China’s relationship with Africa is growing murkier
A decline in capital flows does not necessarily signal disengagement
Editor’s note: On September 5th Xi Jinping opened the Forum on China-Africa Co-operation by offering Africa $51bn of financing over the next three years.
It has been the highlight of most African leaders’ diplomatic calendar for nearly a quarter of a century. Ever since the inaugural Forum on China-Africa Co-operation (FOCAC) in Beijing in 2000, the triennial shindig has been treated as a barometer by analysts seeking clues about the evolving state of relations between Africa and its biggest trading partner.
At first glance this year’s summit, the first to be held in-person since the pandemic, is no different. Chinese media are awash with coverage of an event that allows President Xi Jinping to pose as the undisputed leader of the global south. Billed by China’s foreign ministry as a “grand reunion of the China-Africa big family”, more than two dozen African leaders are in attendance.
Yet in many African countries the run-up to the summit had been muted. One reason is a perception that China has become less interested in Africa. At the previous FOCAC, held virtually between China and Senegal, China made new financial pledges adding up to $40bn—a third less than it had promised in both 2015 and 2018. About half of the reduction was due to a slump in infrastructure borrowing. In several African countries, notably Ethiopia, Zambia and Kenya, governments struggled to pay off debts they had accrued while building big-ticket infrastructure over the preceding decade. By 2021 the value of official new loans from China to African countries had fallen to about 0.15% as a share of African GDP, from a peak of 1.2% in 2016, according to Boston University.
Today, with China’s economy slowing and African governments tightening their belts, few experts expected Beijing to offer anything on the scale of pre-pandemic FOCACs. On September 5th Xi Jinping pledged some $50bn in financial support over the next three years, more than in 2021 but less than in previous years.
The relationship is less frenzied than in the 2000s and 2010s, when China’s state-backed banks funnelled billions into Africa’s roads, railways and ports as part of what became known as the Belt and Road Initiative (BRI), Mr Xi’s signature foreign-policy endeavour. For much of that era, geopolitical competition on the continent could be summed up as “China and the West”, notes Eric Olander, co-founder of the China Africa Project, a media initiative focused on the relationship. Since then, “Africa+1” events have gone global; the second Indonesia-Africa Forum began just three days before the opening of FOCAC on September 4th. “Now, it is China, the West and the rest,” says Mr Olander.
Yet as Mr Xi’s latest pledge shows, that does not mean that China is retreating from Africa, or that African countries are disengaging from China. “Whatever people say, China will remain the biggest economic partner for Africa,” explains a senior official in Ethiopia, one of a few big countries—another is Angola—generally perceived to have pulled away from China in recent years. “You simply cannot afford not to have good relations.”
China remains the continent’s biggest bilateral trade partner. Even as lending has fallen, trade has ticked up. Thanks in part to surging demand for African minerals, especially those critical for the transition to green energy, the total trade volume in 2023 reached a record $282bn, or 9.9% of Africa’s GDP—up from less than $200bn, or 7.8% of African GDP, just four years earlier. The volume in 2023 was more than double that with India, Africa’s second-biggest individual trade partner.
In loans to sub-Saharan Africa, China is still second to none. New lending rose again in 2023 after six consecutive years of decline, according to new data from Boston University’s Global Development Policy Centre. Some of the loans, such as $50m for a solar farm in Burkina Faso, are in line with Mr Xi’s recent directive that the BRI must shift focus towards “small but beautiful” (ie, cheap and green) projects. But others, for instance a loan of roughly $1bn for a railway in Nigeria, are a sign that China “hasn’t got out of the infrastructure game at all”, argues Zainab Usman of the Carnegie Endowment for International Peace, a think-tank in Washington, DC.
The more commonly cited data may be underestimating the scale of China’s lending. Bradley Parks, the executive director of AidData, a research lab at William & Mary University in America, agrees that there has been a measurable “bounceback” in lending in recent years (though volumes remain far off their peak). But he adds that “much of what we think is going on in the world of Chinese lending is based on where the light is shone”. Datasets that focus only on the activity of a small group of Chinese state-backed lenders, such as the two biggest, Export-Import Bank of China (known as Exim) and China Development Bank, do not tell the full story.
Casting a wider light means considering an array of Chinese creditors—both public and private—as well as different types of loans. These include those denominated in yuan, rather than dollars, as well as packages involving multilateral or even Western banks. China also offers emergency-rescue lending to central banks, for example in the form of currency swaps. Chinese banks get involved in special-purpose vehicles established to fund individual projects while keeping debts off the government’s books.
The picture that emerges is more complex than the traditional sovereign debt of decades past. “What we are seeing is a diversification of forms of financial support,” says Robert Dussey, the foreign minister of Togo. Take all of it into account and the volume of lending is several times higher than alternative estimates (see chart).
Consider, for instance, a multi-billion-dollar loan for an iron-ore, rail and port development project in Guinea, which was agreed this year. Unlike the old model of bilateral sovereign debt, the syndicated-loan agreement in question is expected to involve several Chinese banks and possibly Western commercial ones. It will be managed by a special-purpose vehicle in which the Guinean state has a 15% stake. This offers potentially lucrative rewards for the Guinean government, which will receive a share of the project company’s future profits. However, it also raises questions about the extent to which Guinean taxpayers will be on the hook should it go bust (the exact terms of the deal are not public).
African negotiators in Beijing this week hope to bag big promises from Chinese firms and lenders. But in this new, murkier world of loans and investment, quality matters as much as quantity. Folashade Soulé of Oxford University’s Blavatnik School of Government argues that African leaders should work together to ensure that resource and infrastructure deals are clean and transparent. Better co-ordination might also push China to make other concessions, such as increasing access to its own market and doing more to help African countries process and refine minerals before export. It has yet to meet its pledge, made at the summit in 2021, to buy $300bn-worth of African goods.
Too often, though, “internal rivalry and competition over the same resources” weakens the continent’s bargaining power, notes Cliff Mboya, a Kenyan analyst. And, economically, Africa needs China more than China needs Africa. Despite recent growth, the continent still makes up less than 5% of China’s global trade.
Nevertheless, Africa has leverage in the relationship. It has 54 votes at the UN, and a certain moral clout at the heart of the global south. In an increasingly multipolar world it also has competing suitors to play off each other. FOCAC—China’s largest post-pandemic diplomatic event—is itself a reminder of how much Africa matters to China. It remains an opportunity the continent cannot afford to miss. ■