Poor performance of listed firms affirm downward trajectory of China’s economy; PRC adjusts Africa strategy to cope with worsening geopolitical situation

  1   Semi-annual reports of listed firms affirm downward trajectory of China’s economy and increased risks

A total of 5,345 listed companies on the Shanghai, Shenzhen, and Beijing stock exchanges had released their semi-annual report for 2024 as of Aug. 31. Per those reports:

  Revenue, profit, and dividend data

Total operating revenue

• The total operating revenue of the 5,345 listed companies in the first half of 2024 decreased by 1.4 percent from a year ago to about 34.9 trillion yuan.
• The top 10 companies by total operating revenue are:
  1. Sinopec (1.576 trillion yuan; YoY decrease of 1.10 percent)
  2. PetroChina (1.553 trillion yuan; YoY increase of 5.00 percent)
  3. China State Construction Engineering (1.145 trillion yuan; YoY increase of 2.81 percent)
  4. China Mobile (546.744 billion yuan; YoY increase of 3.02 percent)
  5. China Railway Construction (516.137 billion yuan; YoY decrease of 4.61 percent)
  6. Ping An Insurance (494.966 billion yuan; YoY increase of 1.27 percent)
  7. Industrial and Commercial Bank of China (420.499 billion yuan; YoY decrease of 6.03 percent)
  8. China Construction Bank (385.965 billion yuan; YoY decrease of 3.57 percent)
  9. Agricultural Bank of China (366.835 billion yuan; YoY increase of 0.29 percent)
  10. China Communications Construction (357.448 billion yuan; YoY decrease of 2.52 percent)

Net profits

• Net profits attributable to the parent company of the 5,345 listed companies in the first half of 2024 decreased by 2.4 percent from a year earlier to 2.78 trillion yuan.
• The top 10 companies by net profits attributable to the parent company are:
  1. Industrial and Commercial Bank of China (170.467 billion yuan; YoY decrease of 1.89 percent)
  2. China Construction Bank (164.326 billion yuan; YoY decrease of 1.80 percent)
  3. Agricultural Bank of China (135.892 billion yuan; YoY decrease of 2.00 percent)
  4. Bank of China (118.601 billion yuan; YoY decrease of 1.24 percent)
  5. PetroChina (88.607 billion yuan; YoY increase of 3.91 percent)
  6. China Mobile (80.201 billion yuan; YoY increase of 5.29 percent)
  7. China National Offshore Oil Corporation (79.731 billion yuan; YoY increase of 25.05 percent)
  8. China Merchants Bank (74.743 billion yuan; YoY decrease of 1.33 percent)
  9. Ping An Insurance (74.619 billion yuan; YoY increase of 6.84 percent)
  10. Postal Savings Bank of China (48.815 billion yuan; YoY decrease of 1.51 percent)

Dividends

• At the time of writing, more than 670 companies have announced or proposed cash dividend plans for the mid-2024 period. The total dividend amount approaches 530 billion yuan, a record high.
• The leading companies by cash dividends are PetroChina (40.265 billion yuan), Bank of China (35.562 billion yuan), CNOOC (35.187 billion yuan), Sinopec (17.768 billion yuan), and Ping An Insurance (16.840 billion yuan), or traditional high-dividend-yield companies.

  Listed banks data

Net profits attributable to the parent company and net interest margin — two important indicators measuring the performance of listed banks — both fell below 2 percent in the first half of 2024. Listed bank performance becomes even starker in considering that significant layoffs and salary cuts were made.

Net profits

• Net profits attributable to the parent company of the 42 listed banks was 1.09 trillion yuan, an increase of 0.37 percent (4.018 billion yuan) from the same period in 2023 (YoY growth at the time was 3.4 percent).
  • Of the 42 banks, 12 saw year-on-year declines in net profits attributable to the parent company, or an increase of seven banks as compared to the same period in 2023.
    • Zhengzhou Bank and Xiamen Bank saw net profits attributable to the parent company decrease by 22.12 percent and 15.03 percent respectively.
    • Bank of Guiyang and China Minsheng Bank saw net profits attributable to the parent company drop by 7.08 percent and 5.48 percent respectively.
    • The remaining eight banks saw net profits attributable to the parent company decline by more than 1 percent.
  • Of the six major state-owned banks, only the Agricultural Bank of China saw a slight increase in net profits attributable to the parent company (0.29 percent), while the others saw declines:
    • Industrial and Commercial Bank of China (down 1.87 percent)
    • Bank of China (down 1.24 percent)
    • China Construction Bank (down 1.8 percent)
    • Bank of Communications (down 1.63 percent)
    • Postal Savings Bank of China (down 1.51 percent)

