NOA Episode 9.1 Understanding China’s Foreign Policy and the African Debt-Crisis

Host: Angela (UCL Asiatic Affairs)

Podcast Participants (in order of appearance): Larissa (UCL Africa Conference), Stephen (UCL Africa Conference), Lisa (UCL Africa Conference), Hafsa (UCL Africa Conference), Min Jing (UCL Asiatic Affairs)

Angela: Hello everyone, and welcome to the first episode of a collaboration between UCL African Conference and UCL Asiatic Affairs. In this episode, we'll be looking into China's foreign policy in Africa in tandem with the African debt crisis. 

I'm Angela, Publications Officer at UCL Asiatic Affairs, and second-year European Social and Political Studies student and I'll be the moderator for this discussion. Joining me today is Min Jing, one of the members of our Writers’ Group at Asiatic Affairs, and I'm joined also by Hafsa, Larissa, Stephen and Lisa from UCL Africa Conference. 

If I could ask you all to please introduce yourselves.

Larissa: Hi, I'm Larissa. I'm a second-year Law student at UCL and I am part of the logistics team of UCLAC. I am from Cameroonian and German background.

Stephen: Hey I’m Stephen, I’m a second-year Mechanical Engineering student at UCL. I'm from Nigeria, originally from the Yoruba tribe, and I'm co-executive of the UCL Africa Conference. 

Lisa: Hi, I'm Lisa. I'm also a second-year Law student and also co-executive alongside Stephen, and I'm of Nigerian descent also. 

Hafsa: Hi, I'm Hafsa. I'm a second-year History and Philosophy of Science student. I'm President of the UCL Africa Conference, and I am from Somali but born and raised in London. 

Min Jing: Hi, I'm Min Jing. I am a first-year English student and I'm a writer at Asiatic Affairs. 

Angela: Thank you, guys. Thank you for joining me today. So you mentioned the UCL Africa Conference, and I think you've got an event coming up soon. Would you like to jump in and kind of talk a bit more about that? 

Stephen: Yes, we've got a conference coming up on the 13th of February, which is very exciting, it’s the first one that's happening at UCL. So we will literally be discussing Investing in Africa, but we're not only going to be talking about the financial aspects, we'll be talking about investing socially, investing economically in Africa, and just improving the well-being of the African continent as a whole. And yeah, that's our main aim. So we're just aiming to educate students of Africa and the wider community as well. 

Hafsa: Yeah, so get your tickets! The conference is this Saturday, the 13th of February. 

Angela: Thank you, everyone, for joining me today. In our first episode of this miniseries on understanding China-Africa relations, we'll be looking exclusively at understanding China's foreign policy and the African debt crisis. So the African debt crisis is talked about quite a lot in close relation with China-Africa discourses, and so what does the term actually refer to? 

Larissa: So the meaning of debt crisis is basically that China invests a lot of money in African infrastructure, especially heavy, physical infrastructure, like road-building and basically the amount of money that is invested is so high that countries are often not able to repay them fully. They default on their loan, and therefore, they come into the cycle where interest accumulates and they just cannot repay the money ever, and become even more dependent then on China, because China is actually often quite lenient and has a rather friendly attitude towards African countries, and therefore they become politically dependent and for them, it's then difficult to get out of that cycle. Also, because often, the securities are backed by resources, by natural resources, sometimes they run out, so they are just unable to pay and there's nothing they can really do to mitigate those circumstances. 

Lisa: Yeah, just to add to that, the debt is unsustainable. So it's just African countries, African governments, are taking on these loans and not really thinking of the long term effects and whether they can actually pay it back. I think they've been described as like the methamphetamines of the financial world because they're very addictive, they're very easy to access and for the short term, it's, you know, it's positive to get money to be able to fund these infrastructure projects, and these roads, even hospitals. But a lot of times, there's no consideration made about how that's going to work in the future and how they'll be able to pay it back and as a result, a lot of countries are at the brink of default, really, and we've seen recently with Zambia, defaulting on its loans to China. We’re currently seeing how that's gonna play out but it's something that's wide-reaching all across the continent, and literally every corner. 

