| In2000, The Economist saw no signs for hope in Africa. It claimed that Africa was "the hopeless continent", and the capital city of Sierra Leone, once a place of hope in19th century, at the start of the21st century it symbolized failure and despair. It seemed that the world has given up on the continent. However, when the Chinese come with sincerity, technology, talents and aid, things have changed and keeps changing.In2011, a brand new towering20-storey building stood like a giant in the grand headquarter of the African Union in Addis Ababa (the capital of Ethiopia). It is called as "Chinese present to Africa", because China picked up the＄2billion tab for the most advanced complex. It is Ethiopia’s tallest building, completed in2011in time for the coming AU summit, including a2,500-seat conference hall. The present made Ethiopia’s late Prime Minister believe that Africa’s current economic boom is a "renaissance", partly owing to China’s "amazing reemergence and its commitments to economic cooperation based on mutual benefits in Africa."China’s involvement in Africa is not new. For decades China had either assisted or donated in constructing stadiums in Benin and Sierra Leone; a hospital in Luanda, Angola; a road from Lusaka(Zambia’s capital) to Chirundu in the southeast; a water supply project in Mauritania; a sugar mill and sugarcane farm in Mali; the list can go on and on....While China’s involvement was welcomed in the corridors of power in Africa, it sparked significant concern in the West. An article titled "China in Africa:Myths, Realities and Opportunities" by The Harvard Business Review in2012commented China’s involvement in Africa:China is monolithic, mired in banal ideology, overthrowing the Bretton Woods system, and is not willing to provide global public goods. In addition, China doesn’t have " soft power ", which means that China is unable to engage almost one billion Africans by attraction, persuasion, and market relations rather than wildcat economic and military force. The conclusion generated by these myths is that China is aiming to displace the West. It hurts the interests of Africans who have made great efforts to eliminate poverty, build democratic institutions and integrate into the networks of trade and investment.In reality, it is not only out of differences in ideology that the West shows hostility towards China’s emergence in Africa, it is also because the West’s aid seems dead now in Africa, just like the famous Tanzanian economist Dambisa Moyo said in her book Dead Aid. Moreover, what China is doing has generated big threat to the West. Early in the1970s, D. Wall, a fellow of the Charity of Nations observes:" When the rhetoric of aid is confronted with the facts of aid, when promises do not materialize and the supposed generosity appears more like parsimony, then, hardly surprisingly, the expected friendship frequently does not manifest itself or appears muted." The West’s foreign aid once left donors and recipients disenchanted with its performance. Fortunately though, that opens a door for China’s reemergence in Africa.In Chinese relationship with Africa, aid is undoubtedly an important bond to realize the ideal win-win results for both parties. It is regarded as the glue of the relationship with African countries.Thus within this context, this study places emphasis on the positive effects of aid for China-Africa trade through the analyzing of the trade benefits from the building of the infrastructure and the construction of the Overseas Special Economic Zones in Africa. It is divided into five parts:The first part is the introduction, in this part, the background and significance of the study are illustrated. The new party leaders chose Africa as their first official visits, so it’s obvious that Africa keeps playing a vital role in Chinese diplomacy. In the21st century, this diplomacy serves for Chinese booming economy. The Forum on China-Africa Cooperation which was established in2000, has become an important and influential vehicle for the relationship between China and Africa. On the other hand, China-Africa trade volume increased from＄10.5billion in2000to＄198.49billion in2012. Moreover, in China, foreign aid, investment and trade are not really distinct categories. Those are the background of this study. As for the significance, this study is trying to gather information and gain insight into China’s aid policies to Africa and how it benefits the trade between both partners. At the same time, according to different relationships including aid and economic growth, aid for trade and Chinese aid to Africa, the literature review gives specific explanation. At the end of this part, the key concepts including aid, aid for trade and trade facilitation are introduced.The second part is the basis of this study. Since China has reemerged in Africa, the West’s media has reported largely about China’s activities in Africa, some directly claim that China is a " rogue donor " or a " neocolonialist". This part reveals the truth that the West’s approach to aid faces dilemma and Chinese aid is the solution. Moreover, the unconditionality and the fact of infrastructure-prioritized of Chinese aid, the extensive use of Chinese labor and the tied feature of Chinese aid reduce the possibilities for corruption, and indicate that Chinese approach to aid escapes the aid dilemma faced by the West. The rest of this chapter briefly introduces the classification of Chinese aid, and elaborately explains how China delivers aid to other countries. The State Council provides the policy direction and budget allocation. And the Ministry of Commerce(MOFCOM) is responsible for the aid funds, drawing up the aid’s commercial orientation. The Export-Import Bank of China (EXIM Bank) mainly organizes concessional loan financing. It is distinguished for its alignment with Chinese foreign policy of package deals in infrastructure development, and the characteristics of its unconditionality.After having a general idea of the characteristics and the mechanism of Chinese aid, chapter3begins to analyze Chinese aid in Africa. Mainly in three respects:the history, the motivation, and the vehicles.There are various reasons behind China’s aid strategy to Africa. The most important part is that China’s aid strategy and economic engagement nowadays reflect what we learned from the experiments of the1980s and our own experiences as an aid recipient and the business linked to aid. Today’s China is known as an industrial powerhouse, the workshop of the world. But