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China, the world's economic giant, appears to be changing direction. After years of intense investment in Africa, Beijing is turning its attention to Brazil, leaving the African continent in the background.
But what is driving this strategic shift? The answer may not be as simple as it seems. In recent years, China has established itself as Africa's largest creditor, offering billion-dollar loans to several countries on the continent.
According to the YouTube channel “Economia das Coisas”, Beijing already holds more than 70% of all bilateral debt of countries like Kenya. But what seemed to be a successful strategy of economic and political dominance over Africa is now showing signs of exhaustion.
China, once seen as Africa’s “savior,” is now reassessing its ties with the continent. Why this sudden disinterest?
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The beginning of Chinese influence in Africa
The story of Chinese investment in Africa began to gain momentum at the beginning of the 21st century. With the Chinese economy booming and abundant financial reserves, the Chinese government began to seek new investment opportunities outside the country.
As China's economic influence grew, Africa became a strategic target for Beijing, especially because of its wealth of natural resources essential to China's emerging industries.
According to the “Economy of Things” channel, China has launched a massive investment project in Africa, known as the New Silk Road. This multi-billion dollar project aimed to build new infrastructure to expand Chinese commercial influence globally.
In Africa, these investments were crucial for the growth of Chinese industry, which needed large amounts of natural resources such as lithium and silicon for its new technology industries.
However, this relationship between China and Africa has always been marked by a certain imbalance. According to experts, many African countries have become deeply indebted to China, which has allowed Beijing to exert significant influence over these governments.
The practice of using natural resources as collateral for loans raised concerns that China was in effect practicing a modern form of colonialism.
The theory of “Chinese colonialism”
The theory that China is exploiting African countries through debt has gained traction in recent years.
This strategy, known as a “debt trap,” suggests that China is more interested in gaining political influence than securing financial returns.
In international forums, for example, many African governments that depend on Chinese money tend to support Beijing's positions.
However, as the channel “Economy of Things” highlights, this theory is not as simple as it seems. In fact, there are signs that China has been moving away from Africa and reducing its investments in the region in recent years.
A change of strategy?
Since 2016, Chinese investments in Africa have been falling significantly. The value of China’s loans to the continent has fallen from nearly $30 billion a year to less than $2 billion in 2022. This suggests a shift in Beijing’s strategy towards Africa, but what is behind this decision?
According to recent analyses, China is rethinking its infrastructure projects in Africa due to a number of factors. One of the main reasons is that many of these projects proved to be economically unviable.
One example is the Hambantota port in Sri Lanka, where China invested over $1 billion, but the project was a fiasco, leading the country to default on its loan. As a result, China took over 70% of the port’s revenues for 99 years. This type of situation, where China ends up taking control of unprofitable assets, has been repeated in several other countries.
Additionally, we bring Studies show that New Silk Road projects are often associated with corruption scandals. Approximately 26% of these projects face corruption issues, compared with less than 10% of other Chinese projects.
This suggests that Chinese companies face significant difficulties operating in Africa, which may have led Beijing to reconsider its investments in the continent.
Africa’s “lost decade”
Another factor that has influenced China's decision to reduce its investments in Africa is the continent's poor economic performance. In recent years, many African countries have faced a “lost decade” in terms of economic growth.
Since 2014, sub-Saharan Africa's GDP per capita has fallen by more than 10%, mainly due to falling commodity prices. This unfavorable economic scenario has made it even more difficult for African countries to repay their debts, which in turn makes Chinese investments less attractive.
As the “Economy of Things” channel notes, China appears to be shifting its focus to smaller, more profitable projects rather than large infrastructure ventures.
This new approach, known as “xiao er mei,” suggests that Beijing is adopting a more cautious strategy in Africa, focusing on projects that offer faster returns and are less risky.
Brazil as a new priority
As China reduces its investments in Africa, Brazil has become an increasingly attractive destination for Chinese capital.
According to experts, historical ties and abundance of natural resources make Brazil a natural choice for China. Furthermore, Brazil's relative political stability, especially compared to many African countries, makes the country a more reliable partner for Beijing.
In recent years, China has significantly increased its investments in Brazil, mainly in strategic sectors such as energy, infrastructure and agriculture. These investments not only reinforce China's economic presence in Brazil, but also strengthen political relations between the two countries.
China's shift in focus from Africa to Brazil represents a new phase in Beijing's global strategy. While Africa is still important to Chinese interests, Brazil offers opportunities that China cannot ignore.
A new chapter in China-Brazil relations
China is redefining its global priorities, and Brazil is at the center of this new strategy. With the reduction in investments in Africa, Brazil emerges as the new target of Chinese economic expansion. This shift has profound implications not only for the economies of the two countries, but also for global geopolitics.
Do you believe Brazil is prepared to deal with this growing Chinese influence? How could this relationship affect the country's economic future? Share your opinion in the comments!
Brazil should not depend on anyone but itself...we have everything we need to live well...we just need to distribute wealth better...but if we have to do business, it is better with the Chinese than with the Americans who think they own Latin America.