China: Trade War Threatens Hidden Vices

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July 18, 2018: Since the 1990s the Chinese leaders have recognized that the major threats to their power were internal, not external. All the border disputes and nationalistic propaganda is all about retaining the loyalty (or at least obedience) of the population. Even more important was to maintain control of and loyalty from the military. This has become more urgent over the last decade as the military completes its modernization program while also running into a severe shortage of qualified recruits. This was due to the growing shortage of working age Chinese created by the decades old “one child” policy. The government saw this labor shortage coming and relaxed the “one child” policy in 2015 and basically turned it into a “two child” policy.

Young couples did not respond as expected. So the government is now offering cash incentives to couples who have a second child. That is not working either. Surveys found that 60 percent of young couples were reluctant to have a second child mainly because of the expense involved. In 2016 there were nine percent more births which was only 1.3 million more babies and not enough to make a dent in the growing shrinkage of the working age population (which declined over four million in 2016). The government had expected three million more births a year. It appears that China has, since implementing the one child policy in the 1980s, managed to acquire the “affluent mother” syndrome. That means better educated and paid women refuse to have a lot of children. South Korea, Japan and Singapore already suffer from this as does most of the industrialized world. This hit the military particularly hard as the Chinese have, for all practical purposes, come to depend on volunteers to staff the growing number of demanding technical and management jobs. Too many of the too few potential recruits want to make a career of the military or, if coerced, spend much time in uniform at all. But the Chinese military, as it modernizes (even with manpower reductions) cannot find enough qualified people. This situation is made worse by the requirement that all officers and key technical people be loyal to the party. The requirement is rigorously and repeatedly enforced by the party leadership even if it means the military is not as capable as everyone is led to believe. This illusion is difficult to sustain in some cases. The best example is the current expansion of the navy with over a dozen major warships entering service each year and there are not enough competent officers and sailors to run the ships. The navy has urged more women to join the navy and go to sea but it’s not enough.

Since the navy also has enough money (and orders to use it) for keeping most ships at sea a lot there is a lot of opportunity for embarrassing mishaps. Under pressure to deal with this the military has been allowed to hire civilian contractors to fill technical and management (but not command) jobs. These civilians serve on short contracts (a year or two at a time) and are a paid a lot more than anyone in the military would get for the same job. Again, loyalty is important and everyone is constantly made aware of this. In 2014 there was a noticeable increase in public speeches by senior military officers to their subordinates about the importance of loyalty to the Communist Party. Since the founding (1949) of the communist government in China the troops have sworn their loyalty to the Chinese Communist Party (CCP) not the country of China. Chinese leaders see the troops moving away from blind obedience to the CCP and thinking of themselves more as Chinese patriots. This is incorrect thought and the Chinese leadership has been openly demanding that Chinese military personnel remember their oath to ensure that the CCP remains in control of China.

North Korea

Part of the recent willingness of the North Korean leaders to discuss denuclearization and peace is their growing fear of what China might do if the nukes were not eliminated. Historically China was always a threat to Korea but since the Korean War (1950-53) North Korea has increasingly (especially after 1991) depended on China for economic, diplomatic and military support. All that is now at risk because the North Korean leaders would not obey Chinese demands. North Korea sees itself in a situation similar to Vietnam, which has also had a historically hostile relationship with China. But now Vietnam is allied with the United States, South Korea, Japan and many other nations against Chinese aggression. China is aware of this North Korean attitude but China has always believed that it was better to be feared and obeyed than to be loved. Meanwhile Kim Jong Un has often indicated that he feared China more than South Korea or the Americans. China is still the main conduit for imports and exports. Essentials like food come mainly from China but so do smuggled goods (both the items the North Korean government wants and those it forbids). North Korea exports to China, a major source of foreign currency, are down 90 percent so far in 2018 compared to 2017. This has caused growing shortages of foreign goods, which is crippling a lot of construction projects and factory operations. Russia will buy some North Korean exports, but it has to be kept covert and Russia cannot replace China in this respect. North Korea has been able to smuggle in a lot of items, but not as many as it needs because without the exports to China there is no cash for smugglers (who do not offer credit.) The shutdown of North Korean exports to China and restriction on what can be shipped to North Korea has made the North Korean leaders very responsive to Chinese demands. Apparently the North Korean denuclearization is going to be more convoluted than South Korea, the United States and Japan expected because China is calling the shots.

