No corner of the earth has been left untouched by China’s foreign investment strategies, whose sprawling scope are matched only by the mass polarisation they seem to generate among onlookers who can’t agree on whether they’re entirely a good thing.
The economic capital of the east, and soon, perhaps, the world, is engaged in ground-level infrastructure development on an unprecedented scale, having agreed multi-year plans with its many neighbours as well as vast swathes of Europe and South America.
A striking primacy has been afforded to developing nations, which far and wide appear eager to reap the rewards of the new roads, reconstructed bridges and advanced communication systems offered by their new, deep-pocketed benefactor.
China is investing in power networks, too, and nowhere is this more evident than in Africa, with which the country’s partnership dates back more than half a century to the original establishment of diplomatic relations with Egypt.
Over the past couple of decades, however, their relationship has intensified as an influx of more than a million Chinese citizens and the creation of the Forum on China Africa Cooperation (FOCAC) helped forge an inextricable bond.
Particularly in sub-Saharan territories, access to energy remains a major unsolved challenge, with more than half the rural population living without the electrically-powered amenities that have become commonplace in much of the rest of the world.
Here we take a closer look at whether this an issue China can solve with its Belt and Road Initiative (BRI), or if the potential of Africa’s power sector is simply being exploited by an external party for foreign gain.
Chinese infrastructure investment: Benevolence or imperialism?
As the single largest and most ambitious plan in the country’s proposed panoply of foreign infrastructure projects, the Belt and Road will likely prove a pivotal litmus test for the viability of Chinese overseas economic development in the decades to come.
President Xi Jinping announced his vision almost six years ago, and has since made it irrevocably bound to the country’s constitution as a commitment that must be fulfilled during a term that could never end.
In the meantime, its scope grew exponentially as it absorbed more and more trade deals, construction contracts and infrastructure investments, until it became a byword for virtually all of Chinese financial engagement – both foreign and domestic.
At its core is the creation of two trade networks, one on land, the other at sea, which together weave a sprawling tapestry across the vast majority of Eurasia, encompassing more than 70 countries ranging from the south east of Singapore to the heart of Spain.
Its enormous scale accounts for 62% of the world’s population and 30% of its GDP, ignoring the countries outside its reach that have officially pledged support – a plethora of nations ranging from South Africa all the way to Panama.
China refers to these trade networks as a “bid to enhance regional connectivity and embrace a brighter future”, and has invested hundreds of billions of pounds in the countries that track their vast trajectories.
It is expected to pour far more in to the Belt and Road before it is complete, but the question remains: Will it work?
Assessing the impact of the Belt and Road
There can be no question that China’s international operations have the potential to transform economies around the world in the short term, and have gone a long way to doing so over the past few years.
For example, Kazakhstan, the largest country in the world enclosed entirely by land, has gained access to the Pacific Ocean and a number of lucrative trade opportunities with historically unreachable territories therein via the new Lianyungang port in China.
Moreover, a spate of Chinese-made Railway Express freight services have created more than 6,000 jobs in Germany’s logistics sector and provided the likes of Jamaica and Uganda with more efficient transport networks for their myriad commodities.
Belarus’ car industry has been reinvigorated, Sri Lanka’s perennial power shortages are largely a thing of the past, Kenya’s capital of Mombasa has its first Standard Gauge Railway, Tanzania is home to a new industrial zone and port: The list goes on. And on.
Not all that glitters is gold, however, and all this shiny new infrastructure has not come without a price – one that many argue is far steeper than China claims.
Even among host countries, a ground swell of concern is gathering as to the true intentions of the Belt and Road, with some going as far as to accuse Xi Jinping of intentional usury.
This so-called “debt trapping” – locking governments into a financial black hole through extortionate and often misrepresented interest rates – has been the subject of much debate, and the evidence for its existence is starting to surface with greater frequency.
Former US Secretary of State Rex Tillerson said in early 2018: “Chinese investment does have the potential to address Africa’s infrastructure gap but its approach has led to mounting debt and few, if any, jobs in most countries.”
“It encourages dependency using opaque contracts, predatory loan practices, and corrupt deals that mire nations in debt and undercut their sovereignty, denying them their long-term, self-sustaining growth.”
Debt spirals and fine print
The Maldives, for instance, currently owes $600m (£461m) to China, and is liable for another $935m (£718m) of guaranteed loans, two sums which together account for a third of the indebted nation’s GDP.
Its new president Ibrahim Solih’s administration claims the cost of the projects, which include the recently-completed China-Maldives Friendship Bridge, have been inflated by his predecessor Abdulla Yameen.
He has called on the Chinese to lower the associated repayments – a request Xi Jinping’s office has denied in tandem with a staunch rejection of the implied accusations, arguing the loans were “in accordance with the wishes and development needs of the Maldives”.
Elsewhere, Malaysia’s prime minister, Mahathir Mohamad, had been growing dissatisfied with the progression of an under-construction Belt and Road railway on the east coast of his country in recent months.
The contract, however, comprised a $5bn (£3.8bn) termination bill should the project be cancelled by the host country, a hefty blow it managed to avoid, but only in return for losing a 50% stake in the railway’s operation to a company of Chinese origin.
China’s foreign minister, Wang Yi, publicly denied any intention on behalf of his government to trap countries in a downward debt spiral, going as far as to label the Belt and Road an alternative to “rising protectionism and unilateralism”.
