As China’s influence grows in Africa, so
does the controversy. Depending on whom you ask, you’ll either get excitement about
all the new infrastructure, or accusations of ‘neo-colonialism’.
I’m Larry Madowo – and I’m Vincent Ni.
We’re going to tell you how this relationship became so significant…
… and what China’s economic slowdown might mean for the future of African nations. Let’s start with the basics. Which countries in Africa have an economic relationship with
China? Well, it would be easier to say which country doesn’t trade with China, and that
is eSwatini. Yes, China isn’t keen on doing business
with countries that recognise Taiwan as a nation state, but that’s a topic for another
video. And we should totally do that, Vincent! Can you explain why exactly China
has started investing so heavily in Africa? Why now? Well, it’s not coming out of the blue. China has been building up its investment in Africa for about two decades now. For China, Africa is more than just a massive market
for its goods. It’s home to vast natural resources, which China wants to invest in.
The Communist Party also has a strategic policy to gain ‘soft power’, which is right at
the heart of the Party’s leadership. OK, so it should come as no surprise to any
of us that China has become the continent’s greatest trading partner. It actually surpassed
the United States 10 years ago, in 2009. China’s main exports are machinery, electronics and
textiles, but like you said – it’s not just a one-way relationship. China imports crude
oil, iron ore, cotton and other natural resources from African countries. This has never happened
on such a huge scale. What’s making China’s presence felt even more is the fact that the
US has decreased its involvement in the continent, even more after Donald Trump’s administration came to power. So where’s most of the trade happening?
South Africa, Ethiopia, Angola and Nigeria are China’s biggest trading partners on
the continent. There are also countries like Côte d’Ivoire, at the very beginning of
developing a relationship and partnership with China. Overall China-Africa trade volumes amounted
to 170 billion U.S. dollars in 2017, which is a huge increase from just over 10 billion
dollars in 2000. Yes, and the Chinese government estimates
that this will grow even faster, to over 300 billion dollars next year. Of course more investment usually means more debt, at least in the short term. Let me give you an idea of scale of the money owed: in 2017, Zambia’s total debt amounted to 8.7 billion dollars, almost three quarters of which is owed just to China. For Djibouti, 77% of its debt is to Chinese lenders. So why are African countries so keen to do business with China rather than other lenders?
Well, it’s often said that China’s loans are cheaper and come with ‘fewer strings
attached’. What that actually means is that, unlike the USA or the World Bank, China doesn’t
really mind if you have human rights issues, other outstanding debts, or aren’t transparent enough when it’s lending you money. That being said, this doesn’t make the loans
any easier to repay. In 2015, a prominent research group identified 17 African countries
that would be potentially unable to repay their loans, and that Djibouti, Republic of
Congo and Zambia are most at risk. Some countries Some countries are relying on gradually repaying their debts to China by shipping specific quantities of oil. But if the price of oil drops drastically
again, that might make it all the more difficult for the debt to be paid back. What does this mean? Well, the contracts for the projects aren’t public so we don’t
know – but it is feared that some public resources might be used as collateral. Meanwhile, cracks are starting to appear in China’s economy, with signs of weakening growth and trade tensions – especially with the United States. In fact, China’s stock market was the world’s worst performer last year, ending with a loss of 28% – so that is just adding to the worries. China hasn’t talked about what it means but it is assumed that if there’s less
to spend, they may give fewer loans, and fewer extensions of projects such as railways. In other words, China is likely to start tightening the purse strings. What does the rest of the world think of China’s involvement in Africa? UK and other countries criticise
China’s ‘predatory’ work in Africa, calling it ‘debt trap diplomacy’. But
analysts like Joseph Stiglitz say this line of thinking is just ‘sour grapes’ – China
is making tangible changes for people who live in these countries, bringing affordable
goods into the market at a fraction of the costs. Policy makers and governments may be critical of the money being poured into Africa, but
the average African isn’t.