Hafsa: Yeah, and I think that debt has been compared to aid taken by, for example, IMF, and I think China, the aid that they provide, like Lisa just mentioned, is attractive, much more easily accessible compared to the IMF, for example. 

Larissa: And you also have to consider that it's not just that African governments or the governments of African countries are simply not considering the long-term consequences or are just acting without thinking through, they're just really dependent on these investments. The populations are growing dramatically in Africa and infrastructure is desperately needed so they don't really have much choice if they get these investment offers by China.

Angela: These issues regarding China's debt-trap diplomacy are quite prevalent in the media at the moment and we see China investing in Africa in various sorts of ways. Apart from engaging the governments in Africa in these debt relations, is there any evidence of positive development by Chinese investment? 

Lisa: I mean, certainly, the positive impact is quite evident with them investing in roads, in hospitals, in railways and investing in airports, all these things. Of course, there's an impact, positive impact, for Africa as a whole, increasing this inter-connectivity across the continent. So yeah, there are benefits, but there are definitely legitimate concerns that have been raised. Especially given the fact that most of the time, or almost exclusively, the people working on these expansions are Chinese themselves. So a lot of times, there's a key agreement within the loans that Chinese workers be brought in to work and to build more airport terminals, to build the railways. So yeah.

Stephen: Just to add onto Lisa’s point, I also saw an article where we saw Chinese investment going into an airport, and the airport wasn’t actually being used as it's like, as it's meant to be used. So like, it had no passengers going into the airport, despite the fact that it's a brand new airport. So some of the investment that China's putting into Africa is not worthwhile because if it’s not bringing in money straight away, when is it ever going to bring in money?

Lisa: Yeah, to add to what Stephen said, a lot of the times the investments are motivated by what China can get out of them. So they're investing in infrastructure, like the railways, for example, they invested, I think, 4.5 billion in Ethiopia to fund railways, but that was so that they could transport commodities, which would obviously benefit China because a lot of these commodities they require because China being like a key centre of output in the world, and it's really important for them. So they don't directly, in some ways, they don't directly improve Africa in that way.

Angela: To quote China's White Paper, which essentially illustrates their approach to foreign diplomacy with Africa, it states quite explicitly that China has invested in Africa and says that ‘no one could stand in the way or obstruct international efforts to support Africa's development’, and the focus is actually on collaboration. What are your opinions on this whole portrayal of Chinese involvement in Africa as being a multilateral approach, and one that is offering cooperation and co-development instead of just a one-way profit and debt cycle? 

Larissa: I mean, that portrayal is certainly not quite accurate, because you would think, what does China really get out of such collaboration? It’s much more about political dominance and influence, I think, since they're defaulting on their loan payment, China doesn't really get much out of it. And, in fact, many of the deals and investment China does in these countries are commercially not very profitable or sensible, so you really have to see that behind all their actions, there's this kind of political aim to increase their influence. That also becomes very evident if you look at the ports. In fact, all of the ports that were built by China are able to employ or support the employment of China's Navy ships and also all the companies involved are required to support the Chinese army. They have, in fact, already erected the Chinese military base, I think, in Djibouti, so you can really see it's not about profit or collaboration, it's just about political influence and strategic progress.

Stephen: Yeah, most definitely. Again, this has been identified by the US as politically motivated. So all the actions that they're carrying out in Africa are just for them to gain an advantage on the whole world stage and also gain an advantage in things like the UN. So you will see that a lot of African countries will vote with China on certain legislations that are being made within the UN, whereas other countries where they don't have as much investment, will vote against China. So we'll see that a lot of countries that vote for China, they'll receive much more funding in terms of infrastructure, whereas countries that vote against China won’t receive as much funding, So yeah, I would definitely say that it is politically motivated.

