WEBVTT - Why China Is Winning Over Africa 0:00:02.520 --> 0:00:07.360 Bloomberg Audio Studios, podcasts, radio news. 0:00:08.960 --> 0:00:11.280 World leaders a meeting at the UN in New York. 0:00:11.600 --> 0:00:15.400 But in the diplomacy battle, is China making inroads in Africa? 0:00:15.520 --> 0:00:22.600 We Chinese believe the African economy has a very bad future. 0:00:23.120 --> 0:00:28.440 We not regard Africa just as a destination for charity. 0:00:29.040 --> 0:00:35.720 We want to be economic partner for all African countries 0:00:35.840 --> 0:00:39.680 and to grow with you. That also means we can 0:00:39.800 --> 0:00:44.000 benefit from the partnership with Africa. 0:00:44.120 --> 0:00:47.720 As Washington steps back, Beijing is stepping in. But what 0:00:47.800 --> 0:00:49.680 are African nations getting from the deal? 0:00:50.120 --> 0:00:54.760 If we are to realize the sustainable future for our 0:00:54.840 --> 0:01:00.240 beloved continent, Africa and China, and indeed the entire will, 0:01:01.440 --> 0:01:07.959 we must acknowledge the reality of the interdependence amongst our 0:01:08.360 --> 0:01:09.880 community of nations. 0:01:10.240 --> 0:01:13.080 On today's episode of The Next Africa Podcast, we'll look 0:01:13.080 --> 0:01:16.160 at China's relationship with Africa and what a change in 0:01:16.200 --> 0:01:22.280 global order means for African investment. I'm t you Adabayo, 0:01:22.400 --> 0:01:25.360 and this is the Next Africa Podcast, bringing you one 0:01:25.400 --> 0:01:28.120 story each week from the continent driving the future of 0:01:28.160 --> 0:01:33.280 global growth with the context only Bloomberg can provide. While 0:01:33.319 --> 0:01:36.320 Jennifer is away at the UN General Assembly. I'm looking 0:01:36.319 --> 0:01:38.840 after the show this week and joining me to discuss 0:01:38.959 --> 0:01:42.800 China's growing interest in Africa is our Asia columnist Krishima 0:01:42.800 --> 0:01:46.720 of Aswani and our Africa economist Ivon Mango. Thanks both 0:01:46.760 --> 0:01:49.080 of you for joining me. Krishman, let's start with you. 0:01:49.080 --> 0:01:52.280 You've got a brilliant column up on the Bloomberg website 0:01:52.280 --> 0:01:55.160 at the moment where you've said that China's popularity in 0:01:55.200 --> 0:01:58.480 Africa is growing and that's kind of in stark contrast 0:01:58.520 --> 0:01:59.360 to the rest of the world. 0:01:59.440 --> 0:02:00.880 So why do you think that is? 0:02:02.440 --> 0:02:04.720 Yeah, Tia, you know, as part of my research into 0:02:04.760 --> 0:02:08.520 this topic, it was really interesting to look at the 0:02:08.760 --> 0:02:11.560 data that was coming out of this survey that was conducted. 0:02:11.960 --> 0:02:15.200 It's a series of surveys polls over a number of 0:02:15.280 --> 0:02:19.400 years that the Asia Society gathered and collated, and what 0:02:19.440 --> 0:02:22.519 it showed is that in parts of Africa, public opinion 0:02:22.600 --> 0:02:25.520 on China is more favorable than in many other parts 0:02:25.600 --> 0:02:28.080 of the world. And what was interesting to me about 0:02:28.080 --> 0:02:31.720 that it's not just like the elites or government officials. 