• Anxiety about ‘China in Africa’ obscures the wider pattern of Asian trade and investment
• Whether this works for Africa will depend on African governments’ skill in managing investment flows
• China has become the single largest development partner for Africa

Part of the West’s emotional response to China’s rapid economic development has been alarm-lest the Yellow Peril swarm across Africa to strip-mine the continent, encouraging dictatorship, corruption and exploitation along the way.

An antidote to such hysteria, correcting not just inherent bias, but gross factual errors circulated by Western media, donors, think tanks and NGOs, appeared last year in a book by Deborah Brautigam; The Dragon’s Gift: The Real Story of China in Africa, Oxford University Press, 2009.

She began studying China’s aid to Africa in the 1980s so is well placed to sketch its evolution from ‘red’ to ‘expert’ and from ‘aid’ to a distinctly businesslike emphasis on trade and investment.

One of her central insights is that this transition was driven, not just by the economic pragmatism of China’s ‘reform and opening’, but by what China learned—as an aid recipient, trading and investment partner—from the West and, more especially, from Japan.

Upgrading production

A $10 billion deal struck with Japan in 1978 enabled China to buy in Japanese technology for upgrading production in mines and oilfields that Mao Tse Tung had previously struggled to exploit with heroic, proletarian labour, but precious little else.

The loan was repaid with oil and coal exports to Japan, which had already pioneered similar deals with India.

This decade’s multi-billion dollar loans from China’s Eximbank to resource-rich but cash-strapped African states (notably Angola, Nigeria and DR Congo), follow a similar pattern. African governments do not get to see the cash.

Eximbank gives it to Chinese companies to build energy, transport and communications infrastructure, and the loans are repaid from commodity export earnings.

This ensures, Ms Brautigam argues, that at least part of the borrowers’ resource wealth is devoted to growth-promoting infrastructure, rather than merely being ‘eaten’ by elites.

These big loans unsettled Western donors who were pressing for ‘governance’ reforms, including greater transparency, in return for aid.

Yet, as Ms Brautigam emphasises in Angola’s case, the MPLA government had long relied on huge, non-transparent (and more expensive) oil-backed loans from private European banks.

Poorest countries

Enter the dragon, and Angolans get to see cheaper Chinese finance going into postwar infrastructure reconstruction rather than MPLA pockets.

Signs that the West is coming to accept this logic appear in a new book by Britain’s foremost development economist, Paul Collier Plundered Planet, Penguin, 2010.

In a 2007 bestseller, The Bottom Billion, Collier had claimed that governance in the world’s poorest countries “is already bad, and the Chinese are making it worse”.