
Skyscrapers, trains and roads: How Addis Ababa came to look like a Chinese city - tintinnabula
https://www.cnn.com/style/article/addis-ababa-china-construction-style/index.html
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a008t
>Lina Benebdallah, assistant professor of politics and international affairs
at Wake Forest University, North Carolina, however, cautions that the China-
Africa relationship is "asymmetric." In 2016, for example, China exported $88
billion in goods to Africa, but only imported $40 billion from the continent.

And what is the problem with that? If China wants to subsidize African
development or consumption, what is the problem with that? If China loans more
to African nations than they can repay, it is a loss for China, not for the
African nations.

The real problem, it seems, is that China has an excess of USD that it does
not know what to do with. It is afraid to let Yuan appreciate and let the
Chinese people enjoy increased consumption, as while the economy is shifting
from export to internal consumption there would be a period of instability -
the status quo bias.

It is also afraid of buying assets in the US and Europe as it cannot guarantee
that these assets will not be seized if need be for political reasons.
Furthermore, it does not want to do anything that would reduce the value of
the remaining dollars it holds. Trying to establish a resource base in Africa
where they can build relationships, influence, enforce their property rights
and protect trade routes, seems like a reasonable choice.

~~~
coldtea
> _And what is the problem with that? If China wants to subsidize African
> development or consumption, what is the problem with that? If China loans
> more to African nations than they can repay, it is a loss for China, not for
> the African nations._

Only Western powers are allowed to do that!

After all Africa is their playground. How dare anyone else meddle with it?

~~~
adventured
That's not how it actually works, the parent is flat out wrong. Defaulting on
loans from China doesn't happen in a vacuum.

If the African nation in question defaults on big loans to China, their
economy is going down. Millions of people will be severely harmed, possibly
for decades. It's not just China that loses some money. To say nothing of the
fact that China often requires repayment in physical assets of the country
(such as taking physical ownership of a port for their own use, or oil, or
cocoa), they don't just walk away if they're not getting cash repayments.

First the country straps itself trying to repay China. That means they start
missing payments on other smaller debts, they start squeezing the funding of
their welfare systems and basic government functions. Everyone begins to
suffer.

Redirected government funding - which they can't afford to redirect - begins
to harm the economy. Their credit rating gets downgraded, nobody will lend to
them at this point. Only China is left, and they want harsher terms now, more
of the national resources (see: the Venezuela model). Their currency tanks,
inflation skyrockets, the people suffer immensely. The economy goes into perma
recession, no foreign capital trusts the situation, investment plunges.

Cycle and repeat the downward spiral, until you reach a point of social
catastrophy.

~~~
debatem1
I'm unclear on why China would want to crush Africa into social catastrophe.
Why do you think they would?

~~~
adventured
I don't think they do. I think they're looking to make deals with nations that
have resources they want, nothing more or less. I attribute zero ill spirit to
that equation.

Banks typically don't want to see you go out of business when you borrow their
money, such that they have to take your collateralized assets or similar.
They'd prefer you fulfill the terms of the original loan. Regardless, it still
happens routinely that debtors default; sometimes the creditor also lends more
good money after bad, hoping the situation turns around. Ethiopia would be
considered a risky or subprime debtor, as are most of the very newly
developing countries like that which China is lending large sums to. They're
not lending money to borrowers like Germany or Canada, with many decades of
consistently sound economic operation and stability. Those types of economies
don't much need China's capital. The nations that have weak access to global
capital markets, or generally weak foreign investment, are drawn to China's
money for obvious reasons. China is frequently a lender of only resort
(particularly at the scale they're willing to deal).

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jpatokal
One piece missing from the story is that Ethiopia is politically structured
very much like China: an overbearing, notionally Communist [1] state that
operates basically as a dictatorship and is mortally afraid of losing power.
It's no surprise that they're turning to China for help.

[1]
[https://en.wikipedia.org/wiki/Ethiopian_People%27s_Revolutio...](https://en.wikipedia.org/wiki/Ethiopian_People%27s_Revolutionary_Democratic_Front#Ideology)

~~~
g8oz
Indeed - Ethiopian (and other African) officials are regularly sent to China
for training on governing. It's a very effective soft power tactic.

[https://www.brookings.edu/blog/africa-in-
focus/2016/07/05/po...](https://www.brookings.edu/blog/africa-in-
focus/2016/07/05/political-party-training-chinas-ideological-push-in-africa/)

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Fuxy
Well the incentive for China is simple since it uses all Chinese sources so
the costs get higher than necessary but it's a foreign government flipping the
bill so they don't care plus there is no competition.

The risks in Africa are great but when China has got your back as a company
the math is different.

Not to mention we're talking Chinese concrete here that building will be
turning to dust in less than 5 years they do the same in China after all and
that's why it's not smart to buy property long term there although it's
culturally necessary to be able to have a family there.

They may be building grand buildings but they use sub par materials so they
are no build to last so I predict the debt will last longer than what they
offered for it.

I works in China because the handle the supply and demand internally but it's
a different story when they start exporting that.

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baybal2
A fine propaganda pieces:

[https://www.youtube.com/watch?v=k42eqzZWg5A](https://www.youtube.com/watch?v=k42eqzZWg5A)

[https://www.youtube.com/watch?v=9A9HEVkXoJ4](https://www.youtube.com/watch?v=9A9HEVkXoJ4)

You see, there are not many "golden statue" boondoggles, though no denial
there were a few of them...

You see three prominent areas: 1. pay-per-use infrastructure (public transit
for example, those train lines in Africa will be paying a lion share of profit
to for loan repayments for decades,) 2. factories - that's self explanatory,
3. cultural facilities - for propaganda value.

