The three-day Forum on China-Africa Cooperation (FOCAC) summit wrapped up in Beijing on Friday. The big headline from this year’s gathering was the announcement that China will provide $50.7 billion in financing to African countries over the next three years.
Chinese President Xi Jinping unveiled the customary mega pledge as part of a ten-point action plan that will guide China’s relationship with the continent through 2027.
In this special double episode of the show, Eric, Géraud, and Cobus discuss key events from this year’s FOCAC summit and why it’s best not to focus too much on that big financial package.
Show Notes:
- The New York Times: China Woos Africa, Casting Itself as Global South’s Defender by Mara Hvistendahl and Joy Dong
- The Economist: China’s relationship with Africa is growing murkier
- Bloomberg: Xi Wants Bigger Returns, Fewer Headaches From African Debt Deals by Peter Martin and Neil Munshi
Transcript:
Eric Olander: Hello, and welcome to another edition of the China in Africa Podcast, a proud member of the Sinica Podcast Network. I’m Eric Olander, and today I’m joined by CGSP’s Managing Editor, Cobus van Staden, in Cape Town today. Is that right, Cobus?
Cobus van Staden: Yes.
Eric: Okay, Cape Town. And then also joining us on the line from the beautiful island of Mauritius is CGSP’s Africa Editor, Geraud Neema. A very good afternoon to you, Geraud.
Geraud Neema: Good afternoon to you, guys.
Eric: Gentlemen, we have made it to the end of yet another Forum on China-Africa Cooperation Summit. This is the 9th one that has taken place. Cobus, I think this is something like the sixth one that you and I have done together. It’s a pretty exhausting process because we’ve started this journey about a month ago leading up to it and then it happened. And let me give you a quick overview of some of the big headlines.
Xi Jinping declared that China Africa ties are now “the best in history.” He announced also a $51 billion financial pledge. There were dozens of MOUs and deals signed on the sidelines, including a $1 billion deal to upgrade the TAZARA Railway between Tanzania and Zambia. We’re going to dive into that one in particular. The final declaration was adopted, actually, there were two documents that were adopted under unanimous consent by the Chinese and African delegations there — The Beijing Declaration and the Action Plan. In that Action Plan were 10 points that China outlined, and I guess this was both sides outlined, but Xi Jinping articulated it for the guide for the next three years of China-Africa relations.
Cobus, you wrote for our subscribers, at the end of the week, a reflection on the summit and where we are today, and where it leaves us now looking forward to China-Africa relations in the next three years. What did you tell everybody?
Cobus: I made the point that essentially I think that the summit tried to do two things. On the one hand, it tried to show that the relationship is very big and robust and that it hasn’t declined from the 2010s. there’s been a lot of framing of the relationship as smaller than it used to be, particularly on the back of the fact of large scale pullback in funding from China. New Boston University data has shown that that funding, project funding is creeping back up for the first time in about seven years. And on the back of that, I think the summit wanted to show that it is as big as it used to be, while at the same time also reflecting the kind of economic headwinds that both China and Africa have been facing.
So, it’s been interesting for me, for example, that aid, and particularly emergency food assistance has featured more prominently, I think, than before. In that sense, I think it’s both. It kind of walks the line of doing both. On the one hand, it shows it’s still big. On the other hand, it shows that it’s leaner and more pragmatic than it was before. So that was an interesting balance for me.
Eric: Geraud, you were looking at a number of different angles than Cobus was looking at. What are your takeaways?
Geraud: My takeaway is this FOCAC, it was highly and purely politics to a many level. And I’m writing a column on that where my headlines will be China is locked in in Africa. And despite the numbers, for me, it’s much more the priorities. When I read between the lines of the Beijing Declaration, the Xi Jinping keynote speech, and the Action Plan, I can see very big lines around politics around how Chinese really locking itself with Africa in terms of political future. And when, for example, you have China putting in political centers at the forefront of his action plan of Xi Jinping keynote speech, you really see how much politics is becoming very much where China is taking its place into shaping Africa futures and Africa politics. Even when it comes to development agenda where you see China locking himself in that path of, say, I want to become and I’m becoming Africa’s first development partner. And I’m working into making that happen. And that for me, beyond the 51 billion, which we can really delve into that later, but when I look into the philosophy itself of that FOCAC, it’s highly politics, and I believe that China is no way to disengage in Africa. It’s even moving forward to the next step into engagement with Africa in the future.
Eric: Yeah, I thought that, as I was watching this unfold, that if you’re sitting in Washington, London, or Brussels, or even Tokyo to some extent, that you might be a little bit disappointed and discouraged by what you saw this week because there was a little bit of hope maybe that China would be pulling back, that the enthusiasm wouldn’t be there to the same extent. And that was certainly not the case on all sides. Here’s what we’re going to do today. I’ve selected some sound bites from both the event itself and then also some of the discussion that was going on in Africa that I’d like to get both of your response to. Let’s start with the speech that was the highlight, in many respects, of the event, the formal activities of the event, which was the opening address on Thursday by Chinese President Xi Jinping who gave a rather terse, I was expecting this to be a much longer speech, but he was very efficient with his words.
He outlined a 10-point plan. And let’s just go through some of the key points and get your take on it. And we’re going to start, and Geraud, this is a topic you and I went back and forth about this question of diplomatic upgrades and the overall trend and the relationship between China and African countries.
President Xi Jinping: Thanks to nearly 70 years of tireless efforts from both sides. The China-Africa relations is now at its best in history, with its future growth in mind. I propose that bilateral relations between China and African countries having diplomatic ties with China be elevated to the level of strategic relations.
Eric: Geraud, you and I tried to figure out what does this actually mean? There was a number of bilateral upgrades. South Africa was upgraded, Libya was upgraded, and a number of other countries were as well. There, you hear she talking about upgrading the entire continent. What was your takeaway from this? We struggled to figure out what this means. I’m trying to see if other people understand it, and since our discussions, if you understand what it means.
Geraud: Yeah. For me, strategic basically means that really China, as I said earlier, China is really putting Africa as a key element on its global ambition. Basically by doing that, China is saying that Africa is part of that strategy. And elevating all African countries to the strategic level, it means that every African country is important to a certain extent. Because in that strategic element we do have some others gotten very high, like South Africa, for instance, like with the new era of everything. We might be talking about it about it later, but we do have…
Eric: No, no, no. Hold on. Let me just stop you right there because I think before we go into this much deeper, it probably is worth explaining to the audience these different levels that you looked at this week. And it’s very confusing to understand. But I don’t think we can understand the discussion unless we understand the way that China stacks its diplomatic relationships. Do you, by any chance, have the chart from MERICS in front of you? And don’t go necessarily through the whole thing, but describe it for everybody what it is and then we can try and place Africa in the right slot.
Geraud: Exactly. I’m looking at MERICS chart because in 2021, Merrick has released a chart about Chinese diplomatic engagement and relation and we have a type of partnership. We have basically five main type of partnership. We have like basic partnership, cooperative partnership, strategic partnership, strategic cooperative partnership. And you have, on the top of one, strategic partnership of coordination. This is the very top, top of one.
Eric: And that’s Russia. That’s Russia at the very top, right?
Geraud: Russia is not on the top because it’s like comprehensive strategic coordination partnership of a new era. So China, Russia is the only one.
Eric: You see why got only one, Cobus.
Geraud: Exactly.
Eric: It’s not easy to understand.
Geraud: Exactly. And Russia is the only one there. And you have now South Africa. South Africa is a new one because, apparently, South Africa is all round strategic comprehensive partnership of a new era. So basically we assume that South Africa is like one step or one level below Russia, but not to level of Russia because Russia has basically the all-time partnership. And Africa has been-
Eric: Just to be clear here, I know you think that, and I also think that, but we are not 100% sure that that is the case. And we actually asked a couple of experts who are way smarter than we are in this. They weren’t a hundred percent sure either. I want to put that little caveat out there. Keep going.
Geraud: Yeah, it’s very quite important to notice that because even within China institution, when it comes to reporting to certain countries, even the wording changes. For example, I mentioned it in one of the discussion that we had, the DRC has been elevated to cooperative partnership last year in 2023. When you go on the MOFCOM Ministry of Commerce of China, they say DRC is comprehensive strategic partnership, which is to be like simple or nothing big. But when you go to the foreign firm ministry, it says DRC is elevated to the comprehensive strategic cooperative partnership. The lack of cooperative makes difference. It’s completely different levels. So you have really to make sure that you get wording right. And sometime you’re going to have to rely on the Chinese transcript than the English one because the English ones, because of its long some term will remove cooperative, which basically take you from 2.2 level to 3.3 level.
