A prosperous Africa has massive potential to drive global economic growth, which would benefit China greatly. As such, the two may seek to reshape the global order.
Luca D'Urbino
A prosperous Africa has massive potential to drive global economic growth, which would benefit China greatly. As such, the two may seek to reshape the global order.
That the Industrial Revolution first ignited in Scotland is the outcome of both insight and luck. It was America – with its abundant resources, growing population, fine education, and culture for innovation – that continued to fuel the future of industrial revolutions.
Across the Atlantic, Africa has been the "lost continent" in global development for the past 200 years. This century, progress in Africa represents both a massive challenge and an even greater opportunity.
It’s easy to underestimate the sheer scale of Africa. Geographically, it’s large enough to fit the US, China, India, Japan, Mexico, the UK, and France combined – with space left over for more.
Africa also stands as the world's youngest continent and its largest labour reserve; today, it holds 1.3 billion inhabitants, with a median age of 18.8 years.
By the end of this century, it is estimated that about 4 billion people, which account for 40% of the world's population, will reside in Africa. The global centres of economy and innovation will likely gravitate towards Africa in the coming decades.
By the end of this century, it is estimated that about 4 billion people, which account for 40% of the world's population, will reside in Africa. The global centres of economy and innovation will likely gravitate towards Africa in the coming decades.
The continent is richly endowed with fertile soil, exceptional renewable energy potential, vast ocean fronts, and critical rare earth minerals essential for the next wave of industrial revolution.
With sustainable capital injection and technology diffusion, Africa has the potential to be the new America in the 21st century.
End of an era
China, on the other hand, may have reached the peak of its gilded era; its much-anticipated post-Covid economic rebound never arrived. In 2021, China's GDP (on nominal terms) was at 78% of the US; in the most recent quarter, the ratio slid down to 69%.
China is faced with a mounting fiscal and financial crisis, a deflationary economy, shrinking demographics, and restrictions on access to Western frontier technologies.
In the era of West-China decoupling, China continues to redirect its global supply chains, trading routes, capital, and technology flows to the Global South. To compensate for a shrinking labour force and rising labour costs, Chinese multinationals are proactively shifting labour-intensive manufacturing to the Global South with high labour dividends.
Meanwhile, China will look to diversify its imports of essential goods – food and energy – from the West, in favour of developing regions.
China and Africa see willing and complementary partners in each other. But China-Africa relations are not restricted to economics.
Since the institutionalisation of the Forum on China-Africa Cooperation (FOCAC) – a bilateral cooperation mechanism – in 2001, cooperation between the two has gone from intuitive trade to a comprehensive and strategic economy, security, and soft power nexus.
China-Africa relations are not restricted to economics. Since the institutionalisation of the Forum on China-Africa Cooperation (FOCAC) in 2001, cooperation between the two has gone from intuitive trade to a comprehensive and strategic economy, security, and soft power nexus.
Today, China is Africa's largest trading partner, sovereign creditor, foreign direct investments (FDI) originator, infrastructure developer, and renewable energy investor. It supplies nearly half of Africa's smartphones. It installs telecom infrastructures across Africa's urban centres and rural villages. It operates submarine cables along Africa's coasts. It finances Africa's space aspirations.
China supplies the largest number of UN peacekeepers in Africa. It has also displaced the US and the UK as the largest destination for Anglophone African students.
Indeed, it has launched various soft power cooperation mechanisms, from politics and media to philosophy.
But how has the relationship grown to what it is today? And what does Africa mean for China's future?
A reflection of China-Africa relations in the 21st century
By 1996, China trailed Sub-Saharan Africa on a per capita GDP basis. Although Deng's Reform and Opening Up, which had begun two decades earlier, produced a period of double-digit economic growth, China remained a fringe player in the global market up to the turn of this century.
GDP per capita - Sub-Saharan Africa, China.
2001-2006: A trade-centric relationship
Over twenty years ago, when China and Africa established FOCAC, China's economic capacity was not sufficient to have a grand vision for their relationship. Instead, it was marked by incremental progress.
In 2001, China joined the World Trade Organisation (WTO), which ushered in its economic golden era. As a result, Chinese exports began to flood Western markets, and China became known as the "world's factory".
In 2001, China joined the World Trade Organisation (WTO0, which ushered in its economic golden era. As a result, Chinese exports began to flood Western markets, and China became known as the "world's factory".
Unlike huge trade surpluses with Western economies, China's trade with Africa has always been import-focused.
During this time, China granted duty-free imports to Africa's least-developed countries (LDCs). Over the next two decades, China's trade with Africa grew 20 times to around $250bn, 35% of US-China trade.
2006-2015: China, the exporter of capital
During these years, there was an increase in Chinese financial aid, foreign direct investments, and development finance in Africa.
In 2007, the China-Africa Development Fund was established, boosting China's foreign direct investments across the continent.
This decade coincided with the aftermath of the Global Financial Crisis, which saw the retrenchment of Western investments in Africa, leaving a wider gap in development finance, which China aptly filled.
China built, financed, managed, and jointly owned industrial parks, ports, and special economic zones on both coasts of Africa, emulating a Chinese coastal economic development model. It developed transportation infrastructure, connecting Africa's resource-rich inland to the coastal regions.
China developed nearly one-third of Africa's power grids, becoming a crucial financier of Africa's energy infrastructure and resource-intensive projects.
Trade and Investment grew in tandem. Chinese investments in Africa's production, processing facilities, transportation linkages, and special economic zones helped transform the foundation of the economy from local commerce into global trade.
By 2009, China became Africa's largest trading partner. By 2013, China surpassed the US as the continent's largest FDI originator.
China's total trade with Africa.
