This week, China stopped short of providing the extensive debt relief sought by many African nations, but it announced a substantial commitment of 360 billion yuan (approximately $50.7 billion) in credit lines and investments over the next three years. The pledge was made during the latest Forum for China-Africa Cooperation (FOCAC) summit, a platform launched in 2000 that gained significant momentum after the 2013 inception of President Xi Jinping’s Belt and Road Initiative (BRI).
The BRI, which aims to recreate the ancient Silk Road by linking China to various parts of the world through massive infrastructure projects, has positioned China as the largest bilateral lender to Africa. However, China’s recent financial commitments reflect a more cautious approach compared to previous years. The $50.7 billion pledged this week surpasses Beijing’s promise at the last FOCAC in 2021 but falls short of the $60 billion commitments made in 2015 and 2018, which represented the peak of Chinese lending to Africa under the BRI.
During those peak years, China bankrolled the construction of critical infrastructure across Africa, including roads, railways, and bridges. However, since 2019, a reduction in funding has led to stalled projects across the continent. With Africa’s infrastructure funding deficit estimated at $100 billion annually, the need for robust financial support is clear, particularly as the continent seeks to realize the African Continental Free Trade Area (AfCFTA) initiative, a giant pan-African trade bloc.
China’s latest pledge includes funding for 30 infrastructure projects aimed at enhancing trade links, though specific details were not provided. This commitment signals a shift from large-scale infrastructure projects to a focus on what China terms “small and beautiful” initiatives. This strategy change reflects China’s domestic economic pressures and increased debt risks among African nations. Despite the restrained approach, Chinese officials maintain that their overseas lending strategy remains aligned with the collaborative nature of China-Africa relations. “The cooperation between China and African countries, including the specific implementation of projects, is discussed and determined by both sides,” said Mao Ning, a spokesperson for China’s foreign ministry.
The summit also underscored China’s commitment to green energy in Africa, with plans to launch 30 clean energy projects, including ventures in wind, solar, and nuclear technology. China’s push for green projects aligns with its global leadership in renewable energy, as noted by Goolam Ballim, head of research at South Africa’s Standard Bank. He highlighted China’s dominance in the supply chains for wind and solar energy, which has contributed to reduced production costs globally.
However, the forum’s outcomes were met with some skepticism, particularly regarding the lack of debt relief for African countries heavily indebted to China. While China urged other creditors to participate in restructuring African debt on a fair and joint basis, it made no specific offers to assist struggling nations directly. Trang Nguyen, global head of emerging markets credit strategy at BNP Paribas, pointed out that the critical issue is not merely the size of Chinese investments but the transparency around debt terms.
Despite the absence of grandiose announcements, there were signs of optimism. Ethiopia and Mauritius revealed new currency swap agreements with China’s central bank, while Kenya reported progress in talks to reopen funding for key infrastructure projects, such as its ambitious railway that aims to enhance regional connectivity.
China’s recent commitments extend beyond financial investments to include support for Africa’s security and humanitarian challenges. Tanzanian President Samia Suluhu, reflecting on the evolving partnership, stated, “After nearly 70 years of hard work, China-Africa relations are at their best in history.” As China recalibrates its engagement with Africa, the focus appears to be on strategic investments that align with both parties’ evolving priorities and mutual benefits.
