As a new donor, China rejects the traditional western idea of charity that foreign aid is a one-way transaction from the global North to the global South and the latter do not need to reciprocate. Instead, China promotes a new idea of mutual benefits that foreign aid can bring benefits to both sides. This paper critically examines the ways in which China entwines foreign aid with financial flows towards Africa in order to ensure common benefits for two sides. It first offers a comparative analysis of similarities and differences of aid definitions between China’s and western aid. Next, it traces the history of China’s aid from which the mutual benefits model has emerged. It then shows how Chinese official discourses on the basis of mutual benefits legitimize China’s presence on African continent. Drawing on Marcel Mauss’s gift theory, this paper argues that China’s aid offers an alternative to western aid that is considered as the unreciprocated gift which establishes social relationship of superiority and inferiority. In contrast, China’s aid is the reciprocated gift which builds equal social relationship. The last part of this paper focuses on ethnographic materials of two Chinese aid projects respectively in Tanzania and Ghana, which reveals that neither ‘China’ nor ‘Africa’ is relatively undifferentiated, unitary entity. Therefore, this paper argues that the idea of mutual benefits between two parties obscures ever-widening differences of interests within China and Africa.
In recent years, debates around international development have had two themes: firstly the effectiveness of aid based on the Paris Declaration and secondly proliferation of emerging donors in the aid architecture (Grimm, et al, 2010). The aim of this study is to contribute to the debate on the rise of emerging donors at country level, with China serving as the country case.
Since the beginning of the 21st century, the world has witnessed the rise of emerging donors in international development cooperation. China, the United Arab Emirates, Saudi Arabia, Korea, Venezuela, India, Kuwait and Brazil, among other others, have been raising their level of foreign assistance. But referring to these states as ‘emerging’ donors obscures the fact that a number of them have a long history of development cooperation, in some cases dating back to the 1950s. None of the emerging donors belong to the donors’ club, the Development Assistance Committee (DAC) with 26 members (Czech Republic and Iceland joined in 2013), which was established within the Organization for Economic Cooperation and Development (OECD) with 34 members. The DAC has standardized the definition of Official Development Assistance (ODA), and created a powerful forum to negotiate the terms of foreign assistance as well as assess and regulate aid performances.
The traditional unidirectional foreign assistance innovated by the DAC donors has been so naturalized that there seems no alternative of doing development. However, it is faced with challenges from emerging donors, especially from China. Levels of China’s aid qualified as Official Development Assistance (ODA) are still relatively low, but given the entwinement of aid with other financial flows it is having a huge impact on the aid architecture (Brautigam, 2011). China rejects western idea that foreign aid is a one-way charity donation from the rich global North to the poor global South. In contrast, China promotes the idea of mutual benefit between equal partners. This takes the form of entwinement foreign aid with financial flows in order to ensure both sides benefit.
Debates take place around the principle of mutual benefits and combination of aid and business. While some African leaders, such as the Prime Minister of Botswana, said ‘I find that the Chinese treat us as equals. The West treats us as former subjects’ (Mawdsley, 2012:264), some British scholars argue that the mutual benefits policy acts as a different ideology in order to conceal China’s pursuit of self-interests (Mohan, Tan-Mullins, and Power, 2010). There is proliferation of discussions about the concessional loan granted by the Export-Import Bank of China (also known as China Eximbank), exports of Chinese goods tied to aid projects, labour policies of Chinese overseas companies as executors of aid projects, as well as social and environmental standards of infrastructure projects funded by China’s aid. However, these discussions are in the absence of either the knowledge of Chinese aid modality or the observable details of Chinese aid projects on the ground.
The purpose of this paper is to understand Chinese approach of aid and business framed by the idea of mutual benefits, through using historical method, discourse analysis as well as qualitative analysis. Historical method is useful to help us to understand why and how China has developed such practices. Discourse analysis of Chinese foreign policy rhetoric is also significant. There is definitely distance between foreign policy rhetoric and real life. But Strauss points that official rhetoric is important for three reasons (2009). Firstly, it includes the ideas that Chinese policy makers and leaders take for granted and do not question. Secondly, it offers a brief summary of China-Africa relationship for audiences who have limited knowledge of it. Third, it is the legitimate claim of China’s engagement with Africa. Qualitative data is especially important to understand the special approach of China’s aid. Without the grounded analysis of China’s aid projects, the debates remain unproductive generalizations. As Tjonneland (2006) argues, ‘we know very little about the quality and impact of Chinese projects and assistance activities in Africa’ (2006: ix). This is echoed by Mohan (2008) that there is a lack of details of the decision-making processes, how different actors claim their interests, how African governments react to China, and how civil society responds to China’s coming. He calls for more empirical analysis of the presence of China in Africa. Recent years have witnessed the increase in qualitative studies, such as Brautigam (2009), Dolber, (2008), Ho (2008), and Hsu (2007). The 2009 special issue of The China Quarterly, named China and Africa: Emerging Patterns in Globalization and Development, makes special contributions. Eleven articles of this special issue are based on primary research of the relationship between China and Africa, the majority of them using qualitative methods expect for a survey of African attitudes towards China.
This paper first compares the definition of western aid and China’s aid to identify similarities and differences. Secondly, it traces the lineage of the mix of aid with other economic engagement in the history of China’s aid towards Africa. Thirdly, it turns to examine how the idea of mutual benefits has been deployed by China’s foreign policies towards Africa during the last five decades. It then draws upon Marcel Mauss’ gift theory to compare the idea of charity which frames western aid, with ideology of mutual benefits which characterizes China’s aid, in order to explore the social relationship that different sets of ideas seek to create. Finally, through analyzing ethnographic materials of two of China’s aid projects, it explores how the entwinement of China’s aid with financial flows, along with the idea of mutual benefits, is expressed in the ground.
Chapter 2 Definition of Foreign Aid: Official Development Assistance and China’s aid
The definition of foreign aid is not as apparent and straightforward as expected. The donor club, the DAC, do create a hegemonic definition of Official Development Assistance (ODA), which is always used as a standard to assess of China’s aid performance. However, as Brautigam points, the lion’s share of China’s aid activities in other developing countries does not take the form of ODA (2011). So assessments always ‘end up comparing apples and oranges’ (ibid. :753). The main reason for the misunderstanding of China’s aid is mainly regarded as the Chinese government’s lack of transparency of its aid flows. But Hubbard (2008) observes that details of Chinese aid are published in Chinese languages. This part relies on Chinese language sources from the websites of the Ministries of Commerce, the China Eximbank and the most recent the People’s Republic of China (PRC) white paper on Foreign Aid (People’s Republic of China, 2011). Through comparing the definition of ODA and China’s aid, it reveals that ODA prevents benefits from returning to donors whereas China’s aid acts to ensure that both sides can benefit.
2.1 Definition of ODA
The DAC first standardized the definition of official development assistance (ODA) in 1969 and tightened the definition in 1972. The agreed definition of ODA enables the traditional donors to record, report and compare their aid performance. According to the definition, ODA is provided by official agencies including national and local governments or their executive agencies, to developing countries or multilateral institutions such as the United Nations Development Program or the World Bank. This transaction has to meet two criteria. First, its primary purpose is to promote the ‘economic development and welfare of developing countries’ (OECD, 2013). Second, it has concessional characters with ‘a grant element of at least 25 per cent at a rate of discount of 10 per cent’ (ibid.). It is noted that export credits do not count as ODA.
