With the emergence of China as provider of development finance, there has been an unprecedented rise in the dependence of resource-rich and cash-poor African nations on the Bamboo Capitalist. For some, Chinese assistance is a Good Samaritan act, but for some others, the expanding Chinese footprint signals new imperialism and debt-trap diplomacy. While throwing light on debt-diplomacy discourse, this article makes out a case for diversifying the African economy’s dependence on external powers and strengthening inter-Africa trade ties.

by Rama Rao Malladi

Over the last couple of years, considerable academic exchange has occurred over the veracity of China’s debt-trap diplomacy claims.

Some academicians and international relations pundits have expressed concern over the absence of transparency and an efficient and equitable external debt management system (Alden, 2020).

Others have taken a more severe disposition, claiming that China has taken up a colonial era practice of enslaving countries through excessive debt.

The countering camp of scholars considers the phenomenon to be non-existent and the claims fallacious, mostly catering to the narrative of the Western Powers (Brautigam, 2019; Carmody, 2019; Singh, 2020).

As per Brautigam, the narrative of the debt-trap policy is a result of Western media houses, who consider China a threat and its involvement in Africa as a form of new imperialism.  Singh (2020) claims that the argument for a debt-trap policy lacks rigor, and China’s role in international development finance is rather ameliorating for the economy of Africa, non-interventionist, and lacks any kind of predatory behavior towards borrowing countries.

To summarize

One of the major arguments given by the pro-China camp (or those who believe that China’s engagement with Africa is a Good Samaritan act) is based on the tenets of whataboutery:

What about the hypocrisy of the West?  What about when Western companies,  à la Chinese companies,  engage in commercial transactions with Africa?  

The second set of key arguments against the debt-trap narrative is based on the skepticism about the anti-China narrative of the Western media and the environment of fear and negativity bias it creates.

The third argument is broadly based on the lack of evidence of China’s vindictive behavior or interventionist measures (against any defaulting nation).

However, the recent developments in Africa-China relations and the slowing down of the Chinese economy have uncovered many facets of the Sino-African engagement.

And various economic linkages compel experts to call their engagement asymmetric and debt-backed diplomacy.

This paper is an attempt to expound on the discourse of debt-trap policy in the wake of new evidence on the economic development front.

Debt-Trap Diplomacy Broadly speaking, debt-trap diplomacy refers to the deliberative use of development finance through loans, grants, and infrastructure investment, among others, to trap economies to advance the lending countries’ foreign and economic policy objectives (Alden, 2020).

Over the past couple of decades, China has emerged as the major lender to many countries, diminishing the shares of traditional lenders like the IMF and the World Bank. This has led to criticism of Chinese presence in Africa on geopolitical and economic grounds.

First, China’s excess involvement with African nations is considered an unequal relationship. It is a relation characterized by asymmetric power dynamics and imbalanced economic relation between economic giant China and large number of underdeveloped and politically non-resilient African nations.

This power asymmetry has compelled many scholars to understand Sino-African relations from a neo-colonialist/ neo-imperialist perspective.

For two reasons.

One, African economic and political systems are, to begin with, are highly vulnerable.

When China provides excessive funding to these nations, the power gap is further deepened. This directly impacts the African governments’ ability to maintain its autonomy in domestic matters as well as international relations.

A key concern is regarding the independence of voice of the African nations.

Excess dependence on loans from China can lead to arm-twisting, where debt relief or further financial assistance (to Africa) would be contingent on agreeing with China’s stand on international platforms, thus corroding their foreign policy sovereignty.

The recent evidence suggests that several African countries supported China at the UNHRC over the Uyghur minority issue[i]. It is conjectured that excessive economic dependence on China has led Africa to ignore its own commitment to international assistance, solidarity, and cooperation[ii].

In the future, China is expected to seek increasing support from African nations when tensions between China and its other powers in the region, like India, increase.

Given the rising excesses in Hong Kong and the resulting pressure on China, its diplomatic relations with Africa would help China muster further support in its favour.

Langan (2017) points out that China has ensured that African governments advance its mercantilist interests and protection of its businesses at the cost of local social and environmental issues.

This, in turn, makes China’s relations with Africa more of a “quid pro quo” type, with more power resting with the Chinese side.

Two, with increasing deals with Chinese construction companies for infrastructure growth, there is an increase in the presence of Chinese citizens in Africa.

