During the past two decades, as EU-North African^[1]relations have increasingly centred around migration and border control, China has expanded its presence in the region. Beijing offers a different deal. At the 8th Ministerial Meeting of the China–Arab Forum in July 2018, President Xi Jinping preached the virtues of his foreign policy flagship, the Belt and Road Initiative (BRI), insisting that development was key to resolving many security problems in the Middle East and North Africa (MENA). Xi announced during this meeting new loans worth US $20 billion, as well as US $106 million in new financial aid to the MENA region aimed to boost infrastructure construction, industrial revival and new trade relations.^[2]

Beijing has been engaged in a comprehensive economic and diplomatic offensive that is challenging European dominance in the region. China’s presence in North Africa is driven by its desire to expand its global market access while securing key natural resources to power its economy. This paper provides an analysis of Sino–North African relations, spanning from historical roots, the nature of economic exchanges, cooperation in the digital sector and the key controversies emerging from the relationship.

Evolution of Sino-North African Relations

The People’s Republic of China (PRC) and North Africa established close relationships ever since the national liberation movements were formed in the 1950s.  A significant turning point in Sino-North African ties was the 1955 Bandung Conference, also known as the Afro-Asian Conference. President Gamal Abdel Nasser of Egypt, the Chinese Premier Zhou Enlai, and representatives from the National Liberation Front (FLN) of Algeria, the Neo Destour party of Tunisia, and the Istiqlal party of Morocco all attended the summit. Egypt was the first African nation to formally establish diplomatic ties with China in 1956.

Sino-North African relations during the first decades following the establishment of the PRC can be understood through the prism of China’s Three Worlds Theory. In this vein, China was crucial in supporting Algeria’s fight for freedom from French colonial power. In December 1958, China became the first non-Arab nation to recognize the GPRA (Provisional Government of the Algerian Republic). Between 1958 and 1962, China helped the National Liberation Army (Armée de Libération Nationale, ALN), the FLN’s armed branch, by giving it financial support, weapons and training for Algerian fighters.

Beyond appealing revolutionary, anti-imperialist speeches, China proved to be a generous donor to the region during this period.^[3]Driven by political imperatives – chiefly the desire for leadership over developing countries, China signed aid agreements with all North African countries soon after their independence, except for Libya, since Tripoli continued to recognize the Republic of China (Taiwan) as the legitimate Chinese government until 1978.

The launch of economic reforms in China in the 1980s changed the relationship with North Africa from one based on ideological affinity to one based on trade and investment. With China’s accession to the WTO in 2001, the creation of the Forum on China–Africa Cooperation (FOCAC) in 2000 and the China–Arab States Cooperation Forum (CASCF) in 2004, relations between China and North African countries continued to grow.

The BRI, also known as the New Silk Road, signalled renewed Chinese interest in North Africa. The initiative is one of the most ambitious infrastructure initiatives ever devised. It entails hundreds of projects around the globe, ranging from ports, airports and motorways to fibre-optic cables and smart cities. The BRI seeks to increase connectivity, cooperation, and global trade. China has signed memorandums of understanding with 138 nations, including all the nations of North Africa, and pledged to invest an estimated US$1 trillion across the world. The BRI has several geostrategic and economic goals, and it is symbolically scheduled to end in 2049 to coincide with the PRC’s 100th anniversary.

North African officials have largely viewed the initiative as one that could help narrow infrastructure gaps and speed up technological upgrading. However, the US and European nations have expressed suspicion about the BRI, which challenges the interests of traditional powers, particularly France, in the Maghreb. In 2013, China surpassed France as Algeria’s top economic partner. More recently, Chinese multinationals have entered previously French-dominated industries like telecoms, civil engineering and transportation infrastructure. During a 2018 trip to China, French President Emmanuel Macron urged developing countries to be cautious, stating that the BRI could turn partner states into “vassal states.”^[4]That said, several analysts see that France, like other Western powers, is unable to put such large-scale infrastructure and investment deals on the table for North African countries.

