Tag Archives: China foreign policy

To Each their Bank: China’s Infrastructure Investment Bank

Jakarta slum 2006 image from wikipedia

The Asian Infrastructure Investment Bank (AIIB )reflects China’s new eagerness to institutionalise its official lending abroad, which has been generous but contentious….It is billed as China’s “21st-century” answer to lenders like the World Bank (always led by Americans) and the Asian Development Bank (dominated by Japan)…

China’s financial commitment to the AIIB is equivalent to less than one percent of its remaining reserves. Almost 70% of the institution’s $100 billion of capital is drawn from its other 56 participants. It will also raise money by issuing bonds of its own. Far from being a fair-weather folly, the AIIB appears well-timed. Global capital has retreated from emerging markets, leaving a gap the AIIB will help fill. By the same token, the retreating dollars are sheltering in safe assets, such as the highly rated bonds the AIIB proposes to sell.

Unlike the World Bank, which is pulled hither and thither by its members, the AIIB will keep a tighter focus on infrastructure. It has no sitting board or permanent branch offices in borrowing countries. It is also quick, approving four projects within six months of its launch date. More established multilateral lenders can take a year or two to do the same. Some fear the AIIB will deviate from prevailing norms in other, more troubling ways—undercutting environmental standards, say. But of its first four projects, three are joint ventures with existing institutions, subject to their protocols. Its $217m project to improve slum-life in 154 Indonesian cities, led by a veteran of the World Bank, seems alert to the dangers of soil erosion and groundwater pollution. Likewise, its road-improvement plan in Tajikistan, administered by the European Bank for Reconstruction and Development, will tactfully relocate a monument to Avicenna, a Persian polymath who memorised the Koran by the age of ten….

If international financial institutions make room for China, it may bypass them anyway, but if they do not, it definitely will. The AIIB’s first solo venture will bring electricity to 2.5m rural homes in Bangladesh. That is not the only kind of power distribution that needs modernising.

Excerpt from The AIIB: The infrastructure of power, Economist, July 2, 2016

China in Tanzania: colonization in modern times

TAZARA railway.  The governments of Tanzania, Zambia and China built the railway to eliminate landlocked Zambia's economic dependence on  Zimbabwe and South Africa,.

China and Tanzania have concluded (November 2014) a month-long naval training exercise, the first joint training exercise in the history of bilateral military relations between the two countries. The closing ceremony of exercise Beyond/Transcend 2014 was held on November 14 at Kigamboni Naval Base, Tanzania  and attended by guests that included China’s ambassador to Tanzania, the chief of the Tanzanian military and heads of the navy and air force.

The exercise between the Chinese People’s Liberation Army Navy (PLAN) and Tanzanian People’s Defence Force (TPDF) kicked off on October 16 in Tanzania’s capital Dar es Salaam, with more than 100 navy officers and seamen participating, although the official opening ceremony was held on October 21….

Tanzanian has emerged as a key ally to the PLAN as it intensifies partnerships and operational deployments in the Indian Ocean Region (IOR) and conducts anti-piracy patrols in the area. In December last year the 15th Chinese naval task force charged with escorting ships and patrolling for pirates visited Dar es Salaam on its way back to China.

China’s strong relationship with Tanzanian can be seen in its support for the military. China has recently sold the East African country 24 Type 63A light amphibious tanks, 12 Type 07PA 120 mm self-propelled mortars, FB-6A mobile short-range air defence systems and A100 300 mm multiple rocket launchers. This follows military hardware delivered earlier in the decade, including tanks, armoured personnel carriers and combat aircraft.

The Chinese government also built the Tanzanian Military Academy (TMA) and the Shanghai Construction Group has been contracted by the Tanzanian Ministry of Defence and National Service to construct 12 000 housing units financed by a $550 million loan from the Exim Bank of China.

On the economic side, China has invested in various Tanzanian projects and late last month signed investment deals worth more than $1.7 billion, including one to build a satellite city to ease congestion in Dar es Salaam. The money will be used to develop infrastructure, power distribution and business cooperation. Tanzania also announced $85 million in grants and zero-interest loans from China, Reuters reports.  In recent years, Chinese companies have signed deals to build a rail network and a 532 km (330 mile) natural gas pipeline. Between July and September 2014, Chinese investments totalled $534 million, compared to $124 million during the same period last year.

China says it will “speed up the construction” of the Bagamoyo port, a new Indian Ocean project being built north of Dar es Salaam, and begin offshore oil and gas exploration off Tanzania.  China’s exports to Tanzania, which totalled $1.099 billion from 2012 to 2013, were roughly double the $495.74 million worth of goods China imported from Tanzania.

