Navigating China-Africa cooperation under the global development and security initiatives within a globally constrained geopolitical environment
Occasional Paper 6/2023
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MAY 2023
by Daryl Swanepoel MPA, BPAHons, ND: Co. Admin
Until recently the world was getting used to the idea of the world being an interconnected village. The Cold War was becoming a distant memory. The East-West divide, not so much an ideological constraint, but more of a geographical consideration. It was fast becoming a global village. Then came Covid (2019). Then came the Russia-Ukraine war (2022). In the blink of an eye, the old divisions were being re-established. This essay explores how China-Africa development and security cooperation needs to adapt in this new emerging multipolar world.
Make no mistake, great strides have been made towards interconnecting the global architecture so as to focus on the greater coordination of development and security to the benefit of all mankind, as opposed to the benefit of individual nations, often skewed in favour of the developed world. The role of multilateralism in achieving such coordination should not be underestimated. Neither should initiatives such as the Global Development Initiative and the Global Security Initiative.
The Global Development Initiative
The Global Development Initiative (GDI) was put forward to the United Nations by China’s President, Xi Jinping, in September 2021. In addressing the General Assembly, he raised the initiative in his speech titled “Bolstering Confidence and Jointly Overcoming Difficulties to Build a Better World”. It is intended to support the seventeen 2030 Sustainable Development Goals (SDGs) of the United Nations, which goals envisage a “global development partnership” to promote a “stronger, greener and healthier” world (UN, N.d.).
Since then, 32 practical measures for cooperation have been identified and more than one hundred countries and international organisations have indicated their support therefore, 68 of which have joined the Group of Friends of the GDI at the UN (UN, N.d.).
The GDI upholds the following core principles:
Remaining committed to:
development as a priority;
a people-centred approach;
benefits for all to leave no country and no one behind;
innovation-driven development;
harmony between humans and nature; and
results-orientated actions.
(UN, N.d.)
Furthermore, the GDI aims to promote international cooperation in eight priority areas:
poverty alleviation;
food security;
pandemic response and vaccines;
financing for development;
climate change and green development;
industrialisation;
digital economy; and
connectivity in the digital era.
(UN, N.d.)
Going forward the GDI will function under the principles of:
Remaining committed to development as a priority, and focusing on the implementation of the United Nation’s 2030 Agenda;
Remaining committed to results-orientated actions and a project-led approach in promoting policy dialogue, experience sharing, capacity building, and practical cooperation;
Encouraging extensive participation, with the UN as an important partner for cooperation and the Group of Friends of the GDI as the main driver;
Increasing efforts to pool resources, encourage donor participation in cooperative projects and to better leverage the Global Development and South-South Cooperation Fund and the UN Peace and Development Trust Fund;
Strengthening comprehensive GDI cooperation across all 17 SDGs in order to ensure the timely achievement of the 2030 Agenda; and
Focussing on addressing the pressing key issues of poverty alleviation, food and energy security, as well as overcoming the disruption to industrial and supply chains.
(UN, N.d.)
In a nutshell, the GDI provides renewed impetus to the implementation of the UN’s “2030 Agenda by revitalising the global development partnership, mobilising international development resources, deepening development cooperation, bridging the North-South gap, and aiming for stronger, greener and healthier global development” (UN, N.d.).
The Global Security Initiative
The Global Security Initiative (GSI) was also proposed by China’s President, Xi Jinping. It calls on countries to adjust to the changing international environment “in the spirit of solidarity”. It proposes that the complex and intertwined security challenges ought to be addressed with a “win-win mindset” (MOFA, 2023).
The GSI aims to:
eliminate the root causes of international conflicts;
improve global security governance;
encourage joint international efforts to bring more stability and certainty to a volatile and changing era; and
promote durable peace and development in the world.
