China – Africa: Top 10 issues going into 2021
2020 proved to be a year that put the China-Africa relations in the spotlight with the arrival of the pandemic to the continent. As we settle into 2021, here’s a look at 10 issues that will continue to shape the Sino-African relationship.
Vaccines
With the US, EU on the sidelines, China’s vaccine distribution in Africa could produce huge geopolitical dividends
China is building a C0vid-19 vaccine distribution pipeline in Africa including a coldchain air bridge from Shenzhen, a distribution hub in Addis Ababa, and manufacturing capabilities in Cairo.
With wealthy countries hoarding vaccines, China’s supply could have a disproportionate health impact in Africa and produce significant geopolitical dividends for Beijing given that both Washington and Brussels are, so far, not engaged on this issue.
Loans
China will continue to curtail lending to Africa in response to pressure for improved risk management in Beijing
The steady decline in official lending to African countries by China’s two main policy banks, the China Development Bank and the China Exim Bank, will continue in 2021. This doesn’t mean that all lending will cease, just that it will be more selective, require far more due diligence, and may come from alternate sources like Chinese state-owned enterprises and commercial banks. The days when African governments enjoyed relatively easy access to Chinese infrastructure financing are over.
Debt
The debt crisis in a select number of African countries will worsen this year but not because of China
Chinese creditors will likely intensify their efforts to restructure outstanding loans in the 6-10 African countries that face the most acute debt repayment challenges. Just as Chinese policy banks and other lenders reportedly restructured loans in Angola and Zambia this year.
That process will likely extend to Kenya, Ethiopia, and Djibouti this year. There’s no evidence that Beijing will cancel any of its commercial or concessional loans. Instead it will probably provide interest repayment moratoriums as part of the G20 DSSI, extend repayment terms and renegotiate interest rates.
Trade
China’s appetite for African resources will rebound in 2021, but not as much as suppliers want.
Two-way trade is likely to rebound this year from its +20 percent decline in 2020, due largely to a revitalised Chinese economy.
But it’s highly unlikely that it’ll grow beyond 2019 levels (roughly around US$208 billion due to China’s ongoing drive to diversify its sourcing of raw materials so as to avoid regional dependency for certain resources.
For example, oil buying will continue to shift to Gulf countries, the Americas, and Russia. The notable exception, though, will be coltan, cobalt, and other strategic minerals found in the DRC. Chinese imports into Africa will likely remain robust, especially as many local suppliers of processed goods across the continent have struggled to stay in business.
Investment
Volume, not necessarily value of Chinese FDI in Africa will likely increase in 2021.
Chinese investors are eyeing distressed companies in Africa and will likely take advantage of the current economic downturn to pick up assets at a discount. Look for more Chinese mergers and acquisitions activity in the mining industry, oil exploration, and the further expansion of China’s already formidable presence in the African tech sector.
Chinese corporates, venture capital, and private equity firms will likely be just as selective as their government counterparts and become much more disciplined about which companies and industries they invest in next year. While there may be more deals in 2021, the overall value of foreign director investment may not increase.
Belt and Road
Further African integration into the Belt and Road Initiative (BRI) will become a much more important priority in 2021 as Beijing seeks to leverage its sizable prior investments in its vast trading network. There’s growing enthusiasm in Beijing to link the BRI with regional free trade networks in Africa and Asia. The idea here would be for African countries to leverage BRI-financed infrastructure that would move goods duty-free across the continent to customers in BRI member states, with China playing a central role providing logistics, technology, and setting standards.
Technology
Chinese dominance of large swathes of Africa’s technology sector will increase in 2021. Chinese technology companies will build on their already formidable presence in the African tech sector with the expansion of 5G services provided by companies like Huawei and ZTE. There’s no indication that Transsion’s grip on +50 percent of the African mobile phone market is loosening. After hesitating to enter the market, Alibaba now looks poised to expand its presence in Africa, particularly via Aliexpress. It will provide new competition to local players like Jumia and Kilimall. Expanded use of Chinese surveillance technology will also likely become a more contentious issue next year among both African and international civil society stakeholders.
Geopolitics
Africa will no longer be the focus of US – China tensions and will instead become a pawn in China’s other conflicts.
The incoming Biden administration appears interested in making its foreign policy in Africa focus on, well, Africa, and not viewing the continent just as another theatre to confront China. Washington will likely foreground broadening economic engagement, and promoting good governance, with less emphasis on competing directly with China on the continent.
But with China’s international relations souring in many parts of the world (Australia, parts of Europe, Brazil, the US, etc…) African countries will likely be called on to bolster Chinese positions on contentious issues like Xinjiang, Taiwan, and the South China Sea. Also, Beijing may turn to African raw material suppliers to put pressure on governments in places like Canberra and Brasilia, who are seen as challenging core Chinese interests.
Sustainability
China will talk out of both sides of its mouth about sustainable energy development in Africa. Look for Chinese diplomats, official media, and other stakeholders to talk a lot more about the merits of the so-called “Green BRI” and sustainable energy development on the continent, while at the same time continuing to finance coal power generation and expensive hydro-electric dams in countries afflicted by drought.
To be sure, Chinese lenders and state owned enterprises have been steadily increasing their support for solar power generation in countries like Zambia and Kenya, but it is just a small fraction of the more environmentally damaging power generation methods that the Chinese are building elsewhere on the continent.
FOCAC
The Forum on China-Africa Cooperation Summit is expected to take place in Dakar, Senegal. But it looks increasingly likely that the event will be moved online, due to the persistent presence of Covid-19 in West Africa. Chinese President Xi Jinping has not travelled abroad since the beginning of the outbreak and one doubts that he would go to a region where the outbreak hasn’t been completely contained.
That’s probably a good thing for China because if FOCAC takes place online, there’ll be less media attention which will allow them to better control the messaging from the summit. — The Africa Report.