China’s ‘Belt and Road’ opens up new business in Africa – for both the U.S. and China

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There has been no shortage of headlines proclaiming China’s growing clout in a “new world order” in recent months. This speculation resurfaced after the July G-20 summit, at which the United States reconfirmed its withdrawal from the Paris climate accord, and the May 2017 summit of the Belt and Road, China’s $1 trillion global plan for infrastructure projects and trade deals connecting Africa, Asia and Europe. This project aims to span 68 countries, linking China’s people and markets to regions far beyond its borders.

The Belt and Road, announced by Chinese President Xi Jinping in 2013, has conjured images of a colonial China pillaging natural resources and enabling dictators across Africa in exchange for U.N. votes. But our research suggests that there are other drivers behind China’s foreign policy.

Our data at the China-Africa Research Initiative – collected from official websites of central banks, ministries of finance and Chinese contractors, and cross-checked through interviews with Chinese and African officials – reveals that China’s economic needs, rather than any set political agenda, drives Beijing’s activities in developing countries.

The Belt and Road focuses on infrastructure because Chinese construction companies need business. From 2000 to 2015, China Eximbank contributed $63 billion in loans to Africa, largely aimed at road, railroad, airport and harbor construction. In 2000, the gross annual revenue of Chinese construction contractors in Africa was $1 billion; by 2015, this figure was $55 billion.

Critics of the plan tend to view the Belt and Road as merely a trade route for oil and minerals. Indeed, the top 10 Chinese imports from Africa are raw materials. Oil-rich Angola is the top African exporter to China, and 99 percent of its exports to China are petroleum products. African natural resources help power factories across China, and provide the minerals and metals for the manufacturing sector.

But Belt and Road countries may soon inherit these factories. In 2015, manufacturing was 13 percent of Chinese foreign direct investment in Africa. In comparison, just 7 percent of U.S. investment in the region went to manufacturing ventures. Rising wages in China are pushing its firms abroad to regions where labor is cheaper, opening up the Belt and Road countries to a slew of other economic engagements after construction is over.

In this light, China’s “Marshall Plan” looks more like a stimulus project than a blueprint for geopolitical control. African countries embrace China as a development partner precisely for Beijing’s “noninterference” policy: This foreign economic engagement comes with few demands. In contrast, the United States has urged African governments to acknowledge democracy and human rights – or lose out on U.S. business opportunities.

In fact, on the rare occasions when China does intervene in Africa, usually because its projects are threatened, it acts in concert with the United States. The two countries have coordinated peacekeeping missions in Sudan and South Sudan, for example, as well as anti-piracy efforts off the Horn of Africa and response efforts against Ebola in West Africa.

China and the United States both benefit from a safe and productive Africa – it would be overly simplistic to assume there’s a zero-sum game for hegemonic control of the continent. And there may be room for further synergies.

Although the U.S. government sent a last-minute delegation to the Belt and Road forum in May, it has largely shunned the initiative as incompatible with its own interests. But there may be room for further synergies, particularly in Africa.

Chinese banks and firms have requested the help of their U.S. counterparts to navigate existing norms in Africa, creating new potential opportunities for collaboration. Chinese efforts may look to U.S. firms, and protocols in place at the U.S. EXIM Bank, such as its Environmental and Social Due Diligence Procedures and Guidelines, and emphasis on anti-bribery provisions.

For one, Chinese companies that have come under scrutiny for environmental degradation or mistreatment of local labor have implemented their own corporate social responsibility measures through community engagement and skills training of African workers. China-led development banks, in response to international NGOs’ criticism of their lack of transparency, have committed to being “lean, clean and green” – this has involved drafting sustainability criteria in accordance with those of the World Bank and Asian Development Bank, and inviting NGOs to annual meetings. The U.S. EXIM Bank and U.S. firms, based on their own guidelines, can assist China Eximbank and Chinese firms to set up stronger safeguards.

Second, health and social services are top sectors for U.S. loans to Africa. Although these areas have not been Chinese priorities, this is changing. Chinese medical personnel have trained African doctors at hospitals built by Chinese companies. Chinese factories have implemented technical training programs for local employees, an initial step that can further benefit from Chinese loans to broader social service efforts in education. American initiatives, from the U.S. President’s Emergency Plan for AIDS Relief (PEPFAR) to partnerships with African universities, can encourage and work with these Chinese efforts.

A major impediment, of course, is that China is not bound by political, social and environmental standards of the Organization for Economic Cooperation and Development (OECD), a 35-member group that includes many advanced economies, as well as emerging countries such as Chile, Mexico and Turkey. To remedy this issue, the United States can push for China to become a full member, building upon initial progress in signing cooperation agreements. Naysayers may be reluctant to allow China, a non-democracy, to join. But a common language would help bring about practices that promote environmentally sound projects, sustainable supply chains, and labor protections.

The Belt and Road is often framed as China’s plan for an interconnected world – without much input or participation from the United States. But African agendas can mix with those of the United States and China to create novel opportunities for global development. If brokered correctly, relations between the United States and China might grow stronger vis-à-vis African countries.

— Special to The Washington Post