FOCAC 8 - Dakar pledges reinforcing China's Africa commitments
Dakar pledges reinforcing China’s Africa commitments
- China’s embrace of Africa – as framed, fortified and exemplified by FOCAC – has ushered in a period of exponential growth in bi-directional commerce. Just 21 years since the first FOCAC, China has emerged as Africa’s largest commercial partner. The fruits of China-Africa cooperation can be seen across the African continent. FOCAC 8 in fact reflects the further maturation and deepening of China-Africa ties.
- Indeed, the Dakar Action Plan serves as a policy anchor in the China-Africa corridor, and this one is more detailed and wide-reaching than any other preceding Action Plans, covering nine areas: medical and health; poverty reduction & agricultural development; trade promotion; investment promotion; digital innovation; green development; capacity building; cultural & people-to-people exchange; and peace and security.
- China’s pledge to increase the availability of Covid vaccines to one billion has grabbed the headlines, and it includes 400 million doses to be manufactured in Africa.
- To combat Africa’s rising trade deficits, President Xi statedly would want to triple the value of African exports to China – expected to be USD95bn in 2021 – before 2024. To help jumpstart the process, China has committed USD10 billion of export credits to support African traders seeking to access the China market, which is double the equivalent pledge made in 2018. Related to this, China has emphasized the importance of expanding agricultural exports to China and the creation of new “green lanes” that aim to reduce red tape. Also, China confirmed its desire for broader use of the CNY in trade and investment, directing funds for a cross-border RMB hub.
- Looking ahead, fundamentally, in terms of economic sustainability, African economies must diversify, and urgently so. Again, China has statedly committed to “encourage” Chinese businesses to invest USD10 billion in Africa over the next three years. (China committed the same amount in 2018 to this end). And, China proposes establishing an “expert group on economic cooperation” with the Secretariat of the African Continental Free Trade Area – a potential catalyst for boosting intra-Africa trade and manufacturing.
- For Africa, sustainability is first and foremost about alleviating poverty and redressing inequality in the name of social stability, generating income and wealth, modernising the mass skill base, expanding the production base of the economy, creating to material base to underwrite the achievement of national unity, delivering the emancipation of women and gender equality, empowering the youth, and doing so in a manner that is in harmony with the natural environment. Again, echoing the White paper released on 26 November, the overarching policy tilt has pivoted towards the greater promotion of cooperation with Africa in social fields. To this end, an array of initiatives has been announced.
- The key issue that was sidestepped was African debt sustainability but, unlike in the past, no targets were set for concessional lending, which had tended to spearhead the pledges in previous FOCACs. That said, already by FOCAC 7 it was apparent that China’s own domestic de-risking and rebalancing, coupled with the erosion of debt sustainability, had meant this pillar had lost its shine. Therefore, no commitment for grant and interest-free loans (in 2018, the pledge was USD15bn) and no commitment for development financing (in 2018, the number was USD10bn).