China’s Central Bank chief admits difficulties with Africa deals.

By Javier Blas in Kigali, RwandaAuthor alerts

Zhou Xiaochuan, governor of China’s Central Bank

Beijing has made a rare and candid admission of the difficulties in its economic relationship with Africa, with one of the country’s top financial officials describing some Sino-African deals as “not so good, not so satisfactory”.

The comments by Zhou Xiaochuan, governor of China’s central bank, appear part of a much broader effort by Beijing to recalibrate its economic and trade relations with Africa in response to growing criticism inside and outside the continent.
“Different entities have behaved differently. There may have been some phenomena of Chinese investors [that were] not so good, not so satisfactory,” Mr Zhou said.

The comments are among the most forthright by senior Chinese officials about troubles in their country’s relationship with the continent, although Mr Zhou did not elaborate about specific deals.

China-Africa trade has surged over the past decade, reaching $200bn last year, up from $10bn in 2000 and $1bn in 1980, according to customs data. About 2,500 Chinese companies have established themselves in Africa over the last two decades.

Li Keqiang, Chinese premier, acknowledged during his first trip to the continent earlier this month that the relationship between Beijing and its African partners had suffered “growing pains”. But he rejected accusations that Beijing was pursuing a neocolonialist policy in Africa seeking the continent’s commodities.

Mr Zhou made his comments after he signed a $2bn deal with the African Development Bank, Beijing’s first ever departure from its “cheque book” policy of multibillion-dollar bilateral deals on the continent. The new fund will open contracts to the most suitable bidder rather than just to Chinese companies.

Western countries have in the past criticised what they describe as Beijing’s “cheque book” policy of lending money to African countries to largely benefit its own construction groups, which have built everything from roads to hospitals on the continent. African officials have complained about the poor quality of some of the Chinese-built infrastructure and the use of migrant labour from China rather than locals.
Ghana last year deported thousands of Chinese workers in a crackdown on illegal mining in the country, while oil workers at two Chinese projects in Chad and Niger went on strike earlier this year in protest at their unequal salaries.

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.”

Deborah Brautigam, an expert on China-Africa relations at Johns Hopkins School of Advanced International Studies, wrote that the new fund was a “huge change”.

“While the multilateral banks are not immune from 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 engagement with Africa remains far larger – and it continues to grow. Mr Li announced during his trip that Beijing would increase its bilateral credit lines to African countries by $10bn, bringing the total to $30bn for 2013-15. He also announced another $2bn for infrastructure.