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China in Africa: The Real Story

China's Africa Land Grab Myths Part II: The (Non-Existent) $5 Billion Fund

Deborah Brautigam

Is "China" actively seeking land in Africa to grow food, presumably to ship back to China? This is the assumption behind much of the reporting and blogging on this topic. Yet as I have pointed out in The Dragon's Gift, as well as a September 2009 article in China Quarterly, there is (as of yet) almost no evidence to back this up.
Yesterday I read Howard French's new Atlantic Monthly article on China and Africa: "The Next Empire". It is beautifully written, with Howard's distinctive voice and insight. Yet in saying that "Beijing had earmarked $5 billion for agricultural projects in Africa in 2008, with a focus on the production of rice and other cash crops" I think Howard included one of the urban myths (if we can call it that) about Chinese rural engagement in Africa that circulate around the internet.
The source of this story is almost certainly a 2008 report by a Liberian journalist on the visit of a delegation from the China-Africa Development Fund to Liberia. The journalist reported that China had "earmarked $5 billion" for the production of food and cash crops in Africa. But this was a big mistake.
Stephen Marks took up the Liberian report in a story he posted for Pambazuka in 2008. Marks pointed out what China-Africa watchers already knew: the $5 billion China Africa Development Fund (CADF) is an equity fund for Chinese investment in Africa, in all sectors, announced at the Beijing Forum for African leaders, in November 2006. Since then, CADF has been sending teams to almost every country in Africa, including Liberia, to scout out developmental investment opportunities in manufacturing, power plants, and so on. Very little of CADF's investment has gone to agriculture.
As Howard's article notes, on June 30, 2008, China's Economic Observer published what has become the centerpiece of most stories on China's overseas farming plans. This June 30, 2008 story on policy discussions in China was intriguing (and looks authentic), but as the original notes, the report is very tentative. There is ample evidence about Chinese interest in investing in agriculture in Latin America (soybeans in Brazil) and in Southeast Asia (mainly oil palm). But in Africa, although Chinese investors have been exploring farming opportunities in several countries since 1990 (and investing in some, such as Zambia), hard evidence for large, new Chinese farming ventures or farmer exports just isn't there.
Instead, what we are seeing a lot of is an innovative model that combines aid and Chinese agribusiness. As in Mozambique (the subject of a forthcoming post), this experiment tasks Chinese companies with finding a profitable, income-generating activity that can allow them to sustain demonstration centers, 20 in total in Africa, showcasing new agricultural technologies and providing technical training. Are these centers the leading edge of a new land grab? I don't think so. They're far more likely to be the leading edge of China's new multinational agribusiness companies. This could be worrying for other reasons (what about GMOs? controversial hybrids?). But that's a separate issue.