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U.S. Geopolitics Exposes Itself in CFR report on China’s Belt and Road-Will Africa benefit?

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China’s Belt and Road Initiative- BRI (Courtesy of dailysabah.com)

February12, 2022

Lawrence Freeman

The Council on Foreign Relations (CFR) March 2021 report: China’s Belt and Road: Implications for the United States, would be humorous, if it was not so pitiful. In the course of almost 200 pages, the CFR, the premiere think tank of the U.S. Establishment, maligns China’s Belt and Road Initiative (BRI), but admits that the success of the BRI is the result of a failure of U.S. policy. The entire analysis is inherently flawed from the beginning because it proceeds from the axioms of the diseased doctrine of geo-politics, which views the world as a zero-sum game. Rather than understanding that the world is composed of human beings and sovereign nations who share a common interest, Anglo-American devotees of geopolitics only see two sides. In this case, China, and the U.S., where “an advantage to one side is a loss to the other.”   

The CFR report is replete with a compilation of:

  • Contradictions
  • Speculation that BRI nations debt to China “might” or “could” lead to economic distress
  • China is not playing by the international rules imposed by Western international financial institutions
  • Recommendations that do not address the reasons for the success of the BRI, but instead propose new forms of political-economic warfare to undermine China.

The report’s Executive Summary bluntly states:

“U.S. inaction as much as Chinese assertiveness is responsible for the economic and strategic predicament in which the United States finds itself. U.S. withdrawal helped create the vacuum that China filled with BRI…it [the U.S.] has not met the inherent needs of the region.” (emphasis added)  

US Infrastructure Investment?

US stopped loaning money to Africa for infrastructure for several decades

It is well known that beginning in the 1970s, the U.S. moved away from investing in hard infrastructure. Hard infrastructure is essential to the growth of the physical economy. It is irreplaceable in providing a platform that is the foundation of a healthy economy. The U.S. abandoned the needs of the majority of the nations of the world and foolishly sabotaged the U.S. economy as well.

According to estimates by the World Bank sited in this report:

“…$97 trillion needs to be spent on infrastructure globally by 2040 in order to maintain economic growth and to meet the UN Sustainable Development Goals, but an $18 trillion gap exists.”

The report acknowledges that Western financial institutions and governments do not fund hard infrastructure.

Should BRI nations be punished for trying to improve the lives of their population by accepting China’s financing help? The African continent, which has the largest infrastructure deficit in the world, encounters a gap upwards of $100 billion a year for essential infrastructure investment.

The report itself admits the global benefits of the BRI:

“Since BRI’s launch in 2013, Chinese banks and companies have financed and built everything from power plants, railways, highways, and ports to telecommunications infrastructure, fiber-optic cables, and smart cities around the world…BRI has the potential to meet long-standing developing country needs and spur global economic growth.” (emphasis added)

 Geopolitics Governs Western Thinking

If the CFR were genuinely concerned about addressing the huge lack of hard infrastructure that is keeping nations underdeveloped and forcing  billions of people around the world to live in poverty, they would propose the U.S. collaborate with the BRI. However, they are more concerned in trying to maintain U.S. unipolar dominance.

For those of you who do not know, the Council on Foreign Relations is a 100 year old arm of the Anglo-American establishment. Founded in 1921 as the American branch of the British Royal Institute for International Affairs, otherwise known as Chatham House, which was createdtwo years earlier. Chatham House was created by Lord Alfred Milner, then acting as Secretary of State for the British Empire’s colonies, through a vast trust funded by the estate of race-patriot Cecil Rhodes.

(Courtesy of slideshare.net)

The CFR report makes clear their fear of China usurping the U.S. as the one and only world superpower when they write that the BRI will “enable China to lock countries into Chinese ecosystems…“The report attacks China for the crime of violating the so called free-trade system by subsidizing “state-owned and non–market oriented Chinese companies” and that the BRI is “undermining world macroeconomic stability.”

Nevertheless, the report states: “The United States, even if not formally part of BRI, would likely benefit in some ways if BRI builds infrastructure that accelerates global economic growth.” (emphasis added)

The actual threat for the Western financial system, overburdened with quadrillions of dollars of derivatives and unpayable debts, is that it will be outperformed by China, dislodging the U.S. from its perch as the sole economic superpower.

No Debt Trap, Debt Crisis Instead

The CFR report is forced to admit there is no Chinese debt-trap, and no asset seizure.

“Although not setting explicit debt traps, China’s lending practices contribute to debt crisis along BRI.” However, “there has yet to be a case in which China has taken control of other countries’ infrastructure.”

Revealing their real concern, the report speculates, “the risk is clear that countries unable to repay their debts to China could become clients of China, deferring to it on political or strategic issues.”

