A significant gathering of African leaders is taking place in China’s capital this week as they seek crucial funding for large-scale infrastructure projects. This summit comes against the backdrop of intensifying global competition over resources and influence on the continent, with China playing a central role in Africa’s economic landscape.

Strengthening Ties Amid Global Competition

The Forum on China-Africa Cooperation (FOCAC), scheduled for September 4-6, 2024, marks a pivotal moment for African nations as they navigate the complex web of international alliances. With the world increasingly divided by geopolitical tensions, particularly between the United States and China, African leaders are keen to secure financial commitments that will support their development agendas.

China’s engagement with Africa has deepened significantly over the past decade, with the Asian giant extending billions of dollars in loans to fund critical infrastructure projects. These investments have enabled the construction of railways, highways, ports, and energy facilities across the continent. However, this relationship has not been without controversy, as concerns over mounting debt and dependency on China have grown.

China’s Expanding Footprint in Africa

China has emerged as Africa’s largest trading partner, with bilateral trade reaching $167.8 billion in the first half of 2024 alone, according to Chinese state media. This trade relationship is underpinned by Africa’s rich natural resources, including copper, gold, lithium, and rare earth minerals, which are essential for China’s manufacturing and technology sectors.

The Belt and Road Initiative (BRI), a cornerstone of Chinese President Xi Jinping’s foreign policy, has been instrumental in channeling investment into African infrastructure. The BRI’s projects, such as railways and hydroelectric plants, have brought much-needed development to the continent but have also sparked criticism for creating unsustainable debt levels and environmental damage.

For instance, in Kenya, the $5 billion Standard Gauge Railway (SGR) project, financed by the Exim Bank of China, was intended to connect Nairobi with the port city of Mombasa and eventually extend to Uganda. However, the project’s second phase has stalled due to financial difficulties, leaving Kenya with over $8 billion in debt to China. This situation has sparked public unrest, with recent deadly protests linked to the government’s need to service its debt burden.

A New Approach to Investment?

As African leaders converge in Beijing, they are expected to push for not only more Chinese investment but also more favorable loan terms. The economic slowdown in China, coupled with its reluctance to offer debt relief, has made Beijing more cautious in its financial commitments. This shift has led analysts to speculate that the “old model” of large-scale loans for rapid industrialization may no longer be viable.

Tang Xiaoyang, a professor at Beijing’s Tsinghua University, noted that the world has undergone significant changes since the last FOCAC six years ago, including the COVID-19 pandemic and rising geopolitical tensions. These factors have prompted China to reconsider its approach to African investment, focusing more on sustainable development and risk management.

Despite these challenges, China remains committed to its “win-win” cooperation model, which emphasizes mutual benefit and shared growth. However, the dynamics of this partnership are evolving, with African nations seeking greater leverage in their negotiations with Beijing.

Resource Wealth and Geopolitical Tensions

Africa’s vast mineral resources have become a focal point of global competition, with both Western and Chinese firms vying for access to critical materials such as cobalt, nickel, lithium, and manganese. These minerals are essential for the production of renewable energy technologies, electric vehicles, and other advanced industries.

The Democratic Republic of Congo (DRC) dominates global cobalt production, accounting for 70% of the world’s supply, while China leads in processing, handling about 50% of global cobalt refining. Similarly, South Africa holds 37% of global manganese output, and Gabon’s Moanda region is home to a quarter of known global reserves.

As the world shifts towards renewable energy, these resources have become strategically important, further intensifying the competition between the U.S. and China. Washington has warned against China’s influence in Africa, accusing Beijing of pursuing narrow commercial and geopolitical interests that undermine transparency and openness.

The Belt and Road Initiative: A Double-Edged Sword

The Belt and Road Initiative has been both a boon and a bane for African nations. On the one hand, it has brought significant investment and infrastructure development to regions that desperately need it. On the other hand, it has saddled many countries with unsustainable debt levels, leading to economic instability and social unrest.

In Kenya, the SGR project is a prime example of this dichotomy. While the railway has improved transportation and trade, the financial burden it has placed on the country has sparked widespread protests and criticism. Kenya’s President William Ruto has sought to address these concerns by requesting a $1 billion loan from China and restructuring existing debt to complete other stalled BRI projects.

The situation in Kenya is reflective of a broader trend across Africa, where governments are grappling with the dual challenges of leveraging Chinese investment for development while managing the associated debt risks. As African leaders meet in Beijing, they will likely seek to renegotiate terms and secure more sustainable financing options.

China’s Strategic Interests in Africa

China’s interest in Africa is not purely economic; it is also deeply strategic. The continent’s resources are crucial for China’s long-term energy security and technological advancement. As the world’s second-largest economy, China is heavily reliant on African minerals to fuel its industrial base and support its transition to a green economy.

Moreover, Africa’s geopolitical significance has grown as the U.S. and China vie for influence in the region. While Washington has sought to counter China’s rise by promoting alternative partnerships and development models, Beijing has continued to expand its footprint through initiatives like the BRI and FOCAC.

The ongoing rivalry between the U.S. and China has placed African nations in a delicate position, as they navigate the complexities of global power dynamics. Some analysts, like Ovigwe Eguegu of Development Reimagined, argue that African countries lack the leverage to balance these competing interests effectively. As a result, they may be forced to choose sides in the broader geopolitical contest between the world’s two largest economies.

The Future of China-Africa Relations

As the FOCAC summit unfolds, the future of China-Africa relations hangs in the balance. The traditional model of infrastructure-driven investment is being reassessed, with both sides recognizing the need for a more sustainable and mutually beneficial partnership.

For African nations, the key challenge will be to secure investment that promotes long-term development without exacerbating debt burdens or compromising sovereignty. This will require a careful balancing act, as governments seek to attract Chinese capital while also diversifying their sources of funding and strengthening domestic industries.

For China, the challenge lies in maintaining its influence in Africa amid growing scrutiny and competition from other global powers. Beijing’s ability to adapt its investment strategy to the changing economic and political landscape will be crucial in determining the success of its engagement with the continent.

Conclusion

The Forum on China-Africa Cooperation represents a critical juncture in the relationship between China and African nations. As leaders gather in Beijing to discuss the future of this partnership, the stakes are high. The outcomes of these discussions will have far-reaching implications, not only for the development of African infrastructure and industry but also for the broader geopolitical landscape.

In a world increasingly defined by great power competition, Africa’s role as a strategic partner for both China and the West will be pivotal. The decisions made at this summit could shape the trajectory of China-Africa relations for years to come, influencing everything from trade and investment to security and diplomacy.

As the summit progresses, the international community will be watching closely to see how China and Africa navigate this complex and evolving relationship. The future of the continent—and its place in the global order—may well be determined by the outcomes of these high-stakes negotiations.

photo source: Google

By: Montel Kamau

Serrari Financial Analyst

2nd September, 2024