China’s Third Plenum: Implications for Africa

The Third Plenary Session of the 18th Party Congress was completed in Beijing earlier last week. Themed “deepening reform,” the Session had raised high expectations in and outside China about the new directions and initiatives the Party will adopt to address the country’s various problems, including its economic slowdown and other internal challenges. Foreign policy has not been a key topic for this domestically focused Session: Other than the creation of a “state security committee,” which is believed will cover foreign and national security issues, there is little mention of foreign affairs in the communique released after the Session on the November 12. 

Despite this lack of a foreign policy focus, the decisions made at the Plenum, from an African observer perspective the meeting had potential implications for Africa.

Globalization and the economic interdependence among countries have enhanced the butterfly effect of China’s own policy adjustments on others. As Africa’s largest trading partner and a key investor, China’s economic prospects have a significant impact on its economic relations with Africa. The economic slowdown in China will affect its demand for commodities internationally. Among them, energy and mineral supplies are precisely the key strength of those African countries rich in natural resources.  The declining demand will also drive down the commodity price, further affecting these countries’ economic outlook. In this sense, whether the Third Plenum successfully addresses China’s economic challenges will directly affect its trade with African countries and indirectly influence the revenue they will harvest from commodities.  So far, without the widely anticipated financial reform and reforms of the state-owned enterprises, the Third Plenum seems to have disappointed many African nations in the economic arena. 

On the other hand, the Third Plenum might bring some good news for Sino-Africa trade. It pushes forward certain trade and investment facilitation measures, including free flow of domestic and international factors, opening up of markets, relaxation of investment access and speedy construction of free trade zones.  How much Africa could tap into these initiatives beyond natural resources depends on the additional qualities of Africa itself, such as the development of its manufacturing industries. The Plenum particularly emphasized the need for China to “participate in and lead the new comparative advantages in international economic cooperation.”  Since China is trying to upgrade its position in the global supply chain from the “world factory” to a “technological innovator and leader.”  Africa could very possibly see more Chinese efforts to relocate its existing manufacturing centers.

The Third Plenum also announced the creation of a new state security committee that will presumably cover both domestic security and external foreign policies. This is an area that could potentially have most impact over China’s Africa policy. In the past, how to better coordinate and balance China’s economic agenda and political pursuits in Africa as well as manage the proliferation of actors in Africa has been a major challenge for China’s Africa policymakers. In many cases, Chinese companies thirsty for African natural resources engage in resource exploitation and business irregularities with little respect for the local community or their long-term sustainable development. They tremendously undermine China’s long-term friendship with the local people and governments. In other cases, the lack of policy coordination and consultation has led to major commercial losses in unstable countries. It is estimated that the Libyan civil war cost China a total of more than $20 billion in investment and service contracts. With this new institution created at the top, it is hoped that the committee could generate more cohesive and coherence policies with the outside world, Africa included.