China's back in Africa, but does the continent benefit? | REUTERS

Reuters

28 May 202405:08

Summary

TLDRChina's post-pandemic economic cooperation with Africa, under the Belt and Road Initiative, is focusing on trade and investment rather than sovereign lending. While Chinese leaders highlight infrastructure projects and record trade as proof of their support for Africa's modernization, much of the investment is directed towards extracting critical minerals like copper and cobalt. Despite increased Chinese investment in Africa, concerns arise over the growing trade deficit and the potential for a relationship reminiscent of colonial-era exploitation, with Africa's exports to China declining and a focus on raw material imports.

Takeaways

🌍 China's economic cooperation with Africa is rebounding after the global health crisis, with a focus on the Belt and Road Initiative.
🏗️ Chinese leaders highlight new construction projects and record two-way trade as evidence of their commitment to Africa's modernization.
📉 Despite this, Chinese sovereign lending in Africa has declined to its lowest level in two decades, and a rebound is not expected.
🤝 Chinese policymakers are encouraging companies to invest in equity and operate infrastructure projects they build for foreign governments.
🚗 The $668 million Nairobi Expressway, built and operated by China Road and Bridge Corporation, is an example of successful public-private partnership in Africa.
📊 Although global Chinese non-emergency lending has shifted towards special purpose vehicles, this trend is less pronounced in Africa.
💰 Chinese investment in Africa increased by 114% last year, primarily focusing on critical minerals essential for the global energy transition.
⛏️ In 2023, Chinese investments in Africa's mining sector, especially for minerals like copper, cobalt, and lithium, reached nearly $11 billion.
📉 Africa's trade deficit with China is widening, with a 46% increase last year, as the continent's exports to China fell by 7%.
🛑 Despite pledges to boost agricultural imports and manufacturing in Africa, China's economic relationship with the continent remains heavily focused on the extraction of raw materials.

Q & A

What has been China's primary focus in its economic cooperation program after the global health crisis?
-China's primary focus has been on Africa, as evidenced by analysis of lending, investment, and trade data, highlighting the continent's modernization through the Belt and Road Initiative.
How does China present its economic cooperation with Africa through the Belt and Road Initiative?
-Chinese leaders cite billions of dollars in new construction and record two-way trade as evidence of a win-win commitment to supporting Africa's modernization.
What is the complexity in China's relationship with Africa as revealed by the data?
-The relationship is heavily weighted towards the extraction of minerals, despite China's portrayal of a win-win partnership.
How did China's engagement in Africa change before and after the global health crisis?
-Before the crisis, China's engagement was driven by sovereign lending for infrastructure projects like ports, hydropower plants, and railways. After the crisis, sovereign lending has decreased significantly, with a pivot towards trade and investment.
What shift has occurred in Chinese policy regarding infrastructure projects in Africa?
-Chinese policymakers are encouraging companies to take equity stakes and operate the infrastructure they build, rather than relying solely on sovereign lending.
What is an example of a successful public-private partnership in Africa involving a Chinese company?
-The $668 million Nairobi Expressway, built and operated by the state-owned China Road and Bridge Corporation, is an example, as it has exceeded revenue and usage targets since opening in August 2022.
What has been the trend in Chinese non-emergency lending globally compared to Africa?
-Globally, 45% of Chinese non-emergency lending went to special purpose vehicles from 2018 to 2021, but in Africa, this figure was only 27%.
How has new Chinese investment in Africa changed recently, and what sectors are primarily targeted?
-New Chinese investment in Africa increased by 114% last year, heavily focused on minerals essential for the global energy transition and China's economic plans.
What has been the impact of China's focus on critical minerals on Africa's trade deficit with China?
-Africa's trade deficit with China has ballooned, with two-way trade reaching a record $282 billion last year, while the value of Africa's exports to China fell by 7%.
What criticisms have been raised about China's economic relationship with Africa, and how has China responded?
-Some analysts argue that China's relationship with Africa echoes colonial-era economic relations, dominated by the extraction of raw materials. China rejects these assertions, emphasizing Africa's capacity and wisdom to develop its external relations.

Outlines

00:00

📈 China's Economic Focus on Africa Amid Global Recovery

China's economic cooperation with Africa is recovering post-global health crisis, with a primary focus on lending, investment, and trade. Chinese leaders highlight the billions of dollars committed to new construction and record two-way trade as evidence of a win-win partnership under the Belt and Road Initiative (BRI). However, the relationship is nuanced, with a significant focus on mineral extraction. Before the crisis, China's engagement was driven by sovereign lending, financing large infrastructure projects across Africa, peaking in 2016. However, such lending has since declined, and Chinese policymakers are encouraging companies to take equity stakes in infrastructure projects, such as the $668 million Nairobi Expressway. This shift indicates a broader strategy involving more private investment in Africa.

05:01

🔄 Shifts in Chinese Investment Patterns in Africa

While China has traditionally focused on lending for infrastructure in Africa, recent trends show a pivot towards trade and investment, particularly in critical minerals essential for the global energy transition and China's economic revival. New Chinese investment in Africa saw a significant increase, but was largely concentrated in the mining sector. This shift also extends to infrastructure development, with significant investments in countries like the Democratic Republic of Congo for mineral extraction. Despite these investments, Africa's trade deficit with China is growing, and efforts to diversify imports from Africa have seen limited success. Chinese leaders have pledged to support Africa's manufacturing and agricultural sectors, but the relationship remains heavily one-sided, dominated by raw material imports. China's foreign ministry defends its approach, emphasizing Africa's autonomy in choosing its partners.

