Chinese Infrastructure Loans to India:
China's state-owned banks are financing huge infrastructure projects in Africa and India to boost Chinese exports. Leading the effort are China's ExIm Bank, China Development Bank and China Industrial Commercial Bank. Major multi-billion dollar projects being signed by Chinese President Xi Jineng, currently visiting India, and Prime Minister Modi will be financed by loans from one or more of the state-owned Chinese banks.
Chinese Infrastructure Project Financing in Pakistan:
China is also pursuing strategic Pakistan-China economic corridor which includes several large infrastructure projects worth tens of billions of US dollars connecting China with the Arabian Sea through Pakistan. These projects will be financed by China's ExIm Bank and other state-owned banks.
In a report last year, China's State-owned Xinhua News Agency articulated China's motivation to expand land trade in addition to building its navy to protect its sea trade. Here's what it said:
“As a global economic power, China has a tremendous number of economic sea lanes to protect. China is justified to develop its military capabilities to safeguard its sovereignty and protect its vast interests around the world."
China's Global Superpower Ambitions:
The Xinhua report has for the first time shed light on China's growing concerns with US pivot to Asia which could threaten China's international trade and its economic lifeline of energy and other natural resources it needs to sustain and grow its economy. This concern has been further reinforced by the following:
1. Frequent US statements to "check" China's rise. For example, former US Defense Secretary Leon Panetta said in a 2011 address to the Naval Postgraduate School in California: "We try everything we can to cooperate with these rising powers and to work with them, but to make sure at the same time that they do not threaten stability in the world, to be able to project our power, to be able to say to the world that we continue to be a force to be reckoned with." He added that "we continue to confront rising powers in the world - China, India, Brazil, Russia, countries that we need to cooperate with. We need to hopefully work with. But in the end, we also need to make sure do not threaten the stability of the world."
|Source: The Guardian|
2. Chinese strategists see a long chain of islands from Japan in the north, all the way down to Australia, all United States allies, all potential controlling chokepoints that could block Chinese sea lanes and cripple its economy, business and industry.
|Karakoram Highway-World's Highest Paved International Road at 15000 ft.|
Chinese Premier's emphasis on "connectivity and maritime sectors" and "China-Pakistan economic corridor project" is mainly driven by their paranoia about the US intentions to "check China's rise" It is intended to establish greater maritime presence at Gwadar, located close to the strategic Strait of Hormuz, and to build land routes (motorways, rail links, pipelines) from the Persian Gulf through Pakistan to Western China. This is China's insurance to continue trade with West Asia and the Middle East in case of hostilities with the United States and its allies in Asia.
|Pakistan's Gawadar Port- located 400 Km from the Strait of Hormuz|
As to the benefits for Pakistanis, expanded trade and the Chinese investment in "connectivity and maritime sectors" and "China-Pakistan economic corridor project" will help build infrastructure, stimulate Pakistan's economy and create millions of badly needed jobs.
Clearly, China-Pakistan ties have now become much more strategic than the US-Pakistan ties, particularly since 2011 because, as American Journalist Mark Mazzetti of New York Times put it, the Obama administration's heavy handed policies "turned Pakistan against the United States". A similar view is offered by a former State Department official Vali Nasr in his book "The Dispensable Nation".
Chinese Checkbook Diplomacy:
China is now the biggest lender to the developing world, surpassing the World Bank set up as an institution by the West to extend its dominance after WWII. China's checkbook diplomacy is bearing fruit with its growing trade making it the biggest trading partner of a growing number of countries and regions. As China surpasses the United States as the largest economy and its trade volume explodes, it is very likely that the RMB (Yuan), the Chinese currency, will replace the US dollar as the world's main trade and reserve currency.
Between 2001 and 2010, China’s Export-Import Bank extended $62.7 billion in loans to African nations, or $12.5 billion more than the World Bank, according to Forbes magazine. Over the same period, trade between Africa and China grew by more than 700 per cent with China replacing the U.S. as Africa’s biggest trading partner in 2009.
