As the latest Forum on Africa-China Cooperation drew to a close this week in Beijing, our experts analysed China's commitments and implications for development in Africa.
For China-Africa watchers, the past two days have been buzzing. The FOCAC summit is concluded. After many hands shaken, commitments made and bilateral agreements signed, we have a long list of announcements that will shape the next three years of China-Africa relations.
In his opening speech, President Xi highlighted eight areas of cooperation: industrial promotion, infrastructure connectivity, trade facilitation, green development, capacity building, health, people-to-people exchanges and peace and security. African industrialisation and infrastructure feature prominently on the agenda, as we predicted last week.
There are two interesting initiatives that China put forward. The first one is a commitment to support African exports to China, especially of non-mineral products. China is Africa’s biggest trading partner, importing more than US$70 billion worth of goods in 2017. Of these, more than 95% were minerals, fuels and other commodities. African countries need to diversify their export structure to become more resilient. This initiative by China is a step in the right direction, and other countries should actively pursue similar policies.
The second interesting area concerns the ten Luban workshops announced by President Xi. These skills trainings are already running in other countries, but not in Africa. Many countries in Africa face a massive skills gap. Existing technical and vocational training programmes are often not in line with industry’s needs. While many development partners are already engaged in skills training in Africa, the scale of the challenge surely requires more effort.
Of course the real test will be the implementation of these initiatives on the ground. Yet for now this feels like a step in the right direction for African countries.
For the first time ever, China’s financing commitments to Africa stayed flat, with $60 billion pledged over three years. Before this, we had got used to exponential growth, from $5 billion in 2006, to $10 billion in 2009, to $20 billion in 2012 and to $60 billion in 2015.
The composition of this package is expected to change though. The weight of what we would call ‘aid’ (rather than financing at commercial terms) will grow. Out of the $60 billion pledged now, 25% of these commitments – or $5 billion a year – are in the form of grants, interest-free loans and concessional loans. In 2015 grants and interest-free loans totalled $5 billion, but over three years. Financing experts might criticise such the comparison as concessional loans were bundled with buyer’s credit, i.e. financing at commercial terms, in 2015 commitments.
But $5 billion per year would put China as the third largest official donor to Africa, after the United States (nearly $12 billion in 2016) and the European Union (nearly $11 billion), ahead of the other large donors to the continent, such France, Germany, Japan and the United Kingdom.
The scale of China’s resources and prominence in relation to other donors mean that its newly established National Development and Cooperation Agency should, now more than ever, commit to a strong and effective role for China as a provider of development finance, both globally and at the country level.
President Xi’s speech underlined China’s strategy to support agricultural development in Africa. Looking at the numbers, it’s likely that they are particularly interested in investing in sesame crops – of the US$550 million of agro-products Africa exported to China in 2017, sesame accounted for US$449 million. Some argue that Chinese investment in agriculture has been relatively modest, but by my calculations, sesame exports to China are growing faster than any agricultural exports to the EU.
There was also a focus on supporting agricultural modernisation. China is already entrenched in African agriculture, exchanging knowledge and expertise as well as trading in commodities. Chinese software companies are pumping equity into the African ‘Agtech’ space through precision agriculture and apps; Chinese multinationals like Alibaba are offering more sophisticated services such as cloud platforms to support big Ag data collection. And China-led training initiatives in Africa far exceed those provided by Northern aid programmes.
The green development initiative was another notable announcement – though it failed to mention deforestation. This is critical: after natural resources, the biggest exports to China are forestry products, which in 2017 totalled over US$1.35 billion, up from US$747 million in 2010. This implies China has amassed huge volumes of wood from Africa, with the latter bearing the environmental costs. With growing demand for forestry products in China, investing in green development is an obvious strategic move.
We should also look out for the types of sustainability standards China will mobilise within Africa, and how they differ from Northern sustainability standards, be it in food (Fairtrade, organic, Rainforest Alliance) or in energy-efficient buildings and equipment. It will be interesting to learn whether China’s initiatives will be more successful than the North’s.
In sum, China seems to be planning a strategic long-term engagement in African agriculture and President Xi’s speech holds promise for deeper cooperation.
President Xi opened FOCAC by emphasising a ‘five-no’ approach to China’s African policy. This includes ‘no interference in African countries’ internal affairs’ and ‘no attachment of political strings to assistance’.
This principle of ‘non-interference’ has long guided all Chinese foreign policy. Certainly in terms of development cooperation it represents a different approach to Western-style aid, eschewing policy conditionalities and political reform objectives.
Yet in practice, the principle has always been more flexible, both for reasons of economics and perception.
For example, economic interests generated through development cooperation have drawn China into inherently political peacebuilding roles. In South Sudan, China joined North-South mediation discussions, after Chinese citizens were taken hostage by Southern-backed insurgents, and oil production stopped in 2012. Initially, China had insisted on a distinction between business and politics, but under such instability that becomes difficult to maintain.
In Sudan, China also displayed responsiveness to international perception. Based on its provision of large-scale infrastructure programmes and, controversially, arms packages for the al-Bashir regime, campaigners focused criticism around the 2008 Beijing Olympics. Facing the international spotlight, China changed its stance of neutrality towards the al-Bashir regime and the Darfur conflict.
And from 2007 it began to lobby the government to accept United Nations peacekeepers and removed Sudan from its list of priority countries for investment. The Chinese ambassador to the United Nations acknowledged this infringement of the non-interference policy, stating: ‘usually China doesn’t send messages, but this time they did.’
In sum, it has always been implausible to do development cooperation without getting involved in internal politics somewhat. How strict China strives to maintain a principle of non-interference as the scale of its African cooperation grows will be interesting to see.