Mindmap

Keywords

💡Belt and Road Initiative (BRI)

The Belt and Road Initiative is a global infrastructure and economic development project led by China, aimed at enhancing trade and investment links across Asia, Africa, and beyond. In the context of the video, BRI is highlighted as a key vehicle for China's economic cooperation with Africa, promoting modernization through infrastructure projects, although it's also shown to have complexities related to the focus on mineral extraction.

💡Sovereign Lending

Sovereign lending refers to loans provided by a government, typically to another country, for large-scale projects such as infrastructure. In the video, it is mentioned that China's sovereign lending to Africa, which once peaked at $28.4 billion in 2016, has now decreased to its lowest level in two decades, signaling a shift in China's economic engagement strategy with the continent.

💡Public-Private Partnership (PPP)

A Public-Private Partnership is a collaborative agreement between government entities and private sector companies to fund and operate infrastructure projects. The video cites the Nairobi Expressway, built and operated by the state-owned China Road and Bridge Corporation, as an example of such a partnership in Africa, highlighting China's push for more private investment in the continent.

💡Critical Minerals

Critical minerals are essential raw materials required for advanced technologies, including those necessary for the global energy transition. In the video, the focus on mining critical minerals like copper, cobalt, and lithium is portrayed as a major driver of Chinese investment in Africa, reflecting the strategic importance of these resources for China's economy.

💡Trade Deficit

A trade deficit occurs when a country's imports exceed its exports, leading to a negative trade balance. The video discusses Africa's growing trade deficit with China, which has widened as the continent's exports to China have fallen, particularly due to declining oil prices, despite a record in two-way trade between the two regions.

💡Mineral Extraction

Mineral extraction refers to the process of mining and processing minerals from the earth. In the video, this concept is central to the analysis of China's economic engagement in Africa, which is heavily weighted toward the extraction of critical minerals, raising concerns about a relationship that may be more exploitative than mutually beneficial.

💡Modernization

Modernization is the process of adopting new technologies and practices to improve economic efficiency and development. The video frames China's involvement in Africa as part of a broader effort to support the continent's modernization, although it also acknowledges that this relationship is complex and often focused on sectors that benefit China's strategic interests.

💡Economic Cooperation

Economic cooperation involves countries working together to achieve mutual economic benefits through trade, investment, and other financial interactions. The video highlights China's flagship economic cooperation with Africa, emphasizing how it has bounced back after the global health crisis, with a focus on infrastructure and trade, despite underlying complexities.

💡Infrastructure Investment

Infrastructure investment refers to the allocation of funds for the construction and maintenance of public facilities like roads, bridges, and power plants. In the video, this type of investment is presented as a key component of China's Belt and Road Initiative in Africa, although the shift towards more private sector involvement and mineral-driven projects is noted.

💡Global Energy Transition

The global energy transition is the shift from fossil fuels to renewable energy sources to combat climate change. The video connects this concept to China's strategic investments in Africa, particularly in critical minerals essential for renewable energy technologies, illustrating how these investments align with both global trends and China's economic revival plans.

Highlights

China's economic cooperation program is bouncing back after the global health crisis, with a primary focus on Africa.

Chinese leaders cite billions of dollars in new construction and record two-way trade as evidence of their commitment to supporting Africa's modernization through the Belt and Road Initiative.

Despite this commitment, the relationship is heavily weighted towards the extraction of minerals, indicating a more complex dynamic.

Before the health crisis, China's engagement in Africa was driven by sovereign lending for infrastructure projects like ports, hydropower plants, and railways.

Chinese sovereign lending to Africa peaked at $28.4 billion in 2016 but is now at its lowest level in two decades, with no rebound expected.

Chinese policymakers are pushing companies to take equity stakes and operate infrastructure they build for foreign governments, such as the $668 million Nairobi Expressway.

The Nairobi Expressway, built and operated by the China Road and Bridge Corporation, has exceeded revenue and usage targets since its opening in August 2022.

Globally, 45% of Chinese non-emergency lending from 2018 to 2021 was to special purpose vehicles, but in Africa, this figure was only 27%.

Chinese officials point to a pivot to trade and investment in Africa, arguing that Belt and Road Initiative trade boosts the continent's wealth and development.

New Chinese investment in Africa increased by 114% last year, heavily focused on minerals essential to the global energy transition and China's economy.

Investments in Africa hit nearly $11 billion in 2023, the highest level since tracking began in 2005, with $7.8 billion going into mining for minerals like copper, cobalt, and lithium.

The hunt for critical minerals is driving infrastructure construction, with Chinese companies pledging up to $7 billion in infrastructure investment in the Democratic Republic of Congo.

Africa's trade deficit with China has widened as two-way trade reached a record $282 billion last year, but Africa's exports to China fell by 7%.

Efforts to boost African exports of agricultural products and manufactured goods to China have faltered, leading to a more one-sided relationship.

Some analysts argue that the current economic relationship between China and Africa has echoes of colonial-era Europe's economic relations with the continent, a claim China rejects.