FOCAC21: How China is reorienting its Africa policy, shifting focus from infrastructure to digital economy
The Chinese focus has shifted from mere infrastructure to the digital economy, expansion of trade and investment, green economy and the like
China and Africa held their triennial ministerial meeting, the Forum for Cooperation between Africa and China (FOCAC), this week. The two-day meeting in Dakar, Senegal, was attended by foreign and economic ministers from China and 53 African countries. Through FOCAC, China looks at expanding and consolidating its relationship with Africa on an institutional basis.
The FOCAC idea was born in 2000. It held meetings regularly every three years. Three summits were held in 2006, 2015 and 2018. The Chinese approach to Africa is mainly at the level of ministers, with occasional summits brought in. FOCAC21 was addressed virtually by Chinese president Xi Jinping.
FOCAC21 was well prepared and had four documents: The Dakar Declaration, the Dakar Plan of Action (2022-24), the Declaration on China-Africa Cooperation on Climate Change, and the 2035 Vision for China-Africa Cooperation. An overview of the discussions, the preparations and Xi’s seminal address reflects the adjustments in China's approach to Africa.
Politically, China has adjusted to having the African Union as a partner of the FOCAC. Initially, this used to be an irritant since FOCAC preceded the creation of the AU. Moreover, China weaned away nine African countries who in 2000 were accredited to Taiwan. Now there is only Eswatini engaging with Taiwan, though the unrecognised Somaliland has also opened ties with Taiwan.
There is a larger emphasis on peace and security matters than before. Though not substantial, this includes support to AU operations, training in counterterrorism, joint exercises and support to regional efforts for peace and security in Africa. Senegal, the host of FOCAC21, asked for greater Chinese involvement in the Sahel. China remains non-committal. The Chinese foreign minister from Dakar flew to Addis Ababa, the capital of Ethiopia, which is currently in turmoil, perhaps adding his bit to mainly Western efforts so far to secure a ceasefire.
The Xi formula for Africa now has nine programmes and a number of new projects. However, the focus has shifted from mere infrastructure to the digital economy, expansion of trade and investment, green economy and the like. A significant development is a transition from large-scale financing of African projects to more focused and sectoral efforts. At the Johannesburg summit in 2015 China announced $60 billion to support Africa and this was reiterated at the Beijing summit in 2018. It is never clear whether the sums are added or concurrent. This time at FOCAC there are no new bumper announcements of this nature.
This stems from an understanding that Chinese projects are now submerged into the BRI from where the funding will come. The BRI is now overextended in Africa with MoUs with 49 African countries and a lending of $143 billion. While 10 new infrastructure and connectivity projects have been announced it is possible that they will be funded from existing BRI commitments. China is more aware that debt stress in Africa is troubling them and several African interlocutors have asked for rescheduling of debt or write-offs. China had provided up to $10 billion of interest-free loans in 2015. Some of these are likely to be written off or deferred at least till after 2021.
The emphatic point here is that large funding across the board is now sharpened into a more specific engagement. There is also a greater emphasis on FDI and Chinese companies are encouraged to invest $10 billion in Africa. They are also asked to use their CSR for projects like ‘100 companies in 1000 villages’ and for skilling of African youth. This implies that African governments will now have to deal with company management rather than Chinese government officials, embassies or officials of Chinese development banks.
China understands that Africa will be a big market for its digital inroads. The infrastructure push focuses on the next generation 5G networks which Chinese companies endeavour to introduce in Africa. Initiatives for collaboration in the digital economy also include e-commerce. China proposes to market 100 African stores and 1,000 African products on e-commerce platforms, thus tying up African production lines with Chinese e-commerce networks. The Digital Silk Road is the new strong penetrative policy that China is adopting. It has neither attracted the criticism nor attention of the big infrastructure projects or the debt traps. The influence of Chinese digital companies in all aspects of Africa’s digital economy is a challenge to other partners.
For several years China has been Africa's largest trading partner but runs a large trade surplus. This is unlike India, where Africa runs a surplus mainly because of oil supplies. China's import of African products is imbalanced. In order to deal with this, China now proposes to achieve $300 million of African imports by easing regulatory controls, particularly from African LDCs. This is akin to India's DFTP scheme but requires massive investment in product development for the Chinese market.
China is ready to import more African agricultural products, under a ‘green lane’, which are easier to access and could benefit from air connectivity which pre-pandemic was quite robust between Addis Ababa as a hub and Chinese airports. This could be Africa's biggest gain, particularly since up to $10 billion in trade finance is forthcoming. China also proposes a new dialogue with the Africa Continental FTA Secretariat. This will allow it to have a greater say in how the FTA unfolds as it has started implementation in January 2021.
The support to African efforts against the pandemic is well-timed. Xi announced one billion fresh doses of vaccine to Africa to try and vaccinate 60 percent of its people by 2022. About 600 million doses will be a grant. About 400 million are to be produced by Chinese ventures in select African countries. It is unlikely that such products will be ready within a year so the 400 million may well be bought from Chinese stocks.
Africa’s perceived gains are vaccine supplies, trade access and more FDI. China seems to have decreased its costs of engaging Africa and is seeking closer engagement for international fora on its terms.
The writer is a former Ambassador to Ethiopia. Views expressed are personal.
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