The CFR report, while explicitly acknowledging multiple times that there is no debt-trap, argues that Chinese BRI loans are driving the “emerging debt crisis,” threatening todisruptthe global financial system. They write: “When these emerging debt crises in BRI countries materialize, they will undermine global economic growth and macroeconomic stability…”

They also allege that: “BRI participants [will be forced] to choose between meeting debt-service requirements to China or funding local economic recovery and critical medical services at a moment of historic crisis.” Isn’t that precisely what the World Bank and International Monetary Fund have been demanding of developing nations for the last several decades?

China dwarfs the West in infrastructure investment

Gyude More, the former Minister of Infrastructure in Liberia, has on multiple occasions pointed out the fallacies of claiming that China is causing debt distress in African nations. He estimates that Africa’s debt to China is between 20-23%, with a handful of African nations responsible for the majority of the debt. Approximately 80% of the continent’s debt is owed to multilateral Western financial institutions, the private sector, and hedge funds.

Moore cogently points out that prior to China’s involvement in the continent, African nations were forced to pay debt service and arrears on unpayable Western loans. Africans also received no benefit from multi-billion dollar Western extractive mining interests that looted Africa’s resources, contributing little or nothing to improving the conditions of life for Africans. With China there is a new “win-win” model. Moore explains that natural resources are instead used to secure loans from China to actually build vitally needed infrastructure that benefits the lives of Africans. Why should African nations reject this arrangement, which also comes with no demands for political of financial reform of the host nation? The West “doth protest too much, methinks.”

CFR Proposals: Impotent or Geopolitical?

The recommendations of the CFR report are a combination of impotency and geopolitical idiocy, arrogantly displaying no respect for the sovereignty of BRI nations. However, the report itself affirms that China’s BRI is a reality across the globe, and it is here to stay. All of the recommendations in this report avoid addressing what the BRI is providing; government subsidized credit for the construction of hard infrastructure. Instead, they recommend for the U.S. to menacingly wage geopolitical propaganda war against China and the BRI. Their suggestions include for the U.S. to; raise awareness of BRI risks, fund investigative journalism in BRI countries, champion anticorruption, work with IMF and World Bank to assess debt sustainability for BRI nations, and prepare for a conflict with BRI countries.

Notice the glaring absence of a positive development policy that promotes real economic growth around the world, demonstrating the bankruptcy of U.S. foreign policy, as well as the CFR.

Lawrence Freeman is a Political-Economic Analyst for Africa, who has been involved in economic development policies for Africa for over 30 years. He is the creator of the blog: lawrencefreemanafricaandtheworld.com. Mr. Freeman’s stated personal mission is; to eliminate poverty and hunger in Africa by applying the scientific economic principles of Alexander Hamilton.

The Truth: It is good that China Is Investing in Africa’s Energy and Transportation Infrastructure

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The Truth: It is good that China Is Investing in Africa’s Energy and Transportation Infrastructure

Lawrence Freeman

April 8, 2021

Below are two articles examining China’s investment policy in Africa that should be read to learn the truth about China’s lending to the continent. One, is a briefing paper from China Africa Research Initiative (CARI) entitled, Twenty Years of Data on China’s Africa Lending. The second is entitled, “Why Substantial Chinese FDI is Flowing into Africa, by Shirly Yu. Combined, both papers provide a thorough analysis of the positive contribution of Chinese investment in Africa, surpassing the United States in all categories. As  many African leaders know, without China’s contribution to Africa’s development, especially in infrastructure, Africa would be worse off. There is absolutely no indication that the U.S. and the West would fill that void.

It is undeniable that China has invested heavily in the development of Africa over the last two decades. Ignore the claptrap allegations of a deliberate Chinese debt-trap policy to seize control over Africa’s resources. It is nonsense and has not happened; not once, not in a single African nation.

According to CARI’s data base, from 2000-2019, China has made $157 billion in loans to Africa. Of these 1,077 loans, 85% have been in categories of infrastructure, of which 65% have been in energy and transportation. According to CARI, only 13% of Africa’s debt is owed to China. The largest portion of Africa’s debt is owed to multilateral institutions at 32%, followed by loans from private bond holders. Outside of Angola, only 8% of Chinese lending was for resource backed loans. 90% of the contractors in Africa from China are private Chinese companies, not state owned enterprises (SOEs). Also, 90 % of Foreign Direct Investment (FDI) is from private Chinese companies, although SOEs are the largest investors in Africa in total value.

President Biden has recently suggested that the U.S. and Europe should lead a western version of China’s Belt and Road (BRI). If it were to be as productive as China[‘s (BRI), African nations would benefit greatly, especially in this challenging economic period.

Excerpts from Shirly Yu:

“Make no mistake, Chinese state-owned enterprises (SOEs) are still the largest investors in Africa by value and continue to dominate the energy, transportation and resources sectors due to the strategic nature and long-haul return of these investments. For instance, one third of Africa’s power grid and energy infrastructure has been financed and constructed by state-owned Chinese companies since 2010. China is the most significant foreign contributor through SOEs and state-owned banks to Africa’s energy development.

“By 2034, Africa’s labour force is forecast to surpass that of China and India combined. By 2050, the African population is expected to be 2.5 billion, while China’s population will decline to below 1 billion. With these figures in mind, Africa’s young labour force is exactly what China’s labour-intensive manufacturers seek today.”

