A savior or a bully?Discussion on Chinese investments in Africa

Since China's grand One Belt One Road strategy came into action, China's overseas investment has become a hot topic. On 2 February 2018, the HKCTU hosted a discussion on “Chinese investments in Africa”, invited Ms Daisy Chan, who got her master's degree in international political economy of the University of Warwick; Mr Fredrik Fan, who got his master's degree in labour policies and globalization of University of Kassel, as speakers. The two speakers shared two case studies of China's overseas investment, to outline the behaviours of Chinese enterprises in Ethiopia and Kenya.


China has a long history of investment in Africa. Back in 1956, Mao Zedong funded some African countries to support communist countries in the Third World. In Deng Xiaoping's era, China switched to capitalism and the Government became more pragmatic in international trade. By 1999, China officially moved forward from its status of recipient country, changing its role of being a borrowing country to a lending country.

In order to alleviate  the international community's scepticism, China adopted a foreign policy of non-intervention and claimed its foreign aid as “unconditional”, namely, it would not demand its recipient countries to revise their systems or legislations. For the recipient countries, which were colonized by the western forces, Chinese support infers certain connotations of “anti-colonialism” and it becomes an alternative option. However, there is no free lunch. China has a whole agenda of international politics and economic plans, such as to export China's surplus capacity in production and gain grounds in the international political ideologies from the western countries.


To achieve these goals, China is launching more infrastructure projects in African countries. In East Africa, back in the colonial time, Kenyan people had dreamed about development and prosperity through the construction of railway. Between 2005 and 2008, through its Export-Import Bank, China handed out USD 3.8 billion to build a standard gauge railway across Kenya. The project was developed through the “build, operate and transfer (BOT) agreement”, namely it is built by Chinese capital and operated by China Communications Construction Company (the parent company of the constructor) for five years. If Kenya could repay the loan by then, the right to operate would be transferred back to the Kenyan government.


Agreements like prohibit open tenders, Chinese enterprises would carry out the project and are allowed to import Chinese workers to work in Africa. Such an arrangement would inevitably upset the local workers. In August 2016, a conflict broke out, Kenyan workers attacked Chinese workers and ended up with over 10 workers hospitalized. Reportedly, Chinese workers have been under strict surveillance and local trade union could not contact them.


Ethiopia is seen as a successful showcase of China's foreign policy and investment. It has become a shining emerging country in Africa, instead of that starving nation previously portrayed in World Vision's publications. Ethiopia has been ruled by dictators, free from colonial conquerors but heavily depending on western donations. With foreign funds, it revised its policy on public land ownership repeatedly and became a state led by neo-liberalism.

In late 2005, Ethiopian government brutally murdered anti-government protestors, detained reporters and foreign aid workers, gunned down people who were fighting for democracy. Its repression angered the international community, resulting in sanctions, which saw the World Bank and western countries pulled the plug on a USD 370 million aid. Seeing it as a chance, China offered USD 500 million to Ethiopia in 2006 and continued its aid in following years. The international sanctions fail to punish the Ethiopian government, but helped China to grow its roots in Ethiopia, By 2012, China was ranked the third biggest direct investor in Ethiopia.


Due to Ethiopia's political and economic significance, western countries do not want to risk their diplomatic ties with it and the sanctions were dropped eventually. Ethiopia became the biggest winner, receiving aid from both sides while continuing its authoritarian rule. It could even disagree with World Bank's development plans and still gets funding from China. In 2010, China offered USD 420 million to help building its Gibe III Dam. The project was initiated by the Ethiopian government, the loan came from Industrial and Commercial Bank of China and the construction of the dam would be contracted to Dongfang Electric. In 2011, China's Export-Import Bank provided a loan of USD 300 million for Ethiopia's economic reform and investment.


Through massive funds and loans, China is imposing its value and operation model to undermine its western counterparts'. The major difference between China and the western countries is, China provides a full package of capital, trade, financial aid, and infrastructure to promote overall economic development in the recipient countries, which is highly regarded in these countries.


Chinese government also provides trainings to officials in the recipient countries on China's economic strategies, development models and even auditing systems. This might appear harmless. However, together with the influence of Chinese media, China's legislature system and even Party-State system, the media and people of the developing countries would gradually adopt and approve the “Chinese model”. Apparently, the Belt and Road Initiative aims to influence how the world operates by flexing its economic muscles. Under the flag of non-intervention, China is resetting the world order according to its own interests. Many African countries have become faithful supporters of China, when they lend their support in the passing of China’s Anti-Session Law in 2005, rejecting Taiwan's UN membership in 2007 and bidding of the 2008 Beijing Olympic Games.

It is true that western countries' neo-liberal financial aid, through World Trade Organization and World Bank, has caused many economic problems in the developing countries. However, simply accepting China as an “alternative of anti-colonialism” would overlook China's political agenda and the potential harm to human rights. With China's growing significance in the international community, global civil society starts to feel its grasp. When Beijing Consensus becomes a common consensus, the rhetoric in anti-colonialism and anti-imperialism is no longer relevant, because such consensus represents the rise of a new hegemony.