How China is driving America’s new Africa strategy

How China is driving America’s new Africa strategy

Seth Schindler

Relations between the U.S. and many African countries reached a low point during Donald Trump’s first two years in office. Ever since Trump derided African countries as “shitholes” and baffled African leaders at the U.N. by lauding the healthcare system of “Nambia,” the Administration has been eager to reset relations. A U.S. strategy introduced in December 2018 was meant to represent a new chapter in U.S.-Africa relations. The U.S. strategy is not geared toward assisting African countries achieve development benchmarks such as the Sustainable Development Goals. Instead, its overriding objective is to contain China’s growing influence in Africa, and it is one example of the confrontational posture that Washington is increasingly taking toward Beijing.

The strategy ostensibly seeks to expand trade, counter security threats and make more strategic – rather than “indiscriminate” – use of foreign aid. It was introduced by John Bolton, Assistant to the President for National Security Affairs, who argued that the strategy is needed to counter “great power competitors, namely China and Russia, [which] are rapidly expanding their financial and political influence across Africa.” He singled out China for providing loans for projects with adverse social and environmental impacts. According to Bolton the loans issued by China constitute a “strategic use of debt to hold states in Africa captive to Beijing’s wishes and demands.” To the Trump Administration this is evidence of a Chinese plot to supplant the U.S. as the world’s strongest superpower. Bolton stated that these “predatory actions [in Africa] are sub-components of broader Chinese strategic initiatives including One Belt One Road, a plan to develop a series of trade routes leading to and from China, with the ultimate goal of advancing Chinese global dominance.”

Bolton’s speech betrayed a paternalistic approach to Africans, who he portrayed as hapless victims easily duped by the Chinese. In reality, African policy makers engage China as they seek to redefine their foreign policy in a world that is increasingly multipolar. Bolton stated that the U.S. the foreign assistance strategy “will ensure that all U.S. foreign aid in every corner of the globe advances U.S. interests.” Indeed, it should come as little surprise that since the overriding principle guiding U.S. policy is “America first,” many African leaders are inclined to cultivate closer ties with other countries.

The examples Bolton used to substantiate his claim that China aspires to unrivalled dominance in Africa raised eyebrows. He said that Zambia is about to forfeit its national electricity grid to China due to its inability to repay loans, but Zambian officials were quick to categorically deny this claim. And although the IMF ranks Zambia’s level of debt distress as ‘high,’ the IMF notes that the outlook for Zambia has worsened since 2015 “largely reflecting lower copper prices.” Zambia is indeed indebted to China and the terms of these loans should be more transparent, but its debt distress is primarily due to currency fluctuations, U.S. interest rate hikes and the falling price of copper.

The second example provided by Bolton was Djibouti, whose debt-to-GDP ratio, he claimed, is 85%. According to IMF data Djibouti’s debt-to-GDP ratio is a mere 27.9%. In any case, this has little to do with future economic prospects; the U.S. has a debt-to-GDP ratio of 107.8%, and Japan’s stands at a whopping 236%. In response to the alternative facts presented by Bolton a spokesperson from the Chinese Foreign Ministry said that the U.S. Government should “learn a lesson and reflect on things, and going forward not blurt things out.”

The U.S. strategy promises to provide financial support for infrastructure development to friendly African countries. Bolton stated that “we are revisiting the foundational principles of the Marshall Plan,” and this will precipitate a contest between China and the U.S. to finance and build large-scale infrastructure in Africa. The construction of infrastructure has been a key component of China’s activity in Africa. In the latter half of 2018 China funded 18.9% of large-scale infrastructure projects in Africa, while the U.S. funded 1.9%. In the same period Chinese firms built 33% of large-scale infrastructure projects in Africa. America is trying to counter Chinese influence by beating China at its own game.

This represents a significant departure from previous U.S. efforts to maintain its hegemony in the face of a great power challenge from East Asia. The post-war economic order devised by American planners sought to establish Japan as the regional economic engine, and the results exceeded all expectations. By the 1980s Japan controlled global liquidity and the U.S. had become the world’s largest debtor nation. The U.S. Government responded by forcing Japan to accept the rules of American-led globalization. The U.S. pressured Japan to revalue its currency in 1985, and this reduced the competitiveness of Japanese exports. American corporations enhanced their competitiveness by mimicking the organizational structure and innovative production methods that made Japanese firms so successful.