Only time will tell the efficacy of the Belt and Road, as well as the ultimate intentions of its architect, but in Africa’s power sector, the story is a couple of chapters ahead.
Africa’s electricity access problem
The International Energy Agency (IEA) estimates the number of people in the world currently living without access to electricity is roughly 1.1 billion, significantly less than the 1.7 billion at the turn of the millennium.
A disproportionately large amount of this disadvantaged population lives in sub-Saharan Africa, however, and the intergovernmental organisation predicts about 600 million of the region’s 674 million residents will be without power by 2030.
The situation is a debilitating one for the continent, causing various measurable detriments from severely limited healthcare infrastructure, lowered agricultural output and stymied technological innovation, to name but a few.
But things get markedly murkier when trying to asses, for example, the negative effect on a country’s future when its children can only study by candlelight after the sun has gone down.
Even Africans with access to the grid are perpetually hampered by disruptions as a result of out-dated power generation, transmission and distribution technology, as well as an insufficient capacity for robust maintenance and repair.
In Nigeria, a country with a relatively high grid connection rate, a study by research network Afrobarometer found just 18% of people with access to electricity had it when needed, with the other 82% forced to rely on diesel or gasoline generators instead.
To make matters worse, Africa’s population is growing all the time: Out of the additional 2.4 billion people projected between 2015 and 2050, the UN predicts 1.3 billion will be born on the continent.
The need for electricity, it seems, is rising at a commensurate rate, as the IEA anticipates energy demand, which stood as high as 423 terawatt hours in 2010, will grow by 4% annually through to 2040, heightening the scale of the challenge with each passing year.
The Paris-based group suggests to meet the exponentially widening gap would mean doubling current levels of yearly investment in the continent, with almost all of the pot needed in sub-Saharan Africa.
A green belt of connectivity
China’s investment across all industries in Africa has given rise to a glut of more than 10,000 businesses owned, at least in part, by the country, according to analyst McKinsey, with Nigeria and Zambia hosting 920 and 861, respectively.
Notably, in the power sector, its omnipotent state-owned electricity utility State Grid is in the midst of building a “green belt of connectivity”, linking renewable energy installations along a litany of Belt and Road countries in Africa and Asia.
Demand for the ambitious project, it argues, is being catered to by the one billion people without access to electricity throughout both continents, as well as an appetite for upgraded power facilities in neighbouring regions.
State Grid has reportedly begun work on several national power grid projects already, all linked to its overarching foreign investment strategy, which together make for a contract value approaching $40bn (£31bn).
Chinese power equipment is being shipped by the cruiser-load to more than 80 countries spread across Eurasia and Africa, and ten cross-border power transmission lines, intended to improve power grid connectivity, have been completed.
The impact, according to the IEA, is a 30% increase in the productive capacity of Africa’s power sector as a direct result of this work and the $13bn (£10bn) China invested in energy infrastructure in the area between 2010 and 2015.
Over that five year period, which has been arguably the most constructive in terms of engagement between the country and continent, power generation in sub-Saharan Africa, specifically, rose from 95 gigawatts (GW) to 115GW.
Chinese projects added 4.2GW in West Africa, 5.5GW in East Africa, 1.3GW in Central Africa and 5.5GW in Southern Africa, while a quarter of all greenfield power plants were contracted to Chinese companies, with a particular focus on hydro energy.
That’s more progress than any other single country, though some individual organisations, such as the US’ Power Africa, are also working towards ambitious targets including introducing 30GW of clean energy to the continent over the next few decades.
Has it all worked?
The raw numbers make for encouraging reading, but there are those who argue only a fraction of Africa’s potential has been tapped over the past few decades – no more so than in the renewable energy space.
An Oxfam report on the power challenges faced by the continent suggests it could generate up to 10,000GW from solar, 350GW from hydroelectric power and 400GW from natural gas, making for a 11,000GW contribution solely from clean sources.
Meanwhile, a number of commentators posit China could be doing far more to help strengthen its putative partner’s resilience against the natural disasters which periodically ravage its fledgling infrastructure and undermine its economic progress.
Mozambique, for example, a country tipped to become one of the world’s most prolific suppliers of LNG on the planet over the next decade, now faces a substantially obfuscated path to that goal following the havoc wreaked by cyclone Idai in April.
Many reason Chinese investment in Africa’s power sector is merely a means to establish quick wins that turn an immediate profit back home, conspicuously absent the enduring cogency needed to establish a flourishing energy network.
Outside the grid, washed away roads in Zambia, collapsed bridges in Kenya and dilapidated hospitals in Angola, all paid for by loans from Beijing, have dented public confidence in the credibility of Xi Jinping’s ostensible commitment to the continent.
Yet the fact remains his country has done more than any other to address Africa’s electricity access woes, and local opinion leans favourably towards Chinese-funded projects, partially due to the lack of involvement the country assumes in the domestic politics of its debtors.
If it can harness more of Africa’s renewable energy potential, sure up its construction projects and avoid leaving its investment recipients in more debt than they can possibly hope to repay, it could go some way to convincing observers its plans are benign.
Ultimately, however, results speak louder than words, and in lieu of any real competition outside the US, which faces obstacles of its own, China’s work to-date has had little trouble standing out.
Whether it happens to actually be the answer to the African power problem over the long-term remains, for the moment, another matter entirely.
