Conclusion

By way of conclusion, this chapter focusses on two issues. The first is how China’s relations with Sub-Saharan Africa (SSA) and Latin America and the Caribbean (LAC) are likely to be affected in the future by recent changes in the Chinese economy and its internationalization. Since 2012, the Chinese economy has been characterized by a ‘New Normal’ of slower economic growth and a rebalancing of the economy towards increased domestic consumption and less reliance on investment and exports. China also launched the One Belt, One Road (OBOR) initiative in 2013, which seeks to link China with other Asian countries and Europe through major investment projects. The second issue concerns the continuing tensions that derive from the asymmetric economic relations between China and the two regions and whether steps will be taken to resolve them.

Social, Political, and Environmental Impacts in Latin America

Rather less has been written about the social, political, and environmental impacts of China on Latin America and the Caribbean (LAC) than the economic impacts. In terms of social impacts, the chapter considers the effects in terms of both employment and the way in which Chinese companies in the extractive industries have affected local communities. In LAC, discussion of the political implications have mainly focussed on whether or not China’s growing presence represents a threat to US interests in the region, but there is no evidence that China is exercising undue political influence in the region as the case studies of Brazil and Venezuela illustrate. There is little systematic evidence concerning the environmental impacts, although the case of soybeans illustrates the potential negative consequences of growing demand from China.

Social, Political, and Environmental Impacts in Sub-Saharan Africa

Some of the most controversial aspects of China’s economic presence in Sub-Saharan Africa (SSA) relate to the social, political, and environmental impacts. Many of the claims that are made are based on anecdotal evidence, and there is a need for more systematic research on these aspects. In terms of social impacts, the chapter discusses employment, wages, working conditions, and labour rights. Political issues addressed include claims that China’s involvement supports authoritarian regimes, encourages corruption, and leads to conflict and political instability. These claims are not generally supported, and SSA countries have benefitted from the increased policy space that Chinese involvement gives them. The environmental effects of both increased exports to China and the activities of Chinese firms in SSA are analyzed. Contrasting case studies illustrate the negative impacts of China on forestry, and the positive effects of Chinese support for wind and solar power.

China’s Economic Expansion in Sub-Saharan Africa

The chapter documents the growth of economic relations between China and Sub-Saharan Africa (SSA), focussing on trade, foreign direct investment, Chinese construction and engineering projects, loans, and aid. The chapter highlights the way in which these are sometimes combined in resources-for-infrastructure deals. It shows the variety of different actors involved in these relationships, including state and non-state actors, on both the Chinese and African sides. It then discusses the role of strategic diplomatic, strategic economic, and commercial objectives in the growing Chinese involvement in SSA. It also addresses questions of African agency and the interests of African actors in economic relations with China. The impact of political, strategic economic and commercial factors on different types of economic relations is then analyzed econometrically.

The World’s Wallet?

China’s economic success has led to the accumulation of the world’s largest foreign exchange reserves. The chapter discusses the role played by Chinese sovereign wealth funds in reinvesting reserves abroad, as well as the growth of foreign lending by the Chinese banks and the expansion of export credit, with particular attention to the activities of the China Development Bank and the China Exim Bank. Chinese aid has been particularly controversial, with widely differing claims regarding the volume of aid that China gives. The chapter discusses the scale of aid and the key features of the way in which Chinese aid is organized. It identifies the main drivers of Chinese financial flows, distinguishing between the different types. It concludes with a discussion of the wider implications of the growth of Chinese finance for development finance and the access of countries which have been marginalized by traditional lenders.

Going Global

The chapter documents the growth of Chinese outward direct foreign investment (OFDI) and overseas projects carried out by Chinese contractors. The chapter discusses some of the problems in measuring Chinese OFDI. It shows the continuing importance of state-owned enterprises in China’s Go Global policy and discusses whether the international expansion of Chinese firms is primarily state driven or market driven. It shows that although political objectives played a role in the early expansion of Chinese firms, strategic economic factors and commercial objectives have played the most important roles in recent years. Resources and markets have been major drivers of the internationalization of Chinese firms. Chinese firms have also been involved in strategic-asset-seeking investment in developed countries.

Introduction

This is a brief introduction to the re-emergence of China as a global economic power, emphasizing the role played by changes in the global economy from the 1970s and the internal reforms in China from the end of the 1970s. It describes briefly the importance of economic relations with China for Sub-Saharan Africa (SSA) and Latin America and the Caribbean (LAC), and introduces contrasting views of the impact of China on SSA and LAC. It emphasizes a framework which highlights both the direct and indirect impacts of China on the two regions, and identifies both positive and negative effects. It provides an outline of the main parts and chapters of the book.

China’s Economic Impacts on Latin America

The chapter considers three aspects of China’s economic impact on Latin America and the Caribbean (LAC). It looks first at the direct and indirect effects of increased Chinese demand for commodities, which benefitted a number of LAC economies in the short and medium term. China’s role in financing and building infrastructure in the region has been less significant than in Sub-Saharan Africa (SSA). The impact on manufacturing has been of much greater concern, with all the main countries in the region facing increased competition in the domestic market, and those that had developed significant exports of manufactures also losing out in third markets. Three case studies of Brazil, Mexico, and Chile illustrate different patterns of economic relations between China and Latin America.

A Comparative Perspective on China’s involvement in Sub-Saharan Africa and Latin America and the Caribbean

The chapter brings together the findings of the previous two parts of the book to provide a systematic comparison of China’s economic involvement in Sub-Saharan Africa (SSA) and Latin America and the Caribbean (LAC). It compares the history of relations between China and the two regions, and discusses the key actors involved. It shows that Chinese interests in economic engagement in SSA and LAC are broadly similar. However, there are important economic, political, and institutional differences between the two regions which lead to important differences in terms of economic, social, political, and environmental impacts. However, it is also important not to lose sight of the heterogeneity that exists within each region.

China’s Economic Expansion in Latin America and the Caribbean

The chapter documents the growth of economic relations between China and Latin America and the Caribbean (LAC), focussing on trade, foreign direct investment, Chinese construction and engineering projects, loans, and aid. It shows the variety of different actors involved in these relationships, including state and non-state actors on both the Chinese and Latin American sides. The chapter then discusses the role of strategic diplomatic, strategic economic, and commercial objectives in the growing Chinese involvement in LAC. It also addresses questions of Latin American agency and the interests of local actors in economic relations with China. The impact of political, strategic economic, and commercial factors on different types of economic relations are then analyzed econometrically.