(MOFA, 2023)
The six core principles, interlinked and mutually reinforcing, under which the GSI is to operate include:
Remaining committed to the ideal of common, comprehensive, cooperative, and sustainable security;
Remaining committed to respecting the sovereignty and territorial integrity of all countries;
Remaining committed to abiding by the purposes and principles of the UN Charter;
Remaining committed to taking the legitimate security concerns of all countries seriously;
Remaining committed to peacefully resolving differences and disputes between countries through dialogue and consultation; and
Remaining committed to maintaining security in both traditional and non-traditional domains.
(MOFA, 2023)
The GSI priorities of cooperation include:
Actively participating in the formulation of a New Agenda for Peace, as well as the other initiatives put forward on the UN’s “Our Common Agenda”;
Helping to coordinate the healthier interaction among major countries in order to build peaceful coexistence, overall stability, and balanced development;
Upholding the consensus that “a nuclear war cannot be won and must never be fought”;
Seeing to the full implementation of the resolution “Promoting International Cooperation on Peaceful Uses in the Context of International Security”, which was adopted by the 76th session of the UN General Assembly;
Encouraging the political settlement of international and regional disputes;
Supporting and improving the ASEAN-centred regional security cooperation mechanism and architecture;
Supporting the implementation of the five-point proposal on realising peace and stability in the Middle East;
Supporting African efforts aimed at resolving regional conflicts, to fight terrorism, to safeguard maritime security, and to encourage the international community to provide financial and technical support to these African-led operations;
Supporting Latin American and Caribbean countries in actively fulfilling the commitments in the “Proclamation of Latin America and the Caribbean as a Zone of Peace”, and supporting the Community of Latin American and Caribbean States in upholding regional peace and security;
Attending to the special situation and legitimate concerns of Pacific Island countries in regard to climate change, natural disasters, and public health, and supporting their efforts aimed at implementing the 2050 Strategy for the Blue Pacific Continent;
Strengthening the maritime dialogue and practical cooperation to combat maritime differences, and work together to tackle transnational crimes at sea;
Strengthening the UN’s role as the central coordinator in the global fight against terrorism;
Deepening international cooperation in the field of information security;
Strengthening biosecurity risk management;
Strengthening international security governance on artificial intelligence (AI) and other emerging technologies;
Strengthening international cooperation with regard to outer space and safeguarding the international order in outer space regulated by international law;
Supporting the World Health Organization in its efforts aimed at global public health, and coordinate and mobilise global resources to jointly respond to global infectious diseases;
Safeguard global food and energy security;
Seeing to the effective implementation of the UN Convention against Transnational Organised Crime; and
Supporting the cooperation among countries in addressing climate change.
(MOFA, 2023)
The GSI proposes a number of platforms and mechanisms to carry out the hefty objectives. These include engaging in wide-ranging discussions within all organs of the UN, leveraging the roles of the Shanghai Cooperation Organization, BRICS cooperation, the Conference on Interaction and Confidence Building Measures in Asia, and other relevant mechanisms, and holding of high-level conferences on global security (MOFA, 2023).
It also undertakes to support international peace and security fora, such as the China-Africa Peace and Security Forum, the Middle East Security Forum, the Beijing Xiangshan Forum, and the Global Public Security Cooperation Forum (Lianyungang). And, with a view to “improving the governance capacity in the domain of non-traditional security”, it suggests the building of more international platforms and mechanisms for exchange and cooperation on addressing security challenges in such areas as counter-terrorism, cybersecurity, biosecurity and emerging technologies (MOFA, 2023).
What has changed?
Covid-19 and the Russia-Ukraine war has happened, and the world has changed in two major respects. Firstly, global supply chains have been disrupted, and secondly, a multipolar world has started to re-emerge.
The Covid-19 pandemic, for one, brought about considerable supply chain challenges across the globe. This was due to the stopping of raw materials and finished goods flow, which in turn disrupted manufacturing (Harapko, 2021). The seamless flow of goods and services was interrupted because of the lockdown measures adopted by countries as a health strategy to mitigate the impact of the pandemic’s spread amongst their citizens. This resulted in production stoppages and restrictions to the movement of people and goods. Moreover, border closures, logistical constraints, as well as the slowdown of trade and business activities constrained the smooth functioning of the global supply chains (PWC, N.d.).