History is filled with examples of great powers using trade and exports to extend their power and influence across the world. China appears to be taking a page from their playbook in pursuit of massive trade growth through check-book diplomacy in Africa, South Asia and South America.
China's Checkbook Diplomacy
Japan to Finance, Build Karachi Mass Transit System
Pak-China Economic Corridor
Soaring Chinese Imports and Twin Deficits in India
India-Israel Military Relations
Pakistan's Military Production
BRIC, Chindia, and the "Indian Miracle"
India's "Indigenous" Weapons
Pakistan's Telecom Boom
India's Growing Defense Budget
China is also Japan's top trading partner. US is shrinking and spending money in unnecessary misadventures.
in 2014, so far US has a deficit of 170B dollar with CHina. I am sure China wants to dominate US also.
Anon: in 2014, so far US has a deficit of 170B dollar with CHina. I am sure China wants to dominate US also."
The nature of US-China and India-China trade deficits is very different. While India's trade deficit actually transfers money from Indian entities to US entities, the US trade deficit is mostly intra-company where the money changes hands within the US corporation for importing US-company products from China.
The vast majority of the U.S. $727 billion trade deficit in goods for 2011 is due to "intra-firm" or "related party" trade, that is, trade between two units of the same corporation, according to the U.S. Census Bureau. This is significant because such trade is the most open to companies manipulating the prices between subsidiaries to minimize tax liabilities, usually known as abusive transfer pricing. Moreover, as Stuart Holland argued in 1987, intra-firm trade is also less responsive to changes in exchange rates than is trade between independent businesses, since within an individual multinational corporation each subsidiary will have a specific role to play in its supply chain, which won't be quickly changed.
In 2012, India exports were $299 billion and imports were $488 billion. India still holds its forex reserves steady at about $300 billion due to software and BPO exports of $75 billion, remittances of $75 billion and FDI at 20 billion.
2012 was the year when there was a small decline in exports and imports. Since then the uptrend that was present before 2012 has taken root. Although these are still early days and with Modi at the helm, the uptrend is likely to be steeper in all aspects of the economy as well as social indicators.
It will be interesting to revisit many social and economic indices in 5-10 years.
Singh: "India still holds its forex reserves steady at about $300 billion due to software and BPO exports of $75 billion, remittances of $75 billion and FDI at 20 billion."
India's IT exports are highly exaggerated.
A 2005 study by US General Accounting Office (GAO) found that Indian government's figures for software and technology exports to the United States were 20 times higher than the US figures for import of the same from India.
U.S. General Accounting Office looked at the 2003 data showing the United States reported $420 million in unaffiliated imports of BPT (business, professional, and technical) services from India, while India reported approximately $8.7 billion in exports of affiliated and unaffiliated BPT services to the United States.
The GAO found at least five definitional and methodological factors that contribute to the difference between U.S. and Indian data on BPT services. First, India and the United States follow different practices in accounting for the earnings of temporary Indian workers residing in the United States. Second, India defines certain services, such as software embedded on computer hardware, differently than the United States. Third, India and the United States follow different practices for counting sales by India to U.S.-owned firms located outside of the United States. The United States follows International Monetary Fund standards for each of these factors. Fourth, BEA (Bureau of Economic Analysis) does not report country-specific data for particular types of services due to concerns about the quality of responses it receives from firms when they allocate their affiliated imports to detailed types of services. As a result, U.S. data on BPT services include only unaffiliated imports from India, while Indian data include both affiliated and unaffiliated exports. Fifth, other differences, such as identifying all services importers, may also contribute to the data gap.
India's IT exports are highly exaggerated.
You seriously think all those investors in Indian IT shares including some of the world's shrewdest investors like Mark Mobius and hedge fund operators don't do any due dilligence.
TCS as a corporate entity has revenues >10 billion.
Infosys Wipro >8 billion each
HCL Tech Tech Mahindra > 4 billion
These are all companies which are listed on NASDA NYSE and other international bourses and whose ADRs are traded globally.
Their books are regularly audited by multiple auditors and large institutional investors.