Lisa: Just to add to Stephen’s point and yeah, it really makes sense right? Why would you vote against China if they’re your biggest creditor? Who wants to infuriate someone that they owe money? So it makes a lot of sense. Although to be fair, we haven't seen a lot of defaults yet, because these loans, a lot of them are long term, with Zambia being one of the few so far, but we kind of know that defaults are imminent, but it's really evident that it’s like strategic. So, with the fact that the two places that China invests the most in are Nigeria, and that's the biggest economy in Africa, and Angola, which is their fourth-largest source of oil. So yeah, you can really see the strategy behind it. 

Hafsa: Yeah, I think you also just touched upon there, Lisa, is just to kind of mention, not only is it political, but it's also economic dominance, which we all kind of already saying, but Africa is like full of rich oil, minerals, so many resources that China could actually benefit from. So I think Lisa actually mentioned this in one of your articles, but if some countries default on their loans, they have to give up like ports. What they would repay is in resources, but yeah that’s what I wanted to add.

Min Jing: I just want to circle back to what Stephen just mentioned. It was something about how the US was saying that China was providing this infrastructure for political gain and while we cannot deny it, because I mean, it's really obvious to everybody that a lot of that is politically motivated, I think when we talk about China in relation to what the US says, there's always this caveat we have to make that the US is also saying things from a very political point of view. So while the administration of the ex-US President, Trump, while he's keen to promote this notion that, you know, China is providing all this infrastructure funding to African countries in order to help its own economy in order to, I don't know, embark on a plan of domination, I think we still have to take into account the positive sides of the things that were just mentioned. And of course, whatever comes of that administration is also rather politically charged. So I would be a bit more sceptical when I look at it. 

But yeah, I think defaulting on debt isn't a good look on any country. So China, in my personal opinion, and also with what some experts are saying, is that China is becoming more careful about its lending because it's concerned that it has made a lot of credit available to some African countries and if those African countries default on their loans, it's not a good look for them and it's also not good for China, because technically, all these things are investment, and China also doesn't want to lose any money in investing. 

Lisa: Yeah, actually, I have to agree with Min (Jing).  Because yeah, anything the US says about China, that's very true, you do have to caveat it, like where they're coming from. In some ways, they’re almost rivals with China. I think they're projected to overtake the US as the largest economy by 2030. So, definitely can see the rivalry there, and we do have to be clear that it's not just China investing in Africa, that the US and the UK used to be like, dominating in Africa before China came in and started pushing more money and more development, finance and infrastructure. 

Hafsa: Yeah, this is just a side point to that. But we can just see the way China's aiming to become like the next dominant player in the world system, in like the way they've invested in their media. So I’ve noted from somewhere that they are going to overtake Hollywood within the next decade or so. So yeah, although we do need to take it with a pinch of salt, when you compare it to what the US says, every dominating kind of country would always be self-interested and self-motivated. So although there could be some positives to it, I do think China's always just going to be thinking about their own interests, and what would benefit their own economy and their own position as a dominant political player.

Lisa: Yeah to be fair, that makes sense. I mean, if you're loaning someone money, you want to think about how it's gonna benefit you. So yeah, you know, it's not aid, it’s actually a loan. So, yeah, it does make sense - China's thought process. 

Hafsa: Yeah, I was just gonna say maybe African countries need to start having that self-motivated, kind of political, economic policies. So yeah, I definitely agree with you, Lisa. 

Lisa: Yeah and that's something I mentioned in my article about this topic, that I think we need to take a leaf out of their book as African nations and we need to have leaders that are putting Africa first because we've got a long way to go. I think they said, collectively, African countries have, like an infrastructure gap of 68 to 108 billion per year. Yeah, to add on to what Min (Jing) said, I know that China has announced quite recently that they're going to reduce the amount that they are investing abroad. 

Angela: Yeah, I think what you said, Lisa, about taking a leaf out of the book is a good way of kind of finding a balance to the sort of discourse. And my final question to wrap up this episode, which is going to be about whether you thought China's debt-trap diplomacy is a myth, and how good is China for Africa really? 