Manufacturers found it difficult to distribute their products, and there were serious inventory build-ups resulting in an increased cost of storage. And producers of especially perishable finished goods experienced wastages. Due to the restrictions, the cost of distribution was also increased, affecting the profitability of manufacturers, and increasing the cost of living (PWC, N.d.).
A further contributor to the increased cost of living has been the soaring sea freight rates, which, for example, in 2021 registered increases in excess of 300 per cent. This was caused by a series of complex factors, such as shifting air freight to shipping containers, which created container shortages, congestions in ports, holding back of ships because they could not be received in ports due to lockdowns, and rerouting, all of which impacted operational costs (UNICEF Supply Division, 2021).
As a result of the pandemic’s disruption, enterprises plan to be more resilient in future with customers, suppliers, and other stakeholders, and they are reviewing their strategies with regard to their supply chain architecture. In order to prepare for future disruptions, renewed consideration is being given to what should be “done locally, regionally and globally, including warehouses and manufacturing sites” (Harapko, 2021).
Similarly, the Russia-Ukraine war has disrupted global supply chains and increased the cost of living. To cite just one example: Europe has been heavily reliant on gas imports from Russia. Due to the disruption of gas flows caused both operationally and as a result of economic sanctions, energy inflation soared. And since energy inflation is a significant contributor to food inflation, food prices in 2023, for instance, rose by 14,1 per cent (Arce, Koester & Nickle, 2023).
The graphs below show the dramatic impact of the war on the Harmonised Index of Consumer Prices (HICP) and HICP food inflation with sub-components:
Sources: Eurostat and ECB staff calculations. Latest observation: January 2023.
Another example is the disruption in wheat exports caused by the Russia-Ukraine war. This, for instance, has a devasting effect on food prices in Africa. Because Africa imports a large portion of its food from Russia and Ukraine, it has resulted in the prices of wheat going up by as much as 60 per cent. The president of the African Development Bank suggested that the continent could lose up to 11 billion USD worth of food due to the conflict (Tasamba, 2022).
Consequently, China and Africa have not escaped these developments.
The Covid-19 pandemic has materially impacted the Chinese economy.
Following the outbreak in 2019, China’s GDP fell sharply. In the first quarter of 2020, for example, it fell by 6,8 per cent. Demand fell by between 2 and 4 per cent, its GDP fell by 0,2 per cent and imports fell by an alarming 6 per cent. The outbreak of the pandemic disrupted production, business, and households’ standards of living. It harmed the industry, led to many business closures, and made it difficult for them to manage credit, staff, and expenses (Habibi, Habibi & Mohammadi, 2022).
And then the extended lockdown further hampered China’s economic goals. 2022 predictions were obliterated. Retail sales of consumer goods dropped by 11,1 per cent from the previous year. Year-on-year production fell by 2,9 per cent, manufacturing decreased by 4,6 per cent and the sale of motor vehicles dropped by a whopping 31,6 per cent (Chin, 2022).
And, of course, China is also feeling the global cost of living crisis resulting from the war, the imposed sanctions on Russia, and the more inward-looking United States. They have not escaped the rising oil prices, and the disruption to international financial transactions, and they are a target in the United States’ localisation drive.
Apropos Africa, the United Nations Assistant Secretary-General, Ahunna Eziakonwa, has pointed out that Russia’s war in Ukraine “has disrupted Africa’s promising recovery from the Covid-19 pandemic”. It has raided food and fuel prices, disrupted trade of goods and services, tightened the fiscal space, constrained green transitions, and reduced the flow of development finance within the continent (Sen, 2022).