You seem to be getting over excited about nothing.Sure some amount of fudging is possible but its unlikely to be on the scale you are claiming.
The fact that this sort of report hasn't come out for almost 10 years is indicative of this being an abberation and that India's figures are by and large correct.
If not there are plenty of anti outsourcing groups in the US who would love to expose 'Indian Enrons' like they went to town about the Satyam fiasco in I think 2009.
Anon: The fact that this sort of report hasn't come out for almost 10 years is indicative of this being an abberation and that India's figures are by and large correct."
It's also a fact that India's methodology has not been corrected.
In theory, India follows what is known as BPM 6 (MSITS) reporting method for software and information-enabled technology services (ITES) which counts sales to all multinationals, earning of overseas offices, salaries of non-immigrant overseas workers as India's exports. In practice, India violates it. BPM 6 allows the salaries of first year of migrant workers to be included in a country's service exports. India continuously and cumulatively adds all the earnings of its migrants to US in its software exports. If 50,000 Indians migrate on H1B visas each year, and they each earn $50,000 a year, that's a $2.5 billion addition to their exports each year. Cumulatively over 10 years, this would be $25 billion in exports year after year and growing.
In theory, capital goods import signals economic boom, promising rise in industrial production, in GDP. But here? Even as capital goods import rose by 79 per cent in the five years, the growth in index of industrial production fell by 56 per cent (from 11.5 per cent earlier to 5 per cent in the latter five years). And directly hit by the imported capital goods tsunami, domestic capital goods manufacture nosedived by one-tenth in 2011-13.
Ultimately, the macro- economic data has to make sense.
$299 billion exports fob
-$488 billion imports fob
= trade deficit $189 billion (merchandise)
Now, if that trade deficit remains it will cause severe balance of payment problem; however, that doesn't happen why?
Reason is $75 billion software and services exports plus $ $75 billion remittances and $20 billion FDI.
The article presented by the blogger has to do more with salaries - if not it doesn't make any economic sense.
Your list of countries from where India gets most of its Imports in 2012 is:
Yes? Now let us examine all this a little closer. UAE is a minor oil exporter, especially compared to a giants like Saudia, Kuwait, Iraq. So why is the UAE so high up on this list? This is because UAE is an exchange point for Indo-Pak trade. Most of the Indian imports from UAE are actually Pakistani exports. Let us then split UAE into Pakistan (via UAE) and UAE (oil). If we do this we get the following as the list of countries from where India gets most of its Imports in 2012:
2) Pak (via UAE)
11) UAE (Oil)
But what is it that these imports represent? Here is the list:
1) Lower-end capital equipment & cheap consumer goods (China)
2) Regional trade (Pakistan via UAE)
3) Gold (Switzerland)
4) Oil (Saudia)
5) High-end capital equipment (US)
6) Oil (Iraq)
7) Oil (Kuwait)
8) High-end capital equipment (Germany)
9) Commodities (Coal, Coke from Australia)
10) Commodities (Palm oil, Coal from Indonesia)
11) Oil (UAE)
We can then COLLAPSE (or shorten) this list as follows:
1) Lower-end capital equipment & cheap consumer goods (CHINA)
2) Regional trade (Pakistan via UAE)
3) Gold (Switzerland)
4) Oil (Saudia, Iraq, Kuwait, UAE)
5) High-end capital equipment (US, Germany)
6) Commodities (Australia, Indonesia)
Isn't this a lot more clear and meaningful that the original list?
Anon: "TCS as a corporate entity has revenues >10 billion...Infosys Wipro >8 billion each...HCL Tech Tech Mahindra > 4 billion etc etc"
These companies sell services, not products.
These service are mostly rendered by Indian H1-B workers whose salaries are being counted year-after-year, not just the first year, as India's IT exports.
