Economic Implications of China in Africa: Incentives behind China's Belt and Road Initiative

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Running read: ECONOMIC IMPLICATIONS IN AFRICA
Economic implications of China in Africa: incentives behind china’s belt and road initiative

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ECONOMIC IMPLICATIONS IN AFRICA
TABLE OF CONTENTS
Chapter 1: INTRODUCTION....................................................................................................4
1.1 Introduction..................................................................................................................4
1.2 Background..................................................................................................................5
1.3 Research Aims.............................................................................................................9
1.4 Research Objectives.....................................................................................................9
1.5 Research Questions......................................................................................................9
Chapter 2 LITERATURE REVIEW........................................................................................10
2.1 Introduction................................................................................................................10
2.2 Overview....................................................................................................................11
2.3 Implication for Africa from China’s One Belt One Road Strategy...........................12
2.4 Strategic Rationale.....................................................................................................13
2.5 Significance of One Belt One Road in Africa............................................................15
2.6 Methods to protect the African interest in OBOR.....................................................18
Chapter 3: Research Methodology...........................................................................................21
3.1 Introduction................................................................................................................21
3.2 Method Outline:.........................................................................................................21
3.3 Research Onion:.........................................................................................................22
3.4 Research Philosophy:.................................................................................................22

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3.4.1 Reason for the selection of the chosen research philosophy (Positivism research
philosophy):......................................................................................................................23
3.5 Research Approach:...................................................................................................24
3.5.1 Justification for the selection of the chosen research approach (Deductive):.........24
3.6 Research Design:........................................................................................................25
3.6.1 Validation for the selection of the chosen research design (explanatory):.............25
3.7 Data collection process:.............................................................................................26
3.8 Data analysis plan:.....................................................................................................28
3.9Ethical consideration:..................................................................................................28
3.10 Data validation and reliability:.................................................................................29
3.11 Restraint of primary and secondary data:.................................................................29
3.12 Summary:.................................................................................................................30
Chapter 4 : DATA ANALYSIS...............................................................................................32
Impact on Djibouti...........................................................................................................35
Impact on Kenya..............................................................................................................38
Trade................................................................................................................................41
Forum on China Africa cooperation................................................................................45
Aid from China for the development of road infrastructure of Nairobi...........................46
Challenges to OBOR in Africa........................................................................................47
Opportunities faced by Africa due to OBOR...................................................................47
Present infrastructural projects in Africa.........................................................................47
Increase in Chinas soft power..........................................................................................48

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Presence of intra as well as interstate conflicts................................................................52
Chapter 5: CONCLUSION......................................................................................................53

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Chapter 1: INTRODUCTION
1.1 Introduction
China’s belt and Road Initiative is known to be the 21st century Silk Road which is
made up of a “belt” of overland corridors and a maritime “road” of shipping lanes. China is
known to carry out or planning construction projects which is more than 60 countries. The
Belt and road Initiate is expected to cost more than £760bn. China have also invested more
than $210 bn which is majority in Asia (Callahan 2016). The one belt one road underlines
China's push to take a larger role in global affairs, and its need to export capacity in industries
where there is overproduction, such as steel manufacturing and infrastructure construction.
China had been always deeply involved in the economic growth of Africa from the very past.
The president of china have invested more than trillion US dollars for building the one belt
one road for globalization. The Chinese companies have already made huge investments in
Africa and now the country is looking at china for their own development. The belt and road
initiative comprises of two concurrent plans where one is the overland route which is known
to connect the Middle East and Central Asia to China. The second one is the 21st century
Maritime Silk Road which aims for connecting China and South Asia with Africa. This
initiative will be changing a number of social, economic and strategic landscapes. China have
already officially promised for helping Africa via the African union for building the
comprehensive transportation network. It is also known to heavily involve for enhancing the
power generation capacities of Africa. China also led to the establishment of the multilateral
investment Bank and Shanghai based BRICS Development bank. The African leg of the Belt
and Road Initiative is already in progress. Some of the countries which will gain benefit from
the belt initiative are Kenya, Tanzania, Egypt and Djibouti. The new Silk Road will also be
linking Chinese ports to east Africa. Till 2018, more than twenty diplomatic relations took

