• June 6th, 2020

Will Xi's red rising sun really light up the road ahead? (Part 1)

Nalishe Hakweenda

From the historic Silk Road that connected Asia to Europe, to the complementary Maritime Silk Road which starts in China, through the Indian Ocean littoral to East Africa and then to Europe, to what is now known as the Belt and Road Initiative, China has played and continues to play an important role in the world economy. 

It is through these economic belts that China has managed to further its domestic market within the global market and thereby enhance its foreign relations with a wide cross-section of countries. Hence it has been dubbed the “neighbour” of all countries in the world. It is thus not surprising that any major domestic economic projects in China will generate influence throughout the world, as nations link to China through either trade or foreign direct investment. 

Africa with its 1.2 billion people is no exception to this “neighbourly” co-operation. In cementing this cooperation, China and Africa established in 2000 the Forum on China-Africa Corporation (FOCAC).  The objective of FOCAC is to strengthen Sino-African economic cooperation and trade relationships in order to forge strategic and cooperative partnerships in a tangible manner. 

During FOCAC Summits, action plans are developed and reviewed every three years in an African country or China. The action plans are further aligned with each side’s strategic development goals. For Africa, the action plans are aligned to the African Union’s Agenda 2063, the United Nations 2030 Agenda for Sustainable Development and the development programs of African countries. 

For China the action plans are aligned to its two centenary goals - first to build a moderately prosperous society in all respects by 2020 and, second, to build a modern socialist country that is prosperous, strong, democratic, culturally advanced and harmonious by the middle of the 21st century in time for the centenary of the People’s Republic of China. 

The action plans are, however, carried out on a bilateral basis between China and interested African countries. Bilateral agreements emanating from the action plans are monitored and reviewed by a committee. 

As is tradition, African and Chinese leaders converged for the 7th FOCAC Summit in Beijing, China in September 2018. At the opening of the high level Summit, President Xi Jinping in his speech reiterated the call for win-win cooperation between the two sides by each leveraging on their comparative advantage.  

President Xi stressed the need for the two sides to embrace an open world economy and unilateral trading system and reject protectionism and unilateralism. For African leaders, the Beijing FOCAC Summit presented an opportunity to collectively engage China in recognising Africa as an equal partner.

In reviewing the ten action plans emanating from the Johannesburg FOCAC, the heads of state from Africa were informed that of the US$60 billion pledged, several have either been delivered or arranged. For example, a number of railways, highways, airports, ports and other infrastructure projects were built through public-private partnerships (PPP) and build-operate-transfer (BOT) models under the Programme for Infrastructure Development in Africa. 

An estimated six Chinese overseas economic and trade cooperation zones were built in countries such as Zambia, Mauritius, Nigeria, Egypt, and Ethiopia. These cooperation zones offer incentives such as tax holidays and import tax waivers to attract Chinese companies and other foreign direct investments. Some of the zones have witnessed progress in attracting investment focused on industrialisation.

Building on the Johannesburg 10 action plans, China pledged an additional US$60 billion which will include US$15 billion of aid, interest-free loans and concessional loans, a credit line of US$20 billion, a US$10 billion special fund for China-Africa development, and a US$5billion special fund for import from Africa. The pledged funds will be spent on the following eight major initiatives in close collaboration with African countries for the next three years based on tangible results/initiatives:

China will launch an industrial promotion initiative for economic and trade expo. A number of economic zones have been identified for countries such as Zambia, Mauritius, Nigeria, Egypt and Ethiopia. 

China will launch an infrastructure connectivity initiative. In partnership with the African Union, China has formulated a China-Africa Infrastructure Cooperation Plan. Chinese companies (mostly state-owned) will partake in these sectors through investment-constructions-operation or PPPs and build-operate-transfer (BOT) models.
China will launch a trade facilitation initiative. In a call against protectionism, China has decided to increase imports, particularly non-resource products from Africa. 

Launch green development initiatives under the China-Africa Green Envoys Program.  
Capacity building initiative through vocational training for young Africans.
Health care initiative upgrade of 50 medical and health aid programmes for Africa. 
Launch of a people-to-people exchange initiative. 
Peace and security initiatives will be launched. 

In as much the aforementioned action plans are plausible, China’s economic relationship with Africa has over the years attracted negative criticisms not only from the west but within Africa. Notable is   China’s neo-colonial approach to Africa .  Rather than fulfilling its mission of treating Africa as its equal in trade and investment, an imbalance in trade still exists between the two sides.  China stands accused of flooding African markets with cheap exports while limiting foreign access to its own market.  Case in point, in 2010, Djibouti imported US$489 million in goods from China while China imported only US$1 million worth of goods from Djibouti, according to the Observatory for Economic Complexity. The next instalment of this piece will expand on these imbalances.

* Nalishe Hakweenda is an admitted legal practitioner of the High Court of Namibia who holds a Master of Commerce (International Trade Law and Policy) from the Graduate School of Business, University of Cape Town, certificates from the World Trade Organisation, the Public Private Partnership Institute and the Harvard Kennedy School of Government. She writes in her private capacity.

New Era Reporter
2018-09-28 10:11:09 | 1 years ago

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