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China's 'Marshall Plan' changing fortunes

Updated: 2014-01-24 10:14
By Andrew Moody and Wang Chao ( China Daily Africa)

 China's 'Marshall Plan' changing fortunes

Ethiopian President Mulatu Teshome says China's investment is transforming the fortunes of Africa. Wang Chao / China Daily

Approach to Africa differs markedly from that of big international institutions, president says

Ethiopian President Mulatu Teshome believes China's investment in Africa is like a new Marshall Plan that is transforming the fortunes of the continent.

He equates the role that China Exim Bank and China Development Bank play in building infrastructure on the continent to that of the European Bank for Reconstruction and Development, through which US aid to Europe was channeled after the devastation of World War II.

"These institutions are playing a very significant role in Africa's economic development," he says.

"I might say personally that these institutions of China are carrying out the same sort of role in Africa as to what the EBRD did after World War II in Europe under the Marshall Plan. There are no big words (mentioned) from either side about this but in the financing of these big heavy projects, it is the same."

Mulatu, who became president in October, was speaking in the reception hall of the vast Presidential Palace in Addis Ababa, which was once the residence of Emperor Haile Selassie.

The 57-year-old is regarded as very much a Sinophile, speaking fluent Chinese and having spent more than a decade in Beijing, first as a student and lecturer and then as his country's ambassador in the mid-1990s.

China through such bodies as the Forum on China-Africa Corporation, formed in 2000 and which held its fifth conference in Beijing in 2012, has moved the aid agenda away from humanitarian relief efforts to trade and business, he says.

"The old colonial masters or the Western powers shaped international aid architecture in the 1980s and 1990s which was very much an humanitarian aid agenda. The Chinese have changed it to one that is based on economic interdependence through trade and investment."

He insists that China is not trying to somehow control Ethiopia or Africa as a new colonial power as many in the Western media often suggest.

"China has never imposed its will on Ethiopia. For sure, I know that. China and Ethiopia have never talked about each other's policies but we have an excellent relationship, government to government, people to people and party to party."

Mulatu, who met Chinese Foreign Minister Wang Yi in Addis Ababa earlier this month, says China's approach is different to that of the World Bank and other Washington-based institutions in that it does not try to impose conditions on African countries.

"There are no strings attached to the investment or the aid China is giving African countries.

"All these countries have got their own domestic policies, different political views and attitudes and different government systems, and China is basically complying with all of them."

Mulatu, who is from Arjo town in Welega province in western Ethiopia, came back from Turkey, where he was ambassador, to become Ethiopia's fourth president, succeeding Girma Wolde-Giorgis, who had completed two six-year terms.

He is a member of the Ethiopian People's Revolutionary Democratic Front, which has close links to the Communist Party of China.

Mulata's connection with China began when he went to study there at the Beijing Language and Culture University just after Chairman Mao died in 1976.

"From the airport we went directly to Tian'anmen Square, where the body of Chairman Mao was lying in the Great Hall of the People. It was within 15 to 20 days of his death."

He went on to study for a degree in philosophy and political economy, followed by a master's and a doctorate in international law at Peking University.

"When I first went the 'cultural revolution' (1966-76) was no longer in practice but many of my classmates were telling us stories about the good things about going to the countryside and serving the people. I witnessed the coming of Deng Xiaoping Theory and the opening up of China to the outside world."

Mulatu says he has been left with a vast respect for Chinese culture and the people.

"What makes me admire the Chinese people is that they are hard working, very patriotic and whether they are rich or poor, they all say they work for the motherland."

He went on to study at the Fletcher School of Law and Diplomacy at Tufts University in the United States before embarking on a political career, which has taken in being agriculture minister and speaker of Ethiopia's upper chamber, the House of Federation.

Ethiopia is one of the few African countries whose development model is similar to that of China.

Unlike many other African countries, it is not resource rich, so it has emphasized agricultural reform and developing a vibrant manufacturing sector.

One of the biggest manufacturers in the country is Chinese shoemaker Huajian, which plans to create 100,000 jobs over the next five years. It is based in the Chinese-owned Eastern Industry Zone on the outskirts of Addis Ababa.

"What we are witnessing in Ethiopia nowadays in terms of the country's manufacturing capacity would have been unimaginable 10 years ago. Government officials would have never conceived we could have a single factory where 10,000 workers are employed under one roof."

He believes Ethiopia and other African countries could capture a significant proportion of the 80 million manufacturing jobs China is expected to shed over the next few years because of rising labor costs.

"We are going to phase in while China is phasing out. The Chinese textile industry cannot be globally competitive if it continues with a high cost of production. In Ethiopia our comparative advantage is low costs of production, cheap labor, cheap electricity and cheap raw materials."

He says Chinese companies can set up in Ethiopia and sell to the US and the European Union and avoid customs duty they would face if they were based in their own country.

"Once they are fully integrated into the Ethiopian economy what they make won't be called Chinese but Ethiopian. We intend to have a textile sector employing 500,000 in the coming two years from a current level of less than 50,000. I believe that is possible."

Mulatu believes some of the optimism about Africa's economic outlook as highlighted in a recent McKinsey report, Lions on the Move: The Progress and Potential of African Economies, is not misplaced.

He expects Ethiopia, still known for its famines and the Live Aid relief effort of the 1980s, to become a middle-income country, according to the World Bank definition of $1,036 GNI per capita, within 12 years.

"This is my belief. For Ethiopia we are counting 12 years maximum to rank as a middle income country. By then Ethiopia will be very different from what it is today.

"Personally though I don't think per capita income is really a measure of wealth. If you have $1 a day to live off in Ethiopia you are not poor. You can feed yourself. In many countries $1 is just a tip after having a coffee. Having a $1,500 per capita income is not going to make you middle income in Tokyo or Switzerland."

Mulatu says that all countries, including China, have a vested interest in Africa's development because of the market opportunities across the continent with a 1 billion potential consumers.

"If Africa is extremely poor and a basket case Chinese companies may produce a lot but they will have fewer markets. So it is in the interest of China and the whole world to have a prosperous and stable Africa."

Mulatu believes the continued rise of China will have a fundamental impact on the world that will also benefit Africa in the long term.

"The world is not going to be the same. I think it is going to lead to a more equal and equitable distribution of both resources and the balance of international relations," he says.

"If China continues with what it is doing today with Africa, then I think it will enable it to extricate itself from backwardness and poverty."

Contact the writers at andrewmoody@chinadaily.com.cn

(China Daily Africa Weekly 01/24/2014 page8)

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