. The synthesis of these methods produces the results and discussion seen below. Aiddata.org, a collaborative project by the College of William and Mary, Bringham Young University and Development provides the majority of data used in this report. Relying on media reports of aid projects, Aiddata.org has created a comprehensive platform to measure both OOF and ODA. it measures data for not just China but OECD member states and other nontraditional donors, thereby creating a medium by which to compare aid systems. The data assessed covers from 2000 until 2011. These years mark a historic change in China’s aid policy as it launched the Forum on China-Africa Cooperation or FOCAC in 2000 and released its first white paper on foreign aid in 2011. Other data analyzed includes trade and FDI statistics from the Brookings Institute as well as polling information from two Hong Kong based universities. However Aiddata’s statistics are limited. Since China does not publically disclose its aid figures, roughly 35 percent of the Chinese ODA disbursements accounted for in this report lack financial values (Aidata.org). Chinese ODA likely exceeds the numbers reported here. However this data works in identifying the patterns of Chinese ODA disbursement in the region.. The qualitative portion of this report relies on interpretation of China’s aid policies by academics, specializing in this field. China’s aid policy is confined to a few white papers on foreign aid, public statements made by Chinese presidents and the published outcomes of FOCACs. Thus primary sources on China aid policy are extremely limited. To compensate for this deficit, this report consults premier academics based in the United States, Africa and China are provide a holistic understanding of the Chinese aid system within its fifty years history. These academics include Dr. Deborah Brautigam of John Hopkins University, the authority of Sino-African economic relations, Linglan University’s Dr. Baohui Zhang, an expert on Chinese foreign policy and Dr. Dambisa Moyo, an international economist specializing in aid in Africa. These sources can only do so much to characterize the Chinese aid system and its conceptualization in this report is largely based on their and other academics’ findings.
  10. 10. 9 0 20 40 60 80 100 120 Australia Austria Belgium Canada Denmark EuropeanUnion Finland France Germany Ireland Italy Japan Korea Luxembourg Netherlands NewZealand Norway Portugul Spain Sweden Switzerland UnitedStates UnitedKingdom China India MiddleEast* Africa** In$Billions DevelopmentAid to Sub Saharan Africa By Donor 2000-2011 c OECD Member States Non Traditional Donors China *African Development Bank **Consists of UAE, Qatar, Kuwait and Saudi Arabia 0 2000 4000 6000 8000 10000 12000 14000 16000 18000 20000 2000 2001 2002 2003 2004 2005 2006 2007 2008 2009 2010 2011 In$Billions China to Africa FDI vs ODA ODA FDI 0 20000 40000 60000 80000 100000 120000 140000 2000 2001 2002 2003 2004 2005 2006 2007 2008 2009 2010 In$Billions China- Africa Trades 2000-2011 Exports Imports Figure A Figure C Figure B - ODA to Africa by Donor Figure C - Chinese export to and imports from Africa, Figure A - Chinese FDI and ODA to Africa
  11. 11. 10 Section 3: Results To detach the Chinese aid system from China’s economic context towards Sub Saharan African would be to misrepresent it. Indeed, its aid system is an extension of its development strategy which in turn derives from China’s economic context. In contrast to its OECD counterparts, Foreign policy acts more as guidelines. China is after all a development state and so its chief motivation in Sub Saharan Africa is sustaining its own economic growth through the creation of economic linkages across the region. To facilitate the creation of these linkages and the globalization of Chinese firms, it decentralized aid administration across a myriad of Chinese agencies and policy banks. Therefore, this section not only aims to explain the structure of the Chinese aid system but its reasons for being. It is thus broken down into a brief overview of China’s foreign policy and domestic economic context. Given these factors, this section then details China’s development strategy and the consequential structure of its aid system and the methods that system employs to disburse aid. By this means, African leadership can understand both the Chinese perspective on ODA and the Chinese development aid system itself. 3.1 Sino-African Economic Engagement: A Reflection of China’s Foreign policy China ‘s foreign policy toward Sub Saharan Africa responds to geopolitical issues, such as China’s position on the world stage and its efforts to manipulate South-to-South cooperation to is benefit. However it important to note that in these objectives, Sub Saharan Africa is not a priority. That value is reserved for its immediate neighbors and great powers like the United States, Russia and India (Sun 13). In terms of development aid therefore, aid policy is subservient to commercial policy not foreign policy (Sun 21). China’s foreign policy is still worth discussing because it provides a framework by which Chinese aid agencies make decisions and so a precedent by which African states can self-advocate. The strategy of Fazhan Zonghe Guoli, translated literally as ‘reshape the international order’ emphasizes China’s commitment to challenge the normative order of global and regional politics. The FOCAC represents a means by which China can assert itself as a regional player in African politics in a way that undermines rivals like the United States in India (Zhang 40). China seeks to enhance its prestige internationally and make accessible to African states, high profile projects, like dams, stadiums and roadways. This has been China behavior in dealings with Africa for quite some time. In 1972 for example, it built the Tanzam railway in Zambia and
  12. 12. 11 India, while in 2008 it started building the Bui hydroelectric dam in Ghana, pictured in figure F (Moyo 103). This practice, often called ‘Stadium diplomacy’ works to persuade African states to support China in attempts to change international institutions like the United Nations and WTO (Alden 22). African states have voted as a bloc in support of China before, when they voted overwhelmingly in favor of replacing Taiwan with China on the UN Security Council in 1972. China’s determination to upset the international order is however balanced commitment to the philosophy of Hexie Shehui, meaning ‘harmonious world.’ Historically, harmonious world stemmed from China’s desire to differentiate itself from other powers, thereby evading accusations of neocolonialism (Gill 108). This philosophy attempts to make internationalism, multilateralism and noninterference principal parts of Chinese foreign policy, particularly towards its fellow developing countries. Chinese premier Zhou Enlai articulated this commitment in “The Five Principles of Peaceful Coexistence;” they are:  Mutual Respect for sovereignty and territorial integrity  Mutual Non-Aggression  Non-interference in each other’s internal affairs  Equality and mutual benefit  Peaceful Coexistence These principles were rephrased and reaffirmed in former president Hu Jintao’s five principles for assisting developing countries in 2005, which were in turn echoed by current president Xi Jinping in 2012 (Zhang 41). Particularly, when it comes to a policy of noninterference, China has demonstrated its commitment consistently. It did this, first in 2008, when China stood by Sudan during the conflict in Darfur, despite international condemnation, and in 2011 when China made concessions to Zambia, following anti-Chinese protests (Alden 40). The state council consistently demonstrates its commitment to these principles by overruling the decision making of MOFCOM, the MFA or Chinese firms abroad or by making concessions to the aid recipient. Chinese foreign policy is forced to reconcile the political constraints it imposes on itself through Hexie Shehui with the ambitions of Fazhan Zonghe Guoli. African states can exploit these policy declaration to leverage their own interests in aid negotiation, whether this be by protesting China’s failure to adhere to Hexie Shehui or said African states said role in achieving Fazhan Zonghe Guoli in Africa and globally.
