China and Africa: Long-term Strategic Partner

China, Africa’s 50-year trading partner, just announced a $60 billion funding support for development in Africa at the recent China-Africa Cooperation Forum. This strategic funding plan aims to not only assist Africa in improving its poor infrastructures, but also maintaining the long-time trade relationship between Africa and China.

China’s trade with Africa is largely import-driven, as China heavily relies on Africa’s iron, oil and gas, and agricultural products to support its domestic demands. Although China’s manufacturing industry is slowing down and the demand for iron is declining recently, the demand for oil and gas and agricultural products is increasing as China grows its population and its people become richer and purchase more cars. As the second largest food consumer in the world, China finds it difficult to meet domestic demand from its diminishing local resources in arable land and irrigable water. Therefore, Africa, with abundant natural resources, is factored into China’s long-term plan to address the food security needs.

Most African countries have benefited from China’s willingness to build infrastructures, educate professionals, and supply funding shortages in various projects. All of these activities help to boost Africa’s local economy. For example, China has built more than 80 demonstration farms in Africa to give local farmers technical training and support. African farmers have become more productive and are able to attract more foreign investors. Ethiopia, a recipient of Chinese funding, estimates that the funding has helped create more than 300,000 jobs in the past decade.

China’s increasing domestic demand and diminishing resources require the country to find a long-term supplier like Africa, and Africa’s needs in education and infrastructure require the country to partner with China, who is willing to provide financial assistance. In the forum, China also announced that it would negotiate free-trade agreements with Africa to promote imports from the continent and support the agriculture industry to help create more local jobs. This will continue to strengthen the relationship between China and Africa and is a win-win scenario for both countries.