Saturday, December 13, 2014

The Chinese influence

A recent study shows China’s development aid for Africa flows primarily to the home-lands of leading African politicians, when there was greater need for aid in another part of the same country. On average, 270% more financial contributions go to these locations rather than to other areas, the study reveals.

“Leading politicians in recipient countries spend a portion of Chinese aid on personal interests, which can restrict the effectiveness of the aid,” said Axel Dreher, from the Alfred-Weber-Institute for Economics at the University of Heidelberg and was among the authors of the study Aid on Demand: African Leaders and the Geography of China’s Foreign Assistance. The team, consisting of researchers from the United States, Switzerland, Australia and Germany, investigated around 2,000 Chinese development aid projects from 2010 to 2012. The study covered more than 3,500 locations and a total aid value of $90 billion.

China has repeatedly indicated that its foreign investments are not attached to any political agenda. But it is precisely this supposed neutrality that gives African elites the ability to use the funds to their own advantage, the researchers point out. “China’s position makes it possible for African politicians to transfer a substantial portion of Chinese funding to their constituencies,” Dreher indicated. The fact that leading African politicians use development funds to finance their own political agendas immensely undermines the effectiveness of Chinese development aid.

Economically the bilateral trade volume last year exceeded $ 200 billion. In the past, China invested mainly in Africa’s extractive industry. Now things are changing. Currently, Beijing’s investment in African energy accounts for just 20% of the total. China is investing more in infrastructure, manufacturing, and agricultural industries. Beijing’s primary interest is no longer African energy, rather in manufacturing industries. China’s position in the global production networks, by transferring its cost-effective industry to Africa. The previously destination for outsourcing are now the out-sourcers themselves.

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