0:02:31.880 --> 0:02:35.880 This popularity is actually across the board, shared among citizens 0:02:36.000 --> 0:02:39.760 and in sub Saharan Africa, in fact, the positive views 0:02:39.800 --> 0:02:44.480 of China outnumbered negatives roughly three to one, and a 0:02:44.520 --> 0:02:47.360 lot of that is because of the economic ties between 0:02:47.800 --> 0:02:50.400 China and the continent, and particularly when it comes to 0:02:50.440 --> 0:02:55.240 sort of concrete, tangible results like roads being built, highways, ports, 0:02:55.440 --> 0:02:58.919 but also the sort of softer side of that economic diplomacy, 0:02:59.320 --> 0:03:03.280 for instance, cultural exchanges and scholarships. China has been investing 0:03:03.320 --> 0:03:07.119 massively in all of that. But underpinning that desire by 0:03:07.200 --> 0:03:11.880 Beijing to build these closer relationships with Africa is obviously 0:03:12.320 --> 0:03:15.720 the massive amounts of critical minerals that are in Africa. 0:03:15.800 --> 0:03:19.280 Something like thirty percent of the world's critical minerals are there, 0:03:19.560 --> 0:03:22.800 and it's access to that that China is really after, 0:03:23.280 --> 0:03:26.720 and this kind of popularity really helps Beijing pave the 0:03:26.760 --> 0:03:29.359 way in order for it to have more of an 0:03:29.360 --> 0:03:32.600 influence in the continent and get more access to these minerals. 0:03:33.680 --> 0:03:37.160 Yeah, they're after minerals when it comes down to it, 0:03:37.200 --> 0:03:41.040 but tell me about what the relationship looks like in 0:03:41.120 --> 0:03:44.080 real time, maybe some of the sort of soft power 0:03:44.200 --> 0:03:46.840 elements to it. We mentioned the popularity. I've been reading 0:03:46.880 --> 0:03:51.280 recently that Nigeria has actually made steps to add Mandarin 0:03:51.400 --> 0:03:54.120 to the secondary school curriculum. Is that the sort of 0:03:54.200 --> 0:03:56.000 thing we're going to see more and more of as 0:03:56.040 --> 0:03:58.120 their popularity grows within the region. 0:03:58.480 --> 0:04:00.880 Yes, absolutely, and I think think you know, there's two 0:04:00.920 --> 0:04:04.680 reasons for that. One. It's not just simply about adding 0:04:04.880 --> 0:04:07.800 a language to the curriculum for young students to learn 0:04:07.840 --> 0:04:10.400 and to be able to sort of, you know, communicate 0:04:10.520 --> 0:04:13.680 in a business language that is becoming increasingly important around 0:04:13.720 --> 0:04:16.400 the world. It's also a reflection of the kinds of 0:04:16.440 --> 0:04:21.000 investments that China has made in Africa, particularly when it 0:04:21.040 --> 0:04:24.920 comes to infrastructure, but not just that in the mineral spaces. 0:04:24.960 --> 0:04:28.200 I was saying, across the continent, you've got newer and 0:04:28.240 --> 0:04:31.440 newer investments coming in. And I think what this shows 0:04:31.520 --> 0:04:34.600 when it comes to education is that it begins at 0:04:34.600 --> 0:04:38.400 the very sort of you know, early levels of that relationship. 0:04:38.839 --> 0:04:41.839 And what I've noticed in my research for this column 0:04:41.880 --> 0:04:46.239 in particular, it's not just about economic diplomacy. It's also 0:04:46.320 --> 0:04:50.360 about creating a sort of cultural legacy or you know, 0:04:50.400 --> 0:04:54.000 a new generation of leaders in fact, who are becoming 0:04:54.120 --> 0:04:57.919 more susceptible to the way that the Chinese economy is run. 0:04:57.960 --> 0:05:01.239 And it's a very alternative vision that is on offer 0:05:01.320 --> 0:05:04.240 here than from what has been offered by the West. 0:05:04.279 --> 0:05:07.000 And I think it's a really appealing vision, this idea 0:05:07.080 --> 0:05:09.760 that an economy can grow under what is effectively an 0:05:09.800 --> 0:05:14.000 authoritarian state, and that's you know, in some respects, a 0:05:14.040 --> 0:05:17.479 country that does not dole out massive amounts of sort 0:05:17.480 --> 0:05:20.880 of human rights lectures, but is willing to invest a 0:05:20.920 --> 0:05:24.520 lot in the country in terms of you know, actual money. 