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place between china and other countries that include Tajikistan, Israel, Ethiopia, Madagascar
and Israel (Callahan 2016). On the economic front, the investment and trade between china
and the African countries have increased a lot. According to a report it have been found out
that the economic growth of the countries along this route is much faster than the overall
economic growth of china. Due to the foreign direct investment from China in Africa have
also increased to more than 20 percent and is still rising. China have already provide huge
help for the Africa in terms improving connectivity and development of infrastructures. The
railway which is 759 kilometer long made by china is known to connect the landlocked
Ethiopia to the trade routes of the Gulf of Aden and the Red Sea. It have carries a huge of
passengers in the late 2016. China had also constructed the Mdaraka Express which is known
to connect the capital city of Nairobi with the Mombasa. This particular railway have future
plan to extend to the northwest of Kenya.
1.2 Background
The one belt one road initiative of china known to be one of the most determined
project which is known to influence the international trade. Africa had always been an
important market in china because of the investment from the Chinese companies and banks
(Du and Zhang 2018). The abundance of natural resources in Africa makes the continent an
excellent trading partner as well as attractive investment destination for china with is t
billions of population. The On Belt One Road Initiative is known to be the transformational
development strategy as well as framework which is known to be promoted by the highest
level of the government of china it mainly focuses on connectivity and cooperation among
the countries which moves along the two main routes (Ferdinand 2016.). The Maritime Silk
Road is known to touch a large number of African countries which comprises of Ethiopia,
South Africa, Kenya, Madagascar and North Africa. It also touches the inland African
countries which are Democratic Republic of Congo, Zimbabwe and Zambia. The key sectors

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of the One Belt One Road includes development on energy and power, Infrastructural
projects, Public utilities, Development of the Financial markets and construction, logistics
and information technology.
The economic relations which is present between China and Africa started taking place from
many years. China has also become the largest trade partner of Africa which has greatly
expanded its economic ties to the continent. China has also known to boost mining sector and
oil sector in exchange for advantageous trade deals. The companies of China are also known
to diversify their business pursuits in Africa manufacturing, infrastructure and
telecommunications sector (Cheng 2016). However, China’s activity in Africa known to have
faced various criticism from both the African as well from the western society.
The projects as well investments which are undertaken in Africa under the One Belt One
Road includes:
 Huge number of railway projects have been initiated across Africa which includes
completion of first fully electrified cross border railway line of Africa connecting the
Red Sea Port of Djibouti with Addis Ababa. The project was seventy percent
financed by the Exim Bank of China and built by the China railway Group. In the
year 2017, another railway line of 845km was formed in 2017 which connects
Mombasa to Nairobi railway. The project had been constructed
 A large number of road infrastructure projects like the Mozambique’s Maputo Bridge
which is built by China Road and Bridge Corporation. The TIPAZA Cherchell Ring
Expressway Project in Algeria had been built by China State Construction
Engineering Corporation. The project had been constructed by China Rail ad Bridge
Corporation.

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China’s One Belt One Road initiative in known to be two directional in nature which are
known to promote Chinese outbound investment and also encourage international investment
into china. The Chinese government have provided considerable push for industrialization of
Africa. Currently Africa is also establishing itself as the source of labor as well as resources
for china. The private industries of china are taking hold of Africa where more than ten
thousand business of china are present there. While most of the African countries are trying
to industrialize and diversify their economies, china after 40 years of reform has accumulated
rich experience in modernization as well as industrialization (Ferdinand 2016). In some of the
cases, the projects had been suspended by the courts until the government provided enough
compensation to them. There was also a case where the environmentalists took the
government to court in opposition of the railway line which passes through the Nairobi
national park since it will adversely affect the natural habitat of the wildlife within the park.
The combination of the Chinese capital, enterprise, technology, rich experience in the
development have benefitted Africa a lot. The abundant resource of Africa with the huge
demographic dividend along with great market potential will have a great chance of creating
another miracle of development. Nigeria is also a regional and continental self determined
powerhouse is known to adopt and maintain a policy of political neutrality in case of foreign
relations. As a leading nation of West Africa, Nigeria is known to be highly respected in
China. Both Nigeria as well as China are the strategic partners which shares the similar
cultures, historical background and also celebrate their independence on the same day and
also have the highly complementary economies. Therefore comparing the size, market as well
as the population of china and Nigeria, it can be said that the two countries cooperation will
have a large potential to be depended. During the past, china also supports African nations
for attaining the political independence (Cheng 2016). Over the decade, china is also known
to become one of the major economic partner of Nigeria. Nigeria is also known to be one of