POSTCARD: “New Colonialism?” Try “Good Investment."

BEIJING, China—Former British foreign secretary Jack Straw called it the “new colonialism.” Ominous headlines abound about Chinese investment in Africa, as many in the U.S. and Europe worry about Africa falling under the influence of threatening China. However, in The Dragon’s Gift, Deborah Brautigam, a professor at American University, dispels many of these myths and shows that the investment is far more helpful than many believe.

Brautigam recently  spoke at the Beijing Bookworm, a local English-language bookstore. In her speech, she addressed the concern that China’s investment in Africa will make governance across the continent worse, because China invests in any state with which it has diplomatic relations. Yet, as she accurately notes, many Western companies also invest in countries such as Angola and Zimbabwe; the entrance of Chinese companies has not suddenly transformed the funding for rogue nations.

If anything, China might just be doing a better job of aid and investment than Western countries have done in Africa. Western countries have often given aid or investment directly to African governments, much of which then disappears.  On the other hand, as Brautigam described in the talk, the Chinese government often works aid, investment, and trade through Chinese companies, which then have clear projects to work on and an incentive to properly use the funds.

China’s investment in Africa is largely through commercially structured resource-backed loans. China extends a line of credit to the African country which is backed by the country’s resources; for example, Angola can pay its line of credit in oil and Ghana through cocoa. The credit is then used for Chinese goods and services, such as Chinese mining or agriculture operations. Such a structure allows African countries to leverage their resources to develop infrastructure, manufacturing, and a business community. African countries must be careful that they get enough revenue through these trade and investment deals, but in general, the new infrastructure and business is a refreshing development for the continent.

There are concerns about Chinese investment in Africa which Chinese and Western advocates should address. Chinese companies do offer the lowest wages and labor standards in Africa, and they also do not have high environmental standards. They have supported the Sudanese government during a mass genocide, but pressure by advocates has forced the Chinese to change their course, and, according to Brautigam, the U.S. now sees them as part of the solution in Sudan. Advocates must place similar pressure on China and other countries that invest on Africa (none of whom are much better) to improve labor, environmental and human rights standards.

Brautigam told an interesting story to begin her talk. About 40 years ago, an East Asian country was looking for new markets and found a large, poor region that desperately needed development and investment. The poor region was very wary of the investment, but they needed help so badly they were willing to give it a try. She was talking about Japan and China.  Decades later, Japan’s investment has paid off; China is on its way to becoming a rich country. If China’s investment in Africa is anywhere near as successful as Japan’s was in China, it will be one of the most important development success stories of this century.

Ravi N. Mulani ’12, a Crimson editorial writer, is an applied mathematics concentrator in Winthrop House.