Publication International / Transnational - Globalization - Africa - North Africa - Southern Africa - West Africa - East Africa - Corona Crisis Yes to Masks, No to Debt Relief

How China-Africa relations are changing under COVID-19

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Merle Groneweg,

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May 2020

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Addis Ababa–Djibouti Railway in Holhol bridge
In 2011, the Ethiopian Railway Corporation awarded contracts to two state-owned Chinese companies to build a railway line from Addis Ababa to the Djibouti border. The total cost was around USD 3.3 billion. 70 percent of this was provided by the China Exim Bank as loans. Other financing partners were the China Development Bank and the Industrial and Commercial Bank of China. Addis Ababa–Djibouti Railway in Holhol bridge, CC BY-SA 4.0, Skilla1st, via Wikimedia Commons

Contrary to what the “ready-made templates of Africa reporting” convey, African states have quite some experience in dealing with pandemics, not least because of the recent Ebola crisis. However, public health systems remain drastically underfunded, and especially for the care of patients in intensive care units, capacities are low. Preventive measures in the sense of “flattening the curve” thus enjoy top priority.

Merle Groneweg is a freelancer at PowerShift, where she works on resources, mobility and trade policies. She studied Area Studies, postcolonial theories and Mandarin in Berlin, Beijing and Paris.

At least 37 states have banned assemblies completely or partially; at least 31 states have imposed curfews. The measures necessary to contain the virus lead to high losses of income—for people, companies, and state budgets. Factories have shut down, tourism is on hold, and the prices of many raw materials have fallen dramatically. The Bloomberg Commodity Index—which indicates the price development of 20 agricultural, fossil, and metallic raw materials—is at its lowest level since 1986, resulting in a huge loss of income for many states on the African continent. According to the UN Economic Commission for Africa (UNECA), Africa’s oil-producing countries alone, which include a dozen other states in addition to Angola and Nigeria, will lack 65 billion US dollars in export revenue. But other budgets are also feeling the effects of low raw material prices, such as copper-rich Zambia. In UNECA’s optimistic scenario, the growth of the entire continent in 2020 will fall from the originally expected 3.2 to 1.8 percent.

China’s Recession Weakens the African Economy

At the same time, the global economy is in the “worst recession since the Great Depression”with the last crisis having been less than ten years ago. In 2007/8, the Chinese government provided the global economy with a massive stimulus package. As a result, the economy of the People’s Republic in particular was able to recover quickly and returned to high growth rates in 2009 already. Public investment in the Chinese infrastructure sector helped “a number of resource-rich countries to avoid the economic downturn”. China is now not only the “factory of the world” but also the “locomotive of the global economy”, and has been responsible for almost 30 percent of global economic growth in recent years. If the locomotive slows down, it has an impact on the entire world. Likewise, economic relations between African states and China are marked by increasing interdependence—which Western actors not only eye suspiciously but sometimes exaggeratedly refer to as “neo-colonialism”.

Nearly one fifth of all imports to the African continent now come from China—compared with 3 percent at the beginning of the millennium. Two-thirds of all African states name China as the largest source of their goods; numerous raw materials and products are exported from Africa to the People’s Republic. When Chinese production and thus demand is reduced, it is immediately noticeable on the African continent. The last time this was the case was in 2015 and 2016, when, due to various factors, China’s gross domestic product (GDP) growth fell to a comparatively low 6.5 percent. If Chinese domestic investment falls by one percentage point, this is associated with an average decline in African exports of 0.6 percentage points.  

In light of the COVID-19 pandemic, the World Bank has reduced its forecast for GDP growth in China in 2020 from 6.1 to 2.3 percent. Even before the outbreak of the virus, the Chinese economy was in increasing difficulties—partly due to the overcapacity in production caused by the last high stimulus packages and the enormous public and private debt. In March, the Financial Times headlined: “China lacks the appetite to save the world economy, analysts warn.” The Chinese government has become more cautious. Concerning economic relations with the African continent, this was already felt at the last Forum on China Africa Cooperation (FOCAC). At the summit meeting, which takes place every three years since 2000, the financial commitments (credit lines, grants, interest-free loans or special funds) made by the Chinese government to African states have increased from forum to forum. In 2018, Beijing deviated from this trend for the first time. President Xi Jinping announced a total of 60 billion US dollars—the same amount as in 2015.

