Is the Chinese approach so different? Are the Chinese crowding out or crowding in? Chinese development cooperation Conclusion

1. Government to Government (G2G) vs.
Competitive Procurement on
Silk Road Infrastructure Projects
January 2017

2. Contents
• Is the Chinese approach so different?
• Are the Chinese crowding out or crowding in?
• Chinese development cooperation
• Conclusion

3. Is the Chinese approach so
different?

4. US Foreign Assistance Tied to US Firms
• USAID-hired contractors providing services, works in beneficiary
countries
• OPIC financing dependent on US investor participation
• ExIm Bank financing dependent on US manufacturing content
• US TDA funding dependent on US supplier opportunities

5. European Union State Owned Enterprises

6. New Procurement Methods
• EU Competitive Negotiation
• PPPs
• Unsolicited Proposals
• World Bank’s New Procurement Framework

7. Are the Chinese Crowding Out or
Crowding In?

8. China Active in Investment-Starved Regions

9. China has stepped in where multilaterals have
failed
• Example: Kenya-Uganda Rail Concession
• Advised by IFC, Kenya suffered an unsuccessful procurement process
• Concessionaire lacked financial, technical capacity to delivery needed
investments and operational improvements
• Restructuring, fraud investigations ensued
• China’s offer of the Mombasa-Nairobi Standard Gauge Railway Project
was warmly received
• Railway is on target to complete construction in July 2017

10. Conditionality
• Required actions on the part of the beneficiary government to secure
loans and/or grant funds
• Often tied to policy actions whose success may or may not be proven
• Can provide additional burdens to beneficiary without corresponding
results
• Helps to sow frustration and distrust of sponsoring organization
• May lead to increased support for G2G and other alternatives

11. Chinese Development
Cooperation

12. Increased Cooperation (Leadership) from the
Chinese
• EBRD Shareholder
• Increased World Bank quotas
• AIIB, Silk Road – major multilateral initiatives
• Cooperation with existing multilaterals & frameworks at individual
project level

13. Conclusion

14. Conclusion
• Chinese approaches are not much different from existing Western
approaches, considering bilateral development programs, European
SOE activity and new procurement approaches
• Chinese initiatives often serve the least developed countries where
even donor activity is limited
• China offers expeditious and viable options where multilaterals and
others have failed or struggled, providing much needed competition
in the development landscape
• China is increasingly cooperation (leading) development initiatives
and collaboration with existing institutions

15. Thank you!
Brien Desilets | Managing Director | Claret Consulting
8000 Towers Crescent Drive | Suite 1300 | Vienna, VA 22182
bdesilets@claretconsult.com | +1 703 760 4491