China making economic mark in Africa

The Chinese presence in Africa is quite extraordinary and the continent collectively is the third-largest recipient of Chinese outward foreign direct investment of nearly US$90bil.

AFRICA, with its one billion population and surging birth and economic growth rates, is and will be the next economic battlefield, a terrain that will be fought over by Chinese, Indian, American and European investors.

While Malaysia is a small fry among this company, we have a surprisingly high profile thanks to Tun Dr Mahathir Mohamad’s foresight and enthusiasm for the continent in the 80s and 90s. Dr Mahathir founded the Langkawi International Dialogues in 1995, which was and remains an important platform for Malaysia to engage with African nations.

We shouldn’t let these relationships lie forgotten. Instead, we need to build on this remarkable goodwill because it can provide real business opportunities for our country.

As the IMF had forecast in October 2012, Sub-Saharan Africa’s regional output is expected to expand by about 5.25% in 2012 and 2013.

The Financial Times on the other hand reported in November 2011 that the African Development Bank expected pan-African GDP in 2012 to be 5.5%.

True, poverty and political instability remain major issues but these are phenomenal rates compared to its former European colonial masters now.

Meanwhile, the Chinese presence is quite extraordinary, beginning from my fellow travellers on the late-night Kenya Airways Boeing 777 bound for Nairobi during my November trip there — many of whom were clearly from Guangzhou where the plane had originated. I still remember drifting off to sleep as announcements in Mandarin droned on in the background.

Upon arriving in Nairobi, I noticed to my surprise that most of my fellow Asian travellers had merely changed planes for other more exotic destinations – Juba, Lilongwe, Maputo, Addis Ababa, Kinshasa and Douala.

Nairobi, while strange and alien enough for me, was already old-hat for my Chinese compatriots.

Driving into town along the Mombasa Highway, I hit the morning rush-hour, enduring what can only be described of as a truly Asian traffic jam, replete with peddlers selling newspapers, magazines, household implements and toys.

We crawled along for mile after mile, negotiating the now inadequate roundabouts, overtaken in turn by the many people walking along the side of the busy thoroughfare.

After an hour or so, the city’s downtown with the distinctive cylindrical-shaped Kenyatta International Convention Centre – an icon in Nairobi where I was to stay – thankfully emerged into view.

Turning off the highway towards my hotel, I noticed a new intersection, replete with flyovers up ahead. Squinting, I could just about make out the banners announcing its upcoming launch.

Having been struck by the poor state of Nairobi’s infrastructure, I asked my driver about the new development and was told: “The Chinese built it sir. It’s the new Thika Expressway and the president will be opening it tomorrow.”

Chinese trade and investment in Africa has boomed. As Greg Levesque of the US-China Business Council wrote in the Business Insider on 27 June, the continent collectively is the third-largest recipient of Chinese outward foreign direct investment (OFDI) of nearly US$90bil (RM273bil).

Major destinations include South Africa, Angola, Nigeria and Algeria.

The key sector is of course energy, with Chinese state-owned firms like the China National Offshore Oil Company (CNOOC) hunting oil and gas blocks to meet the Asian giant’s energy hunger.

However, China is also moving into other sectors like infrastructure. The Thika Expressway for instance created 3,500 jobs for local Kenyans.

Also, in July, outgoing Chinese President Hu Jintao offered over US$20bil (RM60.8bil) in loans to African countries over the next three years.

But China’s push into Africa hasn’t come without criticism, and during the Mo Ibrahim Foundation dialogue that I attended in Dakar later on, a number of speakers touched on the imbalance in relations. Most felt uneasy about the way Africa’s natural resources were being exported to China, in return for which Africans were importing all manner of consumer goods.

As one speaker said, “The Chinese need to set up factories here in Africa to supply this market. In years to come, we will have the largest pool of young workers”.

The pan-African investment banker, Mamadou Toure felt that the continent is generally receptive. However he stresses: “China’s investments in Africa currently exceed the World Bank’s. We do need to diversify our partners.”

Indeed, there’s concern that China’s influence could alter the very social fabric of Africa. Afia Asantewaa Asare-Kyei, a Program Manager with George Soros’ Open Society Foundation in Senegal and a Ghanaian recalls a recent trip back home to her village in the Ashanti Region:

“I was surprised to see Chinese workers panning for gold alongside the locals.”

The Chinese presence is multi-faceted and deep. Indeed even in Dakar, at the newly built National Theatre (where the foundation’s dialogue took place), constructed with Chinese funding (they picked up around US$28mil (RM85mil) of the total US$32mil (RM97.3mil) cost) and know-how. Chinese workers – pleased with what they’d achieved, were very much in evidence.