  13. 13. 12 3.2 Understanding Reality: China’s Economic Context China’s foreign policy permits a decentralized approach to disbursing ODA, given the constraints it imposes on itself through Hexie Shehui. Chinese agencies, firms and policy banks the lead in aid negotiation, as opposed to the MFA or State council. Thus, China’s aid policy derives from the interests of these actors. These interests power the Chinese aid system in Africa and are consequence of domestic circumstances these actors confront. China’s rapid industrialization has resulted in environmental degradation and been detrimental to food security and public. These problems provoke greater public unrest domestically. More pressing however is the threat globalization and rising input costs poses to the competiveness of Chinese firms. In Africa thusly, these actors see a means to offset these challenges and sustain growth. Pollution in China is rampant. China contributes the second highest amount of greenhouses gases and rated approximately sixty percent of its groundwater resources as being in poor or extremely poor health. In terms of public health, these developments have resulted in more than 100,000 deaths per annum in terms of diseases related to environmental degradation (Pieter van Dijk 41). With coal comprising 69 percent of China’s energy consumption in 2011 and the country’s largest polluter, China desperately needs to diversify its energy resources to scale back pollution (Pieter van Dijk 41). Having exhausted it natural resources, it thus has to outsource to achieve that diversification. In Africa, it can procure petroleum from Angola and Sudan, inputs for solar panels from the DRC and Zambia and natural gas from Nigeria and Mozambique (Pieter van Dijk 42). Energy resources abound, Chinese energy companies’ move to secure their interests in Sub Saharan Africa and have already done so in Ghana and Angola. Social unrests however plays a larger role in the desire to offshore and outsource production. Land use has become a highly contested issue between China’s industrial class and rural communities. In 2005, the Chinese government reported 74,000 incidents of protest over land disputes, as opposed to ten thousand per annum a decade prior (Pieter van Dijk 40). Although environmental degradation plays a role in this issue, industrialization has driven up land prices causing the gradual disenfranchisement of China’s farmers. With China becoming a food importer in 2008, the growing demand for meat and other foodstuffs by the emerging middle class has put pressure on the Chinese government to assure domestic food security (Pieter van Dijk 40). With African agricultural productivity so underdeveloped, the MOA and
  14. 14. 13 MOFCOM perceive Africa as prim for agricultural intensification and extensification, for the purpose of satiating China’s growing food demand (Pieter van Dijk 42). Moving from a macroeconomic to a microeconomic context, firms face an increasingly competitive environment globally, given the increase of input prices at home. This challenge is the legacy of the socialist experiments and self-imposed isolationism of the Mao era. During this period, shielded from competition, manufacturing, energy and construction firms lacked access to innovative technologies and experience in strategizing in global market; this however changed with the Deng Xiaoping reforms of the 1980s but China is still a latecomer to international business (Alden 40). Consequently, Chinese owned MNCs and SOEs find themselves competing in saturated markets against their already established American, European and Asian counterparts. The protectionist policies employed by these firms’ government poses further limits on the growth of Chinese firms. In one example, the Chinese National Offshore Oil Company or CNOOC failed to acquire controlling stakes in Chevron, because US congress passed legislature blocking the arrangement despite outbidding the highest US competitor, Unacoal (Alden 43). However, Chinese firms do not just compete firms from developed countries but those from developing countries as well. Turkey has secured preferential trade agreements with twenty-five African countries and India has launched their own Africa, South America and South East Asia forums to give their MNCs and SOEs the competitive edge in emerging markets (Moyo 112). Thus Chinese firms must contend with globalization, whilst sustaining current growth figures. African markets thus represent relatively untapped For the past twenty years, China has reported near double digits in terms of percentage of economic growth. These factors undermine the extent to which China can continue this level of growth without provoking greater social unrest, jeopardizing public health and isolating Chinese MNCs and SOEs. Being cognoscente of China’s economic context and more importantly its issues enables African negotiators to leverage their interests relative to that of Chinese firms. 3.3 Flying Geese and Zou Chuqu: China’s Development Strategy China’s development aid system reinforces the efforts made by sub-state actors in overcoming China’s economic and environmental challenges. It has adapted the East Asian development model to globalization through its policy of Zou Chuqu, founded upon the ‘Flying Geese paradigm’ and the theory of creative destruction. Development aid for china is thus an
  15. 15. 14 extension of its development strategy to which governmental agencies like MOFCOM and Eximbank are subservient. All actors involved in the development aid process do so in the hopes of accomplishing the overarching goal of sustaining China’s economic development. The Chinese government continues its role as a development state and enters the third phase of the East Asian development model (Alden and Hughes 566). This model, pioneered first by Japan in the 1950s and then adopted by South Korea, Taiwan, Hong Kong and Singapore in the 1970s and finally China in 1980s, emphasizes export-oriented growth through the development of the manufacturing sector, specifically it comprises three phases. In the first stage, the state promotes industrial policy promotes light industry, like textile and other consumer durables. Then, in the second stage, industrial policy shifts to the promotion of heavy industry, such as transportation, steel, petrochemicals and synthetic fibers. Finally in the third phase, governments target skill and research and development intensive industries, such as robotics, biotechnology, computers, telecommunication equipment and computers. The government adjusts its industrial policy through these phases with the objective of producing a surplus of these goods to export and soliciting foreign direct investment to finance economic development (Oatley 373). China is now attempting to transition into the third phase of it development, yet the issues above obstruct its transition. One theory explaining these issues that has a growing following in Chinese discourse is Joseph Schumpeter’s Creative destruction. The theory holds innovation drives business cycles to destroy industries at the same rate at which they create new industries; an example of this in China is the decline of the steel industry relative to the growth of personal computers (Brautigam 90). The attempt to protect and bolster these declining industries domestically has resulted in the issues discussed above. The Chinese government turned to outsourcing or off shoring industry to sustain its current growth figures. Therefore, China incorporated globalization into its development strategy. This strategy is based on the so called “Flying Geese Paradigm” by Brautigam, whereby industry oscillates from developed to developing countries based on the availability of cheap factor inputs in the developing country; the migration of Chinese people to these place triggers this oscillation (Brautigam 90). Consequently, there is third facet of Chinese foreign policy: Zou Chuqu. Zou Chuqu translates literally as “going out” and overshadows Fazhan Zonghe Guoli as a priority for policy planners in China. To explain, Zou Chuqu is the philosophy that if China establishes itself in emerging markets, exposes its firms to global competition and achieves consumer preference
  16. 16. 15 in said market will maintain its current growth figures (Alden and Hughes 565). Hence, China uses a request-based system in the disbursement of development aid to align its development strategy with the interests of sub state actors. Companies can propose ODA projects (Alden 40). This largely works as contractual agreements between China and the company in question and for the most part funding is transferred directly from the government to company as opposed to be channeled through the recipient government. Sinopec, a Chinese oil SOE, employed this method to build a partnership with Sonogol Real Estate, a parastatal construction company. Whether motivated by environmental or economic considerations, the Chinese governments sees Sub Saharan Africa as an avenue by which to implement this strategy. The expanse of arable land and the abundance of energy and mineral resources in the region are obvious incentives. China’s banks, firms and government have invested in mineral extraction from the DRC, ROC and Zambia, petroleum in Sudan and Nigeria as well as agriculture in Ethiopia, Ghana and Angola (Moyo 105). Yet this turn to Africa derives less from cheap inputs and more from the institutional advantages Chinese firms have in Africa. They have a competitive political advantage, where China’s historical adherence to noninterference has built a degree of trust in Sino-African relations absent; it also has a comparative economic advantage stemming from low cost bidding for contracts and cheap managerial costs in project implementation (Alden 42). These advantages erode at the entry barriers that have deterred or driven out American and European firms. Therefore, in Africa, Chinese firms also tap into new forms of demand in African markets and thus have, for example established large, medium and small scale firms in the retail districts of every major African city (Moyo 105). These factors explain the growth of FDI in Figure A above as well as the imports from and exports to China, pictured in Figure C. China directs ODA to Africa, to better enhance the opportunities upon which its own firms and agencies have already capitalized. China’s development strategy seeks to harmonize ODA, OOF and FDI in a way that stimulates the growth of Chinese firms in foreign countries. An example of this, Eximbank contracting out a project that it funds to the China State Construction and Engineering Company. Effectively, the Eximbank provided a concessional loans to the Mauritian government to build an airport expansion near Port Louis, Mauritius, which it in turns uses to pay the China State Construction Engineering Company to build the new airport terminal (aiddata.org). Thus Eximbank actively subsidizes Chinese firms to export their services abroad as a means to better
