China’s flagship economic cooperation program is rebounding strongly in Africa post-pandemic, as evidenced by a significant uptick in investment and trade data. However, despite the billions committed to new projects and record two-way trade, the relationship remains predominantly extractive, revealing a complex dynamic beneath Beijing’s rhetoric of mutual modernization and “win-win” cooperation under the Belt and Road Initiative (BRI).
Investment Surge in Critical Minerals
New Chinese investment in Africa surged by 114% last year, according to the Griffith Asia Institute at Australia’s Griffith University, driven largely by China’s need for minerals essential to the global energy transition and its own economic revival. This focus on critical minerals such as copper, cobalt, and lithium reflects China’s strategic priorities.
Notable investments include China’s MMG Ltd’s $1.9 billion acquisition of Botswana’s Khoemacau copper mine and significant stakes in cobalt and lithium mines across Namibia, Zambia, and Zimbabwe. Trade in these minerals has also grown, dominating the exchange between China and Africa.
Trade Imbalance and Economic Challenges
Despite the surge in mineral exports, Africa’s trade deficit with China has widened. Efforts to boost African exports beyond raw materials, such as agricultural products and manufactured goods, have faltered. Chinese sovereign lending, once a cornerstone of Africa’s infrastructure development, has hit a 20-year low, with public-private partnerships (PPPs) not yet taking hold on the continent.
“China’s engagement in Africa is beginning to echo colonial-era economic relationships, dominated by the extraction of raw materials,” commented Eric Olander, co-founder of the China-Global South Project.
Public-Private Partnerships: A New Approach?
Policymakers in Beijing are now promoting PPPs, encouraging Chinese companies to take equity stakes in infrastructure projects. The $668 million Nairobi Expressway, a PPP built and operated by the state-owned China Road and Bridge Corporation (CRBC), has been a notable success, surpassing usage and revenue targets.
However, this model is not widespread in Africa. Only 27% of Chinese non-emergency lending was directed to PPPs in Africa from 2018 to 2021, compared to 45% globally, as reported by AidData. Legal framework deficiencies and perceived market risks in Africa contribute to this reluctance.
Record Engagement Amidst Shifting Strategies
China’s total engagement in Africa, combining construction contracts and investment commitments, reached $21.7 billion last year, making Africa the largest regional recipient of Chinese economic activity. According to the American Enterprise Institute, Chinese investments in Africa hit nearly $11 billion in 2023, with $7.8 billion directed towards mining projects.
While Chinese officials emphasize a pivot towards trade and investment to drive Africa’s development, the trade imbalance remains a significant issue. Two-way trade reached a record $282 billion last year, but Africa’s exports to China fell by 7%, widening the trade deficit by 46%.
Challenges and Future Prospects
African leaders are pushing for greater access to the Chinese market, particularly for agricultural products. However, stringent health and hygiene regulations pose challenges. For instance, of the $150.94 million worth of avocados exported by Kenya last year, only 10% reached China.
“Unless African nations can add value to their exports through increased processing and manufacturing, the trade imbalance with China will persist,” warned Francis Mangeni, an advisor at the Secretariat of the African Continental Free Trade Area.
As China continues to solidify its economic foothold in Africa, the future of this relationship will depend on how both sides navigate these complex dynamics and whether genuine, balanced development can be achieved.
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