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Trade between China and Africa has seen consistent growth for the past two decades, even though it lost a bit of steam a few years ago due to a weakening Chinese economy and rising African concerns over debt-related problems.
Nevertheless, African exports and imports from China have recorded steady growth since 2021.
Beijing likes to highlight this trend.
Trade and loans on the rise
At the opening of the China-Africa Cooperation Forum this week, the Ministry of Commerce in Beijing announced that trade volume between the two sides climbed 5.5% in the first seven months of this year to 1.19 trillion yuan ($170 billion), marking a new record.
On average, Africa-China trade has expanded by 17.2% annually since 2000, much faster than China’s commerce with other regions.
Chinese loans, which play an important role in trade relations, are also on the rise again.
At the start of the summit in Beijing on September 5, Chinese President Xi Jinping said Beijing will provide a further 360 billion yuan (€46 billion) in funding for Africa over the next three years, including €27 billion in loans, €10 billion in development aid and €9 billion in direct investment. At least one million new jobs will be created, he said.
Unlike in the previous decade, China is now focusing on “small and beautiful” projects, instead of massive, multibillion-dollar infrastructure initiatives, which have often been alleged to push economically weak African countries into debt traps and have ultimately forced China to offer debt relief.
Green energy lies at the heart of this new strategy. Data from Boston University’s Global Development Policy Center shows that China granted loans worth about $4.2 billion to eight African countries in 2023, of which around 12%, or $500 million, was allocated for renewable energy projects.
“China will implement 30 clean energy and green development projects in Africa,” Xi said.
Enormous market opportunities
Christian-Geraud Neema, a China researcher from Mauritius who has studied and worked in China for almost ten years, said it is “definitely one of the highlights of the future Sino-African relationship.”
“Not only will Africa play an important role in the supply chain for China’s green industry, but its own green transition is also significant for this bilateral relationship,” he pointed out.
Neema sees enormous market opportunities for Chinese green products such as solar panels and electric cars in Africa.
“This is because many regions in Africa suffer from an inadequate energy supply, which impairs the development of the economy, especially industry. We are therefore looking forward to new green solutions from China,” he told DW.
The Chinese government and companies have already carried out several hundred solar, wind and hydro energy projects in Africa.
Although it accounts only for a fraction of the world’s renewable energy capacity, the pace of growth is impressive.
In 2023, for instance, the installed capacity of solar power in Africa increased by 19%. Countries such as Egypt, Morocco, Tunisia, Niger and Namibia have already announced ambitious energy transition programs, with Chinese solar and wind energy producers seeing new market opportunities.
“China has been forced to seek opportunities elsewhere because of the growing rivalry between Western countries and China,” said Lina Benabdallah, an expert on China-Africa relations at Wake Forest University in the US.
She told DW that Chinese makers of green products like solar panels and electric cars are finding it increasingly difficult to access US and European markets due to tariffs and trade tensions.
The EU Commission, for instance, imposed penalties on solar panels from China between 2018 and 2023, citing unauthorized state subsidies.
Brussels used the same argument to introduce import duties on e-cars from China in July, saying that Beijing’s state support for its companies has led to a lack of fair competition on the market.
The tough operating environment in the EU and the US has prompted Chinese firms to look for other markets across the globe, including Africa, said Benabdallah.
Can Africa replace Western markets?
But the expert stressed that there is no danger of Chinese goods flooding the market.
“It’s quite ironic that a few years ago, Western countries were still accusing China of having done too little for green energy. But now they say the Chinese are doing too much.”
However, the competition watchdogs in Brussels believe that Chinese producers are flooding the global markets with their products at reduced prices, thanks to heavy subsidies, which they say have created an overcapacity that the state has artificially produced.
But Chinese experts are skeptical as to whether the African market could replace the Western markets for China’s producers.
Zhou Yuyuan, Africa expert at the Shanghai Institute for Foreign Policy Studies, said in an interview with the German public broadcaster ARD: “Africa has great potential, but the markets there are small and divided. They only serve as alternative options, but it is unrealistic to hope that they would absorb the so-called Chinese overcapacity of green products.”
But Neema, the China expert from Mauritius, sounds more optimistic: “Yes, we are not a rich market. But we urgently need green products for our inadequate energy supply. In this sense, Western sanctions benefit us: China’s overcapacity is flowing to places where it is not at all superfluous.”
