Allgemein, Young China Watchers

Bridging the Gap – Cooperation on Infrastructure Investment Between Europe and China

“China is spending more on infrastructure than the U.S. and Europe combined,” finds a recent study by McKinsey & Co. At the same time, Europe lags behind in desperately needed investments in its infrastructure, and its “existing asset base is wearing out.” Europe seems distracted by a range of internal problems: an ongoing sovereign debt crisis; “Brexit” highlighting attempts of re-nationalization; and the challenges of a very low interest rate environment.

Economists realize that the long-praised powers of monetary policy alone appear to be unable to kick-start the economy. Monetary policy needs to be accompanied by fiscal policy to achieve long-term growth, and infrastructure investments are a key element of fiscal policy stimuli.

The IMF in particular calls on Europe’s largest economy, Germany, to set an example on structural reforms to boost the fragile economic recovery of the Euro area. Indeed, the German government has presented plans to increase investments in infrastructure, which are sorely needed. For instance, a 2012 report by the Commission on Transport Infrastructure Financing found that 30 percent of German rail bridges are more than 100 years old. However, the current paradigm of balanced budgets as the ultimate goal of successful fiscal policy in many European countries, ignores: a) the need for investment in Europe’s infrastructure, and b) the opportunities of cheap funding for sovereigns in the current low interest rate environment.

In contrast, the Chinese government has put a particular emphasis on infrastructure investments. Although China could face economic challenges for many years, it has long understood the value of infrastructure investments for short-term economic development through significant fiscal spending, as well as a prerequisite for long-term economic prosperity.

From 1992 to 2011, China spent on average 8.5 percent of its GDP on infrastructure projects, overshooting the necessary amount argued by some. For the same period, the EU invested 2.6 percent of GDP, a figure which has since dropped to 0.5 percent of GDP. China’s approach has significantly contributed to the country’s continuous double-digit GDP growth for the past 30 years. The current situation, in which China continuously invests in its own infrastructure and increasingly those of other countries, appears almost comical compared to a European community that – while advising developing nations on economic development – has seemingly forgotten about its own needs.

China’s global infrastructure efforts

Currently, China acts as global promoter of infrastructure developments not only within its own territory, but also the wider APAC region, Central Asia, South America, and on the African continent. The Chinese government has launched initiatives and institutions to this end, such as “One Belt, One Road” (OBOR) and the Asian Infrastructure Investment Bank (AIIB).

In addition, China has started to build strategic partnerships with various European countries. Its strategic vision for OBOR not only entails upgrading the infrastructure of China’s direct neighbours, but also enhanced transportation routes reaching deep into Europe. Whereas last year Shaohua Yan concluded that there was “little serious research in European academia on the OBOR initiative, nor any real discussion at the official level,” today a number of countries, especially in Central and Eastern Europe (CEE), have welcomed Chinese capital as part of the OBOR initiative.

However, the relationships, frameworks, and understanding of China as a strategic partner, remain ambiguous across Europe. With CEE countries, China has engaged in the 16+1 Cooperation Framework, which serves as a platform for fostering Chinese-funded infrastructure projects. While regular multilateral meetings are held, investment deals are signed on a bilateral basis. Several participating countries, such as Hungary and Poland, have signed MoUs with China on its OBOR initiative, although these MoUs seem to lack substance and tangible outcomes.

Under its OBOR initiative, China also engages multinational European institutions such as the EBRD via the AIIB and its Silk Road Fund. The Chinese government has furthermore announced that it will contribute to the European Fund for Strategic Investment (EFSI), designated for projects in the EU. This cooperation between the EU and China is, for instance, coordinated through the Connectivity Platform, launched in 2015.

Bilateral channels of cooperation

In addition to multilateral initiatives, China explores strategic infrastructure partnerships with European countries bilaterally. In 2015, China and the UK signed a “UK China Infrastructure Alliance” memorandum. Several full-time resources on diplomatic level have recently been allocated for this purpose. The UK supports the Infrastructure Alliance by training Chinese infrastructure investors in the UK, organising public-private partnership training programs in China, and facilitating third-country collaboration.

Theresa May’s recent comments on plans to significantly increase the government’s infrastructure spending demonstrates the UK’s strong motivation to foster these investments. Her commitment to Hinkley Point C is another example of such cooperation in energy infrastructure. Overall it can be argued that the UK’s bilateral relationship with China, including the creation of political and business frameworks, serves as a complementary and beneficial channel for cross-border infrastructure investments. Unfortunately, most Western European countries have not engaged with China as proactively as the UK, although this could help bridge their evident infrastructure gap.

