Jan 12, 2021Posted bySilk Road BriefingWritten byChris Devonshire-Ellis

Op/Ed by Chris Devonshire-Ellis 

• China’s Foreign Minister Visited 5 African Countries last week
• BRI MoU signed with Botswana & Democratic Republic of Congo 
• Chinese firms win US$1.36 billion Tanzania Rail Contract 
• Preparations underway for 2021 FOCAC Summit
     

While other countries have been beset with political arguments and domestic unrest in the early New Year, China has been steaming ahead with developing diplomatic ties and generally promoting its international agenda. Chinese State Councilor and Foreign Minister Wang Yi has been on a Five Nation tour of Africa, taking in Nigeria, the Democratic Republic of Congo, Botswana, Tanzania, and the Seychelles, in a decades-old tradition where Beijing’s top diplomat always visits the continent at the start of the new year. This has been happening for the last 31 years now.

We can examine the highlights of this year’s trip as follows:

BRI MoU Signed  
China and Botswana signed a Memorandum of Understanding (MoU) for cooperation on the Belt and Road Initiative (BRI) on Thursday. China’s Foreign Minister Wang Yi and his Botswana counterpart Lemogang Kwape signed the MoU between the two governments after their talks in Gaborone. Wang said the BRI is an important international cooperation initiative and a public product provided by China to the international community. The MoU focus is to help developing countries strengthen infrastructure construction, better realize connectivity, and enhance their independent development capabilities, he said.

The two countries agreement makes Botswana the 46th partner country in Africa in BRI cooperation, and neatly coincides with the 46th anniversary of the establishment of diplomatic relations between China and Botswana. Botswana President Mokgweetsi Masisi and Minister of International Affairs and Cooperation Lemogang Kwape said that the deal is new progress in China-Botswana relations and will provide new impetus for the cooperation between the two countries.

China-Botswana bilateral trade

Botswana exports primary products to China and imports intermediate and capital goods, which are used as inputs in the development of infrastructure in the country. Increased imports from China into Botswana’s domestic market have replaced imports from other countries, and China’s textile, clothing, and footwear (TCF) exports gained market share from Botswana’s TCF exports in the third markets, that is, South Africa. Current bilateral trade is running at about US$300 million per annum.

BRI MoU Signed, US$28 Million Loans Forgiven   
China has cancelled the Democratic Republic of Congo’s interest-free loans that matured in 2020 and promised to fund infrastructure projects as the Central African nation joined the Belt and Road Initiative. Chinese Foreign Minister Wang Yi said Beijing would write off loans to DRC worth an estimated US$28 million to help the country overcome the impact of Covid-19 and give US$17 million in other financial support. Interest-free loans account for only about 5 per cent of the loans China has advanced to Africa.

While meeting Congolese President Felix Tshisekedi in Kinshasa, Wang said most of the sum pledged, US$15 million, would be channeled towards development projects. The remaining US$2 million would be used to support DRC’s mandate as head of the African Union bloc for the next financial year. China also committed to funding refurbishment of the Congolese foreign ministry headquarters. The DRC took 53 loans worth US$2.4 billion from China between 2000 and 2018, mostly to fund power, transport, and mining projects, according to the China Africa Research Initiative at Johns Hopkins University.

China-DR Congo bilateral trade

In the first half of 2020, bilateral trade between China and the DRC increased, with a total value of US$3.11 billion, an increase of 8.2 percent year-on-year. China’s imports from the DRC reached US$2.31 billion, a year-on-year increase of 20.81 percent, and its exports to the DRC reached US$798 million. Among the 53 engineering projects that are under construction in the DRC by Chinese-funded enterprises, 32 of them involve infrastructure builds in roads, drinking water, electricity, and other infrastructure fields. The DR Congo exports to China Mineral Fuels and Oils, Timber and Charcoal, Copper, Fish and Aquatic products and Ore slag and ash.

US$1.32 Billion Rail Contract Awarded To China   
The Tanzanian Government has awarded a $1.32bn contract to two Chinese companies for the construction of a 341km rail line. The firms that will build the new line are China Civil Engineering Construction and China Railway Construction, reported media sources. The link will connect the Lake Victoria port city of Mwanza to Isaka, Tanzania. Foreign Affairs Minister Palamagamba Kabudi stated that the construction work will be financed by the Tanzanian Government.

Kabudi has signed the agreement with his Chinese counterpart, Wang Yi, has been on a two-day visit to the country.

The Mwanza-Isaka line is part of a 2,561km standard gauge railway network, which connects the country’s main Indian Ocean port of Dar es Salaam to landlocked neighbors in the region. In 2016, the government said a US$7.6bn loan was agreed with China’s Export-Import Bank (Exim) for the railway line.

China-Tanzania bilateral trade

The bilateral trade volume between Tanzania and China is about US$4 billion, while China’s total investment in Tanzania has exceeded US$7 billion, making China the largest foreign investor in the country. The balance of trade is in China’s favor, including exports to Tanzania of machinery, boilers, electronics, vehicles, iron, and steel, while Tanzania exported about US$200 million of goods to China, including electronics, tobacco, fish and aquatic products, animal products and feed.