  17. 17. 16 establish them in foreign markets. Conversely, China employs ODA to incentivize banking with Chinese commercial and policy banks. One way of doing this for these banks to do this, is how policy banks like the Eximbank bundle ODA with OOF to court postwar economics like South Sudan, Ethiopia and Mozambique that have low international credit ratings. Referring back to the Bui Dam project mentioned earlier as an example of China’s projects of prestige overseas, the Eximbank provided both $348 million in ODA and $270 million in OOF to finance the project, when most other donors turned the Ghanaians down (aiddata.org). China’s policy banks seeks to compete with the IMF, World Bank and western financial institutions in development finance by cornering closed markets, where competitors are absent do to poor credit ratings. 3.4 Economics first, Politics later: The players in china’s aid system The Structure of the Chinese Aid System reflects the need on the part of the Chinese government desire to manifest its development strategy through its aid policy. Thus control of foreign aid has shifted from the MFA to MOFCOM. The Eximbank, not just in terms of ODA but OOF as well, has played an increasing role in China’s Africa strategy and the development aid system as a whole. Thus, as pictured in organization chart that is figure D, China funnel development aid through three channels: the MOF, MOFCOM and the Eximbank. However, China’s request based system is still a collective process that involves a myriad of government agencies and banks, depending on the nature of the project under consideration. This subsection details the role of each of these actors within China’s aid system. China’s Aid System Figure D - Organization Chart for the Chinese Aid System
  18. 18. 17 3.4.1 The State Council The supreme governing body of China, on which the Chinese president sits as chair, consists of the leaders from each ministry. Collectively, it approves the annual foreign aid budget; any grants above $1.5 million, aid projects costing $12.5 million or more, aid to “politically sensitive” countries like Sudan or Zimbabwe and any requests that exceed the annual aid budget. Given this approval status the State Council holds, the council can and has bypassed the department of foreign aid in the past, in 2009, former president Hu Jintao signed off on a 260 million dollar loan to build an airport expansion in Mauritius, pictured in Figure F. 3.4.2 The Ministry of Commerce (MOFCOM) MOFCOM evolved out of a merger in 1982 between the Ministry of Trade and the Ministry of Foreign Economic Relations, which was charged with overseeing foreign aid. In addition, MOFCOM determines China’s trade policy by regulating imports and exports, FDI inflows and outflows, consumer protection and market competition. MOFCOM manages development aid through the following offices:  The Department of Foreign Aid (DFA) programs all Zero Interest Loans and Grants, Manages the Foreign Aid Joint Venture and Cooperation Fund and coordinates with the Eximbank on Concessional Loans. The department can rely on the guidance from each other Chinese Ministry’s department of International Cooperation for guidance on subjects like Health, Education or Agriculture. However, Foreign aid oversees the implementation of all ODA projects through the selection and approval process of ODA projects.  The Executive Bureau of International Economic Cooperation (Complant) manages the foreign aid tender system that awards aid contracts to MNCs, NGOs, SOEs and other Chinese agencies. This bureau is also responsible for maintaining a registry of all Chinese companies investing overseas. It enforces corporate regulations on how Chinese company can or cannot operate overseas and therefore reserves the right to revoke their permit for operating overseas.  Department of Foreign Economic Cooperation (DFEC) works with Chinese companies seeking business overseas through consultations and the coordination with Eximbank to disburse preferential buyer’s credits. MOFCOM can also upon
  19. 19. 18 the departments of international economic cooperation housed in every other ministry and municipal government, for specialists and advisors in the disbursement of development aid and execution of development projects. 3.4.3 The Ministry of Foreign Affairs (MFA) The MFA oversees China’s diplomatic relations. It plays a reporting role in the China’s aid system. Its Department of Policy Planning provides guidance to the Department of Foreign aid in the formation of it’s the annual foreign aid proposal. It also monitors the implementation of ODA projects through the Economic Counselors Office (ECO) in each Chinese embassy. Beyond that, it manages China’s volunteer programs as well as disbursing humanitarian aid. 3.4.4 The Ministry of Finance (MOF) The MOF coordinates China’s macroeconomic policy, allocates donations to multilateral institutions, determines the national annual budget, handles fiscal policy and accounts for government expenditure by the state. In terms of development aid, the MOF donates to the United Nations and various regional organizations. In addition, it oversees debt cancellation or rescheduling for all countries, who owe the Chinese government money. 3.4.5 The National Health and Family Planning Commission (NHFPC) the Ministry of Agriculture (MOA) and Education (MOE) China divides its technical assistance programs into functional groups based on the activities undertaken. Thus, NHFPC, formally the Ministry of health oversees medical assistance programs, MOA oversees agricultural assistance programs and MOE oversees teaching assistance programs for non-medical or agricultural subjects. Each Chinese ministry that has a technical assistance program operating overseas has its own respective DFEC. These assistance programs are financed through either MOFCOM or the Eximbank, depending on the program in question. Additionally, MOE funds China’s scholarship program. 3.4.6 The Export Import Bank of China (Eximbank) In 2009 alone, the Eximbank disbursed some $36 billion in loans to African states. Providing buyers credits – subsidies for foreign governments to purchase Chinese goods, export credits – subsidies for companies to export goods abroad, commodity backed loans and regular
  20. 20. 19 loans and concessional loans with MOFCOM’s oversight, the Eximbank exists to promote Chinese exports as well as SOEs and MNCs global expansion. The Eximbank’s concessional loan program can be explained through the following example:  Camco Machinery and Equipment Company proposed an aid project - in this case constructing two agricultural schools. It suggests the project to the Angolan government.  The Angolan Ministry of Finance applied for a loan from the Eximbank to projects.  Eximbank does a preliminary appraisal, and in this case gives the go ahead  The Ministry of Finance then forwards the request to Foreign Aid for approval  Foreign Aid gave Eximbank the go ahead and the Eximbank signs an agreement with the Angolan government contractually binding  The Eximbank then transferred the funds directly to Camco, who implemented the project. However, in the case of a country with a higher credit rating like Botswana or Mauritius, they would pay that government to pay the company in question.  The Angolan government is in the process of repaying the loan now The project referred in the process, is pictured in Figure F. Eximbank’s concessional loan program represents the largest loans available to African governments and is largely driven by the initiative of African governments themselves. 3.5 The Aid Process with Chinese Characteristics Figure E - Process Map for Chinese Aid Requests
  21. 21. 20 Having detailed the structure of Chinese aid system and the foreign policies in which that system functions, this report can articulate the procedure by which ODA requests are processed and implemented, as simplified in Figure E above. This process can be broken down into five phases: budgetary planning, aid proposals, project evaluation, the bidding process and finally project implementation. Occurring outside this process, is the Eximbank’s loan cycle, which is integrated into Figure E above because it still in involves the Department of foreign aid but this loan cycle. These phases define the way China undertakes development aid. In the budgetary planning phase, the DFA makes a foreign aid budget projection for the next fiscal year based on reporting by the Department of Policy Planning (Sun 21). Policy Planning takes into consideration requests from foreign countries, the cost of China’s volunteer and technical assistance programs as well as their own project humanitarian aid budget, when providing this guidance. Included in this discussion is the economic counselor’s offices, who report directly to the DFA, from Chinese embassies overseas, who also advise Foreign aid on what its next annual budget should be. Once a budget is determined, Foreign Aid submits the proposal to the State Council for approval (Brautigam 108). The initial or amended sum requested, once approved, represents MOFCOMs entire budget for foreign aid that year. Additional ODA requests can be made to MOFCOM but they require State Council approval in order to be funder. The approved budget is partitioned between MOFCOM, who takes the lions share and the DFECs operating in all other functional ministries. ODA proposals are funded through this budget. The aid proposal phase revolves around China’s request based system, whereby Chinese agencies, firms and non-profits, having been prompted by an African government, can submit ODA projects for DFA approval. Chinese Ministries for example, can coordinate with African governments through their respective DFEC On one such occasion, specialists from the Ministry of Agriculture administered the cultivation of hybrid rice farms in Sierra Leone in 1999 on MOFCOM’s behalf (Brautigam 233). This extends to any Chinese firm or NGO undertaking an ODA project oversees, whom can be reached by the Economics Counselors Office in any Chinese Embassy. By this means African governments can push their own development aid projects. The DFA evaluates projects based on a cost-benefit analysis of how said project either improves China’s relationship with the country in question or stimulates commerce between the host nation and China. Therefore, Chinese companies and agencies can develop projects that fit a more localized context.
