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China in Africa: New pledges and a new relationship?

China in Africa: New pledges and a new relationship?
Published 12 May 2014 

Chinese Premier Li Keqiang has wrapped up his eight day visit to Africa, his first visit as premier and his first foreign visit this year. Commentators (and African leaders) expect to see big announcements whenever a Chinese leader is in town.

So what has this trip revealed? Here are some of the big ones:

  • A pledge of US$10 billion in lines of credit.
  • A commitment to earmark half of its foreign aid budget to African countries.
  • An additional US$8 million in humanitarian aid for South Sudan.
  • US$10 million support for wildlife protection.
  • A raft of bilateral deals with Kenya, Ethiopia, Angola and Nigeria (there's a good list here).
  • A US$2 billion boost to the China-Africa Development Fund.

What do these pledges mean?

In 2011, 45% of China's approximately US$4.5 billion foreign aid budget went to African countries. This new commitment means China will be directing at least US$3.2 billion (of its current US$6.4 billion) budget in foreign aid each year to Africa. For comparison, the UK provides around US$2.7 billion, Japan US$1.8 billion, and America US$6.6 billion, according to the most recent OECD data. China is now not only a major trade partner and source of loans, but also one of the largest foreign aid providers to the continent.

In addition, the US$10 billion line of credit pledge takes the total amount due to be disbursed between 2013 and 2015 to US$30 billion. Whilst this isn't 'aid', it is certainly significant financing for development.

But before becoming all heady from these numbers, it is worth recalling that when it comes to Chinese development financing, not all is as it seems. Many pledges never materialise, projects stall, and many issues confront them along the way. WSJ has a good recent piece highlighting this.

China has said it wants to 'upgrade' the relationship and 'enter a new era'. It is adamant the relationship is not just about energy deals (it's right, it's not). Premier Li has outlined six areas that the relationship will now focus on: industry, finance, poverty reduction, ecological protection, people-to-people exchanges, and peace and security. It is good to see ecological protection on the list.

We're used to seeing grand statements and large numbers from China. We're also used to hearing about the problems in the China-Africa relationship. There is no doubt these new pledges have the potential to have a significant development impact for the countries involved. What that impact will be remains to be seen.

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