The African decade is upon us. Are we in Malaysia ready to seize the opportunities that Dr Mahathir bequeathed us?

COMMENT 

By KARIM RASLAN

Malaysian education is too Western-centric, ignorance of Asian values, etc!

A Merdeka of the mind

Our education is too Western-centric, aping Western universities and showing ignorance of Asian and African contributions to knowledge.

AS we celebrate 55 years of political independence, we may note the blessings of peace and prosperity in our beloved land. But we also need to reflect on some unfulfilled dimensions of independence.

If independence is autonomy or freedom from the control of another nation, then we Malaysians are hardly free.

The basic assumptions of our political, economic and educational systems are dictated by Western, especially Anglo-American, hegemony. Politically we are free but enslavement of the mind has hardly ceased.

A slave mentality or Western/Euro-centrism need not be a conscious option. It is rooted in our psychology of dependence on, and blind reverence for, everything Western.

Syed Hussein Alatas calls it “the captive mind”. For Ward Churchill, modern intellectual discourse and higher education are “White Studies”.

Hundreds of years ago, the coloniser seized not only land but minds, monopolising information sources and undermining indigenous know­ledge.

For Frantz Fanon, the colonised was “elevated above his jungle status in proportion to his adoption of the mother country’s cultural standards”.

Ngugi wa Thiong says “it is the final triumph of a system of domination, when the dominated start singing its virtues”.

So 55 years after independence, our public figures are still enamoured with the colonial tune. Their intellectual discourses have three tendencies.

First, the Western worldview and its assumptions are blindly aped. Second, we are ignorant of Asian and African roots of knowledge and Eastern contributions to civilisation. Third, there is hardly any critique of Western theories in the light of our own realities.

Take Western-centrism in our educational institutions. Yusef Progler finds that in whatever field of study, a course in most Asian and African universities follows a similar path.

“It will first identify the great white European or American men of each discipline and then drill their theories and practices as if these were universal”, while ignoring knowledge from other civilisations.

Government recognition of foreign degrees is skewed in favour of Anglo-American awards. Eminent citadels of learning in Asia and Africa are largely ignored.

The favoured destination for JPA-sponsored postgraduate scholars is Europe or the United States. The external examiners and visiting professors are mostly from Britain, the US or Australia. Asian scholars are generally excluded from such honours or offered lesser terms.

Intellectual grovelling before Western experts remains as deeply ingrained as during the British Raj. A few years ago, Cherie Blair was invited to lead the arguments in a case before our courts even when scores of eminent local lawyers were available.

In any prestigious lecture series, the guest of honour is invariably a Westerner, sometimes of dubious credentials. For example, Tony Blair was invited by a local NGO to deliver a lecture.

But when Mugabe and Bashar were scheduled to come, concern was expressed, and rightly so. The crimes of Western leaders may be ignored, but we jump up to take a principled stand against Asian and African miscreants.

Our legal system remains British-oriented. In the English fashion of Austinian positivism, the concept of law is tied to the commands of the political sovereign even though most Asians and Africans regard religion and custom as part of the seamless web of the law.

The Civil Law Act continues its worship of outdated British precedents even though we have greater affinity with many other constitutional systems like India’s.

The Legal Profession Act continues to permit British graduates to be called to the Malaysian Bar without undergoing a bridging course. A key component of the course should be a study of the Malaysian Consti­tution.

In our law faculties, legal education is as much a colonial construct as during the Raj. The course structure and content, the book list and the icons are mostly Western.

A typical course on jurisprudence in Malaysia often begins with Plato, Aristotle, Locke, Bentham, Pound, Weber, Ehrlich, Durkheim, Marx, etc.

The Mahabharata, the Arthashastra, the Book of Mencius, the Analects of Confucius and the treatises of Ghazali, Ibn Rushd, Jose Rizal, Benoy Kumar Sarkar, Yanagita Kunio and Naquib al-Attas are not included.

Chinese, Indian and Persian universities predated European ones and provided paradigms for early Western education. Yet our universities ignore centuries of enlightenment in China, India, Japan, Persia and West Asia.

It is as if all things good and wholesome originated with Western civilisation and the East was, and is, an intellectual desert. The truth is other­wise.

In science, Galileo, Newton and Einstein illuminated the firmament but not much is known about Al-hazen and Nasir al-Din al-Tusi. Western chemistry was preceded by Eastern alchemy, algebra had African roots.

