This fall’s Forum on China-Africa Cooperation (FOCAC) brought together Chinese President Xi Jinping with representatives from more than 50 African countries and the UN Secretary General. A recurring quote that, however, this time has been widely commented and analyzed. First, due to the announcement by the Chinese president of invest $50 billion to the continent in just three years after seven years of decline in investment. Second, because China insisted on its interest in deepening cooperation in infrastructure and trade with the continent, caring more about development. He has promised, for example, to create a million jobs. In addition, Jinping held country-by-country bilateral meetings and signed some agreements for specific projects: he has promised to invest $1 billion to connect Tanzania with Zambia by rail (a line that has been stopped for years). “It aims to expand transport links in the resource-rich eastern part of the continent,” says France24. It has signed an agreement with Zimbabwe that allows the country to export its avocados to China.
Also in his speech, the Chinese president wanted to move away from the Western colonialist vision of simply exploiting resources to begin to exercise what Oxford Economics analysts call soft power, that is, influence through persuasion. It is no longer just about obtaining aluminum, cobalt, lithium, nickel or manganese, but there was “talk about creating a China-Africa community with a shared future, a new trade and investment agreement and training African leaders.” , explains the think tank “Carnegie Endowment for International Peace” in a recent analysis.
It is true that in recent years there have been more and more bilateral meetings with leaders of the continent (summits have been held with Italy, Indonesia, South Korea, the United States), but Africa is, in general terms, the great forgotten in international trade flows . China represents a certain exception in this because it has been investing in the continent since 2000. According to a study by the Center for Global Development Policy at Boston University, trade between both economies (imports and exports of goods) has grown from 11.67 billion dollars in 2000 to 257.67 billion in 2022. «Until 2017-18, China focused on loans to governments, but realized that this created some risk of countries going bankrupt. Since then, they have invested in specific projects that also bring benefits to their companies,” explains Bruno Fernandes de Moura, head of macroeconomics at Coface, a firm dedicated to commercial credit risk management.
Generosity in quotes
Fernandes de Moura explains what lies behind this “generosity” is China’s internal economic situation: “It is currently facing two difficulties, the first is that its economy is slowing down. We estimate that this year their growth will be below 5%, a figure that is increasingly difficult for them to reach, when the growth of the previous decade was around 7-8%. They have wanted to be less dependent on exports and prioritize domestic domestic consumption, but at the moment, this consumption is not accompanying them. If in other developed countries families spend 60-70% on purchasing goods and products, in China it only reaches 30-40%. That is to say, families are savers, and increasingly so, especially since the economic crisis. Finally, the reinforcement of investment is also related to tariff problems not only with Europe and the United States, but also with developing countries, although less is said about it. Thailand, Korea, Indonesia and Brazil are beginning to impose taxes on Chinese imports; For all this, it has more and more interest in Africa,” says the analyst.
China has invested mainly in extracting raw materials, especially for the energy transition and for technology. «Practically all the movements they have been making for decades are for the exploitation of minerals such as copper, cobalt, lithium or manganese. China is building infrastructure, but to support fields in Zimbabwe, the Democratic Republic of the Congo, Niger or Angola. The railways and ports that have been built are for that, but it is true that Africa needs to receive capital investments,” explains Cristian Castillo, professor of logistics, production and operations at the Open University of Catalonia.
From 2000 to 2022, «89% of Africa’s exports to China were in the extractive sector. By country, Angola mainly leads the supply of crude oil, followed mainly by South Africa in the form of iron ore exports. The main exporters, Sudan or the Democratic Republic of the Congo, have mainly exported crude oil and copper. Together, these countries’ exports amounted to about 2% of Africa’s GDP in 2022 and 69% of the total value of exports from 2000 to 2222,” according to data from Boston University.
But, in addition, following the publications of the Carnegie Endowment for International Peace, Chinese investments are beginning to cover not only mineral extraction, but also processing on the continent. «Recently announced projects include two lithium processing plants, one of 300 million dollars in Zimbabwe and another of 250 million dollars, inaugurated in Nigeria.
Europe and its green spider web
China dominates the production of photovoltaic panels and lithium batteries and is beginning to challenge the European wind sector. The EU already imports around 29% of its wind turbines and components and approximately 68% of its heat pumps from China. In the lithium market, Chinese companies control 65% of lithium processing and battery manufacturing. So much so that there are already those who claim that the commitment to the European green transition is trapping the old continent in the Chinese commercial web. «Europe has opted for the energy transition and decarbonization and, however, its industrial policies have not developed along the same lines. European industry has been relocating for labor to countries like China, which has ended up developing its own industry, but with lower costs. It is paradoxical that Europe has set the course without the industry having gone in that direction. Now we find that some governments are preparing for a shortage of strategic materials in the future in the face of the hegemony and absolute power of the Asian country,” says Castillo.
“The policy in Africa is likely to continue because China needs new markets, but they have to generate acceptance,” says Fernandes de Moura. Especially when the trade war with the United States does not seem like it will end in the new stage in Donald Trump’s White House. Another thing is what happens internally in each African country and that is that according to some FOCAC chronicles, many African countries have expressed their unwillingness to choose sides. It is also said that China’s intense gaze on the continent is changing the rest of the world’s view of Africa. China has called for a new era of development for the continent and integration into global governance institutions (such as the UN Security Council). “In addition to the proposed billions of dollars, which will be difficult to track, attention must be paid to other development initiatives such as vocational training centers, agricultural support, medical cooperation, rural project development,” says the Carnegie think tank.
The African countries most indebted to China
Currently, according to figures from the International Monetary Fund (IMF), there are twenty-one African countries with debt problems. China is the country that owns the majority of the debt (up to 13%). The largest debtors of the Asian giant in Africa are “Angola, whose debt amounts to 20,980 million dollars, Ethiopia (with 6,820 million dollars), Kenya (up to 6,690 million dollars), Zambia (with 5,730 million dollars) and Egypt (which holds up to 5,210,000 million dollars). Angola and Kenya have narrowly avoided default,” explains the Center for Global Development Policy at Boston University in a recent study. However, the center specifies that moves are being made to alleviate this situation, such as “the agreement reached by Zambia and its official creditors in June 2023, which is considered a milestone for the Chinese approach to debt restructuring. For example, it favors the extension of reimbursement.