Chinese Engagement in the Developing World

It’s interesting, how big the difference is between the approaches to developmental help of the so called “First World” on the one, and China on the other hand. And the effects of them.

“Our”, i.e. industrial countries’, ODA (official development assistance) flows are not only much smaller than they should according to the actual commitments (the only relevant donor countries who spend 0,7% of their GDP as ODA, i.e. in accordance to the UN target, on which the OECD countries agreed years ago, are the Scandinavians and Benelux), they also are highly inefficient. Perhaps we stick too much to the old Bretton Woods system principles of intense (neoliberal) conditionalities – it is not only the highly criticized IMF (consider e.g. this report), still sticking to its “austerity” measures and its paranoid fear of inflation. It is the World Bank and other development banks as well, and also the development ministries of the richest countries in the world – for Germany I should only mention the name Dirk Niebel, a man who actually wanted to abolish the ministry he is the head of now. There is much literature on this – as another examples one could name Ocampo’s, Rada’s and Taylor’s “Growth and Policy in Developing Countries”, Sachs’s “Common Wealth” or Stiglitz’s “Making Globalization Work”.

But there is an interesting question in this context: that of the (alleged) successes of Chinese development cooperation. It is a kind of paradox that China, who itself is still an emerging economy (its developing process to an industrialized country isn’t accomplished yet), cares for the development of other countries. Nevertheless, it has engaged in some kind or other in development assistance for a few years already, especially in Africa. So the question is: could China be more successful in promoting development in other countries (it obviously is very successful in promoting own development)?

For sure it is a much more welcome donor, because the Chinese don’t think much of conditionality.

It is clear that China’s helping other countries to develop isn’t an expression of great altruism – it has an own agenda and own aims to pursuit. But isn’t that so with ODA in general? When, for instance, the African countries would become richer, they also would become a new source of demand – for products from industrialized countries as well. So, development assistance is a kind of self interested behaviour, in some way.

An important forum for Chinese trade and investment in Africa is the China-Africa Cooperation Forum, CACF. According to Sanou Mbaye, China has three objectives for its engagement in Africa:

(…) to consolidate secure energy and mineral supplies, to curtail Taiwan’s influence on the continent (which harbours six of the 26 countries with which it maintains full diplomatic relations), and to augment China’s burgeoning global authority.

It became the second biggest trade partner of the continent (only the USA has a bigger part in it).

An important part of the trade flows between China and Africa are natural resources. That isn’t exactly what promotes development – extracting of natural resources for export mostly causes ecological damages and doesn’t create jobs. Furthermore, China often “pays” for oil, coal etc. through selling cheap weapons – as in the case of Darfur.

Another problem of the cooperation between China and Africa is that of the so called (farm)land-grabbing – the buying of huge areals of cultivated land with the purpose of protecting against food shortages in the future – mostly linked with environmental and social costs for the host country.

On the other hand, according to Jeffrey Sachs, “[t]he advice that the African leaders received from their Chinese counterparts [when China was playing host to the Africa Development Bank (ADB) in 2007] was sound, and much more practical than they typically get from the World Bank.” In contrast to the IMF or World Bank, the Chinese have been stressing the importance of public investment for development purposes. Unlike the Bretton Woods institutions with their infamous “structural adjustment programs”, China seems not to want to constrain the Africans to do what it thinks to be the right thing, but to more adjust to the regional needs and uniqueness.

You probably can say, yes, the Chinese way is the better one. Both sides aren’t doing perfectly: while the Western dominated institutions lay too much stress on inflation and austerity, and dismiss the importance of public investments, China concentrates too much on natural resources. And perhaps no conditionality (e.g. selling weapons to those who want them, no matter for what purpose) isn’t much better than too much of it. To really help Africa (but also Latin America, South Asia and so on), the international institutions should work more flexible and trust the state a little bit more. That is, what they can learn from China.

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