Seizing the Moment: How the US Can Counter China's Economic Influence in Africa

For two decades, China has outpaced the U.S. in Africa, building a vast economic footprint through trade, investment, and infrastructure. While Beijing's engagement is slowing, Washington's response remains tepid---risking a long-term loss of influence on the continent. The Biden administration has taken steps in the right direction, increasing engagement and investment, but these efforts remain insufficient. Meanwhile, a return to the transactional foreign policy of the Trump era---marked by skepticism of long-term development aid and attacks on USAID---would only weaken America's ability to build lasting economic partnerships on the continent. To compete effectively, the U.S. must commit to sustained, strategic investment that fosters genuine economic growth and stability in Africa.

In 2000, General Secretary Jiang Zemin of the Chinese Communist Party (CCP) announced the Go Out policy as a national strategy, incentivizing its enterprises to invest overseas. Xi Jinping expanded on this with the Belt and Road Initiative (BRI) in 2013, seeking to develop trade routes across the world -- including Africa -- through physical infrastructure investments in railways, ports, highways, and energy projects. In addition, the Forum on China-Africa Cooperation (FOCAC) has met every 3 years since 2000, establishing 3-year action plans consisting of Chinese pledges of loans, grants, and export credits.

As sub-Saharan Africa's largest bilateral trading partner, 20% of the region's exports now go to China, and about 16% of Africa's imports come from China, according to the International Monetary Fund (IMF). At the same time, China has emerged as the largest bilateral creditor to Africa; China's share of total sub-Saharan African external public debt grew from 2% before 2005 to 17% by 2021, according to the World Bank. Finally, China's foreign direct investment (FDI) flows to the region have also surged, accounting for nearly 23% of annual FDI inflows (or about $3 billion) in 2021. Through three principal geoeconomic instruments---trade, investment, and credit---China has achieved a staggering level of influence across the continent.

Yet since 2017, Beijing's economic engagement with Africa has slowed considerably. A downturn in China's real estate sector, demographic pressures, Western scrutiny of CCP investments, and external shocks such as COVID-19 and trade tariffs have all contributed to slowing growth. China's lending to sub-Saharan Africa has dwindled, falling from nearly $29 billion in 2016 to under $1 billion in 2022---its lowest level in two decades. According to IMF estimates, a one percentage point decline in China's growth rate could reduce average growth in the region by about 0.25 percentage points within a year. China's shift toward green energy and Russian oil is also squeezing African exporters, reshaping trade flows.

This shift presents the U.S. with an opening to expand its economic presence in Africa while improving lending standards and financial transparency. Indeed, Chinese lending to the region increasingly undermines debt transparency, including terms that bar debtors from revealing terms or even the existence of certain loans. Debt transparency is crucial to mitigating risks of armed conflicts, trade fragmentation, inflation, and weak growth. Additionally, Beijing frequently retains the right to demand repayment at any time, enabling it to use funding as diplomatic leverage.

With China retreating from major infrastructure projects, Washington has a prime opportunity to step in. The Carnegie Endowment for International Peace (CEIP) has identified three key sectors---health, clean energy, and transportation---as areas where the U.S. could make the most impact. Strategic investments in these sectors would not only support Africa's development priorities but also reinforce America's economic leadership through:

1. Leveraging the Development Finance Corporation (DFC): Offering better financing terms for African governments and businesses would unlock investment in sectors where Chinese engagement has slowed, such as infrastructure.

2. Strengthening trade partnerships: The African Continental Free Trade Area (AfCFTA) represents a massive opportunity---Washington should explore ways to further integrate U.S. trade policy with Africa's regional trade initiatives and diversification objectives.

3. Developing early-stage pipelines: Unlike China's state-driven approach, U.S. firms often struggle to find viable, well-structured projects. Early-stage collaboration with African governments could improve project pipelines and create more opportunities for U.S. private-sector investment.

4. Scaling up health and humanitarian assistance: Programs in vaccine distribution and medical infrastructure strengthen diplomatic and cultural ties, opening doors for economic collaboration.

President Biden's recent visit to Angola and his administration's $600 million railway investment mark a step in the right direction---but remain negligible compared to China's multi-billion-dollar commitments. U.S.-Africa trade, currently at $69 billion, still lags far behind China-Africa trade, which stands at $262 billion.

Despite Trump's late-term embrace of foreign aid---most notably through the creation of the DFC---his more recent attacks on USAID, and needless antagonization of the South African government, are strategic missteps. The abrupt termination of numerous global programs, including critical health initiatives in countries like Uganda, not only undermines U.S. soft power but also creates a void that Beijing is eager to fill. As China's influence grows, African nations have increasingly aligned with Beijing on key global issues, including Taiwan---53 of 54 African nations recently signed a joint statement supporting China's reunification efforts. If Washington hopes to maintain credibility in global conflicts, it must recognize that economic leadership in Africa is not just about development---it's about securing partnerships in an era of intensifying great-power competition.