How China-African trade may evolve

China is taking a more cautious approach to trade and investment in Africa and shifting its focus from governments to multilateral institutions.

China Africa trade
The Yantai Port in Shandong province, shown on December 21, 2021, has become the largest port in China’s trade with Africa and an important hub node in advancing its Belt and Road Initiative. China is Africa’s top trade partner and creditor. © Getty Images

In a nutshell

  • Sino-African relations have reached an apogee under President Xi Jinping    
  • China is Africa’s largest trading partner and top lender    
  • Relations are likely to intensify despite many concerns    

Africa has played an important role in China’s global strategy for the past two decades. As reflected in the Global Development Initiative recently presented by Beijing, the continent has become a vital part of a narrative according to which the Chinese economic and political model of state capitalism and authoritarianism represents the road toward prosperity. 

Evolving interests

At first glance, the Forum on China-Africa Cooperation 2021 suggests that China is retreating from Africa. A closer analysis, however, indicates that rather than a retreat or an adaptation to recent and challenging circumstances, updates in Sino-African relations are in line with Beijing’s long-term strategy and evolving African interests.

The announcements made confirm that after commodities and infrastructure, Sino-African relations are now focused on other types of trade and soft power.

In comparison with 2018-2021, Beijing’s financial commitments to Africa have decreased from $60 billion to $40 billion. The number of projects announced has diminished and the scope of cooperation has been narrowed in fields like climate and environment, health, people-to-people exchanges and infrastructure development.  This scaling back of financial engagement is not new: lending commitments have been declining since 2013, the year that marked the end of the commodities supercycle and the announcement of the Belt and Road Initiative (BRI).

In 2020 China was the main official lender in Africa, holding an estimated 62.1 percent of the continent’s bilateral debt.

More important are the changes in the financing processes and mechanisms. Being the world’s top bilateral creditor, in 2020 China accounted for 57 percent of the debt of low-income countries and was the main official lender in Africa, holding an estimated 62.1 percent of the continent’s bilateral debt. Over the past two decades, concessional loans have been provided by two “policy banks,” the Export-Import Bank of China and the China Development Bank.

China is implementing a more cautious approach, changing its focus from governments to African financial institutions and increasing its position in regional and subregional financial institutions across the continent. This shift has been accompanied by the increase and diversification of foreign direct investment flows and efforts to boost and diversify imports from Africa.

China’s domestic imperatives

“Shared future,” the “new era” and “real results” are key concepts of the vision presented by China for engaging with the African continent.

While Sino-African relations have deepened and expanded over the last two decades, first enhanced by the implementation of the Go Out policy under the presidency of Jiang Zemin, they reached their apogee under President Xi Jinping.

This evolution is in line with President Xi’s pledge to “rejuvenate the Great Chinese nation.” Under his rule, Chinese politics have been marked by nationalism, populism, and a process of power personalization. Nationalism (or “socialism with Chinese characteristics”) has become the main transformative force in China. The Chinese people are often represented as the country’s main political agent and corruption as one of its greatest enemies. In 2018, the Chinese leader managed to circumvent a system designed to avoid excessive power personalization and abolished presidential term limits.

Last year, at the centenary of the Chinese Communist Party (CCP), Mr. Xi declared that China had become a “moderately prosperous” society and that the country would become a fully developed, rich, and powerful nation by 2049. The eradication of poverty and rising living standards have been key factors of power legitimation for the Chinese regime.

Foreign policy is subsumed by domestic imperatives. And the main principles of China’s current strategy were presented by Xi Jinping in 2009, before becoming CCP general secretary, responding to critics, he declared that “China does not export revolution; second, it does not export famine and poverty; and third, it does not mess around with you. So what else is there to say?”

These principles have also determined Beijing’s approach to Africa.

China-Africa trade
Chinese Foreign Minister Wang Yi is welcomed by Foreign Affairs Secretary of Kenya Raychelle Omamo upon his arrival in the coastal city of Mombasa, Kenya, on January 5, 2022. Wang Yi arrived in Kenya as part of his East Africa tour to set the pace for future cooperation between the African continent and China. © Getty Images

From infrastructure to trade

Under President Xi’s leadership, ensuring access to commodities has given rise to the financing of infrastructure under the BRI.

Recently, Beijing has declared that “the Belt and Road Initiative is not a ‘solo,’ but an ‘orchestra’ in which the participation of both China and African countries is essential.” This suggests that as major connectivity infrastructure is completed, the focus will shift to trade promotion.

China has become Africa’s largest trading partner, reaching $254 billion in 2021, while Africa still only accounts for less than 4 percent of all global trade with China.

The relationship is dominated by commodities and significant trade deficits by African countries. Both sides are interested in reducing this deficit. Among the resolutions recently announced is the establishment of a green channel for African agricultural products to be exported to China and the expansion of tariff-free conditions for 97 percent of taxable products from the 33 least developed countries. Beijing has also committed to increasing imports to $300 billion in African products over the next three years.

While commodities will remain relevant, trade between China and African countries is going through a diversification process. China is increasing its imports of agricultural products, manufactured goods and services while it exports more technology.

As with infrastructure, Beijing is also increasing its footprint in Africa’s information and communications technologies (ICTs) under the Digital Silk Road (DSR) initiative. Its strategic goal is to create and expand spheres of digital influence and consolidate China’s status as a digital superpower. Chinese companies are well-positioned in the telecom sectors in several key hubs, including Egypt, Algeria, Kenya, Nigeria, and South Africa. Huawei operates in 40 African countries and has established partnerships with multiple governments, including projects for the development of data centers. According to a recent report by the Atlantic Council’s African Center, 50 percent of the 3G networks and 70 percent of the 4G networks in Africa were built by Huawei.