Read: Why Substantial Chinese FDI Is Flowing into Africa”

Excerpts from CARI:

IN 2000, WE RECORDED ONLY three Chinese lenders, financing 14 projects, with an average value of just US$ 10 million. Over the next 19 years, over 30 Chinese lenders would commit loans to African governments and state owned enterprises. Since 2010, Chinese financiers have financed an average of 71 projects per year, at an average value of US$ 180 million.
The four biggest Chinese banks involved with lending to African countries are China Eximbank, CDB, ICBC, and BOC. China Eximbank–which is China’s official export credit agency, and also the only bank offering government
subsidized foreign aid concessional loans–is the largest and since 2000 accounts for 56 percent of all loans.

Read: “Twenty Years of Data on China’s Africa Lending“

Lawrence Freeman is a Political-Economic Analyst for Africa, who has been involved in economic development policies for Africa for over 30 years. He is the creator of the blog: lawrencefreemanafricaandtheworld.com. Mr. Freeman’s stated personal mission is; to eliminate poverty and hunger in Africa by applying the scientific economic principles of Alexander Hamilton

 

Chinese ‘Debt Trap” is a Myth-Biden Would be Wise Not to Continue Trump’s Attacks on China in Africa 

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China’s Belt and Road Initiative

February 17, 2021

This recent article, The Chinese ‘debt-trap’ is a myth, written by Deborah Brautigam, Director of the China-Africa Research Institute (CARI), provides definitive proof that China is not using so called debt-trap diplomacy to Africa’s seize assets. This false narrative, which is been disproved by Brautigam and CARI, time again, was used by the Trump administration to attack China in Africa as a key feature of its geo-political doctrine.

No African nation has been forced to relinquish it natural resources to China in response to late debt payments. No African asset has been seized by China. (See my earlier posts below). Misrepresentation of the case of the Sri Lankan port of Hambantota, which this article refutes, has been used as propaganda to attack the China’s Belt and Road Initiative and malign China’s infrastructure projects in Africa,

China has been a valuable friend in assisting African nations in building vitally needed infrastructure projects. The African continent is suffering today from a massive deficit in infrastructure measured in trillions of dollars. Thus, all nations of good will can contribute to addressing the continent’s huge  infrastructure deficiency, which African nations would welcome. As I have insisted for decades, there is no way to eliminate poverty and bring peace to African nations without electricity, roads, railroads, water management, and port development.

Present Biden would be wise to move beyond Trump’s anti-China policy and initiate a new era of US-Africa policies premised on physical economic development, and join me in my mission to eliminate hunger and poverty in Africa.

Read my earlier posts on alleged debt-trap. Chinese ‘debt-trap’ Propaganda Exposed-Time to End Ignorance & Prejudice Against China in Africa;  No More Lies, No More Anti-China Propaganda: There is No China-Africa ‘Debt-trap’

 Lawrence Freeman is a Political-Economic Analyst for Africa, who has been involved in economic development policies for Africa for over 30 years. He is the creator of the blog: lawrencefreemanafricaandtheworld.com

The West Continues to Attack China to the Detriment of Africa

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A new Cold War is coming. Africa should not pick sides

August 28, 2020

The author, W Gyude Moore, a senior policy fellow at the Center for Global Development, and a former minister of public works in Liberia, makes some insightful observations about the difference between the US and China in their economic strategy for Africa.  China’s investment in infrastructure in Africa is unsurpassed and would not be replaced by the West, if China withdrew from Africa. 

Excerpts below:

“It is, thus, frustrating that in its complicated, enmeshed, centuries-long history in Africa, there has never been a Western proposal for continental-scale infrastructure building. Outside Cecil John Rhodes’s racist “civilising” project of connecting Cape to Cairo from the 1870s, there has never been any programme, backed by financial resources, to build Africa’s rail, roads, ports, water-filtration plants, or power stations. It was the Chinese who sought to build a road, rail and maritime infrastructure network to link Africa’s economies with the rest of the world.

“The Western argument of Chinese debt-trap diplomacy, inferior loan terms and an insidious, covert campaign to seize African national infrastructure assets rings hollow in the absence of a like-for-like Western alternative. Until the arrival of the Chinese, the infrastructure construction space in Africa was dominated by Europeans…

“In the past eight months, Western countries have spent more than $5- trillion to prop up their economies in response to the Covid-19 pandemic. JP Morgan projects that over 14 years (2013 to 2027), China’s Belt and Road Initiative (BRI) will cost about $1.2-trillion to $1.3-trillion. That kind of gap (both in dollars and time) makes it clear that, if it wanted to, the West could equal or surpass China’s BRI with its own infrastructure programme. If Africa steps away from China’s infrastructure programme, which Western country is ready and willing to fill the gap?”

