With the end of the Cold War, the West’s interests and involvement in Africa had been waning. China seized this opportunity to strengthen the political and economic ties with Africa. When President Jiang Zemin paid a state visit to six African countries and put forward a ‘Five Points Proposal’, it eventually led to the creation of the Forum for China-African Cooperation (FOCAC) in 2000 in lieu of shared aspirations for maintaining peace, stability and a more structured ‘South-south cooperation.’
Since then, FOCAC has served as a platform for pragmatic cooperation and collective consultation aided by political dialogue intending to seeking mutual development. FOCAC is an official forum between the People’s Republic of China (PRC) and all states in Africa, except Swaziland since it still recognises Taiwan.
The dialogue took place over two days from September 3 – September 4 commencing with an opening ceremony and a speech by the President of PRC, H.E Xi Jinping. This was followed by two rounds of discussion on the second day and a press conference, thus marking the closing of the 3rd Beijing Summit of FOCAC, and the 6th China-Africa Business Forum. A declaration and an action plan were adopted at the two-phase roundtable meeting chaired respectively by Chinese President Xi Jinping and President Cyril Ramaphosa of South Africa, the co-chair of the forum. To build an even closer Africa-China community, China will launch eight major initiatives in close collaboration with African countries in the next three years (2019-2021).
Themed ‘China and Africa: Toward an Even Stronger Community with a Shared Future through Win-Win Cooperation’, the summit saw the adoption of eight significant initiatives based on the outcomes of the previous Johannesburg summit, which saw the adoption of ten major cooperation plans to promote industrialisation and modernised agriculture. Under the industrial promotion initiative, Chinese companies aim to increase investment in Africa through the organisation of trade and economic expos. China has also promised to aid in Africa in achieving food security by 2030 and provide RMB 1 billion as emergency humanitarian food assistance to natural disasters struck African countries. Infrastructure connectivity initiative offers infrastructural development in Africa by way of construction, investment and operation.
The future of any country lies in the hands of its youth. Taking this into consideration, China has launched the Capacity building initiative where workshops, seminars, government scholarships and vocational training will be provided to high calibre Africans to promote entrepreneurship and youth innovation. While a skilled young workforce is a key to progress, so is a healthy workforce. Therefore, Healthcare initiative will be provided for medical and health aid programs for disseminating more information on public health and ensuring prevention and control of communicable diseases. Apart from this, people to people exchange initiative is also part of the scheme to promote healthy cultural exchange between the people of China and Africa.
To meet all the above-outlined initiatives, China has promised a US$ 60 billion financing by way of government assistance and investment by financial institutions and companies. When such large sums of money flow from the second largest economy of the world to the poorest continent of the world, one cannot help but wonder the reason behind such humongous investments.
Why does Africa prefer to take loans from China when they could get the same from other sources too?
For one, unlike other countries, China approves loans or interest rates solely based on project viability, instead of taking the income of the country or another scrutiny like social or environmental into consideration. The entire processing time involving approval and completion of the project for Chinese loans can be as short two years vis a vis an average waiting time of 9 years for non-Chinese loans.
However, it seems like Africa does not have a lot of financing alternatives and is stuck between ‘tied’ loans and non-access to favourable loans. Researchers at the University of Massachusetts, Amherst, suggest that money is often syphoned out as private assets. Feckless spending in Ghana and Mozambique are a case in point. Due to wariness of other countries lending to Africa, the nation has had to pursue loans from Chinese companies listed on the World Bank’s blacklists of corruption. There is another disadvantage of Chinese credit, known as ‘tying of loans’ which creates a massive conflict of interest. China has been accused of morphing from loans to investment by directing these loans for financing investment in Chinese companies or towards projects build by them. China is now the single largest bilateral financier of infrastructure in Africa (BBC News, 2018).
Another concomitant question which inevitably comes to the mind is, what is in it for China?
China has been expanding its influence in Africa to meet its ever-growing energy consumption. The world’s second largest oil consumer has placed attention to African nations as potential hydrocarbon acquisition sites since the US and European markets dominate Middle Eastern oil and gas production. China has been accused of ‘neo-colonialism’ by way of trapping countries in debt crisis and humongous loans. Not only internationally, but domestic criticism of squandering taxpayers’ money buy foreign money has also been afloat. The FOCAC was a much-needed way out to repair the country’s tarnished image in times of a difficult political and economic position from the trade war with the US.
China has been outright about its no interference policy while entering into agreements with the African nations. This is quite contrary to the Western practice of granting aids. The West criticises the severe violation of human rights and exerts its influence by threatening to cut off the development aid if such practices continue, thereby exerting a positive influence. China, however, has never criticised human rights violation and does not pay heed to it. This has gone to promote the repressive regimes and oppressive dictatorship style followed by African leaders much to the contrary of Western ideas of liberalism, economic openness and political freedom. The deposition of Robert Mugabe and Chinese backing of current leader Emmerson Mnangagwa is a typical case in point. Thus, even though China reiterates no political conditions (except one, seeking diplomatic recognition), it indeed exerts political influence. The burgeoning influence of China can also cause potential long-run disruption of US access to essential resources and raw materials as Chinese firms have landlocked them.
The African continent is of immense importance to China at the moment, and they would leave no opportunity to expand their dominion. Coming times shall reveal how Africa deals with the huge debt while balancing the intricate relations with China.
Xuequan, Mu (2018, September 3). Full text of Chinese President Xi Jinping's speech at opening ceremony of 2018 FOCAC Beijing Summit (2). Xinhua Net. Retrieved from http://www.xinhuanet.com/english/2018-09/03/c_137441990.htm
Trade Law Centre (2018, September 4). 2018 FOCAC Beijing Summit: Chinese President Xi Jinping’s speech at the opening ceremony. Xinhua. Retrieved from https://www.tralac.org/news/article/13435-2018-focac-beijing-summit-chinese-president-xi-jinping-s-speech-at-the-opening-ceremony.html
Ryder, Hannah Wanjie (2018, September 5). Are Chinese Loans To Africa Good or Bad? That’s The Wrong Question. The Diplomat. Retrieved from https://thediplomat.com/2018/09/are-chinese-loans-to-africa-good-or-bad-thats-the-wrong-question/
Sun, Yun (2018, September 5). China’s 2018 financial commitments to Africa: Adjustment and recalibration. Brookings. Retrieved from https://www.brookings.edu/blog/africa-in-focus/2018/09/05/chinas-2018-financial-commitments-to-africa-adjustment-and-recalibration/
Brookes, Peter and Shin, Ji Hye (2006, February 22). China's Influence in Africa: Implications for the United States. Heritage. Retrieved from https://www.heritage.org/asia/report/chinas-influence-africa-implications-the-united-states
Cui, Mui (2018, September 3). What's behind China's 'non-interference' in Africa?. Deutsche Welle. Retrieved from https://www.dw.com/en/whats-behind-chinas-non-interference-in-africa/a-45333266
Kampala (2018, March 8). Increasing debt in many African countries is a cause for worry. The Economist. Retrieved from https://www.economist.com/middle-east-and-africa/2018/03/08/increasing-debt-in-many-african-countries-is-a-cause-for-worry
Anonymous (2018, September 3). China-Africa summit: Xi denies money being spent on vanity projects. BBC News. Retrieved from https://www.bbc.com/news/world-africa-45394668
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