0:05:24.640 --> 0:05:27.400 I think is very appealing to a lot of leaders 0:05:27.440 --> 0:05:28.400 as well as people. 0:05:29.120 --> 0:05:32.080 Yeah, just on that point about cultural legacy, you know, 0:05:32.160 --> 0:05:37.400 because of history, it's something particularly sensitive on the African continent. 0:05:38.240 --> 0:05:41.240 Is there any pushback We've mentioned the popularity, but is 0:05:41.240 --> 0:05:44.840 there any pushback on this growing sense of presence that 0:05:45.000 --> 0:05:46.919 China is seeming to gain in Africa. 0:05:47.839 --> 0:05:50.359 I think there is pushback, and I think it's legitimate 0:05:50.400 --> 0:05:53.920 and I think it's sensible because along with this investment 0:05:54.080 --> 0:05:58.240 comes the concerns around debt diplomacy. You know, You've seen 0:05:58.279 --> 0:06:00.599 this in other parts of the world before, where China's 0:06:00.600 --> 0:06:03.920 Belt and Road initiative has made huge for rays places 0:06:03.960 --> 0:06:06.520 like Sri Lanka and Bangladesh, for instance, where there have 0:06:06.600 --> 0:06:11.479 been real concerns, genuine concerns about going into business with China. Now, 0:06:11.600 --> 0:06:13.880 the US has in the past talked about this and 0:06:13.920 --> 0:06:17.440 consistently waives the specter that if you end up doing 0:06:17.480 --> 0:06:20.680 a deal with China, the terms are not very good 0:06:20.760 --> 0:06:23.400 for you. And I think that's something that African nations 0:06:23.440 --> 0:06:26.000 need to look at really carefully. It shouldn't just be 0:06:26.080 --> 0:06:28.640 a case of where you have investment coming in and 0:06:28.640 --> 0:06:31.240 then Chinese workers come in to build that railway, so 0:06:31.279 --> 0:06:34.039 there's no trickle down effect or transfer of knowledge and 0:06:34.080 --> 0:06:37.600 transfer of skills, and instead what ends up happening as 0:06:37.640 --> 0:06:40.440 has been the case that's been documented by the IMF 0:06:40.440 --> 0:06:43.200 and the World Bank, of a number of African countries 0:06:43.560 --> 0:06:47.320 being in debt to China under unfavorable terms and conditions. 0:06:47.680 --> 0:06:51.960 That is a form of sort of economic colonialism, and 0:06:52.040 --> 0:06:54.960 I think that bodes really badly for the continent if 0:06:54.960 --> 0:06:57.760 that's the kind of relationship that continues in the future. 0:06:58.760 --> 0:07:02.320 Interesting you and here Yvon talk to me about the numbers. 0:07:02.520 --> 0:07:05.080 How big is China's investment in Africa. 0:07:05.200 --> 0:07:09.040 So, China's investment in Africa over the past say, fifteen 0:07:09.080 --> 0:07:12.760 years has been around eight billion dollars per annum. We 0:07:12.880 --> 0:07:18.120 saw an exceptional spike around twenty twelve of around fifteen billion, 0:07:18.480 --> 0:07:21.960 but generally it's been around the five to eight billion 0:07:22.040 --> 0:07:25.720 mark over the past say five years. What's been interesting 0:07:26.040 --> 0:07:29.400 is the sectors that FDI is going into, and that's 0:07:29.680 --> 0:07:32.480 what you find out. It dominates in the extractive industry, 0:07:32.520 --> 0:07:36.040 so it's mainly the extraction of crude oil gas, but 0:07:36.160 --> 0:07:39.800 also minerals. You're seeing an increasing focus of course in 0:07:39.880 --> 0:07:44.360 critical minerals, partaking countries like Zambia which produces copper, in 0:07:44.400 --> 0:07:47.560 the case of the Democratic Republic of Congo that produces 0:07:47.640 --> 0:07:52.320 cobalt and Barbwie for instance, that produces lithium. About half 0:07:52.400 --> 0:07:56.400 of that FDI is going into commodities. On minerals, only 0:07:56.400 --> 0:08:01.280 about twenty five percent ends up in low value manufacturing, 0:08:01.800 --> 0:08:04.440 and that's something I think Africa would like to see shift. 