Article from World Politics Review

Madagascar’s president, Hery Rajaonarimampianina, and Chinese leader Xi Jinping during a signing ceremony, Beijing, March 27, 2017 (AP photo by Lintao Zhang).

In January, Chinese Foreign Minster Wang Yi started his annual Africa tour with a stop in Madagascar’s capital, Antananarivo—a sign of the importance Beijing places on Madagascar’s role in the One Belt, One Road initiative. During Malagasy President Hery Rajaonarimampianina’s state visit to Beijing, the two countries signed several agreements to accelerate Chinese investment in energy, aviation, transportation, ports and airport construction. In an email interview, Dr. Cornelia Tremann, an expert on Sino-Malagasy relations who is now a researcher at the West Africa Research Center in Dakar, Senegal, details the historical ties that provide the foundation for this relationship.

WPR: Historically, what has been the nature of China-Madagascar ties, and how does China’s engagement there differ from elsewhere in Africa?

Cornelia Tremann: Sino-Malagasy diplomatic ties were established in 1972, after which the two countries signed several technical agreements and China began sending medical missions to Madagascar as part of an Africa-wide initiative. In the 1980s and 1990s, China constructed several high-profile public infrastructure projects. It is since the late 1990s, though, that trade, aid, investment and private migration have increased significantly, with the relationship becoming increasingly multidimensional. In 2003, China became Madagascar’s primary source of imports, and it is currently the island’s fifth-largest destination for exports. Overall, China is Madagascar’s most important commercial partner in terms of trade volume and total value of investments.

China’s historical ties to Madagascar set it apart from other African countries. Chinese immigrants began arriving in Madagascar in the mid-1800s as laborers for French colonial projects, and many established themselves as traders along the eastern coast of Madagascar. Intermarriages were common, and at least 60 percent of the “old Chinese”—as they are known in Madagascar—are of mixed Sino-Malagasy heritage. With a Sino-Malagasy population of 60,000, the island is home to the second-largest community of locally born Chinese, behind South Africa.

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This has made the island especially attractive to the new wave of Chinese migrants and investors arriving since the 1990s. Although difficult to quantify, the number of Chinese nationals residing in Madagascar is currently estimated to be around 100,000, which is higher than the number of Chinese immigrants in most other African countries. Chinese are arguably perceived as less “foreign” in Madagascar than in other African societies, allowing the “new Chinese” in Madagascar to take advantage of prevailing economic geographies and facilitate their entry into the Malagasy market.

WPR: What role does Madagascar play in China’s One Belt, One Road (OBOR) initiative, and what are the potential risks and rewards for both countries?

Tremann: Planned projects under the OBOR initiative include the creation of a Chinese-run special economic zone, the construction of a new highway between Antananarivo and Toamasina by China Communication Construction, and a deal with Huawei to develop a network of closed-circuit cameras to improve security in Antananarivo. The two countries also agreed for China to construct a deep-water port in the bay of Narinda, on Madagascar’s northwestern coast facing Mozambique, one of China’s many massive rail and port investments across the African continent intended to improve connectivity between African producers and China.

As the geographically closest African country to China, with direct sea lanes to China across the Indian Ocean, Madagascar is a natural extension of the 21st Century Silk Road. According to the Chinese Foreign Ministry, Madagascar will serve as “a bridge between the African continent and the Belt and Road Initiative.”

The principal risk for Chinese investments in Madagascar is the country’s volatile political system. During Madagascar’s last political crisis (2009-2013), China stayed true to its policy of non-interference in the internal affairs of other countries and neither significantly increased nor decreased its engagement. China moved forward with the largest investment deal in Madagascar to date for mining rights to an iron ore project, at a time when foreign investors and Western donors were pulling out of the country. Yet political crises and resulting civil unrest are bad news for any investor, including China.

The rewards of increasing Chinese investment, especially in Madagascar’s dilapidated infrastructure sector, could be significant. With a GDP per capita of $405 and 70 percent of its budget coming from donors, Madagascar is one of the poorest countries in the world. Strategic foreign investment in key sectors is crucial to economic development and poverty-reduction efforts, and the expected boom from large-scale Chinese investments will inject significant and much-needed amounts of foreign exchange into government coffers. It will also generate local employment opportunities and demand for services, while creating learning opportunities for local enterprises. Improvements in Madagascar’s transport linkages and energy distribution would enable Malagasy producers to more easily connect with global value chains and the large export markets in Asia, and would directly benefit the country’s rural population.

WPR: What political or other barriers might prevent successful implementation of One Belt, One Road projects in Madagascar?

Tremann: China will have to watch closely how its agreements and investments manifest themselves in the polarized and corrupt context of Madagascar’s political and economic rivalries. Madagascar is a highly unequal society, where political structures are permeated by ethnic and class-based social dynamics. Since the formal transition to democracy in 1992, successive democratic presidents have manipulated the democratic process to legitimize their own power and bolster their wealth, while the bulk of the population has remained poor.

Public perceptions of Chinese actors in Madagascar can also be quite negative and influenced by the belief that Chinese economic practices are not sufficiently regulated by either the Malagasy or Chinese state. Several recent acts of violence by Chinese management against Malagasy employees led to national scandals, the deportation of Chinese investors, and the loss of Chinese assets and returns on investments. Some incidents provoked serious riots, and strikes at Chinese-run enterprises are not uncommon.

Madagascar’s unique biodiversity—and the international attention paid to it—might also complicate or delay implementation of large-scale OBOR projects on the island, especially the construction of the port. Eighty percent of the island’s flora and fauna is indigenous, and large-scale projects by the government and foreign investors in Madagascar are closely watched for their environmental impacts by local and international watchdogs.

Another barrier to the swift implementation of OBOR projects is the poor state of Madagascar’s existing transport, communications and energy infrastructure. However, with the support of the current Malagasy government and a stable political context, the construction of infrastructure under the OBOR initiative should be relatively straightforward, at least in the medium term. The long-term sustainability and potential of these projects to contribute to economic development goals in both China and Madagascar is less clear.