China has solidified its relationship with Africa, pledging $20 billion in loans over the next three years during a meeting in Beijing attended by leaders from 50 African countries. This move comes as China continues to strengthen its position as Africa's largest trading partner. The Forum on China-Africa Cooperation (FOCAC), which was first established in 2000, convened for a two-day meeting and emphasized the importance of their strategic partnership. The joint statement issued at the end of the meeting underscored that this partnership serves the fundamental and strategic interests of both China and Africa.

The $20 billion pledge represents a significant increase from China's previous commitment made at the last FOCAC meeting three years ago. While FOCAC primarily focuses on economic cooperation, its political implications are evident. This deeper engagement between China and Africa is seen as a catalyst for promoting South-South cooperation and accelerating the shift of global power from the West to the East.

Chinese Foreign Minister Yang Jiechi highlighted the importance of closer cooperation in international affairs and outlined plans for more exchanges, including those involving media organizations, to foster a positive public opinion environment for sound and stable China-Africa relations. Additionally, China is actively working to enhance its soft power in Africa by sending medical personnel to the continent.

The speed at which China has strengthened its ties with Africa is remarkable, with bilateral trade between the two sides increasing by approximately 30 percent annually in the 21st century, reaching a record $166 billion in 2011. This ongoing partnership between China and Africa has significant implications for both the region and the world.

While China imports natural resources, it exports mostly finished products, manufactured goods and textiles, with Africa enjoying a trade surplus. By contrast, European countries Africas traditional trading partners and its former colonizers are experiencing major financial difficulties and their trade remains bogged down at 2008 levels.


Moreover, as Jacob Zuma, the South African president, made clear, China is perceived as being quite different from the countries of the west. "We are particularly pleased that in our relationship with China we are equals and that agreements entered into are for mutual gain," said President Zuma. "We certainly are convinced that China's intention is different to that of Europe, which to date continues to intend to influence African countries for their sole benefit."


While the West had a big head start over China on dealings with Africa, and continues to import significantly more oil each year than China, the Chinese are clearly in the resource-rich continent for the long haul. After all, seven of the worlds 10 fastest-growing economies are African and, as the Atlantic magazine said recently in a headline, "The Next Asia is Africa."


In fact, China is already thinking of ways in which Africa can help make the Chinese currency more international, such as by encouraging the use of the Yuan in settling trade and investment with Africa and by the development of Chinese financial institutions across the continent. Li Dongrong, assistant governor of the Peoples Bank of China, said at the FOCAC meeting that Africa is capable of becoming a new international capital hub and the use of the Yuan there should improve with increasing demand for the currency there. "We will continue to encourage domestic financial institutions to increase their presence and business across the continent," he said.


African countries, on their part, have shown interest in the yuan, with an official of the Bank of Ghana saying that its board of directors had decided to use the Yuan as part of its settlement and reserve currencies, though details need to be worked out with the Peoples Bank of China. Of course, nothing can be taken for granted. An economic recovery in the United States and Europe along with a strengthening of the dollar and the euro would lessen the attractiveness of the yuan as a reserve currency to African central bankers. As Karl Marx noted in the 19th century, economics determines politics.


This article was originally published in the Stitch Times magazine, September, 2012.