Attracting Chinese private investment is part of Angola’s plan to cut its excessive reliance on oil, most of it exported to China to repay loans advanced during the country’s rebuilding period.
China’s major inroads into Angola can be traced to 2002 at the end of the 27-year Angolan civil war when former president Jose Eduardo dos Santos invited Beijing to invest in Angola after Western governments declined to help with its reconstruction.
According to Boston University, between 2000 and 2022 Angola borrowed US$45 billion – about a quarter of China’s total lending to African countries – which it repays in the form of oil shipments. Currently, Angola owes Chinese creditors about US$17 billion, most of it to the China Development Bank and the Export-Import Bank of China.
Dominik Kopinski, an associate professor in the Institute of Economics at the University of Wroclaw and senior adviser at the Polish Economic Institute, said Lourenco’s visit to China related to the country seeking to diversify and cultivate links with a wide range of partners.
“Those who thought the recent recalibration of Angola’s foreign policy meant ditching China and embracing the West will feel disappointed,” Kopinski said.
Kopinski said that with little chance for new loans like those seen under dos Santos, and a continued infrastructure extravaganza, Lourenco has been trying to shift gears to attract private investment, which is reflected in his China trip schedule.
Lourenco’s four-day state visit that started on Thursday included talks with executives of major Chinese companies, including China Gezhouba Group Corporation which is building the Caculo Cabaca hydroelectric plant in Angola’s Cuanza Norte province, and Hebei Huatong Cable Group, which is building an aluminium production factory in Angola.
Tim Zajontz, a research fellow in the Centre for International and Comparative Politics at Stellenbosch University, said Angola and China were still redefining their economic relationship in a post-oil and post-loans era.
Zajontz said Lourenco promoted Angola as a destination for Chinese investment in the hope it could boost the country’s troubled economy.
“It is also likely that Angola’s debt will be discussed behind closed doors,” Zajontz said.
Focused on Global South, China upgrades ties with Angola
Focused on Global South, China upgrades ties with Angola
Lourenco, in a speech during talks with Xi, pleaded with China to help it ease its debt troubles.
“We addressed the problem of Angola’s debt to China, our desire to continue honouring our commitments and obligations as a debtor, but also the need for the creditor to help us get out of the suffocating situation,” Lourenco said in a speech published in the Luanda-based Jornal de Angola.
He revealed that at a meeting with China’s premier, Lourenco sought financing for a refinery in the port city of Lobito, a petrochemical plant and a military air force base.
Lourenco thanked China for its help during Angola’s reconstruction.
“When we were in urgent need of large financial resources for national reconstruction, China was the only country in the world that truly came to our aid to rebuild the main infrastructure and build new [projects] that were equally important for the economic and social development of Angola,” he said.
As China’s relationship with Angola grew tense because of the Chinese loans that weighed it down, the United States has attempted to push back on China’s influence in Angola. The US pledged US$1 billion to refurbish the Lobito Atlantic Railway, its first major project in Africa in decades, which will stretch 1,300km (807 miles) through mineral-rich Zambia and the Democratic Republic of Congo (DRC) to create a logistics corridor to the port of Lobito.
But China’s economic influence in Angola runs deep and Beijing is not ready to let go of its key diplomatic ally. Angola still needs China to fund the construction of the major infrastructure projects such as the 2,172 megawatt Caculo Cabaca hydropower station and the Lobito oil refinery.
He said that despite the recent decline in Chinese investment and loans in Africa, “this doesn’t indicate China’s retreat from the continent” but it instead reflected pragmatic experimentation – evaluating what works and what doesn’t, and then adapting accordingly.
Kopinski said the Lobito Corridor revamp was not a “China-free” project, with China Communications Construction Company (CCCC) having a 32.4 per cent stake in Mota-Engil, one of two big members of the consortium.
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China-funded infrastructure across Africa force difficult decisions for its leaders
China-funded infrastructure across Africa force difficult decisions for its leaders
Zajontz, who is also a lecturer in global political economy at the University of Freiburg, said there could be no doubt that Beijing was closely watching Western investment plans along the Lobito Corridor.
He said the US government identified Angola as the preferred gateway to critical minerals in the DRC and Zambia but the Chinese government had no interest in leaving the field to Western firms.
Mark Bohlund, a senior credit research analyst at REDD Intelligence, said Lourenco’s meeting in Beijing was arguably more important for Angola because of the high level of payments to Chinese creditors which weighed on the balance of payments and government finances.
He said Lourenco was probably seeking some way to reduce these, most likely by lengthening the term of the loans.
Africa is key in China’s bid to de-risk its iron ore supply
Africa is key in China’s bid to de-risk its iron ore supply
Bohlund said the most important factor for Beijing was likely to be keeping Angola on board in servicing Chinese debt without more aggressively seeking better terms, which could have knock-on effects in other African debtor countries.
He said the race for access to copper and other rare earth minerals in the DRC and Zambia had accelerated with the Lobito Corridor project.
Bohlund said Chinese officials would want to ensure their support for “upgrading the rail route from Zambia through Tanzania to the Indian Ocean does not disrupt their relations with Angola”.