High National Debt Slows Down Necessary Investments

It is estimated that China is now responsible for almost one fifth of the total debt of African national budgets. The lending practice is repeatedly criticised, especially by Western actors, for having low environmental, social, and human rights standards, or overburdening the budgets. Even before the outbreak of the pandemic, many states were in payment difficulties, as a World Bank report from 2019 shows. 2010 marked the beginning of “the largest, fastest, and broadest increase in the debt of emerging and developing countries in the last 50 years.”

Now calls for a debt cut are growing louder and louder. In late March, Ethiopian Prime Minister Abiy Ahmed wrote in the Financial Times: “Health is a worldwide public good. It requires global action guided by a sense of global solidarity.” Therefore, “the issue of resolving Africa’s debt burden also needs to be put back on the table as a matter of urgency.” For in the face of the crisis, many countries are currently borrowing billions to stimulate the economy and at the same time invest in health systems. But not all countries have the same opportunities to do so: while the German government has had to pay interest of –0.47 percent in the meantime, i.e. is effectively being given money as a gift, interest rates for low- and middle-income countries have risen by an average of 3.5 percentage points since mid-February alone, according to the British NGO Jubilee Debt Campaign.

But the loans that are now so urgently needed are not only disproportionately more expansive for many states. A large part of the newly borrowed money flows back into debt servicing immediately. According to the Jubilee Debt Campaign, 64 low-income countries worldwide are currently spending more money on debt repayment than on their public health systems. More than thirty of these states are located on the African continent.[1]

Finally, the government representatives of the 55 states of the African Union demanded that international donors should provide 100 billion US dollars in emergency aid, including the cancellation of 44 billion US dollars in debt of the poorest states. In the meantime, the International Monetary Fund (IMF), the World Bank and the G20 countries have reacted—and are lagging far behind the demands. In mid-April, for example, the G20 announced a debt moratorium for 77 countries worldwide that receive international development aid. These states can suspend the repayment of bilateral loans to the G20 states until at least the end of 2020. After that, the debts must be repaid—including a corresponding increase in interest rates. Today's debt moratorium is thus nothing more than the debt crisis of tomorrow.

The Chinese government has so far made no concessions beyond this agreement reached jointly with the other G20 countries. In the past, the Chinese government has forgiven or restructured the debts of some states in financial difficulty. One example of restructuring is the extension of the repayment period from ten to 30 years for a 3.3 billion dollar loan taken out by Ethiopia for the construction of its railway line between Addis and Djibouti. Other states have had their debts completely cancelled. However, at present, the Chinese government remains more cautious. The Chinese Foreign Ministry only spoke of negotiating bilaterally with individual governments, if necessary, rather than with all the governments of the African Union. This weakens the latter’s negotiating position. It is also unclear how loans from the Chinese government will be handled if they are to be repaid with raw materials, as is the case with Zambia or Angola, for example.

But the fact that so much attention is once again being placed on China in connection with the demands for a debt cut for African states is the result of a discourse that exaggerates the Chinese government as an actor on the African continent. Political scientist Yun Sun comments correctly:

“Debt forgiveness by China without similar forgiveness by other lenders is seen as neither fair nor feasible. (...) Why should China carry the—quite substantial—financial loss alone? Indeed, Beijing points out that China is, in fact, not the largest creditor given that the multilateral financial institutions and the private sector own 35 and 32 percent, respectively, of Africa’s debt. (...) China is more likely to participate in collective debt forgiveness with multilateral institutions and other lenders, instead of chartering its own course unilaterally.”

