July 17, 2019
China has increasingly looked to the continent as an integral part of its plans.
Africa’s Agenda 2063, adopted by the African Union in 2013, clearly outlines Africa’s priority areas for economic growth and development, as well as the implementation plan to be achieved during the 50-year period.
The framework provides a blueprint of opportunities for continued cooperation with global development partners such as China. Out of 54 African states, 53 have bilateral relations with China under the Forum on China-Africa Cooperation.
China views its Africa ties as indispensable for the attainment of its Belt and Road Initiative, which was launched in 2013 as a strategic policy for global engagement.
Under the auspices of the BRI, China has conscientiously made a detailed case for cooperation to facilitate a mutual development agenda between China and Africa. As of April, 37 African nations and the African Union Commission – the executive branch of the AU had inked BRI cooperation agreements with China.
Both the BRI and Agenda 2063 are playing out in a rapidly evolving global context. There are ongoing trade talks on tariffs between the United States and China that are of significance to each of these leading economies, with ramifications for the global economy that are likely to affect African economies as well.
Indeed, the African Development Bank recently cautioned that US-China tensions could trigger a 2.5 percent reduction in GDP for resource-intensive exporters and a 1.9 percent reduction for oil exporters by 2021. A significant portion of African countries are resource-intensive exporters. In Europe, meanwhile, Britain continues to explore Brexit, which has significant implications for Africa’s developing economies.
Against these global dynamics, China is doubling down on its African investments and positioning itself as an alternative, if not preferred, investment partner for Africa’s development agenda. As of 2015, 46.5 percent of Chinese investments in Africa were reported to be in manufacturing, with 44.5 percent in mining.
Through the China-Africa Development Fund, China has extended debt financing, in the form of development aid and commercial, export and supplier credit to the African continent, growing from $1 billion in 2002 to $142 billion in 2019.
In 2018, President Xi Jinping launched eight major initiatives for engagement with African countries, focused on industrial promotion, trade facilitation and infrastructure connectivity. China’s focus on Africa and prevailing global circumstances signal an opportunity for African countries, including Ghana, to review respective resource endowment and comparative economic advantage to facilitate a strategic and mutually beneficial engagement with China.
Indeed, African countries are already positioning for balanced and sustainable trade with China, and the recent China Trade Week in Ghana exemplified a platform on which to showcase and explore more opportunities for mutual engagement between China and Ghana.
While diplomatic relations between Ghana and China date back to the 1960s, it is the 1983 cooperation agreement that kicked off a more formal strategic partnership and trading links between the two countries. Over the past two decades, trade between the countries has grown upward of $6.7 billion from $100 million. China is now Ghana’s largest trade-partner. In 2018, trade between Ghana and China amounted to $5.98 billion. China’s imports from Ghana were approximately $1.3 billion, and exports to Ghana $4.7 billion. China’s nonfinancial direct investment inflows into Ghana amounted to $2.5 billion in 2018.
China Trade Week provided a learning platform for government and business actors from both countries. The event provided an opportunity for Ghana entrepreneurs to develop strategic partnerships and trading links with Chinese manufacturers. This is particularly important for Sino-Ghana bilateral relations, even as President Nana Akufo-Addo taps into China’s industrial promotion initiative to position Ghana as a manufacturing hub of West Africa.
The event provided retailers, wholesalers and distributors of exports and imports with an avenue through which to understand how to begin trade relations by providing information about China and effective trade with China.
To further facilitate trade, China has, in line with its infrastructure connectivity initiative, invested in Ghana’s infrastructure, including the Shenzhen Energy Group-operated 200-megawatt Sunon Asogli thermal plant and the Sinohydro Corp-operated Bui Hydropower Station. The Bui station is expected to generate up to 400 MW of electricity for Ghana’s national grid, allowing potential exports to neighboring countries. The oil reserves in Ghana signify a further energy and trade collaboration between the two countries.
Culturally, China has demonstrated itself to be a long-term partner. This augurs well for Ghana’s long-term development agenda. To this end, the continued teaching of business Chinese at the University of Ghana’s Confucius Institute facilitates trade ties between the two countries.
China has demonstrated its readiness to work with Africa, including adoption of the eight measures. Much has been done to this end, but there also remains much potential for continued mutual cooperation for win-win development.
George Nyongesas is a senior associate at the Africa Policy Institute in Nairobi, Kenya. The views do not necessarily reflect those of China Daily.