An eye-catching article in today's New York Times on China's expanding business dealings in Africa. You can read the whole item here.
But here is the general point of the report:
"From Pakistan to Angola to Kyrgyzstan, China is using its enormous pool of foreign currency savings to cement diplomatic alliances, secure access to natural resources and drum up business for its flagship companies. Foreign aid — typically cut-rate loans, sometimes bundled with more commercial lines of credit — is central to this effort.
"Leaders of developing nations have embraced China’s sales pitch of easy credit, without Western-style demands for political or economic reform, for a host of unmet needs. The results can be clearly seen in new roads, power plants, and telecommunications networks across the African continent — more than 200 projects since 2001, many financed with preferential loans from the Chinese government’s Exim Bank.
"Increasingly, though, experts argue that China’s aid comes with a major catch: It must be used to buy goods or services from companies, many of them state-controlled, that Chinese officials select themselves. Competitive bidding by the borrowing nation is discouraged, and China pulls a veil over vital data like project costs, loan terms and repayment conditions. Even the dollar amount of loans offered as foreign aid is treated as a state secret.
"Anticorruption crusaders complain that secrecy invites corruption, and that corruption debases foreign assistance."
Have we heard this kind of thing before? Yep. I found this item from October 2008 on the Voice of America website. In it, then U.S. Assistant Secretary of State for Africa Jendayi Frazier was quoted as saying China needs to be more transparent with how it gives debt relief and loans to African nations.
"We certainly are concerned about China's lending practices potentially undermining our efforts to insure that Africa doesn't reaccumulate unsustainable debt," said Frazer. "We don't want to on the one hand cancel that debt and then on the other hand, China's giving more debt."
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