China has grabbed the opportunity and made its inroads into the African market, as its trade with Africa touched a record high last year of $261 billion while the US trade with Africa was recorded as low as $64 billion. Sensing the growing penetration of China’s influence in Africa, US, has pledged $55bn for the coming three years, for the modernization of technology in Africa. Furthermore, US invited 49 African countries to convene for a US-African leaders’ summit in Washington from 13-15 December, 2022.
The two global powers and business competitors, USA and China, are racing against each other to win Africa to their side as the continent offers opportunities alongside many risks that caused a drop in US trade with it. While China grabbed the opportunities and made its inroads into the African market during last couple of decades. Chinese trade with Africa touched a record high last year of $261 billion while the US trade with Africa recorded as low as $64 billion.
For the first time, a continent and not a country is being approached by the US with programs and plans to address their grievances and offer them a greater role on global level by seeking a seat for them in G20 and work with them in promoting democratic norms in the African continent where two other global powers, China and Russia, are already enjoying considerable influence. Sensing the growing penetration of this influence in Africa and a worrying possibility of a Chinese naval base on Africa’s Atlantic coast, the USA had invited 49 African countries to convene for a US-African leaders summit in Washington from 13-15 December, 2022.
This was the second time when the African leaders had gathered in the US after their initial visit during Barak Obama’s reign in 2014. With Donald Trump’s ascendance to power, the US followed a new policy that favored ‘America’s first”, which gave the African continent no significant important role. Once ignored by the US, the disappointed (disgruntled) Africans looked elsewhere and found the newly emerged world power, China, ready to fill the gap by investing heavily in building infrastructure, developing energy and other economic fields of Africa. Some other Asian countries like Turkey and UAE also followed suit and made their commercial ventures in the continent and grabbed some of the opportunities they found suitable for their products.
Africa is a continent that has a population of 1.4 billion people and an economy that is close to $2.7 trillion. Nearly 50% of its population has no access to electricity, and about 40% live below the poverty line. By 2050, the population of Africa is expected to be doubled , a market potential that would be most lucrative for the global market players. To explore these opportunities, there will be a need to develop an infrastructure and other facilities suitable for such ventures. Africa needs billions of dollars a year for building its roads, railways, dams and power. China, is already working on these projects and has also lent nearly $120 billion across the continent since the beginning of this century.
Finding the growing influence of Chinese investment in Africa detrimental to the US interests in the continent, the US has pledged $55bn for the coming three years that will be used for the modernization of internet networks, green energy, and training of health workers. For the development of technology, an additional $15bn has also been pledged to the private sector. This is more than half of what China has lent out to Africa during the last two decades that the US is going to spend within the next three years – a new challenge for China to counter with a strategy that can counter balance it.
Lately, the rivalry between China and US has touched new heights on geo-political and economic issues. A war-like situation was created in August this year when the US House Speaker, Nancy Pelosi, visited Taiwan in complete defiance of a looming threat from China for a military action if the visit did take place. The visit went uneventful with the exception that soon after her visit, China, fired missiles into waters off Taiwan that was later countered by visit of US warships to the Taiwan Strait and a $1.1bn arms sale deal for Taiwan that included 60 anti-ship missiles and 100 air-to-air missiles.
For US, the biggest geopolitical challenge is from China, and both countries are now taking actions that are driven by this perception. Recently, Joe Biden acted more like Donald Trump when he announced a trade policy disallowing Chinese companies to buy advanced chips and chip-making equipment without a license. A trade war is going on between both of these countries, which is reflected in the present US drive to call a US-Africa summit.
Statistically speaking, it is the European Union and not China that has the highest business clout in Africa, but as a close ally of US, it doesn’t pose any serious threat to the US interests. In 2019, trade between the EU and Africa had reached €280 billion ($297bn) while China’s trade volume was $192bn. In terms of direct investment, EU stands above China as well. From 2016 to 2018, the EU invested $59bn in Africa, followed by China $57bn, and the US $17bn. The alliance of the EU with the US is a disadvantage to China but not so for the US to enhance its presence in Africa. There are other political advantages available to US that it can use as leverage to pull Africa away from China.
During the US-Africa summit in Washington, the Chairperson of the African Union, Macky Sall, had voiced his concern over a US Congress bill that would impose sanctions on African countries over dealings with Russia. Despite having a low volume of trade value with Africa in comparison with China and the EU, the leverage of sanctions remains effective enough for the USA to compel Africa to take into consideration before taking any action.
Will this trade war between USA and China be a blessing in disguise for Africa or vice versa? The time will offer an answer this question.
