ONE BELT, ONE ROAD
China and Africa Ties
The Belt and Road Initiative (BRI) is advocated as China’s flagship foreign policy initiative. Comprised of two routes: The Silk Road Economic Belt and the 21st Century Maritime Silk Road, the initiative is considered by President Xi Jinping as the “Project of the Century”. The ambitious program is expected to deploy trillions of dollars on necessary infrastructure construction and economic development in at least 64 emerging Asian, Middle Eastern, and African countries where western investors have failed to tread.
In conjunction with the initiative, and to serve as a funding arm for their operations, China also launched the Asian Infrastructure Investment Bank (AIIB) in 2013; the same year the BRI was first mentioned. Intended to supplement the current International Financial Institution (IFI) system rather than compete with it, this Multilateral Development Bank (MDBs) focuses mostly on infrastructure development. In truth, with the latest estimates by Asian Development Bank (ADB) revealing that USD 22.6 trillion will be needed by 2030 just for the (re)construction of Asian infrastructure, the AIIB could not come at a better time. The existing structure of international order does not meet the market demand; despite a capital base of USD 223 billion and 160 billion for World Bank (WB) and ADB, respectively. Though highly active in the region, there is a palatable lack of faith exhibited by the ADB, WB, and European Bank for Reconstruction and Development (EBRD) in Asia. The existing MDBs shy away from long-term, expensive infrastructure development projects deemed too risky and exorbitant for a single government or private entity to handle. In any case, the importance of an a new player in the MDB sphere did not escape the international market: by the end of 2017, AIIB grew from 57 to 84 approved members worldwide.
The BRI is essentially China’s roadmap for developing trade ties around the world by expanding infrastructure projects in key locations and opening doors to untapped markets. It consists of a land route from Beijing to the Netherlands, i.e.: “the belt”, and a sea route from Quanzhou to both Antwerp and Australia, i.e.: “the road”. The roadmap was rolled out in stages: the concept of “Silk Road Economic Belt” was first introduced by President Xi in September 2013 in Kazakhstan, while the “21st Century Maritime Silk Road” model was revealed during a speech addressed to the Indonesian Parliament the following month (October 2013). Finally, the two projects were formally endorsed at the third Plenary Session of Central Committee of the Chinese Communist Party in November 2013.
Ultimately, the architecture of the initiative in its entirety was unveiled to the international stage by Vice Premier Zhang Gaoli during his keynote speech at the 2015 Asia-Europe Meeting (ASEM) held in Chongqing. His excellency stressed the importance of Eurasian connectivity and presented the concept of “economic corridors” which are the routes along which the BRI will be developing. He introduced the unified vision of jointly building the “Silk Road Economic Belt” and the “21st-Century Maritime Silk Road”, and provided the audience with the general background, principles and framework for BRI. According to Premier Zhang, the BRI’s five main priorities rely on policy coordination, facilities connectivity, unimpeded trade, financial integration, and people-to-people bonds. The scope and ambition of this vision became clearer by late 2017 with the acceptance of 27 new members to the AIIB, the approval of 15 new projects (across several sectors), and the expansion of AIIB’s investments by 150% to reach USD 4.22 Billion.
The planned BRI projects largely focus on infrastructure and economic development, they are seen as a bold move towards globalization and an attempt by China to benefit not only itself, but also its neighbors and beyond. With talks of integrating Latin America & the Caribbean into the equation, the BRI is expected to expand to 65 percent of the world’s population, cover 60 percent of global land-based trade, 30 percent of the maritime trade, and 40 percent of its GDP. With a non-political agenda, the impressive development plan has a tangible promise to help a lot of people in a lot of countries, with cooperation priorities reinforcing that it is potentially a well-rounded model for inclusive development. And by constantly emphasizing on BRI as initiative not strategy, it signals China’s intent to work within the existing international order and the country’s active avoidance of “Thucydides Trap” whereby the dethroning of one great power by another is a certain path to war. A matter further stressed by Chinese Foreign Minister Wang Yi when he insisted that “China is not building a rival system. On the contrary, [the country is] seeking to play a bigger role in the existing international order and system.”
As a geographically-targeted development initiative, the Belt and Road follows the concept of “economic corridors”; an economic model based on creating paths that facilitate the movement of people and goods, and consequently stimulating economic growth. Corridors can be either terrestrial or maritime; national, regional, or even international. The concept gained popularity in the late twentieth century when a direct correlation was found between improved infrastructure (roads, energy, telecommunication) and economic development. Most planned BRI spending will be concentrated along the following corridors: China-Mongolia-Russia; New Eurasian Land Bridge; China Central and West Asia; China-Indochina Peninsula; China-Pakistan; and China-Myanmar-Bangladesh-India. Indeed, for a successful corridor, experts argue that proponents will need three main components: industries (for the creation of goods), transportation (for the movement of goods), and cities (for the trade of goods).
