In recent years, Chinese leaders have highlighted their significant financial commitments to new construction projects and record two-way trade with Africa as evidence of their dedication to modernising the continent and fostering “win-win” cooperation. However, a closer examination reveals a more intricate relationship that remains largely extractive and falls short of some of Beijing’s rhetoric regarding the Belt and Road Initiative (BRI), President Xi Jinping’s grand strategy to build an infrastructure network connecting China to the world.
According to the Griffith Asia Institute at Australia’s Griffith University, Chinese investment in Africa surged by 114% last year, focusing predominantly on minerals crucial to the global energy transition and China’s efforts to revitalise its own economy. Minerals and oil also dominated trade, with attempts to boost other imports from Africa, such as agricultural products and manufactured goods, faltering. Consequently, Africa’s trade deficit with China has ballooned.
Chinese sovereign lending, once the primary source of financing for Africa’s infrastructure, is now at its lowest level in two decades. Public-private partnerships (PPPs), which China promotes as its preferred investment vehicle globally, have yet to gain traction in Africa. This results in a more one-sided relationship than China claims to desire, dominated by imports of Africa’s raw materials. Some analysts argue that this dynamic echoes colonial-era Europe’s economic relations with the continent.
“This is something late-19th century Britain would recognise,” said Eric Olander, co-founder of the China-Global South Project website and podcast.
China rejects such assertions. “Africa has the right, capacity and wisdom to develop its external relations and choose its partners,” China’s foreign ministry stated. “China’s practical support for Africa’s path of modernisation in accordance with its own characteristics has been welcomed by an increasing number of African countries.
Shifts in Chinese Investment Strategy
China’s engagement in Africa, a core focus of the BRI, expanded rapidly in the two decades before the COVID-19 pandemic. Chinese companies constructed ports, hydropower plants, and railways across the continent, financed primarily through sovereign loans. Annual lending commitments peaked at $28.4 billion in 2016. However, many projects proved unprofitable, and as some governments struggled to repay loans, China reduced its lending. The pandemic further pushed China to turn inward, leading to a decline in Chinese construction projects in Africa.
Rather than expecting a rebound in sovereign lending, policymakers in Beijing have been encouraging Chinese companies to take equity stakes and operate the infrastructure they build for foreign governments. The aim is to secure higher-value contracts and ensure economic viability by giving companies a stake in the projects.
The $668-million Nairobi Expressway, built and operated by the state-owned China Road and Bridge Corporation (CRBC), stands as a potential proof of concept for this model in Africa. Since opening in August 2022, the toll road has exceeded revenue and usage targets, with a daily average use of 57,000 vehicles in March, surpassing a 2049 target of 55,000 set by CRBC.
Challenges and Continued Engagement
Despite the success of the Nairobi Expressway, few companies are following CRBC’s example in Africa. Only 27% of Chinese non-emergency lending was to Special Purpose Vehicles (SPVs) for PPPs in Africa from 2018 to 2021, compared to 45% globally. Analysts cite the lack of legal frameworks for PPPs in many African countries and the perception of African markets as risky by some Chinese companies.
Nonetheless, China’s total engagement in Africa, encompassing construction contracts and investment commitments, amounted to $21.7 billion last year, making it the largest regional recipient. Investments reached nearly $11 billion in 2023, driven by the demand for critical minerals. For instance, Chinese companies pledged up to $7 billion in infrastructure investment in the Democratic Republic of Congo under a revised copper and cobalt joint venture agreement.
Western and Gulf powers are also competing to lead the world’s energy transition, with initiatives like the Lobito Corridor rail link supported by the United States and European governments. African leaders, however, continue to struggle to secure financing for other priority projects. Despite the Nairobi Expressway’s success, several Kenyan roads remain incomplete due to funding shortages. Similarly, the final phase of a railway intended to traverse Kenya to the Ugandan border has stalled since Chinese financing dried up in 2019.
Future Prospects and Trade Imbalance
Chinese officials point to a pivot towards trade and investment, arguing that BRI-generated trade boosts Africa’s wealth and development. Two-way trade reached a record $282 billion last year. However, the value of Africa’s exports to China fell by 7%, and its trade deficit widened by 46%.
At a summit in Johannesburg last August, President Xi pledged initiatives to support Africa’s manufacturing and agricultural modernisation. China has also promised to increase agricultural imports from Africa. Yet, such efforts are currently insufficient. For example, while Kenya recently gained access to the Chinese market for avocados and seafood, stringent health and hygiene regulations hinder many producers.
Overall, Kenyan exports to China fell by over 15% last year, while Chinese manufactured goods continued to flow into Kenya. This imbalance is unsustainable, according to Francis Mangeni, an advisor at the Secretariat of the African Continental Free Trade Area. “Unless African nations can add value to their exports through increased processing and manufacturing,” he said, “we are just exporting raw minerals to fuel their economy.”
As China continues to navigate its relationship with Africa, the continent faces the challenge of ensuring that this partnership evolves beyond an extractive model to one that genuinely supports its modernisation and economic diversification.
