China’s opaque largesse may come at too steep a price
Are we doing deals with China that may in the future cost us our sovereignty? In one case, we know it has already happened. When Iqbal Survé bought the Independent newspaper group a few years ago he did it with a large contribution from the Chinese. Last week an Independent journalist lost his column after criticising China’s treatment of its Muslim population in the northwest.
President Cyril Ramaphosa has declined to reveal the details of loans granted by the China Development Bank to Eskom and Transnet. To his credit, he has at least confirmed that a $2.5bn (R37bn) loan to Eskom announced recently (to help it complete the Kusile power station) is denominated in dollars. That means it will have to be paid back in dollars. The Transnet loan, for R4bn, is denominated in rands.
More of the latter would be just fine. Ramaphosa went to China for an Africa summit and came back with, apparently, pledges of almost R400bn from the Chinese. There are no details about what currency that investment or loan might be denominated in or what it will be spent on.
That’s the infuriating part of having our leaders deal with the Chinese. We keep being assured that we are in no danger of losing anything. Great.
But the Mail & Guardian this week quotes international relations & co-operation minister Lindiwe Sisulu at some length, defending the new loans. She says there is “no way we can grow our economy on our own” and that SA does not want to be “tied to a particular market because historically and geographically we were tied to Europe … If we want to industrialise at the rate that we would like to industrialise, we would like to do that on the back of somebody that we can depend on.”
In the old days when we wanted to industrialise, Eskom and Transnet borrowed money in the bond markets, where all information, down to the tiniest condition, was known. Schoolchildren could look it up. Now, because of the damage the ANC in general and the Zuma years in particular have caused to the economy, it is increasingly expensive to borrow transparently in the bond markets. Eskom’s debt is junk rated.
So we’re not falling into Chinese arms because we want to but because we have to. And the Chinese like to do things government to government. The markets are too, um, difficult.
And they like to make a mark. Western aid comes in the form of health programmes and education and training. The Chinese like to leave behind big buildings or monorails or harbours. For me the most laughable is the huge and utterly empty airport terminal in Livingstone, Zambia. But there are many dozens of examples around Africa.
Calling big empty buildings infrastructure is a little like calling a boat race “shipping” but, still, we do need investment and this is where the inner socialist comes out in the ANC, even Ramaphosa.
What a confident country does when it wants to industrialise is invite the companies that already make the things people want to buy to come and make them in their country. Thailand did that and so, to some extent, did South Korea. Today both are industrial powerhouses because they made everyone welcome.
Instead of going out to the world, however, we prefer the ideological route. Fortunately, the Chinese have money and ambition — but Sisulu’s phrase, “we would like to [industrialise] on the back of somebody we can depend on” has a desperate ring to it. We’re already industrialised, minister, but we’re chasing old friends away with bad policy. Why?
The Chinese like Ramaphosa. He has signed a deal in which the Chinese will effectively build and own a new, 4,600MW coal power station. That’s the equivalent of another Medupi and it won’t feed into our national grid. It’ll feed a 60km² “metallurgical” economic zone in which the Chinese will produce power and run an integrated steel mill and a variety of other iron and steel operations. The department of trade & industry has confirmed the project.
It sits on the railway line north into the rest of Africa and you can bet that some of the new money Ramaphosa returned with will build new lines or “corridors” from the China Zone in Limpopo to Richards Bay.
But making steel isn’t industrialising. Steel’s a mere commodity. It’ll be interesting to see how many local firms and how much local labour goes into China Zone. Because once signed and sealed, it’ll be all but Chinese territory. All we can hope is that Ramaphosa has extracted a price commensurate with the privilege he’s given to Xi Jinping.