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China's investment in Africa: Everything you need to know - BBC Africa - YouTube
Channel: BBC News Africa
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As China’s influence grows in Africa, so
does the controversy. Depending on whom you
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ask, you’ll either get excitement about
all the new infrastructure, or accusations
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of ‘neo-colonialism’.
I’m Larry Madowo –
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and I’m Vincent Ni.
We’re going to tell you how this relationship
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became so significant…
… and what China’s economic slowdown might
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mean for the future of African nations.
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Let’s start with the basics. Which countries
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in Africa have an economic relationship with
China? Well, it would be easier to say which
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country doesn’t trade with China, and that
is eSwatini.
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Yes, China isn’t keen on doing business
with countries that recognise Taiwan as a
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nation state, but that’s a topic for another
video. And we should totally do that, Vincent!
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Can you explain why exactly China
has started investing so heavily in Africa?
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Why now?
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Well, it’s not coming out of the blue. China
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has been building up its investment in Africa
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for about two decades now. For China,
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Africa is more than just a massive market
for its goods.
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It’s home to vast natural
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resources, which China wants to invest in.
The Communist Party also has a strategic policy
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to gain ‘soft power’, which is right at
the heart of the Party’s leadership.
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OK, so it should come as no surprise to any
of us that China has become the continent’s
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greatest trading partner. It actually surpassed
the United States 10 years ago, in 2009. China’s
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main exports are machinery, electronics and
textiles, but like you said - it’s not just
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a one-way relationship. China imports crude
oil, iron ore, cotton and other natural resources
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from African countries. This has never happened
on such a huge scale. What’s making China’s
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presence felt even more is the fact that the
US has decreased its involvement in the continent,
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even more after Donald Trump’s administration
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came to power.
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So where’s most of the trade happening?
South Africa, Ethiopia, Angola and Nigeria
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are China’s biggest trading partners on
the continent. There are also countries like
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Côte d’Ivoire, at the very beginning of
developing a relationship and partnership with China.
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Overall China-Africa trade volumes amounted
to 170 billion U.S. dollars in 2017, which
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is a huge increase from just over 10 billion
dollars in 2000.
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Yes, and the Chinese government estimates
that this will grow even faster,
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to over 300 billion dollars next year.
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Of course more investment usually means more debt,
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at least in the short term.
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Let me give you an idea of scale of the money owed:
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in 2017, Zambia's total debt amounted to 8.7 billion dollars,
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almost three quarters of which is owed just to China.
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For Djibouti, 77% of its debt is to Chinese lenders.
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So why are African countries so keen to do
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business with China rather than other lenders?
Well, it’s often said that China’s loans
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are cheaper and come with ‘fewer strings
attached’.
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What that actually means is that,
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unlike the USA or the World Bank, China doesn’t
really mind if you have human rights issues,
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other outstanding debts, or aren’t transparent enough when it’s lending you money.
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That being said, this doesn’t make the loans
any easier to repay. In 2015, a prominent
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research group identified 17 African countries
that would be potentially unable to repay
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their loans, and that Djibouti, Republic of
Congo and Zambia are most at risk. Some countries
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Some countries are relying on gradually repaying their debts to China
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by shipping specific quantities of oil.
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But if the price of oil drops drastically
again, that might make it all the more difficult
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for the debt to be paid back.
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What does this mean? Well, the contracts for
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the projects aren’t public so we don’t
know – but it is feared that some public
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resources might be used as collateral.
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Meanwhile, cracks are starting to appear in
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China's economy, with signs of weakening growth and trade tensions - especially with the United States.
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In fact, China's stock market was the world's worst performer last year,
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ending with a loss of 28% - so that is just adding to the worries.
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China hasn’t talked about what it means
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but it is assumed that if there’s less
to spend, they may give fewer loans, and fewer
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extensions of projects such as railways.
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In other words, China is likely to start tightening the purse strings.
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What does the rest of the world think of China’s involvement in Africa?
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UK and other countries criticise
China’s ‘predatory’ work in Africa,
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calling it ‘debt trap diplomacy’. But
analysts like Joseph Stiglitz say this line
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of thinking is just ‘sour grapes’ – China
is making tangible changes for people who
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live in these countries, bringing affordable
goods into the market at a fraction of the costs.
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Policy makers and governments may be critical
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of the money being poured into Africa, but
the average African isn’t.
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