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China, the World Bank, and African Debt: A War of Words

Deborah Brautigam, Director of the SAIS China Africa Research Initiative, discusses in her article below, the duplicity of  the World Bank, in their attacks on the China Development Bank. If the US and Western Institutions would cease attacking China, stopped peddling lies about the “Africa debt–trap” and joined China’s Belt and Road Initiative, Africa’s huge infrastructure deficit could be addressed to the benefit of all Africans.

Read: https://thediplomat.com/2020/08/china-the-world-bank-and-african-debt-a-war-of-words/

Lawrence Freeman is a Political-Economic Analyst for Africa, who has been involved in the economic development policy of Africa for 30 years. He is the creator of the blog: lawrencefreemanafricaandtheworld.com

No More Lies, No More Anti-China Propaganda: There is No China-Africa ‘Debt-trap’

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June 20, 2020

China-Africa Research Initiative-(CARI) presented an interesting and useful webinar entitled : Debt Relief with Chinese Characteristics, using research presented from a Working Paper #39 and Policy Brief #46. View: CARI: Debt Relief With Chinese Characteristics

In response to China’s growing economic and political influence in the world, especially on the African continent, various propaganda outlets located in the West have launched a new assault on China. Their line of attack is to malign China and African leaders with the false narrative that China is intentionally luring African nations into a ‘debt-trap’ in order to seize control of their natural resources. This cynical view of China’s alliance with African nations flows from the age old doctrine of “geo-politics” that only perceives nations as either winners or losers in a fixed zero-sum view of the world.  In this evil world view, stronger powers, hegemons believe they can only maintain their supremacy by having their foot on the neck of weaker nations. The “geo-political” doctrine rejects the notion that all nations share a common interest.

Misinformation or Disinformation

As Deborah Brautigam, director of CARI has stated before, there is no evidence, none, not one single case of China using debt to seize control of an African nation’s assets. “We found no “asset seizures” and despite contract clauses requiring arbitration, no evidence of the use of courts to enforce payments, or application of penalty interest rates.” Despite no substantiation of China using debt as a weapon against African nations, the ‘debt-trap’ mantra is repeated by either misinformed individuals, including Africans, or by those who are deliberately disseminating disinformation with malice.

The CARI working paper reports the following:

“The rating agency Moody’s warned that countries ‘rich in natural resources, like Angola, Zambia, and Republic of the Congo, or with strategically important infrastructure, like ports or railways such as Kenya, are most vulnerable to the risk of losing control over important assets in negotiations with Chinese creditors.’ These assumptions of a malign China were repeated in publications like The New York Times, which contended that Chinese loans “frequently use national assets as collateral” and require refinancing ‘every couple years’ (our Africa data supports neither of these statements).” (emphasis added)

If there is any honesty or integrity left in our duplicitous culture, all claptrap about China’ alleged ‘debt-trap’ as a nefarious attempt to gain control of Africa’s wealth should cease immediately! If one examines the long history of China’s relationship with Africa and the more recent twenty year period, it is clear that China desires to resolve issues with African nations through consultation. China may choose other means of responding to payment difficulties, but there is no evidence that they want to take over African holdings, contrary to prevalent popular opinion. Read: Chinese ‘debt-trap’ Propaganda Exposed-Time to End Ignorance & Prejudice Against China in Africa

Debt Cancellation

As COVID-19 spreads in Africa, nations are struggling to survive economically and simultaneously defeat the deadly virus.  Debt service is onerous and must be suspended indefinitely or cancelled, as leaders of many Africans nation have rightly insisted. According to Dr. Brautigam, from 2000-2018, China has made loan commitments of $152 billion, and of Africa’ total external debt, China holds 17%, while the World Bank hold 18%, and private lenders 31%.  Thus, China will and has already engaged in debt relief, but will do it differently than western institutions like the Paris Club and World Bank.

“Our [CARI] study found that between 2000 and 2019, China has cancelled at least US$ 3.4 billion of debt in Africa. There is no “China, Inc.”: for interest-bearing loans, treatment for inter-governmental debt and Chinese company loans are negotiated separately, and often loan-by-loan rather than for the entire portfolio. While rescheduling by increasing the repayment period is common, changes in interest rates, reductions in principal (“haircuts”), or refinancing are not. We found that China has restructured or refinanced approximately US$ 15 billion of debt in Africa between 2000 and 20190…Chinese lenders prefer to address restructuring quietly, on a bilateral basis, tailoring programs to each situation.”   

China, up this point has only cancelled zero interest loans, which represent only 5% of loans from China, and are issued from China’s Ministry of Commerce. It is unlikely that there will be unilateral debt suspension.  Thus, we can expect that China will negotiate debt relief bilaterally with each nation, and each loan reviewed separately.

Even if debt cancellation is continued into 2021, which has not yet been agreed to, it will be insufficient. The level of investment required to meet Africa’s’ minimal infrastructure needs is in the trillions of dollars, which belies the “geo-political” nonsense of zero-sum assumptions.  Debt relief must be accompanied by issuance of credit for infrastructure and related sectors of production, otherwise Africa and the world will suffer from the spread of COVID-19 and future zoonotic diseases. Poverty is a co-factor for all diseases. Lack of electricity is a co-factor for the spread of disease and hunger, as is the lack of clean water, and inadequate transportation.

