A Case of Chinese Imperialism in Africa: Positive and Negative Effects

Encyclopaedia Britannica defines imperialism as an extension of power and dominion through direct territorial acquisition or by gaining political and economic control of other areas. The 20th century was filled with so much political rivalry to see any empirical power left as remnants of the past, and a new millenia was supposed to be met with global integration, an era of human rights and democratic freedoms. Nevertheless, some tides are shifting now that we are getting close to the end of the second decade of the 21st century, where the former bipolar world has been stormed by the rise of the Democratic Republic of China. No longer is it the rural starving country under Mao, it is the ever-growing, second-largest economic power in the world that has been cleverly taking over sectors which before were perceived as a Western prerogative. The Chinese government fueled innovation across the world including Africa, where investments and integration of capitalism are propelling an extensive machine that is yet to show its full potential, however one thing is clear: China has large interests vested across the world, but particularly in Africa it has shown intensive signs of neo-colonialism or neo-imperialism. That's why i this paper we will research the positive and negative effects of imperialism in Africa.

In September of 2018, Xi Jinping delivered a speech at the Forum of China-Africa Cooperation (FOCAC), where he focused on the common interests and shared vision that involves “responsibility to champion peace and development through ‘brotherly’ cooperation and ‘win-win’ solutions”. Furthermore, the president has promised a 60-billion dollar investment into Africa, however, the extent of their reach is somewhat unclear as it has been going on without any pompous publicity, but rather strategically in steps that can only be referred to as imperialism. As of now, China is Africa’s largest trading partner through extensive investments into key industries; it has been able to take control of major raw materials and supplies, jobs and lands to their own vested interest. This paper looks at the extent to which the Chinese investors are corroding the already shaky and unreliable systems in place, rather than advancing African socioeconomic and political development. We have seen the European power do it from the age of exploration, and now we are seeing it again, by an Asian giant.

Zambia

The first case that stands out is in Zambia, a house to the famous Victoria Falls and more famously copper-rich lands along with emerald mines and chemicals. Zambia has also been one of the significant recipients of Chinese investment, but still faces “persistent unemployment, and poverty… wondering where exactly the fruits of their lucrative deals with the Chinese have gone”. It even appears that the election of the president Michael Sata in 2011 was largely based upon the anti-Chinese sentiment amongst the population that demands “reliable and accurate information on the resources that are generated in the country or which come from foreign resources to develop Zambia”. Extensive exploitation of local workers by Chinese companies have led to several protests that have led to multiple injuries and even deaths, thus showing the malign side of the Chinese operations: there are no protection sentiments among the foreign managers brought from China towards the population of Zambia who work their mines. Furthermore, the New Yorker article suggests that the imperialism taking place does not benefit the local population, as there have been large cases of tax avoidance that supposedly costs the country two billion dollars per year, as well as the fact that most funds generated are taken out of Zambia, creating a case for imperialism; something that the Europeans had done back in the day - sending raw materials to Europe and selling finished goods in their imperial dominions. To tackle this, the government is set to out in place regulations that would require Chinese profits to be invested back within two months, but there is really a lack of evidence to prove how successful this program has been to help the local development of Zambia.

Uganda

Throughout history, Uganda has seen many atrocities and acts of unimaginable cruelty that left a deep scar on the entire country. In the 19th century, Uganda was colonized by the British and gained formal independence only a hundred years later. However, in ten years newly found independence transformed into one of the most brutal dictatorships the African continent has ever seen. Ugandan President Idi Amin, who seized power through a coup, launched a genocidal program to purge Lango and Acholi, ethnic groups. This atrocious campaign killed hundreds of thousands of Ugandans, severely weakened the country’s institutions, and left it open for a foreign country to step in. The foreign power that stepped in was China, who is pursuing a second wave of imperialism in Africa, albeit in a different model than Europeans. This wave of imperialism doesn’t come with military interventions and direct rule but rather takes a ‘softer’ form of economic dependence. However the goal remains the same, China wants to control raw materials, natural resources, and the political agenda of Uganda. Unlike the United States, who mainly gives financial aid to better education and healthcare, Chinese business (or the government) focused on investments into much-needed infrastructure in the form of loans that the Ugandan government is having hard time repaying.