Eric: And those numbers are the way that they stack these relationships.
Geraud: The stacks. Exactly. Yeah, exactly. And now when shipping say I’m elevating Africa to all weather strategic, you’re like, okay, we don’t know where it is, but we know it’s somewhere between the first group and the second group, which is basically put the whole continent on the level of like high when you take the whole continent as a whole. But on a different level, when you take one country by one country, it’s like different country have like… most of them are all in level three of this Chinese diplomatic engagement.
Eric: The reason why this is important is because if you think of this pyramid of diplomatic relationships that China has, Russia’s at the top, Pakistan is at the second level. That’s an all-weather partnership if I remember correctly.
Geraud: Yeah, that was in 2021. In the meantime, many changes. Yeah.
Eric: Most of China’s highest-ranking diplomatic partnerships are in Asia or its neighboring countries, central Asia as well. The fact that Africa is moving up in this ranking is significant. And I think that’s the big takeaway from it. Cobus, he talked about the relationship is the best ever now, the best in history. That’s actually quite a big statement when you think of the breadth of Chinese engagement in Africa, dating all the way back, of course, to Zheng He in the 15th century or 16th century, and then the1960s. and now today Xi says it’s the best ever. What was your take on that?
Cobus: Well, I mean, it depends on how one defines best. But I assume, in many ways, I think he’s probably correct in the sense that it’s the most institutionalized now. I think, by far, it’s the most well developed and fine-grained, I think, in institutional terms than it used to be. Whether that means it’s also, for example, the most profitable or the most commercially, injected, that’s a different issue..
Eric: No, that wasn’t his word. He said best. He didn’t parse the issue. He said best. And I think if we look at it broadly, 53 countries were represented at FOCAC. There’s only one country today in Africa that doesn’t recognize China, that’s Eswatini. So in many respects, that’s different than the Cold War when there were these ideological cleavages that put communism on one side and capitalism democracies on the other side. In many respects, I think you’re right in an all-around way. Economically, politically, ideologically, none of those countries have any real strong dissent against China in any meaningful way. So in that respect, I think you could probably get away with saying it is the best.
Cobus: Yeah, I think so. And I think it’s also the most multilayered than it used to be, simply because they’ve been adding layers over the years. So, it’s kind of cumulative in that sense.
Eric: Well, let’s move on because very early on in the speech, Xi wanted to kind of set the bond between China and Africa and history played a very important role in that. And the shared trauma that these two regions have was an important theme, not only of Xi’s speech, but of FOCAC more broadly.
President Xi Jinping: Modernization is an inalienable right of all countries. But the Western approach to it has inflicted man’s sufferings on developing countries. Since the end of World War II, third-world nations represented by China and Africa countries have achieved independence and the development one after another and have been endeavoring to ride rest the historical injustice of the modernization process. As we are about to celebrate the 75th anniversary of the People’s Republic of China, we are going all out to build a great modern socialist country in all respects and pursue national rejuvenation through a Chinese path to modernization. China and Africa’s joint pursuit of will set off a wave of modernization in the global south and open a new chapter in our drive for a community with a shared future for mankind.
Eric: Cobus, a lot to unpack in that part of the speech. He talked about the community of shared destiny and the shared future. One of the themes that I heard, not only from Xi, but also on CGTN and in Chinese propaganda, and a lot of the talking points is a shared past as well. And there was this bond that the Chinese were trying to make on the trauma of colonialism, and he specifically focused on the West, which, again, in a Chinese context is interesting because out here in Asia, typically Japan is the focus of a lot of the trauma that China suffered under colonialism. And he didn’t mention Japan, which is, again, probably because he was talking about in the context of Africa.
But the wounds of colonialism are still very fresh for the Chinese, still very fresh for many in Africa as well. And that seemed to be a very powerful point that he was trying to make. And we’re going to have a discussion later when President Cyril Ramaphosa also brought up the past and the inequities that were brought upon by colonialism. But what about the theme of the shared pain that the two sides have?
Cobus: This was a very interesting point for me. He’s essentially making two points. One is that China offers an alternative mode of modernization. And the number of times modernization came up was really interesting for me, like more than, say, industrialization. Modernization is a much broader concept. He makes a point that China offers an alternative model and that south-south cooperation on modernization is a separate thing from a singular path to modernization. And in that process, he’s critiquing Western ideas that there is essentially one way to modernization, and that the West walked that path and is now there to show the path to the rest of the world. Instead, Western modernization itself is framed as essentially a historical crime against humanity because it was so fundamentally involved with colonialism and slavery.
In that sense, he really echoes, I think, a very strong intellectual tradition coming out of Africa and the wider global south. I’ve been reading up on some of these older theories, and people from [inaudible 0:17:22] up to newer people like Achille Mbembe, they consistently make this point that there is no history of Western modernity without colonialism. So this is a very, I think, fundamental broad side against Western influence because obviously the message from the West is that it represents universal values of humanitarianism, of free markets, of development as a whole. That the west somehow caught the lightning of development in a bottle and is there to offer it to the rest of the world. And China is making the opposite point that Western modernization is irrevocably tainted and that we need to explore southern forms of modernization. So, this is a really kind of interesting and very radical point for me in the speech. And I think it really dovetails with African thinking at the moment.
Eric: And Geraud, give us your take.
Geraud: I did the breakdown of his speech, I was going point by point to kind of read between the lines of what he was saying. I totally agree with Cobus. And the point is making there, and we’re going to even see that later on, on his speech. You realize that he’s breaking the universality of Western norms that was been led for so many years. He’s not going only straight by saying that that’s not good. But just saying that there is other alternative there, and that alternative that might not be coming from China, but it’s coming within each different countries and within each your own path of history, it’s basically saying that there’s no universality, there’s no norm that can be imposed to another country, which when you read it carefully, it’s basically also breaking the norms of international interference or even the right to criticize any other country when it comes to its own governance to the path is taking.
And when you go even further than that, you realize that it’s not really about Africa, it’s not only about also the West, it’s much more about China itself. But when you break that international norms, you break that universality, what happens is you have so many countries that you have to criticize that you are not going to focus on China only. You’re not going to focus on Russia only because basically every country now has its own path, its own approach, its own… Basically without universality, you lose the right to criticize China, you lose the right to criticize any African country or any country that’s out there. And it’s very interesting the way China is doing it in terms of breaking the norms or recreating, I wouldn’t say breaking the norms, recreating an international system where there’s no universality. There is a specificity of each country with its own path in history.
Eric: Cobus, Geraud talks about breaking the norms of the international system. The last line that we had in that soundbite was China and Africa are pursuing the dream of modernization together, which will surely set off a modernization boom in the global south. And it’s very interesting that he brought this to the larger global south. China sees itself as the leader of the global south. And you’ve talked about in many ways how Africa is the heart and the center of the global south. And the idea of bringing these two together is to center China and Africa and global south countries and to decenter, as Geraud was pointing out, the Western-led system and the G7 system. Did you read it that way as well?
Cobus: Yes, I did. Africa I think occupies this outsized symbolic role, not, not least, I think in the way that it’s frequently framed in its relationship with the West as uniquely problematic or uniquely underdeveloped, uniquely challenging in many ways. And the flip side of that is that in many ways it also functions, as you say, as the heart of the global south in some way. But it also shows that this is part of a global outreach. China has bigger fish fry than just engaging Africa. And Africa fits into a wider set of ideas of China as some kind of natural leader of the developing world. That is a contested position, but I think it’s also, from a global south perspective, China offers some uniquely exciting stuff, including things like green energy, for example, in a way that western power just doesn’t at the moment. And this is very interesting for me rhetorically because I’m just interested in rhetoric, but I think it’s a much more, I think, much more robust challenge, I think, to Western leadership than just rhetoric, I think.
Eric: Did you also find it interesting how many times throughout the conference from African United Nations and Chinese participants in the conference, the word global south was used? I heard it constantly up and down the forum. And it just made me think that we’ve been talking about this white liberal angst about using the word global south, and there is no hesitation whatsoever in stakeholders from the global south, as they were convened in Beijing, to use that word liberally. I don’t know, it just seemed kind of funny to me that here we are in this massive speech from the Chinese, and he used global south very prominently.
And again, it strikes me as unusual that we have this big debate in Europe and the United States, predominantly among white people about, “Oh, I don’t like the word global south,” and yet African presidents, prime minister stakeholders, UN Secretary General Antonio Guterres was using it, and Xi Jinping himself was using it. I don’t know, that was an interesting takeaway. And did you notice the fact that he used the word Third World in that?
Geraud: Yeah.
Eric: Did that stand out?
Cobus: Yeah. That was also interesting for me. Yeah.