To date, the UK attracts the largest share of Chinese FDI in Europe, trailed by Germany, which sits below the European average when it comes to investments in transport and infrastructure. In Germany, several recent projects with Chinese investors, mainly around German airports (Frankfurt-Hahn, Lübeck, and Parchim), have run into difficulties. Whereas Chinese investors had big plans to transform the regional airport of Lübeck into a hub for aviation training, and aimed to use Parchim International as a tourism hub for flights to and from China, after several years the projects failed or struggled to reach the ambitious goals of their investors. In June this year, the government of the German state Rhineland-Palatinate aimed to sell Frankfurt-Hahn airport to a Chinese investor. However, payments were delayed and the deal was ultimately called off.

Besides shortcomings in risk assessment on the German side, another conclusion is that Chinese investors may not be sufficiently well-informed about the German investment and regulatory environment and vice versa. Initiatives such as the UK’s Infrastructure Alliance could prove valuable in this regard. In the German case, a similar framework might be developed with Germany Trade and Invest (GTAI), the national economic development agency.

Coordination across the continent

These bilateral initiatives can only be a start. Investment promotion needs to be better coordinated across all EU member states, in particular for trans-European and cross-border projects. Chinese investments into Europe are growing rapidly, but have shown few concrete outcomes in the infrastructure sector. Especially due to the ongoing privatization trend of infrastructure projects across Europe, including in many Western European countries, the number of private Chinese investors is rapidly increasing.

The significance of high-level political frameworks as a foundation for economic and infrastructure cooperation is not to be underestimated in the Chinese context. Infrastructure projects have long planning phases, and therefore patience and commitment to further framework-building is key. More Western European countries should engage in bilateral talks with China on these issues, taking the UK’s Infrastructure Alliance as a template.

Forums that focus on particular investment environments at a national level can provide Chinese investors with the necessary understanding of local rules, requirements, and regulations, thereby mitigating the danger of setbacks, such as those experienced in Germany. Whereas cooperation on a European level through the above-mentioned multilateral agreements is important, it lacks the granularity and specificity many investors require.

It is therefore paramount that European governments become more proactive in targeting foreign investment, in order to attract and shape valuable investment projects in their countries and to bridge the infrastructure gap in Europe.

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Allgemein, Young China Watchers

Market Economy Status for China: Arguments from Brussels and Beijing

[This article was first published on Young China Watcher’s blog]

By: Insa Ewert and Jan Philipp Pöter

This past week in July, the 18th EU-China Summit was held in Beijing. The summit convenes biannually, alternating between Brussels and Beijing, and guides the relationship between the EU and China at the highest level. The political event is accompanied by an EU-China Business Summit, underlining the importance of business and economic factors to these summits. Representatives of the EU Institutions as well as the Chinese government, such as Presidents Jean-Claude Juncker and Donald Tusk, as well as Premier Li Keqiang, attended the meeting and discussed issues on the EU-China agenda.

Topics that currently dominate the agenda include the implications of the recent UK referendum on trade and investment relations, as well as the question of whether or not China should be granted Market Economy Status (MES) by the EU. The latter has been the subject of vigorous debates for the past months, with a decision due by the end of the year. As the EU-China Summit shapes further debate on the issue, it is the right time for an analysis of the arguments around MES. Taking into account the differences in trade relations between the individual EU member states and China, we argue that this question is largely a political one, despite being framed as a technical or economic issue.

The significance of this question is undisputed. China is the EU’s second-largest trading partner after the U.S., with a trade volume of €520 billion in 2015. Its share of trade with the EU has more than doubled from 7 percent in 2002 to 15 percent in 2015.

The current debate addresses two points: the definition of MES; and the implications of the expiry of Article 15 (a)(ii) of China’s accession protocol to the World Trade Organization (WTO). On the one hand, no universal definition for MES exists, as the example of Russia shows[i], and China’s accession protocol to the WTO does not explicitly mention MES. On the other hand, the importance of the expiry of this subparagraph lies in the WTO’s treatment of China in anti-dumping investigations after December 2016. Currently, the 52 anti-dumping measures in force cover a number of European industries, in particular steel, ceramics, and aluminum. These measures would have to follow different rules and stricter employment criteria once China is granted MES.

