The three-day Forum on China-Africa Cooperation (FOCAC) in Beijing concluded on Friday with pledges of more financial assistance to Africa, but China's struggling economy may make these pledges difficult to deliver on.
of South China Morning Post (South Carolina State University Press) Counted Announced during the forum was $50.6 billion in Chinese loans, aid programs and corporate investments for Africa over the next three years.
Chinese dictator Xi Jinping also pledged to open China's tightly controlled market to 33 African countries and said China would bring at least 30 “green energy” projects to Africa, creating one million jobs. Chinese infrastructure projects A long history Reserve the best jobs for managers and professionals imported from China.
Xi's promise came even as China's economy was entering a period of slowdown as reported by Bloomberg News. It is called A “dangerous new phase” of long-term deflation, falling wages and reduced consumer demand.
“The danger for China is that deflation could snowball as households, shaken by falling paychecks, cut spending or postpone purchases in anticipation of further declines. Corporate profits would suffer, curbing investment, leading to further pay cuts and layoffs, and pushing families and businesses into bankruptcy,” Bloomberg explained.
Overseas analysts have likened China's current situation to Japan's slump at the beginning of the 1990s' “lost decade,” and Chinese analysts are so worried that they are actually using the word “deflation,” a word normally banned by the Chinese Communist Party.
Escaping a deflationary spiral is typically thought to require significant government stimulus, which could significantly reduce the funds available to China to meet its commitments to Africa.
On the other hand, aid to Africa could increase demand for Chinese goods. Largest trading partner And Chinese industry is hungry for Africa's underdeveloped natural resources, including lithium and rare earths, which are essential for the green energy technologies China is promoting in Africa.
With rising tariffs and anti-dumping regulations making it harder for China to sell these green energy products to the West, Africa is perhaps China's best option for boosting export demand. With any luck, China may be able to spur enough demand from Africa to give its own economy a much-needed boost.
China New Models Smaller, more cautious lending to Africa may be the only way to develop its economies enough to repay the huge debts they already owe to Chinese banks.
For example, Kenyan President William Ruto said at the FOCAC summit that China has pledged to buy more agricultural products from the country and help develop its railways. Kenya already owes China more than $8 billion, and Ruto has been calling on the Chinese government for a debt restructuring for the past year.
Reuters attention Last week it reported that all of China's new financial assistance programs for Africa are being offered in yuan rather than dollars, in a “clear push towards further internationalisation” of China's currency.
Reuters also reported that Chinese dictator Xi Jinping appears to have backed away from a grand promise to buy $300 billion worth of goods from Africa in 2021. At the FOCAC summit, Xi said he would allow more market access for African imports, but did not commit to a specific purchase amount. In addition to China's economic slowdown, Xi's reason for backing away from the $300 billion pledge may be that many of Africa's agricultural exports do not meet Chinese health and safety standards.
