Having, Giving, Taking Understanding China’s Development Cooperation in Africa Ward Warmerdam Having, Giving, Taking Understanding China’s Development Cooperation in Africa Ward Warmerdam 2 © Ward Warmerdam 2015 All rights reserved. No part of this publication may be reproduced, stored in a retrieval system, or transmitted, in any form or by any means, electronic, mechanical, photocopying, recording or otherwise, without the prior permission of the author. ISBN 978-90-6490-049-5 3 Having, Giving, Taking Understanding China’s Development Cooperation in Africa Hebben, geven, nemen Het hoe en waarom van Chinese ontwikkelingssamenwerking in Afrika Thesis to obtain the degree of Doctor from the Erasmus University Rotterdam by command of the rector magnificus Professor dr H.A.P. Pols and in accordance with the decision of the Doctorate Board The public defence shall be held on 9 November 2015 at 10.00 hrs by Ward Warmerdam born in Bangert, The Netherlands 4 Doctoral Committee Promotors Prof.dr. M.A.R.M. Salih Prof.dr. M.N. Spoor Co-promotor Dr. A. de Haan, International Development Research Centre, Ottawa Other members Prof.dr. Li Anshan, Peking University Prof.dr. A.J. Dietz, African Studies Centre, Leiden Prof.dr. W. Hout 5 Table of Contents 1 INTRODUCTION 13 1.1 BACKGROUND 13 1.2 CATEGORIES OF FOREIGN AID 15 1.2.1 DOMESTIC POLITICAL FORCES AND INTERNATIONAL SOCIALIZATION 15 1.2.2 SOUTH-SOUTH COOPERATION 16 1.2.3 COMPLEMENTARITY 16 1.2.4 PRACTICAL IMPLICATIONS OF ‘MUTUAL BENEFIT’ 16 1.2.5 CONTRIBUTIONS TO OWNERSHIP OF DEVELOPMENT 17 2 IS CHINA A LIBERAL INTERNATIONALIST?, 19 2.1 INTRODUCTION 19 2.2 CATEGORIZATION OF HUMANE INTERNATIONALISM 21 2.2.1 INTRODUCTION 21 2.2.2 HUMANE INTERNATIONALISM 22 2.2.3 REFORM INTERNATIONALISM 22 2.2.4 RADICAL INTERNATIONALISM 23 2.2.5 LIBERAL INTERNATIONALISM 24 2.2.6 COMPARISON 25 2.3 HISTORICAL DEVELOPMENT OF CHINESE FOREIGN AID 26 2.3.1 SIX DECADES OF ENGAGEMENT 26 2.3.2 HISTORICAL CONTEXT 26 2.3.3 INITIAL PERIOD (1950-1963) 27 2.3.4 DEVELOPMENTAL PERIOD (1964-1970) 28 2.3.5 RAPID EXPANSION (1971-1978) 30 2.3.6 POST REFORM AND READJUSTMENT (1978 TO PRESENT) 30 2.4 FRAMEWORK ANALYSIS 36 2.4.1 CATEGORIZING CHINA’S FOREIGN AID 36 2.4.2 OBLIGATION 36 2.4.3 MOTIVATION 38 2.4.4 OBJECTIVES 39 2.4.5 INTERNATIONAL POLITICAL AND ECONOMIC ORDER 40 2.4.6 SELF-INTEREST 41 2.4.7 AID CHANNELS 42 2.4.8 STATE AND INTER-STATE INTERVENTION 44 2.5 REALISM 44 2.6 CONCLUSION 45 3 THE DIALECTICS OF CHINA’S FOREIGN AID: INTERACTIONS SHAPING CHINA’S AID POLICY 49 3.1 INTRODUCTION 49 3.2 BACKGROUND 50 3.2.1 DOMESTIC POLITICAL FORCES: AN ANALYTICAL FRAMEWORK 50 3.2.2 CHINESE DEFINITION OF FOREIGN AID 53 3.3 KEY EVENTS IN CHINA SINCE 1949 AND DOMESTIC POLITICAL FORCES SHAPING CHINA’S FOREIGN AID 54 6 3.3.1 THE FOUNDING OF NEW CHINA 54 3.3.2 THE KOREAN WAR 55 3.3.3 FIRST FIVE-YEAR PLAN (1953-1957) 56 3.3.4 THE GREAT LEAP FORWARD AND GREAT FAMINE (1958-1961) 57 3.3.5 THE GREAT PROLETARIAN CULTURAL REVOLUTION 61 3.3.6 REFORM AND OPENING UP 64 3.3.7 TIANANMEN SQUARE STUDENT PROTESTS AND THE SOUTHERN TOUR 67 3.3.8 THE WORLD TRADE ORGANIZATION 70 3.4 SOCIALIZATION AND CHINESE FOREIGN AID 74 3.4.1 JOHNSTON’S THREE MICROPROCESSES OF SOCIALIZATION 74 3.4.2 DIFFERENT FROM THE WEST? 75 3.4.3 THE DEVELOPMENT OF CHINA’S AID PROGRAMME 77 3.4.4 CHINA AND THE INTERNATIONAL AID SYSTEM 80 3.5 CONCLUSION 84 4 SOUTH-SOUTH COOPERATION WITH CHINESE CHARACTERISTICS 87 4.1 CONCEPTS OF SOUTH-SOUTH COOPERATION 87 4.2 DEFINING CHINESE SSC: MUTUAL BENEFITS? 