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China strengthens ties despite economy

By Andrew Moody in Johannesburg | China Daily Europe | Updated: 2015-12-13 13:39

China wants to raise its relationship with Africa to a new level, President Xi Jinping declared at the conclusion of the Second Summit of the Forum on China-Africa Cooperation in Johannesburg.

He told heads of state and government as well as other representatives from the 50 African FOCAC member countries on Dec 5 that he wanted to forge a new "comprehensive strategic cooperative partnership" with the continent.

"China and Africa are important forces for maintaining world peace and tranquility, and promoting world development and prosperity. We have the capability to play a bigger role in international affairs," he said.

China strengthens ties despite economy

Before the concluding speeches of Xi and the co-host, South African President Jacob Zuma, the media were invited to the main hall of the Sandton Convention Centre, where all the country leaders as well as representatives from the African Union sat around a vast horseshoe table.

Xi's speech coincided with the publication of two documents, the Johannesburg Declaration and the Action Plan, which were the summation of two days of discussion.

These along with the $60 billion of aid and funding pledged by the president at the opening of the summit - a tripling of the commitment at the last FOCAC meeting in Beijing in 2012 - ended any doubts China was losing interest in its relationship with the continent.

There had been suggestions in the run-up to the summit, after recent high-profile presidential visits to the United States and the United Kingdom, that China was now more preoccupied with cementing ties with the developed world.

China's direct investment in Africa in the first half of the year had also disappointed, falling 40 percent year-on-year to $1.19 billion.

Trade between China and Africa, however, is perhaps a better indicator the relationship is still in full flow - $221.9 billion in 2014 and heading toward $400 billion by 2020, according to official Chinese forecasts released in Beijing on Nov 9.

China strengthens ties despite economy

Apart from calling for a new strategic partnership between China and Africa, the Johannesburg Declaration, which had 30 agenda items, placed emphasis on security, with a pledge that Beijing and the continent would "continue to support each other on security matters and maintain peace and security".

China also agreed to help argue Africa's case for major reform of the United Nations Security Council, paving the way for African representation. The world's second-largest economy is one of five permanent members along with the US, UK, Russia and France. South Africa is particularly keen to have a seat as part of reforms that would involve a wider membership.

The declaration also called for an exploration of possible linkages between China's Belt and Road Initiative and Africa's own economic integration. The new port at Lamu, on the Kenyan coast, being built by the Chinese and part of the $24 billion Lamu Port Southern Sudan-Ethiopia Transport (LAPSSET) corridor to link the region to the sea, is seen as vital to this.

There was also an acknowledgement that the BRICS' New Development Bank, based in Shanghai and with an African regional center in South Africa, will support African development in the future.

The Johannesburg document made it clear there should also be an alignment between FOCAC's goals and those of the African Union's Agenda 2063 and the United Nations' 2030 Agenda for Sustainable Development.

The Action Plan included one of the big themes of the summit, that of China playing a more concerted role in the industrialization of the continent and Chinese companies setting up more manufacturing bases.

Other measures included greater Chinese investment in African agricultural modernization and infrastructure as well as initiatives in financial services, green development, trade and investment, vocational training, poverty reduction, public health and people-to-people exchanges.

Kenyan President Uhuru Kenyatta says the summit sent a very positive message.

"The meeting was very good and very positive and the statement was very clear and categorical on the importance of our relationship."

Kenyatta adds it was up to Africa to make the most of the Chinese offer of investment.

"Not just for Chinese investment but for all investment What we are trying to do is develop a focus on infrastructure and education that is part and parcel of a continent preparing itself for much more inbound investment.

"Every single statement I have heard here talked about the increased interest in investment on the African continent, not just from China but the rest of the world."

Thomas Boni Yayi, president of Benin, welcomes the linking of FOCAC's aims with those of the African Union's Agenda 2063.

"China is a partner in this. It is here to support Africa and pick up on the challenges around the continent."

Justin Yifu Lin, the former chief economist of the World Bank and now professor of economics at Peking University, who was in Johannesburg for the summit, particularly welcomes the priority given to manufacturing on the continent.

There was an implied assumption in the declaration that China's economic restructuring, moving toward a more services-led economy, would create opportunities for some of its manufacturing capacity to move to Africa, rather than just mostly Southeast Asia.

"The program announced puts industrialization right at the top of China and Africa's future cooperation. The way to create jobs, reduce poverty and avoid the middle-income trap is to have the continuous innovation that manufacturing provides."

The economist, who has been advising a number of African governments on their economic strategies, says there was no reason Africa could not emerge as a global manufacturing center over the coming decades.

He believes Chinese manufacturing investment could kickstart industrialization across the whole continent.

"International buyers don't have the confidence to place orders because they worry African firms will not be able to produce goods that are of decent quality. That is why Chinese investment is vital.

"People might think that Africans cannot do manufacturing but they also said that about us (the Chinese), the Japanese and even the Germans."

