China‘s new approach to development cooperation

China‘s new approach to development cooperation

China has pledged to provide Africa a total of $60 billion in loans, aid and investments aimed at reducing poverty and facilitating trade in the next 3 years.

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China has pledged to provide Africa a total of $60 billion in loans, aid and investments aimed at reducing poverty and facilitating trade in the next three years.

Chinese President Xi Jinping announced the new plan at the recent 6th Forum on China-Africa Cooperation (FOCAC) in Johannesburg. The announcement about support for 2016-2018 came at a time when Chinese investment in Africa had been dramatically reduced because of China’s economic crisis.

China and hunger for raw materials

The slogan of the summit this year was “China-Africa Progressing Together: Win-Win Cooperation for Common Development”.

At the forum, Xi Jinping underlined China’s new focus on sustainability in Sino-African relations. Historically, China’s actions have been dictated by its hunger for raw materials. As the Chinese economy has developed into consumer-driven system with a strong middle class, China seeks to export some of its labor-intensive industries into Africa.

Between 2002-2011, economic growth in Sub-Saharan Africa has averaged roughly 5 percent, fueled by intensified trade with China. However, GDP growth went hand-in-hand with depletion of non-renewable resources. The World Bank Little Green Data Book shows that Africa’s wealth drains rapidly, not to mention other impacts: ecological damage, social displacement in mining areas, corruption and serious economic problems.

Rethinking investments during economic crisis

Chinese-led projects have been often criticized for human rights violations, environmental unsafety and the “consumeristic” nature of Chinese investments. One of the most recent cases was the notorious Collum Coal Mining, which was closed after killings of workers by a Chinese manager and multiple safety violations. In April 2015, the mine reopened after promises by the company to improve working conditions.

Nevertheless, some experts hoped that the economic crisis would push Chinese funds towards projects that are more diversified, more localized, more environmentally-friendly and more beneficial to small and medium-sized African businesses.

Increasing presence in the region

In the meantime, China has made a first step to change its strict “hands-off” policy regarding military intervention on the continent. Recently, the government of China announced the plan to build a naval base in Djibouti. Officially, this base is called a “supply and logistic center,“ that would serve to protect China’s shipping routes.

This may be a part of modern China’s foreign investment and development policy “One Belt, One Road”, which outlines country‘s planned activities in setting land and maritime trade routes. The initiative seeks to strengthen economic collaboration, improve transport connectivity, promote trade and investment, and facilitate exchanges between people. Critics note that the main aim of the project would be to facilitate export of China‘s finished products abroad while importing much needed raw materials and foodstuffs from the rest of the world.

Photo: A handout picture provided by the South African Government Communication and Information System (GCIS) shows Chinese President Xi Jinping addressing delegates at the opening of the Forum on China-Africa Co-operation (Focac) Summit being held in Sandton, Johannesburg, South Africa, 04 December 2015. EPA/ELMOND JIYANE/GCIS/HANDOUT.

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