The competitive advantages of Chinese companies in the telecom and digital sectors are the same as in hard infrastructure: easier access to funding, no political strings attached and fast services at competitive prices.

Rising concerns

Beijing’s goals have been to a great extent aligned with the interests of African decision-makers. While the extractive nature of Beijing’s resource policy has not created sustainable growth, it has contributed to the survival and perpetuation of several regimes. Nonetheless, the focus on infrastructure development has raised many questions, including over the quality of work and rising corruption, as well as concerns over the real impact on African economies and mounting debt.

However, the projects have increased connectivity across the continent, a necessary condition to reap the benefits of the African Continental Free Trade Area. Recent efforts to boost trade and diversify investments are in line with the African Union 2063 agenda, and may contribute to the development of the manufacturing, information and communications technology, and pharmaceutical sectors which, given the continent’s economic and demographic features, are decisive.

Yet African countries are not a homogeneous bloc. For some leaders, Beijing’s more cautious approach to financing and its shift to regional financial institutions and private companies to the detriment of governments pose a major challenge. However, while less prominent, the resource-backed lending model will persist. For countries with access to other means of funding and which are not dependent on commodities, this shift represents an opportunity.

In addition, relations with China have become a salient and divisive issue in some countries, especially in democratic settings. In South Africa and Nigeria there are fears that excessive exposure to Chinese goods may compromise the manufacturing sector.

China’s shift

The changes in China’s approach to Africa are driven by political imperatives which determine the country’s domestic and international strategy.

Rather than a retreat, these shifts suggest that Beijing`s previous strategies were, to a great extent, successful. The reason why China is now favoring multilateral approaches is that it managed to secure significant control over multilateral institutions and global governance narratives. The harmony among the United Nations 2030 Agenda for Sustainable Development, China’s Global Development Initiative aimed at fostering global development partnerships, the 2035 Vision for China-Africa Cooperation and the African Union 2063 agenda is more a reflection of China’s leverage than of its effort to adapt to global demands.

Beijing believes in the virtues of its cultural, political, and economic model.

This leverage, in turn, reflects a crucial aspect of the current world order: unlike the West, which many see as in decline, Beijing believes in the virtues of its cultural, political, and economic model. Mr. Xi means it when he claims that the superiority of the Chinese system will be fully demonstrated through a brighter future. Moreover, unlike its Western competitors, and due to the nature of the Chinese regime, Beijing is able to adapt more quickly to changing and challenging circumstances.

But China is also going through deep demographic and economic transformations which may severely affect the regime’s stability and its global prominence in the medium term. Considering this, domestic and foreign policy will be determined by the implementation of the Dual Circulation Strategy (DCS).

The DCS assumes that self-sufficiency is a necessary condition for national security, and internal consumption must become a solid driver of growth. While China is to remain open to the world, reinforcing the “great international circulation” through initiatives like the BRI and the Digital Silk Road Initiative, it will reinforce the “great domestic circulation” (the internal market), strengthening domestic supply chains and reducing reliance on imports.



In this context, two main scenarios should be considered.

In the first, most likely scenario, relations between China and Africa will intensify. Changes in Beijing’s approach, in line with the interests of several African countries, will diversify cooperation. As it happened with hard infrastructure, Beijing will remain a privileged partner in the development of mobile network connectivity and digital infrastructure, deepening its economic, political and security footprint in the continent and, consequently, consolidating its global influence.

This scenario would be reinforced by the progressive completion of hard infrastructure projects and the establishment of a regional preferential trade framework that would unleash the potential of the African Continental Free Trade Area with a positive – if uneven – impact for African economies.

Relations would increasingly move to regional and multilateral fora, where development imperatives – “real results” – would prevail over political and humanitarian considerations. Engagement with Africa would become a zero-sum game, with Western players facing a tougher environment. Absorbed by domestic challenges and internal contradictions, the European Union and the United States would be unable or unwilling to scale up diplomatic efforts or meet the interests and needs of African countries. In conflicts, likely to increase in the near future, punitive measures such as sanctions or removal of trade preferences would lose strength and reinforce the appeal of the Chinese alternative model.

Geography would play its part.  If African countries, particularly those in the Maghreb, the Sahel, and the Horn of Africa (to where Beijing has recently appointed a special envoy), become more exposed to China on the economic and security fronts, Europe would become more vulnerable vis-a-vis Beijing.

Under the second, slightly less likely scenario, changes in Sino-African relations would have mixed results, resulting in a variable-sum game.

Beijing’s more cautious approach to financing would open the way for risk-tolerant investors, including private sector companies, governments, or multilateral creditors. Instead of acting as a homogeneous bloc, African countries under this scenario would take different approaches regarding cooperation with China. Industrialized and semi-industrialized nations, for example, would adopt a protectionist approach to prevent markets from being flooded with cheap Chinese goods. 

In political terms, this scenario would be determined by rising skepticism in some African nations regarding the benefits of cooperation with China. This attitude results from corruption scandals, Beijing’s debt-trap diplomacy, disregard for human rights, and tensions between Chinese immigrants and African citizens which challenge the “people-to-people cooperation” narrative.

Related reports

Scroll to top