more exports

China’s relationship with Africa goes deeper than just resource extraction

By Patrick Anam

Posted on June 16, 2021 12:50

China Africa Vaccines © Director of the Chinese Foreign Ministry’s Africa Department, Wu Peng, takes part in a briefing at the Foreign Ministry in Beijing on Thursday 20 May 2021. (AP Photo/Ng Han Guan)
Director of the Chinese Foreign Ministry’s Africa Department, Wu Peng, takes part in a briefing at the Foreign Ministry in Beijing on Thursday 20 May 2021. (AP Photo/Ng Han Guan)

We’ve all heard the impressive statistics before on Chinese state media: 10,000km of Chinese-built roads and 6,000km of Chinese-built rail across Africa.

It always sounds impressive. But what does it actually mean?  Here’s one clue. It’s equivalent to just under 20% of the length of the nine highways in the Trans-African Highway network, or just larger than the length of Liberia’s entire road network.  Similarly, it’s equivalent to just under 10% of Africa’s current rail network, or just under a third of South Africa’s entire rail network.

Is this too much? Too little? What is the African perspective on this? So far, it’s been unknown, and that needs to change. For the last 20 years or so, many African countries have ‘looked East’, turning more to China for infrastructure funding in particular.

When it comes to trade, African demographics and rising middle-class consumption, coupled with China’s increasing need for raw materials for industry and markets for its products, has made China one of Africa’s most important trading partners.

Varying narratives about China-Africa relations

As this has happened, various narratives have emerged about Africa’s relationship with China, often framed by non-Africans. Yet, these have hardly, if ever, helped African citizens understand the real, key opportunities and challenges of working with China.

For instance, we’ve seen narratives on how “extractive” the relationship is. Yet, in reality, African countries export more of most natural resources to the EU.

Exports from Africa to China compared to total worldwide exports to China over the last 20 years have fluctuated between just two to four per cent since 2006.  The bigger issue trade wise is that Africa’s trade balance with China has shown a general downward trend since 2000.

This is largely attributable to the fact that African countries are increasingly importing finished products from China while exporting raw products to China, falling into similar trade patterns as with former colonial powers.

We’ve also seen narratives on how “indebted” African countries are to China. Yet, our analysis shows that just three African countries owe over 40% of their debt to China (Republic of Congo, Djibouti, and Angola), while three other African countries owe 40% of their debt to the private sector (Mauritius, Nigeria and Zambia).

Other African countries have a broader mix of creditors. In any case, China’s relative rise in this setting is not just due to China. Concessional finance from OECD development partners has slowed considerably, as well as become increasingly difficult to access from multilateral institutions due to conditions and “standards” attached.

A narrative on the importance of Chinese FDI in Africa is also emerging, this time shaped more by China. Yet, while the rise of Chinese FDI has been impressive in comparison to others – especially given the lack of familiarity in terms of legal systems and other financial and trade ties versus British or French investors for instance – China is still Africa’s fifth-largest FDI partner.

To date, Chinese FDI mostly goes to countries that are rich in minerals – such as South Africa and the DRC – and only 12% is to manufacturing. Investment diversification is a key issue to focus on, as well as avoiding negative externalities such as poor labour or environmental standards.

China also frames people flows in terms of “cultural exchange”. Yet, for African countries, more important people issues are to what degree China is investing in African human capital, or how fast African countries can attract more Chinese tourists, or ensuring access for African people to China, especially for short and long-term business.

Africa’s priorities

The fact is African countries have clear priorities. We have the AfCFTA, we have also laid down six major frameworks under the African Union Agenda 2063 which cover agriculture, energy, intra-African trade, mining, as well as science and technology over the next ten years.

These all have clear targets and elaborate pathway toward their achievements. It is crucial for development partners such as China, the EU and the US to align with these – to bolster them through economic relationships, to offer financial and technical support, as well as ensure that their actions do not conflict with the frameworks.

That means African countries collectively being rule-setters in relationships with all development partners, including China. The just-released report by Development Reimagined, ‘From China- Africa to Africa – China: A Blueprint for a Green and Inclusive Continent-Wide Strategy Toward China’ is written with exactly this purpose in mind.

It’s data-rich and highly analytical, with a view to revealing African perspectives on the relationship. It even includes the results of a survey of select African ambassadors in China – stakeholders uniquely placed to assess China-Africa engagement and more specifically, the challenges and opportunities linked to the relationship.

Ultimately, it recommends several approaches that African countries can take going forwards and including at the Forum on China-Africa Cooperation (FOCAC) 2021 in Dakar – covering trade, loans, FDI and people flows.

Bottom line

Africans need to entrench our agency vis-a-vis our relationships with others. China is a perfect place to start that journey.

Understand Africa's tomorrow... today

We believe that Africa is poorly represented, and badly under-estimated. Beyond the vast opportunity manifest in African markets, we highlight people who make a difference; leaders turning the tide, youth driving change, and an indefatigable business community. That is what we believe will change the continent, and that is what we report on. With hard-hitting investigations, innovative analysis and deep dives into countries and sectors, The Africa Report delivers the insight you need.