China consolidates in Africa following $60 billion pledge

To lobby for a lion’s share of projects in railways, highways, ports and power.

China is set to expand investments in Africa that would help absorb its excess manufacturing capacity as part of an effort to re-engage with the continent and integrate it within its Belt and Road connectivity framework.

In tune with the meeting in Johannesburg, of the Forum on China-Africa Cooperation (FOCAC), which President Xi Jinping and his South African counterpart, Jacob Zuma are co-chairing, China, has elaborated on its collective approach towards Africa. The two-day summit starts on December 4.

The summit, in which over 50 African countries are participating, is also expected to unveil the contours of China’s security partnership with Africa, focused on counter-terrorism, peacekeeping and funding to train troops within the framework of the African Union (AU).

Analysts say that resource-rich Africa has become yet another battleground for influence between Washington and Beijing, following the establishment of the U.S. Africa Command. China has also declared that it has established a logistics base in Djibouti — a move that critics say is a cover for a military base in Africa.

On Friday, President Xi announced a $ 60-billion-dollar package that will benefit Africa in 10 major areas: industry, agriculture, infrastructure, financial services, green development, trade and investment facilitation, poverty reduction and public welfare, public health, people-to-people exchanges, and peace and security.

Analysts point out that the offer out-scales the $40 billion Silk Road fund that China has offered for Asia’s infrastructure development. Ahead of the summit, Chinese foreign minister Wang Yi had announced food security, public health and sas priority areas that would be discussed during the summit.

Chinese Commerce Minister Gao Hucheng wrote in an article published in the State-run People’s Daily on Friday that Chinese companies are being encouraged to invest heavily in steel, construction materials, cement and glass. China has developed enormous overcapacity in these areas, as domestic demand has dropped drastically on account of the slowdown in the real estate sector, and exports have slid because of a tepid international market. Mr. Gao also stressed that e-commerce, new energy and finance and push for a more active role in Africa’s aviation and tourism sectors — areas of growing Chinese strengths — will be priority sectors in the future. China’s Alibaba group, led by Jack Ma has already become a world leader in the e-commerce segment.

With its well-established clout in infrastructure development, the Chinese are set to lobby strongly for a lion’s share in Africa’s growing appetite for railways, highways, ports and power. This is likely to lead to a surge in Chinese direct investment which had already scaled $30 billion last year. Trade had also zoomed to $220 billion — Africa’s highest with any single country — though this could taper somewhat as China’s thirst for raw materials recedes following the economic downturn, and its tighter focus on investments in Africa.

In the bigger picture, the Chinese want to harmonise Africa’s Agenda 2063 — a 50 year developmental framework drawn by the African Union — with China’s Belt and Road blueprint of connecting Eurasia with roads, railways, cyber-optic highways, industrial parks and smart cities.

Analysts say that Chinese companies could find further opportunities in Africa’s North-South Corridor, which stretches from Durban in South Africa to Dar es Salaam in Tanzania. In between it passes through eight countries in eastern and southern Africa: Botswana, the Democratic Republic of Congo, Malawi, Mozambique, South Africa, United Republic of Tanzania, Zambia and Zimbabwe.

President Xi’s participation in FOCAC is expected to yield substantial security dividends. Mr. Wang, the foreign minister, has pointed out that China and Africa will “strengthen cooperation in fighting terrorism and extremism” — a decision that has been steeled following the recent killing on three Chinese engineers and technicians in Mali.