Raising Of Relations To Include An Inter-Governmental Committee   
China’s Foreign Minister Wang Yi held talks with Nigerian Foreign Affairs Minister Geoffrey Onyeama in Abuja during his official visit to Nigeria, with Nigerian ministers of Industry, Trade and Investment, Transportation, Aviation and Health also attending the talks.

Wang said that China has always prioritized its cooperation with Nigeria and taken Nigeria as a major strategic partner, adding that 2021 is vital for China-Nigeria relations, and that it is the right time for the two countries to set up an intergovernmental committee and make overall plans for bilateral cooperation and facilitate bilateral cooperation. China is ready to strengthen cooperation with Nigeria in infrastructure, agriculture, investment, free trade zones, education and other fields, and import more Nigerian products. China welcomes Nigeria to actively participate in the China International Import Expo and share China’s development opportunities.

Onyeama said that Nigeria hopes to strengthen cooperation with China in infrastructure, education, information and communications technology, vaccines and other fields, and welcomes more Chinese enterprises to invest in Nigeria to ease the trade imbalance. After the talks, the two foreign ministers signed a memorandum of understanding on the establishment of the China-Nigeria Intergovernmental Committee. Nigeria had previously signed off a Belt & Road Initiative MoU with China in 2019.

Nigeria-China bilateral trade

Bilateral trade between Nigeria and China is about US$20 billion, with Nigeria exporting about US$2 billion to China in the form of mineral oils and fuels, oil seeds, plastics, rubber, animal products, shipping vessels, and fruits. China exports machinery and mechanical products, I.T, computers, mobile phones and digital technologies.

Blue Ocean Protection, Tourism 
Seychelles President Wavel Ramkalawan met with visiting Chinese State Councilor and Foreign Minister Wang Yi on Saturday. 2021 marks the 45th anniversary of the establishment of diplomatic ties between China and Seychelles. Wang said that China is willing to deepen mutually beneficial cooperation with Seychelles in the three areas of green environmental protection, blue ocean and tourism, and that China fully understands the urgent desire of small island countries to cope with climate change. The two sides will sign the implementation agreement on the construction of low-carbon demonstration zones in South-South cooperation, he said.

China is also a major maritime country and would like to deepen cooperation with Seychelles in the fields of seafood farming, marine scientific research and shipping transportation, he said. Seychelles is a country built on tourism. China is ready to encourage more Chinese tourists to visit Seychelles after the epidemic is brought under control, said Wang.

China provided 50,000 doses of Sinopharm’s Covid-19 vaccines to the Seychelles. The country signed off a Belt & Road Initiative with China in 2018.

China-Seychelles bilateral trade

Bilateral trade between China and the Seychelles is about US$65 million, with the bulk of that being Chinese exports of electrical products, paper, tobacco, furniture, wood, plastics and shipping vessels. The Seychelles exports fish and aquatic products to China.

The Forum Of China-African Cooperation, African Free Trade, and On-Going China-Africa Development

2021 is the 20th year since the establishment of the Forum of China-African Cooperation, (FOCAC) and marks the end of the first 20-year China-Africa development plan. All African nations except for Eswatini are members, with summits occurring every three years. The 2021 summit will be held in Senegal.

This year’s summit will focus on “three priority areas of vaccine cooperation, economic recovery, and transformative development,” according to Wang. His visits last week will have helped lay the groundwork for concrete commitments in those areas. China’s involvement and influence in Africa is unprecedented and has reached some significant targets.

In 2020, Covid-19, including disease prevention, treatment, and vaccine distribution – and the associated economic devastation has been the primary focus of China-Africa cooperation, and has left long-lasting projects in place as part of the Health Silk Road. Little recognized in the West, in December, a ground-breaking ceremony was held for the new headquarters of the African Centers for Disease Control, based in Ethiopia. That is a US$80 million construction project bankrolled by China.

In term of accusations of debt traps, it should be noted that Wang stated that China has signed debt service suspension agreements with twelve African countries and provided waivers of matured interest-free loan for another fifteen on his trip.

China has also been active in the African economic and trade sphere. In addition to Wang’s visit, on January 1 the China-Mauritius Free Trade Agreement entered into force. That deal marks China’s first FTA with an African country, while its enactment coincides with the launch of the African Continental Free Trade Area.

The AfCFTA free trade area is the world’s largest in terms of the number of participating countries since the formation of the World Trade Organization. All African countries have signed up to the deal except for Eritrea, due partially to conflicts with neighboring Ethiopia, however this is expected to be resolved next year. The agreement initially requires members to remove tariffs from 90% of goods, allowing free access to commodities, goods, and services across the continent.

China is using its connectivity projects, which represent 20% of its overall projects in Africa, to link its industrial and energy projects in the hinterland to its infrastructure projects along the coastline, as can be seen with the Tanzania rail network map above as one example.

However, China is not investing only in African infrastructure, but also transfers manufacturing activity there. Chinese companies have invested in 128 industrial projects in Nigeria, 80 in Ethiopia, 77 in South Africa, 48 in Tanzania and 44 in Ghana. It seems developing Africa is easier than developing China’s own north-western territories, and this trend is bound to continue in line with rising labor costs in China.

Please see our article here for additional information on Belt & Road projects in Africa, and check out our Silk Road Briefing website for on-going news about China’s Belt & Road Initiative.