Helen Hai, goodwill ambassador for the United Nations Industrial Development Organization, who has been directly involved in setting up manufacturing operations in Ethiopia and Rwanda, also says Xi's moves on African industrialization could be a catalyst.

"I am very glad to see an industrialization movement sweeping across Africa. This was a very well received speech," she says.

As part of its commitment on security, China will provide $60 million for the building and operation of the African Standby Force and will also continue to be part of UN peacekeeping missions on the continent and help train African forces.

China said it would aim to work with African governments in such areas as counter terrorism, riot prevention, customs and immigration control.

David Shinn, a former US ambassador to Ethiopia and Burkino Faso and now adjunct professor of international affairs at George Washington University's Elliott School of International Affairs, says the pledges on security reflected the realities of China's engagement with the continent.

"I suspect China gave more attention to security issues at this summit because of China's growing physical presence in Africa and larger numbers of Chinese nationals now finding themselves in harm's way," says Shinn, co-author with Joshua Eisenman of China and Africa: A Century of Engagement.

Deborah Brautigam, director of the China-Africa Research Initiative at Johns Hopkins University's School of Advanced International Studies, says one of the important moves could be in additional support to vocational training. China will set up regional vocational education centers, train 200,000 technical personnel in Africa and offer 40,000 other training opportunities in China.

"It has never received this degree of emphasis and I applaud this. Chinese companies have long complained about their difficulties in finding skilled workers for their African operations," she says.

The major surprise of the summit, however, was the huge increase in Chinese aid for the continent, which President Xi announced at the end of his opening address. The $60 billion was way ahead of expectations before the summit. The figure had doubled at every FOCAC meeting since 2006 but there were doubts this time, given the slowing Chinese economy, that the figure would even meet $40 billion, which would have been twice the pledge of the 2012 meeting in Beijing.

The aid package was made up of $35 billion of preferential loans and export credit, $5 billion of free aid and interest-free loans, $5 billion of additional capital for the China-Africa Development Fund and a $5 billion special loan for the development of African small and medium-sized enterprises as well as a further $10 billion of initial capital for a new China-Africa Production Capacity Cooperation fund.

Harry Verhoeven, a lecturer at Georgetown University's School of Foreign Service in Qatar and a leading China-Africa expert, says it was certainly a lot of money and sent a clear signal, if one were needed, that China was still committed to the relationship.

"Because we have got so used to China-Africa meetings revolving around big money, not everybody may appreciate just how much cash this really is," he said.

"It is clearly sending an important signal as to how important its relationship with Africa remains and that it is in it for the long haul. Even in economically challenging times, it continues to commit to Africa."

Windsor Chan, strategy consultant for the Asia practice of lawyers Hogan Lovells, who is based in Johannesburg and a respected figure within the South African business community, agrees it made clear China still had an Africa focus and was not just turning its attention to the West.

"The 200 percent increase of concessionary loans demonstrates China's long-term view of Africa, which has not been interrupted by the turbulence in the global economy."

Michael Osime, founder and chief executive officer of ICMG Securities, a leading financial company based in Lagos, Nigeria, hopes that some of the $60 billion will be used to further develop infrastructure on the continent.

"With this money we will be able to fill the gap. Africa needs to invest massively in infrastructure. Evidence suggests we could hit growth rates of 15 percent if we can only sort out our infrastructure."

Brautigam, also author of the recently published Will Africa Feed China?, wondered, however, whether African governments will take up some of the loans on offer over the next three years.

"I doubt they will be willing to take on serious debt between 2016 and 2018, given the clouds hanging over their economic horizon."

There were also attempts at the summit to finally put to bed the contention that China had a neocolonial agenda in Africa and not one of South-South cooperation.

This was firmly rebuffed by Robert Mugabe, the 91-year-old president of Zimbabwe, who was also attending as chairman of the African Union.

"That's nonsense," he told the media. "China never colonized Africa or anyone. It is them (the West) who plundered Africa and they are still doing so now. China is offering win-win partnerships in Africa, and we will benefit from them."

The mood after the summit, the first on African soil, was that the China-Africa relationship was, in fact, evolving to a higher level of engagement, as Xi made clear in his address.

Barnaba Marial Benjamin, the foreign minister of South Sudan, agrees it was a successful summit but says there were many pressing issues for Africa that would not be immediately resolved.

"This $60 billion of funding for development in Africa has to be welcomed but it must also include participation of African business so it reflects a genuine win-win situation for both sides.

"The downsides for Africa remain tremendous challenges such as technology and also other issues such as conflicts in Africa."

Saif Addin Al-Bashir, a spokesperson for the Sudan government in South Africa, says the most uplifting aspect of the summit was that it had managed to come up with a workable agenda.

"Summits in general are often vague and theoretical. This summit is full of practicable plans and intentions. It provides a detailed road map for a comprehensive partnership between China and Africa."

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