China’s Belt and Road Initiative over recent years has begun to address Africa’s infrastructure deficit, but much, much more is required. Collaboration between the U.S. and China on the development of Africa would be consequential for the continent.

I have addressed this issue in earlier posts: World Needs New Economic Platform to Fight COVID-19, New Economic Order Required to Combat COVID-19 in Africa

View: CARI: Debt Relief With Chinese Characteristics

Lawrence Freeman is a Political-Economic Analyst for Africa, who has been involved in the economic development policy of Africa for 30 years. He is the creator of the blog: lawrencefreemanafricaandtheworld.com

US Anti-China Narrative on Africa Unmasked

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AFRICA: THE FIRST U.S. CASUALTY OF THE NEW INFORMATION WARFARE AGAINST CHINA

Chinese President, Xi Jinping addressing conference in Industrializing Africa

February 5, 2020

The article below by Caleb Slayton, director for the U.S. Air Force Special Operations School, Africa course, unmasks the self feeding loop of  US anti-China propaganda. “The U.S. narrative misjudges the full scope of China’s influence in Africa,” according to the author. The narrative attacking China’s relationship with African nations is blinding our elected officials, so called academics, and the general citizenry from understanding the contributions China is making to Africa. This false narrative, intense, widespread, and bi-partisan, has created a dangerous defect in US strategic policy toward China and Africa.  As a result, President Trump only sees Africa as a pawn in a global game to stop China’s influence on the continent. To the dismay of many Africans, the US, unlike China, lacks any serious policy that would assist African nations in pursuit of developing their nations.  

Excerpts:

“According to the U.S. strategic narrative on China in Africa, Beijing intends to steal Africa’s resources, secure corrupt business transactions, and pursue low-quality infrastructure projects. American officials argue that China’s political and diplomatic maneuvers yield little good for Africa and ultimately intend to indebt the continent to China’s bidding. This narrative is misleading. It has served to develop a crippling ignorance of the changing nature of information warfare, China’s weapon of choice. The narrative has also masked the successful means by which China has become a partner of almost every country on the continent and garnered their support at the international level. Perhaps worst of all, the focus on China is inattentive to the needs and ambitions of African partners, the key stakeholders in U.S.-Africa partnerships…

As the director from 2012 to 2016 of the Africa Theater Course for Special Forces out of Hurlburt Field, Florida, I engaged with hundreds of military members, government employees, analysts, operators, and practitioners directly engaged on the African continent. Every sidebar conversation or most student interjections on the topic of China maintained a similar skewed perception of China in relation to Africa.  China’s development projects were all “broken,” the projects hired mostly Chinese laborers, its merchandise was low-grade, China’s aim was to deplete Africa of its resources, the communications infrastructure was a tool of Chinese control, and all of China’s aid was a debt liability. Any mention of potentially beneficial partnership with China was laced with a political, social, or economic spoiler. This consistent negative narrative aligns to many Department of Defense and Department of State talking points….

“African countries draw inspiration from China’s rise. Beijing’s success is more profound than any criticism the United States levels against China’s internal social, religious, and political oppression…

“Africa Isn’t Buying Washington’s Message on China

In Africa, Beijing has demonstrated that it has a lot to offer. Washington, by contrast, appears to offer only criticism. The U.S. narrative against China-Africa activities misrepresents China’s strategy, underestimates its influence, and downplays what a majority of Africa’s population really thinks about China partnerships and great-power competition. The current facts on the ground already give China impressive influence and access to political, economic, and communication sectors across Africa.”

Read the entire article

Africa: The First U.S. Casualty of the New Information Warfare Against China

China Has Embraced Africa’s Development; The US Has Not

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Courtesy of Global Research

January 16, 2020

China Has Embraced Africa’s Development; The US Has Not.

By Lawrence Freeman

It is as clear as day and night, the difference between China’s approach to Africa and that of the United States. There is no equivalence. Historically, China has viewed African nations as part of the developing sector from which China emerged.  This has contributed to China’s distinct attitude to partnering with African nations in promoting economic growth. Over the last two decades especially, the ties between China and Africa have grown stronger, with Africa’s East Coast materializing as an integral part of China’s Belt and Road Initiative.

The US has not always dismissed the importance of contributing to Africa’s growth. President John Kennedy, following in the footsteps of President Franklin Roosevelt, was a strong opponent of colonial subjugation of Africa. President Kennedy, as US Senator advocated Africa’s liberation movement, and as US President supported President Kwame Nkrumah’s plans to construct the hydro-electric dam and bauxite smelting complex on Ghana’s Volta River. By the end of the 1960s the US had lost its optimism and vision for the world, adopting in its place, a British inspired cynical “geo-political” doctrine.