89 4.3 SSC AS THE CORNERSTONE OF CHINESE INTERNATIONAL RELATIONS 91 4.4 CHINA AND THE UN SYSTEM 93 4.5 NORTH-SOUTH DIALOGUE 96 4.6 FORUM ON CHINA-AFRICA COOPERATION 97 4.7 THE ‘GO OUT’ POLICY 99 4.8 CASES IN CHINESE LITERATURE ON SSC 101 4.9 CHALLENGES FACING CHINESE SSC 102 4.10 CONCLUSION 104 5 CHINESE FOREIGN AID AND CHINA’S DOMESTIC DEVELOPMENT EXPERIENCE 108 5.1 INTRODUCTION 108 5.2 THE NATURE AND COMPLEMENTARITIES OF CHINESE AID MODALITIES 108 5.2.1 DETERMINANTS OF CHINESE AID MODALITIES 108 5.2.2 CHINESE AID MODALITIES 110 5.2.3 COMPLEMENTARITY 116 5.3 LESSONS FROM CHINA’S OWN DEVELOPMENT 116 5.3.1 WIDER APPLICABILITY OF CHINA’S DEVELOPMENTAL LESSONS 116 5.3.2 POLICY DEVELOPMENT 117 5.3.3 REFORM-DRIVEN DEVELOPMENT SUCCESSES 118 5.3.4 SOCIAL WELFARE PROGRAMMES 121 5.4 CONCLUSION 123 6 CHINA, UGANDA, AND THE QUESTION OF MUTUAL BENEFITS 127 6.1 INTRODUCTION 127 6.2 FDI AND TRADE IN UGANDA 128 6.2.1 FDI IN UGANDA 128 6.2.2 UGANDA’S TRADE RELATIONS 129 6.2.3 CHINA’S FDI AND TRADE WITH UGANDA 130 6.3 CHINESE COMPANIES IN KAMPALA 132 6.4 POTENTIAL BENEFITS TO THE UGANDAN ECONOMY 136 6.4.1 ASSESSING THE BENEFITS 136 6.4.2 THE BENEFITS OF TURNOVER 136 6.4.3 THE BENEFITS OF INVESTMENTS 138 7 6.4.4 THE BENEFITS OF EMPLOYMENT 140 6.4.5 THE QUESTION OF IMPORTED LABOUR 142 6.4.6 IS THERE LOCAL MANAGEMENT? 143 6.4.7 KNOWLEDGE AND SKILLS TRANSFER 145 6.4.8 MOTIVATIONS FOR EMPLOYEE TRAINING POLICIES 147 6.5 CHINESE AID TO UGANDA 149 6.5.1 CHINA’S RISING IMPORTANCE AS A DONOR IN UGANDA 149 6.5.2 THE ENTEBBE-KAMPALA EXPRESSWAY 153 6.5.3 THE MANDELA STADIUM 154 6.5.4 THE FRIENDSHIP HOSPITAL AND MEDICAL TEAM 155 6.5.5 AGRICULTURAL DEMONSTRATION CENTRE 155 6.6 CONCLUSION 157 7 TAKING OWNERSHIP: LESSONS ON OWNERSHIP FROM CHINA’S DOMESTIC DEVELOPMENT AND CONTRIBUTIONS OF ITS ENGAGEMENT 160 7.1 INTRODUCTION 160 7.2 ANALYTICAL FRAMEWORKS 162 7.2.1 TWO OVERLAPPING FRAMEWORKS 162 7.2.2 NEGOTIATING CAPITAL 162 7.2.3 OWNERSHIP AND CAPACITY 163 7.3 CHINA’S DEVELOPMENT OWNERSHIP 164 7.4 COMPARISONS OF NEGOTIATING CAPITAL 165 7.4.1 IDENTIFYING SUCCESSFUL AID NEGOTIATORS 165 7.4.2 POLITICAL CONDITIONS 165 7.4.3 ECONOMIC CONDITIONS 167 7.4.4 INSTITUTIONAL CONDITIONS 172 7.4.5 IDEOLOGICAL CONDITIONS 175 7.5 CHINA’S CONTRIBUTIONS TO RECIPIENT OWNERSHIP 176 7.6 CONCLUSION 178 8 CONCLUSION 180 APPENDIX 1 ZHOU & ZHAO’S PRINCIPLES COMPARED 185 APPENDIX 2 TRADITIONAL DONOR AID COMMITMENTS BY PURPOSE 186 APPENDIX 3 DRAFT INTERVIEW SCHEDULE ON PARTNERSHIPS 190 APPENDIX 4 CHINESE VERSION OF DRAFT INTERVIEW SCHEDULE ON PARTNERSHIPS 194 APPENDIX 5 SECRETARY’S JING’S RESPONSE TO PARTNERSHIP INVESTIGATION PROPOSAL 197 APPENDIX 6 SURVEY QUESTION LIST 198 APPENDIX 6 