Avoiding buyer’s remorse as China visits Africa in 2021

CONTRADICTIONS, CRACKDOWNS, COERCION, COVID-19 and CORRUPTIONS are steadily becoming the defining features of China. Some incurable optimists still hold on to the viewpoint that China’s phenomenal rise would defy any law of gravity. How wrong!! And African countries would do better to be vigilant, watch out for the unpredictable and be wary of Chinese subterfuge and delusory accomplishments that are yet to prove time-tested. The 2021 Forum on China-Africa Cooperation (FOCAC), a triennial high-level forum between China and all of the states of Africa – with the exception of Eswatini – is approaching. The forum, alternately hosted in Beijing and major African capitals, is expected to be held in Dakar, Senegal in the 2021 edition. This Chinese foreign policy platform, established 21 years ago, had the previous summit in Beijing in 2018 and was attended by over 50 African countries, specifically by 51 African presidents. Juxtaposing the Beijing summit with the UN General Assembly held a fortnight after, the latter attracted a little more than half of the number that attended the former. However, the forum that has been mesmerising African countries with its superlative donations and loans was radically different in 2018.

For the first time, in the 2018 FOCAC meeting, China’s pledges to Africa remained practically unchanged, with $60bn pledged over three years. That was unlike the earlier summits in which superlative and steadily increasing commitments were announced, commencing from an estimated $5 billion in 2006. China may be unable to make new pledges in this year’s FOCAC. Although China was not going to openly admit, its economy was already going through strains, and was slowing down for a number of reasons mostly self-inflicted. That was months before the advent of COVID-19, which plunged the world into a global economic mess and further dampened China’s economy. But China had its plans, unsuitable as they may have been in the circumstances of their implementation. The hostile behaviours of the ruling Chinese Communist Party (CCP) rose to a fever-pitch, focusing on domestic front, nearby neighbours and far-flung foreign countries. China would brook no challengers and was ready to apply iron hands where the need arose.

Hong Kong was a testing ground. Chinese authorities suddenly abandoned the “Two-State One China” model prematurely and suddenly. They then forcefully truncated the democratic rule in Hong Kong and supplanted it with the so-called draconian “security laws” to curb the freedom of the people of Hong Kong, whereupon the Hong Kong citizens had to flee in droves to avoid attacks, arrests, detention and molestations. Chinese ruling CCP would have none of this as it knocked the UK hard for playing host to the fleeing people from Hong Kong. China’s belligerence towards Australia was also evident, but Australia had to strengthen its strategic alliances to curb China’s bullying. And it seemed to have worked as China, facing imminent winter with shortage of coals for heating and power generation appeared to have secretly renewed its import arrangement with Australia which it had earlier snubbed and boycotted. All this while, China still remained on economic war path with the US on trade, and with the on-going deterioration in relationship with many foreign governments.

How African countries perceive China’s political and economic systems remains unclear. The economic foreign policy and influence of Asia on Africa seem yet fuzzy as FOCAC came to complement the earlier version from Japan, the Tokyo International Conference on African Development (TICAD). Although, superficially, the central appeal of FOCAC is its focus on cultivating close partnerships with African countries, its trade relationship remained deeply flawed and asymmetrical such that it is widely perceived that China benefits more from the relationship than its African partners. Figures don’t say much except the facts behind them are explained. So, although the value of China-Africa trade in 2019 was $192 billion, up from $185 billion in 2018, the direction of trade needs to be elaborated, for clarity. Moreover, changes in the balance of trade between China and other major countries did not seem to have benefitted Africa in any noticeable way. In 2009, China reportedly displaced the US as Africa’s largest trade partner, with total trade topping $200 billion in 2020. Chinese imports from Africa make up 20 to 30 per cent of this trade volume and are dominated by crude oil and hydrocarbons, minerals, precious stones, and base metals.

Despite the huge imports of machinery, transport equipment, electronics, telecommunication equipment, textiles and footwear from China, the skewed trade patterns involving tariffs still persist on African value-added products aimed at increasing the quality of Africa-to-China trade. While China’s state capitalism has evolved over the years, it has failed to liberalise. That failure will make its trade practices remain incompatible with the rules of the World Trade Organisation (WTO) that seeks to promote multilateral trade. It will therefore likely continue to operate more outside the framework of the WTO or the WTO will be forced to adapt itself to China’s ways. But this remains ironical as China, 20 years ago, climbed on WTO’s ladder to rise to becoming a major and world leading economy that it is today. Its success, however, is about to be its own undoing, especially as China, until recently, still held on to a contradicting claim of being a developing country, ostensibly to enable it gain access to certain preferential treatments in its multilateral trade. This is one thorny issue that the new Director General of the WTO, Dr. Ngozi Okonjo-Iweala, will have to grapple with while dealing with China.

African countries have a lot to be worried about concerning trade relationship with China. This applies in soybean, for instance. As a major commodity that China imports from the US and Brazil in millions of tonnes, China could easily have incentivised Africa – as a strategic alternative – to produce millions of tonnes for export since the commencement of trade war with the US in 2018 that slowed down the trade flow between China and the US. But, it does not appear China is keen on helping Africa to develop its agricultural commodity export channel. More broadly, State-Owned Enterprises (SOE) – that make up nearly a third of China’s GDP – enjoy a lot of unfair competitive trade advantages. These have implications for fair trade and global competitiveness in both bilateral and multilateral trading systems that should involve level playing field. Those African countries preparing for FOCAC 2021 in Senegal should be worried, especially where the unfair preferences given to SOE constitute non-tariff barriers to trade.