Geo-politics divides the world into two categories; winners and losers in a zero sum game. Today’s unfounded attacks against China’s involvement in Africa, alleging that China is deliberately entrapping nations into debt and stealing their natural resources flows from this perverted world view. Chinese President, Xi Jinping promotes a different philosophy; it’s called “win-win.”

Building, Not Extracting

Unlike British Imperialist Cecil Rhodes, and degenerates like King Leopold II, China is not raping Africa for its resources. Since Royal Dutch Shell discovered oil in southern Nigeria in 1956, the West has focused its investment chiefly in oil and gas-i.e. hydrocarbon extractive industries. China in recent decades has become the leading nation in financing and building infrastructure in Africa.  It is well known that investment in extractive industries do not expand the economy nor provide a large amount of jobs. However, it does yield large streams of revenue.  China has chosen a different business mode; one more beneficial to the African people.

According to McKinsey consulting company’s publication, Dance of the lions and the dragons, released in June 2017, China in 2015 financed $21 billion worth of infrastructure projects in Africa. That is three times the combined total of France, Japan, Germany, and India. US financing of infrastructure in Africa was too minimal to even mention. Detailed in the same document, China’s export and import trade with Africa is quantified as $188 billion in 2015, compared to the US at $53 billion. Deloitte’s 2017 Africa Construction Trends, further documents China’s role in expanding Africa’s infrastructure. As of June 2017, China was only second to African governments in funding large infrastructure projects, 15.5% and 27.1% respectively. The US was listed at 3%, the UK and France at 2%. When it comes to who actually builds these projects the figures are more shocking; China constructed over one quarter or 28.1% of these projects, the US 3.3%, and the UK 2.3%.

Infrastructure Is Essential

Infrastructure is critical for every economy to expand, grow and develop. Africa’s deplorable lack of infrastructure is literally killing its people. There is no more crucial single element of economy that must be addressed for African nations to develop. Infrastructure adds value to the entire economy by augmenting the productive capability of every farmer and worker. More capital intense economies will be affected by technologically advanced infrastructure platforms.

The history of humankind demonstrates that progress of civilizations emanates from the realization of scientific discoveries transmitted through more efficacious technologies. Infrastructure reflecting more advanced machinery is a primary means of transferring technology (science) to the economic production process.

There is nothing wrong with African nations using their resources for collateral or payment of loans for infrastructure. Wealth is not the monetary value of natural resources extracted from the earth. Economic wealth is understood to be that which contributes to the increase of the power of society to provide the material wellbeing of its citizens and their posterity. Infrastructure performs that function.

China’s contribution to building new railroads in Africa, replacing century old British and French antiquated rail lines, and constructing new hydro-electric dams, and ports, is precisely what African nations need to develop.  China is providing indispensable assistance; the US and Europe are not. An experienced former US ambassador to Africa told me bluntly; the US stopped investing in infrastructure in Africa in the early 1970s. Sadly, today, the US continues to repeatedly proclaim, “we don’t build infrastructure.”

 

Debt-Trap or Claptrap?

In her latest paper, A critical look at Chinese ‘debt-trap’ diplomacy: the rise of a meme, Deborah Brautigam, China-Africa scholar and Director of the China-Africa Research Initiative-(CARI) at SAIS*, puts a nail in the coffin regarding false accusations of China deliberately entrapping African nations through debt.

She writes: “…for over a decade Western politicians and pundits have warned that China is a rogue donor with regard to its finance, is a new colonialist, and a predatory and pernicious lender that snares vulnerable states in a debt trap leveraging its loans in order to have its way with weak victims.”

Brautigam responds to these allegations by asking: “However, does evidence exist for this kind of debt leverage?” Then she answers: “It [SAIS database] has information on about more than 1000 loans and, so far, in Africa, we have not seen any examples where we would say the Chinese deliberatively entangled another country in debt, and then used that debt to extract unfair or strategic advantages of some kind in Africa, including ‘asset seizures’.” (emphasis added)

With the population of 55 African nations projected to reach 2.4 billion in the next three decades, the continent needs trillions of dollars in new infrastructure. Presently, the US is more concerned in countering China in Africa, than developing Africa. Many African leaders are hopeful the US will establish a more robust economic relationship with their nations. As has been the case with previous administrations, the lack of vision, and adherence to “geo-politics” is preventing the US from engaging with Africa in a win-win relationship. This can and should change.   

*Johns Hopkins School of Advanced International Studies

Lawrence Freeman is a Political-Economic Analyst for Africa, who has been involved in the economic development policy of Africa for 30 years. He is the creator of the blog: lawrencefreemanafricaandtheworld.com

 

Chinese ‘debt-trap’ Propaganda Exposed-Time to End Ignorance & Prejudice Against China in Africa

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(Courtesy of Quartz Africa)

December 24, 2019

Deborah Brautigam, an expert on China-Africa relations, exposes the fraud of China’s debt-trap diplomacy in her report: A Critical look at Chinese ‘debt-trap diplomacy’ Brautigam, who is director of the Johns Hopkins Center for China-Africa Research Initiative, writes unequivocally that there is no evidence of an intentional effort  to trap African nations into owing debt to China. China is not manipulating African nations in an attempt to control their resources. Ironically this is what the Western institutions did to African nations  following their independence from colonialism. Whether out of ignorance and/or prejudice, Africans and Westerners have been repeating unfounded propaganda that China is the new colonizer of Africa. It is time to finally end this malicious mantra.