  22. 22. 21 The project evaluation process further incentivizes the specialization of ODA projects to the local context of the recipient country. The DFA evaluates project proposals based on the profitability of the venture in accordance with their guiding philosophy of dynamic sustainability, which focuses on the potential of recipients to grow economically, based on domestic market conditions and available natural resources (Brautigam 186). The thinking is that if the loan facilitates economic growth that the recipient can repay the loan. This plays to the Zou Chuqu strategy, as it works to develop productive capacity in the recipient state, thereby creating markets for Chinese goods and inputs for Chinese industries. The logic is plant the seeds of industrialization today, reap the fruits mass production tomorrow. This methodology however contrasts the mentality of DAC nations who have increasingly determine project approval based on the institutions and policies of the recipient governments, as opposed to the benefit of the project itself (Carothers 56). Whereas DAC donors are more concerned with aiding an environment conducive to growth, China opts to assist in creating an environment conducive to growth by building economic capacity in the aid’s recipient. Once projects are approved, Foreign Aid passes them on to Complant for the bidding process, if they do not already have an organization responsible for their implementation included in their initial request. Complant conducts a bidding process for each project and contracts the project out to a Chinese company that that presents the best bid (Brautigam 110). MOFCOM’s interests manifest in the interaction between the selection and bidding process, as they will change the proposed project, if they see a Chinese company would benefit from undertaking it. One such company, the Chinese Construction and Communication Company built the Addis-Adana Expressway, pictured in Figure F (aiddata.org). Complant prefers awarding contracts to MNCs as MOFCOM seeks to enhance their international competiveness. MOFCOM has little oversight over the implementation of the project in question. They defer that responsibility to the Economic Counselor’s Office at the Chinese embassy in the recipient country, to monitor the implementation of the project in question. This office falls outside the jurisdiction of the Chinese embassy and thus the MFA and instead reports directly to MOFCOM (Brautigam 109). Thus, the Economic Counselors Office serves as the recipient country’s primary connection to MOFCOM. However, the recipient government has no influence on the actual financing of the project in question. Indeed like the Eximbank, MOFCOM or whichever Chinese agency is funding the project reserves the right pay the
  23. 23. 22 organization undertaking the project directly as opposed to incorporating the recipient country’s government as a middle man (Brautigam 142). This contrasts China’s DAC counterparts, giving the recipient government minimal direct oversight of the project in question, forcing it to instead petition MOFCOM to take any actions regarding the project in question. The process by which China gives ODA applies to all concessional loan, grant, zero interests’ loans and technical assistance programs, with only scholarships falling outside MOFCOMs mandate. Indeed, as mention it plays a role in even the Eximbank’s concessional loan cycle. It is important to note that this process is largely exclusive to Africa. Indeed, for more politicized areas, like East and Southeast Asia, the MFA and the Chinese military play a larger role
  24. 24. 23 China ODA Investment by Country In Billions (USD) $66 Million to build two agriculture schools in ANGOLA $94 Million build a National Sports Stadium in MOZAMBIQUE $260 Million in ODA for Airport Expansion MAURITIUS $350 Million to finance Addis-Adama Expressway ETHIOPIA $967 million for Fire Power Plant and Refinery NIGERIA $0 $348 million to construct Bui Hydroelectric Dam GHANA $15 Figure F - Geochart for the distribution of Chinese aid in Africa
  25. 25. 24 Section 4: Discussion The results section of this report served to map out the motivations, methods and structure of the Chinese Aid system as it pertains to Sub Saharan Africa. By this means it characterized the Chinese perspective on development aid in the region. Here, however, this report will examine Chinese ODA from the African perspective. Presenting this analysis, this section first examines the geographic distribution of Chinese ODA in the region, examining specifically the strategies and political conditions of the five largest recipients of Chinese development aid in the region. By this means, this section appreciates the role of African agency in the aid negotiation process. Examining the fruits of their labor thusly, this section identifies patterns in Chinese Aid disbursements across economic sectors. With the detailed picture of the Chinese aid system in Africa, it considers public perceptions of China in the countries receiving aid to gauge the legitimacy of this system relative to its OECD counterparts. In short section examines how well adapted the Chinese aid system is to the needs of Sub Saharan Africa based on African perspective. 4.1 Case Studies: Where is Chinese Development Aid Going? Sino-African relations are diverse and so the pattern of development aid disbursements depends extraordinarily on China’s relationship with the African country in question. An argument has been made that the natural resource endowments in an African country are the chief determining factor in ODA disbursements. Although this is much case in a discussion of OOF, as the three highest recipients – Angola, Nigeria and Ghana are all petroleum exporters, this is not true in the case of ODA. To understand the pattern in Chinese ODA disbursement, one must consider that China employs ODA facilitate it Zou Chuqu development strategy. Therefore, where there is great interest in fostering greater economic ties with the African country in question but also great resistance to those ties from internal or external or internal sources, there will be greater level of ODA disbursed. The assertiveness of African states in negotiation with the Chinese has a positive correlation to the amount of ODA received thusly. It is important to examine this assertiveness in the context of Sub Saharan Africa’s experience with aid providers, explored briefly in the background section. Therefore, this sub section provided five case studies of the five largest recipients of the Chinese development aid, according to aiddata.org to examine how these countries have handled themselves in their dealing with Chinese. When reviewing
  26. 26. 25 these studies, consider both the country’s environmental and institutional conditions as well as their positions within African International relations. 4.1.1 Angola Sino-Angolan aid relations underscore how the existence of parastatal organization in the recipient states facilitates ODA negotiations with China, specifically where it concerns economic cooperation with the Eximbank. Angola receives the highest quantity of both ODA and OOF because it segments the aid negotiation process through multiple parastatal organizations. Moreover, Angola has an easier time harmonizing its objectives with China because its government also functions as a developmental state. Although China has an intrinsic interests in Angola’s energy resources, what separates it from other petroleum exporters is how, following the Angolan civil war, the Dos Santos government was economically isolated. The civil war had depreciated the country’s international credit ratings and the Dos Santos regime, condemned internationally for its human rights abuses, rejected the conditions imposed on it by OECD governments to receive ODA (Ngongo 113). China presented itself as the alternative to western donors thusly. The Eximbank believed, evaluating the dynamic sustainability of investments in Angola, determined that if made commodity for infrastructure loans it could recoup losses while simultaneously raising Angola’s international credit rating; it succeeded in both regards by providing loans that had lower interest rates and longer repayment times than commercial loans. (Sun 8). Consequently, trade between Angola and China has grown exponentially, an Angola has become one fastest growing states in Sub Saharan Africa, achieving middle income status in the early 2000s. However, the Angolan government has leveraged its control of Chinese development aid through its parastatal organizations. As of 2010, Angola provides 25 percent of China’s petroleum needs (Mohan and Lampert 98). In exchange for the continual supply of petroleum, Angola has negotiated for long-term development financial agreements, which are supplemented by ODA agreements. Angola has gone directly to the Eximbank and other Chinese financial institutions for multibillion-dollar credit lines (Ngongo 98). To appeal to these institutions, the Angolan government works with MOFCOM through the working group, Grupo de Trabalho Conjunto, which includes it and the Angolan Ministry of Finance. This working group determines development projects to be funded by the Eximbank and other Chinese banks
  27. 27. 26 (Mohan and Lampert 98). This practice mitigates the problem of asymmetric information between donor and recipient, as MOFCOM is directly involved in the development aid proposal process. Yet whereas Angola includes Chinese institutions in the negotiations process, it excludes them from the administration and implementation of the development aid projects themselves, instead choosing to work directly with the Chinese firms carrying out the project. It does this by centralizing administrative control in Sonogol Real Estate, formally Gabinete de Reconstrução Nacional (Ngongo 98). This parastatal organization reports directly to the presidency and determines how and when development aid projects are to take place. Effectively, Angola tackles China’s development aid process like a relay race, whereby one parastatal organization handles the negotiation process and then another handles the implementation process where 4.1.2 Mozambique Mozambique is an outlier in term of Chinese ODA recipients as ODA comprises more than 86 percent of official investment received from China. This contrasts the 33, 18 and 23 percent received by Angola, Nigeria and Ethiopia respectively, the other major recipients of Chinese ODA. China has practiced stadium diplomacy more extensively to achieve the trade and financial preferences that came so easy to it in Angola. In Mozambique, it has had to compete with American, European and Asian donors. Mozambique has benefitted from the saturation of aid providers and its further integration into the SADC community. Mozambique’s experience is more characteristic of China’s reality as a latecomer to international business. In contrast to the other major recipients of aid, Mozambique has aligned itself more with western donors, in terms of how it goes about the aid negotiation process and project implementation. Indeed, in 1987 it conceded to the structural adjustment policies of the IMF and World Bank and at the end of its civil war in 1992, agreed to a high level of involvement by the United Nations into its democratic transition (Roque 3). Consequently, the aid landscape in Mozambique is one characterized by the prevalence of western NGOs and international institutions buttressing civil society and government, all heavily financed by western donors. The liberties taken by Chinese firms in Angola while working with Sonogol Real Estate, are strikingly absent in Mozambique thusly. In one example Chinese companies have participated in illegal logging in northern Mozambique but face increasing resistance from civil society groups
