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China’s role in Africa’s renewable energy sector was a key topic at the Forum on China-Africa Cooperation summit in the first week of September. The Angolan portal has published several articles about the summit. Africa is beginning to be more assertive in its relations with China. Many African countries have difficulties in restructuring their debts to China, Chinese loans in exchange for raw materials and the Africa-China trade pattern, which is still characterized by the export of raw materials, have a negative impact on Africa and Africa’s negative perception of relations with China. Therefore, the 2024 Beijing Forum on China-Africa Cooperation is considered to be the ground zero for rebuilding the Africa-China partnership.
Read here: What do Angola and other African countries expect from FOCAC 2024?
Read here: FOCAC 2024: China’s agenda at the 2024 Africa-China Forum – Climate, global connectivity and political alliances with the Global South
Today, we analyze a document published by Standard Bank on August 20, titled “China’s Interest in Renewable Energy in Africa”. Standard Bank is Africa’s leading asset finance institution supporting Africa’s growth and development.
According to the Standard Bank report, Africa must take advantage of the convergence of Africa’s energy needs, the increasing viability of renewable energy, and China’s global leadership, which has created a “gateway” to strong areas of cooperation between China and African countries. Africa. Both sides should develop specific indicators to measure the implementation of agreed goals, go beyond rhetoric, and share the benefits fairly (not necessarily evenly), which will consolidate the cooperation achievements made so far and promote China-Africa relations into a new era.
Standard Bank analysts have made interesting points about the Chinese economic situation, saying that China has changed the drivers and motivations of its macroeconomic policies. Standard Bank believes that China is shifting from specialization based on relative efficiency (comparative advantage) to actively improving competitiveness (competitive advantage).
To this end, China has mobilized vast resources for renewable energy capacity, with the scale of its expansion unmatched anywhere else in the world. China has become the leading producer of wind and solar energy, and is a global leader in grids, storage, and related technologies and equipment. China’s dominance also involves control of the raw materials supply chain through domestic and foreign investment. At the same time, economies of scale and agglomeration have led to lower unit production costs, improving sales prospects for renewable energy equipment manufacturing, enabling direct competition with the United States and the European Union in a new economic paradigm dominated by the energy transition.
Renewable energy ecosystems are an important thematic area that offers new areas for global governance and serves as a catalyst for the ongoing transition to a more diversified global system.
Renewable energy represents an opportunity for Africa to leapfrog traditional energy sources. Virtually all African countries have solar potential, and most coastal countries have wind conditions that can help redefine Africa’s energy transformation agenda. However, the proportion of the population with regular access to energy in Africa is the lowest in the world, and African countries almost without exception face growing energy demand and insufficient supply, increasing carbon emissions and vulnerability to energy oil price fluctuations. This has a negative impact on African economies. Economic growth, industrialization and modernization, and hinders the progress of their socio-economic well-being.
Nonetheless, the key question for the FOCAC 2024 meeting is how the Africa-China partnership can develop to a new level from the perspective of economic relations, enabling African countries to add value to their raw materials.
Renewable energy faces high initial costs and involves many uncertainties, making financing conditions highly relevant. China will contribute to alleviating the technical and financial constraints of African countries. On the other hand, reducing national and project risks, forming human capital, and creating an environment conducive to investment are challenges that African countries must address.
Based on Standard Bank’s analysis, we can infer that China will be able to transfer to African countries the value chain links where it begins to lose its “comparative advantage”, while at the same time transferring to African countries the value chain links where it begins to accumulate “competitive advantages” relative to the United States and the European Union. Otherwise, if China continues to compete with the United States and the European Union in the fields of energy transition and new technologies, while dumping low value-added manufactured goods in Africa, China-Africa relations will continue to be unbalanced.
By: José Correa Nunes
Executive Director of Angola Portal
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