Net interest margin

• The average net interest margin for the 42 listed banks was 1.64 percent, down 0.14 percent from the end of last year and down 0.22 percent from the same period in 2023.
• With the exception of Lanzhou Bank, which saw its net interest margin increase by 0.05 percent, those of the other 41 listed banks declined from a year ago. The number of banks with a net interest margin of 2 percent or higher fell from 12 in the same period in 2023 to three this year: Changshu Bank (2.79 percent), Changsha Bank (2.12 percent), and China Merchants Bank (2.00 percent).
• In the second quarter of 2024, the net interest margins for large commercial banks, joint-stock commercial banks, city commercial banks, private banks, rural commercial banks, and foreign banks were 1.46 percent, 1.63 percent, 1.45 percent, 4.21 percent, 1.72 percent, and 1.46 percent respectively.
• The net interest margins for the six major state banks — Industrial and Commercial Bank of China, Agricultural Bank of China, Bank of China, China Construction Bank, Bank of Communications, and Postal Savings Bank of China — were 1.43 percent, 1.45 percent, 1.44 percent, 1.54 percent, 1.45 percent, and 1.91 percent respectively.
• The minimum net interest margins of four banks in the second quarter of 2024 were lower than that (1.3 percent) of the same period last year: Bank of Communications (1.29 percent), Xi’an Bank (1.21 percent), Shanghai Bank (1.19 percent), and Xiamen Bank (1.14 percent).

Layoffs

• The total number of employees at the 42 listed banks at the end of the first half of 2024 was in excess of 2.56 million, or down 38,000 employees at the start of the year. Thirty-two of the 42 banks saw a decrease in the number of staff, a sign of workforce reduction.
• The six major state-owned banks collectively reduced their workforce by more than 20,000 employees in the first half of 2024. The Industrial and Commercial Bank of China cut its workforce by 10,000 employees from the beginning of the year, while China Construction Bank, Agricultural Bank of China, Postal Savings Bank of China, and Bank of Communications all saw staff reductions. Only the Bank of China added 1,772 employees.

Salary cuts

• The total salary expenditure of the 42 listed banks in the first half of 2024 decreased by 0.2 percent from a year ago to 465.46 billion yuan. This marks the first year-on-year decrease in salary expenditure reported in the semi-annual reports of listed banks in recent years. In the first half of 2022 and 2023, the total salary expenditure of listed banks increased by 6.3 percent and 6.4 percent respectively.
  • The average monthly salary per employee at 30 of the 42 listed banks in the first half of 2024 dropped from a year ago. At six banks, the average salary per employee fell by more than 5 percent, with Chongqing Rural Commercial Bank seeing the largest decrease at down more than 20 percent.
  • The average monthly salary for employees of listed banks in the first half of 2024 was 34,300 yuan, down 2.18 percent (764 yuan) compared to the same period in 2023.

Mortgage loans

• The total amount of personal mortgage loans at the six major state-owned banks dropped by 325.471 billion yuan in the first half of 2024. In 2023, the total amount of personal mortgage loans at those banks decreased by 556.857 billion yuan.

  Backdrop

Sept. 3 to Sept. 6
The Shanghai Composite Index fell below the 2,800 mark during intraday trading on Sept. 3 to reach 2,794.91 points before closing at 2,802.98 points. The index would close below 2,800 points for the next three consecutive days. On Sept. 6, the Shanghai index fell to a low of 2,765.64 points during intraday trading and closed at 2,765.81.

Sept. 4
1. The National Financial Regulatory Administration released several new lists of legal entities. The lists show that as of June 2024, China has 4,425 banking financial institution legal entities, down 65 from 4,490 at the end of 2023. Also, there were 136 fewer institutions over the past year, of which rural commercial banks (29), rural credit cooperatives (62), village banks (22) accounted for 83 percent of the total.

2. Financial Times reported that the biggest banks in China are preparing to issue hundreds of billions of dollars in total loss-absorbing capacity (TLAC) bonds. Fitch Ratings estimates total issuance across five state banks could approach $866 billion by 2028, and the requirements could also partly be met by issuing capital bonds.

