week 6

Question 1

varieties of Chinese capital

Answer 1

fragmented authoritarian vs China inc
state-owned companies dominate during the early encounters
private firms now taking the lead
number vs size of investment projects
SOEs (autonomous not independent)
private (limited oversight or interference by the Chinese state or embassies)
different attitudes toward risk-taking and profit-making

Question 2

pull factors

Answer 2

vast market opportunities
market potential
resources
limited competition
labour costs (vis-a-vis surging wages in China)
political stability and low crime rate (only in Zambia)

Question 3

Strategies

Answer 3

Producing products customized to meet local demand (e.g. mattresses, furniture, batteries, ceramics, steel)
Tailoring their investment to available local resources- e.g. tropical wood, clay, metal scrap, tobacco
Adapting to the host country’s changing economic circumstances
Pragmatic experimentation and a steep learning curve

Question 4

Reasons for lack of cooperation between Chinese investors with Zambian firms

Answer 4

Guanxi and Chinese enclaves
Low levels of trust
Cultural and language barriers
Access to communication tools (WeChat)
Perceived unreliability of Zambian/Angolan firms
Weak manufacturing and technological capacity
Vertical investment (e.g. acquiring your supplier)

Question 5

Between 2013 and 2014, Ghana’s
relations with China gained global
attention due

Answer 5

to activities of illegal mining in parts of the country
- This occurred during a public uproar in Ghana, over a $3 billion Chinese loan that the Ghanaian government secured in 2011
- This created a perfect storm that put the Ghanaian government in a difficult position, deciding how to appeal to their people while maintaining positive relations with China

Question 6

Causes of anti-chinese sentiment in Ghana

Answer 6

Competition with local businesses for the domestic markets, often with cheap goods like textiles
- Ironically affordable for the local population but bad for local businesses
Increased Chinese human trafficking and its concomitant prostitution
Illegal Chinese mining activities, like galamsey, in different parts of
the country

Question 7

The Ghana-China relationship has evolved from originally a political-ideological one to

Answer 7

currently an economic pragmatic partnership

Question 8

Ghana-China relations began with

Answer 8

the Bandung Conference in 1955, the first large-scale Asian-African Conference
* 5 years later, in 1960, Ghana officially recognized China, despite the very valued comradeship between Nkrumah
and the Soviet Union

Question 9

After Ghana’s independence in 1957, and the rise of the Convention People’s Party (CPP)

Answer 9

its leader, Nkrumah, began to search for resources to build infrastructure and jumpstart the development agenda for a new Ghana
* In 1961, Nkrumah agreed to a $20 million, interest-free loan repayable in Ghanaian exports - a better deal than the Soviets were offering at the time.
* in 1963, another pledge of $22 million during the Zhou Enlai African tour

Question 10

The growing Ghana-China fraternity came to a halt in 1966 when

Answer 10

the Nkrumah administration was overthrown in a military takeover. The relationship then soured as accusations of Chinese interference by Ghana severed diplomatic ties until 1972.
* Scholars believed China took advantage of Ghana’s hospitality to advance its ideological interests and agenda throughout the African continent

Question 11

Since the reestablishment of diplomatic relations in 1972

Answer 11

China’s relationship had gradually evolved away from Nkrumah’s socialist-statist ideological engagement to a more market-oriented economic relationship

Question 12

Most of the support that Beijing has offered to

Answer 12

Ghana in the post-colonial era has been in exchange for crucial diplomatic support of Ghana towards China on the world stage
Examples include:
▪ Nkrumah’s campaign for the reinstatement of China at the United Nations
▪ Ghana’s support during the border dispute with India in 1962
▪ In 1989, the Rawlings administration displayed solidarity during the Tiananmen Square controversy

