Changing Focus

By Hannah Edinger

CHINAs supercharged days of double-digit growth are over. The worlds second largest economy is now rebalancing. Instead of overinvestment， it is to be driven by consumers and services.

The annual session of the 12th National Peoples Congress （NPC）， Chinas national legislature， held in Beijing in March， fixed the nations 2016 growth outlook at 6.5 percent to 7 percent， the lowest in 25 years.

This changing economic structure and transformation - one that is less fixated on infrastructure mega-projects and therefore， is less resourceintensive - has been overdue. As seen in the NPC session， the accompanying plenary of the 12th National Committee of the Chinese Peoples Political Consultative Conference， Chinas top political advisory body， as well as the regional meetings in the run-up to these two sessions， economic overcapacity and pollution issues are high on the agenda.

These issues have also informed the 13th FiveYear Plan （2016-20）， which focuses on a more sustainable growth path， particularly in terms of the environment and social aspects.

Global impact

Chinas ongoing structural shifts and recalibrations in its economic makeup will continue to have global impacts and redefine its relationship and terms of engagement with key commercial and trading partners. This includes many African countries that have largely benefited from Chinas previous growth spurt. A number of Sub-Saharan African economies have been overly reliant on Chinese resource demand for their economic performance. Although still robust and a key economic driver at minimum 6.5 percent growth， Chinas slowdown from double-digit growth rates coupled with globally lower commodity prices has already seen knock-on effects in African states， resulting in weaker currencies， foreign exchange shortages， greater budget deficits and moderated growth rates. African countries and companies are looking to better understand and adapt to Chinas changing realities.

The triennial meetings of the Forum on ChinaAfrica Cooperation （FOCAC）， a conduit for Chinas foreign commercial policy toward the continent， have always supported political， economic， social， security as well as developmental engagements.

However， a shifting emphasis in the engagement dialogue was visible at the Johannesburg Summit of the FOCAC in December. It indicated the need for a more balanced model of commercial engagement， placing greater focus on non-resource sectors. The commitments under the Johannesburg Declaration point to this， focusing on supporting infrastructure， capacity building and funding mechanisms.

Upgraded cooperation

At the summit， Chinese President Xi Jinpings pledge to assist with 10 new cooperation projects was supported by the creation of the $10-billion China-Africa Industrial Capacity Cooperation Fund. The fund will support Chinese companies investments in value-adding sectors in Africa， including manufacturing， hi-tech， agriculture， energy and infrastructure. Launched in January， the fund is regarded by some as an upgraded version of China-Africa cooperation.

The China-Africa Development Fund， which opened doors in 2007 following commitments at the First FOCAC Summit in Beijing in 2006， received Xis pledge to increase its capitalization from $5 billion to $10 billion. This fund， largely linked to resource and commodity invest-ments， is also active in industrial and infrastructure-focused projects.

The various funding pledges will assist the cooperation plan outlined by Xi， with a greater focus on industrialization， agricultural modernization， infrastructure construction， financial service cooperation， green development and trade and investment facilitation.

This proposed upgraded era of cooperation will be an important one for Africa as the China-enabled “golden-growth decade” has passed. As China rebalances， so must Africa， especially as there will never be another China； and the impact it has had on commodities markets and resource-driven economies will not be repeated. African economies will need to seek a new growth model， and fast.

Over the past decade， the Sino-African relationship has matured from political courtship to bolder business-to-business engagements. As a broader variety of players in “China Inc.” consider investment in a greater spread of sectors and opportunities， Africa too should be thinking about Chinas sectors of the future. Chinas internal recalibration will thus require African businesses to refocus their value proposition.