However, problems lie in this definition. Brautigam (2011) points that the condition based on a grant element of 25 per cent at a 10 per cent discount rate no longer makes sense today when the market interest rate such as the London Interbank Offered Rate (LIBOR) ranges from 1 to 4 per cent. In other words, the official loan interest rate is twice that of private banks, which goes against the principle of ‘below market interest rate’ (OECD, 2013). The definition of ODA looks more problematic when it is used to assess China’s foreign aid. This is demonstrated by two Chinese programs in Africa. Between 2003 and 2010, China Eximbank committed US $10 billion to finance post- war reconstruction in Angola, which includes projects such as water treatment system repair, establishment of secondary schools and rehabilitation of regional hospitals. Although the Angola government regarded that Chinese loan as more concessional, it would not qualify as ODA because it had a guarantee of sovereignty and a security of oil exports (Brautigam, 2011). In the second case, in 2006 a Chinese construction company signed a contract to rebuild Nigeria’s colonial-era railway line without funding pending. The Nigeria government applied for loans from Chinese Eximbank in exchange for Chinese preferential access to oil blocks. Neither of these cases qualifies as ODA-financed activities but both are developmental.
2.2 Definition of China’s aid
China does not have a concrete definition of foreign aid but a system of foreign assistance. China’s foreign aid is financed in three ways, namely 1) grants for health, education, housing, humanitarian and technology transferring projects; 2) zero- interest loans for public facilities constructions in creditworthy recipient countries with a twenty-year loan period; 3) concessional loans granted by China Eximbank after 1994. The primary purpose of concessional loans is ‘to promote economic development and improve living standards in developing countries’ which is in parallel with the main objective of ODA, as well as to ‘boost economic cooperation between developing countries and China’ which ODA does not encourage. (Brautigam, 2011:755). The annual interest rate of concessional loans hovers from 2 to 3 per cent, which is much than that of ODA (10 per cent). Its loan period is from 15 to 20 years while ODA does not specify a limit. Concessional loans do not specify its grant element whereas ODA defines a grant element of at least 25 per cent. According to the white paper on China’s Aid to Foreign Countries (People’s Republic of China, 2011), by 2009 China provided a total of 256,290 million RMB in foreign aid, including 106,200 million RMB in grants, 76.540 million RMB in zero-interest loans, and 73.550 million RMB in concessional loans.
The white paper (People’s Republic of China, 2011) lists that China’s aid activities range from turn-key projects, general supplies, technical cooperation, and human resources development cooperation, to health teams, humanitarian aid, oversea volunteers and debt relief. These activities are largely in parallel with ODA’s activities with some exceptions. Assistance to refugees in developing countries is included in ODA while it is not counted as aid by China. Military aid used to be part of China’s aid shown in ‘Measures on Budget Management of Foreign aid’ provided by the Ministry of Finance in 1998, whereas it has never been reported as ODA (Brautigam, 2011: 755). During the African famine of the mid-1980s, the Chinese Red Cross raised approximately five million dollars from the Chinese citizen to relieve famine in Africa (Brautigam, 2009). Furthermore, China offers technical assistance for health. As the Ministry of Health shows, 15,000 Chinese health workers had been dispatched to Africa by 2005 and they took care of nearly 170 million patients across 47 African countries (Chaponniere, 2009). In addition, China has become more active in education through its pledge to double scholarships for African students from 2,000 per year to 4,000 per year by 2009 (ibid.).
The rest of this chapter examines how the main institutions of China’s aid act to incorporate economic activities into the system of China’s foreign assistance. The State Council, i.e. China’s cabinet, plays an oversight role of China’s aid. The Ministry of Finance is responsible for the donation allocation to multinational organizations, such as the United Nations Development Program and the World Bank as well as management of debt relief. However, three key institutions remain: the Ministry of Commerce, the Ministry of Foreign Affairs, and China Eximbank.
The Ministry of Commerce (MOFCOM) is at the center of aid system. Within it, the core is the Department of Foreign aid. Its main duty is to issue grants and zero-interest loans, coordinate with the Ministry of Foreign Affairs on drafting annual budget and aid regulations, and cooperate with China’s Eximbank on concessional loans. As Brautigam (2009) observes, the Department of Foreign Aid is rather small with100 staff, compared with 1,612 staff in Britain’s Department for International Development (DFID) and 2,200 staff in the US Agency for International Development (USAID).
The Ministry of Foreign Affairs works together with the Ministry of Commerce to draft an annual plan for aid, and approve any changes for its aid plan. Yet a high- ranking UN official observed ‘the war between MOFCOM and the Ministry of Foreign Affairs’ (Brautigam, 2009: 111). Compared with the Ministry of Commerce, the Ministry of Foreign Affairs is more concerned with diplomatic nterests. ‘MOFCOM is very reluctant to give up the power in its hands’ said an American analyst (ibid.). This is reaffirmed by a Beijing-based Chinese insider that ‘the Ministry of Foreign Affairs used to be part of the approval process, but now they don’t even get invited. They don’t have a seat at the table’ (ibid.)
China Eximbank does have a seat at the table. Since its establishment in 1994, China Eximbank has been empowered by the Chinese government to offer concessional loans to developing countries. Concessional loans are the only part of China Eximbank operations that qualify as China’s foreign aid. As shown above, concessional loans have similar purposes with ODA to promote the economic and social development of recipient countries, but the former also aims to increase economic cooperation whereas the latter avoids doing so. They have differences in the annual interest rate, the loan period and the grant element. Concessional loans are on the basis of aid projects, mostly infrastructure projects. The project cycle of concessional loans is explained on the website of China Eximbank in the Chinese language shown below. Explanation of numbered steps is based on the translation of Paul Hubbard (2008):
1, The government of the borrowing country submits an application to the China Eximbank.
2, The China Eximbank reports the evaluation to the Ministry of Commerce.
3, The Chinese government signs a framework agreement with the borrowing country.
4, The borrowing government signs a project agreement with the China Eximbank.
5, According to the contractual terms, the Chinese contractors and exporters invoice the foreign executing agency requesting payment.
6, The foreign executing agency submits the invoice and progress report to the borrowing country government.
7, The foreign government submits a drawing application, invoice, and progress report to the China Eximbank.
8, The China Eximbank then disburses the funds to the exporter.
9, The foreign government pays interests and fees and loan repayments to the China Eximbank.
As Brautigam (2009) observes, the above model of concessional loans are provided to bankable projects in less creditworthy countries, such as a rural wireless telecoms project in Sierra Leone or a geothermal power project in Kenya. Regarding creditworthy countries, concessional loans are offered directly to the account of governments, such as Mauritius and Namibia. Debates around this project-based approach arise. On the one hand, the China Eximbank Vice-President argued that China’s project-based approach can generate more tangible and quicker results and is less likely to cause corruption. This is recognized by Sierra Leone’s former Minister of Foreign Affairs, AlhajiKoroma, who said that ‘they [China] give aid, grants, and loans but you never see them’ (ibid. 143). On the other hand, DAC donors criticize that the effectiveness is at the cost of environment, human rights and governance (Mohan, Tan-Mulins, Power, 2010). It is noted that according to China Eximbank (2013), projects funded by concessional loans should have economic and technological feasibility and avoid harming natural and social environments. However, in reality, environmental and social issues are complicated, which is demonstrated by the Bui Dam project in Ghana in later chapters.
China Eximbank also requires Chinese companies who operate projects funded by loans to give priority to import equipment, materials, technology and services from China. This is in conflict with ODA’s exclusion of export credit. Hubbard (2008) explains that the China follows the earlier Japanese model of using development aid to increase its own exports. This is consistent with Brautigam’s observation of history of China’s aid (2009). An article published in Market Daily, a publication of the People’s Daily, seems to illustrate the purpose of export growth more clearly. Under the title of How to Apply for a Concessional Loan, it stated that ‘in order to support and assist Chinese firms doing trade and business in Africa to overcome the problem of insufficient funding, the Chinese government has already signed reduced interest concessional loan framework agreements with 26 African countries, which required them to purchase and import from China as much equipment, technology and services as possible’ and the recipient country should have ‘plentiful local resources, a vast market for goods, favorable economic prospects’ (Hubbard, 2008: 225).
