Sub-Saharan Africa politics: China-Africa relations: a "new stage"

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Country Data and Maps
Economist Intelligence Unit
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Politics, News Analysis
Political Geography
Uganda, Kenya, South Africa, Djibouti, Liberia, Mozambique, Tanzania, Nigeria, Rwanda, Somalia, Burundi, Eritrea, Ghana, Guinea, South Sudan, Guinea-Bissau, Cameroon, Comoros, Gabon, Seychelles, Sao Tome and Principe, Republic of Congo

As has been tradition since the 1990s, China's foreign minister made the first international trip of the year to Africa on January 12th-16th. During his visit, Wang Yi promoted his government's hopes of entering into a "new stage" of co-operation with the African continent. We think this new phase of relations is already taking shape, with ties increasingly determined by businesses and workers on the ground. Looking forward, relations with China will vary across the region, but China's traditional footprint in Africa is likely to be gradually replaced by a more nuanced relationship that is determined as much by market dynamics as it is by political gambits.

Mr Wang visited Rwanda, Angola, Gabon and São Tomé and Príncipe on this year's trip. In each country, he promised to promote the strategic partnership between Africa and China, via the implementation of government-led initiatives launched at the Forum on China-Africa Co-operation (FOCAC), at which some US$60bn was pledged by China to Africa in 2015-18 and as part of the Belt and Road Initiative (BRI), China's flagship programme of infrastructure development with which FOCAC projects are supposed to dovetail. These government-led development plans are hugely ambitious, and we think they will probably overpromise and underdeliver. Moreover, although these mega-programmes dominate ministerial speeches, they mask a much more nuanced relationship between China and Africa.

China-Africa ties beneath the headlines

China's roles in Africa as trade partner, bilateral lender and infrastructure developer are well-known. China-Africa trade has increased twentyfold since 2000, the China Export-Import Bank has become one of the continent's biggest creditors, and almost 300 large infrastructure projects in Africa have attracted Chinese investment since 2005. However, China also has lesser-known roles in Africa as a peacekeeper (with more Chinese peacekeepers currently in the region than that of any other permanent member of the UN Security Council) and as an educator (with more Africans studying in China than in either the US or the UK).

China's engagement with Africa also varies across the continent. During China's phase of rapid industrial development, it was often assumed that Chinese capital flowed to the resource-rich countries in exchange for influence and access to minerals. But this was not the case. Indeed, resource-poor Ethiopia is among the largest recipients of Chinese capital, and less than 30% of direct investment from China to Africa goes to the mining sector (compared with over 60% of US investment in Africa), according to the China Africa Research Initiative . Although some countries' ties with China are based largely on mineral trade, such as Congo (Brazzaville) and Guinea, most African countries' relations with China are underpinned by their rising demand for low-cost goods and efforts by the Chinese to tap into these burgeoning markets.

Next phase of relations will be equally multifaceted

With China-Africa ties already differing across the continent, it follows that the next phase of relations will be equally multifaceted. However, while Mr Wang's "new stage" of co-operation will play out differently across Africa, there will be recurring themes in both economic and political relations.

Economic relations: increasingly bottom up

Top-level relations between the Chinese government and its African counterparts will continue to influence economic ties; some large deals-brokered by governments, delivered by Chinese state-owned firms and financed via bilateral loans-will materialise over the coming years, as the African authorities seek to attract capital for the continent's development and the Chinese authorities seek to create opportunities for Chinese goods and services. However, tighter credit conditions in China will force its financiers to grow more risk averse, while efforts to implement the BRI (which covers only a corner of Africa) will shift a degree of political focus away from economic diplomacy in Africa.

Hence, we think the economic ties between China and Africa will be increasingly shaped by firm-level connections between the two partners. China's contribution to Africa's economic development will therefore be increasingly determined by transactions between Chinese and African businesses (most of which will probably focus on selling Chinese goods in Africa), new technologies developed in China for the African market (which are usually better tailored than rival technologies from the West), and Chinese-educated African youth (who, unlike the UK- or US-educated, usually return home after their studies).

Economic engagements will probably therefore appear increasingly opportunistic, with both Chinese and African firms responding to market prospects rather than a top-level strategy. Some African countries stand to benefit (such as Rwanda and Kenya), as they can provide Chinese investors will a decent operating environment and the prospect of profitable ventures. But other African countries (such as South Sudan and Burundi) are more vulnerable. With Chinese-built infrastructure opening new markets for exporters of Chinese-made products, a further influx of Chinese imports threatens to stifle countries' nascent industrialisation potential.

Political relations: firm, but not without some strains

There is also a political threat, as the rising inflow of Chinese goods and workers risks undermining social stability and stirring political tensions in Africa. Indeed, in the Ugandan capital, Kampala, for example, clashes among street vendors already flare up periodically, amid allegations that the government has failed to protect them from the influx of low-cost Chinese goods with which Ugandan-made products cannot compete. Some African governments may attempt to do more to regulate the industries in which China's presence is most destructive for local livelihoods. But given the growing demand across the continent for consumer goods, it seems unlikely that imports from China will retreat.

The sociopolitical risks stemming from China's growing economic influence in Africa will therefore persist. Even so, we expect government-to-government relations to remain firm. This suits both sides of the relationship; African governments have a partner that can offset the influence of the West, and the Chinese government has a continent of countries upon whom it can depend for support on the international stage. The correlation between Chinese aid flows and African countries' voting patterns in the UN General Assembly will probably continue, with a predictive model developed by US-based AidData suggesting that voting with China at the UN an extra 10% of the time yields, on average, an 80% boost in aid inflows for African countries.

Moreover, the strength of ties between China and Africa will not go unnoticed by other foreign partners. This could fuel competition, with some diplomats interpreting Japan's recent efforts to step up engagement with Africa as a direct attempt to challenge China's influence. Owing to the strength of the economic diplomacy rolled out by China over the past decade, though, we doubt that any other foreign partner will rival it. Instead, more partnerships seem likely. France, which already has firm relations with Africa, forged an agreement between the China Development Bank and the Agence française de développement in January to jointly sponsor projects; these types of multi-country partnerships have previously failed in the African context, but the political will in France to try again is noteworthy.

China's influence in Africa looks set to continue

The next high-level Summit between China and Africa is scheduled for September 2018, when Beijing will host the triennial FOCAC. Ahead of then, some of the Chinese-backed projects that were discussed at the previous summit will be concluded (such as the Ethiopia-Djibouti railway), others will edge forwards (including several industrial parks) and a whole host of plans (often the more ambitious ones, such as venture capital for African small businesses) will fail to get off the ground. Regardless of the patchy implementation, these high-level engagements will consolidate China's influence in Africa. Beyond the summits, though, we think the more important dynamic in the China-Africa relationship will play out in markets, industrial parks and ports-and it is these engagements that will determine which African countries benefit from China's influence, and which suffer.

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