Friday, 18 March 2011

The Chinese in Africa.

A tricky one this. Is the huge investment in Africa by the Chinese a good thing for Africa?

Let's start with what little I know. Firstly the Chinese will happily invest in any country, human rights issues are not even considered. Then there is the type of investment. Which mainly seems to be, build the infrastructure to ship natural resources out of Africa and Chinese products back into Africa.

Though it seems the infrastructure in many places is the bare minimal needed. Often built and run by the Chinese with only low paid jobs for the African nationals. There are sometimes big local companies set up with the local government. Presumably to give the impression that it's a local business. Then again it's not going to be hard to let corruption and miss-management of funds run the company into the ground. Then you can come in and buy the company, install a Chinese workforce for all the skilled jobs and you now own a huge company that is more than likely a monopoly.

Obviously you give the local government their cut with tax and sweeteners. After all having the same dictator or 'only option' elected leader in power for a long time allows you to do long term planning. Like invest in a railway to get to the mine. Invest in the mine to improve investment. Take control of the mine to improve profitability. Invest in the railway to meet maintenance costs. Buy the railway to make it profitable.

Within a decade or two you can help set up a national monopoly and privatize it while making it look like you are just trying to help. Then you can ship all the resources you like back to resource poor China to make all those cheap products. To then ship these products all over the world, including Africa. For there comes another drawback to the Chinese deal. The more Chinese you have working in these new industries, the more services run by Chinese you have. Shops, doctors, banks and entertainment run by the Chinese for the Chinese. Some of these can even under cut the locals with Chinese food or cloths shipped in from China.

Just like the west did for the last couple of centuries the Chinese seem to be taking and giving very little back. Yes you may get some perks like better roads or a mobile phone network. Also the local government will get more money but this is unlikely to filter down to the poor. Along with this you have jobs being replaced by technology and foreigners.

The only real advantage is that better roads, phone networks, internet connection or any other kind of communication infrastructure helps the local start up business. Good communication is important to business and any good business person can utilize good communications to make money and grow.

I guess the question is are more people disadvantaged by the Chinese or are more people better off?

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