EU decision-makers and institutions, however, are divided on how to cope with these issues. The most salient division can be found between the Member States. However, their positions cannot be explained by a purely economic analysis of their trade relations with China. Rather, the importance of Chinese economic diplomacy and positive long-term relationships need to be considered:

  • For instance, Germany has a very strong manufacturing base and was, next to Finland, the only EU country with a trade surplus with China. Although many of its industries, such as steel, are very vocal in opposing MES for China, Chancellor Angela Merkel publicly positioned herself, in principle, in favor of China’s MES in October 2015.
  • The UK, having a larger trade deficit with China and a focus on Chinese FDI rather than trade, has traditionally been a strong advocate for trade liberalization and a supporter of China within the EU. Despite being in favour of granting China MES, Germany and the UK are potential losers in that scenario, according to a prominent study by the Economic Policy Institute (EPI).
  • France and Italy, also cited as losers in the EPI study and running comparable trade deficits with China in absolute terms to the UK, come to different conclusions. France, with a trade deficit vis-a-vis China of around €10 billion and exporting less than a third of Germany’s volume, has refrained from taking a position on China’s MES.
  • Finally, Italy, running a trade deficit vis-a-vis China of around €18 billion, strongly opposes granting China MES.

Taking into account the EU’s cumulative trade relationships is therefore insufficient. Instead, Germany and the UK’s efforts in promoting a long-term strategy towards China, combining bilateral trade, investments, and long-term positive economic relations, seem to play a significant role.

Jean-Claude Juncker, President of the European Commission; Xi Jinping, President of China;  Donald Tusk, President of the European Council. Credit: The European Union.

Further frictions exist between the European Institutions themselves. There is consensus that China does not fulfill the five relevant EU criteria for MES[i], and by now, there also seems to be a consensus that the expiration of subparagraph (a)(ii) does not result in an automatic granting of MES to China. However, it remains to be seen if and how the EU will: a) grant MES to China; and b) modernize its trade defense legislation in order to protect its industries from Chinese dumping. At the EU-China Summit in Beijing, Juncker explicitly linked China’s overcapacities in steel production to the question of MES. Whereas the Commission’s legal service issued an internal analysis that suggested China should be granted MES, the European Parliament recently issued a non-legislative resolution calling for China to fulfill the five criteria for MES and thereby denying any automatic applicability by December 2016.

China has been pursuing MES predominantly on a legal basis, relying almost exclusively on its WTO accession protocol. Since EU member states are divided, the December 2016 deadline raises the question of what strategies China might pursue.

To date, China has pursued four approaches. Under EU law, China cooperated in investigations that assessed its progress toward obtaining MES in 2004, 2008, 2010, and 2011, after which China ceased to cooperate. Second, Premier Wen Jiabao publicly mentioned in September 2011 that the EU could grant China early MES in exchange for further support in bailing out the European economy. However, President Xi Jinping has been more reserved. Third, at a WTO meeting in late 2015, China warned that it would take WTO action against countries that refuse to acknowledge China as a market economy after December 2016. Finally, in pursuing its goal, the Chinese approach seems to be centered on lobbying rather than a negotiation process.

Some Europeans fear that China will retaliate if it does not get MES. China pledged to contribute to the European Fund for Strategic Investments (EFSI) and is currently deliberating the size of its contribution. It could use this as leverage to pressure the Commission to propose granting MES. Second, China could close further parts of its domestic market to foreign competition or enact anti-competitive measures to the same effect. Third, China could employ selective pressure— against specific industries, individual governments, or by using its investments in European companies—to force targets to lobby on its behalf. Although these are only options, the second and third approaches contradict WTO law and go against the spirit of international economic cooperation.

It is not in China’s interest to retaliate or exert pressure on the EU. Contrary to the infamous solar panels case in 2012, in which China launched investigations into European products, MES concerns many industries and involves the entire EU. Where would it begin or end? Given that 1.38 percent of EU imports from China are subject to anti-dumping, the potential costs of deploying economic pressure across the continent would far outstrip the gains of MES, damaging EU-China relations in the process. Second, since joining the WTO, China’s overall trade has soared despite its non-market economy (NME) status, indicating that MES is not an acute issue for China. Third, retaliatory moves by China would further undermine European investors’ confidence in China in the midst of its economic slowdown.