  28. 28. 27 that have thus far limited the extent of these activities and resource extraction by Chinese firms can take place as a whole (Roque 7). China attempts to counterbalance this influence with massive investments made by the Eximbank and MOFCOM into the development of Mozambique’s infrastructure. One example is when MOFCOM financed the construction of a national sports stadium, pictured in Figure F, in Zampeto (adidata.org). With Mozambique’s democratic transition and growing institutional capacity, Chinese firms themselves are losing their comparative political advantage. Yet Mozambique still works to incentivize Chinese official investment, by incorporating Chinese firms into its own development planning. Already, Mozambique has placed a bid for Special Economic Zone, a wholly Chinese EPZ to stimulate Chinese FDI and human development. It has gone farther by creating institutions like the Centro de Promoção de Investimento Desenvolvimento e Comercio China (CPIDCC), which works facilitate trade between these China and Mozambique (Jansson and Kiala 8). These institutions balance the challenges, China faces in Mozambique, incentivizing a more concessionary approach in its Zou Chuqu strategy. For China, Mozambique is stepping stone to accessing the Southern African market as whole, as member to the SADC community, it provides a means by which china can export goods through its EPZ in Mozambique to the rest of the SADC community. Numerous Chinese agencies have spearheaded initiatives emphasizing human development to compete with other donors thusly. The MOA has donated two agricultural research centers and the MOH has built a malaria research center (Jansson and Kiala 8). Here, China recognizes the services offered by other donors, Mozambique’s demand for those services and attempts to replicate. Still, China must context with the fact it has still not secured preference in Mozambican markets. South Africa, for example, has still invested more in Mozambican development and has maintained trade preference as import and export destination (Jansson and Kiala 8). South Africa is China’s chief rival in Southern Africa and continues to use regional integration as bulwark against Chinese inputs. Mozambique is an example of how greater institutional capacity domestically couples with an inclination to both garner FDI and integrate regionally creates a competitive markets place in terms of development finance. China is forced to compete with countries like South Africa in this example or risk losing access to not only Mozambican markets and resources but that of all of Southern Africa.
  29. 29. 28 4.1.3 South Africa South Africa is unlike most other recipients of Chinese ODA in several ways. Chinese firms compete with their South African counterparts in Mozambique and Angola. Moreover, South Africa is using regional trade agreements to exclude erecting regional trade agreements to deter the flow of Chinese imports into the region. Nonetheless, South Africa is major recipient of Chinese ODA for that very reason. China sees good relations with South Africa as critical to the success of Zou Chuqu in Southern Africa. South Africa’s’ membership with BRICS and role as regional leader reinforces China’s attitude towards it. Moreover, South Africa membership in the BRICS gives it even greater importance to Fazhan Zonghe Guoli, by which China aims to assert itself to a greater extent in the international community. China perceives South Africa as a regional leader, given that it is both the largest contributor to economic development in the Southern African Development Community (SADC) (Sun 20). This role is further reinforced by the fact within SADC, South Africa supplies the lion’s share of imports, a position only further solidified by regional integration. Moreover, like China, South Africa plays a key role in challenging the global international order, calling for the reformation of the World Trade Organization and cofounding of the BRICS New Development Bank. With 100 billion in reserve currency, the new development bank presents a viable alternative to the IMF and World Bank (Alden 72). Thus South Africa is a political priority for Chinese government, thereby incentivizing good relations. Despite China’s objectives in South Africa being as political as they are economic, municipal and local governments have primarily led its involvement in South Africa in terms of ODA. Following the collapse of Apartheid in 1994, Chinese provinces established relations with their counterparts in South Africa for the sake of greater commercial ties (Alden 29). At the time, China severed diplomatic relations with South Africa because it recognized Taiwan. The proliferation of these sub-state actors is prevalent even now even now. Indeed, the migration of Chinese immigrants to South Africa has created a lobbying force to solicit greater ODA from China as well as FDI (Aldan and Hughes 575). Similarly, Chinese MNCs and SOEs outsourcing and off shoring to South Africa precedes the government taking an official economic and foreign policy stance towards South Africa. Chinese commercial banks for example have pursued a stake in their South African counterparts, highlighted by the Industrial and Commercial Bank of China purchasing a 20 percent in the South African Standard Bank (Aldan and Hughes 575). South
  30. 30. 29 Africa has, as a consequence of these sub-state actors, the largest Chinese diaspora in Africa, creating an effective lobbying force in China’s aid system. Given the constraints China face politically with Sub Saharan Africa, these actors have been negotiating with their South African counterparts to implement development projects with MOFCOM reduced to an approval role over these projects The South African example presents a reversal of China’s development strategy, whereby instead of the government employing ODA to create opportunities for Chinese firms, those firms and other non-state actors are encouraging the Chinese government to give more ODA. This presents evidence that China’s investments in Africa are self-sustaining in the long term. To elaborate, China’s official investment encourages greater FDI and outsourcing to South Africa, which in turn encourages greater official investment and ODA to sustain and better relations between countries. 4.1.4 Nigeria Nigeria and South Africa share several similarities. For one, Nigeria is like South Africa a leader in regional politics, given its role as primary proponent of ECOWAS and the AfDB. Similarly, Nigerian MNCs and SOEs compete with their Chinese counterparts in African markets and for resources. Yet where these states diverge is how the symmetry of economic relations between China and Nigeria correlates positively to the level ODA, FDI and OOF coming from China to Nigeria. To elaborate, by Nigerian investors and firms establishing themselves in China while Chinese investors do the same in Nigeria, it facilitates financial flows between these states. China’s political interests moreover encourages it use ODA as a means to smooth out relations with Nigeria, further stimulating these financial flows. The growth of Nigeria towns in China has resulted in personal networks between Chinese and Nigerian businesses that have in turn facilitated the flow of FDI and OOF. During the mid 1990s, Nigerian traders traveled to China to purchase cheap Chinese goods and then selling them in Nigerian markets; these traders have become the chief competition for Chinese nationals as they have a greater understanding of Nigerian markets (Mohan and Lampert 100). The personal networks of these traders and establishment of Nigerian communities in China encouraged Chinese entrepreneurs and investors to seek similar opportunities in Nigeria. As this relationship has progressed, Nigerian firms have sourced capital goods, labor, loans and managerial expertise
  31. 31. 30 from partners in China (Mohan and Lampert 101). African firms do this because these products well adapted to Nigeria unreliable utilities and cheaper than their European counterparts did. Consequently, state owned and private Chinese firms invest in Nigerian commercial development because it increases the demand for their goods. Nigeria, in these relationships has become recipient of Chinese FDI and OOF from 2000 to 2011 (aiddata.org). Sino-Nigerian relations demonstrate an example where Zou Chuqu occurs without government intervention. Therefore Chinese aid policy becomes more about sustaining than provoking this occurrence, which is distinct from cases of Mozambique and Angola. Nigeria has a high degree of influence over the African Union, ECOWAS, and the AfDB and over voting by West African states in the United Nations (Alden 68). Moreover, like China it seeks to challenge the international order by taking the proposed Africa seat on the UN Security Council. Consequently, Nigeria is an asset to China’s foreign policy of Fazhan Zonghe Guoli. Thus China employs ODA to smooth out increasingly turbulent relations with Nigeria. Increasingly, Nigerian firms and municipal governments in Nigeria have opposed the growing influence of Chinese firms domestically, causing the government withdraw many of incentives to presented to Chinese firms (Alden 69). This jeopardizes economic initiatives like the Special Economic Zones, China’s oil interests in the Delta region and export to Nigeria. The main cause of concern has been Chinese firms’ labor practices and influx of cheap goods. The fact, Chinese presidents, both Hu Jintao and Xi Jinping have made numerous visits to Nigeria, demanding accountability in Chinese companies operating there, attests to the desire by the Chinese government to maintain good relations (Gills and Reilly 47). Projects like the fire plant, pictured in Figure F, are thus prestige projects implemented as a mean to better relations. Sino-Nigerian relations underscores the leverage African states have over China, when they facilitate China’s Zou Chuqu and Fazhan Zonghe Guoli. Based on the patterns in China’s ODA disbursements, there is a serious concern by Chinese policy makers that poor relations with one African state will have a domino effect on others. This is due relative size of African economies to that of China so that, although Chinese policy markers do not prioritize Sino- African relations, they see appeasing African leadership as having a low cost relative to high rewards investment in African development. Nigeria is a prime example of this relationship.