Eric: I don’t know if that’s intentional. Maybe it’s not as un-PC in China as it is outside, or is it intentional?
Cobus: I think Third World might be coming back. I have a sneaking love for the term Third World simply because it makes so clear the gulf between the Third World and the first world. And it is always very funny for me how in Western circles, people are like, “Oh, we shouldn’t use the term Third World because it’s so insulting to the developing world.” Whereas what it actually makes clear is just ongoing structural privilege of the developed world of the global north, which I think is actually what doesn’t want to be acknowledged.
Eric: And there’s that journal, Third World Quarterly, I think it is, which really is jarring for, again, the white liberal in me. It’s very jarring. But Geraud, go ahead.
Geraud: I’m really wondering if he used that only because he was mentioning the Second World War before that, and he was pointing out the context of how they were called during that Second World War. After World War II that we’re calling Third World Nation is just something that is really putting it into the present as looking forward into that regard. Because when you look at the speech, he mentioned it like once, but he mentioned in the a context where maybe was referring to the fact that during that time, what they were calling a Third World, we are the one representing the Third World country, Third World nation as he pointed that out. But yes, definitely you have to point that out because when you talk about shared future, you have to talk about shared past, shared burden of the past, shared victimhood that you had from the same perpetrators. So yes, he really has to create that combination of unity. So yeah, it really makes sense to me that way. It was highly ideological, highly political. I think that Cobus enjoyed that part because there was a lot of narrative flying around the place that really makes sense on where China wants to go with Africa.
Eric: Yeah, there’s a lot in this speech for you, Cobus, to it. For word nerds like yourself, this was a very good speech, there’s no doubt. Okay, you notice that we did not start with the number, the big number. And I wrote a column earlier in August saying don’t focus on the big number because that’s not the main part of the story, but we are in this time of the show where we have to talk about the number. And it was a big number, again, $51 billion, or to be precise, $50.7 billion. That was the headline, as predicted, that most of the international press took away from the summit. But let’s take a listen now to how Xi broke it down and how it was expressed during his speech.
President Xi Jinping: China will voluntarily and unilaterally open its market wider. We have decided to give LDCs having diplomatic…
Eric: That’s not the right one. Hold on one second.
President Xi Jinping: To implement the 10 partnership actions, the Chinese government will provide 360 billion RMB of financial support through the next three years. This breaks down into 210 billion RMB of credit line, 80 billion RMB of assistance in various forms, and at least 70 RMB of investment in Africa by Chinese companies. In addition, China will encourage and support Africa in issuing Panda bonds in China to enhance our results oriented cooperation in all areas.
Eric: Now it’s interesting that he referenced all of this in RMB, and it was explained to me by two Chinese scholars who took objection when I expressed the number in our reporting in dollars. And they said this was intentionally done by Xi in order to promote the internationalization of the yuan. So they did not communicate this in dollars. Previously, they had communicated in dollars. I did not know that. I thought it was always in yuan. So, this was actually a very conscious decision on the part of the XI administration to communicate that in yuan. For those of you who are not immediately familiar with the dollar to yuan conversion rate, let me break that down for you. So, $30 billion is in these credit lines that Xi was talking about. 11.27 billion is assistance in various forms. That’s probably direct aid. Then he says 9.9 billion in investment in Africa, a total of 50.7.
So that investment is a foreign direct investment. Okay, we’ll have some other numbers. I think this is all very, very fuzzy. I was very skeptical about this in our analysis. The $30 billion of credit, we don’t know what that is. And one expert told me afterwards, said, “Eric, don’t worry. In the next three to four weeks, typically these things start to settle down a little bit. We’ll get more details.” My suspicion is that those credits are for Chinese companies, just as we saw in the Belt and Road Forum where the $100 billion announcement was mostly for the China EXIM Bank and the China Development Bank to support Chinese companies. I suspect that a big, big part of this is either import or export credits for Chinese companies so he can spend that money domestically. That is my suspicion. The politics of China today require him to do that.
The assistance in various forms, that is $11 billion, that’s a pretty poultry number, I’ll be honest with you, over three years. When you consider that the United States spends $8 billion a year on humanitarian assistance in Africa, just humanitarian assistance, the idea of $3 billion a year assistance for a country as large as China, that is not very, very generous. And then the FDI number, and Geraud, this is what you and I were talking about, I think that one’s a fuzzy one too because that really shouldn’t be part of a state or a government assistance package. That is something that companies do on their own. I mean, we saw that China Moly invested two and a half billion dollars in the Tenke Fungurume Mine, they’re a private company, but China’s going to claim credit for that as part of its, or a future investment like that.
And it’s going to claim credit for investment that is done by the private sector or by the state-owned sector but it’s outside of a political agenda. So that felt really kind of fuzzy. Geraud, what was your take on those numbers?
Geraud: But to be fair, talking about the private sectors, I think that we are all falling into the same scene when it comes to talking about China in that regard in the sense that when we talk about China, we tend to put China as a monolithic entity where we put the private sector and the public sector all together in the same basket. At the end of the time, when we see China Moly doing something, we rarely mention the fact that it’s a private company. We talked about China company is doing that, that China has done that or not. And still talking about the number, when you talk of, for example, the Belt Road Initiative, for so long, when you break down the Belt Road Initiative, you’re going to see a lot of private sector investment and engagement in that space.
Which comes to tell you that we’ve come to already include those private, Chinese private companies into China engagement because on the west side, even on Africa side, we’ve come to accept that China “control” its private sectors. So at the end, those private sector become, especially the big ones, are becoming the extension of China public sector in a certain way. Including those numbers right there, I was like, yeah, it “makes sense” from a Chinese perspective. It’s cheap but it makes sense from a Chinese perspective.
Eric: I don’t know, it’s cheap to me.
Cobus: That’s kind of standard now, right? I think that it’s the same for the U.S., the Europeans, and the Chinese, I think.
Eric: I mean we accuse the Americans and the Europeans of recycling numbers. I think these are kind of eh numbers, too, just like the-
Geraud: The difference with Global Gateway is the fact that Global Gateway and the Western cannot really rely on the private sector. That’s why they cannot give numbers related to the private sectors because the private sector are, as they present themselves, they’re independent and they will take their own action independently to what the government say. That’s why from the Global Gateway-
Eric: I think you’re overstating the amount of control that the government has over the private sector. I think there is some influence, certainly, but a lot of these state-owned companies operate on their own agendas, very aggressively. They’re going to do what they want to do. And again, we have no mechanism to verify if the Chinese are going to fulfill this 10 billion. So, if that’s in fact the case, these companies can do anything they want, and then the Chinese will say, “Sure, we achieved it.”
Geraud: I’m doing that on purpose to go that extra mile because just to put everything in the context on how we see China, when we talk about China, we make the mistake of thinking that there’s no private sector, the Chinese government control them. And when I do that, I’m really doing that on purpose. So we come ourself to say is it making sense to mix private sector and public sector Chinese in the same basket or not? That’s just to put a sense that, yeah, we’re going to have to be quite careful on how to approach that number. But yes, that number can be easily fulfilled with the three, four Chinese company investing in a mining in Zambia and Zimbabwe, in DRC. Within the next year, that 9 billion will be reached so easily really at the end.
Eric: I mean that’s 3 billion a year, which, again, for a country as large as China with a $40 billion FDI stock in Africa today, eh, that doesn’t feel like it’s a big sacrifice. It’s not a big number.
Cobus: There was another detail in there that puzzled me. He also mentioned that they’re going to be facilitating the raising of Panda bonds in China. But what confused me was that he specifically mentioned raising them by non-African parties. So, what does that mean? Who are these non-African parties that are going to raising? Is that a reference to possible trilateral cooperation? I didn’t understand the Panda bond detail.
Eric: What I heard from that, do you remember we talked to Tarela Moses from Boston University Global Development Policy Center, and she talked about how there’s a lot of de-risking of the belt and road finance where they’re using capital markets in places like Singapore. They’re working with banks like Standard Chartered. And I have a feeling that’s what he’s talking about there is that he’s going to use the global financial-
Cobus: These would be Chinese companies, for example, releasing them or?
Eric: Potentially, but-
Cobus: Or Chinese entities.
Eric: But let’s talk about how confusing this is. There was another big piece of news this week that we did not cover because it was not part of FOCAC, but Geraud, the Bank of China did a deal with the Emiratis and Glencore for mining in the DRC, is that correct?
Geraud: No, no, the Bank of China, the London branch, but it’s still Bank of China, yes, they did a deal with Glencore to pre-finance 150 million with the Kazak project, ERG Eurasian Group. Yes.
