Economic Relations

Outlook and Objectives

If the rise of China is the greatest economic story of the past 20 years, its growing presence in Africa (perhaps a foundational prerequisite for the former trend) is not too far behind. Between 2000 and 2017, the People’s Republic of China’s role in African economic activity evolved from negligible to elemental; essentially, very few African governments and businesses can plan and envisage initiatives and policies without factoring in Beijing.  By now the figures have become all too familiar; China, since 2009, has become Africa’s number-one trading and investment partner. Beginning in the year 2000, Africa-China trade has seen consistent 20% growth per year. FDI has registered even greater growth, at 40% per year. At the same time, 30% of all new loans to Africa in the past five years have come from China.

China is the largest and fastest-growing source of aid and the largest source of construction financing in Africa. Uniquely, China is among the top 4 partners for Africa in 4 important areas: trade, investment stock, infrastructure financing, and aid. By sector, 30% of African manufacturing, 25% of African services, while 20% of African construction/real estate is under Chinese management. In manufacturing, 12% of African industrial production – at US$500-billion per year – is already handled by Chinese firms, while Chinese firms claim nearly 50% of Africa’s internationally contracted construction market.

In recent years, both entities have undertaken grand initiatives. For its part, the African continent has pronounced its development plan in the form of the Agenda 2063, along with a myriad other regional and national plans of action, including Djibouti’s Vision 2020, South Africa’s NDP. Under the auspices of the AU, the African Continental Free Trade Area has been introduced and is in the process of ratification across the capitals. Yet the success of this initiative relies not only on actions on the continent, but also on how the continent interacts with the rest of the world.

This program will also delve into issues that are at the heart of this relationship, such as degrees of beneficiation, and the role of Chinese aid in Africa. Tested will be the extent to which the relationships conform or diverge away from the traditional models of economic relations between Africa and its powerful interlocutors.