At the China-Africa Forum meeting, China has the opportunity to cement its role in Africa’s economy. The country has invested in major infrastructure projects on the continent for years. Now Beijing is changing its strategy.
The large media center near the former Olympic Stadium in Beijing is ready to go. Employees in blue uniforms buzz through the halls. Hundreds of workstations for journalists are lined up one after the other. The team has cameras ready for live TV broadcasts, as well as satellite connections and private rooms for interviews. The international journalists – most of whom come from Africa – should want for nothing.
At one stand, writings by Chinese head of state and party leader Xi Jinping are being distributed. Not far away, Chinese companies are presenting 3D films in which you can fly through landscapes in China and Africa – including large infrastructure projects “Made in China” from a bird’s eye view: a road in Congo, a port in Cameroon, a government palace in Zimbabwe.
China as leader of the “Global South”
“I hope that my country will receive more investment commitments from China at the summit,” says Ciré Balde from the small West African state of Guinea, who is taking part in a Chinese government training program for journalists from Africa. His colleague from Madagascar sees things similarly. They say that China’s development is a model for them and one from which they want to learn – in keeping with the spirit of their host.
China likes to present itself as the leader of the so-called Global South. And the three-day summit meeting at the “China-Africa Forum” with high-ranking representatives from more than 50 African countries, which begins today, offers plenty of opportunity for this. China’s supreme leader Xi will receive heads of state and government from the most strategically important partner countries for direct talks beforehand.
This includes Félix Tshisekedi, head of state of the Democratic Republic of Congo. His country produces raw materials such as copper and cobalt, which are the basis for the production of solar panels, batteries and electric cars, for which China plays a leading role on the world market. South Africa’s President Ramaphosa will also have an appointment with Xi in advance, as an important ally when it comes to forging new alliances on the international stage.
This includes, above all, the BRICS forum of leading emerging economies, which increasingly sees itself as a counterweight to the G7 industrialized nations. And Djibouti’s President Ismaïl Omar Guelleh will also shake hands with the Chinese head of state and party in the “Great Hall of the People” on Monday. China operates a military port on the Horn of Africa.
1,000 bridges, 100 ports and 10,000 kilometers of railway line
As the world’s second-largest economy, China has long been Africa’s most important trading partner. According to Chinese figures, the volume of trade between China and the African continent in the first half of the year alone amounted to around 152 billion euros. Africa mainly exports raw materials and minerals, as well as agricultural products such as avocados. China, on the other hand, supplies machinery, electronics and clothing.
Speaking to international journalists, Xu Jianping from the State Commission for Development and Reform, which is also responsible for economic relations, lists the major infrastructure projects in Africa. China has built more than 1,000 bridges, almost 100 ports and 10,000 kilometers of railway lines in Africa over the past 25 years. The message: China is helping the continent to make the leap into a new era. But not for free: the projects are financed with debt, and some of them are not profitable.
Chinese lending is declining
That is why China’s investment strategy has now changed. In 2016, China was still issuing loans worth the equivalent of 27 billion euros per year. The money was mostly for mega-projects that were often considered oversized.
Lending was subsequently reduced year after year and, according to the latest figures from Boston University, only increased again slightly last year. At the equivalent of 4.2 billion euros, however, the loans are far below the previous level.
Large infrastructure projects with enormous risk
The Kiel Institute for the World Economy (IfW) is also analyzing China’s loans to Africa and has identified a similar trend. According to economic researcher Paulina Kitzinger, the data situation is difficult because China’s lending is still not transparent. However, she does see a change in strategy in recent years.
“The large infrastructure projects entailed enormous risks. They were geared more towards the wishes of politicians in the countries and less towards what was financially viable.” This has now changed, partly because China’s economy is not getting off the ground and Chinese municipalities themselves have a debt problem.
More investment in green energy
“China tends to finance smaller projects where the risk of default is not so great,” says Kitzinger. In addition, Beijing is now usually looking for other, often commercial, international partners when granting loans. “This also has the advantage of not being the only addressee when demands for a debt cut are made.” According to the IfW’s analysis, the loan conditions are often similar to commercial loans – with higher interest rates than the World Bank’s loan packages. So it’s more about business than pure development projects.
China now wants to reduce investments in African coal energy and oil production projects and instead promote more green energy. Conveniently, Beijing can also supply the solar panels – a new lucrative market. In many areas, Chinese companies have long since become an integral part of the economy of numerous African countries. Even if Beijing is no longer so generous with its credit portfolio.
Eva Lamby-Schmitt, ARD Shanghai, tagesschau, 04.09.2024 06:57 a.m.