Eric: Kazak. That was Eurasia Group. That’s right. Eurasia Group. So my point here is that these are bedfellows that we would not have predicted, even six months ago, that Glencore in the Bank of China would be doing a deal together. Cobus, well, we haven’t seen that up until now. I mean, and it’s not something that we would’ve thought would be possible, but it is possible. I think there’s a lot more interaction and communication between China and the international banking system than a lot of people realize. And my guess is that the Panda bond reference is tied to that where this is all part of the broader area and broader effort to de-risk the Belt and Road and to de-risk this engagement in Africa.
Geraud: Yeah, because at the end, money is money. At some point, many of those companies will be seeking for money to invest in Africa. And still talking about Panda bond, I’m going to mention here in the case of Baowu Steel in Guinea, when Baowu Steel raised 1.7 billion to invest in this project in Guinea, we see that it was not a governmental money, it was like market, Chinese market money basically to be able to do that. Those Panda bond, I think, they’ll been used as much as to non-Chinese entity to invest in Africa or even to Chinese public companies or private companies that are seeking for financing to invest in Africa. Because so far, we still have to see how the Chinese financial community is reacting to investing in Africa, putting billions of dollars. I think these Panda bonds are offering opportunities now to have Chinese market money to invest in many projects in Africa. And we’ve seen a country like Egypt already buying Panda bonds. So yeah, that’s something that we are going to see growing in the coming years with China and Africa engagement.
Eric: In contrast to what I was saying earlier where I think some of the $50.7 billion is fuzzy math and weird numbers, and just as bogus a number as we see coming out of the U.S. and Europe, to Geraud’s point, I think the Panda bond where he did not specify a number actually offers the most tangible, most exciting, and it’s that private capital markets to leverage Chinese capital is something that is, has huge potential. There were a number of other numbers that Xi gave throughout the speech. And Cobus, this is going to be something I want to come to you about. There’s a lot here, so let me go through it and then I want to get your take because training was a very big theme in the speech, and you could hear that this was the African agency and the African agenda really asserting itself because this was a major priority on the part of the African delegations. We heard that from Hannah Ryder, the CEO of development reimagined earlier in the summer when we spoke to her, and she identified this as a major theme.
Let me talk about the training numbers that she detailed. In the security sector specifically, 6,000 military officers will be invited to China for training, a thousand for police, 500 young military personnel also will be coming to China. 60,000 scholarships in training in education, that is more young African students continuing to come to China for schooling. Keep in mind that that is something that fell off sharply during the pandemic and is now rebounding. But when the Chinese make a pledge on the student front, unlike in the financial front, they tend to actually keep those pledges. And so that 60,000 number is absolutely achievable. 20,000 a year. I think they’re doing that already right now. So no problem on that one. In the medical sector, they’re going to send 2,000 medical personnel from China to various African countries. Here, what was interesting as well, they’re going to create a lot more of the center.
Eric: So they have the agricultural technology demonstration centers. These are the ATDCs that are spread across Africa. That too was an outcome of an earlier FOCAC. Well, they’re doubling down on that. 25 centers for China Africa studies. That’s going to be very interesting. And Geraud, that speaks to this question of the China literacy issue. 20 health programs and malaria centers, 30 joint laboratories for clean energy research. Then the Chinese Communist Party will have party-to-party engagements as well. They’re going to invite 1000 Africans from political parties to come to China for training.
And then in the agricultural sector, they’re going to send 500 experts and launch 500 new programs across the continent, probably as an extension of those ATDCs I was talking about. Anything on that list that was surprising to you, Cobus?
Cobus: Not really surprising, but the scale of it is notable. It’s clearly responding to African demand, as you were saying. And it was also really interesting to see it in contrast to the difficulties Africans face to get into other educational environments. I just came across a, an article from this year, from The Presidents’ Alliance on Higher Education and Immigration in the U.S. saying that African students were denied student visas, 54% of the time, by far the highest from anywhere in the world. This is in the U.S. Similarly, in the UK, it’s getting harder and harder for Africans to actually get into the country. And this is when they already have some form of acceptance at an institution, right?
And this is visas alone. It’s not scholarships, it’s not creating new institutions, none of that. So China’s really operating at a different level now I think than most of the places where Africans would study traditionally. And they’re also a lot more responsive, I think, to African demands for skills transfer. It’s going to be interesting to see whether these demonstration centers and tech centers and so on will also translate into any form of technology transfer. That I think is a real issue. But yeah, again, on the level of optics, this puts China on a different level than Western countries, I think.
Geraud: And they believe those numbers are way much important, the numbers that we are given when it comes to financing. Because when you break down the numbers in terms of what they represent, you realize that, as I was saying earlier, it’s like China is really locking itself into shaping Africa in different and various in various sectors — agriculture, medical training, politics. The 25 centers on China-Africa studies. We are talking about political centers. We are talking about having 1,000 members of political parties going to China for training. We are talking about politics and future here. For me those are much more important numbers looking at 10 billions from private sectors of 11 billion because those numbers, they can easily get lost in different forms of China engagement and everything just like Mao Ning diluted the $300 billion in-
Eric: Just one second. Geraud mentioned this 300 billion thing, so this came up. So, in the Dakar Declaration, there was some very vague language that said that China is going to import $300 billion from Africa. Was it specifically in agricultural products or was it across the board? No, it was just-
Cobus: No, that was an issue, like our writing and the run up to that, it was full imports from Africa but not just agriculture. There were other agricultural targets.
Eric: Okay, well, this caused a little bit of a confusion because Mao Ning, the Chinese foreign ministry spokesperson, she said that not only did China meet that, it exceeded it, and a lot of people were like, “Wait, what? Really?” Because China Africa trade total is 282 billion. Now, what they did to get to this 300, total was 305 billion, was they went from December, and I don’t know why they picked these months, December 2021 to July 2024. I guess that’s the FOCAC times — fair enough. Okay. And they basically added up three years of African exports to China, and that’s how they got there. We thought, and I think a lot of people thought that when they said 300 billion, that was annually. It was not. It was cumulatively over the three years.
So that became a little bit of an issue this week in Beijing where a lot of reporters said, “Well, did you meet the 300 billion?” And then she said yes. And then the propaganda mechanism went into full swing, and they started publishing all this saying we exceeded it. So that’s just a little bit on that.
Geraud: Yeah. Not only reporters, but even certain African delegation, I get some information from inside, I won’t mention those countries, but some of them were like saying, “Yeah, we didn’t reach that.” The Chinese were responding, “No, we reached that.” Just like Mao Ning mentioned, she kind of took all the number and summed them up and gave $307 billion. But just to tell you that those financial numbers can be diluted easily. But when you look at all those small, I’d say not small, but those numbers that really doesn’t make the headlines, when you pay attention to that, you realize that, really, China is really into building and shaping Africa the way China wants it to be. And people should be paying more attention to those numbers to see, let’s imagine we have the Leadership School Academy in Tanzania. It doesn’t say they’re going to make the same thing.
But let’s try to imagine having similar training centers or political centers or China African studies as the centers, as they call them, popping out of Africa. It’s going to tell you that it’s more than what we are looking now in terms of financial influence or like economic engagement. It’s really political influence, and this should really get people to pay more attention than the numbers that we are looking into financial. Yeah.
Cobus: Yeah, I agree. And it goes with the fact that, for example, all of this is, how can I say it? Capturing different forms of African futurity and modernity as part of this and then putting them in the context of Chinese systems. The Chinese systems and technologies are the only way to deliver African futurity. For example, that a big deal with South Africa to use BeiDou instead of, instead of GPS, like satellite space stuff, all of these things being announced together with relatively concrete job creation targets and all of this training targets. So then it becomes like little England or little America is too racist to accept African students — sure, we’ll take them and they will train them in non-Western systems and then those non-Western systems become standard in Africa. That’s essentially the story that we’re seeing.
Geraud: Exactly. And when you pick up those training numbers, as we are saying in Washington, D.C., you’re going to find in five years from now, you’re going to have thousands and hundreds of thousands of young Africans who would say that my first professional experience, I got it because of a vocational training center that was built by Chinese. And this is a story that changes everything.
Eric: Well, one of the other themes that we heard throughout FOCAC, particularly from the various African delegations, was the emphasis on agriculture, specifically agricultural exports to China. And you could hear, again, the demand from the African side to include that in the agenda. And Xi addressed it directly in his speech.
President Xi Jinping: China Will voluntarily and unilaterally open its market wider. We have decided to give all LDCs having diplomatic relations with China, including 33 countries in Africa, zero-tariff treatment for 100% tariff lines. This has made China the first major developing country and the first major economy to take such a step. It will help turn China’s big market into Africa’s big opportunity.