The exporting of products such as grain, fertilizer and crude oil has been disrupted. 2019 wheat imports have increased by 68 per cent to 47 million tons since 2007. Kenya, in 2021 for example, imported 30% of its wheat from Russia and Ukraine. This has resulted in unprecedented levels of inflation and food scarcity. And the cost of food is around 42 per cent higher than it was from 2014 to 2016 (The Borgen Project, 2023).
And, of course, Africa has not yet fully recovered from the damage caused to its economies by the Covid-19 pandemic. The continent has not only been set back by the loss of economic activity during the period of Covid-19, but exponentially so through the loss of GDP growth that would have been had, had Covid-19 not emerged. A double whammy, so to speak. This is especially harmful in a high population growth environment, which Africa, especially Sub-Saharan Africa, is.
China-Africa cooperation within the changed environment
China-Africa cooperation has contributed immensely to the economic and human upliftment of Africa.
China is Africa’s largest trade partner and source of foreign direct investment (FDI). The investment has had a significant impact on the continent’s infrastructure development and economic growth. It has offered development loans to nations, such as resource-rich Angola; invests in agriculture; and it has assisted in the development of special trade and a number of economic zones in several states, for example in Ethiopia, Nigeria and Zambia, amongst others (Albert, 2017).
And China’s need for oil and other mineral resources, and the market it presents for selling its products, has driven its investment in Africa (Albert, 2017).
In 2016 already, Angola emerged as China’s third-largest supplier of oil. Other countries supplying oil to China include the Republic of the Congo and South Sudan. China rose to become Africa’s largest trade partner since 2009 (Albert, 2017). Its share in Sub-Saharan Africa trade increased from 4 per cent in 2001 to 25,6 per cent in 2020 (Mohseni-Cheraghlou, 2021).
China’s “going out” policy has resulted in it diversifying its business interests in Africa. It is invested across a wide spectrum ranging from mining to energy, to telecommunications and agriculture – tobacco, rubber, sugar, and sisal plantations, amongst others. And it has through a mixture of public and private funds financed the construction of roads, railways, ports, airports, hospitals, schools, and stadiums (Albert, 2017).
The graphs below indicate the extent of China’s FDI in and loans to African countries.
Source: Jones, Ndofor & Li, 2022
The bulk of Chinese humanitarian aid in Africa in 2020 and 2021 was overwhelmingly in response to the Covid-19 pandemic. The aid comprised the provision of medical supplies, vaccines, and medical teams. Prior to this, the majority of Chinese humanitarian aid was also health-related (making up 74 per cent of activities and 76 per cent of funding) and included the deployment of medical personnel, construction of infrastructure such as hospitals, and contribution of medical supplies, equipment, and drugs.
The remaining aid was more or less evenly split between emergency food aid and disaster relief. China’s African humanitarian spend has been concentrated in Angola, Kenya, Zambia, Zimbabwe, the Democratic Republic of the Congo, and Uganda. These countries accounted for 51 per cent of humanitarian spending from 2000-2017. The vast majority of Chinese humanitarian aid – 89 per cent – tends to be of a bilateral nature, but in recent years it has been increasingly contributing to African multilateral organisations.
