Chinese investment overseas is making headlines again after Guinea’s junta yesterday announced a multi-billion dollar deal with a Chinese company was still going ahead, despite international criticism of its violent crackdown on unarmed demonstrators, which claimed dozens of lives.
If the deal does proceed, it would be a major boost for a recently installed military government that is seeking legitimacy. But it risks clashing with the tough position taken by a contact group that includes the African Union and United Nations, which has called for targeted sanctions.
For African governments, such deals can look like a win-win situation—rapidly growing China is desperate for resources that these nations are happy to supply. And Rwandan President Paul Kagame was half right when he warned this week that ‘a fundamental problem with development aid [is that it] leads to dependence, the desire of the giving countries to control the receiving countries’, though I think the latter half of that statement smacks of some of the paranoia that still haunts some former colonial powers on the continent.
But the subtext to this is that China’s assistance comes without the awkward strings attached that Western aid often comes with, strings that although in the short term may seem annoying and inconvenient often end up encouraging better governance, which has its own benefits for growth.
The risks of the lack of caution among some African leaders in embracing Chinese investment were laid bare earlier this year in a report based on 5 years of research by the African Labour Research Network Finland, which found that although government to government relations often prosper under these deals, the workers on the ground have been suffering from significant violations of working standards laid out by the International Labour Organisation.
And such reports also damage China’s efforts to develop its image as a responsible stakeholder. I’m not saying that free market approaches to lifting significant numbers of Africans out of poverty don’t work—they can and often do. But in their short term rush to embrace, Chinese and African leaders should think about the long term consequences for both of them.