~~~
taobility
I think we all know what to be called investment. Building highway, high speed
train, subway, are all investments, which are called win-win, for local
people, they got the better public transit, and for Chinese developers, they
got the profit.

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adventured
The US has a lot of experience - both successful and unsuccessful - at nation
building, actively and passively via trade and investment, over the last ~70
years or so. When you get it right, the results are spectacular.

If China can invest half a trillion dollars plus into Africa over two decades
and it turns out really well, and they can help lift hundreds of millions of
people out of poverty, then that will be a tremendous outcome. They'll be
contributing back to the virtuous cycle that their own development over the
last few decades has been part of. More and more countries become net
contributors and the pace of eradicating extreme poverty quickens.

The debt trap concerns are legitimate, ignoring the propaganda side of that
for a moment. That's a pretty obvious potential problem for very poor
countries when taking on massive development loans etc.

Ghana for example has a $40-$50 billion GDP, and China recently agreed to lend
them $15 billion to try to develop their natural resources (bauxite mining for
one) for China's use. When you're borrowing that large of an amount of capital
vs the size of the economy that has to repay the debt, it's obviously risky.
Ghana's vice president optimistically referred to it as a Marshal plan for
Ghana. The pessimistic retort by a member of their parliament:

> "How much of our natural resource are they leveraging in that agreement for
> the $15 billion facility? If you’ll remember, former President Kufuor did
> the same thing when we were constructing the Bui dam. He went to China and
> mortgaged our cocoa for a loan agreement. Today we ship the country’s cocoa
> to China to service the debt,” he said.

All of these examples come with that double sided risk/reward concern, with
debt and what you put up in exchange for the development capital.

The other giant issue I rarely see these articles discuss, is practical
sustainability. That's every bit as important as the debt concern. The US
could hand Albania an advanced, $11 billion nuclear aircraft carrier, that
doesn't mean it's a good idea matched to their level of development and what
they can afford to maintain. Skyscrapers are very expensive to maintain across
decades. Ethiopia has a GDP per capita of $700.

To be clear, I'm not saying what does or doesn't make sense for Ethiopia.
Rather, it'd be interesting to see an analysis of what a country like Ethiopia
can support economically. There's a sustainable process to economic
development. You can accelerate it a bit, if you try to leap too far you run
the risk of causing dramatically worse problems than the nation otherwise
would have experienced had it developed more organically or at a more measured
pace. If it goes south, you not only have the debt to deal with, you have
expensive infrastructure you can't afford to maintain, a double blackhole.
China can dump immense sums of capital into trying to leap a country like
Ethiopia forward. If they get that wrong, Ethiopia is stuck with trying to
upkeep that infrastructure. It makes me wonder if there are elaborate studies
done by Ethiopian authorities before allowing major projects funded by China
to go forward, when it comes to estimated 30-50 year type maintenance costs.

~~~
StreamBright
Could you give me both lists (both successful and unsuccessful nation
building)?

~~~
lazerpants
Not full lists but:

Successful: Japan, S. Korea, Germany, Grenada, Panama

Unsuccessful: Iraq, Afghanistan, maybe a lot of S./Central America depending
on how you define nation building, Vietnam, Cambodia (sort of)

~~~
adventured
Regarding Vietnam, there's a version 2.0 of that going on currently, and it's
going very well.

Trade with the US represents not quite 1/4 of the Vietnamese economy. $46b in
imports from Vietnam last year, with their GDP being near $200b. That's a 10x
increase in imports from Vietnam since 2003 (their economy has increased in
size by about 5x in that time, non-inflation adjusted). In the coming two
decades, trade with the US will probably turn Vietnam into one of the world's
25 largest economies.

The US appears to be intentionally trying to build up Vietnam to help offset
the rising hegemony of China in the region. We're running a vast trade deficit
with them (5 to 1 ratio), and hardly a word is being said about it. The recent
military interactions bolster that notion.

Colombia is an example of successful nation building (more like
guiding/assisting, frankly) in South America. Certainly if we're listing
failures in S.America, that's one of the successes. Their GDP increased from
$40b in 1990, to $380b by 2013. It's a dramatically improved nation compared
to 30 years ago, in just about all regards. The US has been aggressively
intertwined (some would say too much) with Colombia the whole way.

~~~
taobility
Besides importing goods from those countries, did US help build any
infrastructure projects in these countries? I believe that's the big
difference between China and western countries, especially US: no governing or
military interactions, but help to improve the citizens' living with concrete
infrastructure projects, like train, highway, subway, telecommunication etc.

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thomasedwards
Fantastically miss-used image before/after sliders, not actually showing
before or after?

~~~
detritus
Add to that a map of labelled "Cities with more than 1m people" which clearly
misses out... well, quite a few.

"Cities with more than 1m people in China and Ethiopia" on the other hand... .