In sum, this chapter shows that China’s aid has elements that can qualify as ODA but differences lie in the China’s incorporation of economic elements into its aid system. The fact that the core institution of foreign aid is set within the Ministry of Commerce, and that both the Ministry of Commerce and China Eximbank are more powerful than the Ministry of Foreign Affairs over the control of aid illustrates China’s emphasis on economic benefits from aid. This takes the form of concessional loans which guarantee the exports of Chinese goods. This is in principle contrast with ODA.
Chapter 3 History of China’s aid: lineage of hybrid of aid and commerce
This chapter traces the lineage of the entwinement of China’s aid and business. There is an assumption that China is a new player in the provision of international development on the African continent. However, it is ‘the first developing country to establish an aid program’ (Brautigam, 2009:33, emphasis in original text). The History of China’s aid to Africa is roughly divided into three phases according to various sources (Brautigam, 2009; Shinn and Eisenman, 2012).
The first phase between 1960 and 1976 is characterized as ‘ideology exportation’ (Li Xiaoyun, cited in Shinn and Eisenman, 2012:144). During this period, China’s aid to African countries mainly served the purpose of breaking out of international isolation, competing with the Soviet Union for dominance in the communist world and preventing Taiwan from being internationally recognized as the government of China (ibid. xi). Although China stressed that its aid was not out of self-interested but altruistic and denied that recipient countries were markets for Chinese exports (ibid.), Prah reminds us that we should not overlook its economic components (2007, cited in Chaponniere, 2009). The idea of mutual benefits is well demonstrated by the exports of Chinese goods in the construction of the Tanzania-Zambia Railway (also known as Tanzam railway), China’s largest aid project at the cost of£166 million. The local costs for the Tanzam railway were expected to be provided by the recipient countries but this turned out to be unaffordable. Due to the shortage of foreign exchange, China could not pay the local cost in hard currency. Therefore, China developed an innovative way of financing local costs: a commodity credit agreement. That is, Chinese goods were sold through national trading organizations to the two countries in order to raise enough funds for local costs. Each country would be committed to annually consuming 8.5 million pounds of Chinese goods for five years. In the early 1960s, China had no trade with the two African countries, but when the railway construction was at its height, Chinese goods represented 5 per cent of Zambian imports and 10 per cent of Tanzanian imports. In 1971, Chinese exports to Tanzania reached £33 million, which replacing Britain as the largest source of imports (Bailey, 1975).But by 1975, China’s trade with Africa was still smaller than its aid to Africa (ibid.).
The second period between 1977 and 1994 is called ‘cooperation for mutual benefit’ by Brautigam (2009). During this period, political considerations for foreign aid were secondary to its economic considerations. Since 1978, China opened up its market and began its Four Modernizations. China announced a ten-year plan which established 120 modernization projects of electricity power stations, railways, coal mines and like projects. At the outset, the Chinese government was unsure how to fit foreign aid into this broad picture. Debates took place amongst Chinese leaders over the necessity and China’s ability to continue to give aid to Africa (Brautigam, 2009). This was because under Mao’s control, China’s aid was difficult to afford and became a burden. But Deng Xiaoping finally decided to continue to give foreign aid. In order to balance the needs of domestic development and foreign aid to Africa, the Chinese government announced that no new project like Tanzam railway would be offered, and the annual expense of foreign aid should not exceed a certain percentage of national budget. More importantly, China adopted a business-oriented approach to engage with Africa which could produce mutual benefits.
Brautigam (2009) observes that China learnt from Japan’s aid system: firstly, request- based aid system and secondly, resource-backed loans (Brautigam, 2009). Firstly, In the 1970s, the Japanese aid system heavily relied on Japanese companies. Japanese corporations sought for their overseas projects and then requested Japanese government to provide funds for projects. This aid system increased Japanese exports of raw materials such as cotton, timber, energy, industry and mining. China’s concessional loan established after 1994 operates in the same way as Japanese request-based loans. Secondly, with worries about energy security, Japan offered low- interest loans to support the 10-billion-dollar export of its industrial technology, materials, and modern plants in exchange with China’s oil and coal. This enabled China to expand its infrastructure and gain access to advanced technology. China applied this model when it engaged with Africa. China provides concessional loans to a Chinese company in order to carry out an infrastructure project in Africa whilst, at the same time, ensuring that a Chinese mining company gains a license to explore raw materials in Africa.
During the second phase, ties between Chinese aid and Chinese business were increasingly visible. Since 1984, China performed a number of experiments to explore how aid could be linked to investment. One approach was to lease former aid projects to Chinese companies. It worked in a similar way to rental agreements whereby property was leased to a contractor in exchange for certain percentages of payments. The contractor does not own the property but has the right of use. Another approach was joint ventures. In 1983, Zhao Ziyang made a proposal that China could transfer 10 per cent of US $100 million in debts owed by Zaire into Chinese investment in joint ventures. The model of debt-equity swap was initially implemented by Jamaica in 1987. Jamaica’s foreign aid debts were transferred into 46 per cent shares of a China’s former aid project, the Polyester Cotton Textile Mill, taken by the Shanghai No.12 Cotton Mill (Brautigam, 2009).
The third phase has begun from 1995 to the present. Learning lessons from previous experiments, China started to reform its aid through two organizational changes since 1995. Firstly, Chinese state-owned companies divorced from Chinese ministries and started to perform as independent corporations which assume sole responsibility for its own losses and profits. They no longer had regular financial support and by 2000, a number of state-owned enterprises collapsed. At this time, the leasing of Chinese former aid projects became an alternative for these state-owned companies to continue their business. Secondly, three banks were established for the purpose of implementing Chinese state policy, namely the China Development Bank, the China Eximbank, and the China Agricultural Development Bank. They serve as government tools for the allocation of finance to facilitate planning and marketing. China Eximbank and the China Development Bank started to seek overseas opportunities. The part of these reforms that was central to China’s aid was the creation of concessional aid loans by China Eximbank, which was detailed in the previous chapter. Learning from the Japanese model as well as its own experiments, China’s State Council sent a clear message: ‘combine aid to Africa, mutual cooperation, and trade together’ (Brautigam, 2009: 80).
In sum, this chapter argues that China’s current model of aid combined with commerce is rooted in its past experience of development, mainly earlier engagement with Japan combined with its domestic development experience of opening-up and going global.
Chapter 4 Chinese official discourse towards Africa: mutual benefits
As Strauss (2009) points, China’s official discourse on its relationship with Africa is of importance because it acts to legitimize and frame Chinese foreign policy towards Africa. This chapter analyzes how the principle of mutual benefits is articulated through China’s official rhetoric on China-Africa affairs. Archival materials are drawn from Julia C. Strauss’s study of the relationship between China and Africa (2009).
Two themes are repeated throughout Chinese official discourses. Firstly, due to the shared experience of fighting colonialism and imperialism, China and Africa must mutually help. Secondly, because they are developing countries and thus have the same developmental needs, they must bring mutual benefits. This part focuses on Chinese official coverage of three high-profile China-Africa meetings: firstly, Zhou Enlai’s tours in Africa from 1963 to 1964, and secondly, Jiang Zemin’sAfrican visit in 1996, and thirdly, the Forum on China-Africa Co-operation (FOCAC) meetings in 2000, 2003, and 2006.