in the1970s China was a country similar in structure to many African countries today. Japan was the earliest to enter China’s fabled market, it offered resource-backed concessional loans. China had the chance to import technology and expertise from Japan. The "vast natural resources" enabled China as " the ideal trading partner " for Japan. It turned out that Japanese companies prospered, and China’s infrastructure expanded, making it possible to feed the growing economy.Besides the historical reasons for China donating to Africa, there is another motivation, which being discussed by scholars and criticised by traditional donors. That is, China is now a resources grabber and a cheap products vendor in Africa. China’s economy keeps booming, as the world’s second largest economy, there is an urgent need for more natural resources than any time, and at the same time a consumer market to digest our products. Africa is the ideal partner. After analyzing the motivations of China delivering aid to Africa, this article also gives a comparison of Chinese and traditional donors’ aid aiming at highlighting the differences between them and thus gaining deep insight of Chinese aid to Africa.The most famous story about China and Africa would be the big event happened in1971, when Africa voted for China as the Permanent member of the United Nations security council. That was the result as well as the reason why China provided aid to Africa, but how about the time after that? China-Africa relationship is more than political, nowadays, China needs Africa just as Africa needs China. Aid is more economy-oriented. Actually, the motivation and the history cannot be separated completely, the history also suggests the motivation for China continuously delivering aid to Africa. While it should be clear that, in this globalization era, it is more out of economic development, and later in chapter5will try to find to what extent the aid will benefit China-Africa trade.Chapter4is the main part of this study. It elaborately illustrates the effects of aid for trade. Before the analysis, the author uses figures to explain the status quo of Sino-Africa trade. The trade volume keeps expanding, since the existing economic complementarities and cooperation between China and Africa, it will keep expand in the future. While at the same time, there are some challenges that we cannot ignore, like too-long-time economic stagnation in most African countries, and Chinese products’emergence in African countries have brought challenges to the local economy, which may cost unemployment and threaten the local economy. The countermeasures will be given in the last chapter.And when it comes to aid and trade, debate continues on the casual relationship between the two factors. It is not until the late1990s that a significant share of official development assistance was linked to donor trade. Therefore, any positive trade-aid relationship would occur only when appropriate endogenous policies come into being in donor countries. In reality, scholars and researchers have found links between foreign aid and donor exports. From trade to aid, endogeneity would make the difference, on circumstances that some donors allocate aid to those countries with strong trade ties.The second half of chapter4analyzes the trade benefits in two ways:1) How Chinese aid is used in the building or renovation of African countries’infrastructure like roads, dams, airports, hospitals and factories etc.Thanks to the improvement of the infrastructure especially those related to trade facilitation, the trade flows grow. To make it more authentic, the "Angola Mode" is studied. There is specific data and analysis that give a full knowledge of how Chinese aid to Angola improve Angola’s oil export to China, and also increase China’s machinery export and make China’s oil import more diversified thus Chinese economic safety is guaranteed to some extent.2)"Go global " is a slogan for Chinese enterprises, while deliver aid to Africa, this slogan can be turned into reality. Building Overseas Special Economic Zone is one of the8initiatives the President Hu Jintao brought up to strengthen friendship and cooperation between China and Africa. These zones concentrate on strategic industries and provide liberalized investment environments. They need large amounts of investment in infrastructure, not only within the zones but the ports linking them to the regional markets. The infrastructure corridors will offer the indispensable linkages between the scattered African markets and have a positive effect on the regional economic integration. The cultivating of the OSEZs are supposed to be Africa’s new economic growth belt, which include one constructed in each region of the continent.Chapter5is the last part of this study. It gives a brief conclusion to the whole study, and according to the challenges mentioned in the previous parts the countermeasures are listed. On the broad world view, Chinese emergence in Africa is a blessing for Africans, with Chinese development assistance, the recipient countries in Africa will benefit from the ability to choose among a diversified menu of options. In terms of the relationship between aid flows and trade flows, certain forms of aid flows promote certain reforms or transform certain infrastructures, in the long term this will reduce trade transaction costs and consequently enhance trade flows. In the end of this chapter, the countermeasures are put forward both from China and Africa’s perspective. On one hand, Chinese enterprises in Africa should pay more attention on corporate social responsibilities. Chinese government should strengthen the cooperation with traditional donors and at the same time engage more frequently in African institutions. On the other hand, to make aid work more effectively and generate more benefits for trade, African governments should coordinate their agendas with China’s aid policies and improve their efficiency. Apart from that, they should also strengthen the average African voices.In the end, challenges like the cultural differences and information asymmetry should not be ignored. Only with better understanding of the culture can China and Africa realize better development. Thus both China and Africa should find more ways to get rid of the block of cultural differences and information asymmetry and bond closer, this is a good and solid basis for business activities including trade for the future development. |
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