Wednesday, May 20, 2020

"China's expensive bet on Africa has failed"

From Nikkei Asian Review, May 1:

Coronavirus crash in commodity prices has wasted $200 billion in investment and loans
Minxin Pei is professor of government at Claremont McKenna College and a nonresident senior fellow of the German Marshall Fund of the United States.
China's commercial activities in Africa, such as investments, infrastructure projects and bank lending, have long attracted scrutiny and criticism. Critics have accused Beijing of practicing a new form of economic colonialism to gain control of the continent's valuable natural resources by luring unsuspecting African nations into so-called debt traps.

While this perspective dominates the narrative about Beijing's economic ties with Africa, it likely exaggerates Chinese strategic foresight and overlooks the pitfalls of China's big bet on the continent.
As the prices of oil, copper and minerals found in Africa have plunged in the global economic meltdown, the prospects for China-funded projects look bleak. China is facing growing pressure to forgive the tens of billions of dollars of loans it has made to African countries since the early 2000s. The mistreatment of African residents in China during the outbreak has fueled cries of racism and prompted diplomatic protests against Beijing.

Even the crown jewel of China's economic engagement with Africa, the trillion-dollar Belt and Road Initiative infrastructure program, is at risk. The coronavirus has dealt a body blow to the Chinese economy, with its economic output falling 6.8% in the first quarter.
It is doubtful that Beijing will have the resources to fund the BRI in the future. One telltale sign is the absence of references in the communiques of recent Politburo meetings of the Chinese Communist Party to BRI as a priority.

In retrospect, the unraveling of China's Africa project should not come as a surprise. Beijing's strategy has been based on flawed assumptions and was executed at the wrong moment.
Chinese leaders see Africa mainly as a source of natural resources. China's fast-paced growth since the early 1990s has generated a voracious demand for oil and subsoil minerals, and Africa appeared a perfect fit since dominant multinationals had a weak hold on the continent and Beijing could easily outbid them to gain equity stakes in mines and oil fields.

For unknown reasons, the Chinese government believed that, as an equity holder and creditor, it could better ensure secure access to critical raw materials there.

As a result, China has opened its checkbooks and become the most active nontraditional lender in Africa. According to the China Africa Research Initiative at Johns Hopkins University, China loaned $152 billion to 49 African countries between 2000 and 2018. The World Bank estimates that, as of 2017, the value of China's loans to sub-Saharan African countries was $64 billion, or more than 60% of the stock of bilateral debt....
....MUCH MORE

And more to come.
They did get Tedros into the Director-General spot at the WHO, all 55 members of the African Union fell in line and voted for him:
Covid-19: How Did Tedros Come To Be Head Of the W.H.O.? (Think China's Belt and Road Debt Trap Diplomacy)

Previously:
May 2019
China's Expanding Media Dominance in Africa
China's Plan For Global Media Dominance 
"Chinese-style 'digital authoritarianism' grows globally"
"Former Google CEO predicts the internet will split in two by 2028 — and one part will be led by China"

See also:
Follow-up: "...African economy needs more usage of Chinese yuan..."
"How China is Transforming Africa Into 'New Factory of the World'"
"Natural Resources & Sleeper Cells: China’s Plan For The Next 5,000 Years"  
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