China to deepen Africa ties over next decade with focus on trade

LONDON (BLOOMBERG) – China will deepen its ties with Africa over the next decade by focusing on trade and is unlikely to be dislodged by US and European Union attempts to re-engage with the continent, the London-based Economist Intelligence Unit said.

The Asian country is likely to keep investing in Africa’s natural resources and may look to the continent as a source of food, boosting its expenditure on agriculture, the EIU said in a report released on Thursday (Aug 4).

Asia may see Africa’s youthful population as a source of labour for its manufacturing companies and as a market for its consumer goods, the research organisation said.

China plans to surpass the EU as Africa’s biggest trade partner by 2030, and while western powers are trying to boost relations with the continent, they will struggle to catch up, the EIU said. Their relations with the continent are complicated by Europe’s colonial history with Africa and distrust of their intentions due to erratic engagement over the last few decades.

“Question marks are also being raised in Africa over the motives behind the re-engagement of the EU and US,” the EIU said. These “raise memories of past failed commitments and are viewed merely as a desire to counter Chinese influence rather than work with African business partners,” the organisation said.

China has held annual meetings with African heads of state and that is now being emulated by its geopolitical rivals, while Russia, Turkey, Brazil and Saudi Arabia are also trying to build relations with the continent.

The EU and African Union held a summit in February, and US President Joe Biden has called for a meeting with African leaders in December.

These “to an extent will help to counter, but not dislodge, Chinese influence across the continent,” the EIU said. China has spent two decades cultivating its political and economic relations with Africa and stronger ties could now benefit its economy even as slowing growth may restrain investment in the continent.

Food security

“Food security issues and enormous food import requirements in China could drive large trade and investment flows in African agricultural products and production,” the EIU said.

“Africa has an enormous, young and low-cost pool of labour that presents a potential outlet for China’s labour-intensive manufacturing sector – something that will become increasingly attractive as China’s labour force grows older and becomes more costly.”

Ties are already significant. Bilateral trade between China and Africa rose 35 per cent in 2021 from the year earlier to US$254 billion (S$350 billion), with African exports hitting a record US$106 billion, the EIU said, citing Chinese government statistics.

Nigeria is Africa’s biggest importer from China while South Africa is the biggest exporter.

“Afro-Chinese relations are clearly moving into a new phase,” Mr Pat Thaker, the EIU’s editorial director for the Middle East and Africa, said in a statement. “Latest policy initiatives, development strategies and financial pledges point to a deeper and broader engagement.”