Considering the above, neither economic nor legal arguments give a clear indication of whether China should be granted MES in December 2016 and the probability of China retaliating—resulting in a ‘trade war’—remains low. Hence, the decision is particularly political when it comes to weighing the possible consequences of the overall relationship of EU states with China and other important partners. After all, economic diplomacy is China’s trademark for engaging with the international community. To what extent the EU understands the importance of this Chinese trait and factors it into its decision-making processes remains to be seen.

There are however several aspects that weigh upon the EU’s decision. First, the indecisiveness of the EU Institutions might have grave consequences for the outcome of the decision. Making use of existing cleavages, China’s lobbying of individual member states is much more effective if there is no clear position from Brussels. Second, the debate reflects more general difficulties in EU decision-making, especially regarding community competences. Third, the decision taken by the EU will send a message about its reliability and legal compliance in international regimes. All of this will inform and impact the relationship of the EU with its partners. While denying China MES may negatively impact the negotiations for the EU-China Bilateral Investment Treaty, granting MES may provoke discontent among other trading partners with whom the EU is currently negotiating agreements, such as the US or Japan. Currently, the Commission is finalizing an impact assessment and expected to present a formal proposal by September 2016. Not long after is the key date of 11 December, with tensions sure to increase ahead of the final decision.

This article is based on “Economics, Law and Politics: The Divisive Question of China’s Market Economy Status” by Insa Ewert, Maurice Fermont, and Jan Philipp Pöter, published in the EU-China Observer 1/2016.


[i] Russia was recognized as a market economy by the EU in 2002. However, at that time Russia was not a member of the WTO. The EU, in parallel to formal recognition as market economy, put in place legal mechanisms to disregard domestic prices and construct the normal value “in particular market situations,” thereby preserving its abilities in trade defense.

[i] The criteria for MES in the EU are: 1) a low degree of government influence in the allocation of resources and in decisions of enterprises; (2) an absence of distortion in the operation of the privatized economy; (3) the effective implementation of company law with adequate corporate governance rules; (4) effective legal framework for the conduct of business and proper functioning of a free-market economy (including intellectual property rights, bankruptcy laws,…); and (5) the existence of a genuine financial sector. In 2011, in the latest review by the European Commission, China only fulfilled one out of the five criteria.

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Allgemein, Young China Watchers

Brexit: “Lose-Lose” Outcomes for China’s Relations with the UK and EU

[This article was first published on Young China Watcher’s blog]

By: Insa Ewert and Jan Philipp Pöter

The outcome of the UK referendum on 23 June 2016—a decision to leave the European Union by 51.9 percent to 48.1 percent—not only triggered political turmoil within the UK and the EU, but also had significant effects on financial markets globally. At this point, uncertainties surround the question of whether Article 50 of the Lisbon Treaty, initiating the UK’s exit negotiations, will be invoked, as well as models for a UK/EU trade deal. Besides these considerations, there are significant uncertainties around the UK’s bilateral and multilateral relationships. In this article, we examine the potential impacts of Brexit on UK-China and EU-China relations—assuming significant negative effects on UK’s access to the EU single market.

The forecasted economic impacts for Brexit by organizations like the International Monetary Fund (IMF) and the Organisation for Economic Co-operation and Development (OECD) are severe. Especially for the UK-China relationship, a “lose-lose” outcome has been predicted. Hence, Beijing’s political leaders, among them President Xi Jinping and Premier Li Keqiang, have voiced their preference for “Remain.”

In the past decade, the UK and China mutually invested in an ever-closer multidimensional relationship, including strengthened political, economic, and trade ties. Leaders on both sides referred to this special relationship as entering a “golden era,” with now-beleaguered Chancellor George Osborne nominating the UK as China’s “best partner in the West.” The UK successfully focused on attracting investments and developing London’s financial center into the world’s second largest RMB clearing hub. The UK in many ways functions as an entry point and stepping stone for China to the EU, economically and politically. As a strong advocate for China within the EU, it was the first member state to apply for membership in the Asian International Infrastructure Bank (AIIB), despite opposition from the U.S., and it has supported  within the EU.

Prime Minister David Cameron meets with President Xi Jinping on a trade mission in Beijing in 2013. Flickr / Number 10.

Regarding economic relations, it is necessary to distinguish between two components: i) UK-specific investments and trade; and ii) EU-relevant investments and trade, e.g. those relying on access to the European market through the UK. With its 64 million people and $2.8 trillion GDP, the UK is Europe’s second-largest economy, constituting a substantial domestic market for investments. The UK is currently the largest recipient of Chinese foreign direct investment (FDI) in Europe, demonstrated by large Chinese-funded infrastructure projects such as the nuclear power plant Hinkley Point C in Somerset and the HS2 rail link. The relevance of the UK market for Chinese investments has grown and will sustain, although investment flows will strongly depend on the UK’s post-EU economic outlook.