  32. 32. 31 4.1.5 Ethiopia Sharing many of the characteristics of the Angolan and Mozambican experiences with Chinese development aid, the case of Ethiopia completes this list. It has created institutions to coordinate and work with Chinese agencies and banks on development projects and is an aid environment characterized by the saturation of aid providers. Moreover, Ethiopia has the characteristic of a postwar economy. However, where Ethiopia diverges from it counterparts is when it comes to natural resource endowments as it has significantly less than any of the other countries included on this list. Nevertheless, it has been able to leverage its strategic importance and institutional capacity to solicit greater concessions from donors in terms of loans and grants. With China, it does this through forum style meeting between Ethiopian agencies and either Chinese counterparts or OECD aid agencies. However, with China, this strategy has been more effective at negotiating OOF than for ODA. Ethiopia has exploited both international sympathies and its geostrategic importance to western governments to create an aid environment characterized by intense competition between the traditional donors, such as the OECD member states and nontraditional donors like China. The United States and the European Union view Ethiopia as a platform upon which they can exert greater influence in East Africa, given the relative stability of the current Ethiopian government and it friendliness towards western governments (Grennhill 35). As a consequence, development aid coming from the United States, Europe and associate NGOs has surged. However, the Ethiopian Revolutionary People’s Democratic Front (ERPDF), the current Ethiopian government has counterbalanced western influence by courting Chinese government, instead of vice versa. The late president Males Zenawi heralded China as a role model for African development and rebuked western claims that China has come to “loot Africa” (Adem 148). Given Ethiopia’s stature in the African community, Sino-Ethiopian relations have for China become a matter of proving a Chinese-African partnership can be successful and so has forgone short term commercial benefit for long term development goals. In essence, China wants Ethiopia to be a model through which Zou Chuqu gains continental legitimacy. By this means, China has pushed Ethiopia to become its “China in Africa,” capitalizing on its cheap labor costs and role as a development state. In contrast to Ethiopia strategy of wooing international donors, it has taken ownership of development aid projects one aid is disbursed. One example of this is how, although Ethiopia
  33. 33. 32 rejects conditionality, it nonetheless aspires to reach the human development goals outlined by western donors and the United Nations. In 2010 for example, the Charities and Societies Proclamation introduced restriction on how these groups operated within Ethiopia, while also directing development planning to reach six of human development targets outlined in the Paris Declaration (Greenhill 35). By this means, it builds legitimacy for itself as development states in the eyes of donors, enabling it to take greater authority of aid provided. It takes a similar route in its dealings with the Chinese. It has incorporated Chinese agencies and banks into development planning process to synthesize China goals in Ethiopia with Ethiopians goals for itself. It formed the Joint Ethiopia-China Commission (JECC) with Chinese, where Ethiopian ministries meet with their perspective Chinese counterparts to coordinate development projects (Davies 32). This process streamlines negotiations for OOF and ODA. By these efforts, Ethiopia takes greater agency in its relationship with aid providers. It not only demonstrates a means by which to circumvent the conditionality employed by western donors but also the adaptability of the Chinese aid system to the interests of African states. 4.1.6 Summary of Case Studies The countries explored in this report have environmental advantage of either being perceived as regional leaders in African international relations or are being courted by several aid donors. Consequently, Chinese ODA serves more to legitimize Zou Chuqu as a mutually beneficial developmental and foreign policy among African states, thereby increasing the likelihood of its success. However, in all five cases, each African states has developed institutions through which sub state actors in China can either negotiate with or funnel funds through when it comes to matters of development aid. These institution moreover prioritize structural transformation to facilitate industrialization and thus economic development. Thus, if African leaders seek greater agency in aid negotiations with China, they must first develop organizations capable of administering development finance and representing their interests to the Chinese. In other words, to optimize Sino-African aid relations, African leaders have to determine their development strategies, create institutions to implement strategies and then incorporate Zou Chuqu into that strategy. The only alternative is political advantage, which is only afforded to regional leaders like South Africa and Nigeria. These cases therefore represent an effective intersection of China and Sub Saharan Africa’s development agenda.
  34. 34. 33 4.2 Catalysts of Industrialization: Chinese ODA across economic sectors The previous section explored China’s motivations in Africa and the role of China’s aid system in its development strategy. In addition, the previous section explored the agency of African states in the implementation of this strategy through case studies of the five largest recipients of the development aid. By this means, Chinese ODA is most typically directed to the African states development agenda due to China’s request base system and its desire to foster greater economic ties between Sub Saharan Africa. Sub States, actors whether they African agencies or Chinese firms take the lead in aid negotiations. Accounting for all ODA disbursements, it appears Chinese and African government prioritize infrastructure but if we examine this in terms of the number ODA projects initiated, Chinese efforts are more directed to same fields as their OECD counterparts, that being public health, government support and agriculture. This subsection explores briefly the statistical distribution of Chinese ODA and number projects across economic sectors to show how China ODA disbursements are more reflection of China’s relations with each African state then overarching policy. Aiddata.org gathered data on 2,438 development aid projects taking place or having taken place in Sub Saharan Africa between 2000 and 2011. The majority of the 2438 projects accounted for is in infrastructural development, as seen in Figure I. Approximately, 52 percent of all Chinese ODA is directed to this economic sectors. Breaking it down further, around ten percent goes to the development of energy resources, such as the construction of the Bui Hydroelectric Dam and Fire Plan in Nigeria pictured in Figure F (aiddata.org). Conversely, 34 percent of Chinese ODA is directed towards the development of the transportation sector, with Chinese construction firms building roadways and railways like the Addis-Adama Expressway, pictured in Figure F (aiddata.org). Examining these projects thusly, China’s efforts in stadium diplomacy as discussed as a part of Zou Chuqu, work to give Chinese firms experience that is more international but also the infrastructure African states need to sustain an industrial take off. Electricity and effective transportation are both in deficit in most African states. Since structural adjustment, the structure of most Sub Saharan economies has leaned towards agriculture because low input and skill costs (Oatley 113). China facilitates the growth of the manufacturing sector in and exports from Su Saharan Africa. Thus, infrastructure is as much a part of African States’ development agenda as it is Zou Chuqu, to which the case studies attest.