Some examples are cited in the table below:
Kenya food aid / drought relief, 2016-2022: Kenya has suffered from a long-running drought beginning in 2014 leading to rising food insecurity from 2014-2016, a national drought emergency in 2017, and ongoing food stress, crisis, or emergency conditions persisting in various locations until the present day. China has made regular donations of rice to Kenya since 2016, including 21,366 tons of rice worth 22.5 million USD in 2017 and a series of eight consignments between 2018 and 2022 totalling 11,835 tonnes worth approximately 12 million USD, the last of which was delivered on 14 February 2022. |
Sierra Leone food aid, 2021: In mid-2021, the World Food Programme (WFP) was undertaking food aid distribution in Sierra Leone to more than 100,000 people facing severe food insecurity largely as a result of rising food prices due to the socioeconomic impacts of Covid-19. China donated an unspecified quantity of rice in August 2021 via its South-South Cooperation Assistance Fund for distribution through the WFP relief efforts. Agreements to provide similar food aid were also signed with Guinea-Bissau, Cameroon, and Uganda. |
Lesotho food aid, 2020: At the end of 2020, all districts of Lesotho were in acute food security crisis affecting 766,000 people due to persistent drought, widespread poverty, and the impacts of Covid-19. China donated aid through the World Food Programme targeted at maternal and child health and nutrition, reaching 18,000 pregnant and breastfeeding women across four districts and 18,000 children across five districts, the latter amounting to 366 tonnes of food aid. |
Tunisia hospital construction, 2020: China funded the construction of a 246-bed hospital in Sfax province in Tunisia from 2016 to 2020; due to the ongoing pandemic when construction was completed in December 2020, the hospital was designated as a national centre for the care of Covid-19 patients. |
Cyclone Idai response, 2019: In response to Cyclone Idai, which affected Southeast Africa in 2019, China provided humanitarian supplies to Zimbabwe, Mozambique, and Malawi, and deployed an international rescue team of 65 people to Mozambique. Work undertaken, in collaboration with the UNDP and UNICEF, included repairing damage to housing, schools and clinics; reproductive health care activities including training for local health workers; provision of clean drinking water and emergency hygiene facilities; child protection activities; and strengthening surveillance of post-disaster diseases in cyclone-affected areas. |
Namibia food aid, 2019: At the end of 2019, Namibia was experiencing drought conditions that led to 430,000 people facing severe food insecurity across large portions of the country. China donated an unspecified amount of food aid to Namibia through the World Food Programme in December 2019; additional government aid was channelled through the Red Cross Society of China, and Chinese residents in Namibia also donated approximately 140,000 USD towards drought relief. |
Somalia food aid, 2019: Due to long-term drought alongside political and economic instability, more than 2.2 million people were facing critical levels of hunger in 2019. China donated 6,500 tonnes of food aid to Somalia, including rice, corn, beans, vegetable oil and other food items, beginning with 2,000 tonnes of rice which arrived in June 2019, and provided funding to support the World Food Programme in purchasing additional food items locally. |
Ebola response, 2014-2018: China provided emergency humanitarian aid worth 120 million USD to 13 African countries, including building laboratories and treatment centres, dispatching nearly 1,200 medical workers and public health experts to affected countries, and training approximately 13,000 local medical workers. In 2018, China provided supplies, money, health experts, medicine and training to the Democratic Republic of Congo, Rwanda, Burundi, and Uganda, as well as the African Union. |
Source: Lucas, 2022
China is also increasingly helping Africa to establish a more secure, conflict-free continent.
At the opening ceremony of the Eighth Ministerial Conference of the Forum on China-Africa Cooperation (FOCAC) last November 2021, President Xi said that peace and security play an important role and that China would undertake ten peace and security projects for Africa. He said that China would continue to deliver military assistance to the African Union, and that it would support African countries to independently maintain regional security and fight terrorism. It was also announced that it would conduct joint exercises and on-site training between themselves and African peacekeeping troops and cooperation on small arms and light weapons control (Zhou, 2022).
China’s contribution to peace and security in Africa is characterised by:
Using diplomatic means to push for the resolution of some conflicts such as that in Darfur, but in a manner that does not compromise the principle of non-interference in the domestic affairs of other countries;
It is becoming a major supplier of conventional arms to African countries;
It is increasing the number of troops toward UN peacekeeping missions, which has seen a twenty-fold increase since 2000, with the majority based in Africa; and
It intends to involve itself in post-conflict reconstruction through its economic engagement.
(Saferworld, N.d.)