Eric: Okay. A little bit of parsing is required on this as well. And again, I don’t want to take anything away from the offer that the Chinese are making to African countries to reduce the tariffs to almost zero. And that is a milestone. But the fact is, is that a lot of African countries already had the lowest level of tariff entry into the Chinese market. But that’s not really the problem because just exporting to China doesn’t mean that it’s a tariff issue. There’s non-tariff barriers as well. And we saw this with avocados in Kenya, the difficulty that Kenyan farmers had in order to meet the photo sanitary and the hygiene requirements set by the Chinese government, which are as strict as they are for the Europeans, the Americans, and the Japanese, but they are different than those others.
And so it’s been very difficult for African exporters to meet a lot of those non-tariff challenges that they’re coming. So the tariffs are important, but they’re not the only issue there. Cobus.
Cobus: Yeah, I mean, what would probably be more transformative is proactive training funding provision of different kind of technologies and so on by China to help Africans to get through those hoops. I think that will markedly increase the imports, I think.
Eric: That’s right. That’s what I would’ve liked to have seen in the training. So remember when the Kenyans were going through the avocado process and they said they didn’t have the flash freezers that are required by the Chinese to send the fruit over before it gets to China. So they had to freeze the fruit. It would’ve been great if there was an assistance and training program that said, “We’re going to provide the flash freezers, we’re going to provide the training, and then that will facilitate the exports.” That’s the kind of assistance that would be really great.
Geraud: We’re going to see how they’re going to do with the agricultural training they’re offering, if it’s going to go into that space where they’re going to empower African agriculture to meet the standard, allowing them to export to China. This is something I think we ought to look at, if it’s just like basic training for producing food but not making its marketable to the Chinese market. Yeah, I think they’re going to fall a bit short on that promise.
Cobus: But then it still does also fit into all of this trade infrastructures being set up in Hunan and elsewhere, which does already include a lot of those kind of beneficiation processes. It’ll be interesting to see how it dovetails.
Eric: Well, on the sidelines of the summit was a lot of discussions and a lot of press conferences and a lot of enthusiasm by the African delegations. And Geraud, this was something that you noticed even in the runup to it where you saw just the excitement on the X feeds of the various delegations of the president’s leaving, the president’s in flight, the president’s arriving. Exciting. Again, I noticed that even compared to previous summits, you noticed that compared to the Africa plus one summits in Italy, in Indonesia, in the United States, and elsewhere, there was nowhere near that level of enthusiasm on the part of the communications team. So, you saw a lot more excitement on the part of the African sides going into this summit.
Geraud: Yeah, there was a lots of excitement, a lot of engagement. I was really particularly following president Hakainde Hichilema from Zambia Twitter feed. He was really excited everywhere he was going, the shares, and everything, the welcoming. And you really could see that in different governmental delegation Twitter feed that there was that excitement that we are going to something big, to something interesting, to something that we are looking forward to get to. And that was really contrasting, knowing that for the last four years we got the number dropping and everything. People would’ve expected that will show less excitement to be there. But that was different. Completely different. You saw a lot of engagement that people were really looking forward to.
And after that, the communication that came after that, and especially after the bilateral meeting the different head of states had with Xi Jinping, there was a lots of content that communication from presidency of different countries kind of twisted, created content around it, allowing people to communicate and everything. So yes, that was something really noticeable during this FOCAC.
Eric: But in addition to the FOCAC gathering where 53 countries were represented, there was also a number of bilateral state visits, including that of South African President Cyril Ramaphosa, who went, and on Monday and Tuesday of this week, he had a bilateral state visit that was in return for Xi Jinping’s visit to South Africa during the BRICS Summit last year. Ramaphosa held a press conference, and Cobus, I’d like to get your take on his comments given the fact that he is your president and some of his reflections. But it’s interesting, he brought up two themes that were consistent throughout this FOCAC in this week. Number one, that in shared pain of colonialism that Xi referenced, again, came up here in Ramaphosa’s comments as well as the model for development that we’ve talked about that China sets for African countries.
President Cyril Ramaphosa: We face enormous challenges of unemployment in South Africa, with almost 12 million people unemployed. We also face a challenge of inequality. And inequality that stems from our past, where the past rulers of our country designed a system and an economic system that relegated the majority of the people of our country to a status of inequality. But we also face the challenge of poverty, how we should address poverty. And we are deeply impressed with the manner in which China has been able to lift so many people out of poverty and has built an economy that has continued to grow, many lessons for us on a number of fronts. And we have seen how China’s transformation as a major economic powerhouse has many lessons for us and which we can learn from
Eric: Cobus, this is a point that is fundamentally misunderstood in the West, that they do not appreciate China’s soft power. We still define soft power in the United States and Europe as Beyoncé, Marlboro cigarettes, Starbucks, cultural soft power. China’s development trajectory is absolutely core to the message that it has in its engagement with Africa. But also the other point that we’ve talked about is how history is very close to the surface in Africa but also in China as well. Geraud, you and I have talked about this as well in the context of the Congo, when we heard the Americans talking about how the Chinese are the awful players in the Congo, and you think to yourself, you have no sense of history that in my lifetime what the Americans did in the DRC. And so this weight of history is present in this dialogue.
Cobus: Yeah, of course, South Africa tends to hit those notes very heavily, as is its want, but I think it’s also because South Africa is living those realities. And I think what the history of apartheid shows is that this ravages of colonialism, everyone speaks to Western stakeholders, they tend to think of them as far in the past. But of course, apartheid was very much part of a larger Western project. I mean, it’s a project of extraction. I mean, it’s no accident that one of the big companies that historically funneled gold and other mining resources from South Africa into the global market was called Anglo American. South Africa isn’t subtle in its symbolism. And so South Africa frequently sees its role in the world, it’s kind of reminding the world that these systems are not over, they’re not something from the past. They’re very much alive.
And so in that sense, it really shows that China’s power or the power of China’s story, of China’s development story is unparalleled, I think, in the global south. It’s unique. You can’t dismiss it. And it’s a very, very strong rebuke, I think, to this idea of universal Western values, particularly because China, in many ways, managed to achieve that by going against the grain of Western expertise. China’s very different from Russia. A lot of western experts in the ’90 were in Russia, and they were held at arm’s length in China, and China ended up coming out of that a bit better than Russia, I think.
Eric: Speaking of rebukes, it was very interesting in the joint statement that emerged from the China-South Africa bilateral summit between Ramaphosa and Xi, there was a direct reference to Gaza. And this is unusual. Let me read to you from the statement, and I think you’re going to have a lot to say on this. “China commended the positive role that South Africa played in activating the role of the international community in the conflict in Gaza and is willing to work together toward a comprehensive just and lasting settlement at an early date.” That’s unusual to me. They are usually not that direct. Typically they use these code words in this very vague language about fighting hegemonic powers and that China and South Africa worked together against injustices all over the world. The fact that they zeroed in and mentioned the Palestinian question twice in the joint statement, I thought, was very interesting. Did it surprise you?
Cobus: No, it didn’t surprise me. Partly because obviously both South Africa’s taken a very prominent stance of this and China’s doing a lot of work, particularly, for example, around the recent uniting of different Palestinian factions. And I think China has been really, I think, smart in terms of recognizing the special role that the Gaza crisis is playing symbolically in the world and the way that that the entire global south is seeing itself reflected in the Gaza crisis and the role of the Gaza crisis in raising huge, huge, huge questions about the universality of Western values. I think in lots of ways, I’ve characterized the Gaza crisis as a global referendum on the future of Western leadership. One that I think Western stakeholders are not really seeing how their claim to universal leadership is shredded on a daily basis in Gaza. This doesn’t surprise me, but it was notable how explicit it was. And I think-
Eric: That’s the part that surprised me. It was just how explicit it was. Yeah.
Cobus: Exactly. And that China is clearly using Gaza as an extremely fruitful way of gathering an entire global south coalition around it and positioning itself as this unique spokesperson for the global south. I think it’s a great bonanza for China if for no one else.
Geraud: And for me, for China to say it out loud really highlights how much China is really getting bold into taking the position of its statement by saying, “Yes, I’m calling this situation out.” And you cannot really try to seduce global south country to talk and to revisit and to question the international order right now doubt really highlighting the epitome of the hypocrisy of these international norms, which is the crisis of Gaza today, and say, “Yes, we have to call it out.” And China has been calling out the crisis of Gaza for so long now. They even got its ambassador in the UN even mentioned it quite some time, quite explicitly. During a meeting like this is FOCAC meeting like this and having a bilateral meeting with South Africa, which play a tremendous role into, I would say waking up the international system or many countries into riling up against this crisis in Gaza really cemented China narrative.
