Africa is the main target of China’s flagship economic cooperation programme, which is reviving after a hiatus during the worldwide pandemic, according to a Reuters examination of credit, trade, and investment statistics.

Chinese officials have been pointing to the record two-way commerce and billions of dollars allocated to new development projects as proof of their determination to support modernization efforts on the continent and promote “win-win” collaboration.

However, the information shows a more nuanced picture of the relationship, one that is still mostly extractive and has fallen short of some of Beijing’s hype around President Xi Jinping’s plan to create an infrastructural network that connects China to the rest of the globe through the Belt and Road Initiative.

According to the Griffith Asia Institute at Griffith University in Australia, Chinese investment in Africa rose 114% in the previous year, although the majority of this investment was concentrated on minerals that are crucial to the global energy revolution and China’s efforts to boost its own struggling economy.

Trade was also controlled by those minerals and oil. Africa’s trade imbalance with China has exploded while attempts to increase other imports from the continent, such as manufactured goods and agricultural products, have failed.

The primary source of funding for infrastructure in Africa, Chinese sovereign loans, is now at its lowest point in twenty years. Furthermore, public-private partnerships, or PPPs, have not yet gained momentum in Africa despite being promoted by China as its new preferred investment instrument worldwide.

As a result, the connection is more one-sided than China claims it desires, dominated by raw material imports from Africa and, some observers claim, evoking the economic ties between Europe and Africa during the colonial era.

Co-founder of the China-Global South Project website and podcast Eric Olander stated, “This is something late-19th century Britain would recognise.”

China disputes such claims.

China’s foreign ministry replied to Reuters, saying, “Africa has the right, capacity, and wisdom to develop its external relations and choose its partners.”

“China’s practical support for Africa’s path of modernisation in accordance with its own characteristics has been welcomed by an increasing number of African countries.”

In the two decades prior to the COVID-19 outbreak, China’s involvement in Africa, the focal point of the Belt and Road Initiative (BRI), increased significantly. Chinese enterprises constructed railroads, ports, and hydroelectric dams all throughout the continent with the majority of funding coming from governmental loans. A milestone of $28.4 billion in annual lending pledges was reached in 2016, according to Boston University’s Global China Initiative.

But a lot of the initiatives were unsuccessful. China stopped funding since some countries found it difficult to return their debt. After that, Covid-19 forced it inside, which led to the collapse of Chinese building projects in Africa.

Sovereign financing is not anticipated to rebound.

Rather, Chinese enterprises have been under pressure from Beijing policymakers to run infrastructure they develop for foreign governments and accept financial holdings in the projects.

According to China experts, the objective is to assist businesses in securing higher-value contracts and, by putting them in the driver’s seat, guarantee the projects’ economic viability.

As a percentage of China’s foreign loans, lending to Special Purpose Vehicles (SPVs), arguably the most popular vehicle for PPP infrastructure investment, has been increasing, according to data that AidData, a research centre at William & Mary University in the United States, exclusively shared with Reuters.

The state-owned China Road and Bridge Corporation (CRBC) constructed and operates the $668 million Nairobi Motorway, a public-private collaboration that may serve as an African proof of concept for the model. The toll road has surpassed income and use expectations since it opened in August 2022 by enabling commuters to travel past the notorious traffic jams in the Kenyan capital.

A 2049 objective of about 55,000 cars was exceeded in March by the daily average use of 57,000 automobiles, as reported by Reuters from a 2019 CRBC presentation on the project’s economic sustainability.

But in Africa, not many businesses are imitating CRBC. In the most recent year for which AidData statistics are available, 2018 to 2021, almost 45% of Chinese non-emergency loans went to SPVs globally; however, the percentage was just 27% for Africa.

Analysts identify a variety of plausible causes, such as the fact that many African nations lack PPP legal frameworks and that certain Chinese businesses, many of whom are relatively new to PPPs, believe that African markets are dangerous.

Reacting to a request for clarification regarding the lower SPV figures for Africa, China’s foreign ministry stated that the government supports Chinese enterprises to “actively develop new modes of cooperation” including PPPs in order to increase private investment in the continent. The Griffith Asia Institute estimated that China’s total engagement in Africa, which includes both construction contracts and investment commitments, was $21.7 billion last year, making it the region’s largest recipient. The American Enterprise Institute, a Washington-based think tank, reported that investments reached nearly $11 billion in 2023, the highest level since it started monitoring Chinese economic activity in Africa in 2005.

Roughly $7.8 billion of that was allocated to mining, including the $1.9 billion acquisition of Botswana’s Khoemacau copper mine by China’s MMG Ltd, as well as cobalt and lithium projects in Namibia, Zambia, and Zimbabwe.

The search for essential minerals is also propelling the building of infrastructure. For instance, Chinese businesses promised to invest up to $7 billion in infrastructure in January as part of a modification to their joint venture agreement with the Democratic Republic of Congo for copper and cobalt.

With support from the governments of the United States and Europe, the Lobito Corridor—a rail connection that would transport metals from Zambia and the Congo to Africa’s Atlantic coast—is another example of how Western and Gulf nations are vying to take the lead in the global energy transformation.

Nonetheless, African leaders have had difficulty securing funding for a few other important initiatives.

For example, despite the Nairobi Expressway’s success, development on a number of Kenyan roads came to a standstill when the government ran out of funds to reimburse the Chinese construction companies.

In October of last year, President William Ruto requested a $1 billion loan to finish the projects while in Beijing.

Talks over the request are still underway, according to Wang Wenbin, a spokeswoman for the Chinese foreign ministry. A request for response was not answered by Kenya’s finance ministry.

Since Chinese funding stopped up in 2019, the last section of a railway line that was supposed to cross Kenya from its main port to the Ugandan border has been in a similar state of flux. After Chinese sponsors withdrew, Uganda terminated the contract for their share of the line in 2022.

Chinese authorities emphasise trade and investment as a solution to the fall in financing for infrastructure in Africa, claiming that commerce facilitated by the Belt and Road Initiative (BRI) increases the continent’s riches and development.

China Customs statistics shows that two-way commerce reached a record $282 billion last year. However, China’s trade imbalance increased by 46% at the same time as Africa’s exports to China decreased in value by 7%, mostly as a result of falling oil prices.

Chinese authorities have made an effort to allay certain African leaders’ worries.

Xi announced in August at a conference in Johannesburg that Beijing will start launching programmes to assist the modernization of the continent’s manufacturing and agricultural sectors, which are seen by African leaders as essential to reducing trade barriers, diversifying their economies, and generating employment.

Additionally, China has promised to boost its purchases of African agriculture.

These attempts are currently failing.

Kenya has been lobbying for more access to the world’s second-biggest consumer market—China—due to Africa’s greatest trade imbalance, which it just achieved for fish and avocados. However, many companies are still unable to reach Chinese customers due to onerous health and hygiene restrictions.

“The Chinese market is a new one,” said Ernest Muthomi, CEO of the Avocado Society of Kenya. “It was a challenge because you have to install the equipment for fumigation.”

China received barely 10% of the 20 billion shillings ($150.94 million) in avocado exports last year.

Chinese customs statistics revealed that overall, Kenyan exports to China decreased by more than 15% to $228 million as shipments of titanium, a vital commodity to China, decreased due to a decrease in production.

However, Chinese-made items continued to arrive.

Francis Mangeni, an advisor at the African Continental Free Trade Area Secretariat, stated that’s not sustainable.

“We are just exporting raw minerals to fuel their economy,” he added, unless African countries can raise the value of their exports via expanded processing and manufacturing.

(Adapted from Reuters.com)