0:08:04.480 --> 0:08:08.080 That'd like to see more of that funding, including the 0:08:08.240 --> 0:08:12.480 debt that comes from China. When the China Africa Summit 0:08:12.560 --> 0:08:15.880 happened about a year ago in Beijing, one of the 0:08:16.000 --> 0:08:19.800 concerns was that China's trade surplus with Africa is growing, 0:08:20.160 --> 0:08:23.400 so basically that you're seeing the exports to the continent 0:08:23.640 --> 0:08:28.680 increase relative to what China is importing from Africa. So 0:08:29.160 --> 0:08:31.400 a shift in that or at least a reduction in 0:08:31.440 --> 0:08:34.600 that trade surplus is something that Africa is seeking to 0:08:34.640 --> 0:08:37.120 do and they're hoping that China can help them do 0:08:37.200 --> 0:08:41.200 that by investing more in the manufacturing sector so that 0:08:41.280 --> 0:08:45.000 Africa can also produce manufacturing products that it can sult 0:08:45.080 --> 0:08:48.040 to China, Asia and other markets. 0:08:48.559 --> 0:08:51.480 Okay, stay with me, krieshman Ivan. When we come back, 0:08:51.520 --> 0:08:53.800 we'll have a look at what the impact of the 0:08:53.920 --> 0:08:57.119 US tariffs could have on China's relationship with Africa. 0:08:57.280 --> 0:09:03.520 We'll be right back. Welcome back. Today. 0:09:03.520 --> 0:09:06.960 We're talking about China's growing popularity in Africa and how 0:09:07.040 --> 0:09:10.120 the relationship is growing at a time when Washington is 0:09:10.160 --> 0:09:13.679 stepping back. Karishma of Veswani and Ivon Mango are still 0:09:13.679 --> 0:09:16.920 with me. Before the break, we talked about Chinese investment, 0:09:17.280 --> 0:09:20.679 but China also sees Africa as a customer base. Ivon 0:09:20.960 --> 0:09:22.959 what is China exporting to Africa. 0:09:23.280 --> 0:09:27.880 It's mainly manufactured goods that's coming low value added manufactured 0:09:27.880 --> 0:09:31.560 goods that are of low cost compared to those from 0:09:31.559 --> 0:09:35.160 other regions. That's what we're seeing coming into the continent 0:09:35.360 --> 0:09:38.800 at very competitive prices, which is probably another reason why 0:09:39.080 --> 0:09:43.560 African countries are struggling to break into the manufacturing industry. 0:09:43.760 --> 0:09:46.880 Let's talk about tariffs here. Have they made it harder 0:09:47.200 --> 0:09:50.080 for China to export to the US. Is that having 0:09:50.080 --> 0:09:52.160 an impact on the amount of goods that are being 0:09:52.200 --> 0:09:52.959 sent to Africa? 0:09:53.480 --> 0:09:55.960 In terms of the response or the reaction of African 0:09:56.000 --> 0:09:58.560 countries to the tariffs, what you're seeing is that countries 0:09:58.600 --> 0:10:01.679 that have been hit hard by these US tariffs are 0:10:01.720 --> 0:10:05.280 seeking alternative markets for their products. South Africa has been 0:10:05.640 --> 0:10:09.760 sending delegations to Asia, in particular the Asian countries, seeking 0:10:09.800 --> 0:10:13.080 alternative markets. Of course, this is not going to happen overnight. 0:10:13.360 --> 0:10:17.840 It takes months, six month, years to establish new trade relationships. 