When you do that, you can now come with your keynote speech, mention the need of reforming the international system, sharing the burden of shared past and shared victimhood of what’s happened in the past. So yes, calling it out loud really cements that narrative of saying that yes, we are into that shared future because we had that shared past, and we are all the victim of the hypocrisy of this inter-universal international system which pick and choose which crisis to treat well and the other one to treat bad.
Eric: Well, throughout the course of the week, it was very busy for us because we were writing material and producing content for you on the podcast feed, but also on our site and our social channels. But we were also giving a number of interviews to the media. And so I had a chance to speak with The New York Times, The Economist, Bloomberg, a number of different publications, and then also on television, Channel News Asia, the BBC, and Bloomberg TV as well. What was interesting for me was how often, in the conversations with, not only Western media, but also Asian media here as well in regards to FOCAC, the question of the debt trap came in over and over again it came up, there was the debt trap. But what about the debt trap? And I sat there and I was like, “Yes, but here’s the thing, there is no evidence to support the debt trap.”
And they said, “Okay, it may not be a debt trap, but what about Chinese debt?” And then I would kind of lay out the point that said, “Well, China accounts for only about 11%, 12% of the total debt.” And it was very interesting when I was talking to an Austrian reporter and I was talking also to some UK reporters, and that was something that came up quite a bit in the discussions, also in France as well. Interestingly, though, Geraud, I don’t think you got any French reporters talking to you. None of the French reporters wanted to talk to you, right?
Geraud: We’re going to get one, maybe next week we’re going to see, but no.
Eric: Maybe next week. Okay.
Geraud: But this week it was much more English-speaking and everything, so yeah. We are not going to blame, we’re not going to point fingers anyway, but yes.
Eric: No, we’re not going to point fingers. The reason I bring this up is because the discourse in the mainstream Western media, and I really hate to use those words, but there’s just no other way to describe it, was so reductive when it came to debt. And I want to play you a little bit of an alternate universe that exists in Nairobi, where, on Spice FM, which by the way is just one of the best talk radio channels in the world, and they broadcast almost everything that they do on YouTube, so I highly recommend that you go check out Spice FM’s channel on YouTube. I’ll put it in the show notes there. They had a lot of discussion about President William Ruto’s visit to Beijing, not just to participate in FOCAC, but also to talk about some of the public-private partnership deals. I’m going to play you a little bit of the discussion that took place on morning drive time radio in Nairobi on Spice FM talking about debt. And I want you to contrast that against the narratives of debt trap diplomacy that we hear too often in the international media.
Speaker 1: We just look at some of these things that have been put on the table. We know now that Kenya has become a member of the AIIB, and you asked what that is — that is the Asian, what is the name of that?
CT: It’s the Asian Infrastructure Investment Bank.
Speaker 1: That is exactly what I was saying.
CT: Yes.
Speaker 1: You see, essentially what it does is that it allows you to then borrow concessionally. You are essentially part of a club and that you will be considered for certain things, interest will be considerably lower than what you’ve done before. And it’s a route to market essentially that you will then be allowed to get more help at a lower percentage, and maybe, maybe just then be able to negotiate better. Some of these cases that we’ve seen where Kenya has gotten into this throttling debt is that the negotiating aspect of this either the door has been shut or that it hasn’t been negotiated properly.
Kenya’s currency doesn’t allow you to compete right now on the international scale, whereby you’ll borrow in your own local currency like what the Japanese do. But here, we are looking at a situation whereby on top of an already difficult situation, Kenya has gone back to the scene and said, “You know what? You are our friend, and let us get into talks with you and hold our hand a little bit more.” But then we’re looking at the question of what it actually portends for Kenya’s debt burden, which already is not good. When you’re looking at 71 shillings, around about 71 shillings out of every 100, that on the first charge from the consolidated fund goes directly to debt, there’s a big problem here. And then the second charge, when you look at pensions and then other payments, one has to ask the question, what is then left for development?
And I think this is a key conversation right now because the president is having conversations that hinge directly on development. And some of the things that he has gone and said during these relations and during this summit that what we are asking for is the funding that will go directly towards development. In my opinion, on one side, this is a very good thing. Why? Because what it allows you to do is that you’ve opened your mouth and said this help or this assistance that we are getting is going directly towards development. You then must see the outcome of it.
CT: Is that on the bane of our existence? Because other conversations that have preceded other borrowings have had a similar narrative — we are borrowing so that we can do this and this and build this damn and that bridge and to do this and the other, and the debts, on the other time that happens, but the debt remains as a constant. Because with the sort of monies that we say we are paying, if you look at the debt that has brought about that repayment schedule, it means that that sort of amount of money, you say this every other day, if it had been invested in the country, surely would we not see it?
Speaker 1: Yes.
CT: Should there not be a huge difference? But we don’t see it.
Speaker 1: This is the thing here, because the CT, during this summit, they didn’t say our debt burden is too high, please help us offset our debt. No, no, no. In the first round of communication, which happened yesterday during the summit and there was a direct opportunity for Kenya and the President William Ruto to have a conversation with President Xi Jinping, the first thing that rolled off the tongue was that the big-ticket projects that he discussed with a multi-billion shilling extension of the standard gate railway. If money comes, that is what we expect to see. The second one was the Rironi-Mau Summit-Malaba dual carriageway, which he said were Nairobi’s top priorities in the engagement with China. So if the money comes from China, that is what we expect to see.
Eric: Cobus, two things stood out in that discussion for me. One was the texture to it. Again, when you compare that with this base discussion about the debt trap, it’s infuriating because Spice FM is out there, you can find it. I just looked it on a Google search, there it was. It’s not hard to find. Okay? And you’re hearing this much more nuanced discussion about debt, but also what you heard in those comments, it’s something that we don’t hear in the Western narrative, is the fact that the corruption incompetence of African leaders, particularly Kenyan leaders for not managing the debt well, that’s what Xi was talking about, how she wants the money that goes directly to development to appear in development. Too often in many of the other projects, the money goes into the system and gets lost either through ineptitude, either through corruption, either through bad planning, and we don’t see the results of those loans that should be advancing Kenya’s development. I just thought that was a fantastic discussion, and that’s the discussion I’d like to hear more of when we talk about Chinese loans in Africa.
Cobus: Yeah, I absolutely agree. I think there’s certain kind of barriers, I think, to that discussion in the Western world because I think the way of thinking about the global development financing system has really calcified, I think, in the Western commentariat, and there’s very little energies being put into challenging established thinking, partly because I think it’s more trouble for them than it’s good. Bilateral aid-related funding for these kind of projects have cratered from Western countries. It’s been replaced by a lot of private sector lending, which frequently overcharges Africa very heavily. But there’s very little incentive to challenge that system because that would take, in the first place, understanding a lot of kind of boring fine print, but then also challenging the financial industry in New York and London and Frankfurt that are very big donors to political parties and who no one wants to pick a fight with.
I think there’s this structural resistance in the west to discuss the role of the western private sector in a growing African debt crisis. Partly because everyone is used to Africa suffering, right? Suffering is Africa’s job in the international system. And so, to challenge the terms of that suffering ends up being an African job rather than anyone in the West’s interest.
Geraud: And this is exactly the international economic system that Cyril Ramaphosa was just mentioning a few minutes ago. So yeah, that’s exactly the point where when it comes to that discussion, we lack the nuances, we lack the depth to go into looking into different stakeholders who are responsible of that crisis. We tend to find very simple narrative, maybe misleading, simple narrative to explain something that’s much more complex, much more nuanced. And just to mention the conversation that we just heard, I understand why President Ruto did not mention that burden relief when he was having that conversation with President Xi Jinping.
Because maybe that conversion would’ve gone in a sense like we both know that we don’t have a crisis with us. We both know that we don’t have a burden crisis that stop you to repay us. So, there’s really much more space for Kenya to ask for relief whilst they’re still looking for money, they’re still repaying that money. It just reminds me the conversation that we had in Washington, Eric, where an expert told us that yes, Kenya was not in a situation where China had to do something preemptively to prevent a crisis where there’s no crisis happening right now.
Eric: Well, it’s interesting you say that because this framing of it, and this came up in the New York Times in the run up to the conference where a New York Times report kind of mentioned the fact that the bulk of Kenya’s bilateral debt is owed to China. And that, again, is technically true, but it’s misleading because Kenya doesn’t, like a lot of African countries, does not borrow bilaterally that much. It’s a small part of the debt portfolio. About half of Kenya’s borrowing is domestic. And then the two largest other categories are from Eurobond, or private creditors and the multilaterals. China’s debt in Kenya accounts for only about 8% of Kenya’s total public debt. That wasn’t included in the New York Times article.