China and Tanzania conclude historic naval exercise, defenceWeb, Nov. 18, 2014

China and its Collaborators in Africa

Congolese critics accuse Sassou-Nguesso [President of Congo] of using the Chinese-backed building boom to move from his ‘authoritarian-authoritarian’ model to something nearer the ‘developmental authoritarian’ style of Rwanda’s President Paul Kagame. However, Sassou-Nguesso was in triumphant mode as he inaugurated a spate of Chinese construction projects in the country’s hinterland on 14-18 May. These projects are intended to bring the benefits of oil-backed growth to regions previously isolated from the bustling cities of Brazzaville and Pointe-Noire.  Now known locally as ‘The Cutter of Ribbons’, Sassou-Nguesso is using oil money and plans to develop Congo-Brazzaville’s mineral resources to shape a new relationship with China. Once a key commercial and diplomatic ally of France, Sassou-Nguesso’s headlong rush to Beijing coincides with the election of President François Hollande. Hollande’s African policy team promises to break with the old Françafrique networks. Among their advisors is the activist lawyer William Bourdon, who has been pursuing a case against Sassou-Nguesso in France for stealing Congolese state assets…..

From fibre-optic installation and new dams to more than 1,000 kilometres of paved roads, companies like China Road and Bridge Corporation and China State Construction Engineering Corporation have quietly landed most of the major contracts issued by the Brazzaville government.  That means large profits and more deals to come.

Congo-Brazzaville, for so long the preserve of European companies, is drawing serious attention from China. The two countries have signed deals to develop special economic zones, build a new oil port and revamp an ageing refinery. For the Chinese investors, the lure is Congo-Brazzaville’s rich but under-exploited resource base. Having relied for decades on offshore oil riches and forestry, the country has until recently made little effort to exploit its mineral deposits, develop its more remote regions or diversify the economy into commerce and services. That could change if the new Asian relationships live up to their billing. For Sassou-Nguesso, the big attraction is an engagement based purely on economic and financial criteria, with a partner who does not impose awkward governance or human rights conditions.

This is not Congo’s first encounter with Asian investment. South Korean and Malaysian companies, via the Consortium Congo Malaisie Corée, had proposed a huge resources-for-infrastructure deal that would build new rail lines in exchange for access to forestry and mining permits in 2008. That deal didn’t work out but the Chemin de Fer Congo Océan received part of its order of engines and cars from Korail in August 2011. Malaysian investors have looked at opportunities in the hydrocarbons sector and – building on their experience of rural Congo in the timber business – palm oil production. In 2010 Atama Plantation agreed to invest $300 million in new oil palm plantations and processing capacity.

The most recent interest from Chinese entities takes the engagement a step further. Alain Akouala Atipault, a Minister in the Presidency, was China’s guest at an international infrastructure and investment forum in Macau where, on 24 April, he signed an agreement with the China Friendship Development International Engineering Design and Consult Corporation (FDDC) – an offshoot of the Trade Ministry in Beijing.  FDDC will seek out Chinese investors interested in setting up operations in four special economic zones, which Congo plans to establish in Brazzaville, Pointe- Noire, Ouesso and the Oyo-Ollombo area. FDDC will also help to mobilise financing for the zones, build their infrastructure and carry out feasibility studies……

China’s engagement in Congo is typical of its strategy elsewhere in Africa. Beijing often takes a long-term view of whether projects will generate an economic return. Viability is seen in broad terms, encompassing not just the specific project’s concerns but also the wider trade and political benefits of partnership and the political goodwill that could open up access to valuable natural resources. Congo has both major reserves of high-value timber – a sector where Congo Dejia Wood Industry, Jua Ikié, Million Well Congo Bois, Sino-Congo Forêt and Société d’Exploitation Forestière Yuan Dong are already active – and reserves of minerals such as iron ore and potash, which are largely untouched.

China National Complete Plant Import & Export Corporation is developing the potash reserves at Mengo with Canada’s MagIndustries; Australia’s Sundance Resources relies on finance and expertise from Hanlong Mining and other Chinese infrastructure companies to make its designs on iron-ore projects in Cameroon (Mbarga) and Congo-Brazzaville (Nabeba) viable. Sundance is waiting for final approvals from Yaoundé and Brazzaville and expects all the paperwork to be signed before the end of 2012.

Beijing’s policy of ignoring questions of democracy and human rights is certainly helpful to Sassou-Nguesso’s regime – which has a poor human rights record, is marred by widespread corruption and remains fundamentally authoritarian despite the trappings of a multiparty system.

Excerpt, Congo-Brazzaville: Sassou Draws in Beijing,AllAfrica.com, June 2, 2012

See also A Continent for Sale through Queensway