FOCAC – the Forum on China-Africa cooperation – meets every three years and allows for a stock-taking of the agenda. By 2018, virtually all African countries (except for Swaziland) engage with Mainland China, which is Africa’s biggest trade partner, a large investor, and a donor with substantial importance for African development. It is, indeed, important to know where Chinese interests move.
The Chinese leadership’s slogan about “no-strings attached” in their finance continues to be a popular dig at European policies. China’s supposedly “non-interference” policy serves as a political selling-point as compared to “Western” assistance – and is a much appreciated tune by many African policy-makers. African leaders in attendance in Beijing were more numerous than at some AU summits, including for instance Paul Biya and wife, rarely seen in Addis Ababa. Beijing tends to rhetorically emphasise continuity in the relationship with Africa. Yet, subtle shifts occur, and they have some messages for European actors.
Chinese aid to Africa
China is here to stay in Africa and Europeans better engage with its policies. Beijing’s financial engagement is the core of engagement. The Chinese government’s commitment of an additional US$ 60 billion of various types of finance for the continent over the next three years is big money, and it is the same amount as in 2015 again. In other words: Chinese engagement is as relevant as ever. There are two main messages, however, that we should be aware of: First, we have come to the end of a doubling of financial commitments with each FOCAC, as we have seen with each previous round. Secondly, it is necessary to look at the numbers more closely: Of the US$60 billion, a large chunk is for loans at commercial conditions, investment funds and other instruments that would not count as “aid” by any understanding, including Chinese wording, which speaks of “aid” in two policy white papers, 2011 and 2014. Within the overall amount, US$15 billion are for grants and concessional loans, i.e. for finance that we could compare to aid. This is roughly US$5billion per year for Africa.
Currently, China annually spends about US$7 to 8 billion in aid globally, according to estimates (the exact annual numbers are not published by Beijing, despite improvements in the reporting). China has committed to spending at least half of its aid on Africa, which currently means around US$4billion per annum, similar in size to some individual European bilateral donors. In other words: the FOCAC 2018 commitments of US$15billion allow for an increase in foreign aid from China, but mostly send the message that the engagement will continue at similar scale as before.
Development finance – and “vanity projects”
China has never been selfless and prefers the term “development actor” rather than “donor”. Beijing is openly pursuing “mutual benefit”, read: returns on its investments. Loans at commercial terms or finance for investment projects is clearly at the core of Chinese engagement. While this type of development finance might promote development, it is equally driven by business opportunities and the quest for markets. Chinese finance beyond aid needs to generate returns. While funding lines for state-owned enterprises helped with market entry, Chinese finance institutions become increasingly aware of “white elephants”, i.e. prestige projects with little developmental effect.
With FOCAC 2018, though, the tone from Beijing has become a notch more critical. Xi Jinping spoke of “vanity projects” that China would not be willing to fund. This might indicate some tightening of the very loose purse in Beijing. Projects need to create value – both for China and for African societies. China’s pockets are still deep, but not bottomless. This shift does not come as a surprise. The more Chinese investors and traders stand to lose in an often frail environment, the higher their risk awareness. Discussions in China include topics such as investment climates – a key word for burdensome regulations – or how African societies will be able to repay their debt. The latter is likely to be a lessons from, say, the Sri Lankan port of Hambantota (https://qz.com/1317234/chinas-debt-trap-in-sri-lanka-is-even-worse-than-we-thought/), which is now run in a century-lease by Chinese companies.
Knowledge cooperation and stakes in the future
The experiences in donorship are not always that fundamentally different, after all. Learning in the relationship has happened on all sides. In China, this has led to the establishment of a China International Development Cooperation Agency (CIDCA), announced in April this year. This move might be more powerful than all financial announcements, as it is meant to improve planning of projects. At this front, much can be improved. The myth about an all-powerful and ever strategising centre is flattering to the leadership in Beijing. However, the situation is often much less orderly; coordinating Chinese actors has become increasingly difficult. The drive for CIDCA can therefore be compared to the EU’s past motivation to create EuropeAid.
However, more important to watch for European actors, are some elements with a smaller price tag, but taken into the partnership with foresight from Beijing. The list of China-Africa joint cooperation projects is particularly interesting and reveals ambitions in knowledge creation. They include:
- cooperation center for ocean science and the blue economy,
- research center for development of green agriculture,
- energy technological cooperation center and
- geo-science cooperation center.
These headlines send the most important message: while Europe struggles to send positive signals with its focus on stemming migration from Africa, China, instead, is investing in joint expertise and is fast becoming the most important partner for Africa’s future.
The views and opinions expressed in this article are those of the authors and do not necessarily reflect the official policy or position of the Italian Institute for International Political Studies (ISPI)