Economic Relations

Trade

Trade between China and the Northern shores of Africa can be chronicled to the Pharaonic period. There is anecdotal evidence that China extended its trade to the Pharaoh and Cleopatra who ornamented their wardrobes with Chinese silk garments. Yet, it was only at the turn of the 21st century that trade between the two regions increased significantly, making China a top-three import origin for all North African countries and a top-ten export market for Egypt and Libya. Between 2004 and 2014, trade volumes between China and the region grew by 20 percent annually on average, rising from $4.9 billion to $28.1 billion.^[5] As of 2020, Sino-North African total trade volumes hit $33 billion.  However, the EU remained by far North Africa’s largest trading partner, with total trade volumes surpassing $124 billion for the same year.^[6]

CHART 1 Sino-North African Trade  (USD Billion)

The Arab Spring negatively impacted Chinese-North African economic relations. Prior to the Libyan uprising in 2010, China received 10% of Libya’s oil exports, representing 3% of China’s total oil imports, the equivalent of roughly 150,000 barrels per day.^[7] Libyan exports were impacted by the unrest following the 2011 toppling of Muammar Gaddafi. However, Libyan oil exports to China have resumed in recent years to reach $3.8 billion in value in 2018. Similarly, Egyptian-Chinese trade experienced a downturn following the events in Tahrir Square in January 2011, before sharply picking up just after the 2014 military coup, which brought President Abdel Fattah El-Sisi to power. Egyptian imports from China increased from $10.46 billion in 2014 to a staggering $47.83 billion.^[8] The decline in commodity prices since 2014 has also significantly impacted the value of North African exports to China, even while Chinese exports to the region remained steady.

Data on Sino-North African trade show a sizable trade deficit for North African countries, in contrast to China’s trade with the Gulf, which is marked by a trade surplus in favour of Gulf states

It is crucial to note that data on Sino-North African trade show a sizable trade deficit for North African countries, in contrast to China’s trade with the Gulf, which is marked by a trade surplus in favour of Gulf states. For instance, in 2020, Algeria imported around $5.6 billion in goods from China, while its exports did not exceed $1 billion.^[9] The same year, Egypt imported over $13.6 billion in goods from China but sold as little as $905.9 million in return. This puts Egypt’s trade deficit with China at over $12 billion for 2020 alone.^[10] Trade figures with other North African countries also indicate trade deficits with China.

Investment

Chinese businesses, both public and private, started investing abroad in the early 2000s following Beijing’s “going out” strategy. Chinese corporations have steadily expanded their foothold in North Africa since then, aided by enticing financial terms and astute diplomacy. Nonetheless, North Africa receives a small portion of China’s foreign direct investment, according to the MOFCOM’s annual Statistical Communiqué on Chinese Foreign Direct Investment. Chinese FDI in North Africa totalled only $3.5 billion in 2019, accounting for only a marginal 0.15 percent of all Chinese FDI and less than 8% of the total amount spent in Africa.

Since the launch of the BRI in 2013, China has shown greater interest in investing in North Africa. Chinese firms have expanded investment to the non-energy sector to incorporate electronics, the automotive industry and textiles, as envisaged in the 2016 China-Arab policy paper.  Egypt captures the bulk of Chinese investments in North Africa, with Chinese businesses involved in major investments in Egypt’s infrastructure, including the building of a New Administrative Capital, power plants and industrial zones. President Sisi received political and financial backing from President Xi Jinping during his 2016 visit to Egypt. The two countries signed 21 agreements during that visit, including one for significant Chinese investments, totalling $15 billion, in numerous projects.

In Algeria, Chinese companies do not invest much but have been successful at winning several tenders for public infrastructure. The Great Mosque of Algiers, the East-West motorway in Algeria and the city’s new airport, all depicted as Chinese investments, are lucrative contracts financed by the Algerian treasury and executed by Chinese construction firms. According to estimates from the China-Africa Initiative at Johns Hopkins University, Chinese companies received contracts from Algeria worth more than $70 billion, between 2009 and 2019, making the country the largest market in Africa and one of the most significant markets globally for Chinese construction companies.

In recent years, Beijing has shown more willingness to invest in high-value-added sectors, promote technology sharing by establishing a collaborative network of integrated technology transfers, encourage exchanges between young scientific talent, create joint research and scientific facilities and encourage Chinese technology firms to expand their business activities and establish local R&D centres in the region. The digital sector has emerged as a notable area of cooperation between China and North African countries.

China’s Digital Presence in North Africa

With the world’s largest online population, estimated at around one billion users and a booming digital industry, China has expanded its global digital footprint. Chinese ICT multinational corporations have built the backbone infrastructure used by millions of internet users across Africa. China stands to become an even more important actor in the ICT industry in the foreseeable future through the Digital Silk Road (DSR), the digital component of the BRI. Driven by China’s tech giants, the DSR aims to promote connectivity by bringing advanced digital infrastructure to BRI countries, such as fibre optic cables, data centres, 5G networks, e-commerce platforms and smart cities.

