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149,777 views|Aug 4, 2018,11:20 am
What Is China Doing In Africa?
Panos MourdoukoutasContributor
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(Photo by Mark Schiefelbein- Pool/Getty Images)
Chinese corporations are all over Africa. In June 2017 a McKinsey & Company report estimated that there are more than 10,000 Chinese-owned firms operating in Africa.
What are Chinese corporations doing in Africa? That’s a highly controversial issue.
The reason Chinese corporations are in Africa is simple; to exploit the people and take their resources. It’s the same thing European colonists did during mercantile times, except worse. The Chinese corporations are trying to turn Africa into another Chinese continent. They are squeezing Africa for everything it is worth.
This is the view several African politicians have. The Zambian politician Michael Sata was one of them. At least he was before being elected President of Zambia in 2011. He wrote a paper presented to Harvard University in 2007 that said “European colonial exploitation in comparison to Chinese exploitation appears benign, because even though the commercial exploitation was just as bad, the colonial agents also invested in social and economic infrastructure services Chinese investment, on the other hand, is focused on taking out of Africa as much as can be taken out, without any regard to the welfare of the local people.” (quoted in Scott D. Taylor’s “The Nature of Chinese Capital in Africa, Current History, May 2018, p. 197)
Sata’s bold position got some support by a deadly blast at an explosives factory partly owned by the Chinese state killing 50 Zambian workers.
Africa’s Equities Have Underperformed Emerging Markets
ETF 5-year performance (%)
VanEck Vectors Africa Index (AFK) -21.69
iShares China Large-Cap (FXI) 22.14
iShares MSCI Emerging Markets (EEM) 12.32
Source: Finance.yahoo.com 8/4/2018
Globalization managed to skip Africa by for years. There were several reasons for this. Africa was considered to have poor infrastructure, political instability, and low income. “The trade in oil, gas, gems, metals and rare earth minerals wreaks havoc in Africa. During the years when Brazil, India, China and the other “emerging markets” have transformed their economies, Africa’s resource states remained tethered to the bottom of the industrial supply chain,” writes Tom Burgis in The Looting of Africa (New York: Perseus Books Group, 2015). While Africa accounts for about 30 per cent of the world’s reserves of hydrocarbons and minerals and 14 per cent of the world’s population, its share of global manufacturing stood in 2011 exactly where it stood in 2000: at 1 percent.
Everything changed when China came along. The country was desperate for raw materials and energy to power their growing manufacturing capacity. They put Africa on the globalization map. The continent was placed right next to Shanghai in terms of Beijing’s business priorities.
Africa was at the top of the Beijing economic agenda. It was an easy and convenient target. Chinese leaders sent business delegations to every capital in Africa year after year. These delegates secured infrastructure projects and proposed trade deals, converting Africa into a “second continent” for China. Metaphorically, that is.
Howard W. French describes the situation in the book China’s Second Continent (New York: Alfred A. Knopf, 2015), explaining; ““Sensing that Africa had been cast aside by the West in the wake of the Cold War, Beijing saw the continent as the perfect proving ground for some Chinese companies to cut their teeth in international business. It certainly did not hurt that Africa was also the repository of an immense share of global resources—raw materials that were vital both for China’s extraordinary ongoing industrial expansion and for its across-the-board push for national reconstruction.”
The long arm of globalization had touched Africa. Trade between China and the “second continent” of Africa reached close to $300 billion in 2015.
Not everyone feels that China is attempting to turn Africa into a Chinese colony though. One such person is Ching Kwan Lee, a professor at the University of California. Lee argued in the Specter of Global China: Politics, Labor, and Foreign Investment in Africa (University of Chicago Press, 2017) that the investments the Chinese state made in Africa weren’t made as “imperialists” or “colonialists”. Nor were ones by private corporations. Chinese corporations aren’t being motivated by profits. They have a long-term horizon in mind, and they make for good local citizens. The Chinese people in Africa pay their fair share of taxes to the countries they do business with. Lee goes so far as to contend that Chinese corporations actually promote African independence and autonomy, rather than the usual dependence that is associated with colonialism. China is helping Africa to stand by themselves, rather than making Africa dependent on them.
