Thursday, July 19, 2012

Checkbook diplomacy? China pledges $20 billion in credit to Africa

China's President Hu Jintao (right) shakes hands with South Africa's President Jacob Zuma during the opening ceremony of the Fifth Ministerial Conference of the Forum on China-Africa Cooperation in Beijing on Thursday.
BEIJING -- Chinese President Hu Jintao on Thursday pledged African governments $20 billion in credit over the next three years and called for more China-Africa coordination international affairs to defend against the "bullying" of richer powers.

Hu made the lending pledge during the opening ceremony of the Forum on China-Africa Cooperation in Beijing. The credit line is double the amount offered in 2009 at the last forum held in Egypt.

Hu promised more Chinese help for African countries in building agricultural technology centers, training medical and other personnel, and digging wells to expand access to clean water. China will encourage investment and assistance in infrastructure that facilitates trade within Africa, he said.

China has emerged as Africa's main trading partner and a major source of investment for infrastructure, pouring billions of dollars into roads and developing the energy sector across the continent.

But the loans could add to discomfort in the West, which criticizes China for overlooking human rights abuses in its business dealings with Africa, especially in Beijing's desire to feed its booming resource-hungry economy.
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Hu brushed off such concerns in his speech at the Great Hall of the People, attended by leaders including South African President Jacob Zuma and Equatorial Guinea's Teodoro Obiang Nguema, a man widely condemned by rights groups as one of the world's most corrupt leaders.

"China wholeheartedly and sincerely supports African countries to choose their own development path, and will wholeheartedly and sincerely support them to raise their development ability," Hu said.

China will "continue to steadfastly stand together with the African people, and will forever be a good friend, a good partner and a good brother", he added at the summit held every three years since 2000.

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Hu also pledged to "continue to expand aid to Africa, so that the benefits of development can be realized by the African people." He did not provide an amount.

Hu said the new loans would support infrastructure, agriculture, manufacturing and development of small and medium-sized businesses in Africa.

'Checkbook' approach

Critics say China supports African governments with dubious human rights records as a means to get access to resources.
The EU has rejected what they call China's "checkbook" approach to doing business with Africa, saying it would continue to demand good governance and the transparent use of funds from its trading partners.

Such criticism draws rebukes from China that the West still views Africa as though it were a colony. Many African countries say they appreciate China's no-strings approach to aid.

"Africa's past economic experience with Europe dictates a need to be cautious when entering into partnerships with other countries," Zuma told the forum.

"We are particularly pleased that in our relationship with China we are equals and that agreements entered into are for mutual gain," Zuma added.

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"We certainly are convinced that China's intention is different to that of Europe, which to date continues to intend to influence African countries for their sole benefit."

China's friendship with Africa dates back to the 1950s, when Beijing backed liberation movements in the continent fighting to throw off Western colonial rule.

Growing trade links

Chinese state-owned firms in Africa also face criticism for using imported labor to build government-financed projects like roads and hospitals, while pumping out raw resources and processing them in China, leaving little for local economies.

"Certainly quite a number of us are thinking we need to move into more value addition," South African's Trade and Industry Minister Rob Davies told Reuters.

"We need to export mineral products in a more processed form ... We need to bite this bullet very seriously."
Trade has jumped in the past decade, driven by Chinese hunger for resources to power its economic boom and African demand for cheap Chinese products.

China's trade with Africa reached $166.3 billion in 2011, according to Chinese statistics. In the past decade, African exports to China rose to $93.2 billion from $5.6 billion.

Industrial and Commercial Bank of China 601398.SS, for example, the world's most valuable lender, has invested more than $7 billion in various projects across the continent.

Reuters and The Associated Press contributed to this report.

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