THE BLOG

China's Presence In Africa - Growth And Modernisation

30/06/2017 11:55

Africa is growing 7-10 times faster than any other continent in the world and with that comes an increased need for foreign investment. China is Africa's biggest single trading partner and is now the largest lending country to infrastructure projects on the continent. In 2015, Chinese President Xi Jinping pledged $60 billion in loans and aid to Africa and as of September 2016, Chinese companies have invested $56 billion into construction and infrastructure projects alone around the continent.

While many bi-lateral trade deals tend to be government-to-government, the Sino-African relationship is in principle mutually beneficial with both positive growth and macroeconomic indicators. Africa needs new infrastructure to speed up its development and China needs Africa to enable a free flow of mineral resources. Africa continues to be a developing resource for China and focuses on much needed modernisation while China focuses on gaining from extractive industries.

Chinese firms are running major infrastructure projects across the continent and are actively sourcing projects to fill the 'wish lists' of African governments in the construction, telecoms, road and rail sectors. Al Jazeera estimates that almost 30 per cent of all new infrastructure projects in Africa are as a result of Chinese investment.

One of these projects is the $3.2 billion Nairobi-Mombasa railway which opened earlier this year in Kenya. China's Export-Import Bank funded 90 per cent of the build, while the Kenyan government financed the remaining 10 per cent. The Chinese backed railway will eventually extend to Rwanda, South Sudan and Ethopia and is part of China's "One Belt, One Road" project, which aims to create the world's largest platform for economic cooperation.

And it's not just Chinese backed infrastructure projects that are contributing to the long-term economic growth of the continent either. China is Africa's largest source of imports, accounting for 20 per cent of total imports into Sub-Saharan Africa. Exports to China from the continent are decreasing however, while Africa's demand for Chinese goods is increasing. South Africa, Equatorial Guinea, Angola, The Republic of Congo, and Zambia are China's primary trading partners on the continent and combined, account for more than 70 per cent of all Chinese imports as of 2016.

Attitude to China's presence on the continent is changing, last year Quartz published data from Afrobarometer showing that China's popularity is increasing among locals. 63 per cent of the 56,000 people surveyed responded that China's presence in their country was somewhat or very positive. Good news, as there are now over 2500 Chinese companies trading in Africa with around one million Chinese nationals moving to Africa in the last decade. "Public perceptions not only confirm China's important economic and political role in Africa but also generally portray its influence as beneficial. China's infrastructure/development and business investments are seen as reasons for China's positive image in Africa..." Afrobarometer said.

As China's booming economy continues to slow, Africa can still expect almost $220bn worth of trade and investment from China by 2020. Aubrey Hruby, co-author of the book The Next Africa: An Emerging Continent Becomes a Global Powerhouse, says: ''There's no doubt that the Chinese slowdown is impacting Africa.'' With reports of China owing nearly 300 per cent of their GDP in debt, Africa can expect a continued presence from China as they push to vertically integrate their investments on the continent and become more internationally focused as a nation.

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