However, investments with a primary focus on the UK are only one part of this story. All trade and investments in the UK that aim to profit from its single-market access are likely to diminish in the short-term, and only regain momentum if a favorable deal with Brussels materializes. Negative consequences will likely impact a number of projects envisaged at the UK-China Economic and Financial Dialogue in September 2015, such as those that address the distribution of financial products in the EU and assume the single market’s “passporting” rights for financial services.

If the UK left the EU, a new UK-China trade agreement may have to be negotiated bilaterally, otherwise the relationship would be governed by the less preferential WTO framework. The timing around this is a huge uncertainty, with an immediate impact on long-term trade and investment decisions. With trade and investment between the UK and the EU likely to decrease, the relative importance of Chinese investment and trade rises. A quick and comprehensive trade agreement shortly after Brexit will therefore be key.

Increasing the UK’s dependence on China might, however, prove dangerous if the Chinese economy has a hard landing ahead, as Damian Tobin asserts in this YCW Conversation. In addition, not everyone in the UK administration has been content with the current strategy towards China. A sea change in public policy—in favor of more nationalistic voters—could imply a more cautious approach.

European Parliament President Martin Schulz meets President Xi Jinping in Beijing in 2014. Flickr / European Union 2014 - European Parliament.

The view from Beijing is of a less important UK, having lost access to the EU’s single market and, concomitantly, its bargaining power for China in EU forums. The threat of secession movements within the UK (e.g. Scotland) sharpens this decline in relative importance—and could trigger significant repercussions from China in light of its own domestic territorial disputes.

Post-Brexit, the EU will also look less muscular to China without the UK as a counterbalance to the U.S. in a multipolar world. Having lost one of its biggest allies around the EU table, it may refocus on other European partners. Due to its historically strong trade relationship with China, Germany (accounting for 40 percent of all EU-China trade) might profit from a weakened UK-China relationship. Alternatively, and in light of China’s ongoing investments in its One Belt One Road (OBOR) initiative in Eastern Europe, China may turn to Eastern European member states instead.

Finally, Brexit also impacts China domestically. One pre-referendum comment indicated that the referendum might undermine Xi’s leadership due to his embrace of the UK. In contrast, it could be grist to the mills of the Chinese Communist Party’s narrative about the inadequacies of the popular vote. In addition, if the RMB emerges relatively stronger than other currencies such as the Euro, this might erode China’s export competitiveness and negatively affect its trade with the EU. While this serves the administration an opportunity to further devaluate the Yuan, it has already reached a six-year low to the dollar, making China’s currency stability a particularly difficult task.

China-watchers should prepare for a noticeable shift in its relations with the UK and the EU. Whereas the UK is destined to be the single biggest loser (economically and politically), should Brexit go ahead then China and the EU will face significant changes to their relative positions. While the UK and the EU would both lose collective bargaining power vis-à-vis China, Beijing will need to rethink its strategic approach and partnerships towards the EU as a whole, as well as determine its key allies going forward. Two weeks after the vote, uncertainties about Brexit remain high, demanding a close eye on developments in the coming months. Once the road ahead becomes clearer, we can reassess the links between Beijing, London, and Brussels.

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Allgemein, Young China Watchers

“China in Africa”: A Reality Check

[This article was first published on Young China Watcher’s blog]

By: Insa Ewert
The second summit and sixth ministerial conference of the Forum on China-Africa Cooperation (FOCAC), the main political forum for China-Africa relations, will be held in South Africa this December. Government leaders from China, 50 African states, and the Commission of the African Union will convene for the highest level meeting since 2006.[i]  Past FOCAC conferences have seen a series of commitments between China and African countries, strengthening trade, investment, and cooperation in other fields such as diplomatic support in international fora. They have also served as a platform to establish the China-Africa Business Conference and the China-Africa People’s Forum. FOCAC draws increasing attention from media and experts alike, serving as a simple representation of “China in Africa”. But Chinese engagement with African states deserves a more nuanced approach based on two factors: the definition of “Africa” and different actors’ perceptions.

Leaders at the 5th Ministerial Conference of the Forum on China-Africa Cooperation, held in Beijing in 2012. Credit: GovernmentZa / Flickr.

