After some years of rough going and despite the already huge strains on China’s economy, Beijing has decided to double down on its Belt and Road Initiative (BRI) in Africa.
Earlier this month, Chinese Communist Party leader Xi Jinping told the representatives of 50 African nations attending the China–Africa Cooperation Summit in Beijing that China will make an additional 360 billion yuan (about $51 billion) in credits and other aid available to its African BRI partners over the next three years and step up the number of infrastructure projects it is supporting to employ a million workers.
The commitment will put additional strain on already stretched Chinese finances. Clearly, Xi and CCP officials think the BRI is worth the additional economic and financial burdens, and they may be right. China, if not Africa, will benefit.
As always in such settings, Xi sounded fulsome when he spoke to representatives of African nations earlier this month. He told them that some 210 billion yuan (about $29 billion) would come in the form of new credit lines. The balance would come in part from military aid but mostly from fresh investments by Chinese companies, almost all state owned. Xi described BRI arrangements as “a shared future in a new era.” He sought to bind his listeners, saying: “China and Africa account for one-third of the world’s population. Without our modernization, there will be no global modernization.”
This promise is a major step up for China. At the last such summit in Dakar in 2021, Beijing promised only $20 billion in new credit lines and direct investment.
The collapse of real estate has also impaired local governments’ finances, and many now face unsupportable debt obligations of their own. Chinese economic growth has accordingly proceeded at its slowest pace in decades. Efforts to recapture the nation’s economic momentum have generally failed and added to the debt overhang, which is now besetting Chinese finances and economics. Beijing’s decision to step up its commitment to Africa speaks to the importance of the BRI scheme to both Beijing and Xi.
In many ways, the structure of the BRI scheme made this distress inevitable. Indeed, the scheme seems designed to put client states into a dependent and indebted position opposite China.
Here is how the BRI works: Beijing approaches a developing country that has raw materials that China needs or that occupies a geopolitically strategic position. It offers loans from Chinese state-owned banks to finance impressive infrastructure projects of China’s choosing, such as roads, rail links, bridges, port facilities, etc. Because these projects are something the recipient country could never afford on its own and very likely could not get credit from elsewhere to pursue, that nation’s leadership naturally sees the offer as a boon.
Other aspects of the scheme are hardly beneficial to the developing country. While the developing country gets its project, it also gets a debt obligation that makes it beholden to China and so subject to political pressure from the CCP. Beijing insists on Chinese contractors for the construction and subsequent management of the projects, giving the CCP all but complete control indefinitely. If the recipient country fails to fulfill its obligations on the loan, ownership is given to China.
Beijing also insists on trade ties as part of the deal. Meanwhile, China secures the products—mostly raw materials—it needs. It also trains a native workforce to be as loyal to China as to its native leadership. Because these projects often take a longer time to pay out than the debt demands, they are all but guaranteed to fail as support for the loan. These failures may burden China financially, but they enhance the extent to which the recipient country remains under the CCP’s sway.
Several BRI partners have begun to wake up to the disadvantages implicit in the scheme. Italy, a prize for Beijing because it is in the G7 group of fully developed economies, dropped out of the arrangements. Other nations began to turn down China’s offers. Chinese loans in Africa, for instance, fell 86 percent from the peak of almost a $30 billion equivalent in 2016 to less than $5 billion in 2023, the most recent period for which data are available.
If the BRI program was not to die for lack of interest on the part of the developing world, Xi had to make a gesture, and he has. The CCP is ready to burden China’s economics and finances in order to continue to gain the clear material, political, and diplomatic advantages of BRI. Given how the structure ultimately burdens the recipient countries, the CCP will still have to make more such commitments and promises in the future. It may be expensive, but it is less expensive than a military alternative.