On October 18, 2018, Uganda signed an agreement with China for $212.6 million loan for rural electrification, which is an urgent problem since the Ugandan government needs to attain its target in the electricity distribution sector. However, this deal is only the beginning stage, since the Chinese government announced its plan to invest an additional $3 billion in the electricity sector. The Ugandan electrification rate in rural areas is dismal 7%, hence additional funding is necessary for the infrastructure. However, the terms of this deal are more similar to loan-sharking practices, because there is barely any negotiation on the terms and the loan rate is incredibly high. Ugandan government recognizes this threat as Matia Kasaija, the Minister of Finance, wrote a concerned letter to Yoweri Museveni, the President of Uganda. The Independent reports the content of this letter as follows:

“We have noted some critical issues in the Financing agreement,” Kasaija writes and lists three main areas: on China’s insistence to supply all technology and materials for the project, its insistence that Uganda opens an escrow account in Beijing and deposits money as security in case of default, and the holding of national assets as collateral in case of loan payment failure.

“Given what is happening in our peer countries as regards to China's debt, we strongly believe we should protect our assets from possible takeover,” Kasaija told Museveni.

As the letter demonstrates, Kasaija is concerned with the terms of this deal, because there would minimal amount of jobs created since the Chinese government is going to supply materials and working power. However, his main concern is that Uganda is going to be so in debt to China, that there could be a potential takeover of natural resources, defense and security and other important assets. Also, Kasaija stresses the importance of not opening an escrow account in Chinese banks and uses it as an example of how bad Chinese loan truly is. Under the loan agreement, before China gives out a loan, Uganda must open a repayment/reserve or escrow account and deposit money to cover the highest annual amount of interest and fees under the agreement as a security in case of any defaults. Kasaija warns Museveni that “this implies government will open an account in China and hold money on that account for the period of the loan”. “It impounds government funding that would otherwise be used for financing other development programmes,” he says.

Chinese banks set up these escrow accounts so that debt will grow exponentially at an accelerated rate, which makes it practically impossible or extremely expensive to repay. If the loan can’t be repaid, Chinese banks will seize all the assets associated with the loan and unfortunately this not the only loan with similar terms that the Ugandan government accepted. In fact, according to Kasaija, Uganda has already signed five loan agreements with almost the same terms. They include the loan for National Backbone & E-Government Phase III, the Kampala-Entebbe Airport Expressway, the Nsimba Hydropower Project, the Aviation Authority project, and the Karuma Hydropower Dam.

Ethiopia

Another striking example of Chinese imperialism in Africa can be seen through the rapidly developing Ethiopia, which according to World Bank has grown its GDP from roughly $7 billion in 1994 to $80 billion in 2018. It has also become one of the main sights of the Belt Road initiative by the Chinese: a $4billion dollar investment into the railway system, Ethiopia-Djibouti has left the country largely indebted to the Export-Import Bank of China, one of the total Chinese 5,217 investment projects in Ethiopia. Although the system of railways has been up and running, this project has not been making the anticipated profits, further exacerbated by the fact that it is “unclear who receives the money” because it is operated by the Chinese company Shenzhen Metro Group, which also includes maintenance of the lines, virtually stripping away any Ethiopian involvement in the money-making. Moreover, of these projects about 400 are valued at more than $4 billion that are already operating. The relationship between two countries can be called asymmetrical, which is evident in the negative balance of trade with their partner country, that on the other hand shows a positive outcome. Furthermore, the kind of model upon which their partnership exists on paper is the development of a country, while in reality is based upon the “patron-client relationship between African ruling elites and China”. Some call this involvement on behalf of China as “neo-colonialism” which not everyone agrees with, however, one thing is clear: that this puts Ethiopia in a vulnerable position as it puts them further into debt with the Chinese investors, who bring their own personal to build and operate these massive infrastructural programs and further raises their role in the country. 

Conclusion

After examining different cases of Chinese involvement in Ethiopia, Uganda, and Zambia, evidence shows that the Chinese government is actively pursuing African countries, that are in desperate need of funding, in order to broaden their influence. In many cases, Chinese banks set up terms in such a way that repayment is highly unlikely and China is fully aware of it. The strategic investment on behalf of China shows signs that the goal is to exploit economically weak developing countries in Africa into a state of colonial dependency by extensive funding of infrastructure and sourcing of raw materials. By creating ties with corrupt government officials, the Chinese were able to propel the patron-client relationship, further deepening the existing socio-economic problems of the region, exploiting legislative loopholes that has allowed them to take the money out of the country thus avoiding taxes and expelling any sentiments of ‘brotherly cooperation’ and ‘win-win solutions’ with African countries. With that said, there still have been significant progress taking place that has allowed some forms of trade and employment opportunities for the local populations as well as leaving behind new infrastructure projects that may benefit the people of those countries in the long term. Nevertheless, the final outcome still remains unclear, as China has never explicitly stated its extended outlook of Africa, thus leaving a window of hope for the continent to stop its over-reliance on foreign investment and imperialist power, and continue the development of domestic industries, that would imply the retainment of funds for the local governments.