North Africa has become home to notable Digital Silk Road projects. For instance, in 2018, the China Satellite Navigation Office and the Arab Information and Communication Technology Organization launched the BeiDou Navigation Satellite System’s first facility abroad in Tunisia. The centre organizes joint research, testing activities and workshops that emphasize the strengths of BeiDou and the Chinese products that tap into the system. It aims to provide training on satellite navigation to Tunisian scientists and spur growth in the digital economy across the broader region. Beijing also offers scholarships to students from North Africa who specialize in navigation systems.

Another flagship Digital Silk Road endeavour is the Tangier Tech City, a Chinese-built smart city in northern Morocco. Initially, this mega-project, signed in March 2017, was expected to create 100,000 jobs, provide housing for 300,000 people, and consolidate Morocco’s trade relationship with China. On completion, the city was set to constitute China’s most prominent industrial and technological hub in Africa, with around 200 Chinese companies specializing in high-value-added sectors such as aeronautics, automobiles, and ICT innovations.^[11]However, a dispute between the Chinese group Haite and Moroccan authorities over the “ownership of the city” led the Chinese constructor to leave the project in 2018. Ultimately, the China Road and Bridge Corporation took over from Haite, but the project has been considerably downsized.

As it stands, North African economies are concentrated in low-value-added sectors and suffer from sluggish growth. Chronically high youth unemployment, estimated at 30 percent as of 2017, is a distinctive feature of the Middle East and North Africa. Remarkably, 40 percent of the region’s university graduates were unemployed, according to a 2017 report by the World Economic Forum.^[12]More than a decade after the mass revolt against autocratic rule and lack of economic opportunities, no meaningful change has materialized in the region. To generate long-term growth and create high-quality jobs for these millions of unemployed workers, North African economies need to undergo a structural transformation involving a transition from low-productivity, labour-intensive economic activities to high-productivity, technology-intensive activities, such as those in the digital economy.

Political leaders across the region have viewed the Digital Silk Road as an opportunity to bridge the digital divide and bolster indigenous efforts to build digital economies

While North African countries have different political economies, political leaders across the region have viewed the Digital Silk Road as an opportunity to bridge the digital divide and bolster indigenous efforts to build digital economies. Recognizing the potential of the digital economy to help this transition, governments across the region have adopted distinctive ICT strategies designed to boost internet connectivity, upgrade workers’ skills and build thriving knowledge economies. The price-competitiveness of Chinese ICT Equipment manufacturers such as Huawei and ZTE can potentially help North African countries to catch up in terms of digital infrastructure, speeding up their digital transition. 

Key Controversies in Sino-North African Relations

Trade Imbalance

Despite much fanfare about the “win-win” nature of China’s relations with countries in North Africa, the composition of trade between the two mirrors key features of unequal exchange. Beyond the trade deficits registered between China and all North African countries, manufactured goods such as electronics, automobiles, mobile phones and clothing represent the lion’s share of Chinese exports to North Africa, while oil, minerals and agricultural products constitute the bulk of North African exports to China. Energy resources dominate imports from Libya, Algeria and Egypt, and minerals and agricultural goods occupy an important place in Moroccan and Tunisian exports to China.

With the rising demand for foreign food in China, agricultural exports from North Africa grew in importance in recent years. While North African consumers have benefited from the price competitiveness of Chinese products, cheap products from China represent a major challenge to North African manufacturers in both their respective domestic markets and third-country markets, fuelling chronic unemployment in the region.

Corruption

Major controversies have emerged in recent years regarding the practices of Chinese businesses in North Africa. Executives of Chinese companies seeking market access have been charged with paying illicit commissions, bribes and kickbacks. The most notorious corruption scandals in the history of Algeria’s telecommunications sector involved Chinese-headquartered Huawei and ZTE. A court in Algeria held two ZTE employees and one from Huawei responsible for paying bribes totalling $10 million between 2003 and 2006 to obtain contracts from state-owned Algérie Telecom. The two Chinese firms were banned from tendering in public telecommunications contracts for two years in Algeria.

The 1,216-kilometre East-West Highway in Algeria, which connects Tunisia and Morocco, was likewise tarnished by corruption allegations. For $6.2 billion, a Chinese consortium consisting of CITIC and the China Railway Construction Corporation won the bid to construct nearly half of the motorway. However, major kickbacks were paid throughout the construction phase, which increased the final cost of the highway significantly. It is important to note that these controversies are not solely the responsibility of Chinese companies, but are more the outcome of the pervasive corruption that characterized President Abdelaziz Bouteflika’s mode of governance (in office from 1999 to 2019).