Rating agencies expect Beijing to support the banks in times of crisis. Vivian Xue, an analyst at Fitch Ratings, expected a “very high probability of state support to prevent default and below-average recoveries” and added that it was “unlikely” that the CCP authorities would allow banks to default on TLAC bonds. Moody’s believes that Beijing’s “primary motivation” to bail out the big banks would be “concern that a failure to do so would trigger systemic contagion.” And S&P said in a report this year that China’s globally systemically important banks are expected to “receive pre-emptive support from the government.”

Moody’s, which also anticipates an “uplift” to ratings, believes that Beijing’s “primary motivation” to bail out its biggest banks would be “concern that a failure to do so would trigger systemic contagion”.

3. Bloomberg News reported that 19 emerging market ex-China equity funds have been launched this year as of Sept. 4, equal to the total for all of 2023. BlackRock and the Sydney-based First Sentier Investors are among the companies that have marketed such funds this year.

Bloomberg added that the growing number of ex-China equity funds reflects the country’s “declining heft in the global money pool amid persistent concerns about its policy and geopolitical risks.”

4. Financial Times reported that several investment banks now expect China’s economy to grow at less than the targeted 5 percent in 2024.

Revised growth forecasts include:

• Bank of America — 5 percent to 4.8 percent.
• TD Securities — 5.1 percent to 4.7 percent.
• Goldman Sachs — 5 percent to 4.9 percent.
• Citi — 5 percent to 4.8 percent.
• Barclays — 5 percent to 4.8 percent.
• JPMorgan — 4.6 percent.
• UBS — 4.6 percent
• Bloomberg poll of economists — 4.9 percent to 4.8 percent.

  Our take

1. The data in the semi-annual financial reports of Chinese listed companies indicate that the economy is underperforming and China’s actual economic growth for the full year is unlikely to be close to the CCP authorities’ target of around 5 percent. If anything, China’s GDP for 2024 might even be negative.

i) The performance of the 5,345 listed companies that released semi-annual reports approximately reflects the business situation of Chinese enterprises.

Some brief takeaways from the data:

• The 5,345 listed companies saw their revenues (down 1.4 percent; accounting for 21.1 percent of the revenue of all listed companies) and profits (down 2.4 percent; accounting for 37.22 percent of net profits of all listed companies) decline in the first half of the year, a sign that the Chinese economy is underperforming.
• Five of the top 10 companies by total revenue saw declining growth rates. Only PetroChina, the second-ranked company, saw revenue growth (5 percent) matching Beijing’s targeted GDP growth. Meanwhile, ICBC, the most profitable listed company in the first half of 2024, saw its revenue fall by 6.03 percent and its net profits drop by 1.89 percent.
• Five of the top 10 companies by net profits attributable to the parent company saw declining growth rates. Only three of the 10 saw net profit growth exceeding Beijing’s 5 percent GDP target, namely, China Mobile (5.29 percent), Ping An Insurance (6.84 percent), and CNOOC (25.05 percent.
• It is possible that the profitability of the listed companies was artificially inflated through layoffs, salary cuts, and asset sales. If so, the profit growth of those companies is unsustainable.
• The underperformance of Chinese companies could have contributed to global investment banks downgrading their forecast for China’s GDP growth in 2024 and the launching of more emerging market ex-China equity funds. The data and increased pessimism about China’s economic prospects also appear to be factors behind the Shanghai index falling below the 2,800 mark for several consecutive days.

ii) The data from the semi-annual reports suggest that private enterprises in China are likely faring worse than their public counterparts.

For one, the major shareholders of the top 10 listed companies by total revenue and net profits are all state-owned entities. Of the leading companies, there are six banks, one insurance company, two energy firms, and one telecommunications company, all of which are state-owned enterprises under administrative monopoly and with not a single technology or manufacturing company represented.

That state-owned or state-linked companies dominated led in revenue and profits is unsurprising considering that they took in much more investments in the first half of the year as compared to private firms. Fixed asset investment to state-owned companies grew by 6.8 percent while private investment increased by just 0.1 percent when calculated on a comparable caliber. When calculated in absolute terms, private fixed asset investment declined by 1 percent in the first half of 2024.

