odi china jh2

Slide1: 

The rise of China: challenges for development policy and strategy John Humphrey

Slide2: 

China matters and it matters big! DFID, “Promoting growth in Africa: working with China” October 2006

Challenges in three areas of development policy: 

Challenges in three areas of development policy Impact on developing countries As a model for other countries Through trade investment and aid As a donor Regional leadership Global public goods

Challenge for UK and Europe : 

Challenge for UK and Europe Working with China: global public goods financial stability trade reform. climate change security, etc. Working towards the MDGs: China’s policies matter Influence (i.e. change) China on trade policy on governance on donor coordination

Two bases for Western influence in development assistance and policy: 

Two bases for Western influence in development assistance and policy Economic power Soft power Both being challenged

Economic Power (1): 

Economic Power (1) Trade China a market for resources, intermediate good and final products One of focal points of Asian trade Measurable impact on GDP growth in some Latin American countries Third largest trading partner for Africa – first by 2010 Some preferential access to Chinese market: Early Harvest Programme, tariff exemptions for poorest African countries Investment Infrastructure spending in Africa and the Mekong region FDI rising: $16.1bn in 2006

Economic Power (2): 

Economic Power (2) Loans and debt relief Aid infrastructure, health, education, training China is quite effective in these areas aid to Africa, $2.7bn in 2004 the promises of the November 2006 Beijing summit None of this power anywhere close to the Triad Economies – US, EU and Japan But it is an unexpected challenge

Soft power (1)Credibility: development paradigms: 

Soft power (1) Credibility: development paradigms Not what China is, but what it will be: Modernity: the lure of success Current trends will lead China to be even more important, and quite soon It is the future Rapid growth: a different path much faster than Europe and the US faster than countries that have followed IMF and World Bank advice

Soft power (2) China’s development posture: 

Soft power (2) China’s development posture Acceptance in Africa China has a discourse of mutual benefits and cooperation among equals: Bandung - five principles. non-interference, peaceful coexistence, respect for sovereignty, etc. Conditionality does exist Taiwan No criticism of China’s human rights Tied aid, including labour

What to do? The “taming” perspective: 

What to do? The “taming” perspective Bring China into line with Western practice Involvement with the DAC Involvement with donor groups in developing countries China’s view: “little brother”: entry into fora were the rules have been set by Western countries hypocrisy over-confidence in western solutions

Are we powerless?: 

Are we powerless? UK and Europe as increasingly marginal in the 21st century Little leverage: aid for China is low, and being phased out by various donors

Addressing China’s needs and concerns: 

Addressing China’s needs and concerns Responsibilities of increasing power, pressure from developing countries: for market access for export restraint dumping actions Sensitivity over Africa’s perceptions of China lack of knowledge: influence is a surprise concerns about some Chinese firms – construction, the Kampala riots assumption that trade must be good being questioned pressure for more engagement in multilateral fora

Scope for engagement: 

Scope for engagement China is feeling its way (for the time being at least) China is changing: policy still being formed Interaction needed at multiple levels: from scholarly exchanges to ASEM Support for more interaction with African scholars Cross-country collaboration in Europe