In North Korea most people don’t know or care much about the nuclear weapons. Basic needs like food, fuel and education for their children are more immediate issues. Among North Koreans working in China (who often speak “off the record”) and the donju (entrepreneurs) and senior officials in North Korea know about the denuclearization and either back keeping the nukes or believe that giving up the nukes would bring more economic reforms as well as foreign aid and investment. The nukes are simply not as big an issue for most North Koreans because so many are living on the edge as a result of shortages. North Korea also take for granted that the news of peace talks is just more state propaganda and means nothing unless something actually happens to make their lives better. A growing number of North Korea see better trade relations with South Korea and the most worthy goal, especially if it led to reunification and North Koreans living as well as South Koreas. A growing number of North Koreans are learning that South Koreans are even wealthier than the Chinese and that knowledge involves a degree of national pride because China has always been a potential threat to Korea.

One Chinese demand that Kim Jong Un is apparently agreeing to is implementation of market economy, using the Chinese experience (a successful market economy in what is still a communist police state). Kim has long resisted this, feeling that was too risky and might not work as it did in China. At this point Kim has few options and the Chinese economy plan no longer looks as dangerous as it once did. For one thing, Kim has had more time to study it. Kim showed keen interest in the Singapore “economic miracle” (by an ethnic Chinese majority state on an island with no natural resources other than location near a major trade route and a large port.) during his brief visit. On the June 19 visit to China Kim spent more time inspecting economic activities. Kim is increasingly desperate to get some economic aid and if giving up nukes does that, and restores good relations with China (and guarantees to keep the Kim dynasty in power) then life becomes much safer for the Kims and a lot easier for most North Koreans. Another indication that North Korea is serious this time is the both Koreans have already agreed to play down any thought of reunification (something China is very much against). All Koreans will still want unification but the attitude now is, one major crises at a time.

Since all the peace talk activity began in May China has greatly reduced border security. There are far fewer police and soldiers patrolling the border and China based smugglers are back in business. On the North Korean side of the border security has been increased. But North Korea security personnel are easier to bribe, so with fewer problems on the Chinese side the smugglers are back in business. There has also been more legitimate commerce with more North Korean going to China on business or to work. One problem with commerce between China and North Korea is that Chinese businesses have learned to distrust their North Korean partners (usually the North Korean government) and are now demanding more assurances that they will not be cheated in any future deals. For one thing the Chinese investors are seeking the right to install surveillance cameras, that can be monitored from China, to keep an eye on activity in North Korean enterprises created by Chinese investors.

China has assured the United States that China wants North Korean nukes gone but China is in a better position (politically, culturally and physically) to work out and enforce the details of denuclearization. The Americans insist on CVID (Complete, Verifiable, Irreversible Denuclearization) and the Chinese say they agree. But it appears there will be no detailed timetable for the entire process, even though the Americans and South Koreans don’t want to start shipping aid to North Korea before they have something verifiable to show for it. This part could get messy on several levels but at least the Americans have an experienced negotiator. The lead U.S. negotiator is the American Secretary of State who was previously the head of the CIA. This puts the North Koreans on the defensive since none of their usual negotiating stunts will work. At the very least this will speed the process along, whether it is succeeding or not. The U.S. negotiator is to visit the two Koreas before the end of June. Working closely with South Korea is important because the South Koreans have excellent intel on what is going on inside North Korea and the South Koreans have to sign off on many of the negotiating goals (especially those covering South Korean aid).

Foreign Economic Entanglements

Chinese foreign trade and investment activity has been growing for decades. China was successful not just because of lower prices but because Chinese firms were encouraged by their government to exploit corruption and opportunities to steal trade secrets and patents, especially in the West. American firms complained of this for decades and the current government has called China to account over these issues. This is being done by imposing higher tariffs on Chinese imports and cracking down even more on Chinese economic espionage and patent abuse. While China can and has retaliated with tariffs (and more denials about other trade and patent abuse accusations) China is definitely more vulnerable to this sort of thing than the United States. Not only does China have a lot more internal government and commercial corruption but their economy is far more vulnerable to trade interruption than America. Rising unemployment if far more of a political threat in China (despite being a communist police state) than in the United States. The Chinese financial system is far more sensitive to disruptions caused by a trade war. For example when the tariffs were first imposed in early 2018 the Chinese stock market fell 20 percent while the Americans markets declined one percent. Facing declining financial markets and rising unemployment magnify other unresolved problems in China, like the huge amount of bad debt the banks hold (most of it the result of corrupt practices).

