New Commitments, New Directions
China’s engagement with Africa is not cooling, but intensifying with innovative initiatives
The Eighth Ministerial Conference of the Forum on China-africa Cooperation (FOCAC) that took place in Dakar, Senegal, from November 29 to 30, 2021, illustrates new directions in China’s emphasis and approaches in boosting China-africa cooperation. There have been concerns regarding the quantitative drop in China’s financial commitments from $60 billion in 2018 to $40 billion in 2021. However, it is the qualitative changes that raise the bigger question of whether China is retreating from the continent of Africa after over 30 years of robust and growing engagement.
The whole picture
Although there may be some temporary changes due to the COVID-19 situation, China will not leave Africa. To clarify the viewpoint, we need to look at the complete picture and take into consideration all the commitments announced at Dakar – not just the financial commitments. This is because if the commitments promised at FOCAC are met, China-africa relations, instead of cooling, will intensify and become very significant in the following specific areas.
The first area we need to look at is vaccine. As promised by Chinese President Xi Jinping, China would offer 1 billion doses of COVID-19 vaccines to African nations. China intends to donate 600 million doses directly and a further 400 million doses would come from other sources, such as investments in production sites. Based on this, the Chinese Government intends to encourage Chinese firms to invest no less than $10 billion in Africa over three years (202124). So, the pledge of additional vaccine doses, on top of the almost 200 million that China has already supplied to Africa, could make China the largest supplier of vaccine doses to African nations. In addition, China is willing to jointly produce vaccines with African nations. Under the guidance of the Chinese Government, Chinese firms have produced vaccines through cooperation with 19 nations, including African nations such as Egypt, Algeria, and Morocco.
The second area we need to look at is trade. China is the largest trading partner for Africa. According to China’s General Administration of Customs, trade between China and Africa rose 23 percent to $64.86 billion in the first quarter this year compared to the same period in 2021. The data also reveal that Chinese imports from the continent increased by 29.3 percent to $29.7 billion while exports to Africa rose by 18.2 percent to $35.16 billion during the first three months of 2022. In addition, the targets of $300 billion in Chinese imports from
Africa over the period from 2022 to 2024 and $300 billion in annual trade by 2035 would make China Africa’s largest export destination - exceeding the European Union as a whole, which has been importing about $100 billion in African goods annually for years. This is a sign that China is not retreating from Africa, but will continue to invest in Africa and support Africa’s development.
The third area we need to look at is investment. Foreign direct investment (FDI) inflows contribute significantly to income rise, trade growth and the invigoration of the industry, while playing a crucial role in advancing the soft side of development, such as technology, labor training, employment opportunities and business management knowledge transfer. Chinese firms have made great advances in these areas in Africa. As a result, since 2000, China’s direct investment in Africa has increased by over 25 percent per annum. Between 2017 and 2020, China was the largest investor in Africa by jobs and capital and third by the number of projects. Over this threeyear period, 20 percent of Africa’s capital came from China. According to the Ministry of Commerce of China, the country’s direct investment to Africa was $2.96 billion in 2020, a year of COVID19 lockdowns. The targets of $10 billion in new direct investment by 2024 and $60 billion in additional direct investment by 2035 could move China from the fourth place to the top position in investment within the next 10 years.
With this kind of prospect and commitment, the reduced amount of financial support in Africa committed at FOCAC does not mean that China doesn’t see Africa as a viable place for investment.
The fourth area has to do with the headlines that China seems to be planning to cut loans to African nations by a third, thereby shifting away from infrastructure investment. Many observers have noted the complete absence of infrastructure from the FOCAC
commitment. However, the dearth of reference to infrastructure in China’s 2021 FOCAC commitment does not suggest that China will exit the domain. After all, one of the critical ingredients in meeting the sustainable development challenges as well as the African Union Agenda 2063 vision is infrastructure - and no nation has answered Africa’s call quite like China. China has a large number of ongoing infrastructure projects with loan terms, especially after their debt renegotiation, extending far into the future.
Creative approaches
In order to allow the Chinese contractors and African nations to continue to enjoy the dividend of infrastructure investment as well as avoid a debt crisis in Africa, the recent FOCAC meeting explored new models of infrastructure development that include private sector participation in the Belt and Road Initiative in Africa. In the new model, China will encourage Chinese-funded firms to adopt models such as public-private partnership (PPP) and BOT (build, operate, transfer) models to invest in African industry for more localized production of African brands. Since China is willing to provide more flexible and innovative infrastructure finance, such as PPPS and swap formula, especially if African governments request it, then I think it is worth noting that the PPP model coupled with the Chinese swap formula could solve Africa’s financial constraints and also cut African nations’ dependence on raw materials.
The swap formula seems truly innovative since, for the first time, it appears like Africa’s resources could be directly converted into development projects. This is another sign that China’s engagement with Africa is not cooling but intensifying with creative and pragmatic ideas that are giving birth to innovative initiatives. The establishment of this innovative initiative shows Africa needs China, and China needs Africa, and it is only through innovative and pragmatic initiatives that both parties will be able to sustain the relationship.
China’s role in Africa can be clearly seen and mainly depicted as a paramount instance of convergence of interest and mutual economic partnership.
So, African governments need to work closely together with China now to reap dividends from the relationship that will help African nations spur economic recovery from the COVID-19.
Job seekers take a selfie at a job fair held by Chinese companies operating locally in Johannesburg, South Africa, on April 14
So, the general directions of Chinaafrica relations signal an intensification rather than a cooling of engagement. This is because after I have carefully studied the documents and speeches delivered at the meeting in comparison to the past declarations and action plans, I discovered that the plans unveiled at the recent FOCAC meeting are more African-led. Therefore, my conclusion is that African governments need to keep up the momentum and really make sure that the commitments are harnessed in a way that benefits Africa positively and circumvents negative impacts.