China Plunders Minerals from Africa As Trade Deficit Grows

China has become Africa's largest trading partner and creditor in recent years under the Belt and Road Initiative. Today, both are facing a global economic slowdown. Meanwhile, Beijing's economic focus on Africa, especially for the latter's raw minerals, has restarted full-scale in the post-COVID years. China's relentless hunt for critical minerals is driving its new initiatives inside Africa. Meanwhile, it also continues to maintain its old ones such as infrastructure construction.

Widening Trade Imbalances

Further, according to findings by Australia's Griffith Asia Institute, new Chinese investment in Africa increased by 114% in 2023. However, it remained heavily focused on minerals, coupled with Beijing's plans to revive its own flagging economy.

All efforts to boost other imports from Africa seem to be faltering. This has resulted in the continent's ballooning trade deficit with China. In fact, the value of Africa's exports to China has fallen by 7% and its trade deficit has widened by 46%. Carrying one of Africa's largest trade deficits with China, Kenya is fast becoming a critical case study in this context.

Official Narratives vs Economic Realities

Despite these hard data-based realities, China's official Xinhua News Agency still harps on how numerous construction companies from Hubei and Hunan provinces have ventured into Africa. Xinhua claims that these companies are undertaking diverse engineering projects, for instance, in Kenya. Some sectors it mentions are energy, transportation, municipal construction, housing, telecommunications, and metallurgy. Furthermore, there are other projects in agricultural technology, equipment manufacturing, and fish-processing infrastructure. But the trade exchanges with Africa are anything but "thriving" as Xinhua puts it.

*Kenya's President William Ruto. (©Kyodo)*

Beijing makes tall commitments worth billions of dollars for new construction projects. However, data also reveals a mercantile and extractive kind of Chinese strategy and approach towards Africa. According to the Global China Initiative at Boston University, ports built by Chinese companies, hydropower plants, and railways across the continent peaked in terms of annual lending worth $28.4 billion USD in 2016. These are financed mainly through sovereign loans.

Extractive Nature of Beijing's Investment

Notably, Chinese sovereign lending now is at its lowest level in two decades. It was once the main source of financing for Africa's infrastructure. This ominously indicates a heavily lop-sided equation favoring China — a situation wherein Beijing is plundering Africa's raw materials.

The Griffith Asia Institute further estimates China's total engagement in Africa in 2023 was $21.7 billion USD. That includes construction contracts and investment commitments. In other words, Africa remains of immense value to Beijing for its raw minerals, and energy sources, and as a strategic canvas. Besides, its infrastructure investments throughout Africa have far-reaching implications. This renders Africa as China's largest regional recipient.

In the past years, many Chinese-funded projects have proved highly unprofitable. Many African governments have struggled to repay loans. As a result, Chinese construction projects have fallen across Africa.

Moreover, it's not just in Africa. The trends involving Chinese infrastructure policy and its dangerous fallout are quite the same across the entire Global South. This has led to questions surrounding various projects' economic viability and safety.

Reputational Damage Control

China's Africa strategy in the past decade finds its foundation in the Belt and Road Initiative, whose deals are based on opaque agreements on multiple counts. Beijing aggressively pursued repayment of its debts from many African countries in the past. However, this approach created real problems for China's international standing and approach towards developing nations.

In its attempts to refurbish its tarnished image, Beijing seems to be in damage-control mode in Africa. It is seeking to reach reasonable financial settlements with African countries in debt distress, albeit without much success. Beijing's policymakers are pushing Chinese companies to take equity stakes and manage infrastructure projects they construct for foreign governments.

Strategic Implications

After all, China's infamous debt-trap diplomacy is not hidden anymore. Akin to other parts of the world, China's Africa policy reeks of being a debt trap. It is a deliberate strategy to loan unmanageable sums to African countries. This forcibly induces them into China's sphere of influence, which presses unfair commitments upon them.

The pattern of how China uses its economic leverage for achieving politico-strategic ends at a later stage has been well displayed across Asia, Africa, and Latin America. In fact, this has become a predictable pattern in China's toolkit. An added phenomenon to this strategy is the application of blunt coercion in the case of many lesser-developed and impoverished African economies.

China fully comprehends that Africa, geo-strategically and geo-economically is a key milestone for its global ambitions. It seeks to seize the opportune moment to further its objective of creating an alternative Sinosphere of influence, especially in the Global South.

Considering China's policy and approach, it is in Japan's strategic interest to gain greater traction and support from the Global South including many African countries.

Author: Dr Monika Chansoria

Learn more about Dr Chansoria and follow her column "All Politics is Global" on JAPAN Forward, and on X (formerly Twitter). The views expressed here are those of the author and do not reflect the views of any organization with which she is affiliated.