____________________
"The scale of China¹s plans are beginning to assume imperial
proportions, some observers contend."
"This posed a challenge, Mr Kaberuka acknowledged, to
traditional donors in Europe, the US and indeed the AfDB who
are attempting to impose stricter criteria for debt
management in the wake of their recent write-off of some
$50bn in African debt. "
____________________
Friends,
Who's being imperial? China loans money without restrictive terms, in return for
access to commodities that it needs. The West, which imposes all sorts of
conditions on its loans, sees this as 'a threat'. It seems to me the Western
behavior is imperial, while China's reflects a fair marketplace exchange. In
terms of Arrighi's 'cycles of accumulation', we are seeing here the rise of
Chinese financial influence, and dismay on the part of the declining power.
rkm
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Original source URL:
http://www.ft.com/cms/s/a94d5e86-04a1-11dc-80ed-000b5df10621.html
China pledges $20bn for Africa
By William Wallis in Shanghai
Published: May 17 2007 22:04 | Last updated: May 18 2007 03:22
China intends to provide about $20bn in infrastructure and trade financing to
Africa during the next three years, eclipsing many of the continent¹s
traditional big donors by a single pledge.
The scale of China¹s accelerating financial flows were revealed to the Financial
Times on Thursday by Donald Kaberuka, president of the African Development Bank
(AfDB).
The sums involved are beginning to outstrip individual contributions from
traditional donors, including multilateral development agencies.
Their combined pledges towards a special fund intended to assist sub-Saharan
Africa to tackle shortfalls in electricity supply, roads and other
infrastructure are about $7bn, Mr Kaberuka said in an interview with the FT.
China has hosted the AfDB meeting, which closed in Shanghai on Thursday, in an
effort to consolidate ties with Africa, born from the pursuit of oil and mineral
resources to fuel its booming domestic economy.
The scale of China¹s plans are beginning to assume imperial proportions, some
observers contend.
During the course of meetings this week, officials from China¹s Exim bank told
Mr Kaberuka they were looking to spend ³in the neighbourhood of $20bn² over
three years. ³That is quite something, because it shows you what traditional
donors are up against,² he said.
But Africa¹s needs were so great, Mr Kaberuka added, the $7bn so far promised
still represented only ³a drop in the ocean².
While grants and soft loans to Africa from Europe, the US and Japan still exceed
China¹s, they come with conditions attached and often fail to materialise when
these are not met.
African countries endowed with natural resources but emerging from civil war
would be treated by multilateral agencies as candidates for debt relief and
grants.
China, however, looked at their potential in the long term, rather than
assessing their immediate ability to repay loans.
This posed a challenge, Mr Kaberuka acknowledged, to traditional donors in
Europe, the US and indeed the AfDB who are attempting to impose stricter
criteria for debt management in the wake of their recent write-off of some $50bn
in African debt.
China¹s willingness to lend money on demand, where it suits its mercantile
interests, appeals to some African governments starved of short-term credit.
But there are concerns some countries may be locking in their commodity exports
to deals that could prove disadvantageous in the long-term.
China¹s Exim bank provides funding in various forms, sometimes in straight
financing, or in Angola¹s case in return for oil.
Its lending is on top of China¹s planned $5bn development fund for Africa.
The $20bn would go partly towards projects already announced, including the
rehabilitation of railway networks in Angola and Nigeria, and the building of a
hydroelectric dam in Ethiopia.
Mr Kaberuka, a former Rwandan finance minister, said Chinese premier Wen Jiabao
had assured him China was alert to the dangers of a new debt pile-up. But the
Chinese took a longer-term approach to debt sustainability, he said.
³The chairman of the Exim bank used a word which is very interesting. He said:
ŒYes, debt sustainability is important but development sustainability is what we
are after¹.²
Copyright The Financial Times Limited 2007
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