The U.S. cannot respond to China in the same way. First, Donald Trump has referred to China as the ‘grand champions’ of currency manipulation, yet efforts to pressure China to allow the Yuan to appreciate have met with limited success. The U.S. simply lacks the leverage over China that it had with Japan. Furthermore, Donald Trump’s renegotiation of NAFTA and withdrawal from the Trans-Pacific Partnership demonstrate that the U.S. itself is not enthusiastic about the rules-of-the-game that have structured globalization for the past three decades. Finally, American firms have shown little interest in learning from Chinese state-owned enterprises and there is a consensus that their success is largely due to support from Beijing. Thus, rather than influence China or learn from Chinese firms, the U.S. Government is embracing components of China’s foreign policy that have made it a leader in the field of global infrastructure development.

In October 2018, the U.S. created the International Development Finance Corporation (IDFC) and it will most likely be the vehicle through which U.S. funding for infrastructure projects in Africa is channelled. It is worth noting that while the U.S. Government extends its longest shutdown ever over the construction of a wall along the border with Mexico that may cost as little as $5 billion, the IDFC was quietly passed with bi-partisan support and capitalized with $60 billion. It will provide loans for infrastructure projects to low-income countries allied with the U.S., and it is meant to be “a robust alternative to state-directed investments by authoritarian governments.” This is one component of an expansive U.S. strategy to contain and confront China. In a report entitled Assessment on U.S. Defense Implications of China’s Expanding Global Access, the U.S. Department of Defense stated that “competition with China as a long-term challenge and prompts a whole-of-government focus.”

The competition between the U.S. and China raises two questions. First, will the new U.S. strategy limit China’s influence in Africa? It seems unlikely that the U.S. will convince African countries to shun Beijing unless its overture is backed up by more money. While the IDFC will have $60 billion at its disposal it will operate globally, while China recently pledged to invest $60 billion in Africa alone. Furthermore, the IDFC cannot fund more than 30 percent of a single project, which means that infrastructure projects still require private-sector investment. Chinese funding is an attractive alternative for African countries because it will cover a single infrastructure project in its entirety. Thus, unlike the IDFC that seeks to complement the private sector, Chinese loans can substitute private-sector funding.

Second, how will African countries be impacted by the competition between the U.S. and China? Many African countries suffer from significant infrastructure deficits, and they could benefit from competition among lenders. However, the U.S. is currently seeking to contain China rather than compete with it. A bi-partisan group of U.S. Senators have argued that countries that have borrowed from China to fund infrastructure projects should be unable to obtain loans from the International Monetary Fund. This would force African countries to choose between China and the U.S., but it is unlikely to have the desired effect because of the amount of money on offer from Beijing. Whether the U.S. likes it or not, it will be forced to compete with China for influence in Africa, and the most dramatic impact of the competition may be transformation of U.S. policy.

Washington’s sudden interest in large-scale infrastructure projects signals a re-think of neoliberal economics and constitutes a Sinification of American development policy. However, if the U.S. wants to beat Beijing at its own game, it will have to embrace state-sponsored infrastructure development. The Trump Administration will have to abandon the irrational enthusiasm for free markets that has characterised U.S. development policy for over three decades, and offer African countries more funding for infrastructure projects and better terms than China. If this happens and America’s new strategy helps African countries address chronic infrastructure deficits, they will have China to thank.

 

Seth Schindler is a Senior Lecturer in Urban Development and Transformation at the Global Development, University of Manchester. His research focuses on the growing emphasis on inter-city mega-infrastructure projects in national development strategies, and their impacts on cities in developing countries. His research appears in leading academic journals, and is supported by the Economic and Social Research Council and the British Academy. Prior to joining the University of Manchester he coordinated the Global Studies Programme at Humboldt University of Berlin. @seth_schindler

IMAGE CREDIT: author’s own

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