China’s Effect on Governance Reform in Angola

1. China’s Effect on Governance Reform in Angola Source: <http://www.chinaafricarealstory.com/> What Evidence is There? Bobbie NJ Macdonald b.n.macdonald@lse.ac.uk MSc Student, London School of Economics and Political Science London, UK

2. Summary Source: <www.african-politics.com> • Core Question: ‘What effect is China’s growing presence in Angola having on governance in Angola?’ • Main Results: • Ambiguous and Indeterminate evidence of China’s relationship with governance in Angola. • In contrast, a significant negative relationship exists between trade with China and several measures of governance in Africa. • Discussion: • Strong need for more sophisticated thinking about the political economy of China’s impacts on governance in Africa. • ‘China in Africa’ discourse and research should shift to a much greater focus on African agency.

3. The Rise of China in Africa

4. The Rise of China in Africa China overtook the US to become Sub-Saharan Africa’s largest trading partner in 2008. Source: <http://publicandculturaldiplomacy4.wordpress.com> Source: <www.chinatalkingpoints.com>

5. The Rise of China in Africa

6. The ‘China Alternative’ • Chinese aid and finance is purportedly undermining the West’s efforts at promoting good governance throughout the African continent. • Collier (2007):“In the bottom billion it is unusually bad, and the Chinese are making it worse, for they are none too sensitive when it comes to matters of governance” (p. 86). • Evidence gap: • Absence of empirical work on relationship between Chinese activities and governance across Africa. Source: <www.angolaembassy-china.com>

7. China in Angola 2002: • Official end of civil war, Angola under significant pressure to repay loans from private creditors. • To become eligible for debt rescheduling, Angola was heavily pressured by the IMF to undertake an intensive program of political and economic reform. 2004: • Just when Angola was about to agree to the IMF program, China Eximbank offered Angola a US$2 billion credit line. • …leading to widespread criticism from the West: • Angola “…is avoiding pressure to clean up corruption thanks to aid from China” (Swann & McQuillen, November 3 2006). • “The Chinese are not investing to develop the country. They have brought more corruption and, consequently, more poverty” (Marques de Morais, August 29 2012).

8. China in Angola • But… It’s not that simple. • Between 2000 and 2003, Angola continued to receive billions of dollars in loans from Western creditors. • So, what evidence really exists to suggest that China is having a negative impact on governance in Angola? • Since 2004, Chinese finance and investment has become increasingly important in the Angolan economy. • In recent years, 16% of China’s total oil imports came from Angola, accounting for over 30% of Angola’s crude oil exports.

9. Research question: ‘what effect is China’s growing presence in Angola having on governance in Angola?’ Source: <http://www.chinaafricarealstory.com/> Source: <http://www.chinaafricarealstory.com/>

10. Governance Data • Worldwide Governance Indicators Data Set: • Six aggregated continuous measures of governance placed on a standardized scale ranging from -2.5 to +2.5 • Higher score = Better performance • Six measures: • Voice and Accountability; Political Stability; • Government Effectiveness; Regulatory Quality; • Rule of Law; Control of Corruption

11. Chinese Trade Data Total trade with China • Available from UN Comtrade database, 1962 - 2010 • Sum of Chinese imports and exports • Chinese aid data not available Source: <http://edition.cnn.com>

12. Mean Differences: Average Changes in Governance, 2004-2010 (one sample ttests)

13. Governance in Angola: 1996-2010

14. Partial Correlations: Chinese Trade and Governance in Angola, 1996-2010 Note: Pearson’s r reported. *** = p < 0.01; ** = p < 0.05; * = p < 0.10.

15. Partial Correlations: Chinese Trade and Governance in Africa, 1996-2010 Note: Pearson’s r reported. *** = p < 0.01; ** = p < 0.05; * = p < 0.10.

16. Fixed Effect Regressions: Trade With China Note: Robust standard errors in parentheses. *** = p < 0.01; ** = p < 0.05; * = p < 0.10.

17. Summary of Results: Is There Evidence of a ‘China Curse’ in Angola? • Ambiguous and indeterminate evidence of China’s relationship with governance in Angola. • Angola’s annual rate of change in governance has not been significantly worse than the average for Sub-Saharan Africa. • In contrast, a significant negative relationship exists between trade with China and several measures of governance in Africa. • However: these results do not address endogeneity concerns and provide no evidence of a causal effect between Chinese trade and governance within African countries.

18. Discussion: Looking Ahead • Strong need for more sophisticated thinking about the political economy of China’s impacts on governance in Africa. • ‘China in Africa’ discourse and research should shift to a much greater focus on African agency. Source: <http://www.zimbio.com> Source: <http://corporateforeignpolicy.com>

19. China’s Effect on Governance Reform in Angola Source: <http://www.chinaafricarealstory.com/> What Evidence is There? Bobbie NJ Macdonald b.n.macdonald@lse.ac.uk MSc Student, London School of Economics and Political Science London, UK