Increased profits for banks and energy companies reflect higher financing and energy costs for other enterprises. Also, the lack of private enterprises in the top 10 companies by revenue and profit is a troubling sign for the Chinese economy given they contribute 50 percent of the tax revenue, more than 60 percent of the GDP, over 70 percent of the technological innovations, more than 80 percent of urban employment, and accounts for more than 90 percent of market entities in China, per the CCP authorities’ characterization.

iii) The 5,345 listed companies issued a record amount in dividends. But this is not necessarily a sign of an improving economy or market prospects.

First, the listed companies appear to be acting in accordance with the State Council’s “new nine provisions” to guide the capital market that was issued in April 2024. On the topic of strengthening supervision over cash dividends, the “new nine provisions” called for restricting the reduction of shares by major shareholders and implementing risk warnings for companies that have not distributed dividends for many years or have low dividend ratios.

Second, listed SOEs could be issuing dividends to help state entities that are part of the “national team” to provide them with some “return on investment” and prop up their political achievements. After all, state entities in the “national team” have been likely bleeding funds since the second half of 2024 when they were tasked to intervene in the markets after the Shanghai index started to fall below the psychologically important level of 3,000 points.

Third, most of the companies that paid out large amounts in dividends are either central or state-owned enterprises, and the majority of the recipients are also state-owned entities. For example:

• PetroChina’s major shareholder is the state-owned China National Petroleum Corporation.
• Bank of China’s major shareholder is the state-owned Central Huijin Investment Ltd.
• CNOOC’s major shareholder is the state-owned CNOOC BVI.
• Sinopec’s major shareholder is China Petrochemical Corporation.

State entities are less likely to reinvest the dividends in the capital market compared to most retail investors. Instead, state entities will more likely remit profits to the CCP authorities or use them to repay debts.

2. The declines in net profits attributable to shareholders and the net interest margin of listed banks in the first half of the year reflect the accumulation of economic problems and financial risks in China.

China’s deteriorating real estate market and the shrinking of personal mortgage loans appear to be a central factor behind the banking sector’s underperformance. For instance, the balance of personal housing loans decreased instead of increasing despite the trillions of yuan worth of new housing sold in the first half of the year. With new residential sales amounting to 4.13 trillion yuan in H1 2024, banks should have handled 2.89 trillion yuan worth of housing loans assuming a mortgage ratio of 70 percent. However, PBoC data indicated that the balance of personal mortgage loans decreased by 380 billion yuan in the first half of 2024. This indicates that many people are paying off their mortgages early or applying for fewer mortgages, and the resulting credit contraction is impacting bank revenue.

Another factor impacting the net profits and net interest margin of listed banks is the “asset famine” in China. Enterprises and individuals are reluctant to invest given low returns and lack of safe investments, and prefer instead to put their money in fixed deposits or “risk-free” government bonds. China’s M1 money supply, which consists of cash in circulation and corporate demand deposits and is viewed as a key indicator of private business confidence, has been continually declining this year, with negative 1.4 percent growth in April to negative 6.6 percent growth in July.

Finally, the fall in net profits and net interest margin of listed banks indicates that many commercial banks in China are technically operating at a loss. Notably, the net interest margins of large commercial banks (1.46 percent) and city commercial banks (1.45 percent) are lower than the non-performing loan rate (1.56 percent) in the second quarter of 2024. As Chinese banks often conceal their bad assets, the actual NPL rate could be much higher than the official figure and the banks could be in much worse condition than the data suggests. The bad situation with the banks could be a reason why the biggest banks in China are preparing to issue hundreds of billions of dollars in TLAC bonds. Bank risks will continue to accumulate as long as the Chinese economy fails to turn around.

3. The lackluster performance of the 5,345 Chinese listed companies suggests that domestic demand in China is weak. Also, domestic price wars could intensify and companies will resort to various methods to compete for low-cost exports.

As Chinese companies compete to export excess capacity, the PRC’s trade disputes with other countries are likely to intensify. China will face an increasingly unfavorable geopolitical environment as countries impose tariffs on Chinese goods to protect local industries and step up decoupling from China.

  What’s next

The PBoC could cut the reserve requirement ratio after the U.S. Federal Reserve makes rate cuts later this month, providing more base money to the market to mitigate the impact of credit contraction.

  2   PRC adjusts Africa strategy to expand its influence, cope with worsening geopolitical situation

The CCP authorities hosted the Forum on China-Africa Cooperation (FOCAC) from Sept. 4 to Sept. 6. Delegates from more than 50 African nations traveled to Beijing for the event.