Question 13

According to research, China’s recent economic activities in Ghana range from

Answer 13

major mining operations to small-scale businesses – some of which are joint ventures with Ghanaian partners with many more unregulated
Notable projects:
▪ Bui Hydroelectric Dam construction, which costed $622 million, with an $850 million agreement for a gas project (attracted over 3000 workers, most of which Chinese)
▪ Essipong stadium at Sekondi-Takoradi (150 out of 230 total workers were Chinese)

Question 14

In the late 1990s, as China’s “Going Out” policy, rapid economic growth, and allowance into the WTO, all set the stage for

Answer 14

a liberalized, natural resource exploitation, export-driven, Ghana-China relationship

Question 15

Galamsey

Answer 15

local term for the illegal and unregulated artisanal
gold mining in Ghana
– Traditionally, small-scale gold mining was
a preserve for the poor and underprivileged
locals
– By law, Ghanaians can apply for licenses to
operate small-scale gold mining
– Large numbers of Chinese migrants,
largely from China’s Shanglin County, have moved to the most gold-rich regions in Ghana
– These foreigners can provide resources for
machinery and technical knowledge, leading to a series of joint ventures between Ghanaians and the Chinese

Question 16

Who is to blame about the Galamsey issue?

Answer 16

– According to Chinese scholars, the Chinese
migrants are not informed about Ghanaian laws by
the middlemen that offer the jobs and bring them
to Ghana
– Most research vaguely blames both Ghanaian
political actors and the Chinese diplomats and
nationals
– Cannot overlook the preponderant role played by
the local and traditional political forces and actors
o Constitutionally non-partisan local chiefs,
district assembly members, and community
leaders
o They serve as conduits between those with
power in Ghana and the local people
– The activities of the Chinese illegal miners,
through the help of local and traditional leaders,
are sustained by the existing frailties in the
government monitoring institutions and the
local/traditional structures in Ghana.

Question 17

Galamsey Crisis of 2013

Answer 17

Increasing Chinese involvement in galamsey, and the attendant excesses of violent clashes, raids and
deaths could not have come at a worse time
▪ Ghana’s then Vice President (now president) John Mahama had just signed the tranche of a $3 billion loan
with the China Development Bank (CDB) in April 2012
o Also had another $6 billion loan in the works with the China Exim Bank
o “this is the single largest loan Ghana has taken; actually it’s the single largest credit facility to any
African country”
▪ After the disbursement of approximately $600 million by 2013, there were disagreements resulting in
demands for renegotiations of the terms based on Ghana’s newly discovered oil resources.
o Shortly after the start of this renegotiation, the galamsey crisis came to a head in 2013
▪ This put the Ghanaian government in a complex and delicate situation
o Under pressure from the general populace to react to the increasing Chinese involvement in galamsey
▪ “we are in a very tough spot…it is either galamsey crackdown or a big loan from China” - Ghanaian
government worker
▪ The Ghanaian government decided to respond by deporting 713 Chinese nationals, 67 percent of all
deportations in 2013.

Question 18

Consequences of the Galamsey Crisis

Answer 18

– Ghana had begun major spending on infrastructure projects due to the expectation of the $3 billion loan
– The crisis increased mistrust between the masses and the newly elected National Democratic Party (NDC) government in Ghana.
– Increased anti-Chinese sentiment in Ghana
– Worsening the China-Ghana relationship and stalling the $3 Billion Loan

Question 19

Gains in China-Africa relationship are

Answer 19

often overshadowed by local dissent and anger toward the competition between Chinese nationals and the locals in many African economies

Question 19

As China expands and sustains its activities in Africa,

Answer 19

so will Beijing’s inability to control the economic
and political actors working in various African economies

Question 20

As these subnational actors related to China incur local anger and mistrust, such as in Ghana

Answer 20

the resulting anti-Chinese sentiment presents large diplomatic costs, as the masses pressure their
governments to act

Question 21

The Chinese galamsey situation in Ghana is an example of

Answer 21

the side effects of Chinese involvement in Africa, and the local institutions that often exacerbate these effects