4.1 Zhou Enlai’s tours in Africa from 1963 to1964
Between December 1963 and February 1964, Chinese the premier Zhou Enlai visited ten independent African countries and announced ‘Eight principles’ of Chinese aid in Ghana. The announcement emphasized ideas about mutual benefits, equality and respect for sovereignty, which dated back to the fundamental principles created in the mid-1950s. China’s Premier Zhou Enlai introduced the ‘Five Principles of Peaceful Coexistence’ when he negotiated with India over the Tibet issue in 1954. These principles became foundational to the non-aligned movement at the Afro-Asian People’s Solidarity Conference in Bandung, Indonesia, which dozens of new African and Asian leaders attended in 1995.
Within the Five Principles, the Bandung Principles, and the Eight Principles of aid, the core theme was repeated: China and Africa have analogous experience of colonial exploitation so they should reject hierarchical the relationship and establish equal relationships by giving mutual help. This was clearly expressed by Zhou: ‘although the Chinese people and the African people speak different languages and are thousands of miles apart, we have similarly experienced aggression and oppression by imperialism and colonialism, and we face the common fighting tasks of opposing imperialism and building up our respective countries. We understand each other best and we share each other’s feelings’ (Strauss, 2009: 235). This generalizing claim was tailored to cater for different African countries. Zhou drew clear similarities between the revolutions of the Algerian Liberation Army and that of the Chinese Communist Party: ‘new born revolutionary forces, though seemingly weak at first, can ultimately defeat the outwardly strong but decadent counterrevolutionary force. […] We are glad to see that […] the Algerian people, under the leadership of President Ben Bella and the FLN, are united in a resolute struggle against all kinds of disruptive schemes of the colonialists, are successfully pushing ahead the revolutionary cause and are determined to take the socialist road’ (ibid.:234). Such parallels were drawn even between the relatively conservative Haile Selassie government of Ethiopia and China: ‘the people of Ethiopia, with a long tradition of battling imperialism, have carried on consistent struggle against aggressors since the 16th century. Led by the present Emperor, they were victorious in their heroic fight against Italian fascist aggression’ (ibid.).
4.2 Jiang Zemin’s tour in 1996 and FOCAC in the 21st century
Between Zhou Enlai’s first African tour in the early 1960s and Jiang Zemin’s visit to Africa in 1996, there was one other high-profile Chinese tour of Africa when Zhao Ziyang visited ten African countries between December 1982 and January 1983. Zhao clearly stated that ‘China is also readjusting its economy and we have our own difficulties. […] we must not strain to do what is beyond our country’s capabilities,’ but ‘it is preciously because we have difficulties that we urgently need mutual help [with Africa]’ (ibid. 240). When Jiang took a visit to six African countries in 1996, the tone of official discourse experienced a significant shift due to the success of the economic reform. A new mission was proposed: economic growth. The logic is that as China and Africa have the same desire for development, they need to work together and provide mutual benefits. This message was explicitly expressed at the FOCAC in Beijing (2000), Addis Ababa (2003), and Beijing (2006). Due to its high rate of economic growth over these two decades, China could no longer claim the same level of poverty and struggling. Recognizing the limits of older official discourse, China included new notions of complementarity, international division of labour between China and Africa, and positive sides of globalization. This was affirmed by Zhu Rongji’s closing speech at the 2000 FOCAC in Beijing: ‘Africa, on the one hand, boasts talented and hardworking people, abundant natural resources, and great market and development potentials. China, on the other hand, has got considerable economic strength, a promising market and a wealth of commodities, managerial expertise and production technologies suitable to African countries’ (ibid. 242). However, as Strauss (2009) observes, the older official rhetorical have remained powerful within Chinese foreign policy towards Africa. In the opening speech at 2003 FOCAC, Wen Jiaobao stated that: ‘China as the largest developing country in the world and Africa [as] the continent with the largest number of developing countries’.
In conclusion, although the distance between foreign policy rhetoric and foreign policy reality does exist, ideas of foreign aid are discursively embodied in rhetoric. The analysis of China’s official discourse towards Africa shows that the principle of mutual benefits is on the basis of a common history of colonialism and developmental needs of China and Africa.
Chapter 5 Gift theory and Foreign aid
This chapter draws on anthropological theory of giving, receiving, and reciprocity to examine the idea of mutual benefits in order to explore the social relationship that this idea seeks to create. It starts by critical engagement with gift theory, and then applies this theory to the comparison between the idea of the charity framing western aid and that of mutual benefits shaping China’s aid.
5.1 Mauss and The Gift Any anthropological discussion of the role of gift dates back to Marcel
Mauss and his landmark book The Gift, first published in 1924. Mauss states his thesis at the beginning of his book – ‘exchanges and contracts take the form of present; [though] in theory they are voluntary, in reality they are given and reciprocated obligatorily’ (1990: 3, cited in Osteen, 2002: 3). The essence of this thesis is that the act of giving gifts involves various kinds of obligations, which opens up a social relation. According to Mauss, there are three kinds of obligations: the obligation of giving which establishes the social bond; that of receiving which confirms the social relationship; and that of reciprocation which demonstrates the honour and wealth of the receiver (Mawdsley, 2012). The best known example of the obligation of giving in his book is the ceremony of ‘potlatch’. At the potlatch, North American chiefs gave away without any expectation of return, or even destroyed a large amount of objects of value in order to accumulate their symbolic capital. To counter the symbolic capitals of the giver, other chiefs had to give away more valuable objects at the next potlatch. The point of this potlatch case is that ‘to refuse to give, to fail to invite, just as to refuse to accept, is tantamount to declaring war’ (1990: 13, cited in Osteen, 2002: 40).
So the fundamental question raised in The Gift is ‘what rule of legality or self- interest…compels the gift that has been received to be obligatorily reciprocated? What power resides in objects given that causes its recipient to pay it back?’(1990:3, cited in Osteen, 2001:3). Based on the words of a Maori informant, Mauss argues that a spirit – named hau by the Maori – within the gift is the force of reciprocation. Hau is a mystic power that resides in the object given and always attempts to return to its owner. If the receiver fails to return the gift, he will get into trouble, even die. However, Mauss’ explanation has evoked dispute among anthropologists. Claude Levi-Strauss’s criticism is that Mauss provides an example of anthropologists failing to use their rationalization to seek for general structural logic but compromising themselves to the indigenous people’s mystification of the role of gift (Parry, 1986:456). Raymond Firth holds that Mauss confuses the hauof a gift with the hau of the giver and argues that it is not the object but the person who set the obligations of gifts (ibid.)
Later, Marshall Sahlins in his highly influential book Stone Age Economics argues that Mauss provides two different answers to the fundamental question (Parry, 1986).
The first one is the Maori concept of hau. Sahlins demystifies this indigenous explanation and turns to affirm Mauss’ second answer of the norms of reciprocity (Yan, 2002). He points that Mauss’ understanding of gifts neglects the power relation between the giver and the receiver. So Sahlins divides the act of giving into three sub- categories according to the nature and the degree of reciprocity. Mauss’ conception of gift is the basic form, ‘balanced reciprocity’ in which the obligations of reciprocity are carried out and therefore affirm a social relationship between social equals. The second form of giving is ‘generalized reciprocity’. It only emerges in societies which have a high degree of social cohesion which allows the duty of reciprocity to comply between generations. For example, a child who is a receiver will become a giver in the future (Hattori, 2001). The third form is ‘negative giving’ which results in the creation and maintenance of a social relationship of superiority and inferiority rather than that of honour and dignity (Mawdsley, 2012).