  35. 35. 34 The story is however not that simple. Transportation and energy projects take up the most ODA funding because they cost the most implement, relative to other development aid projects. Indeed the primary provider of this funding has been the Eximbank and the project implemented by Chinese firm to carry it out (aiddata.org). However, as expressed, there is a myriad of Chinese agencies involved in ODA and so when we look at the number of projects as opposed to funding, Chinese development aid is diverse. Pictured in Figure H, 109 projects undertaken are in government related activities, 104 are in public health, while only 42 and 13 projects undertaken are in transportation and energy respectively (aiddata.org). In terms of public health, these projects typically involve the construction or outfitting of hospitals, like the construction of a cardiac training facility in Tanzania; alternatively, government support projects range from the construction of a national assembly building in Malawi to the expansion of African Union headquarters in Ethiopia (aiddata.org). Thus, China’s involvement in other economic sectors is also predominantly infrastructural but that is because it corresponds of expertise of Chinese firms. It is important to note, that these firms were extensively involved in development domestically so it is only natural that they would take their skills abroad; the Shanghai Construction Group, who built a Senate building in Gabon was involved in several building projects in China, most notably the Shanghai Tower (aidata.org). Thus, Chinese ODA is more concerned matching the skills of Chinese firms to the needs of their African recipients. Chinese firms are most involved but not limited infrastructural development. An entire paper written on the technical assistance teams deployed by Chinese ministries to develop health, agricultural and educational sectors in Sub Saharan Africa but their activities minute in comparison to the number of infrastructural projects funded by the Chinese aid system. As identified in previous sections, structural transformation is a priority for both African and the Chinese government in African development. Resources are therefore deployed to that effect. 4.3 In the Public Eye: How the African public perceives the Chinese Aid System This section has explored the role of African government in the Chinese aid system and the consequential distribution of ODA across economic sectors. This however begs the question as to whether these efforts have been received positively by the public in recipient states. Policymakers know that how development aid received by the general public in recipient states is mixed. The background section tackled a general history in Sub Saharan Africa and during this
  36. 36. 35 time there have been accusations of a lack of accountability in aid providers, of an inequitable provision of aid and that development aid fosters dependency on donors. With civil society in most African states developed to a point where it can both scrutinize and protest aid policies, administrators and politicians are under increasing pressure legitimize aid policies. Yet the public perception of Chinese ODA has been thus positive. More importantly, the public perception of China’s involvement in Africa has generally been more positive than that of OECD member states. This assertion stems from a multi-country survey based on university polling in eight African countries – Botswana, Ethiopia, Ghana, Kenya, Nigeria, South Africa, Sudan and Zambia collected by the Hong Kong Polytechnic University and the Hong Kong University of Science and Technology. With three of the countries covered in the case studies featured in these polls, this becomes a good measure of public perception towards China. This subsection will analyze the results of these findings in the context of Chinese ODA to the region. Having argued that Chinese allocate ODA to countries where their development agenda aligns with the domestic agenda, data gathered in this survey suggests that the general public in most African states would be in support of their governments harmonizing their development goals with China. In the nine countries surveyed, respondents view China’s development model as positive. Of three states examined in the case studies, over eighty percent of Ethiopians and seventy percent of Nigerians survey view China’s model positively and so too do approximately 74 percent of all Africans surveyed (Sautman and Hairong 736). South Africa is the only outlier with around 50 percent of respondents surveyed being uncertain about this model. However while other countries surveyed, except Botswana have low income economies, South Africa is an upper middle income economy and therefore have developmental success already and so South Africans are reasonable skeptical. However, this polling does highlight how Zou Chuqu is positively perceived by Africans, thus suggesting public ease with Sino-African cooperation in development planning. Moreover, this view is held in spite of the fact the majority of Africans, around 78 percent survey believe China exerts at least a fair amount of influence over their country (Moyo 109). The belief that China and Africa have common interests is also prevalent in the multi-country survey. Approximately sixty percent of respondents felt China and their respective countries had common interests, while only thirty percent said they had few or none (Sautman and Hairong 737). This suggests Sino-African cooperation would also be logical in the
  37. 37. 36 public eye given common interests. These statistics allude to how the structure and motivations of Chinese aid system are suitable in the eyes of average Africans. More to this point, when we compare public perception of China relative to the United States in this regard it becomes clear that Chinese ODA is preferable to OECD ODA or at least the United States. Pictured in Figure G, around 50 percent of survey respondents found China’s polices toward Africa as less harmful to their economic and social well being than their American counterparts (Sautman and Hairong 741). Referring back to the background section, this perception makes sense, given the effects of Structural Adjustment are still being felt by Africans today and the volatility in US policy toward Sub Saharan Africa overall. China conversely has been relatively consistent though the volume of ODA disburses in the continent have been increased; for example, whereas China just built the Tanzam Railway in 1972, now it builds railways in Sudan, Nigeria, Ethiopia and Namibia at the same time (aiddata.org). Another explanation for this position, is China’s perceived efficacy in implementing development projects. Approximately 53 percent of those survey were satisfied with the work done by Chinese firms on large scale projects, compared to 12.9 percent that were dissatisfied and thirty 4 percent who were neutral (Sautman and Hairong 742). Thus, China is perceived more positively in terms of project implementation. Referring back to china’s advantages in Africa, touched upon in China development strategy, this makes sense given the cheaper managerial and labor costs associated with Chinese firms. A continual complaint raised about OECD development projects is how money is spent on administrative costs. These surveys do however have to be taken with a grain of salt, as they prove public perception can shift dramatically as it has done for one outlier in this survey: Zambia. China’s relations with Zambia have been exacerbated by strong anti Chinese sentiment in political system, fueled by labor protests over the working conditions in Chinese owned companies. An explosion at Chinese munitions factory in Chambishi killed 46 Zambian workers in 2005, sparking national debate on the conduct of Chinese companies and being issue raised by Michael Sata’s opposition party in the 2008 election (Alden 74). How public perception responded to these incidents is accounted for in the multi-country survey. Around 50 percent of Zambian surveyed found Chinese policies as harmful to their country as helpful and ten percent felt, those policies were more harmful to their countries (Sautman and Hairong 740). Moreover, Zambian reportedly felt Chinese firms and migrants were less adapted to local society, than their western
  38. 38. 37 counterparts, which is opposite perception of most other countries survey; additionally, thirty percent of Zambian respondents classify China practices as neocolonial (Sautman and Hairong 746). Thus, the Zambian example attests to how public perception can quickly shift if China’s development projects or activities in general are mismanaged or considered neocolonial in their presence. African critics abound have charged China’s development practices as neocolonial and China has made concessions to ensure good working relations in these countries. For more information on China’s reactionary foreign policy, see Appendix C. Public surveys like these are biased in that derive public opinion from lower to middle class and urban Africans and for the most part and so fails to poll rural communities. These surveys therefore do constitute a holistic evaluation of public perception towards the Chinese. They do nonetheless provide a snapshot of what average Africans think. In addition, from this, African policy makers should understand that for the most African perceive economic cooperation with the Chinese in a positive light. However, the continuity of this position is contingent upon local and national governments hold Chinese firms implementing development aid projects accountable and ensuring a public voice in the deployment of Chinese ODA. Thus policy progress in aid negotiations, they should be sensitive to public desires.
