Is China’s agenda hidden? Read between the lines. people. Is China exerting influence because of being nice?
Africa- China Trade
In just within the timeframe of 20 years, China is leading the world as Africa’s largest trading partner topping $128 billion by 2016 and increasing at an accelerating rate. It’s foreign direct investment (FDI) stock reached approximately $35 billion by 2015.
McKinsey & Company estimates that about 10,000 Chinese firms operate in Africa today. Yet, the continent unemployment rate is still high, because those firms bring their own people to do the work, exploiting limited skills gap in these countries in which they do business.
Gone are the days when Beijing’s supported anti-colonialism and anti-apartheid movements in Africa. Those ideological efforts have been replaced by shared economic, security, and strategic interests in sometimes complex and partnerships that are controversial.
The speed at which China’s activities are increasing makes some to believe that it is masterminding reverse neocolonialism that would plunge many African nations into debt which could strip these nations of their resources and ability to exist.
For example, in Djibouti, China controls about 80 percent of its public debt which is exceeding 86 percent of GDP. Similarly, in Zambia, it is suggested that unsustainable and uncontrolled lending is resulting into takeover of the public electric company.
Africa – China Cooperation Summit 2018 -Beijing
Because China financial institutions are willing to provide low interest loans and more flexible payment terms and few questions asked, as compared to globally recognized and reputable international financial institutions such as the International Monetary Fund (IMF) and the World Bank, African leaders and decision-makers find them attractive trading partners without reading the fine print and writing on the wall. Don’t be fooled. China is doing no one any favor. Before we move forward with these things, we should do research so the data can drive decision-making. Also we should learn from other African countries where this relationship has soured.
Flag of China
The latest news from the just ended ‘Forum on China-Africa Cooperation in Beijing’ revealed an upbeat attitude and optimism from African leaders who do not understand what China is up to. Have an open mind, folks.
These meetings and engagements are intended only to drive China’s “One Belt One Road” (OBOR) initiative that has been classified as a debt trap diplomacy on the one hand and its excess capacities and migrate excess and overburdened factories that have created negative externalities such as pollution and greenhouse gas emissions.
Similarly, from a geopolitical lens, this China world order is an attempt to enhance a robust regional connectivity through Asia, Africa and Europe that enhance and push for China’s dominance in global affairs with a China-centered trading network that is a kind of economic globalization and regional integration effort. This would include 71 countries that account for half the world’s population and a quarter of global GDP.
China Belt and Road Initiative in East Africa
Countries are beginning to read the writing on the wall. For example, just recently (2018) Malaysian Prime Minister Mahathir Mohamad cancelled two China-funded projects, a $27 billion East Coast Rail Link and $3.1 billion dollars awarded to the China Petroleum Pipeline Bureau and warned “there is a new version of Colonialism happening.” Conversely, Sri Lanka, where the government leased a port to a Chinese company for 99 years is struggling to make payment terms.
Quite recently, the Center for Global Development found eight more Belt and Road countries at serious risk of not being able to repay their loans. Similarly, Djibouti, Kyrgyzstan, Laos, the Maldives, Mongolia, Montenegro, Pakistan and Tajikistan will soon owe more than half of all their foreign debt to China. To compound on it, China created its first military based in Djibouti in 2018 to expand its influence and put stamp on its interests there.
We must think through these things carefully and why I think it is a good idea for the opposition parties in Liberia to press and challenge the current government on the US$2.5 billion resources swap alleged deal based on the points made. We, as a country, have done very poorly managing our resources in ways that create missed opportunities to improve the standard of living for our people.
Look, Liberia doesn’t have a resource gap problem but a leadership and management problem. Unless we think things through and change our worldview about how we develop our country, nations like China will exploit our weaknesses driven by weak institutions and corrupt policy makers and leaders to own and control us. A hint to the wise is quite sufficient.
African and Chinese Officials at 2018 Summit in Beijing
So, we need to be smart about what we do. For example, In the first three months of 2018, China faced its first current account-deficit since 2001 and it’s foreign-exchange reserves felled to roughly $3.1 trillion from $4 trillion in 2014 and its production capacity has weakened in the midst of trade wars with the United States.
If we decide to move forward with a deal, we must make sure that it is in our best interest and any resources is maximized to achieve its intended out because as Gina Heeb of Business Insider just observed, China’s pockets may not be deep enough to bail out emerging markets. And Ting Lu opined “China is still financially healthy, but its pockets are not as deep as they were.”
About The Author
Dr. A. Joel King has a doctorate in Management and a diploma in Public Policy Economics from Oxford and Executive Coaching from Cambridge.