Practical examples include the provision of strong support for the strengthening of Africa's own peacekeeping capacity by providing aid and support to Africa to enhance its independent peacekeeping capability. Since 2018 it has delivered at least “100 million USD to the African Union (AU) in military assistance grants to support building up the African Standby Force (ASF) and the African Capacity for Immediate Response to Crises (ACIRC)”. Furthermore, it has established a Peace and Security Cooperation Fund. It has undertaken 50 security aid projects, and it has provided equipment, supplies, training, and other forms of support for Africa’s efforts at maintaining peace and stability. It also regularly has close high-level exchanges with its African counterparts, carries out military technology exchange and cooperation, and assists in the building of academies, hospitals, and other facilities in Africa. It also assigns military experts to advise on the strengthening of national defence, military development, and the reinforcement of Africa’s own peacekeeping capacity (Lin & Zhou, 2022).
China played a mediation role in Darfur, Sudan in 2007, Zimbabwe, the Democratic Republic of Congo, and Rwanda in 2008, South Sudan since 2013, and Djibouti in 2017.
Military and police cooperation, counter-terrorism, and law enforcement are also listed as strategic priorities in the Dakar China/Africa Action Plan 2022-2024.
Between 2003 and 2017, China was engaged in mediating 15 conflict situations globally, including seven in Africa. It is currently actively involved in crisis management in Sudan and South Sudan (Ryder, 2022).
The destruction of the mutually beneficial cooperative nature of the China-Africa development model must not become a casualty of the emerging multipolar global order. Both China and Africa must guard against this. African countries, the author predicts, will come under increasing pressure to choose sides. They must not.
The Forum for China-Africa Cooperation (FOCAC) is already viewed with a measure of scepticism by some of those outside of the arrangement. Amongst others, China is often criticised as having a habit of offering huge amounts of low-interest loans to countries that they know will most probably not have the means to pay them back. They accuse China of “debt trap diplomacy” (Shattuck, 2018).
FOCAC should not be swayed. Rather, instead of retreating, FOCAC should strengthen its resolve for multilateralism. In this regard two proposals are ventured:
• FOCAC should establish a strategic think-tank within its structures to contemplate the changing diplomatic environment, and to mitigate the new economic challenges that are bound to arise from the actions of more inward-looking superpowers. And the work of FOCAC needs to be aligned with the Global Development and Global Security Initiatives.
The think-tank needs to be properly resourced and organised to enable it to adequately prepare research and analyses to underpin the policymakers within FOCAC. To this end, a proper inclusive coordination mechanism – balanced with China and African input – needs to be designed that will ensure adequate research outcomes across all the strategic focus areas of the initiatives on an ongoing and sustainable basis. This will require workstreams aligned with the GDI and GSI objectives. And since the priority areas of the GDI (and GSI) are closely aligned with many of the 17 Sustainable Development Goals (SDGs), including in the areas of poverty eradication, food security, health, climate action, the planet, industrialisation, innovation and means of implementation, the workstreams’ programmes ought to be synchronised with the SDGs (Chatterjee, 2023).
The China-Africa Think Tanks Forum (CATTF) could seamlessly be morphed into such a structure, tasked to undertake such work.
• Africa should advance an argument in favour of triangular engagement between itself, China, and the West. Competition between the United States and China is not going to go away, and Africa is increasingly going to be confronted with demand choices. But for Africa, it should not be about what the decision holds for the United States, or for China, but what is in the best interest of Africa. A sound relationship with China, and a sound relationship with the West, is what is in the best interest of Africa. Therefore, creating a mechanism for the three parties to engage in developmental and security issues in Africa could be a useful tool to guide and assist continental leaders in harnessing the most out of their diplomatic and inter-governmental efforts.
This will be no easy feat given the heightened tension of late between the United States and China. Political observers told CNBC that the relations are on a dangerous path, with no trust on either side. They said that Beijing regarded the United States as its primary adversary and believes that the United States “is intent on closing off the path of China” (Bala, 2023).
That said, the more rational thinkers do see the need for improved relationships between the two superpowers. For instance, US Treasury Secretary, Janet Yellen, recently said that the US and China “can and need to find a way to live together” despite the strained relations (Hussein, 2023).