Parry (1986) is against Levi-Strauss, Firth, and Sahlins, and argues that Mauss’s interpretation of the Maori’s conception of hau has more values than they realize. He criticizes that Sahlins makes a separation between things in which hau resides and persons who set obligations of reciprocity. Parry argues that ‘it is because of this participation of the person in the object that gifts create an enduring bond between persons’ (Parry, 1986:457). The two aspects are inseparable. Furthermore, Parry criticizes that Sahlins fails to recognize that the main purpose of The Gift is to construct ‘a kind of prehistory of our modern kind of legal and economic contract’ (Parry, 1986: 457, emphasis in original text). Mauss broadly outlines the evolution from ‘total prestations’ as non-economic exchanges between groups, to exchange gifts between persons as representative of groups, and finally to modern market exchange between individuals (ibid.). By indicating that Mauss’ thesis is about origins of modern contract, Parry asks ‘what then are modern gifts?’ (1986:458, emphasis in original text). He argues that gifts in modern society signify something entirely different, something opposed to commercial exchange, and something opposed to self-interests. The key insight he draws from Mauss’ work is that the ideas of gifts and disinterestedness and the ideology of economic exchange and interestedness are ‘our invention’ (1986:458). In archaic society, like Trobriand, prestations represent a combination of gifts, loans and pledges. This is echoed by Bourdieu’s argument that economic theory reduces the universe of exchange to commercial exchange due to its pursuit of the maximization of profit, i.e. self-interests, and therefore defines other forms of exchanges as disinterestedness. He regards this as ‘the historical invention of capitalism’ (1986:242, cited in Stirrat and Henkel, 1997).
Pierre Bourdieu refines Mauss gift theory through introducing the conception of symbolic violence to analyze the gift exchange. According to Bourdieu, symbolic violence is ‘the gentle invisible violence, unrecognized as such chosen as much as undergone’ (1990:127, cited in Hattori, 2001:639). In other words, symbolic power signals and euphemizes the mode of domination. It can be viewed that it is more powerful than physical power because it penetrates into every-day social habits and knowledge structures of individuals (Nicolaescu, 2010). In modern society, symbolic violence sometimes takes the form of gestures. For example, employees feel obligated to laugh when the boss tells a joke, which signifies the superiority of boss. Bourdieu regards that gift giving is an effective practice of symbolic violence and mode of domination (Silber, 2009). As such an act of giving involves materials that are desired by recipients and offered by givers, it has the power to transform a social relationship of domination into that of gratitude and generosity. It is here that Bourdieu adds further to gift theory by arguing that recipients play an active role in the mode of domination because their acts of persistent unreciprocated receiving help to maintain and naturalize the unequal social order (Hattori, 2001).
5.2 Western aid as the unreciprocated gift
Mawdsley (2012) outlines the symbolic claims of DAC donors’ foreign policy on foreign assistance to developing countries. Western donors claim that they are out of sympathy for different and remote others, and feel more responsibilities to the less fortunate countries. So they should provide the unfortunate countries with assistance based on superior knowledge, technology and institutions. Most importantly, they do not expect any reciprocation. These claims have core themes of charity and generosity. Mawdsley (2012) describes this relationship in a way that in virtue of western ‘development’ and civilization, western donors play a role of parents to discipline and educate the childlike Africa. The gift theory, which concerns obligations of giving, receiving and reciprocity, offers a perspective to explain this one-way foreign aid from the First World to the Third World and to uncover the particular social relationship it aims to create.
Among writers who apply gift theory to western aid, a notable example is Tomohisa Hattori. He observes that most international relations theories are only concerned with the effects of aid policy while overlooking the conditions of foreign aid. So Hattori asks ‘how is foreign aid possible?’ (2001: 634). To answer this question, He first contends that the interplay between states is a set of social relations instead of a total of individual actions or abstract structural logic. He argues that grants of foreign aid are unreciprocated gifts which are categorized as Sahlins’ ‘negative reciprocity’. In ‘negative reciprocity’, the universal norms of obligation to reciprocate are suspended. Social relationship arising from negative reciprocity is interaction of superiority and inferiority rather than that of honour and dignity. Hattori draws two insights from the work of Sahlins. First, foreign aid emerges from material inequality between donors and recipients. Second, foreign aid policy serves to secure unequal social relationship. In a word, he suggests that foreign aid is ‘a practice that signals and euphemizes social hierarchies’ (2001: 639). Hattori then turns to Pierre Bourdieu’s conception of symbolic domination. He argues that foreign aid has ‘the gentle invisible violence, unrecognized as such, chosen as much as undergone’ (Bourdieu, 1990: 127, cited in Hattori, 2001: 639). Persistent unreciprocated receiving naturalizes social inequality. Recipient countries are accomplices in maintaining the social hierarchy. Through applying gift theory into the examination of military aid of the US and the Soviet Union during the Cold War, he observes that foreign aid plays a symbolic role which mirrors and obscures the persistent social inequality in the post-war era. Hattori concludes that the effects of foreign aid policy and practice are inferior to its basic role of naturalizing social inequality as the condition from which it arises.
The assumption of one-direction aid from the global North to the global South is revealed more clearly through Patty Gray’s study of Russia’s (re)-emergence as an aid donor (2011). She had conducted fieldwork in Russia at the time when it was an eastern recipient and in recent years when it has become an aid donor. The Soviet Union was a key player in international development during the Cold War but after its dissolution in 1991, Russia, the core of the Soviet Union, was demoted to the position of recipient in the international development world. However in 2007 Russia officially signaled its return to the development world as a donor. The message was clear: it refused to play the role of non-reciprocating aid recipient and claimed to be a player of international development. Gray observes that although Russia’s foreign aid only focuses on central Africa, both Russian official press and international media presented that Africa is the main recipient of Russia’s development assistance and highlighted that Russia’s contributions are in conformity with the Millennium Development Goals. Based on this observation, Gary mainly argues that the signifiers ‘North’ and ‘South’ and ‘West’ and ‘East’ are ambiguous but what is signified is a common sense that the North is developed and capable of offering aid while the South is underdeveloped and needs help. She suggests that the rise of Russia both challenges and strengthens these assumptions. On the one hand, Russia challenges them through entering the world of development neither as a traditional donor from the global North nor as a recipient from the global South and can offer new ways of doing development. On the other hand, Russia confirms these assumptions in the sense that ‘by using Africa as a fulcrum Russia attempts to level itself out of the West-East axis as transitioning recipient country and into the North-South axis as an emerging donor country’ (2011:8).
She argues that foreign aid is not a culture-free category but a cultural phenomenon. The discourses of the North developing the South and the West developing the East are cultural assumptions – not a culture of any country or region or people but that of an imagined ‘development community’. Such culture includes the ways of planning and funding projects, belief in ‘capability building’, and stress on ‘deliverables’ and ‘reportables’ (Gould, 2005 cited in Gray, 2011: 7). They have been naturalized to the extent that convincingly there is no other alternative approach to do development. Gray points that the ‘new’ donors are opposed to ‘traditional’ donors not because they are newcomers to the game of development aid but because they do not share the same culture of this imagined development community and instead ‘introduce new cultural practices of development into the global arena’(Gray, 2011: 7, emphasis in original text).
In sum, through the lens of gift theory, western aid is regarded as the unreciprocated gift. Obligations of reciprocity are not performed under the assumptions of a one-way transaction from the global North to the global South and from the West to the East. As a result, the social relationship of superiority (donors) and inferiority (recipients) is created and maintained in the international aid regime.
5.3 China’s aid as the reciprocated gift
China’s two-way aid on the basis of mutual benefits is performed in the Maussian sense of reciprocal gift. China performs the obligation of giving aid and its recipients perform the obligation of receiving and returning, so that they create equal social relationship. This is in contrast with one-way ODA on the basis of charity. It suspends recipients’ obligations of reciprocation and therefore creates the social relationship of superiority and inferiority.
