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Economic Commentary Share
 

China's role in the economic life of developing countries, such as Ethiopia, has become a subject of intense interest to many scholars. China's indifference to values often upheld by the liberal West but compromised by governments in developing nations and its role in lubricating their economies regardless, causes fear, observes Getachew T. Alemu, who works at the Ministry of Finance and Economic Development (MoFED). He argues that Ethiopia, focusing on building its institutions, can still be on good terms with both the East and West.

China: Lifting or Lulling Ethiopia?

 

The shift in the global power balance towards the East, with a larger weight being contributed by China, has become the reality of the day. Being the manufacturing hub of the century, China has increasingly become a prominent actor in global issues. From free trade to global warming, from anti-terrorism to nuclear proliferation, and from human rights issues to Internet censoring, there seems to be nothing that can be done without engaging China.

At a time, when the economies of United States and Europe shattered to historic low performance and their financial sectors slid to a complete crash, it was China that appeared to be the lifesaver with its over two trillion dollars in reserves. In the recent earthquake that devastated Haiti, China was quick to arrive there with a helping hand, even before generous Europe.

In the defining moment of the climate change conference last December 2009 in Copenhagen, China was seen as the detrimental force to ink a consensual and binding climate accord. Though the conference failed to deliver a binding global Carbon dioxide emission reduction threshold, it has nonetheless passed, witnessing China becoming a giant but poor player in the global arena.

Despite its strong economy, growing global presence, huge human capital, increasing technological capability and potent military capacity, China has been getting its share of blame from activists of human rights and the free trade movement, as well as from leaders of civil society organisations, Internet giants and the West at large.

The causes for the blame are indeed many. From its closed political environment to its high rate of corruption and hideous human right records; from a one party governance system to high income inequality, as well as high government intervention in business and the economy; from unendurable Internet censorship to flawed labour relations; China has plenty in store as setbacks. The blame has continued to print a hazy picture on the outstanding economic achievement of the nation.

Worse is the quiet and non-interventionist foreign policy of China. Its motto of independent foreign policy for peace has made the allegations grow each day the nation fails to employ its political leverage to stop human sufferings in Sudan, Burma, North Korea, Chad, Angola, Mozambique, and Zimbabwe. Furthermore, some analysts believe that the "all-out" and "no-strings-attached" aid and loans that the country extends to developing countries, especially those in Africa, has back-pedalled significant reforms in governance, freedom of expression, the independent development of the media, civil society operations, freedom of association and democracy at large, which liberals have been championing for a long time now.

China is being considered by some African governments as an alterative to the imposing Western nations and their conditional finance. Considering China as an alternative seems to get deeply ingrained among African leaders. Not surprisingly, this popular hype has also taken hold of ground in Ethiopia, the single largest non-oil economic partner of China in Africa.

"It is not only possible but highly probable that the Chinese will take steps that would widen the window of opportunity for Africa," said Prime Minister Meles Zenawi on the annual African economic conference of 2009.

The involvement of China in the Ethiopian economy is mainly in the building of public infrastructure, where its companies undertake transport, telecommunications and power infrastructure projects. Lately, it has become engaged in manufacturing, pharmaceuticals, oil exploration, agriculture and alternative energy sectors.

With an investment outlay of 960 million dollars between 1992 and 2007 spent by Chinese companies, if we take the Ethiopian Investment Agency (EIA) numbers for example, China's hold in Ethiopia is getting firm. Yet, with all the shortcomings of its "business only" attitude and "non-interference" policies, there is a fear that Chinese involvement, which some have even nicknamed the "Chinese Model," will affect the democratisation process of our nation.

What lies behind this fear and what shall be done to avoid all the ill-effects of this eastward friendship needs a deeper look.

The diplomatic relations between China and Ethiopia, both culturally rich countries of the planet, have been evident since Ethiopia's support to the admission of China to the United Nations, in 1971. The friendship passed through a handful of milestones, including Emperor Haile Selassie's visit to China in the 1970s and Meles's recent visit in 1995. Ethiopia co-hosted the second and fifth Forum on China-Africa Cooperation.

Suffice Ethiopia's foreign affairs, security policy and strategy affirmation that Sino-Ethiopian diplomatic relations are healthy.

However, Ethiopia has not explored the Chinese market as expected, although the strategy foresees to enhance the cooperation in trade, human development, technology transfer and development finance. The Economic Diplomacy agenda that the Ethiopian Foreign Ministry has adopted in recent years seems to be fruitful, as can be seen from the increase in Sino-Ethiopian bilateral trade volumes from 100 million dollars in 2002 to 860 million dollars in 2007. However, this has a negative trade balance hugely biased towards China, with its exports to Ethiopia amounting to 565 million dollars. Chinese imports from Ethiopia were at 95 million dollars in 2007.

The strong presence of Chinese companies in Ethiopia's economy is felt in the infrastructure sector. Many Chinese companies and joint ventures, such as the China Roads and Bridge Company (CRBC), ZTE, ZPEB, and CNWRHEC are engaged in building infrastructure from hydroelectric power plants to

 

 
 
 
 
   
   
   
 
 
 

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