And that is the misleading framing that oftentimes comes up in the discussions about Chinese debt in Africa. The purpose of this show and the purpose of this segment really wasn’t to turn it into some kind of leftist Marxist kind of celebration. Cobus, I know you would love to do that, but that’s actually not what we were trying to do. But in some ways, it is to reflect the frustrations that people in Africa and elsewhere in the developing will field towards the international financial system. And none other than UN General Secretary Antonio Guterres brought that up when he took the stage at the FOCAC gathering and he delivered a scathing indictment of the current international system.
Antonio Guterres: We meet in difficult times — Geopolitical tensions are rising, conflicts are raging, and poverty and anger are unfortunately growing. The war in Ukraine is reining on with global impacts, and immeasurable death and destruction rein in Gaza, and the people of Sudan are enduring untold suffering. The climate crisis keep getting worse, and inequalities are everywhere, exacerbating divisions and polarization. The 2030 agenda and the Paris Agreement are at risk. Meanwhile, many African countries are knee-deep in debt and struggling to invest in sustainable development. Many have no access to effective debt relief, enjoy scarce resources, and clearly insufficient concessional funding to respond to the basic needs of their population and protect them from the rummages of a climate crisis they did nothing to create.
This situation is unsustainable and the recipe for social unrest. That is why we propose deep reforms in the outdated, ineffective, and unfair international financial system and an SDG stimulus to provide developing countries with the liquidity they need while seeking medium- and long-term solutions. Solutions such as increasing the lending capacity of multilateral development banks and enabling them to massively scale up affordable financing for development in Africa, expanding contingency financing to the rechanneling of special drawing rights that, until now, have essentially benefited rich countries and not those that need them the most. And promoting an effective transformation of the G20 framework to guarantee real long-term debt restructuring that puts people at the center. The support of China and Africa for these reforms is essential.
Eric: Cobus, the problem with Antonio Guterres speech there was that he was basically preaching to the converted. When you look at Politico’s newsletter this week, their China Watcher newsletter, which is the main China watching newsletter in Washington, D.C., not only do they not have any reference to anything that UN Secretary General Guterres said, they didn’t even mention FOCAC once, they talked about the South Pacific, they talked about the South China Sea. This event went largely undiscussed in vast parts of Europe and the United States. It didn’t happen for the most part. And that’s not even to say even here in Vietnam, nobody paid attention to it either. So, the concern is that all of this that’s being discussed is talking to people who already agree with that, like you, right?
How do we get it into people who don’t agree and be able to understand that it’s BlackRock is the problem, it’s not necessarily the Chinese?
Cobus: Yeah, I mean, that’s a big challenge because many stakeholders in the West don’t want to hear that. And they have a lot of ways to not hear it. But I think it also reflects, it’s just I think that the U.S.-Africa relationship maybe dead.
Eric: Dead. Oh, now you’re going too far. That’s too far. That’s not fair.
Cobus: But it’s extremely stagnant. I think stagnant is maybe the right word.
Eric: It is stagnant, but there’s a very robust military engagement, very robust humanitarian engagement. Not a robust trade relationship. But in lots of other ways. And also certainly on people to people exchanges with…
Geraud: Some would argue that there is a lot of humanitarian engagement because of the consequences of the system that was created that puts Africa in that position. So yeah, but that’s something else.
Cobus: There hasn’t been anything exciting in that relationship for a long time.
Eric: That I agree with. That I agree with, yes.
Cobus: I think, in some ways, Africa is going through a kind of a normal, well, a process of resetting. And what I think is emerging is that all of all of the most compelling linkages that Africa has is to its east, not only to China, but to the UAE, to other Gulf states, to various emerging actors in larger Asia. And that there’s very little action on the Atlantic side. There’s almost nothing happening with the U.S. except for these very delineated areas which tend to, like military engagement, where the U.S. feels that that it’s priority. And there there’s very little back and forth in terms of raising African priorities. And on the European side, it’s all immigration. European is so right wing now that that is essentially dominating that conversation.
Eric: Cobus, I mean, just to push back on you here a little bit, and again, I’m not taking this position because I’m American, but just the same way we want to challenge some of the reductive tropes about the Chinese, the Americans have put billions of dollars now into projects like the Lobito Corridor, they’ve put it through the development finance corporation, funding small startups. This is a more dynamic engagement from the U.S. than we’ve seen in a long time, thanks to things like the DFC, where they’re filling financing gaps that the capital markets and the aid business doesn’t fill. So, I don’t know if it’s just to say it’s all crap. I think that’s…
Cobus: No, no, let me add a bit of nuance. That’s not what I’m saying. There is a re-energization in some aspects of the relationship via fields like critical minerals. What we are not seeing, I think, is any kind of factoring of Africa into the U.S. or Europe’s own vision of their own future. These are externalized initiatives that depend very much on the wax and wane of political will in the U.S. and in Europe. There’s no jointly created future there. On the case of China, and not only China, but in the case of this entire Indian ocean realm connections that are being built with Africa, that is different, I think.
Eric: That look towards the Indian ocean is a perfect segue for what I think is going to be one of the key milestones of the summit. And this is going to be our last point that we talk about is that there was a very important signing ceremony with the presidents of Zambia and Tanzania and China for a billion-dollar refurbishment of the TAZARA Railway. And Geraud, you and I, when we saw this happen, went, yeah, that’s it. That’s big. That’s a really big deal. So we talked about the fuzzy numbers are not so much of a big deal. This is a very big deal, and in part because what it is, is it’s going to refurbish a line that goes from the copper cobalt belts right now in the DRC and Zambia to the Port of Dar es Salaam in Tanzania. And in many ways it contrasts with the Lobito Corridor that goes from that same copper cobalt belt, but it takes a left instead of going right, and it goes to the Atlantic Ocean and not the Indian Ocean. Geraud, why is this important?
Geraud: Oh, it’s important in the sense that it really materialize the months of negotiation between China and Zambia and Tanzania into making that t our projects take shape. Since early this year, the Chinese ambassador in Tanzania said that China’s going to put $1 billion in this project, and having Xi Jinping present and those three resent during the signing of this MOU just tells you that yes, the TAZARA project is really getting something, it’s really getting out of the ground, it’s moving forward. And it’s really bad news for those who are looking at Lobito because it’s basically going to shifts all the trade and all the massive mining trade that’s happening in the copper belt to the Indian oceans. Because when you forget China, you put China aside, you realize that the gold produced in the DRC, in Uganda, in Tanzania and Kenya, where they’re going, they’re going to Dubai, Saudi Arabia.
You look at the same thing, it’s going to Qatar, to the Emirates, to all that region in the Indian oceans. So when you look at all of that, you realize that TAZARA is going to become really that entry and exit point that’s really going to attract all the major trades. And it’s really bad news if you’re thinking of Lobito as an alternative to country China. Because when all the minerals, the 85% and 90% of the minerals are going toward east to China, the point is, why are you going to use Lobito to contain all of that? Yeah.
Cobus: Well, Geraud, I want to just ask you, like in the same week, there was the announcement that the US-led PGI Lobito Corridor project is expanding to nickel fields in Tanzania. I was wondering what you made of that because it was then heralded as a possibility of building the first like east-west cross continental trade and logistics connection. I was wondering like how the TAZARA announcement affects that project.
Geraud: For me, my reading of that was like as long as there’s no market, when I say market in terms of nickel processing and transformation and refining on the Atlantic side, it means that in Europe, in Latin America, or in the U.S., as long as this nickel needs to go through China, again, to be processed and refined, the point is why any miners will be going to using Lobito. And building that connection in Tanzania maybe it’s going to even help much more the TAZARA because when you remove the mining sector, you look into the trading profile of the region, the majority of the trade happening in that region happen on the Indian Ocean. So everything connecting that to the Indian Ocean, it’s something that’s going to help them.
Traders are going to leave Lobito to take the railway to go to Tanzania because they’re going straight to China. They have product made in China. So why are we going to go on the Atlantic Ocean just to go down to Durban and to go back up? No. It’s going really to help much more Tanzania than Angola in the longer run, I believe, as long as the trade remains the way it is now.
Eric: A couple key points here, the billion dollars that Geraud referenced is in the form of a public private partnership. It will not be in the form of loans to either the Tanzanian or the Zambian government. This is probably going to unfold in a way similar to what we saw in the Nairobi Expressway or the Chancay Port in Peru where the Chinese builder, whoever it is, will have it for a period of 10, 15 years. This will probably turn into some kind of mineral express, and that’s how they will pay it back. As Gerald pointed out, they’re probably going to divert the Chinese mining companies to stop using the railways and the transit points through the port of Durban in South Africa and start going up through the TAZARA to the Port of Dar es Salaam. The challenge, as Geraud pointed out, for Lobito is that let’s say the Chinese do put their stuff onto the Lobito Corridor, or other mining companies, Glencore, Ivanhoe, you name it, they’re going to have to steam around the Cape of Good Hope another week or so in order to get to the Indian Ocean, to get over to China for processing because there are not enough processing facilities in the U.S., Europe or points from the Atlantic Ocean.