0:10:18.360 --> 0:10:20.800 That will take time in terms of achieving and I 0:10:20.800 --> 0:10:23.080 guess China is also one of the markets they are 0:10:23.080 --> 0:10:26.440 looking at. But also keep in mind the US is 0:10:26.440 --> 0:10:30.200 a significant global consumer of imports. That is, it is 0:10:30.360 --> 0:10:33.400 South Africa's second biggest trade partner, So trying to find 0:10:33.480 --> 0:10:36.880 markets that can take up the share of exports from 0:10:36.880 --> 0:10:39.840 South Africa that we're being consumed by the US will 0:10:39.880 --> 0:10:40.400 take time. 0:10:40.760 --> 0:10:41.280 I'm interested. 0:10:41.320 --> 0:10:43.400 We've been talking about some of the countries that the 0:10:43.440 --> 0:10:48.559 hardest hit by tariffs, like South Africa is China then 0:10:48.840 --> 0:10:52.679 a winner of this tariff situation. Does it put some 0:10:52.840 --> 0:10:56.000 African countries that are hard hits in the position that 0:10:56.000 --> 0:10:59.520 they want in terms of looking to diversify into other markets, 0:10:59.559 --> 0:11:00.480 which could be China. 0:11:00.559 --> 0:11:02.319 Has this helped them. 0:11:02.720 --> 0:11:05.960 The two answers to that question. So the first one, yes, 0:11:06.160 --> 0:11:08.880 it helps China in that not just Africa, but I 0:11:08.880 --> 0:11:12.199 guess the rest of the world is now seeking alternative 0:11:12.559 --> 0:11:16.839 trade partners given the more inward US policies. So it 0:11:16.880 --> 0:11:21.280 does imply that countries globally, including from Africa, are more 0:11:21.280 --> 0:11:26.840 receptive to exploring trade relationships with other countries, including China. 0:11:27.280 --> 0:11:30.720 That's the upside and that's what we expect to happen. 0:11:31.160 --> 0:11:36.040 Chrishma, it seems like this relationship between Africa and China 0:11:36.200 --> 0:11:38.119 has ramped up recently. 0:11:39.040 --> 0:11:39.880 Is that true? 0:11:40.480 --> 0:11:43.719 And how does Africa see its relationship with China over 0:11:43.720 --> 0:11:44.360 the long term? 0:11:44.440 --> 0:11:44.600 Then? 0:11:44.679 --> 0:11:46.720 Is it likely to be a priority. 0:11:47.080 --> 0:11:49.000 I think it would be fair to say that it's 0:11:49.120 --> 0:11:54.080 ramped up recently because of the economic linkages and how 0:11:54.120 --> 0:11:59.000 attractive Africa's critical minerals have become to China in this 0:11:59.200 --> 0:12:02.720 race against the United States. You know, these minerals are 0:12:02.760 --> 0:12:06.400 really important for future industries, and I think that is 0:12:06.440 --> 0:12:09.960 one of the reasons why Beijing has been so keen 0:12:10.200 --> 0:12:14.360 to develop this relationship further with Africa. But I think 0:12:14.400 --> 0:12:17.600 it's also important to remember that it goes back a 0:12:17.640 --> 0:12:21.520 long way. In fact, you know, Chinas supported several of 0:12:21.559 --> 0:12:25.680 the African liberation movements during the Cold War, and again 0:12:25.960 --> 0:12:28.040 for similar reasons in the sense that it was partly 0:12:28.080 --> 0:12:31.840 to diminish the West's influence on the continent. And it's 0:12:31.920 --> 0:12:35.000 also hugely important for China to have these votes at 0:12:35.040 --> 0:12:38.439 the United Nations countries that support it and its position 0:12:38.960 --> 0:12:42.199 on things like Taiwan, for instance, and I think it 0:12:42.240 --> 0:12:46.280 sees Africa as a really reliable partner in that situation. 