Chinese President Xi Jinping speaks at a Forum on China-Africa Co-operation (Focac) summit. Focac 2024, which will be held in Beijing from September 4 – 6, comes at a time when the 21st century scramble for Africa is assuming exciting yet challenging dimensions, says the writer.
Afro-super power relations take centre stage on September 4, when the Ninth Forum on China Africa Co-operation (Focac 9), hosted by President Xi Jinping, convenes in Beijing.
For continental African leaders, especially those from South Africa, the Democratic Republic of Congo, Nigeria, Egypt, Kenya and Angola – countries with rising economic and investment ties with China – the forum comes at a time when the 21st century scramble for Africa is assuming exciting yet challenging dimensions.
This is driven partly by the global economy’s insatiable thirst for energy transition-related critical materials, such as manganese, graphite, cobalt, nickel, lithium and iron ore, of which Africa has, in some cases, more than 48% of global reserves.
On the one hand, Africa seems to be wooed by the charm of a fiery Chinese dragon and on the other hand, a watchful American eagle.
As beguiling as the competitive attention might seem, it is steeped in the realpolitik of ideological, geopolitical and security self-interest.
The US positioning itself as a well meaning “friend with benefits” of the Global South, while China with Russia, posturing as dubious cheer leaders and leadership partners of the Global South, though they are superpowers.
The powerful counterweight to Focac 9 is the annual US-Africa Leaders’ Summit, hosted by the US president, with its various components of which the US-sub-Saharan Africa (SSA) Trade and Economic Co-operation Forum, the African Growth and Opportunity Act Programme and the Agoa Private Sector Forum are the go-to indabas.
Since its enactment in 2000, Agoa has been at the core of US economic policy and commercial engagement with Africa, accounting for $28.6 billion (R508.6bn) worth of SSA exports to the US last year. Agoa gives the 30-odd SSA member countries tariff-free access to the US markets on some 6 800 products.
The trade balance under Agoa is heavily in favour of African states increasing from $13.5bn in 2022 to $14.1bn last year. It is no secret that the US is keen to help “wean” Africa off dependence on Chinese investment and imports by lowering the cost of trade, encouraging investment, and building bridges with the African Continental Free Trade Area that will cover 54 states and a 1.4bn consumer market. The US in 2022, for instance, overtook China as South Africa’s largest export market.
The wannabe disruptor vying for the attention of the SSA are the Gulf Co-operation Council states, led by the United Arab Emirates and Saudi Arabia, with a focus on developing the continental carbon credits market to finance green projects in Africa, and investment in the mining sectors and building a geothermal data centre in Kenya, with deals of more than $2bn signed in Burundi, Tanzania, Kenya, Angola and Zambia this year.
African relations with China, especially those of South Africa, are multipolar, as they are with the US, EU and Russia. Sometimes, the discourse is skewed by the rhetoric of the radicals on both sides, giving the impression of a bilateral zero-sum game, driven more by ideology than real economic considerations and the reality of the global economic and financial dynamics.
As such, it would behove African leaders and China to recognise that Focac 9 could progress based only on “primus inter pares” (first among equals) that would serve the interests of both sides.
As sovereign nations, it is the right of African nations, like others in the developing world, to decide which countries they want to do business with, if they are in the interest of their citizens, consider macro-economic and global implications and are not couched in the fog of non-disclosure and the rhetoric of vagueness, and subject to arm’s length oversights and audits.
Sino-African economic relations must also be seen in the sober context of the state of China’s macroeconomic management, resource strengths and deficits, domestic and geopolitical governance and how these may impact on the interconnectedness of African economies with regional and global others.
The latest International Monetary Fund (IMF) World Economic Outlook Update in July projects a subdued gross domestic product growth trend for the Chinese economy – 5% – this year, decreasing to 4.5% next year, albeit this trajectory is also for the global economy per se.
In foreign direct investment flows, whatever the rhetoric of promises and pledges, the reality according to the Organisation for Economic Co-operation and Development is that global FDI flows fell by 7% last year, to $1364bn, continuing a declining trend and remaining below pre-pandemic levels for the second-consecutive year, including to China which received record-low FDI flows due to geopolitical tension and high interest rates, slipping from $190bn in 2022 to a projected $43bn last year.
Similarly, FDI outflows from China dropped from $210.05bn to a projected $185.3bn in the same period.
This is reflected in South Africa’s own FDI flows – attracting a projected $5.33bn last year, down from the $9.23bn in 2022, largely from China.
Last year, FDI flows to Africa, estimated at $48bn, with projects especially in Morocco, Kenya and Nigeria, were flat. However, the overall global trend for this year is a possible modest upside, given the stabilising inflationary and interest rate scenarios.
African sovereign debt exposure to China, especially the so-called “Chinese Debt Trap”, is a sensitive political issue. Angola’s sovereign debt exposure to China in 2022 was a staggering $18bn, making it the most indebted country to Beijing. Kenya’s debt exposure to China was $6.83bn in 2022. The Nigerian debt management office is at pains to regularly clarify the country’s debt exposure to Beijing.
Against this, China is a non-traditional official creditor member of the World Bank/IMF/G20 Global Sovereign Debt Roundtable and the G20 Common Framework and a proactive supporter of debt write-off for least developed countries. Beijing has written off debts relating to Zambia and Malawi. In April, it wrote off an unspecified amount of Zimbabwean debt. However, according to CNBC Africa, China’s share of SSA external public debt was less than 2% before 2005 but grew to about 17%, or $134bn by 2021.
The strength of Sino-African relations is that China is SSA’a largest bilateral trading partner, which, according to the IMF, amounted to $282.1bn last year, with a widening trade deficit of $63bn in Beijing’s favour. Chinese data indicates that Sino-African trade for the January to July 2024 period increased year-over-year by 5.5% to $166.6bn. The elephant in the room is China’s economic management and performance. IMF data shows that every 1% decline in China’s real GDP growth leads to about 0.25% in SSA’s total GDP growth within a year.
* Parker is an economist and writer based in London
Cape Times