New Zealand markets closed
  • NZX 50

    +68.89 (+0.59%)

    -0.0009 (-0.15%)

    +0.0000 (+0.00%)

    +66.60 (+0.84%)
  • ASX 200

    +72.70 (+0.94%)
  • OIL

    -0.10 (-0.12%)
  • GOLD

    +8.60 (+0.37%)

    +242.95 (+1.24%)
  • FTSE

    -4.71 (-0.06%)
  • Dow Jones

    +188.94 (+0.49%)
  • DAX

    +66.19 (+0.37%)
  • Hang Seng

    -4.56 (-0.03%)
  • NIKKEI 225

    +283.84 (+0.74%)

    -0.0970 (-0.10%)

China's back in Africa, but does the continent benefit?

STORY: China's flagship economic cooperation program is bouncing back after the global health crisis, with Africa as a primary focus.

That's what's been shown through analysis of lending, investment and trade data.

Chinese leaders are citing the billions of dollars for new construction and record two-trade as evidence of their "win-win" commitment to supporting the continent's modernization through the Belt and Road Initiative.

But the data, however, reveals a more complex relationship that is heavily weighted towards the extraction of minerals.

:: Lending

Before the health crisis, China's engagement in Africa was heavily driven by sovereign lending - financing ports, hydropower plants and railways across the continent.


That peaked at $28.4 billion in 2016, according to the Global China Initiative at Boston University.

But Chinese sovereign lending is now at its lowest level in two decades and a rebound is not expected.

Instead, Chinese policymakers have been pushing companies to get some "skin in the game" by taking equity stakes and operating infrastructure they build for foreign governments.

The $668 million Nairobi Expressway is one example.

It was built and is run by the state-owned China Road and Bridge Corporation through a public-private partnership.

Since opening in August 2022 it has beaten revenue and usage targets.

But few Chinese firms are following CRBC's example in Africa.

Globally some 45% of Chinese non-emergency lending was to special purpose vehicles from 2018 to 2021, the most recent years for which figures from U.S. research center AidData are available.

But the figure was only 27% for Africa.

When asked about a decline in lending for African infrastructure, Chinese officials point to a pivot to trade and investment - arguing Belt and Road Initiative trade boosts the continent's wealth and development.

China's foreign ministry said the government encourages Chinese companies to "actively develop new modes of cooperation" such as PPPs to bring more private investment to Africa.

:: Investment

New Chinese investment in Africa increased 114% last year according to the Griffith Asia Institute at Australia's Griffith University.

However, it was heavily focused on minerals essential to the global energy transition and China's plans to revive its flagging economy.

Data from Washington-based think tank the American Enterprise Institute showed investments hitting nearly $11 billion in 2023.

That's the highest level since it began tracking Chinese economic activity in Africa in 2005.

Some £7.8 billion of that went into mining for minerals like copper, cobalt and lithium.

The hunt for critical minerals is also driving infrastructure construction as well.

In January, for example, Chinese companies pledged up to $7 billion in infrastructure investment under a revision of their copper and cobalt joint venture agreement with Democratic Republic of Congo.

:: Trade

Critical minerals and oil have also dominated trade.

But efforts to boost other imports from Africa, including agricultural products and manufactured goods, have faltered.

That's seen the continent's trade deficit with China balloon.

Two-way trade reached a record $282 billion last year according to Chinese customs data.

But the value of Africa's exports to China actually fell 7% - mainly due to a decline in oil prices.

The trade deficit widened 46%.

Last August Chinese President Xi Jinping said Beijing would launch initiatives to support Africa's manufacturing and agricultural modernization.

China has also pledged to increase agricultural imports from Africa.

:: Outcome

But the result of all this, potentially, is a more one-sided relationship than China says it wants.

That is one dominated by imports of Africa's raw materials.

Some analysts argue there are echoes of colonial-era Europe's economic relations with the continent.

China rejects such assertions.

Its foreign ministry said Africa has the "right, capacity and wisdom to develop its own external relations and choose its partners".

"China's practical support for Africa's path of modernization in accordance with its own characteristics," it wrote, "has been welcomed by an increasing number of African countries."