Maybe it would be best to avoid sharing this opinion with the Pakistanis and Sri Lankans that are heavily indebted to China. These are the people that are most at-risk of becoming modern-day colonies for Beijing.
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I’m Professor and Chair of the Department of Economics at LIU Post in New York. I also teach at Columbia University. I’ve published several articles in professional…MORE
2,815 views|Sep 12, 2018,2:45 pm
The Past, Present And Future Of Global Money Transfer
OFXBRANDVOICE
By Teresa Meek
The exchange of goods and services is older than civilization itself. Though the methods have changed, the goals have remained constant: establishing trust and getting a fair deal. Here’s a brief history of money transfers through the ages — and a glimpse at a possible future.
The metal implements were rounded off, possibly to prevent accidents. They evolved into coins — the first money.ISTOCK
From Barter To Coins
In the beginning — long before wire transfers or central banks or even coins — there was barter. Tribes in Mesopotamia and Phoenicia began trading livestock as early as 6000 BCE, adding grains and vegetables as agriculture developed.
Driving cattle and hauling heavy sacks of grain was cumbersome. Around 1200 BCE, Chinese merchants began using cowrie shells and metal knives and spades as substitutes for goods they delivered later. The metal implements were rounded off, possibly to prevent accidents. They evolved into coins — the first money.
By 500 BCE, coins were circulating in Turkey, Greece, Persia and Macedonia. Later, they spread to the Roman Empire. Nonetheless, ancient Roman soldiers may have been paid at least partially in salt, a practice that — according to Pliny the Elder — explains the word “salary.”
The Bumpy Move To Paper
Paper currency first appeared in China sometime between 600 and 900 CE. Light, foldable and easy to carry, paper money made transfers easier. But in a foreshadowing of modern problems, too many bills were created, causing bouts of massive inflation.
In medieval Europe, merchants used short-term bills of exchange with foreigners, settling their accounts at trade fairs. Later, bank bills arose. They were based on gold or silver, with the premise that people could exchange them for coins. In 1816, England designated gold as the official standard of value.
Bills and coins circulated freely, but they could also be lost or stolen. In the 16th century, checks began to appear, and they eventually became the dominant means of value transfer for both businesses and individuals.
Transporting money or checks by ship or horse-delivered mail could take months. The invention of the telegraph enabled merchants to use Western Union for money transfers from 1851 on, greatly speeding the pace of transactions and bringing businesses into the modern era.
From Gold To Governments
Money began to travel faster and in large volumes. Gold worked as a value standard because so many people accepted it; currencies, however, were another matter. Bank-issued bills weren’t always reliable or universally accepted. Many countries countered this issue by establishing central banks intended to standardize and stabilize their currencies. The United States — whose founding fathers had mixed opinions on central banks — finally established one in 1913, with the creation of the Federal Reserve System.
Though central banking made currencies more stable, pegging them to gold made them inflexible. During World War I, some countries temporarily abandoned the gold standard so they could print more money to finance the war.
The Great Depression saw countless runs on banks, as frightened people rushed to exchange the bills they no longer trusted for gold. As a result, Britain dropped the gold standard in 1931, followed by the United States a couple of years later.
Today, the value of a currency depends not on gold, but on the reputation and laws of the issuing country. The U.S. dollar, backed by a stable government, forceful laws, a strong economy and plenty of Treasury notes, has long been considered the world’s reserve currency.
In Credit We Trust
To many people, the dollar is money, butPerry Mehrling — a professor of international political economy at Boston University — says that idea is wrong. All money is a system of liability and credit, he notes, and what is circulating is really a promise to pay. Without credit, money systems would be too inelastic to function.
Even back in the barter days, there was typically a time lag before goods were exchanged, he said. Otherwise, not much trading could get done.
Trust has always been essential to money transfers. The only thing that has changed is whom or what we trust
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