So that cost difference is going to make a very important distinction that’s there. Now, you talked about the presence of Xi Jinping at the signing ceremony, Geraud, let’s dive into that. Why is that important that Xi himself was there to supervise this?
Geraud: Oh, it’s important because TAZARA also has an historical importance to the China-Africa story because TAZARA was built by the Chinese workers in 1974 to 1976. A lot of Chinese died building TAZARA. So, having Xi Jinping there, it’s really cementing, it’s all coming into that narrative of really we are part of you. This is part of our own history. You take the geopolitics, you take the symbolism, you take the history, all of that. It really comes to say China is really behind it. And having Xi Jinping being present there, people may say it’s only an MOU, but when you have Xi Jinping really himself being there for that MOU, it’s more-
Eric: This thing is getting done.
Geraud: It’s more than… exactly.
Eric: This thing is getting done.
Geraud: It’s not just like an MOU — come on, it’s the MOU. It’s just like a shape to take it. This thing is getting done, as you say. We are moving forward with that.
Eric: There’s no doubt. And it’s going to get done fast, I think, because there’s also this geopolitical factor with the U.S. that if they can get the TAZARA, and this is a refurbishment, so it’s not a rebuilding. So they’re not ripping up all the lines, they’re not ripping up everything. They’re going to modernize the cars, they’re going to modernize the track system. So, this thing can get done in potentially 18 to 24 months if they want to move quickly on this thing. So we could see some really quick movement on that. Okay, woo, if anybody is still with us, this is a double episode today, but we wanted to dive into all of these different aspects. This was an important milestone in the China-Africa relationship. There’s no doubt. And in many ways, it culminates what we have been doing all month in terms of looking at all aspects of FOCAC. Again, we want to thank all of the guests who joined us, all the experts who joined us, and Cobus and Geraud for all your input on this. Let’s just now wrap up our discussion with a reflection on what this means. What do you want people to take away from FOCAC nine?
Cobus: I guess what I would want people to take away is that it’s a continuation and an escalation at the same time. They put in a lot of work to make sure that it connects to all of the previous FOCACs, but at the same time, I think like Africa got a bit more of a say in, and that it… I think some African priorities have become elevated in the process. And those are industrialization and development priorities, which is quite interesting for me, and it’ll be interesting to see whether all of these targets will be hit. What I do expect, though, is the same kind of fuzziness as we’ve seen with FOCAC also throughout years in the sense that FOCAC is difficult to track. It’s very difficult to say what these 30 green energy projects or whatever, what they’re going to actually be on the ground. That’s unfortunately also a continuation from the past.
Geraud: For me, it’ll be, don’t look at the big numbers, look at those small numbers that you mentioned around the training centers, the hospital, the doctors and everything, the agriculture center, the political China-Africa study centers. Look at those numbers because this is where I think the bulk of China relationship for the next three to five years is going to happen. A lot of shaping is going to happen there. Because when you cover China-Africa, we don’t cover those small topic because they are not geopolitically “sexy” because they don’t make headlines. But those numbers, those small project really matters a lot. And I do believe that if you start tracking China, following up closely on those action, we might see within 10 to 15 years in Africa that has been shaped by Chinese norms, not only values but Chinese approach and vision to do things the way things are doing.
And when I think of what Xi Jinping was saying that this FOCAC is going to be a milestone of China-Africa relationship over the next future, and I think, yes, this is going to be a milestone, especially when you look not only the keynote speech, you read the Beijing Declaration, you read the action plan, you realize that we are going to see a lot of economic framework agreements coming out of China and Africa. And I’m even suspecting that we might see something similar to what we had with Europe and Africa and Caribbean country, the Cotonou-agreement. We might see something similar coming out from China and Africa in the future. So yes, this was the things that, for me, to pay attention to. Don’t look at the numbers. Those numbers, they mean something. They also don’t mean a lot. But those other numbers are much more insignificant, I believe.
Eric: A couple months ago I mentioned on the show, and I’ve talked to you guys at length about this that I said if the Chinese are smart, and I didn’t necessarily assume that they are, but if they are smart, they would take advantage of this FOCAC to lock in the relationship for the next five to 10 years, maybe even longer. Because we’ve seen how Africa has, once again, fallen off the agenda in the U.S. and Europe. We’re right back where we were at the end of the ’90s and the early 2000s when Africa was a place for, do they know it’s Christmas, live aid, charity, poverty, war, child soldiers, HIV? That’s what Africa is in the imagination of most people in the United States and Europe. Now in Europe, of course, it’s about immigration and keeping Africans on their side of the Mediterranean.
I don’t know if you guys have noticed, but on Twitter, there’s just one meme after another of how awful Ireland has become now because of black people beating up white people. Okay? Now, Twitter has become, what, I think they describe it as a Nazi porn bar, but it’s an awful place. But you can see the framings in a lot of people’s, particularly on the right, how they see Africa. The Chinese did what they needed to do — they came and they delivered. They said that Africa matters, Cobus, as you pointed out. They didn’t back it with a lot of money. Because, again, Geraud, I agree with you that 50 billion, I think is whatever. Don’t pay attention to that. That’s smoke and mirrors.
But the substance of the relationship is strong. And I think that’s the key takeaway for me. There’s a lot here. It’s multifaceted, it’s political, it’s military, it’s trade, it’s economic, it’s people to people, it’s party to party. It’s operating on a lot of different levels. And I think the enthusiasm that we saw from the African delegations was the best indication that this relationship is healthy. And I think that was my key takeaway. Okay. Woo, thank you both for a very long episode. Thank you both for a very long week.
By the way, on our website, if you click on the FOCAC tab that’s right on any of the stories, I’ve unlocked all of the FOCAC stories, so they are free for everybody to read. We want to get that out there. So you don’t need a subscription in order to read our FOCAC coverage or to listen to the shows or read the transcripts from the programs. I invite everybody to do that. We have produced probably more than anybody else in the world for this particular FOCAC. It’s something we’re very proud of that we produced just some amazing analysis. And again, I will brag on behalf of my colleagues who are far more modest, and particularly Cobus’s two reports that he did. And Cobus is going to be working on an after-action report on what FOCAC means, which we will share with you as well. That’ll take probably three to five weeks to do because we also want to let things settle down.
One of the things that we’ve noticed from past FOCACs is we start to see announcements come out two or three weeks afterwards. So, just because it’s technically over now doesn’t mean it’s actually over. So, there’s some things that are going to settle down as the presidents and prime ministers come back to their home countries in Africa. You’re going to start to see some announcements, some spinning, and we’ll start to see some follow-through. Let’s leave our conversation there. We want to thank both of you and thank all of you for a wonderful month of coverage of FOCAC. We’re going to kind of put FOCAC aside now and get back to some other issues. It’ll be nice to not do China-Africa FOCAC kind of stories. There’s a lot going on in the China-Africa space. And Geraud and I last week did a fantastic interview on critical minerals and so we’re going to focus a lot more on that. And by the way, Geraud, tease the fact that you have a brand new cobalt data set coming out very soon.
Geraud: Yes, we have the new DRC cobalt, copper data set for 2023. We’re going to put it live soon. And we revamped the whole content. We revamped the design. It’s mobile friendly, it’s tablet-friendly. You can use it. So yeah, we have put the work on that and we are happy to share it with you, guys.
Eric: Oh, it’s beautiful. So beautiful. We have a number of cool things coming up. Nickel data set, energy data set, cobalt data set. We’re also working on an EV dataset as well. Very cool things for you guys. So keep paying attention. Go to chinaglobalsouth.com And all of this is only made possible by our subscribers, you, our listeners, and also our Patreon supporters. I want to thank you all. If you would like to support the work that Geraud and Cobus and the rest of the team are doing, the best way to do that is to subscribe to the China Global South Project. Go to chinaglobalsouth.com/subscribe. The subscriptions are very affordable. And if you are a student or a teacher, you can email me, eric@chinaglobalsouth.com, and I will send you a half off link for a $10 a month subscription. So let’s leave the conversation there. For Geraud Neema in Mauritius, and Cobus van Staden, in South Africa — I keep remembering if you’re in Cape Town or Johannesburg, you’re in Cape Town — I’m Eric Olander, thank you so much for listening.
Cobus: I’m in Cape Town.
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