The philosophy of Plato, Aristotle, Kant, Sartre and Goethe can be matched by Ghazali, Ibn Rushd, Mulla Sadra, Shenhui, al-Mutanabbi and Kalidasa. Durkheim’s and Weber’s sociology must compete with Ibn Khaldun’s.

Freudian psychology had its corrective in Buddhist wisdom. The Cartesian medical model has its Eastern counterpart in ayurvedic, unani and herbal methods.

Very few know that Arab Muslims were central to the making of medieval Europe.

A slavish mimicking of Western norms of government, law and economics prevents us from tackling our own problems like poverty and unsustainable development.

Our attitude leaves us vulnerable to many predatory policies of Western-dominated institutions and processes. Transnational corporations dominate our economies.

Many Asian and African nations choke under the debt stranglehold. The West can bring down our economies with currency speculation, hedge funds, piracy of indigenous resources and trade boycotts as new forms of tyranny.

Yet we are too scared or ashamed to express our own views. Basing our life on other nations’ opinions is slavery.

As Aug 31 approaches, we must resolve to free our minds from Western intellectual hegemony. A Merdeka of the mind will put us on the path to that.

Comment
Prof Shad Saleem Faruqi
> The author wishes all readers Salam Lebaran and Salam Kemerdekaan.

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US threat: superpower gun barrels pivot east

As US election fever sizzles, pressure mounts to spread the militarist mindset deeper and wider.

African agenda: Clinton (right) visiting a clinic in a suburb of Cape Town. — Reuters

THE heavy-duty globetrotting of Hillary Clinton as US Secretary of State was bound to take in Africa sooner or later. Now it has done so with as much gusto and relish as a new colonial carve-up of the continent.

This was the “dark continent” before it was “discovered” by the white man, before the African could succumb to Western maladies from various illnesses to the “structural adjustments” imposed by Western-controlled multilateral lending agencies.

And Africa today is the continent that Washington sees China moving into. How could the world’s sole superpower let that go unchallenged, particularly when the moves come from the world’s fastest rising power?

China is seeking natural resources for its growth, scouring the earth from South America to Africa and anywhere else with potential. The US, coming from behind in Africa, wants to get even and then pip China at the post.

Just what that means in real policy terms, or how that can benefit US interests, would have to be determined later.

So Clinton goes to nine countries in 11 days, posing with Nelson Mandela in South Africa and holding hands around campfires and singing Kumbaya from Benin, Ghana, Kenya and Malawi to Nigeria, Senegal, South Sudan and Uganda.

All of it made for good diplomacy and even better feel-good US news copy. However, some analysts observe that the US just does not have the funds to fulfil its African pledges.

Predictably, Washington denied this was in competition with China over Africa. And like all such official denials, it was as good an unofficial confirmation as any.

Clinton’s African agenda was formally based on the White House white paper “US Strategy Toward Sub-Saharan Africa” produced just weeks before. This policy document aims to strengthen democracy, boost growth, promote peace and security, and encourage development.

Clinton asserted that the US had had a long history in Africa (before China), and it had been there for all the right and good reasons. But whether China is in the picture or not, US policymakers have a problem in credibly claiming both altruism and a long history in Africa.

Such claims of early US engagements typically neglect mentioning the slave trade from the late 15th century. This notorious denial of human rights through massive human trafficking involved the kidnap of countless African men in their prime over centuries by Europeans who sold them to Americans, setting back African development for generations.

Abraham Lincoln reputedly fought a civil war to end slavery only in the 19th century. That showed how embedded slavery had become in the New World, requiring a civil war to abolish.

Yet even this stain on Western history was predated by several decades by Admiral Zheng He’s three voyages to Africa in the early 15th century. These were Chinese trading missions that came to barter goods, not to extract vital human resources in a criminal fashion.

Later, Ronald Reagan’s administration infamously did business with the international pariah state of apartheid South Africa, while branding Mandela a terrorist leader. When questioned, Reagan called it “constructive engagement” to excuse his collaboration with a racist Pretoria.

Other US experiences elsewhere in Africa resulted in gross corruption and denial of human rights. From Rwanda and Somalia through Zaire (Democratic Republic of Congo), Equatorial Guinea and Ethiopia to Egypt and Libya today, the positive gains are not as rosy as they have been advertised.

More lately, the Obama administration overturned 10 years of hard work internationally by abruptly dumping a global arms trade treaty at the United Nations. Both legal and illegal arms and munitions supplies have devastated the developing world, notably Africa, which continues to lose thousands of lives and more than US$18bil (RM56bil) a year through armed conflict.