0:12:46.920 --> 0:12:50.040 Eswatini is the only African nation that actually has diplomatic 0:12:50.080 --> 0:12:53.559 relations with Taiwan, which of course Beijing claims as its 0:12:53.559 --> 0:12:57.120 own territory, and Sijinping Presidents Sigin Ping has talked about 0:12:57.160 --> 0:13:01.439 unification with Taiwan, either through peaceful means or by force. 0:13:01.840 --> 0:13:07.000 So having allies in Africa that can effectively become proxies 0:13:07.080 --> 0:13:11.040 for China's position at the United Nations is a hugely 0:13:11.360 --> 0:13:15.000 important diplomatic aspect of this relationship. In fact, I don't 0:13:15.000 --> 0:13:17.160 know how many people listening know this, but in nineteen 0:13:17.240 --> 0:13:20.160 seventy one it was African votes at the United Nations 0:13:20.440 --> 0:13:24.560 that helped Beijing displace Taiwan and claim China's seat on 0:13:24.600 --> 0:13:28.120 the Security Council. So I think, yes, it's true that 0:13:28.400 --> 0:13:32.720 the ties between the content and China have significantly upgraded, 0:13:32.760 --> 0:13:34.880 as we've heard from Yvonne, in terms of the actual 0:13:34.880 --> 0:13:37.199 investments that have gone in in the last few years. 0:13:37.520 --> 0:13:40.280 But this goes back a long way, and I think 0:13:40.360 --> 0:13:43.559 that's something people forget from time to time, that this 0:13:43.640 --> 0:13:47.160 is a relationship sometimes that it's based on ideology as well, 0:13:47.559 --> 0:13:49.720 and I think that's why it's stood the test of 0:13:49.760 --> 0:13:52.240 time and being so fruitful for both sides. 0:13:52.480 --> 0:13:56.720 Wow, so perhaps some age old partnership being renewed for 0:13:56.800 --> 0:13:59.440 the modern age. You might say, Krishna and Levon, thank 0:13:59.440 --> 0:14:02.040 you for joining me both today. And you can read 0:14:02.120 --> 0:14:05.440 Karrishma's report on Bloomberg platforms. Now we'll put a link 0:14:05.480 --> 0:14:10.120 in the show notes. Here's some other stories from the 0:14:10.160 --> 0:14:13.840 region we've been following this week. The world's cocoa crunch 0:14:13.920 --> 0:14:17.079 is finally showing signs of a turnaround, as better harvest 0:14:17.120 --> 0:14:21.040 in South America and waning demand put supplies on track 0:14:21.120 --> 0:14:24.240 for a back to back surplus. The improvement will help 0:14:24.280 --> 0:14:28.880 replenish global inventories that had been depleted following consecutive poor 0:14:28.920 --> 0:14:33.720 harvest in West Africa, a major growing region, and Botswana's 0:14:33.760 --> 0:14:36.760 president aims to complete a deal to take a majority 0:14:36.800 --> 0:14:39.760 stake into Beers by the end of next month, even 0:14:39.760 --> 0:14:44.000 as his administration and other potential buyers continue negotiations with 0:14:44.080 --> 0:14:48.520 the diamond company's controlling shareholder. Anglo American, is looking to 0:14:48.600 --> 0:14:52.120 divest its eighty five percent stake into Beers, which mines 0:14:52.240 --> 0:14:55.160 most of its gems in the southern African nation, as 0:14:55.240 --> 0:14:58.680 part of a restructuring process that began sixteen months ago. 0:14:59.360 --> 0:15:02.520 You can follow so these stories across Bloomberg, including the 0:15:02.600 --> 0:15:05.320 Next African Newsletter. Will put a link to that in 0:15:05.360 --> 0:15:11.120 the show notes. This program was produced by Adrian Bradley. 0:15:11.720 --> 0:15:14.320 Don't forget to follow and review the show wherever you 0:15:14.400 --> 0:15:15.720 usually get your podcasts. 0:15:16.200 --> 0:15:18.240 I'm tia Adebayo. Thank you for listening.