A reflection of “China in Africa” is long overdue. With interest on this topic only growing, the public image of China-Africa relations is predominantly negative. Mainstream media often promotes simplistic rhetoric or stereotypes. And as actors and perceptions diversify, it seems impossible to make a true statement about China’s engagement in Africa.

Not only is the term “Africa” contested, but its usage is not reflective of the wide range of divergent cultures, peoples, and political attitudes on the continent. While “China” is a well-defined termfor the People’s Republic of China, researchers and journalists frequently use the term “Africa” contiguously, lending a false impression of an equally precise definition. On the contrary, conceptions of “Africa” involve manifold notions of discourse, power, location, representation, geopolitics, and identity. Homogeneous “African” positions do not exist to the degree that journalists and academics uphold. An even more nuanced approach could equally distinguish between different Chinese actors and differentiate between their interests.

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The one-size-fits-all approach of FOCAC operates on a similar rationale, and hence also might not serve as the best forum to understand the diverse needs and interests of African countries. Further, FOCAC is criticized as a political ceremony that has little bearing on the lives of ordinary Africans, with heads of state meeting behind closed doors in a remote setting. Instead of high-level summits, “China in Africa” is unfolding on the ground. Yet what indeed is happening on the ground is difficult to assess; while economic analyses tend to be narrowly focused, big-picture impressions overlook the complexities of reality.

A systematic comparison of the perspectives of four key stakeholders—the Chinese government, African government officials, Western academics, and African academics—can better shed light on this reality. By assessing each group’s perceptions through their publications, policy documents, and interviews, this analysis revealed the entanglements inherent in this topic. (Of course, this analysis presumed homogeneity of admittedly constructed groups. The Chinese government is the easiest to justify, but what makes a “Western” academic or an “African” academic? Whereas the former referred mainly to academics from universities in Great Britain and the United States, the latter included authors who self-identified as African.)

The examined actors agreed that: competition exists between Chinese and Western ideological approaches; trade imbalances disadvantage African countries; and the image of China within African societies is rather poor.[ii]  But differences in their views dominate the picture. The four groups diverged when comparing Chinese- and Western-implemented projects, measuring the impact of trade deficits, and supporting Chinese development policies as models for African countries.[iii]

All groups found it difficult to classify China as either developing or developed. Chinese and African government officials focused on the perceived strengths of “Africa,” which were, interestingly, natural resources, the power of media in shaping opinions, and policymaking capacity. In contrast, both groups of academics focused on perceived weaknesses, such as weak governance structures, a lack of skilled labor, and dependency on external powers.

The stark and almost diametrical perceptions of “Africa” between government officials and academics exemplify the demand for a more nuanced approach. As always, reality is more complex than catchy terms like “China in Africa” suggest. So what is the way forward? How can we speak, write, and perform research on Chinese engagement in African countries, while avoiding the pitfalls of conventional reporting?

Ahead of the summit, The China Africa Project developed a guide for reporting on FOCAC, including a publication debunking five widely believed myths about the Chinese in African countries (e.g. Chinese firms only hire Chinese workers). The China-Africa Reporting Project recently hosted a roundtable for international experts and journalists writing about FOCAC. Without doubt more research is required on Chinese engagement with different African communities. But equally necessary is a constant reminder of the multiplicities of actors, locations, languages, and experiences inherent to “China in Africa.” Responsible analysis should reflect the nuances of language and different perceptions of this complex issue.

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Endnotes:

 [i] Burkina Faso, São Tomé and Príncipe, the Gambia, and Swaziland are not members of FOCAC, as they do not adhere to the “One China” principle and maintain official diplomatic relations with Taiwan.

[ii] China emphasizes the following principles in its relations with Africa, based on the Five Principles of Peaceful Coexistence: sincerity, friendship, and equality; mutual benefit, reciprocity, and common prosperity; and mutual support and close coordination. The only conditionality China applies to its financial support is adherence to the “One China” principle. This contrasts Western policies of financial support, which often include conditionalities (e.g. World Bank and IMF lending clauses regarding human rights and democracy).

[iii] Although Chinese and Western approaches may differ in ideological terms, in practice China’s policies differ little from those of “Western” countries. This is significant as governments tend to make decisions based on strategic interests rather than ideals.

Insa Ewert is a Marie Curie Research Fellow and Doctoral Candidate at the German Institute of Global and Area Studies (GIGA) in Hamburg. This article is partly based on research conducted for her master’s thesis at the University of Vienna.

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