To make matters worse some massive Chinese overseas investments are going bad and efforts to deal with could mean more problems for China. In Venezuela the socialist government has ruined its economy, despite having the largest crude oil reserves on the planet. But even the Venezuelan oil industry is falling apart and Venezuela has defaulted on more than $50 billion Chinese loans, many to be repaid with oil. Chinese firms are offering to invest $250 million to revive the Venezuelan oil industry but only if the government allows China to convert some of the bad debt to ownership of some of the Venezuelan oil reserves. Throughout Latin America that type of foreign ownership of natural resources is generally forbidden. Then there is the American Monroe Doctrine which has, since 1812, protected all Western Hemisphere nations from foreign military intervention to collect bad debts. China is playing a very high risk game in Venezuela which, if it backfires, will have serious financial and economic repercussions in China.

Venezuela isn’t the only tropical investment that is going bad. In 2008 a consortium of Chinese companies agreed to build nine billion dollars’ worth of infrastructure in Congo in return for access to mineral resources. The 2008 deal specified China would have access to ten million metric tons of copper and around 600,000 metric tons of cobalt. At the time it was believed that China would ultimately make a couple of billion dollars on the deal and possibly more because China was financing the operation. The sheer size of this investment guaranteed China political access to Congo’s corrupt and bribe-friendly leaders. Yet by 2012 the deal began to come apart when Congo could not provide the electricity it promised. To overcome this the Chinese firms had to buy electricity from Zambia. This was an unexpected expense, as was the Chinese decision to build their own hydro-electric dam facility. More recently there was another problem; the copper reserves turned out to be about a third less than originally estimated. The price of copper has also dropped over 20 percent since 2008. This means that the Chinese investments in Congo will, at best, break even and could easily become unprofitable. What is apparent is that China did not appreciate the problems one could encounter with the mining business and investing in sub-Saharan Africa. One final problem is that the corrupt politicians who helped China get the 2008 deal are being forced from power, putting the Chinese investments at even greater peril.

Not all Chinese foreign investments are in trouble. Case in point is Russia where China has quietly taken control of the local economy in those parts of Russia that border China and North Korea. That explains why China has ignored North Korea using Russia and Chinese cargo ships to illegally export coal. North Korea moves the coal (illegally) into Russia via truck where it is exported on ships owned by Chinese companies. China is tolerating this because Chinese firms have been exploiting corruption in Russia (which is worse than in China) to dominate the economy in the Russian Far East (the area between Mongolia and the Pacific coast). China has a historical claim on this area which China revived after World War II when the communists took over China. Those claims led to border skirmishes during the 1970s that were halted when Russia made it clear it was prepared to risk nuclear war over this issue. That Russian policy still stands, although it is not publicized. When the Soviet Union collapsed in 1991 and the Russian economy went free market and open to foreign trade and investment China saw an opportunity to get back its lost lands in the Russian Far East. China will slowly absorb the Russian Far East economically and demographically (with more Chinese settling in the Russian Far East, legally or otherwise.) Eventually Russia finds that Chinese comprise most of the population in their far eastern provinces and control the economy as well. This approach takes longer but is less likely to trigger a nuclear war with Russia.

Another investment project with neighboring nations is doing less well. This is Obor (One Belt, One Road), the Chinese effort to build roads, pipelines and railroads throughout Eurasia to give China easier access to markets via land routes. A growing number of these neighbors are having second thoughts and calling for the deals to be negotiated or renegotiated to provide the host country with a better deal. As with Congo, China often gets into trouble with Obor deals when the corrupt government it made the Obor deals is replaced. This happened recently in Malaysia and the Obor deals there quickly found themselves in trouble.

July 16, 2018: Burma is again asking for Chinese help in bringing peace to the troubled tribes of northern Burma. Some of these tribes are ethnic Chinese that long ago fled China to escape imperial control. The most powerful of these Burmese tribes are the Waa md there are many Wa still living in Chat. That’s because until the late 1940s these tribal areas between China and the kingdoms of Thailand, Burma and India were a no man’s land because there was nothing their but jungle and hostile tribes who wanted nothing to do with any government. The British convinced the tribes to join either Burma or India because the British were leaving and at the time China was still fighting a civil war which, no matter who won, would be good for independent tribes in these jungles. Turned out that there was a lot of jade and other minerals in those hills as well as a tradition of the tribes producing opium. While the Indians finally subdued their tribes Burma is still working on it.