Clinton’s asides on China’s African presence come amid general criticism of Beijing’s modus operandi when doing business in Africa. China stands accused of not placing conditions on its African hosts before proceeding to deal with them.

To those intent on demonising China, however, Beijing can never win: it will be condemned whatever it does or does not do. If China were to impose political conditions on business deals, those who now complain it is not doing so will again be the first to complain.

There is a historical record for reference: once, an ideologically rampant China offered inducements to factions in developing countries to support their domestic communist movements.

Beijing has wisely refrained from such preconditions. Should China still offer such inducements, if only to make its own Communist Party or government look good?

Would it really be better if China exerted pressure on its trading partners or investment destinations to do what it considers important for its own values and objectives? To do so would be China’s equivalent of imposing US conditions on the developing world.

Some countries have also been guilty of offering “aid programmes” that hire their nationals as expatriates in the country supposedly aided. In contrast, China is said to hire African nationals for work on infrastructure projects it builds in Africa.

This provides local employment, while the infrastructure once built will remain in those countries to produce a multiplier effect for development through improved transportation for trade, investment, tourism and the distribution of educational opportunities and healthcare facilities.

Unlike the US variety, Chinese aid, trade and investment come with no strings attached, no crippling IMF or World Bank conditions, no military industrial complex supplying weapons to one side or the other, and no promises or threats of destabilisation, subversion, invasion, occupation, war or “regime change”. And Western critics pick on Beijing for that.

African analysts cite these as reasons why Africans will welcome China’s presence more than a competing US presence. China’s business deals come without the extra baggage of self-righteous preachiness and ideologically loaded value judgments.

Like the rest of the Third World, Africa may want to get as much as possible from both China and the US. So, in practice, it will not be a question of one suitor or the other.

But if Africa on its own is such a compelling case for renewed US interest, with China not a factor at all as officially claimed, why did Washington take so long to get interested? US policymakers must know that the official narrative of a rising Africa is not quite accurate.

To a degree, the Obama-Clinton act over Africa has also resulted from Mitt Romney’s presidential challenge. A leading US specialist on China, Prof David Shambaugh, finds that the Romney campaign is building a foreign policy team based largely on George W. Bush advisers.

This team sees China as a “global competitor” over Africa, and which despite some diplomatic platitudes in the preface, is relying heavily on greater military power. Lethal fallout may yet land in other regions from a superpower tottering in West Asia through teetering in South Asia on the way to Obama’s “pivot” in East Asia.

US presidential campaigns traditionally focus on domestic issues, but China and Africa are now generating a buzz among Americans online. Obama may also win a second term, but Romney’s influence on the campaign trail and Republican pressure in Congress may yet set the tone for US-China relations to come, to impact inevitably on East Asia as a whole.

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The yuan goes global: Money talks and London is listening to the yuan

The Chinese currency is fast gaining weight worldwide and becoming a key topic of conversation for bankers.

THE fashionable youths in hot pants flocking to high-end department stores in London and bankers in dark suits walking in and out of skyscrapers in the financial district have one thing in common, a growing interest in the Chinese currency.

During the recent holiday to celebrate the Diamond Jubilee of Queen Elizabeth II, Harrods, a department store known for its ties with the British royal family, launched its own Sina Weibo, a popular Chinese social media platform, to attract more Chinese customers. Shoppers can find “the very latest, limited edition and exclusive products”, with Hermes, Chanel and Louis Vuitton among the most popular brands, according to the store’s spokesman.

More than 100 UnionPay payment terminals in the store also help to make Chinese shoppers feel more at home. Through the machines, part of China’s unified bank card network, Chinese visitors can pay for their purchases with the same cards they use at home.

Hear, hear: A man walking past the London Stock Exchange in London. London is now a yuan offshore trading centre, which will help both Chinese and European business people to avoid foreign exchange risks. — China Daily/Asia News Network

 

A few streets from Harrods, a billboard featuring a green jade dragon shaped like the yuan symbol stands outside a bank. The ad reads: “A new global currency is emerging. Be part of it.” The commercial is for HSBC, a bank rooted in the silk and tea trade between China and Britain in the 19th century.

The UnionPay terminals, the jade dragon advertisements and the shops on the streets of London offering exchange services between the British pound and the yuan are the tip of the iceberg in the biggest story in the financial markets today: the internationalisation of the Chinese currency.

As people search for a bright spot amid sluggish economic growth in the West, beset as it is by the European debt crisis, companies, investors and financial institutions are increasingly focused on the yuan. From Beijing to Hong Kong, Tokyo to London, policymakers and businesses are part of the push.

