China-hosted FOCAC Summit

Syllabus: GS2/Regional Groupings

Context

• Chinese President Xi Jinping pledged $51 billion of funding to African countries at the ninth edition of the Forum on China-Africa Cooperation (FOCAC) in Beijing.

About

• China will support 30 infrastructure projects across the continent, with 360 billion yuan ($50.7 billion) to be offered as financial assistance.
• The theme this year is “Joining Hands to Advance Modernization and Build a High-Level China-Africa Community with a Shared Future.”

What is the FOCAC?

• The Forum on China-Africa Cooperation was established in 2000 to formalise the strategic partnership between China and African nations. 
• A summit is conducted every three years, with the host alternating between China and an African member.
• The FOCAC counts 53 African nations as its members – the entire continent except Eswatini.
  • Eswatini has diplomatic ties with Taiwan against Beijing’s “One China” Policy. 
  • The African Union Commission is also a member.

China’s Investment in Near Future in Africa

• China’s approach has changed for investment in African Nations: China wishes to narrow the country’s investment portfolio away from big-ticket infrastructure to “small and beautiful projects.”
  • It also hopes to sell advanced, green technologies which Chinese firms have heavily invested in.
• Reasons for Change in China’s Approach: The summit comes at a time when China is experiencing a prolonged economic slowdown post-pandemic, with China’s growth target for the year looks out of reach.
  • Its manufacturers are battling deflationary pressures and unemployment challenges.
  • There are also concerns about loan defaults — in 2020, Zambia defaulted on its loan , while Ghana defaulted on most of its $30 billion external debt in 2022. 

Significance of FOCAC 2024

• One goal of the summit can be narrowing the growing trade imbalance between China and Africa through increasing imports of agricultural goods and processed minerals.
  • Meeting these African demands is in China’s geopolitical interest to keep them onside in the tussle with the U.S.
• African leaders are likely to seek backing for big-ticket items, as they have in the past, but also place greater emphasis on debt sustainability.
  • Recent deadly protests in Kenya were triggered by the government’s need to service its debt burden to international creditors, including China.
  • African leaders at the forum seek not only more Chinese investment but also more favourable loans in light of such events.

Source: IE