The Wa are powerful because they have been most successful in the drug business and have good connections in China and Thailand. The Wa gave lots of cash for arming their private army and providing economic opportunities for the Wa. Thus the War are a military force the Burmese Army has never been able to subdue. With the help of China the Burmese Army could defeat the Wa and other rebels but the Chinese want much in return, especially in terms of cooperation in keeping the tribes from interfering with Chinese economic projects in the north.

The main Chinese goal is to get its economic projects, mainly those connected with the Obor project. Obor is all about China building roads, railroads, pipelines and ports to make it easier for Chinese imports and exports to move around. Pakistan, Nepal, Thailand Sri Lanka and Burma are all Obor participants that are seeing billions of dollars in construction Chinese projects taking place and the terms of these deal tend to favor China, not the country where the construction takes place. Not surprisingly many people in these Obor countries see the Chinese investments as another form of colonialism. China prefers not to call it colonialism but rather seeking to expand its commercial activities. The Burmese tribes have long depended on Chinese cash and diplomatic influence to survive.

July 12, 2018: China won another victory in its border disputes with India as Indian revealed that it was not going ahead with its 2013 plan to raise a new force of 90,000 troops equipped and trained to deal with growing Chinese military activity along the mostly mountainous border with India. China saw this new Indian force as a threat to its efforts to maintain military superiority along the border. India said it backed away from forming the new mountain force because the Indian military budget could not afford the expensive equipment and weapons all these specialist soldiers would require. That pretty much sums up the situation between India and China. The Indians have a much smaller defense budget than China (because of a much smaller GDP). To make matters worse the Indian military procurement is much more corrupt and inefficient than its Chinese counterpart.

July 11, 2018: A Chinese intelligence collection ship arrived off Hawaii to unofficially observe the RIMPAC (Rim of the Pacific) international military exercises. In late May the United States withdrew its invitation for China to attend the 2018 RIMPAC. This exercise has been held since 1971 and is currently held every two years for nations that are dependent on freedom of the seas in the Pacific Ocean. During the Cold War (that ended in 1991) RIMPAC was about how to deal with the Russian threat. China was first invited to attend in 2014. RIMPAC is the largest international naval exercises held anywhere. There are usually twenty or more nations participating plus other invited to observe. Even when China was invited to observe RIMPAC one of their Chinese intelligence collection ships would show up as an unofficial observer.

July 10, 2018: Chinese and foreign economists agree that the current trade war between China and the United States will have little impact on Chinese economic performance and that Chinese GDP growth this year will be as earlier predicted; about 6.5 percent. While good growth in world terms the 6.5 percent represents another downward step for Chinese GDP growth which, until a decade ago, had been ten percent or more a year since the 1980s. But now the boom is winding down. The U.S. trade war is mainly for show as the Americans signal that they will no longer tolerate the Chinese theft, cheating and deception that has characterized Chinese economic behavior with its foreign trading partners since the 1980s. China fears that if the Americans keep at it China will be hurt and GDP growth will plummet.

July 6, 2018: Malaysia is suspending $22 billion worth of Chinese construction contracts for Obor related transportation projects. The problem here is corruption. The recent national elections in Malaysia surprised most everyone when an anti-corruption party took power and promptly went after known or suspected shady deals the outgoing government had engaged in for years. China tends to go along with government demands for bribes and this is especially true with Obor related projects.

July 5, 2018: The government publicly warned Iran that threats to block the Strait of Hormuz (and block most world oil exports) in a crises would be considered a hostile act by China. The Chinese put it more politely by simply saying that Iran should make more of an effort to get along with its neighbors. The Chinese warning carries much weight. China is, and has long been, a major customer for Iranian oil and been very helpful when it came to certain types of imported goods that might be seen as violations of sanctions. China was also very helpful in the UN because China is one of a handful of nations that have a permanent veto power and often used it when Iran needed it. When China admonishes an ally openly like this it is not just to put some emphasis on a private warning but also to let others know exactly what the Chinese position is on the situation.

July 4, 2018: Three Chinese coast guard vessels entered Japanese territorial waters (within 22 kilometers of land) around the Senkaku islands and remained in Japanese waters for 90 minutes. This is the 13th such incident in 2018. A growing number of Chinese coast guard ships are actually older warships with some of their weapons removed. In these cases Japan issues an official protest which China dismisses because China does not recognize Japanese claims to Senkaku. There have been a growing number of such incidents since 2015. In early 2016 Japan announced the creation of a new naval task force to patrol and defend the Senkakus. This force consists of ten new 1,500 ton patrol ships and two older vessels carrying helicopters. Japan has controlled the Senkakus for over a century and says it will use force to retain possession. China has challenged Japan and its allies to do just that. To make matter worse this year the Chinese coast guard has been transferred to the navy making it even easier for coast guard and navy forces to coordinate operations.

