China

1
Chinas Effect on Governance Reform in Angola
Source lthttp//www.chinaafricarealstory.com/gt
What Evidence is There?
Bobbie NJ Macdonald b.n.macdonald_at_lse.ac.uk MSc
Student, London School of Economics and Political
Science London, UK
2
Summary

• Core Question What effect is Chinas growing
  presence in Angola having on governance in
  Angola?
• Main Results
• Ambiguous and Indeterminate evidence of Chinas
  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 Chinas impacts on
  governance in Africa.
• China in Africa discourse and research should
  shift to a much greater focus on African agency.

Source ltwww.african-politics.comgt
3
The Rise of China in Africa
4
The Rise of China in Africa
China overtook the US to become Sub-Saharan
Africas largest trading partner in 2008.
Source ltwww.chinatalkingpoints.comgt
Source lthttp//publicandculturaldiplomacy4.wordpr
ess.comgt
5
The Rise of China in Africa
6
The China Alternative

• Chinese aid and finance is purportedly
  undermining the Wests 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 ltwww.angolaembassy-china.comgt
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 US2
  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 Its 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 Chinas total oil imports
  came from Angola, accounting for over 30 of
  Angolas crude oil exports.

9

• Research question what effect is Chinas
  growing presence in Angola having on governance
  in Angola?

Source lthttp//www.chinaafricarealstory.com/gt
Source lthttp//www.chinaafricarealstory.com/gt
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

Country Year Voice Acct. Political Stability Gov. Eff. Regulatory Quality Rule of Law Control of Corruption
Ethiopia 2010 -1.314 -1.705 -0.349 -0.884 -0.755 -0.704
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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 lthttp//edition.cnn.comgt
12
Mean Differences Average Changes in Governance,
2004-2010 (one sample ttests)
WGI indicators Africa Avg Angola Avg Mean Diff. T score P-value Angola percentile rank
Voice Acct. 0.003 0.021 0.018 0.057 0.957 0.617
Pol. Stability -0.012 0.141 0.153 1.878 0.119 0.915
Gov. Eff. -0.007 0.037 0.044 0.564 0.597 0.809
Reg. Quality 0.005 0.034 0.029 1.041 0.346 0.809
Rule of Law 0.003 0.028 0.024 0.586 0.583 0.745
Control of Corr. 0.012 -0.004 -0.016 -0.362 0.732 0.383
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Governance in Angola 1996-2010
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Partial Correlations Chinese Trade and
Governance in Angola, 1996-2010
Total Trade with China (GDP) Voice Acct. Pol. Stability Gov. Eff. Reg. Quality Rule of Law Control of Corr.
No lag -0.601 0.094 -0.431 -0.167 0.539 -0.491
2 year lag 0.069 0.274 0.059 -0.198 -0.270 0.607
4 year lag 0.407 0.555 0.371 0.639 0.192 0.297
Note Pearsons r reported. p lt 0.01
p lt 0.05 p lt 0.10.
15
Partial Correlations Chinese Trade and
Governance in Africa, 1996-2010
Total Trade with China (GDP) Voice Acct. Pol. Stability Gov. Eff. Reg. Quality Rule of Law Control of Corr.
No lag -0.072 -0.143 -0.442 -0.434 -0.350 -0.171
2 year lag -0.074 -0.060 -0.422 -0.434 -0.336 -0.200
4 year lag -0.116 -0.081 -0.430 -0.480 -0.363 -0.297
Note Pearsons r reported. p lt 0.01
p lt 0.05 p lt 0.10.
16
Fixed Effect Regressions Trade With China
(1) Gov. Eff. (2) Rule of Law (3) Control of Corr.
Trade with China (GDP) t - 4 - 0.0067 (0.0021) - 0.0055 (0.0028) - 0.0102 (0.0027)
ODA (GNI) 0.0024 (0.0012) 0.0029 (0.0012) 0.0043 (0.0014)
Total FDI (GDP) 0.0053 (0.0011) 0.0041 (0.0012) 0.0039 (0.0016)
Trade, all countries exc. China (GDP) - 0.0012 (0.0011) 0.0002 (0.0012) - 0.0019 (0.0014)
Xit ? ? ?
Year dummies ? ? ?
F-test for joint signif. 6.2 5.27 3.91
n 374 374 374
of countries observed 45 45 45
Obs per country (avg) 8.3 8.3 8.3
Note Robust standard errors in parentheses.
p lt 0.01 p lt 0.05 p lt 0.10.
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Summary of Results Is There Evidence of a China
Curse in Angola?

• Ambiguous and indeterminate evidence of Chinas
  relationship with governance in Angola.
• Angolas 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.

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Discussion Looking Ahead

1. Strong need for more sophisticated thinking about
   the political economy of Chinas impacts on
   governance in Africa.
2. China in Africa discourse and research should
   shift to a much greater focus on African agency.

Source lthttp//www.zimbio.comgt
Source lthttp//corporateforeignpolicy.comgt
19
Chinas Effect on Governance Reform in Angola
Source lthttp//www.chinaafricarealstory.com/gt
What Evidence is There?
Bobbie NJ Macdonald b.n.macdonald_at_lse.ac.uk MSc
Student, London School of Economics and Political
Science London, UK