2015-2021: China-Africa's common destiny
Over this period, China expanded its hard power presence in Africa. It went from being the continent's largest investor to its most formidable technology provider. In addition, it added mutual security assistance to its bilateral vision.
China's soft power also began to take root in Africa.
In 2013, China launched the grand strategy of the Xi Jinping era, the Belt and Road Initiative (BRI). Over the span of a decade, the global infrastructure development initiative recorded over $2.2 trillion of financing worldwide.
In 2015, BRI had its first strategic elevation. Previously centred on physical infrastructure (roads, rails, ports, power supplies, etc.), it soon began to focus on digital and technology infrastructure.
This was crucial for Africa's transformation towards the digital economy and its participation in the next wave of the industrial revolution.
But it caused concerns for the West, due to its success.
Among global 5G competitors, China's Huawei has the most far-reaching success in Africa. The company also succeeded in operating data storage centres and developing Africa's first public cloud.
China was the one to lay down the massive PEACE Cable system, a submarine cable network connecting Africa with Asia and Europe, providing large parts of Africa with low-cost and high-speed data.
China was the one to lay down the massive PEACE Cable system, a submarine cable network connecting Africa with Asia and Europe, providing large parts of Africa with low-cost and high-speed data.
In addition, China provides software systems to Africa's public sector. Alibaba initiated the ETWP programme, a digital WTO framework supporting Africa's global trade.
China also participated in Africa's space missions. In 2019, China helped launch Ethiopia's first satellite. Unlike Africa's traditional space partners, China not only provides launch services but also finances the satellites. This holistic approach has made China an attractive option for African nations, particularly as the space domain becomes increasingly important in global competition.
The World Economic Forum has reported that data collected from space has the potential to generate annual benefits worth $2bn for Africa.
Chinese private companies, especially tech giants, have been leading the way in exporting production capacity and services to Africa. As of 2021, 90% of Chinese businesses operating in Africa were privately owned, attracted by the lower production costs and the promising consumer market.
Africa has a burgeoning middle class of 300 million, which presents the largest potential for urbanisation in the world, and Chinese entrepreneurs, who have already benefited from China's rapid urbanisation, believe that they can replicate the same success in Africa.
Private companies are investing in real estate, construction, entertainment, financial services, healthcare, education, and e-commerce in Africa.
During this time, China has emphasised security and political cooperation as key elements of its relationship with Africa, blending mercantilism with idealism. China put forward an alternative global destiny known as "China-Africa Common Destiny," where democracy is not a necessity for development and modernisation does not hinge on westernisation.
In FOCAC's 2018 meeting, Chinese President Xi asserted China's support for African countries to explore alternative development paths that suit their national characteristics, manifesting China's vision for Africa.
2021 onwards: a strategic pivot
In the post-Covid era, China once again advanced its presence in Africa. From being its exporter of goods, capital and technology, China transformed into Africa's public goods provider, most notably through health, education, job training, and renewable energy investments.
China-Africa trade between 1992 and 2022 (in billion US dollars).
During the pandemic, China pledged 1.5 billion doses of vaccines. It also built hospitals and supplied medical personnel to the continent.
There are currently 600 million Africans who are deprived of electricity. To solve this issue, Africa would need $2 trillion of infrastructure investments by 2030.
China owns over 70% of the global solar supply chain and more than 50% of the global wind assembly capacity, holding a dominant position in global renewable energy; this means that it will be Africa's essential partner in the green revolution.
There are currently 600 million Africans who are deprived of electricity. China owns over 70% of the global solar supply chain and more than 50% of the global wind assembly capacity. This means that it will be Africa's essential partner in the green revolution.
Indeed, China is rapidly developing hydropower across Sub-Saharan Africa, solar in West and Southern Africa, wind in North Africa, and emerging geothermal energy in East Africa.
While some of China's commitments have grown stronger, others have reduced, indicating a possible strategic pivot.
In FOCAC's 2021 meeting, China promised $10bn of private sector investments in Africa over the next three years. Compared to its 2018 pledge of $60bn in state-backed financing and various concessional loans and development aids, China's commitment has been significantly scaled back, and active players have shifted from state to private.
Since the pandemic, China's economic projection appears far less rosy, thereby casting uncertainty on its capacity as Africa's largest external lender and developer.
By 2021, China had loaned $140bn to Africa, representing 20% of its outstanding debt. Many believe that China's "debt trap" poses a grave concern for the continent.
However, China stepping back from its investment and development commitments in Africa poses another, maybe even greater, risk – it could exacerbate a deficit of capital and technology inflow to the continent, which has been one of the biggest obstacles to its development over the past two centuries.
If China were to leave a development vacuum in Africa, it would be so vast that no other stakeholder could readily fill it.
GDP per capita, 1820 to 2018.
Where is the bilateral relationship heading?
Representing its perfect match, Africa offers what China lacks. China is faced with a declining labour force, which Africa has in spades. China is the world's largest importer of food and energy; Africa is richly endowed.
China's extensive manufacturing capabilities are situated in the lower-to-middle segment of the global supply chain, including machinery and auto parts. Offshoring the supply chain to markets with lower labour costs, such as Africa, is inevitable.
Not only that, but China desires a market with enormous industrial and agricultural scaling potential to continue to supply China's rising consumer needs, and Africa has massive territory and the ultimate ocean fronts.
In addition, China needs multilateral institutions in the Global South that support its vision of a global future.
Due to their political histories, Africa and China share common grievances (and therefore, empathy) around Western colonisation, as well as aspirations of national rejuvenation.
A prosperous Africa has massive potential to drive global economic growth. This would benefit China, providing the country with the resources it needs but cannot produce on its own. Ultimately, Africa could be China's economic saviour.
Africa represents a new frontier that can't be ignored. Indeed, both China and Africa could be in this for the long haul, seeking to reshape global order in this century and beyond.