Finding that way will require mechanisms of dialogue between the two sides, and as Africans ponder their relations between the two, the need for three-way engagement seems evident. It may be, given the current tensions, that direct triangulation may not immediately be possible, and that parallel dialogue might be more feasible. Whatever the mechanism, the need is urgent.
The initiation of the triangular discussion could take the form of a high-level roundtable between academics, geopolitical analysts and experts tasked with exploring options for convergence, cooperation, and co-existence. The neutrality of the convening authority will be key.
New global trade and investment thinking
Both the Covid-19 pandemic and the Russia-Ukraine war have been a wake-up call with regard to global supply chain thinking and have highlighted a need for new international trade and investment architecture. Firstly, it shone a light on Just-in-Time (JIT) manufacturing and, secondly, it brought into question the efficacy of global value chains (GVCs) and the outsourcing of manufacturing to external jurisdictions.
Modern manufacturing across the globe widely uses Just-in-Time (JIT) manufacturing processes, which is the “production model in which items are created to meet demand, not created in surplus or in advance of need. Organisations adopt the JIT approach to increase efficiency, reduce costs and speed up product delivery. To achieve these goals, however, they must eliminate the types of waste typically associated with manufacturing, such as overproduction, unnecessary wait times and excessive inventory – only then can they implement an effective JIT strategy” (Sheldon, 2022).
The vulnerabilities and deficiencies of the lean, just-in-time global supply chain model have been exposed by the Covid-19 pandemic. The geopolitics, labour shortages, and pandemic-related shutdowns, led to supply chain bottlenecks, increased costs and disruptions. The imbalances with supply versus demand made the JIT strategies somewhat obsolete and resulted in increased costs, and rising inflation (Kimberling, 2022).
The tumultuous events associated with Covid-19 challenged the merits of paring JIT, as industries were left vulnerable when the pandemic hampered factory operations and sowed chaos in global shipping. Economies around the world were bedevilled by shortages of a vast range of products (Goodman & Chokshi, 2021).
The Russia-Ukraine war had a similar impact on JIT manufacturing. Fourty-two per cent of Ukraine’s exports were, for example, semi-finished manufactured products, which when stopped or delayed as a result of the war, had a negative knock-on effect on production processes down the line in other jurisdictions (Goodman & Chokshi, 2021).
In response, organisations are now trying different strategies like onshoring or reshoring vendors and vertically integrated supply chains. Several leading organisations are planning to build operations closer to the markets they serve, arguing that locating suppliers closer to assembly and manufacturing locations could assuage product shortages (Hamilton, 2023).
Similarly, Global Value Chains (GVCs) were disrupted by the Covid-19 pandemic and are still being disrupted by the Russia-Ukraine war.
A GVC is where the different stages of the production of a product are located across a number of jurisdictions. Enterprises structure their processes through outsourcing and offshoring the production stages across different jurisdictions in order to optimise productivity and production costs (OECD, N.d. (a)). It is about maximising benefit derived from, for example, different government incentives, tariffs and subsidies, availability of skills and labour costs, and manufacturing cost structures, which differ from country to country.
To cite the OECD example: “A smartphone assembled in China might include graphic design elements from the United States, computer code from France, silicone chips from Singapore, and precious metals from Bolivia. Throughout this process, all countries involved retain some value and benefit from the export of the final product” (OECD, N.d.(b)).
It goes without saying though that in order for the GVCs to function effectively, all jurisdictions across the chain need to be stable, predictable and open for business. Covid-19 disrupted this. “The persistent uncertainty related to the shift of the epicentre of the pandemic from region to region, and the parallel instability affecting production costs”, made it impossible for enterprises to restart their business on a global scale. This led to many having to decrease or stall their production activities. Yet, simultaneously, there was an increase in demand for a range of critical products that could not be met (Fortunato, 2020).
The Russia-Ukraine war is having a similar negative impact on GVCs.