Economically Restrained, Yet Pushing Forward Diplomatically

But in another area the Chinese government would like to take the lead. Expressions such as “win-win cooperation” and “all-weather-friendship” have shaped China’s diplomatic rhetoric towards African states for decades. When 100,000 masks, 20,000 test kits, and 1,000 protective gowns arrived in Tanzania—donated by the Alibaba Foundation of Chinese billionaire Jack Ma—the Chinese embassy in Dar es Salaam announced: “The supplies represent the Chinese traditional spirit of benevolence. China will provide more in supporting Tanzania’s fight against COVID-19.”

Medical aid packages are also being put together by the government. The Chinese Ministry of Foreign Affairs continuously presents reports on Twitter documenting the dispatch of medical aid, the departure of Chinese experts to other states or the holding of workshops on virus control. On 10 April the Chinese Foreign Ministry announced: “China is helping the world to the best of its ability. Supplies have been or are provided to 127 countries & 4 intl orgs. We donated $20mln to WHO, sent 13 expert teams & held 70 video conferences. Local govts, companies also donated to over 100 countries & regions.” The message is always the same: “Together, Stronger”, “United We Shall Overcome” or “Solidarity stands as the key to our victory against the COVID-19.”

The Chinese government depicts itself as a hegemon that looks after the international community—and tries to let the idea of a “Health Silk Road” flourish. This is happening in the context of increasing tensions between the People’s Republic and the US. President Donald Trump did not speak of COVID-19 for a long time but of the “Chinese virus”, has now brought into play reparation payments from China for the follow-up costs of the pandemic, and is now even threatening to break off relations. Doubts about the Chinese government’s information policy are growing louder not only in the US, but worldwide.

China is making efforts to limit the damage—and in doing so is continually firing back at the US. For example, a spokesman for the Chinese Foreign Ministry denounced the “politically motivated misinformation” of the US State Department in mid-April and rhetorically belittled the other great power: “We hope the US will respect facts and international consensus, and focus on domestic fight. China will work with international community to stand firmly against WHO and supports its leading role in this global fight.” A few days later, Trump announced that the US would stop payments to WHO for the time being, which in turn prompted the Chinese government to donate another 30 million dollars to the organization.

The International Crisis Group attests to an increase in tensions between the major powers, which complicates cooperation in global crisis management. Herein, health will be a new field in which the US and China will compete for supremacy. Against this backdrop, the Chinese government’s charm offensive towards other states will be intensified, while also the US government announced its intention to support private healthcare, particularly on the African continent. As during the Cold War, part of the battle between the great powers will be fought on the African continent—albeit so far only on a symbolic and economic level.

Political, Economic and Financial Sovereignty for Africa

The current situation once again reveals the structurally unequal position of the continent, which is being courted diplomatically and with “health offensives” from various sides—among other things with the aim of steering United Nations votes in the desired directions. Instead of becoming the plaything of interests, however, the potential for new choices for African governments also arises: intensifying South-South cooperation in particular increases the political power to act vis-à-vis Western actors.

At the economic level, in light of the global recession there is even less reason than usual to hope for a solidarity-based response from the economically strong states. As producers of raw materials that are processed elsewhere in the world, African countries are particularly hard hit by reduced production. But instead of supposed “solidarity” in the form of “development aid”, for example, what is needed is a consistent turning away from the previous economic structures that cement inequality. This implies not only, but also a cut in debt—for the high level of debt of African states is directly related to their political independence for which they had to pay dearly not least to the former colonial powers. The aim is therefore the political, economic and financial sovereignty of African states.

On a smaller scale, as Ghana’s President Nana Akufo-Addo puts it, this means more processing and diversified production chains on site, including in the pharmaceutical sector. On a larger scale, it means—as around 100 African intellectuals are calling for—strengthening pan-Africanism and making context-based, people-oriented policies: “The dearth of political will and the extractive practices of external actors can no longer be used as excuse for inaction. We no longer have a choice: we need a radical change in direction. Now is the time!”

Appreciation goes to Franza Drechsel for her support.


[1] In 2019 the Zambian government invested 8.8 percent of its revenue in the health sector—and had to spend almost three times that amount on debt service. In Ghana, 28.3 percent of government revenues went into debt service in the same year, in Angola as much as 42.6 percent. This compares with 10.8 percent and 6.4 percent for the health sector respectively.