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  • Political alliances manifest themselves hereon the voting floor of the United Nations General

  • Assembly in New York, New York.

  • In this room countries impose legislation that carries weight worldwide and so what

  • happens in this room is the physical materialization of the world's politics.

  • 47 years ago, exactly that happened when one of the General Assembly's most consequential

  • votes occurred.

  • China, you see, essentially has two governments.

  • There's the Republic of China which used to control the mainland and Taiwan but today

  • only administers Taiwan and there's the People's Republic of China which controls

  • the mainland.

  • Both claim to be the rightful governments of all of the Chinese territoryboth Taiwan

  • and the mainlandand so back in 1971 the United Nations had to decide which government

  • would represent China.

  • Essent ially, the question was which government was the rightful leader of the territory as

  • there could only be one in the United Nations.

  • The US was the main superpower opposing the People's Republic representing China as

  • it had a strong political and military alliance with the Republic of China government and

  • so the vote was essentially the US' sphere of influence versus the world.

  • Among the 35 countries that voted against the People's Republic were much of Africathe

  • Central African Republic, Chad, Gabon, Liberia, Niger, South Africa, and plenty of others

  • that sided with the US.

  • Despite the US's efforts, the resolution ended up passing and the representative government

  • for China in the UN was switched to the People's Republic of China but what's interesting

  • about this is not the result, it's who voted against the People's Republic.

  • Since that 1971 vote, you see, something has changed.

  • In 2007, the UN general assembly met once again to vote on whether to adopt a resolution

  • condemning the human rights situation in North Korea.

  • As one of North Korea's strongest allies, this vote was China and its sphere of influence

  • versus the world.

  • In this vote, though, only Burundi, Equatorial Guinea, Eritrea, Ghana, Kenya, Lesotho, Liberia,

  • Madagascar, Malawi, Mauritania, and Tanzania voted against China.

  • All the 43 other African countries either abstained or voted no along with China because

  • in the forty years between those votes, political ties changed.

  • Africa no longer bows to the US.

  • Much of the continent is now economically and politically aligned with the world's

  • fastest emerging superpowerChina.

  • The simple answer for why this is is because China has pumped huge amounts of money into

  • the continent of Africa.

  • They're buying allies.

  • For example, China built a $3.2 billion railway in Kenya trekking the 300 miles from Nairobi,

  • the capitol, to Mombassa, the second largest city and primary port, in 4 hours and 30 minutes.

  • That's faster than what the fastest train in the US, the Acela Express, takes to travel

  • the equivalent distance from Philadelphia to Boston.

  • China also built a $526 million dam in Guinea which helped push the country from having

  • constant power shortages to making more energy than it needs and selling the extra capacity

  • to its neighbors.

  • China also built a $475 million light rail system in Addis Ababa, Ethiopia, the first

  • of its kind in sub-Saharan Africa, designed as a way to combat the capital's crippling

  • traffic.

  • These are only a sampling.

  • There are literally hundreds of others of Chinese infrastructure projects in Africa

  • each year.

  • All across the continent, China is playing a part in projects both big and small that

  • are transforming African economies.

  • It's important to note that these projects are not, though, free.

  • Each of these three were financed by loans granted by China's state-owned and controlled

  • Export-Import bank and these loans do, of course, need to be paid back by the countries

  • granted them.

  • Large African infrastructure projects, though, would be viewed as risky by any traditional

  • bank and would therefore struggle to get financed but China's export-import bank doesn't

  • care.

  • Assuming cooperation between the Chinese and African countries' governments, this bank

  • will give low-interest or no-interest loans to African countries so they can build these

  • trains or dams or other projects.

  • These loans are therefore considered a form of foreign aid since China doesn't expect

  • to get all their money back, at least adjusted for inflation, since they're not charging

  • much interest and there's a high risk of default.

  • Of course China isn't just financing these projects out of kindness.

  • For each of them there's a political goal behind it.

  • You see, the country of China is running out of growth potential.

  • Its era of double digit year over year GDP growth is over as it makes the shift from

  • industrializing to industrialized.

  • Africa, meanwhile, is one of the least developed areas of the world and a lack of development

  • actually makes fast growth easy.

  • The first step of economic development for many countries is natural resource exploitation.

  • Nearly every country has some level of natural resources that they can use to kickstart growth

  • but first they need to have enough money to build the infrastructure and take the steps

  • needed to gather these natural resources.

  • As everyone knows, it takes money to make money and China has money.

  • By investing in African mining and farming, China can profit off of Africa's growth

  • and fuel the business back in China that require minerals and food, but in addition to it serving

  • as a source of natural resources, Africa has another resourcelabor.

  • It might seem strange that China, the country that the world uses for low-cost manufacturing,

  • is looking for a labor source elsewhere but that is exactly what it's doing.

  • China is a victim of its own success.

  • The economic development that its manufacturing industry brought pushed a large segment of

  • its population into the middle class which raised labor costs country-wide.

