China's fourth quarter 2018 purchasing managers' index data was at 49.4, a clear signal that China's economy is slowing down. Anything below 50 signals a slowing economy and dampened prospects for future growth.
The International Monetary Fund forecasts Chinese growth will slow to 6.2% in 2019 from about 6.6% in 2018, due to among other factors escalations in the trade dispute between China and the United States.
There are also rising fears over the rapid growth of debt in China used to fuel its expansion over the past decade.
Just like Austrian aristocrat, Klemens Wenzel Fürst von Metternich once said ‘when America sneezes the whole world catches cold, the saying couldn’t be truer but, in this case, ‘when China sneezes the rest of Africa gets a cold’.
In the past few decades, Beijing has funded an overseas investment boom as it moved to become the world’s second largest economic superpower, while also buying vast amounts of the natural resources produced by emerging nations.
According to Unctad, China holds the fourth-largest stock of foreign direct investment in Africa at $40bn, behind the US at $57bn, the UK at $55bn, and France at $49bn.
The investments run from aid projects to infrastructure, including help to upgrade more than 18,000 miles of highways, 1,200 miles of railways, and raising ports capacity by about 85 million tonnes per year.
China too is the most visible single-country funder and builder of infrastructure projects in Africa, having spent about $11.5bn a year on average since 2012 – about a third of all African government spending, worth an average $30.1bn, according to Deloitte.
Craig Botham, an emerging-markets economist at the City investment firm Schroders, warns that a weaker China translates to a weaker Africa and demand for raw materials from Africa may soon dry up
“It should mean slower growth for anyone with an export link to China,” says Botham.
One aspect of Africa’s-China relations likely to be hard hit by the slow growth is stalled massive infrastructure projects lined up under the One Belt One Road, (OBOR) or the New Silk Road project.
The transcontinental development project launched by China’s president, Xi Jinping, in 2013 aims to improve infrastructure links between Asia, Europe and Africa, with the aim for China to reap the benefits from increasing levels of global trade.
“What we hope to create is a big family of harmonious coexistence," Xi told over 28 world leaders and 70 representatives from around the world in 2017, before adding that all countries were welcome to take part in the project.'
To make OBOR a reality, China plans to build multiple high speed rail networks, massive ports across Asia and Africa and a series of free trade zones into Europe.
In total once completed, OBOR which is a signature policy of President Xi Jinping will connect 4.4 billion people and lift the global trade by 2.5 trillion dollars in a decade.
Another aspect likely to also take a hit and which has grown to define China-Africa’s relations is Africa’s gluttonous appetite for Chinese loans.
Like kids in a candy store, African heads of state have raced to sign deal after deal with abandon running into billions of dollars further sinking their poor countries into unmanageable debts without as much as a care and badly exposing their sovereignty.
Kenya is among the highest indebted countries to China in Africa and her debt stood at Sh980 billion as at the end of 2017.
Currently, the debt-to-GDP ratio for China stands at an alarming 250% of GDP, an unsustainable number and one that presents formidable challenge to China's economic policymakers.
As a result, the Asian giant may start reevaluating and doing more thorough backgrounds checks of just who qualifies for a Chinese ‘no-strings’ attached loans.
Looks like a new era of China’s-Africa relations is in the offing.