On Sept. 5, Xi Jinping attended the opening ceremony of the FOCAC and delivered a speech titled, “Joining Hands to Advance Modernization and Build a Community With a Shared Future” (攜手推進現代化, 共築命運共同體).

Xi proposed elevating diplomatic relations between China and all African countries to the “level of strategic relations.” He also called for elevating the “overall characterization of China-Africa relations to an “all-weather China-Africa community with a shared future for the new era.”

Xi said that Western modernization brought “great suffering” to developing countries. He added that third-world countries, represented by China and Africa, achieved independence and development after the Second World War, and continuously “rectified historical injustices in the modernization process.”

Xi pledged to help African countries advance their national modernization efforts and deepen cooperation in fields such as industry, agriculture, infrastructure, and trade and investment. Xi said that the PRC will work with Africa to take ten partnership actions for modernization over the next three years to deepen China-Africa cooperation and lead the modernization of the Global South. The partnership actions include political party exchanges, trade cooperation, industrial chain cooperation, network communication infrastructure, development cooperation, industrial chain cooperation, network communications infrastructure, development cooperation, healthcare, agriculture, cultural exchanges, green development, and military assistance.

Xi further pledged to provide 360 billion yuan (about $50.7 billion) of financial support to African countries, including 210 billion yuan in credit lines, 80 billion yuan in various types of aid, and encouraging Chinese enterprises to invest at least 70 billion yuan in Africa. He added that the PRC supports African countries in issuing “panda bonds” in China.

Other items the PRC pledged at the forum include:

• The PRC invited 1,000 African political party personages to China for exchanges.
• The PRC is willing to unilaterally expand market access by granting zero-tariff treatment to 100 percent of products from the least developed countries that have diplomatic relations with China, including 33 African countries.
• The PRC will launch an “Africa SME Empowerment Plan” (an enterprise training program) and build 20 digital demonstration projects.
• The PRC will implement 1,000 “small yet smart” (小而美) livelihood projects.
• The PRC will provide 1 billion yuan in emergency food aid to Africa, establish a 100,000 mu (about 6,667 hectares) standardized agricultural demonstration zone, and dispatch 500 agricultural experts to Africa.
• The PRC will construct 10 “Luban Workshops” (vocation training program) and offer 60,000 training opportunities for African women and youth.
• The PRC will implement 30 clean energy projects in Africa.
• The PRC will provide 1 billion yuan in military aid to Africa, train 6,000 military personnel and 1,000 police officers, and invite 500 young officers to visit China.

On the same day, the PRC and 53 African countries issued a “Beijing Declaration on Jointly Building an All-Weather China-Africa Community with a Shared Future for the New Era.”

  Backdrop

The FOCAC is a PRC initiative to strengthen good relations between China and African countries. The forum has been held every three years since October 2000, alternating between Beijing and Africa.

Publicly available information shows that China’s traditional loans to Africa provided through state-owned policy banks surged from nearly $100 million in 2000 to a peak of $28.8 billion in 2016, making China the largest bilateral creditor to Africa.

At the Beijing Summit in 2018, Xi Jinping pledged $60 billion in support for Africa and announced the cancellation of interest-free intergovernmental loans that were due to mature in 2018 for African countries that have diplomatic relations with China.

During the pandemic, China’s lending to Africa fell to just around $1 billion in 2022 before rebounding to $4.6 billion in 2023. At the 2021 FOCAC in Dakar, China pledged at least $10 billion in investment and the same again in credit lines.

  Our take

1. The CCP appears to be recalibrating its strategy towards Africa to mitigate the negative outcomes of the bilateral relationship and increase its influence over the continent.

i) The CCP has long spent huge sums of money to try and cultivate its influence over Africa, including investing in infrastructure and so-called aid. Over time, the PRC became Africa’s largest trade partner and the biggest bilateral creditor to the continent. However, Beijing’s strategy also produced several negative outcomes for both the PRC and Africa.

First, there is a growing negative view of China in Africa as countries on the continent struggle to pay off PRC loans. Beijing has invested heavily in building infrastructure in Africa, and particularly over the past six years under the framework of the Belt and Road Initiative. While Chinese investments have created jobs in Africa and the PRC’s financial aid comes with fewer conditions as compared to those from Western countries, Chinese loans to Africa have ballooned and pushed several African countries into debt crises. For instance, foreign interest payments to China rose so high in Zambia that the government had to cut spending on healthcare, social services, and subsidies to farmers for seed and fertilizer. Zambia eventually stopped paying interest in November 2020 and defaulted. Other African nations resorted to handing over decades-long port management rights, resource extraction rights, and other strategic assets to pay off their debts.

