China in Africa

The other day, I saw Zimbabwe president paying a visit to BYD Headquarters and realized that head of states are now making their way to China for the 9th FOCAC (Forum on China–Africa Cooperation). A lot of African head of states will be visiting various Chinese cities over the next few days. I spent a long time looking at the current state of China & Africa Cooperation and wrote up a long thread.

Let’s take a look at what I found during my research.

One thing is for sure. Africa is looking for Chinese expertise to industrialize and train its workers to move up the value chain. Zimbabwe president came to BYD and Huawei HQ for a reason. He and the rest of African leaders are looking to China to pass on their expertise on various fields. As Western countries are increasingly closing off their domestic market to Chinese national champions, it makes a lot of sense for China Inc to focus more on the Global South. Since Chinese products are very affordable, it should not be surprising to see African countries and the rest of the Global South looking to buy Chinese tech and expertise. It is a win win situation (although a big L for Western competitors of Chinese tech).

It goes way beyond that. One thing that really impressed me is just how hard China has worked at attracting more African students into Chinese universities. China’s ambassador to Ghana mentioned this in his letter.

In the field of education and training, China has set up scholarship programs to support outstanding African youth to study in China, established a trust fund project at UNESCO and trained more than 10,000 teachers in African countries, and built 17 “Luban Workshops” in Africa for Africa’s vocational education development and innovation.

and saw more of that here

According to China’s Ministry of Education, of the 81,562 African students who were studying in China in 2018, 6,385 were pursuing a PhD — representing about 20% of all foreign students undertaking a doctoral degree in the country. In 2018, the Chinese government pledged to provide 50,000 scholarships for African students to pursue higher-education studies in China over the following three years. By 2020, China was outranked only by France as the top destination for African students pursuing higher education abroad…

Those who study in China or are trained in Luban workshops are more likely to use Chinese technology and standard as well as do business with Chinese companies. There are significant benefits in training the next generation of African professionals. As such, China continues to offer more scholarships to African students.

China’s effort on this front can also be seen in emerging industry like AI. Just in April, Huawei launched Egypt’s first public cloud service in Cairo,

Huawei announced that it would pump $430 million into North Africa to build the firm's first cloud center there as well as train thousands of developers and tech specialists.

It’s important to consider that Huawei is not only building an AI data center in Egypt, but also unveiling an Arabic language LLM and training many local talents. Anyone who works in AI and chatbots can tell that you that a lot of training is needed for applying LLMs to real world applications.

As I listened to a recent “China in Africa” podcast, it dawned on me that China is also playing a huge role now in green energy transition in much of Global South. Chinese solar panel export has recently surged to Pakistan after surging in South Africa last year. In both cases, it basically fixed the energy crisis or blackout issues that they were having. You can connect solar panels to grid or build distributed projects faster than any other form of energy. In a continent where 44% of people don't have access to electricity, the flexibility of distributed solar is welcoming. Beyond that, I would expect to see a surge in electric 2 and 3-wheelers in African countries as oil prices remain too high for many people. In my recent visit to Morocco, locals told me that Chinese motorcycles took over the local market, because they were selling them for around $2000. Even if electric mopads are more expensive than that, it would be a huge gain economically to not have to spend gas money. Will we see more solar projects & assembly of EVs (2/3-wheelers as well as cars) in Africa? I think there will be some trade offs and we will see greater involvement from China in various countries’ energy sector.

And cooperation goes beyond new energy. Chinese companies was contracted to build Nigeria’s Dangote refinery. Now, Angola is seeking Chinese help in building its own refinery. Uganda is seeking Chinese help in building oil pipeline. Many possible projects ahead. When Western countries are not providing funding or expertise, China is the only one African countries can turn to.

As China Inc increases sales in African countries, it will also set up more local assembly, supply chain and production. Algeria reports that JAC, Geely and Chery are looking to do local assembly there. BYD seems to have some kind of MOU with Zimbabwe. Gotion is investing $1.3B to build a battery factory in Morocco. Other Chinese companies are also bringing battery supply chain to Morocco. There will be increasing investment here.

But just as critically, affordable Chinese trucks and machineries have made it cheaper for African countries to build infrastructure and set up industries.

They are selling the cranes that Egyptian deep sea port is using to move around containers. XCMG is selling massive amount of heavy duty, medium and specialty (like mining) trucks that are powering the African economy. Sany is selling the heavy machinery like loaders, excavators and cranes needed for construction and more. Sany has been operating its factory in South Africa for a while now.

Chinese machinery and expertise are also going a long way in improving farming techniques and yield. This Xinhua article showcases all the ways that China is doing so from hybrid rice, to new crops to drone usage and farming equipments. Affordable farming equipments around global south has gone a long way in solving the issues of feeding growing global population as reported here.

And China is still involved in building ports, roads and rail in Africa. A while back, Lekki deep sea port opened up in Nigeria. China also built the light rail system in Lagos. All of which are increasing commerce in Nigeria around Lagos area.

This CGTN report shows how China has aided development of Addis Ababa. I remember hearing one prominent African China watcher say how Addis Ababa skyline is now looking like a Chinese city. And this goes all the way around Africa in major cities. China is involved in the new capital project in Egypt.

As FOCAC 9 kicks off, it will be interesting to see what else get signed. But one thing is for sure, China Inc continues to be more involved with African economy every year.