African countries depend on Chinese firms and lenders to finance and build critical export infrastructure. Yet African firms face significant entry barriers to China’s value-added product markets relative to commodity exports.

China under President Xi Jinping presently scores low on issues of Environmental, Social and Governance (ESG) issues. His campaign for “common prosperity,” indicative of the ideal communism, after cracking down on rich people, big business owners and celebrities, is intolerable. His heavy-handed regulatory measures, cutting across technology, finance, education, real estate and logistics, have come under intense criticisms, stress and strain. President Xi’s approach to solving inequality appears similar to Robin Hood’s style of philanthropy. His intervention is anything but reformist as he seeks to centrally control everything, including the entrepreneurship and innovation. When it comes to examples on how African countries can meaningfully handle the challenges of climate change, China is certainly not the model country to look up to. As the foremost global polluter nation, China is not about to significantly cut down its greenhouse gas emission despite the claims of a rise in the number of electric vehicles now on its roads. The same goes with the complaints about the country’s handling of human rights issues, especially in the western part of the country.

China’s Anti-Monopoly law, passed in 2008, a precursor of antitrust law, will be useful in the hands of an increasingly recalcitrant Xi in his pursuit of antitrust measures that may see to the breaking down and weakening big multinationals such as Alibaba. The frustration experienced on the IPO by the Ant Group was more or less a foretaste of worse things to come for Chinese entrepreneurs. African countries should note that, unlike the ease China has in establishing and operating their own corporate businesses in FDI-hungry African countries, China has a habit of forcing conditions -especially of joint ownership – on foreign direct investments in their own territory.

It is hard to conclude whether the various extremist policy decisions Xi has taken lately was primarily informed by political expediency or pure economic consideration. However, none of them is without its dire consequences. For instance, the financial crisis that is likely to follow the Evergrande real estate default may assume international dimensions which may drag many countries down with a sinking China. The difficulty of Chinese market access, made possible by tariffs on Africa’s value added goods, is a problem that requires major policy reforms on the Chinese side. On the African side, greater efforts are needed to expand opportunities for technology-intensive manufacturing. China’s economic growth has slowed significantly and its sovereign wealth has taken a plunge as post COVID-19 pandemic recovery loses momentum. This will greatly affect global trade in no small measure. Its impact on supply chain disruption will remain enormous. As pressure on coal supply has forced Xi to tone down on his bully tactic against Australia recently to stave off further power cuts and provide for heating during the forthcoming winter.

This year’s FOCAC summit might not deliver much on promise. However, its attendance by African political leaders may be high because it will take place on African soil. African leaders should help domesticate and customise China’s Belt and Road initiative to suit individual countries’ priorities and most urgent needs. They should go the extra mile in deliberations on various sectors such as healthcare, investment, trade, industrialisation, agricultural security, climate change, peace and security, human resources and digital economy for which African countries have urgent need. African leaders should stand up to China. But whether President Xi will be there in attendance or will participate in FOCAC in person in Dakar is yet to be ascertained. After all, he was absent in the United Nations General Assembly in September, G20 and may be absent in COP 26 in Glasgow in November. There are huge implications to these. But it has been surmised that President Xi’s absence in these major world summits is intended to avoid being confronted with questions on damage done to the world by COVID-19 that reportedly originated from Wuhan in China – a story that the Chinese authorities have made spirited efforts to obliterate.

Participants in this year’s FOCAC are urged to speak up and make their voices heard. President Félix Tshisekedi of DR Congo, who reprimanded Chinese miners for their excesses in his country should not shy away from pointing this out at the Dakar FOCAC summit. Late Tanzanian President John Magufuli’s successor, Samia Suluhu Hassan, needs to re-emphasise Magufuli’s resistance against irresponsible exploitation of Africa’s minerals by foreign miners and ensure possible cancellation of some questionable miner’s projects. China may be the single largest player in African infrastructure for now. But that is how far the sweet part of the story goes. The same China helped build the AU secretariat but bugged the building, thereby secretly wiretapping, collecting and transferring its vital information to China daily for many months before it was found out.

China is easily the country with the largest country with the highest loans to African continent. From 2000 to 2020, no fewer than 274 loans worth $46.6 billion for transport infrastructure, 174 loans for energy projects worth $38 billion, and 141 loans for communications and national security purposes worth $15.3 billion have been signed by African countries. It has been gathered that “the FOCAC enterprise itself was initiated by African countries to minimize the risk of being marginalised by the major powers after the Cold War.” It should therefore not be a problem for African countries to take the lead in discussions there in Dakar. If Kenya could cancel a railway project in September 2020, or Tanzania could be bold enough to say no to “unacceptable” and “demeaning” terms of the $10 billion Bagamoyo Megaport Project, then Africa may be getting somewhere in the ability to say No to unjust exploitation of the continent’s resources. FOCAC may well provide the platform for a reset of Africa-China relationship for better mutual outcomes.

Will China support Africa in the production of, and access to, COVID-19 vaccines? Will debt forgiveness by China be on the table at Dakar due to the growing number of borrowers unable to repay their debts? African countries are therefore expected to come from the position of strength, not from the position of weakness. Those leaders in attendance should negotiate well with China. African countries need to be mindful of the coming storms ahead of China, and therefore diversify in terms of items of trade and trading partners to avoid getting stuck with a likely declining China.