China has acknowledged growing criticism of its infrastructure investment policy in sub-Saharan Africa with its central bank Governor Zhou Xiaochuan saying some of it has been “not so good or satisfactory.”
China is currently heavily involved in infrastructural development of the East African rail network as well as the region’s ports.
Critics have said that much of this investment comes with too many caveats, such as having to use Chinese workers and firms, with additional concerns over the quality of the work carried out.
Prime Minister Li Keqiang, acknowledged during his first trip to the continent last month that the relationship between Beijing and its African partners had suffered “growing pains.” But he denied accusations that Beijing was pursuing a neocolonialist policy in Africa seeking the continent’s commodities.
China-Africa trade has surged over the past decade, reaching $200 billion last year, up from $10 billion in 2000 and $1 billion in 1980. About 2,500 Chinese companies have established themselves in Africa over the past 20 years.
Mr Zhou acknowledged after signing a $2 billion deal between the People’s Bank of China and the African Development Bank late May that “different (Chinese) entities have behaved differently. There may have been some phenomena of Chinese investors [that were] not so good, not so satisfactory.”
Western countries have criticised what they term Beijing’s “cheque book” policy of lending money to African countries to largely benefit its own construction groups.
African officials have also complained about the poor quality of some of the Chinese-built infrastructure and the use of migrant labour from China rather than locals.
Mr Zhou said the new “Africa growing together” fund was “supplementary” to traditional Chinese lending to the continent, which until now has been channelled exclusively into grants, bilateral loans and infrastructure projects financed by Chinese state-owned banks.
“[The fund] provides new flexibility and arenas to operate,” he said.
The new fund will open contracts to the most suitable bidder rather than Chinese companies only.
Chinese officials rarely make such public statements and Mr Zhou’s comments are among the most forthright by senior officials about the troubles in China’s relationship with the continent, although Mr Zhou did not elaborate about specific deals.
Deborah Brautigam, an expert on China-Africa relations at the US-based Johns Hopkins School of Advanced International Studies, told Britain’s Financial Times that the new fund was a “huge change.”
“While the multilateral banks are not immune to corruption and embezzlement challenges, they do have stakeholders that try to hold them accountable in a transparent process,” she said. “That has not been the case with the Chinese policy banks.”
Despite the latest multilateral move, China’s bilateral investment in Africa continues to grow. Mr Li announced during his trip that Beijing would increase its bilateral credit lines to African countries by $10 billion, bringing the total to $30 billion for 2013-15.
He also announced another $2 billion for China acknowledges ‘growing pains’ over its investment policy in sub Saharan Africa