More than 30 African leaders have just returned from Beijing after the triennial diplomatic summit with Xi Jinping, China’s president.
While the meeting, the first in-person event between Chinese and African leaders since the Covid-19 pandemic, took place on Chinese soil, symbolically it signalled the return of China to its continent of choice: Africa.
The official theme of this year’s meeting of the Forum on China-Africa Co-operation (Focac) was “Joining Hands to Advance Modernisation and Build a High-Level China-Africa Community with a Shared Future”.
To understand what the future of this relationship will look like it is important to understand the recent history of the relationship between China, by most accounts the world’s second-largest economy, and Africa, the world’s poorest yet resources-rich continent.
The future is likely to be complex and fraught with challenges, constant flare-ups of tensions and geopolitical rivalries. In the run-up to last week’s summit, China’s considerable presence in Africa remained low-key, which is understandable. The rollout of the Belt & Road Initiative (BRI), an ambitious intercontinental infrastructure investment, has caused a lot of controversy.
The project, which was launched to much fanfare a decade ago, was accompanied by loans worth billions of dollars in aid, trade and investment. But in the past two years at least three African countries — including Kenya and Zambia — have found themselves with unsustainably high levels of indebtedness and unable to repay these loans.
Early this year, many young Kenyans took to the streets for months protesting against the cost-of-living crisis caused by new taxes aimed at helping Nairobi pay off loans that were falling due. The riots, which forced President William Ruto to share power, have died down. Yet the problem is still there.
However, it would be a mistake to attribute all of Africa’s debt crisis to China. Western governments, and commercial and multilateral lenders are also to blame.
China’s complex lending system is rather opaque, though. This has been made worse by Beijing’s diffidence in communicating its intentions to show that its foreign policy, anchored on the BRI, is a force for good for it and its poor partners.
During the Covid pandemic, the BRI was paused briefly by lockdowns and a backlash due to anti-Chinese sentiment and propaganda. In general, China became cautious and risk-averse.
The other contributing factor is that China’s infrastructure investments have not translated into more African exports to China. Of the nearly $300bn in two-way trade, China enjoys a significant surplus.
Parks Tau, SA’s new trade, industry & competition minister, has come back with a pledge from Beijing to do more to balance trade. Beijing has also promised concessions regarding SA’s agricultural exports in case of animal disease outbreaks. In future, if one SA province is affected by disease this will not trigger a blanket ban from China.
Pretoria, which undertook a state visit to China on the eve of the Focac summit, has yet to resolve a long-standing dispute involving the procurement of parts and locomotives by Transnet from a Chinese state-owned locomotive maker.
In SA, Chinese traders are eating the breakfast of local entrepreneurs with low prices. Chinese traders are also entangled in the growing anti-foreign sentiment in SA’s townships and villages. Big retailers’ forays into the township economy without local partners is not helping matters.
Like all foreigners, China is facing a new problem. Africans have identified their new levers and are becoming increasingly protective of their mineral resources, especially the so-called critical minerals: copper, cobalt and lithium, among other minerals that are critical to enabling the transition from fossil fuels to green energy.
African states, including Zimbabwe, want the critical minerals to be beneficiated in Africa. As before, China appears to have stolen the march as Africa lags behind in this regard. Apart from barring exports of its critical raw materials in some cases, the continent has done little to make its inward investment environment attractive to cash-flush and resource-hungry foreign investors.
The EU has introduced an import tariff of up to about 35% on Chinese electric vehicles (EVs), while the US and Canada have both hiked tariffs to 100%. They cite unfair subsidies given to Chinese manufacturers of these vehicles.
Faced with these restrictions and other non-tariff barriers, China is targeting Africa as the next base for manufacturing its EVs. This offers it two distinct advantages — Chinese exports, especially with significant African inputs, could find their way into Western markets with lower tariffs, and the implementation of the African Continental Free Trade Area (AfCFTA) makes Africa a captive market for African-made EVs.
At the summit, Xi offered $50bn worth of trade, aid and investment to Africa over the next three years. He also opened tariff-free access to China’s markets. However, these Chinese opportunities are not without risks. The West may find other non-tariff barriers to limit Chinese vehicles. Rules of origin, aided by technology, make it easy to calculate how much value an African partner would have added, and if Africans do nothing to harmonise their trade, tax, immigration and industrial policies these opportunities will amount to very little.
China also faces a non-African hurdle: the outcome of the American presidential election in November. Republicans and Democrats are intent on limiting China’s rise. Ultimately, it will depend on whether Africans can walk into these opportunities with their eyes open and how they leverage their bargaining power between the West and China, the new leader of the Global South.
• Dludlu, a former editor of The Sowetan, is CEO of the Small Business Institute.
Would you like to comment on this article?
Sign up (it's quick and free) or sign in now.
Please read our Comment Policy before commenting.