China’s aid programmes are winning “hearts and minds,” especially in Africa. AidData, which assesses development programmes in the College of William and Mary, in its 2017 Listening to Leaders Survey placed China’s aid programme as the 21st in the world in terms of “perceived influence,” up from 29th only three years ago. India’s aid programme saw a jump from 31st to 24th. This placed both of them higher on the table than the larger aid programmes of Japan and Canada.

AidData also carried out a detailed study of the impact of Chinese connectivity projects on local economic conditions and concluded most such projects helped reduce inequality and spread economic activity. The report cited the TaZaRa railway that China built connecting Tanzania to Zambia in the 1960s as the forerunner to today’s larger Chinese infrastructure projects. Beijing had a “revealed preference for funding ‘connective infrastructure’ at home and abroad.”

The study noted Chinese transport projects had three key advantages over those of other foreign governments. One, they were completed much faster. An ex-Senegalese president said it took five years to negotiate an infrastructure project with the World Bank and “three months when we have dealt with the Chinese authorities.” Two, China was more willing to invest in coastal-to-interior connectivity and these provided the greatest economic benefit for most host countries. Three, China placed special emphasis on “complementary social sector and productive sector investments” along its transport projects.

A case study of the giant $9 billion Sicomines deal between China and the Congo indicates, however, that resources-for-infrastructure deals are more problematic. The deal, initially larger than Congo’s entire budget, envisaged China building infrastructure in return for mining rights and using future copper-cobalt profits to pay off the resulting debt. A study by World Bank consultant David Landry has shown how what was heralded as a breakthrough deal became an economic mess. His analysis concludes that the net present value of the deal – the difference between present value and future returns – has fallen from positive $ 10 billion to negative $150 million over the past several years.

 

September 25, 2018

About the Author

Pramit Pal Chaudhuri writes on political, security, and economic issues. He previously wrote for the Statesman and the Telegraph in Calcutta. He served on the National Security Advisory Board of the Indian government from 2011-2015. Among other affiliations, he is a member of the Asia Society Global Council, the Aspen Institute Italia, the International Institute of Strategic Studies, and the Mont Pelerin Society. Pramit is also a senior associate of Rhodium Group, New York City, advisor to the Bower Group Asia in India, a member of the Council on Emerging Markets, Washington, DC, and a delegate for the Confederation of Indian Industry-Aspen Strategy Group Indo-U.S. Strategic Dialogue and the Ananta Aspen Strategic Dialogues with Japan, China and Israel. Born in 1964, he has visited over fifty countries on five continents. Mr. Pal Chaudhuri is a history graduate from Cornell University.