The China-Africa summit on COVID-19: Geopolitical and economic considerations,European Centre for Development Policy Management

3 juillet 2020Wathinote Covid-19

Authors: San Bilal and Lidet Tadesse

Affiliated organization: ecdpm

Type of publication: Article

Date of publication: 22 June 2020

While the EU weeps over the slow progress in the preparation of the EU-Africa Summit in October – partly slowed down by the COVID-19 pandemic – China and African leaders held an ‘Extraordinary China-Africa Summit on Solidarity Against COVID-19’ last week. Thirteen African leaders took part in this virtual event, including South Africa’s President and African Union Chairperson, Cyril Ramaphosa, and Moussa Faki Mahamat, Chair of the African Union Commission.

The Summit focused on addressing the health and economic impact of COVID-19 through the China-Africa partnership. Nothing groundbreaking was announced on these two topics. Yet it is noteworthy that the leaders at the Summit laid out political alignments between China and Africa, with reciprocal support and commitment, and sent implicit geopolitical messages to outside listeners, namely the US.

Political and geopolitical alignment

While the point of departure of this year’s Summit was the current pandemic and the underlying theme – solidarity, China and African countries didn’t shy away from using the platform to mutually reinforce their broader political and geopolitical interests. The joint declaration of the Summit underlines Africa’s support to African states’ endorsement of the ‘one China’ policy is not a surprise but the explicit reference to China’s interest in Hong Kong coincides with China’s recent move to tighten its hold of Hong Kong, particularly in the domain of law and security.

African states, for their part, used the Summit to call on the international community to suspend the sanctions on Zimbabwe and Sudan, whose access to capital and international markets is still overshadowed by sanctions that continue to apply to them despite the major political shifts they underwent in 2017 and 2019 respectively.

China also reiterated its commitment to making sure that an eventual vaccine against COVID-19 will be available to developing countries, should such a vaccine be developed in China – a commitment the EU also made but that the US has refused to make as of yet.

During the Summit, China and Africa underlined their alignment when it comes to an open world economy, multilateralism, the UN system and the World Health Organization (WHO) in particular. UN Secretary General Antonio Guterres and WHO Director General Dr Tedros Adhanom Ghebreyesus were both virtually present at the event. China also reiterated its commitment to making sure that an eventual vaccine against COVID-19 will be available to developing countries, should such a vaccine be developed in China – a commitment the EU also made but that the US has refused to make as of yet.

China-Africa: health and economy or health of the economy?

In the past few months, China has been at the forefront of supporting several African countries in responding to the Corona-crisis. It has provided technical and material support such as personal protective equipment (PPE), ventilators and testing kits. Such support has been appreciated and, in his opening remarks, President Ramaphosa further noted the need for China’s “support for the provision of diagnostic and therapeutic supplies over a period of six months.” Access to diagnostics (testing equipment, kits and reagents) is one of the key challenges facing the continent’s response to the pandemic. In the same speech, President Ramaphosa announced that an African Medical Supplies platform will soon be launched to facilitate procurement of critical equipment.

The Summit saw China’s renewed commitment to the Africa Centres for Disease Control and Prevention (Africa CDC) – the main health coordinating body of the continental response to COVID-19 – and a promise to ‘expedite’ the construction of a new building for the institution, due to start this year. The construction of the African CDC has long triggered the fury of the US, who questions China’s intentions for constructing the Centre and has accused China of spying, trying to dominate health management in Africa and trying to gain access to African genomic data.

While things seem to be clear on China-Africa cooperation on health, China and Africa don’t seem to see eye-to-eye on each other’s expectations on debt, which was another agenda item of the Summit. China is the largest bilateral lender worldwide and holds about 20% of Africa’s total debt. But in general, about half of China’s lending to developing countries is not recorded in official statistics, which makes it hard to include in international debt relief discussions.

The construction of the African CDC has long triggered the fury of the US, who questions China’s intentions for constructing the Centre and has accused China of spying, trying to dominate health management in Africa and trying to gain access to African genomic data.

In his speech at the Summit, President Xi Jinping committed to cancelling the service of “the debt of relevant African countries in the form of interest-free government loans that are due to mature by the end of 2020” and to work with the global community to extend the debt service suspension beyond 2020 for those countries most in need. He also called on “Chinese financial institutions to respond to the G20’s Debt Service Suspension Initiative (DSSI)” for poorer countries and engage in debt negotiation with African countries. As part of the DSSI, China already agreed to suspend principal and interest payments to 77 countries (40 of which are in sub-Saharan Africa), until the end of 2020.

Debt relief with interest-free government loans is certainly a positive step, but it is far from addressing the continent’s financial needs for two reasons. First, much of the debt Africa owes China is in the form of commercial loans, not in the form of government loans. In the 2015 Forum on China-Africa Cooperation (FOCAC) meeting, for example, around 70% of the $60 billion China pledged to Africa was, concessional loans, credit lines, and African small- and mid-sized enterprise loans, while zero-interest government loans accounted for only 9%. Hence neither China’s commitment to the G20 DSSI, nor President Xi Jinping’s announcement last week, manage to really hit Africa’s debt problem on the head.

While China hopes that the international community will consider debt relief for Africa to unlock finance in response to COVID-19, it stays away from expressing a clear position for itself, and particularly on the issues raised by the AU’s Group of Special Envoys on economic support to COVID-19.

Secondly, while China hopes that the international community will consider debt relief for Africa to unlock finance in response to COVID-19, it stays away from expressing a clear position for itself, and particularly on the issues raised by the AU’s Group of Special Envoys on economic support to COVID-19. These include the temporary suspension of debt services for some low-income and non-low-income countries that would need it, the participation of the private sector in commercial debt suspension programmes, an increase of Special Drawing Rights (SDRs) at the International Monetary Fund, the possibility of setting up a special purpose vehicle, as a bridge finance facility to be accessed on a voluntary basis.

Moreover, China strongly prefers addressing debt issues bilaterally. This may limit the scope for a truly multilateral and transparent approach to debt relief, and therefore, risks undermining efforts to that end. Without substantial debt negotiation with China and Africa’s other creditors (commercial and multilateral) or alternative ways of accessing finance suggested by the AU’s Group of Special Envoys, it is not clear how African countries can raise the more than US$100 billion they need to address the economic and health impact of COVID-19.

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The China-Africa summit on COVID-19: Geopolitical and economic considerations,European Centre for Development Policy Management

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