July 3, 2018: Two new Type 055 destroyers were launched today. These two 12,000 ton ships did not have to be launched on the same day, but they were being built simultaneously in the same shipyard and the government decided it would make for a useful media event. And so it was, showing how rapidly the Chinese fleet is modernizing and growing. In the late 1980s the Chinese navy had fewer destroyers and frigates than it does today and all were Russian designs with weapons and equipment inferior to Western warships. That has all changed, especially in the last decade. China launched the first of four (later increased to six) Type 055 destroyers in mid-2017. This was not unexpected because evidence of such a ship (Internet photos of ship mockups for training and chatter) began showing up in early 2015. Back then it appeared that this new (Type 055) 12,000 ton cruiser class ship would have 128 VLS (vertical launch system) tubes and much else besides. China claimed this ship would be the equivalent of a U.S. Burke class destroyer. The Type 055 would be, and now is, the largest surface combat ship China has ever built. Before 2015 the new Chinese Type 052 destroyers were described as similar to the Burkes but in reality the Type 052s were “Burke Lite” while the Type 055 is much closer to the Burkes in capabilities and, at least on paper, surpasses the American ships in some ways. The first Type 055 is still being equipped with all its electronics and weapons and expected to begin sea trials before the end of 2018. These sea trials will be closely watched by foreign navies. This is usually very revealing about what works and what doesn’t. The Chinese have, so far, been quite persistent in fixing flaws discovered during sea trials and regular operations and that makes the new Chinese ship designs rather more frightening.

July 2, 2018: China assured Bangladesh that Burma would take back the million or so Rohingya Moslems who were driven out of Burma in the last two years. While this was reassuring to Bangladesh it was mystifying to Burma where the Chinese have not made any threats lately to persuade Burma to take back their Rohingya. Then again, China prefers to use surprise as well as threats in its diplomacy.

June 30, 2018: Sri Lanka announced that it will move one of its major naval commands to the enormous new Hambantota port facility Chinese loans had financed in Sri Lanka. The Chinese investors who financed the port recently took control because Sri Lanka could not afford to repay the loans. The port was too big to be profitable. The Sri Lankan Navy is leasing space at the port from the Chinese. As many finance experts warned, Sri Lanka could not meet the payments on the loan and defaulted. Chinese firms took controlling interest of the port. China is increasingly using its large foreign investments as weapons. Case in point is the tactic of loaning poor countries large amounts of money for huge development projects (like ports, roads and railroads). The loans are on terms that look attractive but eventually must be repaid by governments that find themselves unable to do so. When the debtor nation runs into trouble making payments China offers to reduce the load in return for control (if not majority ownership) of the ports, railroad, airport or whatever. With control of these facilities China can probably run them more efficiently, and profitably. But control means it is easier for China to use the facility for military or espionage purposes. This is called DTD (Debt Trap Diplomacy) and has been a favorite Chinese tactic for over a thousand years by virtue of China having been, until a few centuries ago, the wealthiest empire on the planet. Nations currently vulnerable (they have large Chinese debts) to DTD are Sri Lanka, Djibouti, Kyrgyzstan, Laos, the Maldives, Mongolia, Montenegro, Pakistan, Venezuela and Tajikistan. Most nations are aware of the DTD trap but where there is a lot of corruption China can create a DTD situation anyway. Some of these DTD efforts go bad and cost China a lot of money, but on average DTD is a net gain for China as it acquires military, economic and diplomatic advantages without having to fight.

June 25, 2018: In the northwest Xinjiang province now has a reputation of being a large test site for new “Big Brother” (as in the anti-communist novel “1984”) technology. Apparently the government considers this effort a success because it was recently revealed that $9 billion was spent on this tech in Xinjiang during 2017 and that was twice what was spent in 2016. This is being done in the name of controlling Islamic terrorism (although there is very little of that in China, even in Moslem majority districts) and ethnic separatism (which is a real threat especially in Xinjiang and Tibet). On the other hand the government has made enormous strides when it comes to reducing poverty in Xinjiang and Tibet but that tends to produce more affluent and educated separatists. Economic investments also continue but the largest investments continue to be for Big Brother projects.