China’s aid combined with financial flows demonstrates the co-existence of economic exchange and ‘pure’ gift which assume to be separated. Parry points that The Gift is a powerful example to prove that the ideas of pure gift and disinterestedness as well as those of commercial exchange and interestedness do co-exist. In other words, the distinction between the two sets of ideas is our invention. Whereas China’s aid shows that self-interested economic exchanges and altruistic ‘pure’ gift can be combined, ODA’s exclusion of exports reflects the separation of the two opposing ideas. ODA assumes that foreign aid is completely out of altruism instead of self-interests. But as recipients do not perform the obligation of returning, the social relationship that ODA creates becomes distorted. In fact, charity is the counter example of Mauss’ reciprocal gift. Mauss puts that ‘charity is still wounding for him who has accepted it, and the whole tendency of our morality is to strive to do away with the unconscious and injurious patronage of the rich almsgiver’ (2002: 83, cited in Gray, 2011: 6).
The observation that China’s aid in theory symbolizes the equal social relationship is consistent with Mawdsley’s observation of China’s symbolic claims from the lens of gift theory (2012). She drew out four main elements of Chinese discourse about development cooperation as follows. China considers that the global order is unjust so globalization brings more challenges and risks than opportunities. Southern countries therefore should cooperate together. China also claims that each nation has its own right to determine its internal affairs and reject interference from other countries. Furthermore, China encourages more South-South economic cooperation including investment, banking, joint ventures and technology transfer that can produce mutual benefits. Finally, China asserts that it is committed to promoting peaceful multilateralism, nuclear non-proliferation, and control of light arms trade. She argues that by creating and promoting these ideas, China aims to offer an alternative social relationship opposed to the hierarchal one between the North and the South.
In sum, drawing from gift theory, China’s aid is performed as the reciprocated gift in the Maussian sense that combines the ideas of self-interested economic exchange and ideology of disinterested free gift. In contrast, western aid is carried out as the
unreciprocated gift that excludes self-interested commercial exchange from disinterested pure gift. In theory, China’s aid creates an equal social relationship with recipient countries while western aid creates a social relationship of superiority and inferiority.
Chapter 6 Case studies
As Mohan (2008) argues, detailed accounts of Chinese projects are important in order to understand the relationship between China and Africa. This chapter concentrates on ethnographies of two Chinese aid projects in Africa. Through examining interactions between Chinese managers, African workers, workers’ unions, and the Tanzania and Ghanaian governments, it argues that neither ‘Africa’ nor ‘China’ is an undifferentiated and unitary entity. The discourse of mutual benefits obscures ever- widening differences of interests within China and Africa.
6.1 Case study 1: Tanzania-China Friendship Textile Mill in Tanzania
The first case is the Tanzania-China Friendship Textile Mill in Tanzania which was one of China’s notable aid projects in Tanzania in the late 1960s and was transferred to a joint venture in the mid-1990s as a part of new China’s aid. Ethnographic materials are drawn from sociologist Ching Kwan Lee’s paired comparison of labour relations in the Friendship Textile Mill in Tanzania and the Chambishi mine on the Zambian Copperbelt, as well as Brautigam’s field research about the outcomes of the Friendship Textile Mill’s transformation from aid to business (Lee, 2009 and Brautigam, 2009). It first briefly surveys the history of this textile mill project, and then analyzes the factors that shape the interactions between Chinese managers and African workers, and finally examines conflicts between multiple interests during the casualization.
In January 1969, a large new textile mill which was built and funded by China was opened by the former Tanzanian President Nyerere. A reporter for the Black Panther newspaper witnessed this and wrote an article expressing admiration about this Tanzania-China Friendship Textile Mill (or Urafiki, its name in Swahili) (1969). The most admirable thing was the Tanzanians’ ownership of this Friendship Textile Mill in contrast with Western ownership of aid projects. The fact that the Chinese brought their engineers, technicians, cooks, drivers and labourers was interpreted as a spirit of self-reliance. The Chinese characteristics of being hard working and frugal were regarded as necessary. How have these ideas changed in the later decades?
The Tanzanians had failed to run the textile mill by themselves and thus in 1984 Tanzanian government required Chinese to return to rebuild and manage this factory. The Chinese government gave no response to the Tanzanian government until the mid-1990s when a new aid system was established. China Eximbank provided US $1.7 million in concessional loans to ‘rescue’ this former aid project by transferring it into a joint venture. The Chinese government therefore became the majority stockholder (51 per cent) of this joint venture. A Chinese provincial textile company in Changzhou city in Jiangsu province won the bid to carry out this project.
Next, this chapter explores the major factors that shape the interactions between Chinese managers and African workers, namely segregation of workers’ lives, communication problems, and Misalignment of mutual expectations. The Lives of Chinese and African workers in this mill are segregated. The residential area of the Chinese workers, including 25 managers, engineers and office staff, is secluded from other Urafiki workers with its own security. During the leisure time, Chinese watch television with their own satellite dishes, sing songs in their karaoke rooms, and sometimes play ping-pong and basketball. They eat Chinese vegetables grown by African workers in a huge vegetable garden as well as their own livestock, and even drink water from their own wells. Every day, the Chinese workers are chauffeured from the mill to their own canteen for lunch and dinner despite the fact that the distance is only half a mile. These behaviours used to be interpreted as a spirit of self- reliance but tended to breed discontent from African workers today. It is part of the company’s policy to avoid the Chinese workers from venturing into local communities. But Mohan (2010) also points that Chinese migrations have a long tradition of failing to incorporate into local community. During the construction of the Tanzania-Zambia railway, the largest Chinese aid project, although Chinese engineers worked shoulder to shoulder with African workers instead of finger pointing like white supervisors, they were like strangers when off duty. They lived in separate areas of the same temporary camp, enjoyed different leisure activities, and ate various cuisines. But true friendships did develop between the Chinese and African engineers who lived in a large and permanent camp and attended to the same training workshops and meetings together (Monson, 2009).
Language was another main factor of interactions. Middle-aged Chinese managers usually speak little English, and young Chinese who can, always make complains about ‘impure’ English of Tanzania and Zambian workers. None of Chinese speak Swahili, the national language of Tanzania. Human resource managers in Urafiki factory are Africans who studied or worked in China and can speak fluent Mandarin. African workers always complain that Chinese take advantage of communication problems. When African workers demand the higher wages, Chinese managers pretend to not understand English. But when government officials take a visit, same people are able to demonstrate fluent English. A Tanzanian technician complained that ‘white colonialists were better, at least they greet you. The Chinese don’t greet you when they pass by you’ (Lee, 2009:107). Communication also cause big problem for Chinese construction companies in Angola (Corkin, 2012). Chinese corporations have two organizations in Angola which aim to promote interactions between Chinese companies instead of Chinese and Angolan enterprises.
One element that influences the interaction between Chinese managers and African workers is what Chinese managers call ‘work ethics’ and African workers view ‘exploitation’. A young Chinese man who used to work in Urafiki said, ‘we wanted to introduce a system of eight hours plus four hours overtime, with extra pay and other benefits, so that we could have two shifts a day, like in China’, but after two years of arrangement, ‘the unions began to lobby against the system’ (Brautigam, 2009: 198- 199). Before showing the Chinese and Africans’ interpretation of this system, it is helpful to know the background of the textile industry. The busy season for kangas, the cloth produced by Urafiki, is between July and October because this period is when farmers gain money after their harvests and buy kangas for themselves or as gifts. Chinese managers demanded a 12-hour work schedule during this time but it was rejected by the union.