  • It's not bad news, China as a country has shifted from having a low-skilled to a medium-skilled

  • workforce as their education level has improved, but for the lowest cost, lowest skilled manufacturing

  • work, the country of China is no longer competitive.

  • Therefore, Chinese manufacturing firms are setting up their own operations in Africaone

  • of the cheapest and lowest skilled labor markets in the world.

  • Today, China is now the largest trading partner with Africa as a whole.

  • Despite China being a vastly larger country than the US in population, the US and China

  • both trade a similar value of goods worldwide each year.

  • In this case, though, whereas $48 billion worth off goods were exchanged between the

  • US and Africa in 2016, China traded $128 billion worth of goodsnearly three times as much.

  • Now, the whole idea of setting up a structure of power over other less developed states

  • in order to gather resources and use their labor force might sound familiar because that's

  • largely what colonialism was.

  • The motives behind European powers expanding their territory to less developed nations

  • in the 15th through 20th centuries were remarkably similar to the motivations behind China's

  • growing economic influence in the developing world today.

  • Despite what some may say, there is empirical evidence that China has been using these infrastructure

  • investments to affect worldwide politics.

  • It's been found that if an African country recognizes Taiwan as a country they receive,

  • on average, 2.7 fewer Chinese infrastructure projects within their borders each year.

  • Conversely, if an African country votes overwhelmingly along with China in the United Nations General

  • Assembly, they receive 1.8 more infrastructure projects per year.

  • Considering that the General Assembly is an equal representative body where each country

  • gets one vote no matter if they have a million residents or a billion, China's getting

  • a lot of influence for, in the grand scheme of things, not a lot of money.

  • China touts the fact that their foreign investment and aid isno strings attached.”

  • Unlike other institutions that give low or no-interest loans to developing countries

  • like the International Monetary Fund or World Bank, China give loans with no requirements

  • on factors like respect of human rights or democratic elections.

  • Of course, this data linking infrastructure investment with political leanings shows that

  • there are indeed hidden strings that require benefit for China rather than benefit for

  • the receiving country.

  • Western powers are understandably concerned about this shift in power dynamics towards

  • a country with vastly different ideals.

  • In 2017, China entered a select club as it opened a military base in Djibouti.

  • While four other countries have bases in DjiboutiFrance, Italy, Japan, and the USthis base was unique

  • as it was China's first base abroad and those by themselves, military bases abroad,

  • are unique.

  • Only 15 of the world's most developed and militarily powerful countries worldwide have

  • them and now China is one of them.

  • Although, western powers might be worried for the wrong reasons.

  • The government of China is clearly putting a lot of focus and money into Africa but not

  • as much as you'd think based off the result they're gettingvast amounts of influence

  • over a whole continent.

  • There are two key numbers to look at.

  • In 2015, China loaned just $12 billion to African countries.

  • In the same year, the country invested a mere $3 billion in the continent.

  • That's just not much but the reason China is gaining this enormous influence over the

  • continent is because the Chinese government no longer has to force this phenomenon.

  • Private Chinese industry is taking hold of Africa.

  • Of the estimated 10,000 Chinese businesses in Africa, 90% of them are privately owned

  • rather than one of the numerous Chinese state-run companies.

  • The Chinese companies in Africa are actually making moneysome substantially so.

  • The Chinese government certainly has provided a considerable push to the industrialization

  • of Africa but now that that's done, economic forces are moving the initiative further forward.

  • Chinese small business is gripping the continent.

  • Much of the western world is ignoring the prospects of the continentignoring that

  • business in Africa can now be as profitable as business in China was when its period of

  • tremendous growth began.

  • Right now, Africa is establishing itself as the source of labor and resources for China

  • and so, until the west pays attention, Africa will continue inching forward on its path

  • towards becoming China's China.

  • One of the techniques used to predict the GDP or GDP growth of a country, which is of

  • course used to decide which country to invest in, is machine learning.

  • For example, here's what a machine learning model predicted a country's GDP would be

  • over three months and here's what it actually was.

  • It forecasted the country's GDP far better than humans did.

  • The science behind predictions like this is complex but fascinating.

  • If you want to learn how it works, though, the best place to do so is brilliant.org.

  • Their machine learning course makes this advanced concept simple because their simple explanations,

  • illuminating graphics, and thought-provoking questions break a concept down into small

  • packages and then builds it back up to the final result.

  • They truly are experts in successfully teaching complex topics.

  • They also have plenty of other fascinating courses on topics like computational biology,

  • number theory, artificial neural networks, and more.

  • You can start learning for free at brilliant.org/Wendover but then, if you want to access the full range

  • of classes with their premium subscription, the first 200 to use that link will also get

  • 20% off their annual premium subscription.

  • Thanks for watching and we'll see you again in three weeks for another Wendover Productions

  • video.

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How Africa is Becoming China's China

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    Samuel posted on 2018/09/10
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