Post-Covid-19, is China making a stronger comeback in Africa?

The Khoemacau copper mine in Botswana was acquired last year by China's MMG company.

Data on lending, investment, and trade shows that China's flagship economic cooperation program is recovering after a lull caused by the Covid-19 pandemic, with a primary focus on Africa, according to a Reuters analysis on May 28.

Chinese leaders cited billions of dollars pledged for new construction projects and acknowledged bilateral trade as evidence of their commitment to supporting the modernization of the mainland and promoting "mutually beneficial" cooperation.

Focus on mining

However, the data reveals a more complex relationship, and one that remains largely exploitative, according to the analysis.

While investment in Africa increased by 114% last year (data from the Griffith Asia Institute at Griffith University, Australia), China is focusing heavily on minerals essential for the global energy transition and its own plans to revive its economy.

Minerals and oil also dominate trade. Because efforts to increase imports of other goods from Africa, including agricultural products and industrial goods, have not been as successful as hoped, the continent's trade deficit with China has skyrocketed.

According to the Griffith Asia Institute, China's total investment contracts and commitments in Africa reached $21.7 billion last year. Data from the American Enterprise Institute shows investments reached nearly $11 billion last year, the highest level since the Washington DC-based organization began tracking China's economic activity in Africa in 2005.

Approximately $7.8 billion of that is related to mining, such as Botswana's Khoemacau copper mine, which China's MMG company bought for $1.9 billion, or cobalt and lithium mines in countries like Namibia, Zambia, and Zimbabwe.

The US and Europe are competing with China in Africa via railways.

Infrastructure investment has decreased.

Chinese government loans, which have been a major source of financing for African infrastructure, are at their lowest level in two decades. Public-private partnerships also lack appeal in Africa.

As a result, the relationship is more one-sided than China has expressed its desire. The relationship is primarily manifested in the import of raw minerals from Africa, which some analysts believe reflects Europe's colonial economic ties with Africa.

The Chinese Foreign Ministry rejected the above statement.

"Africa has the right, capacity, and wisdom to develop its foreign relations and choose its partners. China's practical support for Africa's modernization path, which is in line with the continent's unique characteristics, has been increasingly welcomed by countries there," according to the Chinese Ministry of Foreign Affairs.

When asked about the decline in infrastructure investment in Africa, Chinese officials argued that trade would drive Africa's wealth and development.

Trade deficit

Bilateral trade reached a record $282 billion last year, but exports from Africa to China fell by 7%, mainly due to lower oil prices, and the trade deficit widened to 46%.

Chinese officials have sought to allay concerns among some African leaders. China has also pledged to increase agricultural imports from Africa, although these efforts have so far fallen short of expectations.

In Kenya, exports to China fell by more than 15% to $228 million last year, due to a drop in titanium production which led to a decrease in exports of the metal, a key export item to China. But manufactured Chinese goods continued to arrive.

Francis Mangeni, advisor to the Secretariat of the African Continental Free Trade Area, argues that this is unsustainable. According to him, unless African nations can add value to their exports through increased processing and manufacturing, "we are simply exporting raw minerals to power their economies."

Source: https://thanhnien.vn/hau-covid-19-trung-quoc-tro-lai-manh-me-hon-o-chau-phi-185240528152743647.htm