Chinese managers in Urafiki considered this refusal as evidence of indolence, poor work ethics, and bad life styles of Tanzanian workers. A Chinese senior manager at Urafiki pointed out that ‘here [Urafiki] they [African workers] think because this is a Chinese-owned factory, that we have come to assist them, so it’s natural that we should feed and pay them every day they are alive. They don’t have ambition or motivation to improve them or work hard.’ (Lee 2009:106). A manager of Urafiki’s finance department complained about their bad life style:‘I understand their lives are hard, prices are high and they have to support six to 12 people in the household. […]I grew up in very poor and backward rural areas in Anhui province. Before I turned 17, I had never tasted milk. When I first arrived at Changzhou, I did not have enough to eat. No rice, just porridge, a bit of cabbage, salt and oil. Three times a day, the same porridge. Now these Africans all spend their money on Coca-Cola. They could use the same money to buy eggs or milk to get nutrition. Chinese would never waste their money on Coke. We Chinese will save their money for the family. But here whenever they have money in their pockets, they just spend it without thinking. One month’s wage can only support half a month’s expenses. Then they turn to stealing’ (ibid :105).
Whenever Chinese managers impart their work ethic to Africans, they always refer to their previous difficult working conditions and what they called ‘old Chinese wisdom’ i.e. ‘bitterness first, enjoyment later’. The first general manager of the factory recalled that in 1997, Urafiki factory was damaged by a severe drought. At that time, although Chinese personnel had a very difficult time of life, they first put money into production instead of improving their living conditions. They considered that China’s recent economic development was explained by this spirit of self-sacrifice and hard work. Therefore, the Chinese managers demand similar sacrifices from the African workers.
On the other hand, the African workers see the Chinese ‘work ethic’ as ‘exploitation’. They have the understanding of labour rights which was rooted in the colonial time and demand that foreign investors today should provide at least the same level of service. The African workers consider that the Chinese are practicing class exploitation because they pay lower wages and refuse the demands of the workers. ‘If you want your cows to give more milk, you have to give them more grass, but the Chinese give them less grass,’ a Tanzanian technician at Urafiki argued (ibid.:107). Like the Chinese, the African workers complain about the Chinese lifestyle. A female electrical engineer grumbled that ‘many workers only get little transport allowance but have to travel 16 or 20 kilometres to get home. The Chinese live in the Compound across the street but they have a car to take them back and forth’ (ibid. :107). The African workers also criticize the importation of large numbers of Chinese goods and some of them are second-hand and low-quality. They consider that in this way, the Chinese steal Tanzanian wealth. They do not complain about the number of Chinese workers at Urafiki because there were only a 25-person management team and 1,923 permanent Tanzanian workers in 1998.
Corkin (2012) also documents the misalignment of mutual expectations between Chinese managers and Angolan workers in construction companies. Chinese managers complain that African workers do not have Chinese workers’ ability to ‘eat bitterness’ nor work hard. Angolan workers criticize that Chinese managers do not show sympathy to bereavement leave nor observation of religious practices.
The above analysis shows that there seems to be no mutual understanding between Chinese managers and African workers. In fact, misunderstanding seems to increase with contact. The rest of this case focuses on the politics of casualization in this mill in order to reveal interaction between Chinese managers, Tanzanian workers, workers’ unions, and Tanzanian governments.
As Lee (2009) points, casualization – the pursuit of flexible labour – is the logic of global capital flows. After the Chinese assumed the majority ownership of Urafiki, they adopted the same approach. In 1998, the Chinese company brought a 25-person management team from China, and recruited 1,923 Tanzanian workers originally from Urafiki and arranged three-shift production. By 2002, the number reduced to 1,260. The recruitment of casual workers started from 2003 with 200 per year or one-fifth of the total which reached to half of the total by 2006 (869 casuals to 818 permanent workers). This reflects the redefined notion of Chinese ‘friendly assistance’ as the first Chinese general manager clearly explained in 1996 ‘it could not be like foreign aid in the past. It has to be financially viable, although the joint venture is also partially politically motivated.’ (ibid. :101-102).
Tanzanian workers’ strikes for higher wages and more secure employment took place in Urafiki in 2002 and 2005. However, the workers became frustrated by the recurring failure of strikes.In 2002, Tanzanian workers demanded back pay of 10,000 shillings for each worker in the last decade, and a reduction of the number of working hours from 12 to 8. However, these were rejected by the Chinese management. Workers asked for help from the Minister of Industry but he failed to settle the issue and was chased by furious workers until he was rescued by the police. Workers turned to the Prime Minister, Mr Sumaye, but he stated that ‘those who want to work keep working, those who do not want to work, off you go’ (ibid. :112). A worker who joined the strike in 2002 complained that ‘the government supports the Chinese because the two governments are in good relations, and the Chinese government gives aid to the Tanzanian government, but they do no good to the ordinary Tanzanians’ (ibid. :112).
In 2005, the Tanzania Union of Industrial and Commercial Workers (TUICO) regional office called Tanzanian workers at Urafiki together to discuss the strike. Three quarters of the workers voted to strike and demanded the dismissal of entire Tanzanian management team because they all supported the Chinese. On the next day, the District Commissioner promised that he would talk to the President, but he never returned again. After five days, a rumour spread that workers would be expelled if they did not return to work. As a result, all workers returned to work because of their fears. But in coming days, the truth was exposed that it was the union leader who started the rumour. He was voted out by furious workers. In the end, the Chinese did not dismiss any workers but deducted four day’s pay from all workers.
In 2007, the Chinese management fired 725 casual workers who had worked at Urafiki for one to five years. Instead of mobilizing workers for strikes, the branch union persuaded the workers’ representatives to make a complaint with the Commission of Mediation that the Chinese denied formal contracts under the 2004 Labour Law. A small strike took place but did not bring any result. Dismissed workers were called to take their last payment on that day. At the end of the same year, the Ministry of Labour in Tanzania announced the new minimum wage for textile workers, rising from US $ 42 per month to US $ 140. The Chinese management at Urafiki was shocked. At the same time, the Confederation of Tanzanian Industries (CTI) quickly reacted by arguing that it would be destructive to raise salaries in labour-intensive sectors. The Confederation provided the governments with data concerning the levels of pay for textile workers in different countries. The minimum salary in Kenya was US $ 79 per month, US $ 45 in Nigeria, US $ 28 in Madagascar. On the other hand, the unions claimed that low wages made it impossible to increase the buying power of workers which limited the demand for industrial products. As a result, the government abandoned the announcement because they feared that all textile mills would close down. The above analysis reveals that the Tanzanian governments who support Chinese, Confederation of Industries who protect the interests of industries, and unions who prefer bureaucratic arbitration to the mobilization of strikes, are barriers of the success of strikes.
This case highlights the main factors that shape the interactions between Chinese managers and African workers, including separate living, communication problems and misalignment of mutual expectations. Through examining the daily interactions and the politics of casualization, it reveals that there is no single ‘African interests’ but various kinds of interests of different groups of Africans. The principle of mutual benefits between China and Africa acts to diminish acknowledgement of the ever- widening differences within Africa.
6.2 Case study 2: the Bui Dam in Ghana
The second case continues to contextualize the ‘African interests’ which are assumed to be unitary. The ethnographic materials are drawn from Oliver Hensengerth’s two- week fieldwork study of the construction of the Bui dam in Ghana, China’s most significant aid project in Ghana (2011). Through analyzing the process of financing, planning and implementation of Bui dam, it aims to reveal how interests of different actors are claimed and articulated.
The Bui hydropower dam was funded by China Eximbank and constructed by a Chinese company, the Sinohydro Corporation Ltd, but its ownership was the Bui Power Authority established by the Ghanaian government to take full responsibility for the Bui Power’s planning, execution and management. The Bui Dam Project cost in a total of US $ 622 million, including US $ 60 million funded by the Ghanaian Government. The remaining US $ 562 million was contributed by China in a form of a mixed finance package, consisting of a concessional loan of US $263.5 million provided by China’s Ministry of Commerce through China Eximbank, as well as a buyer’s credit of US $298.5 million offered by China Eximbank alone. The concessional loan did not qualify as the ODA because the grant percentage of this financing package was only 22, which is less than the grant element of at least 25 per cent according to OECD’s definition of ODA (Brautigam, 2009). But it is clearly part of China’s aid. This indicates that the notion of ODA is not appropriate to capture Chinese development cooperation. Cocoa was used as collateral to secure this mixed financial package, which aroused controversy. 30,000 tons of cocoa per year was guaranteed to be sold to the Chinese government at changing global market prices until the dam construction ended. Brautigam (2009) points that money earned by selling cocoa was placed in the escrow account held by the China Eximbank toguarantee the loan repayment during the construction of the Bui Dam.
