On the sidelines of the Beijing Summit, ANA asked Jean-Joseph Boillot, a specialist in China-Africa, about the challenges of the meeting and the background to this privileged cooperation between the Middle Kingdom and the African continent.
By Jean-Joseph Boillot*
What were the issues of this Summit? Confirming China’s position as Africa’s leading trading partner.…
No, the issue was not just about China. There was in fact an emergency context for both continents. On the Chinese side, this is the trade and even strategic war launched by Donald Trump in recent months, which has forced him to accelerate his economic and geopolitical diversification. And on the African side, there is also an urgent need to support the fragile recovery of growth in a context where the growth of unemployed youth is becoming truly dangerous. In my opinion, this is the only reason why 53 African Heads of State and Government are in Beijing.
China will devote an additional 60 billion dollars to the economic development of African countries, President Xi Jinping promised at the opening of the China-Africa summit in Beijing, including 15 billion in the form of grants and interest-free loans, “without counterpart” according to the Chinese authorities. Really?
Be careful as always with the very political announcement effects. The devil is indeed in the details. First of all, this is not a considerable amount in itself, since China was able this summer to disburse, for example, 44 billion dollars for the purchase of the Swiss group Syngeta alone and it is estimated to have invested nearly 35 billion in Africa in 2017 alone. But this is obviously important for Africa, whose infrastructure needs alone, for example, are estimated at $50 billion a year, while it is currently struggling to achieve some $20 billion.
Moreover, it is not clear what the time horizon is for this 60 billion. And on the other hand, you are absolutely right, China does not lend without compensation. In reality, it is very demanding, and even more so, on signed contracts that are always linked, for example, to its own conglomerates. They also include drastic repayment conditions, in particular in the form of guarantees that often affect the sovereignty of countries in their natural resources, land or port facilities. Not to mention the political counterparts with the recent example of Burkina Faso, which had to stop recognizing Taiwan in order to benefit from Beijing’s financing.
Why has China become the preferred partner of African leaders ? Is the partnership as win-win as it seems, while the continent’s debt – nearly 113 billion euros in credits – to China is growing….
Yes, China has truly become a “privileged” partner since economic theory tells us that Europe should actually trade three times more than China given its geographical and historical proximity. It is a paradox that China is finally the one that offers a real structural solution to the current migration crisis, largely linked to the chasm between population growth and economic growth that is too weak to create the jobs needed by the millions of young people who enter the African labour market each year.
Apart from this European paralysis, the reason lies largely in the alignment of the planets between China and Africa. But it cannot be said enough that China actually needs Africa at least as much as Africa needs it to continue its growth, to run its factories, to propel its large state conglomerates on the world market, etc. China absolutely needs opportunities. And Africans are obviously very much in demand for cheap products and significant and rapid financing to build their 21st century infrastructures.
In this sense, the synergy between the two is potentially win-win in effect. But a balanced sharing of these gains obviously presupposes that the negotiating power of both partners is balanced. This is not always the case, particularly for small, relatively landlocked African countries or in fragile political situations, while others such as Nigeria – China’s largest African partner, it should be recalled – have much more room for manoeuvre. So there is not a single configuration to assess whether it is a win-win game. Moreover, this sharing of gains is largely in the hands of Africans and civil societies are increasingly looking at the contracts signed with China, as we saw in Senegal in last August
As far as debt is concerned, beware of false debates. The sustained take-off of Africa obviously requires very significant amounts of investment. The real issue is therefore the sustainability of debt and the quality of projects. If they generate sustainable growth in the order of 6 to 8% per year, then there is no problem. Since China generally lends in the long term and interest rates are rather reasonable. On the other hand, the lack of transparency of most of the projects may give rise to fears of some slippage, as I have seen with the Addis Ababa metro or the railway line to Djibouti, which are extremely unprofitable at the moment.
