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China’s Aid to Africa: Monster or Messiah?

Original link to article:

http://www.brookings.edu/research/opinions/2014/02/07-china-aid-to-africa-sun

In the article, “China’s Aid to Africa: Monster or Messiah?”, the author presents a cross-examination of the economic presence in China. China’s Ministry of Commerce reported that Chinese investment in Africa grew 2.96B USD from 2000 to 2011. However, according to China Radio International, the billions China commits to Africa is in the form of long term, concessional loans. The IMF defines concessional loans as loans that are extended on terms substantially more generous than market price loans with grace periods and low interest rates. The article states that the bulk of Chinese financing in Africa falls under developmental financing; and not aid. I think this is important to point out because they are quite different, theoretically. Chinese leaders claim their actions are selfless, but I believe the

situation in reality is far more complex than what we currently are being told.

The author claims the concessional loans are associated with securing the countries natural resources. This is related to something referred to as the Angola Model. The author described the ‘Angola Model’ as the frequent times China would provide a low interest loan to a nation that relied heavily or solely on a commodity(s), such as oil or minerals, as collateral. Apparently, Chinese banks loan African governments loans backed by commodity or infrastructure projects but those projects go to state-owned Chinese companies. As I was doing outside research for this assignment, I discovered that other researchers found similar deals in 7 other resource rich African countries that were valued at a total volume of 14B

China's Energy Footprint in Africa, 2009, Institute of Developing Economies - Japan External Trade Organization
China’s Energy Footprint in Africa, 2009, Institute of Developing Economies – Japan External Trade Organization

USD.

The author writes that the Ministry of Foreign Affairs believes foreign aid is a political instrument to strengthen bilateral ties and facilitate development throughout Africa. Contrary to what the Ministry says, the aid being received by African countries are those that are resource rich and also suffer from political problems like authoritarianism, poor governance and corruption. The topic of China in Africa is relevant to this class because the actions these two entities take have the capability to affect everyone. After analyzing this article, I ask myself if these Chinese companies and the corresponding African governments are justified in their actions and if they’ve been transparent and inclusive with the frameworks they’re enacting upon.

In the age of conscious consumerism, consumers want to know where and how their products were made, and they want it to be ethical. While we may have different ideas of what the right thing is, I do believe what China is doing regarding the natural resources in Africa is not ok. Is this modern day colonialism?

 

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About jbanister

International Business Management Kogog School of Business VP Black Student Alliance American University '17

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