In theory, India follows what is known as BPM 6 (MSITS) reporting method for software and information-enabled technology services (ITES) which counts sales to all multinationals, earning of overseas offices, salaries of non-immigrant overseas workers as India's exports. In practice, India violates it. BPM 6 allows the salaries of first year ofmigrant workers to be included in a country's service exports. India continuously and cumulatively adds all the earnings of its migrants to US in its software exports. If 50,000 Indians migrate on H1B visas each year, and they each earn $50,000 a year, that's a $2.5 billion addition to their exports each year. Cumulatively over 10 years, this would be $25 billion in exports year after year and growing.
For the first time in seven years, the fiscal deficit could fall below 4 per cent of GDP, as buoyant tax receipts and disinvestment proceeds, along with lower spending on food and fuel subsidies, improve the balance sheet.
“It’s early days still, but if the current trends on both the expenditure and revenue sides continue, the fiscal deficit could lie between 3.9 per cent and 4 per cent in 2014-15,” a senior government official said.
Optimism stems from lower crude oil prices and delay in the rollout of the Food Security Act — which are likely to together help cut the total expenditure bill of Rs 17.94 lakh crore by about Rs 30,000 crore.
Ballooning subsidies throw targets amiss
FY'12 deficit jumps to 5.9%; seen at 5.1%
'Fiscal deficit may rise to 5.8% of GDP'
Buoyant taxes pull down deficits
Telecom windfall wasted by Govt
A spurt in economic activities is already translating into higher than estimated tax collections. And the continued bull run is expected to ensure that disinvestment proceeds meet, if not exceed, the target of Rs 58,425 crore.
The last time fiscal deficit was under 4 per cent of GDP was in 2007-08 (2.7 per cent), after which it soared to 6 per cent in the wake of the global financial crisis. Fiscal deficit in 2013-14 was 4.5 per cent of GDP. A lowered fiscal deficit will be a significant achievement for the Centre, which has been trying to convince rating agencies of its commitment to fiscal consolidation. A higher sovereign rating would translate into more investments.
Former finance minister P Chidambaram had estimated a fiscal deficit of 4.1 per cent in the Interim Budget in February. Finance minister Arun Jaitley retained the target in his Budget in July, but described it as “daunting”. “Lower global crude prices could translate into savings of Rs 10,000 crore this fiscal, but only if this trend persists,” said the official. Crude was trading at $97.79 a barrel in international markets on Monday, much below the finance ministry’s estimate of $110 per barrel, on the basis of which it has allocated Rs 63,426.95 crore as fuel subsidy for 2014-15. Deregulating the price of diesel could bolster the fisc further. Again, while the Budget had pegged food subsidy at Rs 1,15,000 crore for the current fiscal, officials said back of the envelope calculations show the delay in implementing the law could result in savings of about Rs 20,000 crore.
“Half the financial year is over, and some states are not keen to implement the National Food Security Act. There will definitely be savings on this account,” another official, who is involved in the exercise, said. The finance ministry is also confident that improved market sentiments will translate into success for its big ticket disinvestments in Coal India, ONGC and Steel Authority of India Ltd, scheduled around September 26.
- See more at: http://indianexpress.com/article/business/business-others/for-first-time-in-7-years-fiscal-deficit-could-fall-under-4/#sthash.Ixypr1Qg.dpuf
The most proximate impediment to India’s quest for Great Power status remains Pakistan.
THE election of Narendra Modi as prime minister and geopolitical developments — particularly the US pivot to Asia and the Russia’s new Cold War with the West — have revived India’s prospects of achieving Great Power status. In quick succession, Modi has visited Japan’s ‘nationalistic’ prime minister; hosted China’s president; and will be received this week by the US president in Washington.
The US obviously wishes to embrace India as a partner in containing a rising China, responding to a resurgent Russia and fighting ‘Islamic terrorism’.
It is prepared to bend over backwards to secure India’s partnership. During his Washington visit, Modi is likely to be offered the most advanced American defence equipment; military training and intelligence cooperation; endorsement of India’s position on ‘terrorism’; investment, including in India’s defence industries; nuclear reactor sales; support for a permanent seat on the UN Security Council, and a prominent role in Afghanistan after US-Nato withdrawal. There will be no mention of the Kashmir dispute, nor of past or current human rights violations in India.