There are several forces driving this move, both at home and abroad. The People’s Bank of China has made several moves this year to liberalise the exchange rate; George Osborne, the UK chancellor of the exchequer, took the initiative to develop London into an offshore trading centre for the yuan earlier this year; and this month, the yuan became convertible with the Japanese yen under an agreement between the Chinese and Japanese governments.

“All of it demonstrates that the Chinese government is pushing forward the internationalisation of the yuan and encouraging the use of yuan offshore. That will help the global economy in many ways,” said Adam Tyrrell, head of European capital markets for Standard Chartered in London.

Greenback to redback

These initiatives will have a profound influence on the development of trade. For instance, China and Europe are each other’s largest trading partners, but, up till now, the bulk of that trade has been settled in the US dollar. If a Chinese company buys pork from a UK company, it does not buy and sell in yuan, the pound or the euro. It settles in dollars.

That paradox is changing. Now the same pork company can open a yuan account at a British bank such as HSBC or Standard Chartered, or a Chinese bank that operates in Europe, such as Bank of China or Industrial and Commercial Bank of China, and can then invoice the goods or settle the deal with its Chinese clients in their national currency.

The advantage of this is clear: Settling in yuan helps both sides to avoid foreign exchange risks and reduces transaction costs. For instance, in 2008, many companies in southeast China had to lay off workers and close factories because they were losing money through currency appreciation.

That situation would have been different if the contracts had been signed in yuan, because the agreements would have a fixed value no matter what the change in the exchange rate.

The initiative can also benefit companies outside the European time zone, given London’s position as the world’s foreign exchange centre. “The beauty of London is not just about London,” said Patrick Law, Hong Kong-based managing director and head of trading for Greater China at Barclays. “If you look at the London time zone, it covers both the northern and southern hemispheres.” And that means it will also help facilitate business between China and Africa and the Middle East.

“Africa is a very interesting market to look into because China and Africa have a lot of business together,” Law said. He added that Barclays, a bank with strength in commodity trading, began to conduct trade between the South African rand and yuan from April.

Uncle Sam to dim sum

The internationalisation of the yuan will also offer a new platform for companies and investors looking for alternative methods of financing.

The “dim sum bond” got its name from delicacies in Chinese cuisine such as spring rolls, shrimp dumplings and steamed buns. The name has been appropriated for fixed income denominated in yuan and was started in Hong Kong when the city became the first offshore centre for yuan trading. The bond has become increasingly popular outside Asia and grew rapidly in Europe last year, according to Standard Chartered’s Tyrrell.

British banks were involved in five dim sum bond deals with European companies and financial institutions last year. It has also been involved in three client deals so far this year, according to Tyrrell: “Over time, as the yuan is used more, more European corporations and financial institutions will be interested in transacting in yuan, either for their China business, when they can remit onshore, or as a way of diversifying their investor base.”

The motivation for getting involved in dim sum bonds is also changing, he said. When the yuan market first developed offshore, a lot of investors were looking for a currency play rather than a bond play. At first, investors were looking to invest in the currency because they thought it was going to appreciate.

“Over time, it is developing into a more mature bond market,” said Tyrrell. “It will tend to be more driven by traditional bond market influences.”

Chances and problems

That’s particularly true this year, because of the fragile state of the global economy. If the investor sentiment is not there, there will be fewer bond issuances, according to Tyrrell. “There is definitely momentum in the yuan. It will not stop. It will grow,” he said.

Given the fact that the yuan is still not fully convertible, there is still a lot of work to be done to encourage people to hold it and conduct business with it, as they do with dollars.

The main issue for London as it attempts to develop into an offshore yuan trading centre revolves around the lack of liquidity. That’s due to both a paucity of knowledge about the yuan market and the limits of infrastructure to facilitate trade flows.

“Without liquidity, we cannot grow the pie and make the market more efficient,” Law said. “Everybody is definitely very interested. The current situation is that people have just started looking into it,” he said. “The involvement is still relatively small, but the amount of interest is actually very high.”

Some observers have suggested that the pool of yuan liquidity in London can grow through a huge variety of sources. For instance, Standard Chartered recently issued yuan-denominated European Commercial Paper to investors in Europe.

“ECP is issued to investors. Then Standard Chartered holds the liquidity in yuan and can use that for trade finance. This will help to increase trade flows with China for European clients,” Tyrrell said.

“As investors become more comfortable holding yuan, it will help build liquidity here.”

By Diao Ying, China Daily/Asia News Network