As the West restricts imports of green technology products from China, the world’s largest manufacturer is looking for new markets. Analysts say the issue will be high on the agenda at the Forum on China-Africa Cooperation (FOCAC) in Beijing next month.
The high-level meeting, which takes place every three years, is the first since the world emerged from the COVID-19 pandemic and China itself experienced an economic downturn. It also comes against a backdrop of growing geopolitical rivalries and as China shifts the priorities of its global infrastructure construction project, the Belt and Road Initiative (BRI), to what it calls “green BRI” and “small is beautiful” projects.
The theme of the meeting, which will take place from September 4 to 6, is “Jointly advancing modernization.” Lin Jian, spokesman for the Chinese Foreign Ministry, said it will “open up new prospects for China-Africa relations.” One of those areas will be “supporting Africa’s green development,” according to Wu Peng, the Chinese ambassador to South Africa.
While many African countries – some facing an energy crisis – would welcome help in switching to renewable energy, Paul Nantulya, a research fellow at the Africa Center for Strategic Studies in Washington, said China also “benefits greatly”.
“If you look at green growth, for example, the technology that is being commercialized in African countries that those countries have to buy, either through loans or directly through commercial companies, that is one way that China benefits,” he told VOA.
And China needs new buyers.
China’s overproduction problems
China is the world’s largest producer of solar batteries and, according to the International Energy Agency, will account for three-quarters of all global investments in the production of green technologies in 2023. In addition, more than half of all electric vehicles sold worldwide were manufactured in China last year.
China’s lead in these industries has led to increasing competition from the West. The US and the European Union have taken protectionist measures and increased tariffs on products from China, including electric vehicles, batteries, solar panels and critical minerals. Europe and the US want to boost their own production and create jobs.
“We are seeing increasing restrictions on Chinese products in the U.S. and Europe, and I believe China will look for alternative markets in Africa,” Cliff Mboya, an analyst at the Pretoria-based China Global South Project, told VOA.
However, he said African governments could use China’s problems on this front as a bargaining tool. Although China is the continent’s largest trading partner, it exports far more to Africa than it imports.
“We know that China has previously promised better market access for African products. As China now seeks the African market for some of its products that face high tariffs and restrictions in the West, this is an opportunity to negotiate better access for African products to the Chinese market,” said Mboya.
The West is concerned about possible “dumping” by China, which is flooding foreign markets with cheap exports to get rid of its global trade surplus. Mboya said this should also be a concern for African governments.
“We should also be able to negotiate and ensure that there is no dumping of these products on the continent because we also need to create jobs for our youth and ensure that we are also able to produce some basic goods on the continent,” he said.
According to the United Nations, 70 percent of the population in sub-Saharan Africa is under 30 years old.
Ambassador Wu did not mince his words when he spoke about this “sensitive issue” at an event in South Africa in early August.
“In 2023, China also produced nearly 9.5 million electric vehicles (EVs) and exported nearly 1.8 million EVs to the world,” he said. “Some people blame China for the so-called overcapacity.”
“The Europeans or the USA are already imposing high tariffs on these electric vehicles – or will do so.”
“Let’s wait and see, OK? If they can catch up and quickly produce more electric cars that are affordable for customers… no problem. But if not, then I think that’s a little unreasonable,” he continued.
However, China is struggling with a mismatch between supply and demand for its products. Last year, China’s solar cell production was twice as high as global demand, and in July, major solar module maker Longi Green Energy Technology reported a net loss of around $750 million.
“There are significant parallels between the overcapacity China faces today in its clean technology sectors and the overcapacity it faced a decade ago in heavy industry and infrastructure when the BRI was originally launched,” Yunnan Chen, a researcher at the London-based research group ODI, told VOA.
China has used the BRI to relocate its domestic industries abroad and build markets for its infrastructure in developing countries. It is now doing the same with renewable energy, she added.
“Tariffs from Western markets represent further, compounding pressure that will further increase the importance of middle-income emerging markets for Chinese goods and even for the relocation of production lines and supply chains abroad to access EU and Western markets via third countries – as we are already seeing in Vietnam and Mexico,” she said.
Focus on Africa
Chinese Ambassador Wu said FOCAC would focus on the energy transition needs of African countries and that “China will encourage Chinese companies to invest.”
He said the new energy cooperation could become an engine of growth and a highlight of economic and trade cooperation, especially between China and South Africa.
But Yun Sun, director of the China program at the Stimson Center in Washington, said FOCAC’s focus on green technology and energy is not necessarily a boon for Africa.
“This does not necessarily give Africa an advantageous position in the global supply chain. China, for example, owns a number of lithium deposits (mines) in Africa and this could technically be called green energy and technology cooperation between China and Africa,” she said.
“Traditionally, Africa has been a source of raw materials for China, such as oil and minerals. If it is now lithium and other important minerals that are being used for green energy, what is the difference from before?” she added. “Mining and processing, the benefits of which for local people are disputed.”
In addition to green technologies, analysts expect FOCAC to also focus on areas such as agricultural modernization and trade, information technology and connectivity, and education and training. The African leaders will also seek to hold a one-on-one meeting with Chinese President Xi Jinping.
Some African countries that have secured large loans from China and are heavily indebted are under pressure at home.
Kenya, for example, is rocked by anti-government protests, but experts doubt that African leaders will publicly push for debt restructuring so as not to embarrass China.