The reticence, if any, in this love fest is likely to emanate from India rather than the US. While seeking all the advantages of a strategic partnership with the US, India is unwilling to relinquish the benefits of its relationships with Russia, China, Iran and other power players.
India’s evolving relationship with China is complex. Both Asian giants see the benefits of trade and investment cooperation and want to ‘democratise’ the post-Second World War economic order dominated by America. During President Xi Jinping’s recent visit China offered to invest $20 billion in industrial parks including in Modi’s home state of Gujarat and to support India’s infrastructure development.
India under Modi has maintained the multifaceted Indian strategy to break down Pakistan’s will and capacity to resist Indian domination.
This strategy includes: building overwhelming military superiority, conventional and nuclear, against Pakistan; isolating Pakistan by portraying it as the ‘epicentre’ of terrorism; encouraging
Baloch separatism and TTP terrorism (through Afghanistan) to destabilise Pakistan; convincing Pakistan’s elite of the economic and cultural benefits of ‘cooperation’ on India’s terms.
In this endeavour, India is being actively assisted by certain quarters in the West.
Insufficient thought has been given in New Delhi and Western capitals to the unintended consequences of this strategy. It has strengthened the political position of the nationalists and the Islamic extremists in Pakistan. Islamabad’s vacillation in confronting the TTP was evidence of this. Further, the growing asymmetry in India-Pakistan conventional defence capabilities has obliged Pakistan to rely increasingly on the nuclear option to maintain credible deterrence.
The combination of unresolved disputes, specially Kashmir, the likelihood of terrorist incidents and a nuclear hair-trigger military environment, has made the India-Pakistan impasse the single greatest threat to international peace and security.
New Delhi’s bid for Great Power status could be quickly compromised if another war broke out, by design or accident, with Pakistan.
In "Capital in the Twenty-First Century", French economist Thomas Piketty argues that the GDP growth rates of India and China are exaggerated.
Picketty writes as follows:
"Note, too, that the very high official growth figures for developing countries (especially India and China) over the past few decades are based almost exclusively on production statistics. If one tries to measure income growth by using household survey data, it is often quite difficult to identify the reported rates of macroeconomic growth: Indian and Chinese incomes are certainly increasing rapidly, but not as rapidly as one would infer from official growth statistics. This paradox-sometimes referred to as the "black hole" of growth-is obviously problematic. It may be due to the overestimation of the growth of output (there are many bureaucratic incentives for doing so), or perhaps the underestimation of income growth (household have their own flaws)), or most likely both. In particular, the missing income may be explained by the possibility that a disproportionate share of the growth in output has gone to the most highly remunerated individuals, whose incomes are not always captured in the tax data."
"In the case of India, it is possible to estimate (using tax return data) that the increase in the upper centile's share of national income explains between one-quarter and one-third of the "black hole" of growth between 1990 and 2000. "
China on Saturday promised neighbouring Pakistan investment worth $42 billion, an official said, as Islamabad promised to help Beijing fight what it calls a terrorist threat in its far-west.
Pakistan's Prime Minister Nawaz Sharif oversaw the signing of 19 agreements and memorandums mostly centred on the energy sector as he met Chinese President Xi Jinping in Beijing.
Pakistan, a close ally of China, suffers from chronic electricity shortages and Islamabad has long sought investment in coal-fired power stations which it sees as a solution to the problem.
Other countries have balked from such investments, sometimes on environmental grounds.
The new agreements pave the way for Chinese state-owned companies to help build at least four new power stations in Pakistan, while the deals also cover the supply and mining of coal, the prime minister's press office said.
"The deals being signed between China and Pakistan are worth $42 billion. The whole investment is being made by China," said Amir Zamir, spokesman for Pakistan's ministry of planning and development.
"There is no loan or aid for the energy projects, but pure investment by the Chinese," he told AFP.
Pakistan has for decades been China's closest ally in South Asia, and Beijing is a major trading partner and key supplier of military technology to Islamabad.
