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Closer Sino-African partnership for win-win results

DEC . 01 2021
Peking University, Decemebr 1, 2021: The two-day Eighth Ministerial Conference of the Forum on China-Africa Cooperation, which concluded on Tuesday, reviewed the FOCAC's achievements since its establishment in 2000 and vowed to take China-Africa cooperation to a higher level in accordance with the theme of the conference, "Deepen China-Africa Partnership and Promote Sustainable Development to Build a China-Africa Community with a Shared Future in the New Era".

A key task of the conference was to dock China's Long-Range Objectives Through the Year 2035 and the "dual circulation "development paradigm with the African Union's Agenda 2063 so the two sides can more effectively tap into each other's economic complementarity and further strengthen their win-win cooperation, in order to improve people's well-being.

China committed to helping Africa

That China is committed to helping Africa meet the challenges it faces was once again confirmed by President Xi Jinping on Monday. In his speech at the opening ceremony of the conference, President Xi said that apart from helping Africa fight the novel coronavirus and making sure African countries have access to enough affordable vaccines, China will also make efforts to increase trade and investment, share its experience in poverty alleviation, deepen cooperation on the digital economy, promote green, low-carbon development, and help develop renewable energy.

Data from the Ministry of Commerce show that China's direct investment in Africa has increased by more than 25 percent a year since the establishment of the FOCAC. By the end of 2020, China's direct investment in Africa had exceeded $43.4 billion, covering more than 50 African countries, and Chinese enterprises had helped establish 25 special economic zones or industrial parks in Africa, which contributed about $1.47 billion in taxes to the host countries and created more than 42,000 local jobs.

China has scaled up assistance to African countries since the 18th National Congress of the Communist Party of China in 2012. For example, foreign aid from 2013 to 2018 totaled 270 billion yuan ($42.26 billion), 45 percent of which was in the form of grants, interest-free loans or concessional loans.

From 2000 to 2020, China helped African countries to build 13,000 kilometers of expressways and railways, and more than 80 other large-scale infrastructure facilities, and funded over 130 medical establishments, 45 sports venues and 170 schools. It also helped train over 160,000 personnel from Africa, and built a series of flagship projects including the African Union's new headquarters with a huge Conference Center in Addis Ababa, Ethiopia.

But since the 2018 FOCAC Summit in Beijing, the world has encountered three new challenges, and Africa seems to be particularly vulnerable to them.

The COVID-19 pandemic has had a huge impact on the global economy. According to the African Development Bank, Africa's GDP contracted by 2.1 percent in 2020 due to the pandemic, and its projected growth in 2021 will be lower than that in other regions. And according to the World Bank, the pandemic is estimated to push an additional 29 million Africans into extreme poverty by the end of 2021.

The pandemic and the continued trade frictions among some major economies have also disrupted global supply chains and obstructed global economic integration. Since the major trading hubs are largely concentrated in North America, Europe and East Asia, many African countries are marginalized and tend to lose the benefits of global economic integration.

More important, even though 592 million people in Africa do not have access to electricity, African countries have committed to joining the international community in taking climate action to limit global temperature rise to below 1.5 degrees Celsius. This means African countries have to provide affordable clean energy to the people as well as address climate change that has increased the frequency of extreme weather events.

According to ancient Chinese philosophy, opportunities can arise even from crises. This holds true for the future of China-Africa cooperation. To begin with, the pandemic has not undermined Chinese investors' enthusiasm to invest in Africa. Despite the challenges and difficulties posed by the pandemic, the Nigerian Rye Railway-built by China Civil Engineering Construction Company-started commercial operations on June 10. It is the first modern double-track standard gauge railway in West Africa, and the longest double-track standard gauge railway in Africa.

As one of the biggest sources of foreign direct investment in Africa, China will continue to play a key role in its industrialization and economic transformation, and adopt a market-oriented "infrastructure-plus-manufacturing-plus-services" investment model. Under this model, Chinese enterprises will team up with local partners to expand manufacturing and services capacity in special economic zones and/or industrial parks. Such a coordinated approach will require investments in infrastructure projects given the market potential of both the manufacturing and service industries.

By the same token, investors in manufacturing and service projects need to ensure that power supply is undisrupted, transportation capacity is adequate and the industrial supply chain is functioning smoothly. In the short term, since the pandemic is still raging in many countries, Chinese enterprises should help African countries increase their vaccine production capacity through joint licensed production and technology transfer. Such an arrangement would provide African people with safe, effective, high-quality and affordable vaccines.

Africa's new free trade deal can boost its economy

While the pandemic has intensified the opposition against globalization in some countries, African countries have consolidated their unity more than ever with the creation of a single market under the African Continental Free Trade Area agreement. The agreement connects 1.3 billion people across Africa and adds momentum to the $3.4 trillion African economy.

In particular, the ACFTA has created new cooperation opportunities in the digital economy, which will improve Africa's connectivity with the rest of the world. In this regard, Chinese enterprises can share with African countries their experience of digital technology and help increase the exports of African goods.

In fact, Chinese internet giant Tencent recently invested in Ozow, a South African online payment and e-commerce platform, in a bid to expand its operations in other African countries. Alibaba, another major Chinese information and communications technology company, entered the African market even earlier, in 2018, when it signed an agreement with the Rwandan government to launch the Electronic World Trade Platform, which made Rwanda the first African country to allow small and medium-sized enterprises to participate in cross-border electronic commerce.

Aside from the big players, many smaller Chinese companies have also entered the African e-commerce market including Buffalo in South Africa (a cross-border logistics platform) and Kilimall in Kenya (a one-stop global online trading service platform integrating trade, payment and distribution of goods).

Although Africa faces a serious power deficit, as 44 percent of its population has no access to electricity, the annual average solar power capacity in most African countries is 2,000-3,000 kilowatt-hour/square meters, making the continent the region the most abundant in solar energy. Therefore, harnessing solar energy is an effective way to not only reduce the power deficit but also propel low-carbon development.

China has already announced that it will no longer support new coal-fired power projects abroad, which means China is likely to provide more funding for renewable energy projects in Africa, which will help the two sides to meet the dual challenge of generating energy and fighting climate change.

In addition to large-scale solar photovoltaic projects, there is also huge potential for small-scale off-grid solar PV projects to supply power to remote areas and islands in Africa. Since 2018, StarTimes, a Chinese media company and technology provider, has been engaged in small-scale off-grid solar PV projects in Kenya, Zambia, Uganda, Tanzania and Rwanda, which have improved the living standards of local residents.

Moreover, it should also be emphasized that China-Africa cooperation is not exclusive in nature. Third-party cooperation in Africa, whether by developed countries or international organizations, is welcome, as long as it creates more win-win results for the benefit of people in Africa and beyond.

The author is Yu Jia, director of International Development Cooperation Department, Institute of New Structural Economics, Peking University.
China Daily