Excerpts:

“The Johns Hopkins School of Advanced International Studies curates a database on Chinese lending to Africa (Brautigam & Hwang, 2016). It has information on about more than 1000 loans and, so far, in Africa, we have not seen any examples where we would say the Chinese deliberately entangled another country in debt, and then used that debt to extract unfair or strategic advantages of some kind in Africa, including ‘asset seizures’. Angola, for example, has borrowed a huge amount from China. Of course, many of these loans are backed by Angola’s oil exports, but this is a commercial transaction. China is not getting huge strategic advantage in that relationship. Similarly, others have examined Chinese lending elsewhere in the world – some 3000 cases – and while some projects have been cancelled or renegotiated, none, aside from the single port in Sri Lanka, has been used to support the idea that the Chinese are seizing strategic assets when countries run into trouble with loan repayment (Kratz, Feng, & Wright, 2019).

The evidence so far, including the Sri Lankan case, shows that the drumbeat of alarm about Chinese banks’ funding of infrastructure across the BRI and beyond is overblown. In a study we conducted using our data on Chinese lending and African debt distress through 2017, China was a major player in only three low-income African countries that were considered by the IMF to be debt distressed or on the verge of debt distress (Eom, Brautigam, & Benabdallah, 2018). A similar country-by-country analysis that included use of our data shows that the Chinese are, by and large, not the major player in African debt distress (Jubilee Debt Campaign, 2018). Therefore, the role of China in African debt distress was limited when one remembers that there are 54 countries in Africa.”

Read: A Critical look at Chinese ‘debt-trap diplomacy’

China & Russia-Africa Leads to Economic Growth; Not Debt Trap

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Below you will read about the success of the second segment of Kenya’s Standard Gauge Railroad, and President President Cyril Ramaphosa’s firm refutation of allegations that a number of countries in Africa are being led into a debt trap by China and Russia

November 2, 2019

“Proponents of the New Paradigm in Africa have a new milestone to celebrate, with the opening of a new segment of the Mombasa-Kisumu Standard Gauge Rail (SGR) line in Kenya. On October 16, Kenyan President Uhuru Kenyatta led a celebration to open Segment 2A, a 120 kilometer (75 mile) extension from the capital (and current terminus) of Nairobi, to Naivasha, a large town northwest of the capital. Opening of this—admittedly rather short—segment nonetheless brings the SGR project one step closer to its planned destination: Kampala, the capital city of neighboring, landlocked Uganda.”

Stunning Progress

Kenya’s SGR project, the most advanced in Sub-Saharan Africa, began in 2014, when the country began construction of a modern, standard gauge (1.435 meter) rail line from the port of Mombasa on the Indian Ocean, northwest to the nation’s capital of Nairobi, a distance of 450 km (275 mi). Opened in 2017, on Madaraka Day—Kenyan Independence Day, when the people took political control of their destiny from the British Empire on June 1, 1963— the rail line has been a huge success, cutting transport and delivery time significantly for both goods and people. Exceeding expectations, the railway transported two million passengers within its first 17 months; and in 2018, its first full year of operation, carried over 5 million tons of freight.

The Mombasa-Nairobi line was initiated in 2009 discussion between the China Road and Bridge Corporation and the Kenyan government, as reported by P.D. Lawson in the April 27, 2018 EIR. China’s Exim Bank extended credit for 90% of the project. By May 2016, initial track laying was completed in just over 1 year. Passenger service was opened May 31, 2017, eighteen months ahead of schedule. Freight services commenced in January 2018. Plans are now underway to electrify the segment from Mombasa to Nairobi, which will greatly lower operating costs.

Benefits of the new, faster technology now extend far beyond mere transport, where the railway has taken hundreds of trucks (and buses) off the notoriously congested highways, making them safer and more useable for the population.

With the increased capacity and speed of freight transport, Kenya’s exports to the East African Community (including neighboring states Uganda, Tanzania and South Sudan) have hit a three-year high in the first eight months of 2019. Not only have government earnings from domestically produced goods increased 6% compared to 2018, but Kenya’s domestic consumption of electricity—certainly not a nation known for its over consumption of this resource—has increased 3.2% in the first 8 months of 2019.

Uhuru Kenyatta, President of the Republic of Kenya.

President Kenyatta has launched additional infrastructure projects, building on the Kenya Vision 2030 plan. In addition to the opening of SGR Section 2A on October 16, he has announced plans for construction of an inland container depot (ICD) at Naivasha (to store or transfer goods from rail to truck, or from SGR to the old meter gauge rail, MGR); a new 23 km expressway in Nairobi; and a water project in rural Kimuku (stemming from a natural spring accidentally discovered during construction of the rail line!). He wants to create a Special Economic Zone—to include the port of Mombasa—to further speed up freight delivery.

