World Economy

Beijing invites US to link up over Africa

Geoff Dyer
U.S. President Barack Obama engages in a question-and-answer session with Takunda Ralph Michael Chingonzo of Zimbabwe (L) during the U.S.-Africa Business Forum in Washington, DC.
Chip Somodevilla | Getty Images

China has invited the U.S. to co-operate in financing and building infrastructure in Africa and other parts of the developing world, an unprecedented proposal that has potentially sweeping implications for the future of international development aid.

Chinese officials first approached Washington last year to discuss working together on a $12 billion dam project in the Democratic Republic of Congo, U.S. officials said, but the talks gathered momentum at the annual China-U.S. summit in July in Beijing.

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The putative partnership is challenging: a bid for what could be the world's largest hydropower complex, in one of the world's least developed countries. While the World Bank has recently funded a report to evaluate the project, proposals for the Inga-3 dam have been discussed for years without resolution.

The Chinese approach, nonetheless, signals a possible change of approach by Beijing as it indicates a desire to recalibrate its relationship with Africa. It comes as the White House seeks to step up U.S. engagement in the region, home of six of the world's 10-fast growing countries, hosting this week the first ever U.S.-Africa summit.

US-Africa Summit: China-style deals unlikely to happen?
US-Africa Summit: China-style deals unlikely to happen?

Chinese officials have faced mounting accusations in the West and Africa in recent years over its engagement strategy with the region. It has been accused of pursuing a "check book" policy, lending money to states largely to benefit its own construction groups, which have built everything from roads to hospitals on the continent.

China appeared to embrace a more multilateral approach earlier this year, when it launched a $2 billion fund with the African Development Bank, but that is a fraction of its bilateral deals.

U.S. officials say that a partnership with China on Inga-3 or another dam would be an important breakthrough in collaboration at a time when military rivalry between the two countries in Asia is growing. However, they stress that parts of President Barack Obama's administration, Congress and the multilateral financial institutions remain wary over US involvement.

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Backers in the U.S. government believe America and the World Bank have paid too little attention to major infrastructure projects in Africa.

However, any collaboration with China will be controversial against the backdrop of China's record in Africa for a lack of transparency in its business dealings. U.S. officials say no decision has been taken.

The DRC's ambitious hydropower plans, which supporters argue would benefit a number of economies in sub-Saharan Africa, will be discussed on the margins of the US-Africa summit in Washington attended by leaders from 50 African nations.

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Mr Obama on Tuesday announced that U.S. companies have pledged $14 billion in new projects for Africa during the summit, including for the U.S.-backed "Power Africa" initiative to expand electricity generation across the continent.

The Inga-3 project is part of a bigger endeavour to tap the hydropower potential of the Congo river, the second largest in the world in terms of volume. The broader Grand Inga plan is designed to generate 40,000MW which would be twice the size of the Three Gorges dam in China.

Expectations from the US-Africa summit
Expectations from the US-Africa summit

Although the river's hydropower potential has been discussed for decades, it has been given new impetus by an agreement last year between DRC and South Africa to purchase a large part of the energy it would yield.

Three consortiums, from China, Spain and South Korea, have indicated they intend to bid for the Inga-3 project. The World Bank has approved a $70 million grant to DRC to conduct a technical evaluation, although it says it has not yet decided whether to back construction and is not in talks with potential bidders.

The Chinese consortium bidding for the dam on Tuesday said it has "been actively tracking the progress in the Inga project", adding: "The consortium has been closely following Obama's 'Power Africa' initiative, and considers co-operation with companies from around the world, including U.S. companies."

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In a sign of the continued political opposition to hydropower in the U.S., Congress passed an amendment last year barring the U.S. government representative at the World Bank from supporting the construction of large dams.

Analysts said that ambitious multibillion-dollar projects in the DRC have a long history of complications, as well as a tendency to ignite geostrategic rivalries. Moreover opaque, high-level interference by members of President Joseph Kabila's administration in commercial contracts has been de rigueur – although some improvements in the investment climate have taken place recently.

The discussions between China and the U.S. about collaborating in big projects are most advanced over Inga-3, but there have also been talks about projects outside Africa, including Nepal and Pakistan.