Friday, August 5, 2022

Economist Intelligence Unit Predicts New Direction in Africa-China Relations

 The Economist Intelligence Unit (EIU) has just released a thoughtful report titled "A New Horizon for Africa-China Relations."

It concludes that the new themes in the Africa-China relationship suggest a more balanced approach to Chinese engagement in Africa during the decade ahead.  EIU argues that China intends to expand its engagement with Africa over the coming decade through increasingly diversified trade; additional investment in target sectors and trade-facilitating infrastructure; projects that address Africa's environmental, social and governance issues; and a more hands-on and interventionist approach to regional diplomacy.

EIU says China's food security issues and enormous food import requirements could drive large trade and investment flows in African agricultural products and production.  African-located manufacturing ventures will increasingly serve as an export base for industries that connect with Chinese value chains and target Chinese markets.

Citing the hosting by China in June of a Horn of Africa Peace Conference in Addis Ababa, EIU foresees an increase in political engagement in the subregion but without a fundamental shift in Chinese foreign policy away from its long-standing principle of non-interference in the affairs of other countries.

The trajectory of China-Africa ties will remain more focused on deepening still relatively shallow trade and investment links, rather than more active diplomatic mediation or more formal security arrangements.  

EIU offers a cautionary note.  The Chinese economy is slowing, and this will directly impact Africa in the short to medium term.

Comment:  I would add three other cautionary notes.  While China-Africa trade has resumed and reached a new high in 2021, it has since 2013 become increasingly unbalanced in favor of China with China maintaining a significant trade surplus with Africa.  This is good for China, but not so good for Africa, and will likely lead to growing concerns in those African countries experiencing large and persistent trade deficits with China.

EIU suggests Africa may play a more important role in exporting agricultural products to meet China's increasing need.  This may occur over the long term, but Africa remains a net importer of food products and is not well positioned over the short and medium term to fulfill this need.

EIU also suggests Africa may benefit from the shifting of manufacturing capacity from China to Africa.  So far, however, most of the manufacturing that has left China has not gone to Africa but to other lower cost destinations in Southeast and South Asia.