EIR magazine, Nov. 1, 2019: “Kenyan Standard Gauge Successful in Looking Beyond the Here and Now”

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NEWS October 28, 2019

Russia-Africa Summit: African countries not being led into debt trap —South Africa’s Ramaphosa

President Cyril Ramaphosa on Monday refuted allegations that a number of countries in Africa are being led into a debt trap as they take up loans to fund a number of projects.

Ramaphosa said this during his weekly address from the Desk of the President in Cape Town, after returning from the Russia-Africa Summit held in Sochi last week.

“One need only look at initiatives such as the Forum on China-Africa Cooperation, which was last held in Beijing in 2018, to see that the focus is now on partnership for mutual benefit, on development, trade and investment cooperation and integration,” Ramaphosa said.

He lambasted remarks which label initiatives like the recent Russia-Africa Summit as an attempt by world powers to expand their geopolitical influence. African countries had taken part in the  summit to discuss ways of how to increase trade and cooperation between Russia and Africa. He said the summit was a sign of the growing economic importance of Africa on the world stage.

“What we are witnessing is a dramatic re-balancing of the relationship between the world’s advanced economies and the African continent,” he said.

African countries have consistently affirmed that Africa no longer wants to be passive recipients of foreign aid, said Ramaphosa. The president said African countries are developing and their economies are increasingly in need of foreign direct investment.

“We are ever mindful of our colonial history, where the economies of Europe were able to industrialize and develop by extracting resources from Africa, all the while leaving the colonies underdeveloped,” said Ramaphosa.

Even now, African countries are still trying to stop the extraction of its resources, this time in the form of illicit financial flows through commercial transactions, tax evasion, transfer pricing and illegal activities that cost the continent more than 50 billion dollars a year, according to Ramaphosa. The age where “development” was imposed from outside without taking into account the material conditions and respective requirements of our countries is now past, the president said.

“China, Russia, Organisation for Economic Cooperation and Development countries and other large economies are eager to forge greater economic ties with African countries. “This is because they want to harness the current climate of reform, the deepening of good governance, macro-economic stability and the opening up of economies across the continent for mutual benefit,” the president said.

 

China-Africa Debt Trap Refuted Again. Belt and Road Building Infrastructure-Developing Africa

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July 12, 2019

President Xi and African Heads of State (courtesy of Al Jazeera)

This excellent article, once again refutes the slander that China is imposing a ‘debt-trap’ on African nations. The author, Ehizuelen Michael Mitchell Omoruyi, executive director of the Center for Nigerian Studies at the Institute of African Studies, Zhejiang Normal University, shows how China through the Belt and Road is developing vital infrastructure for Africa. 

“Millions of articles have been written on China-Africa engagement that involve the terms “Sino-optimism,” “Sino-pragmatism” and “Sino-pessimism.” With that said, somehow, China has also been mentioned in some Western media in a negative light, including headlines with phrases such as “Can China circumvent the middle-income trap?” “China’s trapped transition,” “The Thucydides Trap” and the “debt trap.”

“As for the debt trap, the term refers to the idea that Chinese loans in the continent of Africa are a strategy by the Middle Kingdom to extract concessions and purchase allegiance. I do not concur! China’s involvement with African nations is far beyond building railways, bridges and roads…

Continue reading: Belt and Road Offers Development not Debt Trap

China Announces $1 Billion Belt and Road Africa Fund Led by South African

Announced July 3 on the sidelines of the Summer Davos Meeting World Economic Forum in Dalian, China, this $1 billion investment fund also achieves another first–in that it will be not be run by the state government–thus being China’s first “NGO.” It will also notably be led, not by a Chinese, but by a South African.

Intended to be up and running by September, this fund–to be capitalized by wealthy Chinese businessmen and their families–will be headed by Dr. Iqbal Survé, “born and educated in Cape Town” (according to his website). Survé had started his own, Sekunjalo investment fund in 1997, leaving his medical career at the call of Nelson Mandela, who was seeking local investors to lead the development of the economy. Dr. Survé had become “affectionately known as the ‘Struggle Doctor’ because of his provision of medical care towards victims of apartheid brutality,” says his “about” page.

Since then Survé came to serve as chair of the BRICS Business Council for South Africa, and most recently as a member of the Business Council Chairman for the five BRICS countries. A hedge fund operator he definitely is not. Commenting from China, Dr. Survé said, “The discussions that we’ve had with Chinese business people, state-owned enterprises and family offices, have resulted in the establishment of this fund. Africa is ready to grow and is heading towards a $5 trillion economy. The [Africans] have seen how China was able to grow from 1980, when China made up only 2% of the global GDP when compared to today, where China makes up 19% of the global GDP.

This fund is a great boost for the development of Africa.” The fund will be overseen by a Belt and Road Business Council, eventually to grow to 1,000 Chinese and African members.