Analysis: China’s Davos push builds on African ambitions

What does China’s pitch to be the champion of globalization mean for Africa?


For the international business elite gathering for their annual shindig on the slopes of Davos, the sight of a Chinese leader presenting himself as a champion of global trade and a guarantor of free markets was an unlikely, if welcome, event.  

Yet as President Xi Jinping, General Secretary of the Communist Party, took to the stage this week to rail against protectionism – usurping the traditional leadership role of the United States and sending a pro-trade message to the incoming Donald Trump – attendees from Africa may have been less surprised by his embrace of capitalism. While this year’s World Economic Forum in Davos has been pitched as a bold attempt by Beijing to project economic leadership and colonise the space vacated by a retreating US, many of the themes under discussion – from the ambitious multi-national trade routes of ‘One Belt, One Road’ to Chinese firms’ thirst for outwards expansion  – are long familiar to African policymakers.

For the continent’s observers, the question is not whether China is serious about trumpeting globalisation, but whether it will distract from support for the African partners on which it has lavished billions in recent years. On the evidence of January’s visit to five African countries by foreign minister Wang Yi, retreat is far from the minds of Chinese officials. While the timing of Wang’s trip may be routine – a visit to the continent has become the traditional starting point of China’s diplomatic year – the journey offered signs that Beijing is preparing to ramp up support to new and existing partners.  

In Nigeria, long considered one of Africa’s more China-sceptic nations, Wang unveiled extensive infrastructure deals said to be worth some $40bn. That figure may prove wildly optimistic. Janet Eom, research manager at Johns Hopkins University’s China-Africa Research Initiative, tells African Business that reality often falls short of rhetoric when it comes to funding pledges from China as firms come up against local challenges and a lack of infrastructure.  

Yet even a partial completion of that multi-billion dollar deal would stand as a rebuke to local critics who argue, like former Nigerian central bank governor Lamido Sanusi in 2013, that Chinese involvement in Africa carries “the whiff of colonialism”. Indeed, Nigeria’s new openness towards China shows the extent to which the economic calculations of Africa’s resource producers have changed.

After a prolonged oil slump beginning in 2014 decimated foreign exchange reserves, upended macroeconomic stability, and plunged the country into recession from the second quarter of last year, President Buhari can no longer afford the luxury of choosing his sources of investment. The IMF predicts growth of just 0.7% this year. As a result, Nigeria’s previous squeamishness about China has given way to a hard-edged pragmatism – witness the way in which Nigeria reportedly ordered the trade office of Taiwan, long considered an illegal breakaway province by China, to leave capital city Abuja. Other African countries reeling from commodity price declines may be similarly tempted to lay out the red carpet for senior Chinese officials and forcefully reassert their backing for the ‘One China’ policy. 

For the Chinese, the Nigerian ties, if realised, represent a renewed interest in African extractors. Major crude producer Angola, which received a quarter of all Chinese loans over the 15 years from 2000, has long been a favoured destination. If the tentative recovery in other minerals – including copper, coal and iron ore – continues, Chinese firms may be tempted to ramp up their investments in other extractive nations.

Yet there are reasons why China’s focus on Africa is likely to remain more than just a resource play in 2017. The rise of blue-collar wages in China – while somewhat tempered by savings made by factory automation – means that many firms are keen to make labour savings abroad. Contractors on infrastructure projects remain hungry for foreign projects given a backdrop of continued sluggish domestic growth – among Wang’s pledges was a bid to develop the Tazara railway between Tanzania and Zambia. Chinese firms’ turnover from fulfilled contracts in Africa increased every year from just $2bn in 1998 to $53bn in 2014, according to 2016 data from the China-Africa Research Initiative. 

Funding targets certainly remain ambitious. The $60bn of pledges made at the 2015 Forum on China-Africa Cooperation offer a yardstick to measure Chinese progress.  

Kai Xue, a cross-border transactions lawyer at DeHeng Law Offices in Beijing, tells African Business of a ‘constant conveyor belt’ of transportation and energy projects across the continent and expects funding pledges to be met or exceeded. Whether or not China’s charm offensive manages to woo the ultra-rich of Davos, Africa is unlikely to be short of Chinese attention this year.

 David Thomas

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