China skilled a huge financial growth within the Nineties and 2000s which elevated its demand for useful resource imports, like oil, from Africa. This led to a mannequin of improvement finance through which China funded infrastructure in African nations in return for entry to sources. This strategy grew to become often known as the Angola mannequin, as a result of it began with an infrastructure-for-petroleum partnership between China and Angola in 2004.
Inside a decade, nevertheless, a shift in China’s strategy was wanted, for a few causes.
First, African nations are susceptible to shocks they usually battle to maintain up with mounting debt repayments. For example, in Angola’s case, the value of oil fell from a excessive of US$115 to under US$50 in mid-2014. Extra not too long ago, the impression of COVID’s financial shutdowns and provide shocks across the warfare on Ukraine are taking a toll.
Second, China’s home wants are altering. Lately, local weather change and altering diets have put strain on China’s home provide of meals. This triggered curiosity in partnerships that would assist. China can also be shifting away from being an exporter of heavy-industry and energy-intensive manufactured items. Its focus is extra on progress areas, akin to larger value-added agriculture and manufacturing. Geopolitically, it additionally desires to help African improvement and its personal meals safety.
My research of those shifts reveals a altering relationship between China and Africa, shifting past a deal with primarily oil and extractive commodities. The brand new focus is extra on industrial manufacturing, job creation, investments that result in African exports, and productivity-enhancing agricultural and digital expertise alternatives.
This mannequin, referred to as the “Hunan mannequin”, is called after the province in southern China that’s main the push. African bureaucrats, researchers, commerce associations and companies ought to perceive what’s occurring in Hunan. It’ll assist them to understand new alternatives and be certain that African corporations are competitively positioned.
What’s the ‘Hunan mannequin’?
The Hunan mannequin goals to help the 2035 Imaginative and prescient for China–Africa Cooperation by pushing for:
The supply of these objectives occurs beneath the umbrella of the China-Africa Financial and Commerce Expo and a pilot zone for in-depth China-Africa Financial and Commerce Cooperation. Each are centred on Changsha, the capital of Hunan province.
Hunan province was chosen as the brand new frontier of China-Africa relations partly as a result of lots of China’s aggressive industries are primarily based there. They embrace main agri-tech corporations, a number one Chinese language digital automobile firm (BYD Changsha), and manufacturing tools and building {industry} corporations. Many of those corporations have a presence in, and long-run technique for, African markets.
China-Africa Financial and Commerce Expo
The China-Africa Financial and Commerce Expo has many actions and occasions hosted in huge exhibition centres. This permits new enterprise partnerships to be cast with pace and logistical ease. At a 2023 occasion with 10,000 Chinese language and 1,700 overseas members, it was reported that 120 initiatives, price a complete of US$10.3 billion, have been signed. All 53 African nations with which China has diplomatic relations have been current.
Chen Hongdou/VCG by way of Getty Pictures
Pilot zone
The pilot zone for in-depth China-Africa Financial and Commerce Cooperation is a large space that’s been developed with the purpose of increasing bilateral commerce, coping with bottlenecks in commerce and cooperation and bettering logistics between the 2 areas. Examples of typical bottlenecks embrace market entry, finance, logistics, expertise and companies akin to advertising and marketing and regulation.
A few of the initiatives that may be discovered within the pilot zone embrace vocational and schooling coaching and a digital companies hub that helps Chinese language corporations within the efforts to economically have interaction Africa. The zone features a everlasting exhibition platform and an illustration park.
Some implications of the shift
The Hunan mannequin’s particular focus is on agriculture, heavy {industry} tools, and transport akin to electrical vehicles and trains. These are areas the place Hunan is a frontrunner inside China. And they’re progress industries in lots of nations in Africa.
For China it could result in new sources of meals safety in addition to new markets for expertise merchandise and alternatives to set expertise requirements. The strategy thus locations Africa in an essential place for greedy new alternatives and shaping associated areas of cooperation – at dwelling, with China and globally.
The Hunan mannequin additionally seeks to help extra environment friendly commerce. New commerce passageways by rail, river, air and ocean are being cast to raised join Hunan with African nations, particularly commerce hubs.
There are additionally efforts to sort out problems with entry to overseas alternate and foster larger use of native currencies. In the intervening time plenty of worldwide commerce is completed within the US greenback, as a result of it’s broadly accepted throughout all nations. However many creating nations battle to build up {dollars} in the event that they don’t have a commodity like oil or gasoline to export. Small and medium-sized (SME) merchants battle particularly, and are much less in a position to bear any forex dangers in opposition to the worth of their very own native forex. The zone in Hunan consists of a centre that’s testing commerce fee programs primarily based on different currencies. This might develop into a broader mannequin for SME-based commerce in native currencies.
Finally, China’s Hunan agenda will imply various things for various African nations and can evolve over time. It’s a current shift, since 2018 particularly, however past its potential to raise meals safety and manufacturing capability in China and African nations, there shall be different essential implications. It might facilitate digital and communications logistics for commerce between China and Africa, in addition to analysis on expertise, {industry} and commerce requirements, and commerce flows and traits.