Currently, it is estimated that around two million Chinese migrants are settled across Africa, particularly in Zambia, Angola, Kenya, South Africa, and Ethiopia[iii]. Many of them are working as construction workers building infrastructure that has been funded by China.

This has led to some concerns about African nationals getting displaced from employment as the Chinese companies are bringing their own workers from the Middle Kingdom.

Moreover, there have been episodes of racial discrimination.

In Nairobi, Kenya, a restaurant owned by a Chinese person discriminated against Africans, banning their entry[iv].

The heat was also felt on social media platforms, where the Chinese were called out for being discriminatory and racist.

One comment on social media read: “Chinese only want their road tenders and ivory”[v].

The friction between Chinese and Africans also emerges because of the significant cultural differences.

The culture of questioning the boss and maintaining a strict hierarchy in a workplace doesn’t exist in China, which is not the case in Africa, leading to tensions between inter-racial work environments.

Sadly, the Chinese still live under the impression that Black people are lazy and can’t be trusted[vi].

ECONOMIC TANGENTS

Sino-African relations are economic in nature, built on the tenets of development aid and infrastructure finance. 

Based on historical experiences, Beckley (2023) poses a straightforward question with a rather apparent answer:

What compels an already rising state like China to expand  abroad? One key reason is slowing economic growth at home.

 According to Beckley, the expected slowdown of the economy drives otherwise rising states to adopt aggressive expansionary policies, and that has been the case with major powers including the US, Russia, and Japan, over the past 150 years.

Evidently, the China’s high growth phase slowly began to faint with the turn of the century.

Thus, China’s tryst with Africa is its response to its own structural issues, namely considerable excess capacity and insufficient internal impetus driving economic growth.

Expansion of Chinese presence has begun to create issues in some African countries contrary to the claim of the pro-China camp.

Sierra Leone has experienced the expansion of the Chinese agenda in the identical spirit of “deception, corruption, and intimidation”[vii] as once exercised by the British.

An investigation has revealed cases of extraction of natural resources by the Chinese in Sierra Leone, causing damage to people’s health and the environment.

In Zambia, there is rising friction between Chinese migrants and the natives, with rising perception about Chinese employers as exploitative[viii].

Chinese investments in Africa have not helped extirpate any of the socio-economic vices but have rather exacerbated them.

In the Democratic Republic of Congo, China’s investment in mining has given further impetus to child labour concerns, employee safety and remuneration violations, and oppression of workers if they raise their voices against mistreatment.

Chinese-owned mines are known for employing thousands of children and workers facing physical and verbal abuse.

The situation in Congo is compared to “a “colonial era” level of discrimination[ix].

Lives of people and natural resources like rivers have also been polluted in the Central African Republic.

Lastly, and most importantly, there is a rising concern about the model of resource-financed infrastructure, which mirrors the exploitative practices of the colonial era and the terms of agreements that are extractive in nature. 

Chinese financial institutions and construction companies are engaging in two prominent models of infrastructure financing: Resources-for-Infrastructure (R4I) and Resource-Financed Infrastructure (RFI).

In the case of RFI, governments promise the future stream of revenues of the sale of resources from development projects (like mining) to the lending nation, whereas R4I is like a resource swap, where actual natural resources are exchanged in return for the development of public infrastructure.

Sino-African engagements are characterized by both kinds of financing models (Ogwang & Vanclay, 2021).

Though both models sound pro-development theoretically, in practice, the repercussions are severe and exploitative for the borrowing nations.

Take a reality check

• Chinese construction companies in Africa are not directly leading to any improved goods and labor market engagements, capacity building, or growth through multiplier effect, as many of the infrastructure projects are using Chinese inputs and services from Chinese construction firms and workers. This leads to limited technology transfer from technology-rich China to resource-rich Africa (Ogwang & Vanclay, 2021).

• African nations like Zimbabwe, Ghana, and Angola have engaged in a resource-backed borrowing approach with China (R4I contracts).

• Ghana has collateralized its debt using bauxite, cocoa, and oil, and the agreement empowers China to take over these natural resources to pay off the debt. In the wake of the recent debt default in Ghana, the nation may lose its natural resources to China if China wishes. However, it is expected that taking over natural resources against default would face backlash and resistance from locals, but it will still lead to hampering the debt-dispute resolution in the future (Mihalyi et al, 2021).

• In a nutshell, the R4I lending model is risky. 

• One, it may provide a perverse incentive to lending nation, making default by borrower an opportunity.