According to Dun and Bradstreet data, at least 374,000 businesses worldwide rely on Russian suppliers, and at least 241,000 businesses across the world rely on Ukrainian suppliers (FF, N.d.). The war has interrupted the logistics supply chain and by extension made any GVC dependent on these two countries unworkable.
The trade sanctions imposed on Russia and those that circumvent the sanctions, the disruption of shipping and air routes, are impeding the flow of goods and creating product shortages. Catastrophic food shortages around the world as a result of the war – Ukraine is a global supplier of wheat – raise the real possibility of famine in vulnerable societies across the globe (Stackpole, 2022).
At the same time, the movement of electronics, raw materials, and parts supplies out of China and other countries has seriously hampered GVCs (Stackpole, 2022).
They now need to find innovative ways to recalibrate alternative ways to ensure a complete GVC.
What does this mean for global trade and investment?
Apropos trade, it means that individual countries (and/or regions) will have to re-evaluate their dependence on imports. They will have to plan their economies in such a way that they can be more self-reliant, lest they are held hostage by future pandemics and natural catastrophes. This does not necessarily dictate that countries need again to become inward-looking, albeit that in many instances local manufacturing will be more beneficial, for example, where it could aid job creation in high-unemployment economies. But then it needs to be balanced with competitiveness.
What it may entail is that supply chains need to be adapted to ensure sufficient stock reserves in individual markets and not only in the country of production. It may also entail new thinking in terms of the domain of manufacturing. Where markets – individual countries or regions – warrant it, the sight of manufacturing should shift to those individual countries and/or regions.
African trade ministers have been calling for such for a long time. And with the launch and implementation of the African Continental Free Trade Area (AfCFTA) – the world’s largest free trade area which brings together 55 African countries, organised in eight regional economic communities – this has become an imperative for African economic planners. It creates a single market comprised of 1,3 billion people with a combined GDP of around 3,4 trillion USD (AfCFTA, N.d.).
The objective of the AfCFTA is to, amongst others, remove trade barriers and advance Intra-Africa trade. It aims to promote “trade in value-added production across all service sectors of the African Economy” and to foster industrialisation, job creation, investment, and competitiveness (AfCFTA, N.d.)
In terms of Chinese investment into Africa, the changing focus from export trade to manufacturing investment needs to be accelerated, which, in any event, fits well with the objectives of the Global Development Initiative.
Conclusion
As a result of the Covid-19 pandemic and the Russia-Ukraine war, the world has changed. A new multipolar world is emerging, which is counter-productive to what is envisaged within the Global Development and Global Security Initiatives. This negative trajectory must be countered in the interest of economic and human development.
The cooperation between Africa and China, through fora such as FOCAC, have had immense positive spin-offs for development and stability on the African continent. Africa and China must guard against their cooperation becoming a casualty of the emerging new order. To this end, it needs to adapt and deepen its reach through new strategic thinking and triangular engagement between themselves and the West.
If the ideals of the Global Development and Security Development Initiatives are to be advanced, it will require a departure from posturing diplomacy to engaged diplomacy. No easy achievement within the constrained global geopolitical setting. This paper serves as a pointer as to what is required.
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This report has been published by the Inclusive Society Institute
The Inclusive Society Institute (ISI) is an autonomous and independent institution that functions independently from any other entity. It is founded for the purpose of supporting and further deepening multi-party democracy. The ISI’s work is motivated by its desire to achieve non-racialism, non-sexism, social justice and cohesion, economic development and equality in South Africa, through a value system that embodies the social and national democratic principles associated with a developmental state. It recognises that a well-functioning democracy requires well-functioning political formations that are suitably equipped and capacitated. It further acknowledges that South Africa is inextricably linked to the ever transforming and interdependent global world, which necessitates international and multilateral cooperation. As such, the ISI also seeks to achieve its ideals at a global level through cooperation with like-minded parties and organs of civil society who share its basic values. In South Africa, ISI’s ideological positioning is aligned with that of the current ruling party and others in broader society with similar ideals.
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