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Xi Jinping pledged $60 billion for Africa. Where will the money go?

- September 17, 2018
Chinese President Xi Jinping stands with African leaders during the Forum on China-Africa Cooperation in Beijing on Sept. 3. (AFP/Getty Images)

For the 53 African nations attending the annual Forum on China-Africa Cooperation (FOCAC) in Beijing, the welcome news was President Xi Jinping’s $60 billion pledge for new projects. FOCAC takes place every three years, offering a platform for China and African countries to coordinate cooperation mechanisms on development investments, cultural exchanges and military cooperation, among a wider range of topics. FOCAC 2018 marked the fourth time the Chinese government hosted the event in Beijing.

The $60 billion promise matched the pledge total from the previous FOCAC in 2015. But the distribution breakdown is different this time. Here’s what you need to know:

1. Beijing’s pledge will include fewer outright loans and grants.

In delivering the FOCAC 2018 summit opening remarks, Xi pledged $20 billion in new credit lines; $15 billion in foreign aid as grants, interest-free loans or concessional loans; $10 billion for a special fund for development financing; and $5 billion for a special fund for financing imports from Africa. The remaining $10 billion will come from Chinese companies, Xi announced.

While the overall pledged amount is the same as the 2015 Chinese package, there is a decline in the amount pledged as grants and loans. In 2015, China pledged $35 billion in interest-bearing loans and $5 billion in grants and interest-free loans; $5 billion for a special fund for development financing; $5 billion to the China-Africa Development Fund; $5 billion for the Special Loan for the Development of African Small and Medium Enterprises; and $10 billion for the China-Africa production capacity cooperation fund.

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Research shows that for three African countries — Djibouti, Congo and Zambia — Chinese loans are the most significant contributor to debt distress. In light of the Sri Lankan government handing over its port of Hambantota on a 99-year lease to China because of failure to pay its debts, fears of such a scenario happening in Africa were present at FOCAC 2018. The lower loan amounts announced this time are likely a result of such fears and a way to control the magnitude of loans in order to lower the risk of debt distress.

Despite China’s foreign aid to Africa rising to $15 billion in 2018 (the largest amount yet announced by China), the figure is still very marginal in the overall foreign aid figures to Africa. For comparison purposes, U.S. foreign aid disbursements to Africa in 2017 were almost equal to what China is offering over the course of the next three years combined.

2. Investment in human capital is rising rapidly.

One area of cooperation that has seen a dramatic increase since the previous FOCAC is China’s investments in human capital and professional training for Africans. Beijing announced higher targets for government-sponsored training opportunities for Africans in China. Xi announced FOCAC 2018’s goal of training 1,000 Africans, hosting 50,000 workshops (in areas as diverse as party politics, sports medicine, agriculture, etc.), awarding 50,000 government scholarships — a big increase from 30,000 in 2015 — and sponsoring 2,000 student exchanges.

According to a study by researchers at Michigan State University, China has already topped the United States and the United Kingdom as a destination for African students. The surge in the numbers of African students in Chinese universities is largely attributed to FOCAC scholarship pledges, and the trend is continuing. To encourage exchanges related to science, technology and entrepreneurship, FOCAC 2018 also launched the China-Africa Innovation Center. Details on location and programming have yet to be revealed.

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Vocational training programs and investments in human capital are central to China-Africa relations. Even if it is not always clear what the return on investment is regarding these programs, one thing is clear: They are increasing in number and expanding in scope. For example, the FOCAC 2018 Action Plan pledges training for defense and military personnel, anti-corruption officers, law-enforcement personnel, peacekeeping and police units, agriculture development and local Chinese language teachers.

Beijing uses these training programs to share technical knowledge and transfer expertise — and this effort is well-received by African officials and professionals who participate. Xi also announced plans to open an Institute for African Studies along with 10 Lu Ban workshops across Africa. (These are workshops designed to train youth in manual skills and crafts.)

3. How does the China-Africa Summit tie into broader Chinese goals?

Two African countries registered their first participation in FOCAC: Gambia and Burkina Faso. Both recently broke off diplomatic relations with Taiwan and normalized ties with China. This break with Taiwan is necessary to adhere to the “One China” policy, in which the People’s Republic of China is recognized as the only official representation of China. Countries that recognize Taiwan as an independent country are not eligible to receive Chinese investments and aid. In Africa, only Swaziland, also know as eSwatini, retains full diplomatic relations with Taiwan and was the only African country not represented at FOCAC 2018.

FOCAC 2018 also had a strong emphasis on security issues in West African countries, demonstrated in commitments to combating terrorism in the Sahel and fighting piracy off the Gulf of Guinea. Xi announced setting up a China-Africa Peace and Security Fund and launching 50 security assistance programs under the Belt and Road Initiative (BRI).

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The BRI is Xi’s flagship foreign policy initiative, aimed at promoting Chinese goods and services to other Asian countries, Africa and Europe — as well as developing China’s interior provinces. BRI was highly marketed during FOCAC 2018 as a platform to bring much-needed development. Securing logistics routes and protecting BRI projects are, in part, what motivates the Chinese government to be involved in security activities in Africa.

Some 18 years after its founding, FOCAC seems to be emerging as an umbrella institution containing several specialized forum initiatives. The Action Plan also announced the establishment of a China-Africa State Governance Forum, China-Africa Agriculture Cooperation Forum, China-Africa Private Sector Forum, China-Africa Developmental Financing Forum, China-Africa Law Enforcement and Security Forum, among others.

This is a new direction for FOCAC but suggests Beijing will use this forum to expand cultural diplomacy mixed with capacity-building programs — and keep the BRI goals at the core of China’s foreign policy. Specific implementation details, when they emerge, may give more insights on Beijing’s priorities — though it seems clear that Chinese investments in human capital and cultural exchanges in Africa are on the rise.

Lina Benabdallah (@LBenabdallah) is an assistant professor of politics and international affairs at Wake Forest University. Her research focuses on China-Africa relations. 

Winslow Robertson (@Winslow_R) is a doctoral candidate at IESE Business School and is also the founder and managing member of Cowries and Rice, a China-Africa strategic consultancy.