The BRI is being implemented through large Government to Government (G2G) infrastructure projects with initial financing support from the AIIB. Private companies are also being actively encouraged to invest along the Belt and Road. A matter that was addressed during the recent 2018 Beijing Summit and the Seventh Ministerial Conference of the Forum on China-Africa Cooperation (FOCAC) which was held in Beijing from 2 to 4 September 2018. The Ministerial conference was attended by a slew of Heads of State and Government, Heads of Delegation, the Chairperson of the African Union Commission, Ministers of Foreign Affairs and Ministers in charge of economic cooperation from China and 53 African countries. A strong indication of the importance of China on the international stage, a goal the state has been working calmly towards as famously stated by former Paramount Leader Deng Xiaoping “Observe calmly; secure our position; cope with affairs calmly; hide our capacities and bide our time; be good at maintaining a low profile; and never claim leadership.”
During the summit, President Xi Jinping pledged an additional USD 60 billion (on top of the original USD 60 billion pledged three years before in South Africa) and promised tangible projects with environmental sustainability considerations by tackling climate change, desertification and wildlife protection. Addressing present leaders, President Xi Jinping revealed that the new pledge will include aids, extend interest-free loans, make loans reasonably more concessional, export credit lines, create new financing models, improve the terms and conditions of the credit, and create special funds. In fact, USD 10 billion will be solely dedicated to China-Africa development, allowing Chinese companies to confidently invest in Africa in the next three years, by constructing and developing a number of economic and trade cooperation zones in Africa. Proving that BRI’s impact would not be as effective if not for its “soft power” element as well, i.e.: the People-to-People bonds. Thus the new financial pledge falls in line with the initiative’s goals of providing support in forging alliance of corporate social responsibilities and support Africa's efforts to harmonize policies, laws and regulations pertaining to private sector investment in regional projects.
The historical 2018 Beijing summit emphasized the important role of Africa, as a historical and natural extension of the Belt and Road. The cooperation between China and Africa under the Belt and Road Initiative is expected to generate more resources and means, expand the market and space for African development, and broaden its development prospects. The summit highlighted the need for African leaders to form a strong synergy between the Belt and Road Initiative, the 2030 Agenda for Sustainable Development of the United Nations, Agenda 2063 of the African Union (AU), as well as the development strategies of African countries. The closer connectivity in policy, infrastructure, trade, finance and people-to-people ties, strengthened industrial capacity cooperation under the BRI, and greater cooperation in the planning of African infrastructure and industrial development will lend new impetus to the win-win cooperation and common development between China and Africa.
The Belt and Road will support China-Africa cooperation and industrial capacity cooperation, by pumping resources into infrastructure construction, development of energy and resources, and by supporting existing supply chains (or creating new ones) through investments in agriculture and manufacturing, and the comprehensive development of the whole industrial chain of Africa. Interestingly, unlike typical multilateral financial institutions, the greater part of the projects financed by AIIB under the BRI umbrella will focus on much needed small-scale investments like electricity grids, gas storage and flood management. While a few significant developments like a proposed high-speed rail link between Dhaka and Chittagong in Bangladesh are also proposed. However, it is exactly this type of low-key projects that pave the way and attract other multilateral lenders.
In May 2017, the Chinese government held the Belt and Road Forum for International Cooperation (BRFIC), in Beijing. Representatives from more than 130 countries were in attendance of which 57 were at Head of State or Ministerial level as well as 70 international organizations. The objectives of the forum were establishing action plans for implementing planned BRI projects across several sectors. It was also intended as an opportunity to assemble world leaders and international organization to reach agreement on several fronts including (a) financial cooperation mechanisms, (b) science, technology and environmental protection cooperation; and (c) enhanced exchanges and training of talent. As a matter of fact, 68 states and international organizations signed agreements furthering BRI cooperation. The forum ended with officially inducting the BRI into the Chinese constitution.
So what does this mean for Africa? The future seems to be promising: Simply put, China is willing to coordinate development strategies with African states, put into play each other’s advantages and potentials in order to achieve common progress and development and benefit on both sides. This goal will be accomplished through promotion of international production capacity cooperation and enhancing cooperation in the fields of infrastructure construction, trade and investment facilitation, new energy, agriculture and finance. As one of its main goals, the BRI will provide facility connectivity, i.e.: investing in infrastructure that promote connectivity. As of this date, China has funded the railway system of at least five African countries (Kenya, Ethiopia, Angola, Djibouti, and Nigeria). Additionally, China's volume of trade with Africa was recorded at USD10 billion in 2000, hit USD 300 billion in 2015, and expected to reach USD 400 billion by 2020. Taken as a continent, Africa is China’s largest export market, this can be expected to increase substantially with the proposed Free Trade Agreement. With regards to financial integration, African countries are founding members of the AIIB; which is offering currency swap agreements to facilitate financing regional projects in Chinese Renminbi. China is helming the most developed cooperation priority in Africa deepening interdependence between both sides by meeting economic and strategic interests for both sides and leading the way to a future with a much deeper Chinese footprint in Africa.