June 19, 2018: North Korean leader Kim Jong Un arrived in China for his third meeting with Chinese leader Xi. American and Chinese officials have long agreed that these talks with Kim Jong Un won’t work unless the North Korean nukes are gone and effective verification installed. The last two (March and May) meetings between Kim and Xi were apparently to make sure Kim understood what was expected of him and what the consequences would be if he did not comply. The Chinese realize that the Kim dynasty can decide to go down fighting, which has been a common outcome in Chinese-Korean disputes in centuries past. China does not want an unstable, nuclear armed North Korean “ally” on its border. Kim Jong Un traveled to China on the 19th using his elderly Il-62 jet, which Kim had never used before (but other senior officials have) and relied on his private train. This trip was more open (to media) and relaxed that the last few. This is the second visit to China this year. The trip to Singapore was his first use of air travel since he took power. His father and grandfather also avoided air travel. The might have something to do with North Korean Cold War era efforts to plant bombs on aircraft used by South Korean leaders. These days the aversion to air travel has more to do with fear of a coup by military leaders who have a long list of grievances against the Kim dynasty. The details of how this worked during the Singapore trip took more than a week to get outside North Korea. The first signs were the fact that Kim took two senior army leaders with him. He had never taken these fellows to China for his visits with the Chinese leader. Why take them to Singapore? It was another example of the old saying; “keep your friends close and your enemies closer”. Kim has a lot of enemies in the military leadership because this privileged group has suffered more loss than any other segment of the senior leadership (the few percent of the population that keeps the Kims in power and lives well because of their services). In order to keep the ballistic missile and nuclear weapons programs going the military has suffered the most obvious budget cuts during a period of continuing economic stagnation. For the troops this means little or no new equipment and less fuel, food and other resources to keep the million troops going.

June 18, 2018: China is calling on India to meet and work out a mutually agreeable solution to their border disputes. China is also calling on Pakistan to do the same with India.

June 15, 2018: Great Britain, France and the U.S. have suspended action on a request by the Central African Republic (CAR) that the UN Security Council approve the delivery of Chinese weapons deliveries to CAR security forces. In early June the CAR asked the UN to exempt it from an arms embargo and allow China to provide its army and police forces with light infantry weapons, anti-aircraft weapons, ammunition and armored personnel carriers. France and the U.S. noted that the CAR is not threatened by air attacks. The UN imposed an arms embargo on the CAR in 2013. China has offered to donate the equipment. The EU military training mission in the CAR and the UN peacekeepers both supported the arms request.

June 11, 2018: North Korean leader Kim Jong Un travelled to Singapore aboard one of the four B-747s China uses for travel by senior officials. Kim has an official airliner (which he has never used) but it is an elderly Russian Il-62. Kim did not trust his Il-62 for his first foreign travel especially this trip in which he was to meet with the American president. .

June 10, 2018: In North Africa (Algeria) a Chinese citizen was robbed and murdered in the capital (Algiers) during daytime in a supposedly safe area and China is pressing Algeria to find the killers and improve the security for more than 40,000 Chinese in Algeria. China has billions of dollars construction projects in Algeria. For example a Chinese firm is building a new port facility 60 kilometers west of the capital that will cost $3.3 billion. China is paying for it and Chinese builders handling the construction say that by 2025 the 23 docks in the new port will be able to handle 26 million tons of cargo a year, most of it in containers. China and the Algerian government will operate the port, which will be one of the largest in North Africa. China is becoming a major presence in Algeria. By 2013 Chinese firms had invested $1.5 billion in Algeria and there were some 30,000 Chinese working in Algeria for fifty Chinese companies. Since 2013 Chinese investment has grown enormously and by the end of the decade will amount to more than $1o billion in just twenty years. Most of the Chinese are working on transportation (roads, ports and railroad) projects. Although Algeria has lots of unemployment, there are few people with the necessary skills for many of these projects, so China brings in skilled workers from China. Some of those Chinese will settle down in Algeria, but not as many as in non-Arab Africa. The Arabs are not as accepting of foreigners as many other cultures are. While many oil-rich Arab states import foreigners for most of the civilian jobs, these workers are not encouraged to stay and there are strict laws governing the presence of the foreign workers. Algeria sees the Chinese investments, especially in infrastructure, as a way to get the local economy growing and thus provide jobs for the many young Algerians who are increasingly angry about being unemployed. The Chinese workers are very efficient and tend to get their projects done on time and on budget. This makes the Chinese popular with the government which, mainly because of corruption, is notoriously inefficient, especially when it comes to building things for the public.

 

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