Pakistan borders the far-western Chinese region of Xinjiang, which has seen a series of clashes and attacks on civilians that have left more than 200 dead in the past year.
Beijing blames some of the region's violence on an organised terrorist group it calls the East Turkestan Islamic Movement (ETIM) seeking independence for the region, home to the mostly-Muslim Uighur minority.
Many analysts doubt that any large scale organisation of the kind exists, while rights groups blame the violence on what they call the repression of Uighur language and culture by Beijing.
Sharif told Xi that Pakistan would "resolutely fight the East Turkestan Islamic Movement terrorist force," China's foreign ministry said in a statement following the meeting in Beijing.
"We stand behind China on all the core issues like Taiwan and Tibet to human rights, the fight against the ETIM," Sharif added within earshot of journalists.
Xi was forced to cancel a planned trip to Pakistan in September due to anti-government protests in Islamabad.
But the Chinese president visited Pakistan's arch-rival India the same month, signing a raft of deals.
Sharif acknowledged that "somehow the circumstances led to the postponement of the visit," adding to Xi: "I believe you will be visiting Pakistan very soon."
BEIJING—A major textile producer in China has backed out of a high-profile deal for control of a Pakistani company. The stated reason: Banks in the Chinese company’s home province face such large loan defaults that they balked at lending the $62 million needed to complete the acquisition.
The scuttling of the deal by Shandong Ruyi Science & Technology Group Co., which has investments around the world, is a further signal that stress is mounting in China’s banking system and that the days of easy credit in the world’s second-largest economy are drawing to a close.
According to Masood Textile Mills Ltd.’s chief executive officer, Shahid Nazir, Ruyi in October pulled out of the deal to buy 52% of his company, almost nine months after committing to the acquisition.
“Shandong banks were having some serious issues on defaults,” Mr. Nazir said he was told by Ruyi, adding that the Chinese company said it wasn’t alone in having funding troubles. “Because of the general situation in Shandong…lots of companies in the province were feeling the squeeze.”
A spokesman for Ruyi couldn’t be reached, and the company’s Shenzhen-listed unit declined to comment.
Credit from China’s state-owned banking system has in the past been readily available to companies with political backing and ambitions explicitly in line with those of the central government. Ruyi has received well-publicized visits from President Xi Jinping and Premier Li Keqiang and is expanding overseas, as Beijing has urged. As the economy slows, however, the vast expansion in bank loans used to help keep growth humming over the past six years is now being followed by rising defaults.
China’s financial system is opaque. Authorities have been reluctant to publicize defaults, often swooping in with bailouts at the last minute.
But nationwide, cracks are starting to appear. In the third quarter, the aggregate deposit base of China’s four biggest banks declined after years of robust growth. Since September, the central bank has pumped hundreds of billions of yuan directly into the country’s biggest financial institutions in an unconventional move to give the banks the resources to continue to support an economy that has grown dependent on borrowing.
Here's an excerpt from US Bureau of Economic Affairs (BEA) on source of differences between Indian exports and US imports of IT and related products and services:
BEA follows international standards for balance-of-payments accounting by excluding the compensation paid by U.S. firms to U.S. residents. Foreign workers who are in the United States for less than one year are considered to be foreign residents, and typically their earnings are included as compensation of employees (under “income” in the balance of payments accounts). Workers who are in the United States for more than one year are considered to be U.S. residents, and so their earnings are excluded from the balance of payments accounts. According to the GAO study, Indian officials acknowledged that temporary Indian workers in the U.S. have accounted for about 40 to 50 percent of their data on exports of BPT services.
b) Sales through affiliated companies. India’s data on services exports to North America include sales of services to affiliates of U.S. companies located in India or another foreign country, as well as sales by affiliates of Indian companies located in the United States to other U.S. residents. According to international standards, BEA excludes these sales from U.S. trade in services because the transactions did not occur between a U.S. resident and a non-resident. A U.S. company’s foreign affiliate that is located in India is an Indian resident, and so its transactions with other Indian residents should not be included in the balance of payments. Similarly, an Indian company’s affiliate in the United States is a U.S. resident, and so its transactions with other U.S. residents should not be included. According to the GAO study, an Indian official stated that inclusion of sales to affiliates of U.S. companies is “likely a significant factor” accounting for differences between U.S. and Indian data.