Lisa: Yes, China is not faultless, but I would put the blame mainly on African leaders - with them really facilitating what's going on in Africa, them allowing themselves to become indebted, their nations to become indebted, allowing Chinese workers to be brought in on projects when there's a lot of unemployment across the continent. So yeah, I would shift the blame a lot to the leaders and their short term thinking and not considering the long-term impacts, although I do believe that China is complicit as well because they kind of know what they're doing and they do see the benefit of investing in Africa in such a way. 

Stephen: Yeah, just to add to Lisa’s point, I would say that China has just been taking the opportunity they see in front of them. If I was another country, I would also take that opportunity. I feel like European countries haven’t already taken the opportunity mainly because of what happened, what's happened in the past. They don't want this to be portrayed as another form of colonialism. So I'd say China is literally taking the opportunity when compared to other countries because I remember reading an article and it was asking the question, why doesn't the US do this to Africa, or why doesn't the UK do this to Africa? So yeah, I would just say China is in the prime position to make the most out of the situation. 

Hafsa: And I would also just add that, yeah, as you just mentioned, Stephen, of course, they want to present as not being another colonial power, but if we look at some of the socio-political discourse around neocolonialism, one of the points mentioned by Frank Wallerstein is dependency theory. So countries in the New World Order are actually made dependent by the already developed countries, and I would say that the debt trap diplomacy isn’t a myth and it's just another example of developing countries being made dependent by already developed countries. 

Larissa: Yeah, I would definitely agree with those points. And also with what Lisa said that blame should be put on the African governments. If you look at the growth of population and considerations like food shortage, and also, at the moment, there are many new technologies also concerning agriculture. So when China invests in these kinds of technologies, they can really help in the short-term, as we said, to remedy some of these problems. The blame should be put on the government because they accept the investments, but because they do not themselves remedy the actual causes that prevent other countries from making less unilaterally beneficial investments. So lots of Western investors and many European countries have stopped investing and aiding African countries because of the risks and the risks are created by the malfunctioning governments. Corruption is one of the main causes. Yeah, and I think that's the fault of the African leaders. They should just construct properly functioning governments, and then they could also attract better and more collaborative investors. 

Min Jing: I honestly didn't expect to hear so much of the blame, if we can call that, being shifted on Africa’s side. Yeah, I thought I would be hearing another narrative. But we also have to think about China's lack of transparency when it comes to loans because that definitely increases the risk of corruption, not just in Africa, but also on China's own side. So, that I think also fuels the whole debt crisis in general, when there's no transparency, you don't know where the money goes and corruption is an entrenched problem that can lead to further debt. 

Lisa: Yeah, I do- I agree with that. Because, yeah, even now, we don't know the extent of indebtedness, like it's not public knowledge. Nobody knows because the way that China invests is through multiple streams, through multiple of its state-owned banks. And, I don't know, the reason I do put it on African leaders is just that if they were thinking with their people in mind in the first place, they wouldn't allow things like that to happen, or they would negotiate it in a way where it would be more beneficial for Africans. But like I said, I definitely think China's still complicit because they know what they're doing and yeah, they know the impacts for African nations, they can kind of see, a lot of them might not be able to pay in future.

Hafsa: Yeah, I think as a younger generation, we're kind of tired of the typical view, ‘oh we should have put blame on the western colonial powers.’ But we're no longer living in a period of colonialism, and you see so many countries that were previously under colonial rule that are now able to no longer fall under the same debt trap, for example, like if we use India as an example, they're self-sufficient. So yeah, I think we’re all kind of tired of that trope.

Angela: Yeah, and I think these are some really great points to end on. Just really wanted to go back to two points that were mentioned about how China's government is very much opportunistic, and Min Jing mentioned that in its lack of transparency with its loans, that's something that we should definitely be more conscious about and looking more closely at. And I think that links up really well going into our next episodes about China's BRI system. Personally, I'm quite surprised we talked about blaming the government, but also see how it is an important point to bring up because we'll be looking at the role of the government in its response and the way it interacts with China's Belt and Road Initiative in Africa in our following episode. 

So that's all the time that we have for today. Thank you, everyone, for tuning in and the six of us will be continuing our conversation in the second episode on China's Belt and Road Initiative and the implications for Africa.