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OPINION: US Strangled by Budget While China Beefs Up Investment in Africa

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The US is restricted by budgetary issues in its strive to wield influence in Africa, while China is beefing up its investment into the continent, Oded Shenkar, professor of international business at the Fisher College of Business, told RIA Novosti.

MOSCOW, May 6 (RIA Novosti), Daria Chernyshova – The US is restricted by budgetary issues in its strive to wield influence in Africa, while China is beefing up its investment into the continent, Oded Shenkar, professor of international business at the Fisher College of Business, told RIA Novosti.

“The US is very limited by its budget situation. The US can write checks here and there including to the Lebanese government, but the US itself is mired in very deep debt,” Shenkar said.

“So I don’t think the US is in a position to pour as many billions of dollars as China does into huge infrastructure projects like in Sudan,” he said, adding that on the contrary China is in a better position.

“China has not only the money, but the will and lack of public opposition to pour in a huge amount of money into those projects. And the US is not in that position,” Shenkar told RIA Novosti.

Speaking at the Organization of African Union headquarters in Addis Ababa, Ethiopia, Chinese Premier Li Keqiang said this week China will increase credit lines to Africa by $10 billion and will boost the China-Africa Development Fund (CAD Fund) by $2 billion, bringing it to a total of $5 billion, according to the Xinhua news agency.

Beijing also offered to share advance technology to help Africans develop high-speed railways.

“That’s something that’s been happening for a while,” Shenkar said commenting on China’s move. “It has been defined long ago as China’s strategic interest.”

According to the African Development Bank, at the end of 2012, Chinese investments in Africa totaled $20 billion, and trade turnover reached over $200 billion last year.

The US has also been investing in Africa, which drove international observers to speak about the competition between Beijing and Washington.

“Both the US and China are looking to have more influence in Africa,” Shenkar said. “Africa in some respect is not closely aligned with any political side. So yes, in some respect you can see struggle for global domination. Even though both will deny that such competition is taking place, it is taking place,” he asserted.

The financial pouring by Washington and by Beijing is different however. Unlike the US, China is interested in African agriculture. “One of the reasons is that China has a very strong interest in maintain food supply,” Shenkar explained. Another difference is the scale of investment. “While the US investment is usually limited to corporate investment, there are a lot of Chinese individuals – small merchants – that appear in some of those countries,” Shenkar said.

According to Shenkar, the major difference is in politics. China has a free choice on where it wants to pour its money, whereas in the case of the US, countries like Sudan will be out of consideration because of their human rights records.

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