Spreading Chinese Reforms in Africa

The cover story of the March issue of Prospect magazine is China's new intelligentsia by Mark Leonard. Although interesting in its own right, the part that most grabbed my attention was China's attempts to export its economic reforms, especially to Africa.

In February 2007, Hu Jintao proudly announced the creation of a new special economic zone complete with the usual combination of export subsidies, tax breaks and investments in roads, railways and shipping. However, this special economic zone was in the heart of Africa—in the copper-mining belt of Zambia. China is transplanting its growth model into the African continent by building a series of industrial hubs linked by rail, road and shipping lanes to the rest of the world. Zambia will be home to China's "metals hub," providing the People's Republic with copper, cobalt, diamonds, tin and uranium. The second zone will be in Mauritius, providing China with a "trading hub" that will give 40 Chinese businesses preferential access to the 20-member state common market of east and southern Africa stretching from Libya to Zimbabwe, as well as access to the Indian ocean and south Asian markets. The third zone—a "shipping hub"—will probably be in the Tanzanian capital, Dar es Salaam. Nigeria, Liberia and the Cape Verde islands are competing for two other slots. In the same way that eastern Europe was changed by a competition to join the EU, we could see Africa transformed by the competition to attract Chinese investment.

As it creates these zones, Beijing is embarking on a building spree, criss-crossing the African continent with new roads and railways—investing far more than the old colonial powers ever did. Moreover, China's presence is changing the rules of economic development. The IMF and the World Bank used to drive the fear of God into government officials and elected leaders, but today they struggle to be listened to even by the poorest countries of Africa. The IMF spent years negotiating a transparency agreement with the Angolan government only to be told hours before the deal was due to be signed, in March 2004, that the authorities in Luanda were no longer interested in the money: they had secured a $2bn soft loan from China. This tale has been repeated across the continent—from Chad to Nigeria, Sudan to Algeria, Ethiopia and Uganda to Zimbabwe.

But the spread of the Chinese model goes far beyond the regions that have been targeted by Chinese investors. Research teams from middle-income and poor countries from Iran to Egypt, Angola to Zambia, Kazakhstan to Russia, India to Vietnam and Brazil to Venezuela have been crawling around the Chinese cities and countryside in search of lessons from Beijing's experience. Intellectuals such as Zhang Weiying and Hu Angang have been asked to provide training for them. Scores of countries are copying Beijing's state-driven development using public money and foreign investment to build capital-intensive industries. A rash of copycat special economic zones have been set up all over the world—the World Bank estimates that over 3,000 projects are taking place in 120 countries. Globalisation was supposed to mean the worldwide triumph of the market economy, but China is showing that state capitalism is one of its biggest beneficiaries.

States are among the worst robber barons on earth, but if state capitalism can build wealth that improves the lives of state citizens, I'm all for it.

via Arts & Letters Daily