Sutcliffe (2009) states that Sinohydro failed to implement the proposal made by the Environmental impact assessment (ESA). But the following analysis clearly shows that the Sinohydro Company was excluded from the procedure of defining responsibilities of environmental issues. Despite the lack of funds, the Bui Dam has been ranked at the top of projects listed by the government of President John AgyekumKufuor for the period 2001-2009. This resulted in the National Development Planning deciding to incorporate the Bui Dam project into the 2006- 2009 planning cycle and this continued when the John Atta-Mills succeeded as President in 2009. The fact that Bui Dam has always been a political priority has an impact on the procedure of planning and implementing shown below.
The Bui Power Authority as project owner had to obtain several permits before signing the loan agreement with China Eximbank. The process of permits acquisition shows that the low status of regulatory agencies within the government system prevents them from effectively urging Sinohydro to abide by environmental and resettlement rules. The Bui Power Authority was required by Environmental Protection Agency to obtain the Environmental Permit before signing the loan agreement with China Eximbank. China Eximbank had the same requirement that the bank would not sign the loan agreement if the project owner could not provide governmental approval which must include the environmental and social assessments.
In fact, the loan negotiations took place before the Environmental Permit was issued, but the loan agreement was not signed until the issue of that permit. As the dam was a river construction, the Bui Power Authority had to apply for three licenses as required by the Water Resources Commission. Firstly, the division of river requires a Diversion Permit. Secondly, the dam construction requires a Construction Permit. Thirdly, a Water Use Permit is required before commissioning the dam. However, ‘the government sometimes jumps steps’ in the process of licenses application (Hensengerth, 2011:15). The Water Resources Commission complained that ‘For Bui, the river had already begun to be diverted when the Bui Power Authority applied for the Diversion Permit’ (ibid.:15). Furthermore, the Ghanaian government had already given approval for the loan agreement with China Eximbank before the permits were issued. So ‘the permits couldn’t be refused’ (ibid. :15). Interestingly, this point was confirmed by a governmental official who claimed that if it ‘had not been a government project, the dam probably would not even have gotten the Environmental Permit’ (ibid. :16). Because, he admitted that, there were issues associated with the Bui National Park, living environment of the hippopotamus and the river. After obtaining the Environmental Permit as well as three licenses issued by the Water Resource Commission, the Bui Power Authority applied for licenses required by the Energy Commission who had already promised that licenses would be issued once the Bui Power Authority gave the license payment. The Bui Power Authority as the project owner had the responsibility to ensure that Sinohydro abided by the conditions attached to permits but it is clear that Sinohydro Company was excluded from the above procedure.
By 2010, Sinohydro employed more than 2000 Ghanaian workers and fewer than 1000 Chinese workers. This shows that the perception that Chinese companies only recruit Chinese labour is not always valid. Sinohydro employed workers independently from the Ghanaian government but had to abide by the Ghanaian law. Although the establishment of a union was permitted by the law, Sinohydro regarded it as ‘unnecessary interference in their work’ (ibid. :35). Therefore, the Bui Power Authority stopped the Resident Engineer from interfering in the internal affairs of the Chinese. This resulted in workers’ strikes, which affected the progress of the dam construction. Ultimately, the Bui Power Authority asked Sinohydro to approve the formation of the union.
The first conflict between Ghanaian workers and Sinohydro took place in 2008, right after the start of construction. Ghanaian workers complained about the eleven hour working days, lower wages than were contracted although slightly higher than minimum wage, no allowance for rest after hospital treatment, and 14-bed crowded dormitories without mattresses.
Interestingly, regarding the accommodation, the Bui Power Authority asked the workers to ‘exercise patience and be prepared to sacrifice a little as the Chinese workers did until the camps were fully completed and to work as hard as the Chinese, thus learning lessons from their work ethic’ (ibid. 36). Furthermore, the CEO of the Bui Power Authority denied its responsibility for welfare of Ghanaian workers and considered that Sinohydro and the Trade Union Congress should bear such responsibility. It took two years for Sinohydro and the Trade Union Congress to reach an agreement on wages.
In sum, this case shows that the Chinese company should not assume sole responsibility of environmental problems because it was excluded from the procedure of dividing responsibilities of environmental protection. It is interesting that the Bui Power authority encouraged Ghanaian workers to learn Chinese spirit of hard work and self-sacrifice. The analysis reveals that there are increasing differences of interests within Ghana. However China’s conception of mutual benefits obscures these differences and assumes that there is a unitary Ghanaian interest.
As Gray (2011) argues, foreign aid is not a culture-free category but a cultural phenomenon. The term ‘culture’ here does not refer to culture of ethnicity, religion, or people, but culture of a development community. The DAC is a development community which has its own culture of doing development. It assumes that foreign aid is a one-way transaction from the fortunate global North to the less fortunate global South. This assumption is so naturalized that there seems no other ways of development cooperation. However, China challenges this assumption through entering the international development regime not as a traditional donor from the global North nor as a recipient from the global South and can offer new ways of doing development. China is a new donor not because it is a newcomer of international development cooperation but it does not shared the imagined development community with the West and is introducing a new culture of doing development. China promotes the two-way development cooperation between South and South on the basis of mutual benefits. The entwinement of foreign aid and economic activities is part of system of mutual benefits.
This paper has sought to understand China’s distinctive approach through tracing its lineage in history, analyzing its official discourse towards Africa and revealing daily operations of aid projects. It argues that the notion of ODA impedes bringing benefits back to donors while Chinese aid ensures that both African nations and China benefit economically. It also shows that after the opening up policy in 1978, China learned to
take advantage of its resources to attract Japanese investments, and get access to their advanced technology and equipment, and then apply this model to its development cooperation with Africa. Furthermore, Chinese official discourse towards Africa is based on common interests between two the parties that stem from the same history of colonialism and shared identity of developing countries. Drawing on gift theory, it argues that China’s aid on the basis of mutual benefits is regarded as the reciprocated gift that seeks to establish equal social relationship with Africa, whereas one-way western aid on the basis of charity creates a social relationship of superiority and inferiority. The empirical data of two Chinese aid projects challenges the assumption that there are unitary and undifferentiated ‘African interests’ and ‘Chinese interests’. In contrast, there are increasing differences of interest between China and Africa.
As Chinese aid system largely depends on Chinese companies, this paper calls for the development of Corporate Social Responsibility (CSR). With the support of the Chinese Academy of Social Council, a social science think tank in China attached to the State Council, a five-person team conducted an investigation about conditions of Chinese companies’ CSR in Mali, Ethiopia and Sudan, and published the report in January 2008 (Alden and Hughes, 2009). According to the report, the positive side is that Africans appreciate Chinese companies working without numerous conditions in contrast to western aid’s unfulfilled promises. Yet the negative side is that Africans worry that African native industries would be damaged by Chinese imports. Therefore, this report recommends that Chinese firms should adopt a long-term strategy in Africa through cooperating with native African companies and deepening their understanding of host country’s legal system, customs and religions. In 2007, China’s former president, Hu Jiaotao, appealed to Chinese companies in Africa to develop Sino-African relations by making contributions to local people’s welfare (ibid.). Chinese firms should also learn from western enterprises to practice corporate social responsibility.