c) Sales of goods. India’s data on trade in BPT services include some sales of goods, such as prepackaged software and software embedded on computer hardware. The U.S. data on trade in these products are included in the goods trade data, not in the services trade data. According to the GAO study, Indian officials stated that embedded and prepackaged software account for about 10-15 percent of India’s estimate of exports of BPT services to the U.S.
d) Sales of technology-enabled services. India’s data on trade in BPT services include some technology-enabled services (such as some financial services). BEA includes these services in other services categories.
e) Intrafirm trade. Through 2006, U.S. data for trade in services are collected separately for cross-border trade between unaffiliated companies and for intrafirm (or affiliated) trade. The surveys that BEA uses to collect data on unaffiliated trade are detailed enough to allow BEA to identify trade in BPT services vis-à-vis India. Affiliated trade, however, is collected on separate surveys, and data for individual foreign countries that separately identify BPT services are unavailable. Therefore, reported BEA data for BPT trade with India cannot be directly compared with the Indian data, because BEA’s data for BPT services include only unaffiliated trade and India’s data on BPT services include both affiliated and unaffiliated trade.
BEA adjusted its own data to include an estimate of affiliated transactions, which are collected on surveys that do not allow for BPT services to be separately identified by individual foreign country. In order to estimate affiliated imports of BPT services from India, BEA used a ratio calculated from global affiliated and unaffiliated imports of BPT services. BEA used the same procedure to estimate affiliated imports of computer services
#Africa-#China Ties 2021: “China still addresses Africa’s hunger for structural transformation in a way that the West does not....Any African country with urgent need for new roads, bridges or ports, then Chinese finance and firms are the obvious option" https://www.economist.com/the-world-ahead/2020/11/17/african-countries-will-remain-best-friends-with-china
VERY THREE years African and Chinese politicians gather at a diplomatic jamboree known as the Forum on China-Africa Co-operation (FOCAC). The summits, which attract more African heads of state than annual UN gatherings, are waypoints in China’s long journey on the continent. Over the past three decades it has become the pre-eminent partner for many African countries. Its importance will be apparent again in 2021 at the next FOCAC meeting, the eighth, which is due to take place in Dakar, the capital of Senegal.
Yet the context for this summit is different from that of the previous seven. During the Trump presidency China’s role in Africa came in for increasing American criticism. In 2020 the secretary of state, Mike Pompeo, accused China of offering African countries little but “empty promises and tired platitudes”. Though the Biden administration is less likely to use provocative rhetoric, scepticism of Chinese intentions on the continent will nevertheless endure. So the coming year could prove a tricky one for African policymakers, who are already grappling with the fallout from the pandemic.
China’s image in Africa was tarnished last year by the ill-treatment of African migrants in Guangzhou, a port city. That brought condemnation on social media and by African politicians. But, broadly speaking, African views of China are nuanced and resilient. Polling of 18 countries by Afrobarometer, a pan-African research group, released in September 2020, found that an average of 59% of respondents had a favourable view of China—marginally higher than of America (58%). No wonder African politicians are careful not to take sides.
Nor will they see much benefit in speaking out against China over issues such as Xinjiang, Hong Kong or Taiwan. China places great value on the 54 African countries’ votes at the UN and other international organisations. (In 1971 African votes ensured that the People’s Republic of China was admitted to the UN and that Taiwan was expelled.) It will reward those who vote with it and punish those who do not. Officials in Kenya are known to have studied China’s punitive response to Australian criticism of its human-rights records—and fear what would happen if their country did anything similar.
Even if African politicians wanted to speak out against China, few believe Western governments would support them if they did. “The West is unwilling to underwrite the cost of antagonising China,” says W. Gyude Moore, a former cabinet minister in Liberia, now at the Centre for Global Development, a think-tank. “The continent is best served by charting its own course.”
Post a Comment