• Two, it would lead to the loss of sovereignty of the locals on their national natural resources.

ECONOMIC EXCESSES –RACIAL TENSIONS

Africa is an integral part of China’s Belt and Road Initiative (BRI) and has led to a large number of infrastructure ventures. However, the present work throws light on the long-term concerns of the Sino-African engagement.

The pro-China camp of scholars is seemingly oblivious to rising economic excesses in Africa and brewing racial tensions. The narrative of debt diplomacy is often called out for being Western-propaganda-driven and false.

On the other hand, a group of scholars, experts in geopolitics and international relations, see China’s rapid expansion in Africa as a form of new imperialism and provide evidence for their claims. It is pertinent that the conflicting views are seen in the light of current socio-political-economic developments in the two regions.

Nations like Zambia have experienced a reduction in their political sovereignty, while other like DRC have experienced a rise in human rights violations under Chinese operations.

CONCLUSION

Given the non-transparent and non-democratic nature of Beijing, fear is only valid that unstable governments of Africa would consider the China as a model and suppress their desires for democracy. 

It is well known that China is focusing on the promotion of soft power with Chinese characteristics and has also developed the concept of Chinese-style democracy[x][xi].

Excessive co-dependency also leads to a spillover of negative externalities from one party to the other. More so because of slowing down of the Chinese economy and the vast amount of pending investment commitments in Africa.

It has been found that a one percentage point decline in the Chinese economy is responsible for reducing growth in Sub-Saharan Africa by 0.25 percentage points.[xii]

The recent decline in Sino-African economic engagement due to the slowing down of the Chinese economy is a call for building resilience and strengthening inter-Africa trade ties, as well as diversifying the African economy’s dependence on external powers (POREG).

References

Alden, C. (2020). Understanding debt and diplomacy: China, ‘debt traps’ and development in the Global South.

Beckley, M. (2023). The Peril of Peaking Powers: Economic Slowdowns and Implications for China’s Next Decade. International Security, 48(1), 7-46.

Brautigam, D. (2020). A critical look at Chinese ‘debt-trap diplomacy’: The rise of a meme. Area Development and Policy, 5(1), 1-14.

Langan, M (2017). Emerging Powers and Neo-Colonialism in Africa’. Neo-Colonialism and the Poverty of ‘Development’ in Africa, Palgarve Macmillan, Newcastle.

Mihalyi, D., Hwang, J., Rivetti, D., & Cust, J. (2021). Resource-Backed Loans in Sub-Saharan Africa.

Ogwang, T., & Vanclay, F. (2021). Resource-financed infrastructure: thoughts on four Chinese-financed projects in Uganda. Sustainability, 13(6), 3259.

Singh, A. (2020). The myth of ‘debt-trap diplomacy’ and realities of Chinese development finance. Third World Quarterly, 42(2), 239-253.

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[i] https://www.hrw.org/news/2021/03/29/why-are-some-african-governments-shielding-china-over-xinjiang

[ii] https://www.hrw.org/news/2021/03/29/why-are-some-african-governments-shielding-china-over-xinjiang

[iii] https://english.elpais.com/international/2023-09-02/chinese-in-africa-a-complex-relationship-fraught-with-tension.html

[iv] https://edition.cnn.com/2015/03/25/africa/kenyan-chinese-restaurant-discrimination-arrest/index.html

[v] https://edition.cnn.com/2015/03/25/africa/kenyan-chinese-restaurant-discrimination-arrest/index.html

[vi] https://english.elpais.com/international/2023-09-02/chinese-in-africa-a-complex-relationship-fraught-with-tension.html

[vii] https://www.telegraph.co.uk/global-health/climate-and-people/china-investment-sierra-leone-africa-mining/

[viii] https://www.wilsoncenter.org/publication/chinese-migrants-versus-ordinary-zambians-causes-tension-and-possible-peace-pathways

[ix] https://www.wilsoncenter.org/blog-post/examining-chinas-impact-mining-africa-critiques-and-credible-responses

[x] https://www.ndtv.com/world-news/china-has-chinese-style-democracy-xi-jinping-to-joe-biden-3520550

[xi] https://moderndiplomacy.eu/2021/03/06/chinese-style-soft-power/

[xii] https://www.imf.org/en/News/Articles/2023/11/09/cf-chinas-slowing-economy-will-hit-sub-saharan-africas-growth