Second, the CCP’s dealings in Africa are increasingly coming under Western scrutiny. Western countries have accused the PRC of carrying out “debt trap diplomacy,” exploiting Africa’s rich natural resources, and engaging in a form of “new colonialism” in the continent. As tensions between the PRC and Western countries grow, Africa could become a potential flashpoint and another area of unwanted crisis for the CCP regime.

Third, African countries are experiencing a growing trade deficit with China, which in turn causes an imbalance in international payments, foreign exchange shortages, and debt crises. The trade relationship between Africa and China revolves mainly around exchanging primary products for manufactured goods. Nearly 90 percent of Africa’s exports to China from 2000 to 2023 came from the extractive industries (oil, copper, iron ore, aluminum, etc.), although demand in China for African resources has dropped off in recent years with the worsening of the real estate crisis. Meanwhile, about 90 percent of what Africa mainly imported from China from 2000 to 2023 was manufactured goods like telecommunications equipment and textiles. In 2023, China’s trade surplus with Africa increased 35.1 percent from a year ago to reach $63.47 billion, accounting for about 2.21 percent of Africa’s GDP.

ii) Beijing’s “ten partnership actions for modernization” seeks to deepen the PRC’s influence over Africa by expanding people-to-people exchanges between both sides to a broader audience.

Previously, the PRC mainly targeted officials, military officers, and students from African countries. According to mainland media, the PRC increased its funding to exchange students from Belt and Road countries to cultivate “pro-China forces” starting in 2015, and two-thirds of those students came from African countries. Mainland media also noted that about 10,000 African officials participated in short-term courses (agriculture, economic developments, etc.) in China every year during the pandemic (before the pandemic, China offered Africa about 100,000 training opportunities each year via the FOCAC). A 2023 study by the US Institute of Peace found that the PLA Command College in Nanjing includes among its African alumni 10 defense chiefs, eight defense ministers, and former presidents Laurent Kabila (Congo), Joao Bernardo Vieira (Guinea-Bissau), Sam Nujoma (Namibia), and Jakaya Kikwete (Tanzania).

Under the “ten partnership actions for modernization,” the PRC’s non-governmental exchanges with African countries would be strengthened, including helping African SMEs with digital projects, as well as training opportunities for 60,000 African women and youth.

2. Beijing could be increasing aid to Africa partly as a way to indirectly create demand for the sluggish Chinese economy. Notably, the RMB-denominated financial assistance (360 billion yuan and issuing “panda bonds” in China) makes it easier for African countries to purchase Chinese goods and services.

Meanwhile, the granting of zero-tariff treatment to 100 percent of products to 33 African countries is likely to have almost no negative impact on the Chinese economy. Instead, the move reduces the cost of importing commodities, creating competitive pressure on commodity imports from other regions and enhancing the competitiveness of Chinese goods globally.

3. The CCP’s renewed effort to strengthen its influence over Africa could be partly an attempt by Xi Jinping to boost his eroding “quan wei” (authority and prestige). In particular, the Xi leadership’s governance failures are accumulating and becoming more obvious as China’s economy falters and the international environment grows increasingly hostile to the PRC.

Having the heads of states and delegates of 53 African countries visit Beijing and issue a high-profile joint declaration (which includes support for the “one China” policy) of friendship and cooperation highlights the Xi leadership’s diplomatic “prowess” and grants Xi a propaganda-worthy political “achievement” at a time when he is weighed down by crises.

4. Finally, the CCP’s courting of Africa could be partly aimed at countering the growing U.S. “containment” of China.

Having a friendly Africa is vital to the PRC as it searches for markets to export electric vehicles, “green” technology, and other goods that are struggling to enter the U.S. and other countries due to tariffs and other restrictions. Africa has been a reliable market for Chinese exports, and Chinese electric vehicles are popular throughout the continent.

Beijing is also looking to promote its brand of “multilateralism” (including the “community of shared future for mankind”) and set up an alternative international world order that it dominates and hopes to replace the U.S. led rules-based international order. To achieve this, the CCP needs support from countries in the Global South, of which African nations are a major part. The CCP also prefers that African countries continue to be aligned with the PRC’s direction in international affairs so that it can continue to disrupt the agenda of the U.S. and its allies.