September 11, 2024
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In Africa, China Strikes Back
Beijing has prepared for the coming competition with new economic promises.
By: Ronan Wordsworth
A little over a year ago, China was consigned to spend less in pursuit of its interests in Africa. It cut back dramatically on lending, on infrastructure projects, and on any form of investment because the governments were corrupt and there wasn’t much competition to China besides. But now that there is a renewed global interest in Africa for its place in supply chains and its supply of critical minerals, Beijing feels it can no longer sit idly by. The reasons behind the decision are many, but perhaps most tellingly, it shows that Beijing believes it will come out of its current economic malaise.
China’s Decline
The significance of China’s near-monopoly in Africa cannot be overstated. From 2006, when it began to invest in Africa in earnest, to the height of its investment in 2016, Beijing faced very little competition. This enabled the government to secure long-term deals to develop mines and export raw minerals and maintain large trade imbalances. It also gave China a huge head start in developing batteries, solar panels and other products related to green energy. Beijing’s strategy was successful even when African governments failed to pay back their loans, and even when Beijing itself fell under economic duress. The mines stayed open, ensuring a constant flow of critical minerals.
But other countries started to take notice. The United States now intends to partner with Africa partly to develop trade relations but mostly to gain access to its resources. This was exemplified by the first U.S.-Africa Leaders’ Summit in December 2022, when President Joe Biden hosted leaders from the continent in the hopes of demonstrating Washington’s commitment to building new economic engagement, strengthening ties, promoting private equity to use in such key sectors as health, infrastructure, energy, agribusiness and digital, and supporting peace initiatives throughout the continent. Thus, in 2023, a record amount of private and government investment flowed from the U.S. to Africa.
A major recipient of this money was the Lobito Corridor project. With Europe’s help, the U.S. mobilized nearly $2 billion to develop this rail corridor, which links the copper belt in Zambia and the Democratic Republic of Congo to the Angolan coast and provides a reliable way to export copper, cobalt and other rare earths such as niobium, tantalum and germanium to the Atlantic Ocean shipping routes. More than just an economic initiative, the Lobito Corridor is a way for the U.S. and Europe to counter China’s dominance in critical minerals and reinforce otherwise shaky supply chains.
The West isn’t alone in its interests. In trying to diversify their portfolios away from hydrocarbons, many Middle Eastern countries have started to invest in African commodities markets. Turkey, Saudi Arabia, Iran, the United Arab Emirates and Qatar are all active there, and though they operate in different countries and sectors and for different short-term goals, they are all directly competing with China. The UAE, for example, which is now the fourth largest investor on the continent, is participating in areas such as infrastructure, energy, transport and logistics – areas in which China used to have a strong presence. It also signed an agreement with the DRC to establish a mining joint venture to extract tantalum, tungsten and tin – all critical raw materials used in the manufacture of green technology.
China is still Africa’s most important trade partner and the biggest beneficiary of African resources, but its position now is nowhere near as strong as it was just a few years ago. In fact, Chinese outreach had begun to drop even before the competition was rekindled. Money for programs related to agricultural assistance, climate and environment, health, peace and security, and trade dropped by roughly 50 percent. During that time, there was also an 80 percent drop in the sheer number of projects being announced. In a Zoom call with African leaders in 2021, Chinese President Xi Jinping made no reference whatsoever to continental infrastructure – once seen as a hallmark of their relationship.
The most recent China-Africa summit, held just a few days ago, focused on how to add value to African exports. According to China's Foreign Ministry, imports from Africa reached $305.9 billion over the past two and a half years, beating preliminary objectives on targeted value but still failing to add much beyond the utility of the minerals themselves. Beijing also said it wants to reduce its trade imbalance to usher in a new era of bilateral ties, demonstrating a willingness to develop a more sophisticated relationship based on trade ties and potential dependencies rather than one based purely on extraction.
China’s Response
And because China knows its position in Africa has declined relative to others, it has prepared for the coming competition accordingly. Its plans, crucially, include the largest ever military pledges, but its outreach still centers on economic cooperation. At last week’s summit, Xi announced that the ”Beijing Action Plan for 2025-2027” includes a promise of 360 billion yuan ($50 billion) for the continent over the next three years comprising credit funds, government-issued yuan-denominated loans, private investment from Chinese firms, an involvement in 30 infrastructure projects, the creation of 1 million jobs in Africa, a unilateral improvement on access to its market for African trade, 30 clean energy projects and Chinese involvement in developing Africa's nuclear energy industry.
Though this is no small matter, in some ways it is merely in keeping with previous efforts. In 2023, Chinese investment in Africa came roaring back. By the end of August, the Global China Initiative reported that China had approved $4.61 billion in loans to eight African countries and two regional financial institutions, marking the first annual increase in loans to the continent since the peak of the Belt and Road Initiative. Chinese financing also returned to small-scale renewable energy projects, such as solar and hydropower, after two years of no energy investment in Africa. These projects remain modest, however, and the “30 clean energy projects” promised by Xi at the summit will likely be of similar scale. Infrastructure projects are also expected to be smaller, reflecting lessons from earlier large-scale initiatives that faced repayment challenges. However, China continues to extend loans to countries with ongoing financial difficulties, including Egypt, Nigeria and Angola – three of its largest loan recipients.
One notable memorandum of understanding from the summit concerned revitalizing a railway between Tanzania and Zambia. Built in 1976 and funded by a zero-interest Chinese loan, the railway helps copper and cobalt from Zambia and the DRC reach ports in Tanzania. The refurbished railway will highlight the benefits of cooperation between China and Africa, according to Xi. It also looks like a direct response to the Lobito Corridor.
Besides economic support, Xi also pledged $140 million in military aid to Africa. The aid package includes training for 6,000 military personnel, 1,000 police officers and 500 young military officers who will come to China for further training. Insecurity in places like Sudan, the Sahel, the DRC and the Central African Republic is disrupting Chinese mining and logistics operations. What’s more, some of this instability is a result of Russian activity, as Moscow exploits the lawlessness to access and covertly export minerals. This dynamic has led to clashes between Chinese and Russian actors in areas such as the Central African Republic. Meanwhile, China accounted for 19 percent of sub-Saharan Africa’s arms imports from 2019 to 2023 – a figure that is likely to grow as Russia remains preoccupied with Ukraine.
Though African leaders welcomed these pledges, they now hold a stronger bargaining position with Beijing. As a result, China is unlikely to match the levels of infrastructure financing seen before 2016. Instead, Beijing is adopting a multifaceted strategy, deepening military ties with African countries while signaling its return as a reliable partner for development assistance. It faces significant competition this time from Western and Middle Eastern countries. These rivals are challenging China’s traditional areas of influence and working to secure their own supply chains in order to reduce their dependence on Chinese manufacturing for the green energy transition. The China-Africa summit shows that the competition has forced China to refocus on Africa just as it was beginning to shift its attention elsewhere