CHINESE VERSION OF SURVEY QUESTION LIST 199 APPENDIX 7 NEW CONTACT LIST FROM ECONOMIC COUNSELLOR’S OFFICE 200 APPENDIX 8 LIST OF QUESTIONS FOR DATA ANALYSIS 206 APPENDIX 9 LIST OF POSSIBLE ANSWERS TO QUESTIONS IN DATA ANALYSIS 208 8 APPENDIX 10 CHINESE FOREIGN AID STATISTICS 213 APPENDIX 11 FORMS OF INTERNATIONALISM 216 REFERENCES 222 9 Acknowledgements First of all, I thank Bahá’u’lláh without whom none of this would have been possible. I thank my wife and daughter who have stood by me and made countless sacrifices so that I could complete this study. I also to thank my parents who have always been eager to support us whenever we needed it. There are a number of other people without whom this study would not have been possible. I deeply thank Arjan de Haan for having inspired this research, for helping me get on my feet, and for his constant support. I thank Professor Mohamed Salih and Professor Max Spoor for their critical insights at crucial junctures that helped shape this study. I heartily thank Professor Meine Pieter van Dijk, who took me under his wing, carried out fieldwork together with me, and ceaselessly and diligently provided me strong academic and moral support even though he was never required to do so. I also thank Professor Peter van Bergeijk, who was a constant source of moral support. Many other people also helped me complete this study in different ways and at different times. These include, but are not limited to, Wil Hout, Andrew Fischer, Sarah Hardus, Sanne van der Lugt, Peter Konijn, Jan Willem van Gelder, Frank Pieke, Deborah Brautigam, Ton Dietz, Frans-Paul van der Putten, Mayke Kaag, Tang Xiaoyang, Huang Meibo, Liu Haifang, Arjan Kersten, Michelle Luijben and Matthias Stepan. 10 Abstract In the last decade or so China has re-emerged as an important actor in the international development cooperation arena at a time when development cooperation was undergoing reflection and critical revaluations in many traditional donor countries. The academic and policy debate on China's re- emergence as a donor has been divided between proponents who saw a new hope for the developing world, where lessons for the developing world could be drawn. Opponents or critics, on the other hand, posed a critical stand against China’s non-adherence to the common standards, principles and practices of traditional donors considered fruits of decades long international development experience. However, despite a myriad of publications on China international development policy and practice, much is still needed to fully grasp its architecture. How is it developed? What motivates it? How's does China conceptualize foreign aid? Does it draw from its own experience as an aid recipient and as a developing country? What are some of the practical implications of Chinese foreign aid? This thesis seeks to answer these questions by drawing heavily on Chinese sources, bringing together various complementary literatures supported by field research in Uganda, a developing country and recipient of Chinese foreign aid and investment and a trade partner.