Support of Authoritarian Regimes

China is viewed by North African populations as a force that backs authoritarian practices in the region. Neither countries in the region nor China shy away from supporting each other’s human rights violations. After the Rabaa massacre, in which Egyptian security forces killed an estimated 800 peaceful protesters, Beijing did not express any commendation and continued its diplomatic and economic interactions with Egypt as usual. At the same time, Egypt has backed China’s treatment of its Muslim Uyghur minority.^[13] Despite worldwide protests and criticism from human rights organizations, Egypt imprisoned close to 30 Uyghurs in 2017 and deported 12 of them to China.

In Algeria, Chinese officials did not miss the opportunity to reiterate their support for the Algerian regime during the 2019 Hirak movement, which aimed to topple it. Although, after the protests began in February 2019, President Bouteflika was forced to resign, the army, Algeria’s true power-holder, prevented a genuine democratic transition by imposing a regime insider as head of state. Yet, when the European Parliament adopted a critical resolution on the “Situation of Freedoms in Algeria,” criticizing the regime’s arrest and harassment of political opponents, human rights activists and journalists, China’s Ambassador to Algeria was quick to back the Algerian regime’s response by stating that China was opposed to any “interference” by foreign powers in the country.

North African nations, for their part, see cooperation with China as a chance to lessen Western influence and reliance on the EU and US

Conclusion

In a post-Covid-19 world, the continued Chinese presence in North Africa will have a substantial impact on national and regional security, political systems, social cohesion and economic growth. North Africa’s strategic location and proximity to the European market have increased its geopolitical importance in recent years from Beijing’s perspective. Although China has a limited appetite for radically overturning the international system, its increased involvement in the region nonetheless challenges European interests. North African nations, for their part, see cooperation with China as a chance to lessen Western influence and reliance on the EU and US.

^[1] For the sake of this paper, North Africa includes Egypt, Libya, Tunisia, Algeria and Morocco.

^[2] Ministry of Foreign Affairs of the People’s Republic of China, “The 8th Ministerial Meeting of the China-Arab States Cooperation Forum (CASCF) Held in Beijing.” www.fmprc.gov.cn/mfa_eng/wjb_663304/zzjg_663340/xybfs_663590/xwlb_663592/201807/t20180712_530194.html

^[3] Carneiro Vieira, Victore “From Third World Theory to Belt and Road Initiative: International Aid as a Chinese Foreign Policy Tool.” Contexto Internacional 41, no. 3 (December 2019): 529–51.

^[4] Chatzky, Andrew and McBride, James “China’s Massive Belt and Road Initiative.” CFR, 28 January 2020, www.cfr.org/backgrounder/chinas-massive-belt-and-road-initiative.

^[5] “China-Africa Trade.” Johns Hopkins School of Advanced International Studies China Africa Research Initiative, 2020, www.sais-cari.org/data-china-africa-trade.

^[6] European Commission data on trade with North Africa, https://ec.europa.eu/trade/policy/countries-and-regions/countries/

^[7] Wehrey, Frederic and Alkoutami, Sandy, “China’s Balancing Act in Libya.” Carnegie Endowment for International Peace, https://carnegieendowment.org/2020/05/10/china-s-balancing-act-in-libya-pub-81757.

^[8] “China-Africa Trade.” Johns Hopkins School of Advanced International Studies China Africa Research Initiative, 2020, www.sais-cari.org/data-china-africa-trade.

^[9] Ibid.

^[10] Ibid.

^[11] “Morocco to Launch Chinese Industrial City in Tangiers.” Africa News, www.africanews.com/2017/03/21/morocco-to-launch-chinese-industrial-city-in-tangiers.

^[12] “The Future of Jobs and Skills in the Middle East and North Africa: Preparing the Region for the Fourth Industrial Revolution.” World Economic Forum, May 2017, www3.weforum.org/docs/WEF_EGW_FOJ_MENA.pdf.

^[13] Al-Anani, Khalil “Egypt’s Strategic Partnership with China: Opportunities and Implications.” 27 January 2023  https://arabcenterdc.org/resource/egypts-strategic-partnership-with-china-opportunities-and-implications/

(Header photo: President of China Xi Jinping and South African President Cyril Ramaphosa attend the China-Africa Leaders’ Roundtable Dialogue on the last day of the BRICS Summit, in Johannesburg, South Africa, August 24, 2023. REUTERS/Alet Pretorius/Pool)