Why China needs Mozambique

Some Portuguese-speaking African countries are expected to be stars of GDP growth on the continent in 2017, while others will continue to be flat, according to the most recent economic forecasts from international institutions, Macau Hub reported.The World Bank assesses the Mozambican economy as the most dynamic in the Portuguese-speaking world, growing 5.2 percent in 2017 and 6.6 percent in 2018 – although these forecasts are down 2.5 percent and 1.7 percent from earlier ones.

The U.N. outlook for Mozambique is even stronger. Mozambique and Sao Tome and Principe are expected to record 5.5 percent GDP growth increases, according to the U.N’s “World Economic Situation and Prospects 2017,” Macau Hub reported.

Lusophone Africa includes Angola, Cape Verde, Guinea-Bissau, Mozambique, São Tomé and Príncipe, and Equatorial Guinea.

Guinea-Bissau is expected to record 4 percent growth and Cape Verde’s economy is expected to grow 3.5 percent. Angola is expected to see GDP growth of 1.2 percent in 2017 and 0.9 percent in 2018 and 2019.

The Chinese Ministry of Foreign Affairs has repeatedly highlighted the unique compatibility of Portuguese-speaking countries with China’s ambitious “Belt and Road” initiative, Asia Times reported in October.At the 2016 Macau Forum, China reinforced its commitment to lusophone countries — especially Africa — promising a US$290 million loan package with special conditions to Angola, Mozambique, Guinea Bissau, and Cape Verde and East Timor, Africa Review reported.Macau is a semi-autonomous region on China’s south coast, across the Pearl River Delta from Hong Kong. It was a Portuguese territory until 1999.

Sub-Saharan Africa is expected to see overall economic growth in 2017 of 2.9 percent, according to the World Bank. Angola’s economic growth fell from 5.4 percent in 2014 to 3 percent in 2015 and 0.4 percent in 2016, according to World Bank. U.N. GDP forecasts are more favorable for the Angolan economy — 1.8 percent growth in 2017 and 2.8 percent in 2018, Macauhub reported.

Angola is the one-time poster child of China’s Africa expansion, said Jon Connars, an independent U.S. risk analyst and researcher, in an Oct. 28 Asia Times column. The Angola-China relationship was once so close that it gave rise to the so-called “Angola model” of economic development. Luanda’s skyline is dotted with Chinese-built skyscrapers, and it often tops the list of world’s most expensive cities. But the glamour ends at the waterfront Connars said.After Angola’s civil war ended, China came through with a lifesaving US$2 billion, oil-backed credit line to help Angola rebuild. Under Beijing’s patronage, Angola became Africa’s No. 2 oil producer and China’s No. 1 supplier of crude. After oil prices crashed, Angola could no longer service its US$25 billion debt to China. Since the loans were supposed to be paid in oil, most of the country’s crude production now goes toward debt repayment, leaving little to finance economic development. Spending has decreased by 40 percent and cuts to water sanitation and waste collection helped put Angola sixth from the bottom of the World Bank’s index of inequality, Asia Times reported. Unlike Angola, Mozambique’s foreign debt and accompanying economic problems cannot be traced back to Chinese loans. Instead they are the result of Chinese illegal fishing in its waters, Connars said.

By a recent count, 129 out of the 130 vessels operating in Mozambique’s territorial waters were registered in the Middle Kingdom and the country is losing US$35 million every year to the practice. This is alarming for the financial security of a country that IMF ranks 179th out of 185 in terms of GDP per capita. The World Food Program estimates that 34 percent of households are “food insecure and face perpetual hunger.”To stop the bleeding, Mozambique bought several patrol boats through the state backed EMATUM agency, which got the government in hot water with international creditors who deem the acquisition too expensive for its finances.There is a haunting disconnect between the priorities of Mozambique (where a third of its citizenry suffer from poverty) and China (which scours a 1,500 mile, poorly monitored coastline to essentially poach food resources desperately needed by the local population).African leaders are becoming more dubious of China’s intentions, whether because they are drowning in debt and unable to maintain venal political structures (like Angola) or because their countries are actively undermined by Chinese economic interests (like Mozambique).