How China is reframing its Africa strategy

We think the impact of the stimulus announced by China on the prices of commodities exported by Africa will be limited. What matters more is China’s changing long-term strategy on the continent.

What you will learn:

• China is shifting its focus in Africa away from a mineral extraction-for-export model towards investment in industry, local value chains, and processing capacities. Coupled with a growing focus on its ‘green transition’ strategy, this presents opportunities for African economies with natural reserves of the minerals and metals these industries need.
• Still bearing the scars of recent debt restructurings in Africa, China is looking to limit its direct exposure to African government balance sheets while still expanding its influence on the continent. Instead, it increasingly favours private investment by Chinese companies in Africa and panda bond issuances by African sovereigns and financial institutions.
• China’s shifting financing strategy may change the nature of balance sheet risks affecting Africa, transferring risks away from the public sector to private sector balance sheets.
• We don’t think bilateral funding taps are completely shut for Africa, amid increasing geopolitical competition on the continent between the US and China, plus the entrance of new potential partners such as the Gulf States, India, and Turkey.