However, China’s offer, which combines technology and financing, is now the most competitive…
Yes, it is probably the most competitive and China is doing everything in its power to do so, just like its products that are flooding world markets and not just African markets. It has not become the world’s leading trading power by accident. On know-how and technology transfer, things are progressing a little bit, under the impetus of Africans, and the summit has increased the number of training programmes offered by China. The trade-off between the speed of project implementation and that of training is a difficult issue, for Africa itself.
On the other hand, the real issue for an economist is the obvious dumping from China, which can result in the total eviction of competition, creating a monopoly rent that actually allows him to increase his prices and conditions. This is a real concern for Africa, although I note that African countries sometimes know how to compete when necessary, and even cancel projects signed with Chinese companies accused of corruption, as I saw in Tanzania last year.
For the followers of “China bashing” I often answer that they take Africans a little too much for fools and that they rather try to hide their own laziness. It is up to them to take up the Chinese challenge with more competitive and particularly more intelligent projects such as the French Engie and its models of off-grid solar power plants that work all over Africa. China still sees everything large and very centrally, while Africa’s future could rather be based on simple and decentralized solutions. Western supply too often relies on the best so-called technological and this is probably a mistake. The Chinese takeover of Syngenta was partly motivated by its African model targeting small independent farmers. As for why the Swiss gave it to the Chinese, you have to ask them…
However, China-Africa also has its dark side: China is also one of Africa’s main arms suppliers, including to countries in conflict…
Oh, yes, I do! Transparency is far from being China’s strong point in its relations with Africa. But it does not have a monopoly on it if we look at the way Westerners or France in particular operate. Similarly, if, in my opinion, the priority is largely economic for the moment, China is the empire of GO’s strategic game. Its action is part of a long-term strategy to conquer territories. However, geopolitics is a reality of today’s world with power rivalries that China cannot ignore. It has true global diplomacy and Africa with its 54 votes at the United Nations is an essential part of any rising superpower. Moreover, international relations have always seen traders, priests and the military acting in concert. Why would China do otherwise? It is up to the international community and therefore also to the West to set an example and agree not to turn the African continent into a real over-armed battleground. Unfortunately, this is not the case at all.
How should the new Beijing strategy, the new Silk Road, develop this China-Africa partnership?
The Silk Road is a real sea snake that has nothing to do with Africa. But it is simply a hobby of the Grand Xi (Jing Ping) as it is called today. A few years ago, he found a slogan that flatters the pride of the Chinese, since it recalls a golden age of their Chinese civilization, but I also see in it the will to make the new Chinese strategy of “Global Go” consistent, that is, to assert itself as the new superpower of tomorrow against the United States.
Putting Africa into this “one road-one belt” logic simply means that China wants to rationalize its financing and projects a little more to make economies of scale because it feels that its foreign exchange reserves have a limit. In doing so, it clearly indicates that its ambition is truly global, particularly in the entire southern hemisphere. Beijing considers that Latin America is also part of this famous Silk Road.
How are Africa’s other partners, France among others, adapting to this Chinese competition?
That is the real question. China bashing is a bit of a mirror of the weakness of the West and a scapegoat for their inability to define a real ambitious strategy for Africa, and in particular for Europeans. Not only is Europe devoting much more resources to protecting itself from Africa, but it is also going in a dispersed order, as shown by the recent trips of Theresa May and Angela Merkel to the African continent after President Macron’s landmark visits earlier this year.
First of all, we should take advantage of this incredible opportunity that is the beginning of Africa’s take-off to build a new European ambition. And the Chinese competition could well be the trigger. No European country can compete in isolation with the Chinese superpower, and geographical and historical proximity is a real asset of Europe.
As for France, it obviously seems to be hesitating between protecting its pre-square and embarking on a European adventure. On the contrary, a real lobby has been set up in France to suggest a three-way partnership with Africa and China and some meetings have already taken place, without much success. Of course, this should have been done with our other European partners. Moreover, the French companies I know speak of this triangular cooperation as a fallacy, given the rigidity and competitiveness of China.