  39. 39. 38 Chinese ODA spent Per Economic Sector Infrastructure Services and Education Public Health Financial Assistance Agriculture Multsectional Unspecified Government Industry Infrastructure Services and Education Public Health Financial Assistance Agriculture Multsectional Unspecified Government Industry Social and Communications 0 50 100 150 200 Number of Projects per Sector Figure G - Survey of African citizens on Chinese Aid policies compared to Western Equivalents Figure H - Chinese ODA to Africa by Economic Sector Figure I - Number of Chinese ODA project by Economic Sector
  40. 40. 39 Section 5: Conclusion The objective of this report was to create road map by which African policy makers and administrators might navigate the Chinese aid system. It has provided a holistic overview of not just China’s objectives in Africa but Africa’s role in China’s development strategy. With that in mind, it has presented China’s aid system as a manifestation of that strategy and thus detailed the role of Chinese agencies and banks in powering that system. Yet it is only through analyzing China’s aid policy in specific African states, the distribution of its ODA across economic sector and response from African states and their polities, does the way forward in dealing with the Chinese aid system become clear. Policy makers must determine how their state’s development agenda aligns with that of China, how to establish or strengthen institutions to implement that agenda and then propose key infrastructural projects to key Chinese Agencies that would actualize it as well as consider regional cooperation in dealing with the Chinese. Aligning the development agenda of one perspective state with China’s, the first of these recommendations is not unique to Sino-African relations. Historically, African leaders who have been more successful in leveraging foreign aid have presented their development agenda as in accord with western donors. Ethiopia’s Males Zenawi managed to bypass conditionality as factor in negotiations for western ODA by implementing a national development plan that achieved the goals articulated in the Paris declaration. Thus, Ethiopia continued to receive aid without undertaking the structural adjustment programs that had taken root across Africa by presenting its interests as concurrent with that of western donors. With China, African policy maker should behave no differently. China has heralded Angola and Ethiopia as proof of the Chinese model, showering them with ODA in the process because these states have presented their development plans as being modeled after China’s own development strategy. The key here for African policy makers is to predict and preempt donor’s possible demand. Since currently, the public in Africa believes China and their respective nations have common interests, policymakers have the flexibility to present their development agenda such, without risking public backlash. Beyond the diplomatic overtures however, policymakers need to address the lack of capacity in public institutions administering aid. The absence of institutions historically has caused ODA projects to deviate from the needs or recipient African state; this was a widespread problem in the 1960s and 1970s. The proliferation of donors warrant the creation or strengthening of institution that can receive aid funds as well as fund and coordinate
  41. 41. 40 development aid projects. The Mozambican case demonstrates how nontraditional donors china will employ ODA to secure trade preference in emerging markets. Centralizing control of these funds and all development aid received in singular agencies optimizes the benefit of competition between aid providers. Moreover, the creation of these institutions or their matching with their counterparts in China expedites the aid negotiation process and goes toward establishing long term relationship with Chinese agencies. The Eximbank relationship with Sonogol Real Estate has made long term development finance possible for Angola. Seeking a similar relationship should be a priority for African policy makers. Lastly, policymakers should take an active role in the proposal process itself by singling out Chinese firms and/or agencies they feel would make effective partners and with conceptualize infrastructural projects that make the most of their respective states and Chinese resources. As said, MOFCOM and the Eximbank have little oversight on development project and the way they ate implement that responsibility is instead deferred to the Chinese firm undertaking the project with these actors merely evaluating the project for completion. This has in the case of Nigeria and Zambia resulted in several incidents of substandard work or an inefficient use of ODA. Considering Chinese firms ahead of time improves performance in project management and the likelihood that China will fund said project. This method can also be employed when petitioning China’s technical assistance programs by directly contacting the NHFPC, MOA or MOE, remembers all these ministries have their own respective DFECs. Lastly African policy makers need to consider regional strategies for how to deal with the Chinese as well as all donors. Part of Zou Chuqu, is bypassing the trade barrier erected through regional integration and trade agreements. Its efforts in this department can be harmful as they are beneficial to African development. The flood of cheap goods in to Nigeria exemplifies how Chinese firms can undermine local producers. However, China’s attempt to penetrate the SADC community attests to how these efforts place the recipient in a better bargaining positions, as it has for Mozambique and South Africa. China has consistently appeased states is perceive as regional leaders to secure diplomatic support. Ethiopia, Nigeria and South Africa all exemplify this point . Thus by African policy makers from different countries colluding during China’s FOCACs or on their own, they can better leverage their political position for ODA. These recommendations can be implemented separately but together they work to maximize the amount ODA received from not just China but all donors.
  42. 42. 41 References Annotated Bibliography Brautigam, Deborah. The Dragon's Gift: The Real Story of China in Africa. Oxford: Oxford UP, 2009. Print. A professor of comparative politics at the School of Advanced International Studies at John Hopkins University, Dr. Deborah Brautigam has been a consultant for the U.S. Agency for International Development, U.K. Department for International Development and the African Development Bank. She has become the premier authority on Sino-African engagement. The Dragon’s Gift details and summarizes that engagement, focusing on economic relations. Thus this book not only tackles China’s foreign aid programs in Africa but the Chinese government’s investments in Africa, as well as that of private firms and non-profits. It also provides a history on Sino-African Economic relations from 1959 onward. Thus Brautigam’s work provides a contextual framework for analyzing China’s aid system, detailing the organizational structure of that system and its operations in Africa. Carothers, Thomas, and Diane De. Gramont. Development Aid Confronts Politics the Almost Revolution. Washington, D.C.: Carnegie Endowment for International Peace, 2013. Print. While Thomas Carothers currently serves as vice president of the Carnegie Endowment for International Peace, Diane De Gramont is research analyst at that same institution. Their work, Development Aid Confronts Politics: The Almost Revolution presents a retrospective of foreign aid from traditional donors, specifically the member states of the Organization of Economic Cooperation and Development. Along those lines, it addresses the topic of development aid from a political perspective, aiming to convey the political processes that go into disbursement of aid and the selection of recipient nations. Consequently this works serves as a good point of comparison, when discussing the Chinese aid system. Greenhill, Romilly, Annalisa Prizzon, and Andrew Rogerson. The Age of Choice: How Are Developing Countries Managing the New Aid Landscape? Rep. no. 9781909464162. Overseas Development Institute, Mar. 2013. Web. 27 Oct. 2014. Andrew Robertson, a senior research associate at the Overseas Development Institute, joined by research fellows Romilly Greenhill and Annalisa Prizzon attempt to map the new international aid regime in this report. Through a case study of Zambia, Ethiopia and Cambodia, they address how the proliferation of nontraditional donors like China and Korea has affected aid negotiations, projects and development schemes in developing countries to determine how these changes have benefitted or marginalized these states. Consequently this report provides insight on not only the Chinese aid system but development aid in general from the recipients perspective.
  43. 43. 42 Additional References Addison, Tony, George Mavrotas, and Mark Mcgillivray. "Development Assistance and Development Finance: Evidence and Global Policy Agendas." Journal of International Development 17.6 (2005): 819-36. Print. Adem, Seifudein. "China in Ethiopia: Diplomacy and Economics of Sino-optimism." African Studies Review 55.1 (2012): 143-60. Print. Alden, Chris. China in Africa. London: Zed, 2007. Print. Blanchard, Jean-Marc F. "Harmonious World and China’s Foreign Economic Policy: Features, Implications, and Challenges." Journal of Chinese Political Science 13.2 (2008): 165- 92. Print. Davies, Martyn, Hannah Edinger, Natasya Tay, and Sanusha Naidu. "How China Delivers Development Assistanceto Africa." Centre for Chinese Studies (2008): n. pag. Print. Gill, Bates, and James Reilly. "The Tenuous Hold of China Inc. in Africa." The Washington Quarterly 30.3 (2007): 37-52. Print. Gill, Bates. Rising Star: China's New Security Diplomacy. Washington, D.C.: Brookings Institution, 2007. Print. Gore, Charles. "The Rise and Fall of the Washington Consensus as a Paradigm for Developing Countries." World Development 28.5 (2000): 789-804. Web. Jansson, Johanna, and Carine Kiala. Patterns of Chinese Investment, Aid and Trade in Mozambique. Rep. Stellenbosch: Centre for Chinese Studies, 2009. Print. Mohan, G., and B. Lampert. "Negotiating China: Reinserting African Agency into China-Africa Relations." African Affairs 112.446 (2013): 92-110. Print. Moss, Todd J. African Development: Making Sense of the Issues and Actors. Boulder: Lynne Rienner, 2007. Print.
  44. 44. 43 Moyo, Dambisa. Dead Aid: Why Aid Is Not Working and How There Is a Better Way for Africa. New York: Farrar, Straus and Giroux, 2009. Print. Ngongo, Francisco Kapalo. The Impasse of Post-conflict Reconstruction Economic Growth vs. Governance in Angola. Houston: Strategic Book, 2012. Print. Oatley, Thomas H. International Political Economy. Boston: Longman, 2012. Print. Rimmer, D. "Learning about Economic Development from Africa." African Affairs 102.408 (2003): 469-91. Print. Roque, Paula C. China in Mozambique: A Cautious Approach Country Case Study. Rep. no. 23. Braamfontein: South African Institute of International Affairs, 2009. Print. Sautman, Barry, and Yan Hairong. "African Perspectives on China–Africa Links." The China Quarterly 199 (2009): 728. Print. Strange, Austin, Michael Tierney, Brardley Parks, Andreas Fuchs, and Vijaya Ramachandran. "Working Paper 323." China’s Development Finance to Africa: A Media-Based Approach to Data Collection. Center for Global Development, Apr. 2013. Web. 27 Oct. 2014. Sun, Yun. Africa in China's Foreign Policy. Rep. Brookings Institute, Apr. 2014. Web. 27 Oct. 2014. Zhang, Baohui. "Chinese Foreign Policy in Transition: Trends and Implications." Journal of Current Chinese Affairs 39.2 (2010): 39-68. Print.
  45. 45. Appendix A - Glossary of Terms

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