DEVELOPMENT TRAJECTORY OF AFRICAN countries seems to be hanging in the balance. From the enormous evidence of Africa’s poor economic well-being and the continent’s tilt towards China as a role model and a super lender, African countries are taking a big leap in the dark. Political leaders within the continent need to reorder their priority. They have to look again, more carefully and with discretion.
Lately, China has taken a number of brash official decisions and policy directions that are unsettling and should provide clear indications that the country is heading in the wrong direction and could lead any country emulating it in the path of destruction. Home and abroad, China is taking major missteps, almost all of which could bring the country to its knees
The Chinese Communist Party (CCP) under Xi Jinping is making serious onslaught against many prominent individuals and corporate organisations within the Chinese economy, which should be a source of worry for all local and foreign direct investors, or any country seeking to learn from China.
Could this be the time for the fulfilment of the coming collapse of China earlier predicted by Gordon G. Chang? Events of the past one week have been particularly worrisome in China. Chinese tech stocks came tumbling and began to sink as regulation fears hit three major companies.
Tencent, Meituan and Alibaba had lost hundreds of billions of dollars in market value within just two days in what could be the beginning of a sustained slide that could turn economic tide against China and permanently ruin its hitherto booming economy.
As Chinese tech stocks began a free fall not experienced in a decade, investors have resorted to selling on concerns of widening regulatory crackdown that could turn out to be irreversible and far-reaching in impact.
The stunningly massive sell-off that has swiftly wiped out hundreds of billions of dollars in market value in the aftermath of crackdown on private enterprise may spread in influence further afield within a short period.
Losses are piling up for Meituan, which closed down 17.7 per cent in Hong Kong on Tuesday, followiing Monday’s massive 14 per cent loss. Investors’ confidence will likely continue to wane as tech giant Tencent experienced a nine per cent drop in Hong Kong, its worst day in about a decade.
For Meituan alone, over $62 billion has been wiped out in market value after Chinese regulators issued had new guidelines insisting on certain standards. With the precipitous drop in the stocks of other tech giants, particularly Alibaba and Tencent, shockwaves have been sent across the globe as Alibaba closed down 6.4 per cent on Monday and Tuesday in Hong Kong.
More than $100 billion of Tencent’s market value has been erased within two days of China’s official indiscretions as the three tech giants — Tencent, Meituan and Alibaba — have lost more than $237. billion. Indicators from the Hang Seng Tech Index, similar to Nasdaq technology index that tracks the largest tech firms trading in Hong Kong, reportedly took a dive by as much as 8 per cent last Tuesday.
Political influence is clearly at work here as Chinese authorities appear to believe that China doesn’t need external money. This could be creating real genuine concerns for investors. The top-down and centrally-controlled system of governance is leading to some sort of narional economic suicide. But it seems Chinese political leaders are downplaying the possible disaster that could follow.
Meanwhile, there are reports that many Chinese are desperately seeking asylum in many other countries as China is becoming increasingly unsafe for them. African leaders cannot afford to ignore these social and economic rumblings, which are a direct result of political machinations of the CCP. China’s economy is currently experiencing ‘slowbalisation’ arising from the post pandemic policies for economic revival in many countries. Although China may not publicly admit this, it is currently experiencing a quiet and insidious surge of a ‘quit China’ movement, arising from a response to the harsh policies of the ruling party.
China is Africa’s largest bilateral creditor, with China holding at least 21 per cent of African debt. At least 30 per cent of 2021 debt service is expected to be paid to China. This debt-trap diplomacy of China is bogging down the borrower countries with enormous debt, thereby increasing the lenders’ leverage over it. Zambia stands out as a country at the brink of Africa’s first sovereign default since the coronavirus outbreak.
Unfortunately, China runs an opaque system of governance and statistics as they refuse to cooperate with external bodies in search of credible information within the country over the years. China’s official data remain dubious and incredible, even though many liberal West media have been quite sympathetic and complicit with China, despite its reluctance to put forward comprehensive, high-quality data regarding its lending overseas, particularly the poor countries.
A 2018 report covering 72 low-income countries indebted to Chinese creditors revealed that $64 billion or 62 per cent of $104 billion was disbursed in Africa.
But in something of an about-turn, President Xi Jinping this month urged top political leaders to help cultivate a “reliable, admirable and respectable” international image in a bid to improve China’s soft power.
For some analysts, the comments spoke to a growing realisation that years of stoking nationalism at home have left Beijing with little room to make more complex diplomatic manoeuvres.
Africa has reasons to be wary of indebtedness to China. The benevolence of China may have been overrated by African leaders. The language of Chinese diplomacy can be very harsh. And China would deploy such while going after its debtors. It is gradually showing the world what to expect. The past one year has clearly proved how harsh China can be as seen in the rise of bellicose Chinese diplomats on social media in their eagerness to correct ‘negative impressions’ and criticisms, particularly from the western democracies.
Use of Chinese “wolf-warrior diplomacy” with aggressive style has been on the increase, with diehard nationalism now taking centre stage. Only recently, a Chinese diplomat spoke in a recent bilateral meeting with officials from the US in a way that is indicative of a rising level of intolerance of China to anything assumed unfavourable to China under the CCP. These overzealous diplomats, unaware of the rising scale of challenges at home, now choose to vehemently fight Western criticism abroad over their country’s harsh policies.
Only recently, China initially chose a hardline and resistance instead of cooperating with the team of health experts who visited on a fact finding mission on COVID-19. China has been variously accused over issues bordering on human rights abuses, to which the CCP has refused to accept culpability.
The mess that Hong Kong has become is the result of a forceful imposition of the so-called security law by Beijing, effectively putting Hong Kong under authoritarianism. The outcome is predictable — and is already manifesting. People and corporate investors are leaving for safer places.
Chinese extremist nationalism will turn round to hurt it. This may already have been realised as President Xi Jinping recently urged top political leaders to help cultivate a “reliable, admirable and respectable” international image in a bid to improve China’s soft power.
The upsurge in harsh diplomatic manoeuvres by Chinese officials was a product deliberate policies of government in dealing with other nations. The same could be applied to China’s official relationship with African countries indebted to it. In essence, the world should be bracing for a belligerent but rising world power that may soon prove too hard to handle. This is why Africa needs to be wary as Chinese diplomats now known to defy diplomatic norms, manifesting in belligerent tones in their speeches, sometimes revealing their secret belief that the West is in irreversible decline and, therefore, China no longer needs to maintain friendly ties. It will therefore be in Africa’s enlightened self interest to use discretion in its diplomatic relationship with China and not to put all its eggs in one China’s bag as unexpected and unanticipated may happen. This is important so that Africa will not be left in the lurch.
Frontpage February 14, 2019
Frontpage February 13, 2021