非洲大陆自贸区建设与中非合作

马汉智

On January 1， 2021， the online launch ceremony for the African Continental Free Trade Area （AfCFTA） marked the official start of trading among African countries under the new continent-wide free trade area. The Agreement Establishing the African Continental Free Trade Area， as the legal basis for the AfCFTA， serves as a framework pact that covers trade in goods， services， investment， intellectual property rights， competition policy as well as dispute settlement. So far， the first phase of negotiations has been basically concluded， with the signing of protocols on trade in goods， trade in services， and rules and procedures on the settlement of disputes， while negotiations on some other issues， including the rules of origin， the schedules for tariff concessions， and the schedules of specific commitments for trade in services， especially in the five priority sectors of business， communications， finance， tourism and transport， are still underway. And Phases II and III negotiations are expected to be finalized by the end of 2021.

For the next few years， building the AfCFTA will be the core agenda for the development transition of African countries and the economic integration of the African continent. Considering its profound influence on China-Africa relations， it is imperative to fully understand the characteristics of AfCFTA， the constraints facing Africa in building it， and the potential opportunities and challenges it will bring to China-Africa cooperation. Such analysis will help the two sides meet each other halfway， expand and deepen their existing cooperation， and build a more solid China-Africa community with a shared future.

Distinct African Features of AfCFTA

All of the 55 African Union （AU） member states except Eritrea have signed the AfCFTA Agreement. As of the end of July 2021， 40 African countries， including major economies such as South Africa， Nigeria and Egypt， have ratified the agreement. The executive and negotiating arms of the AfCFTA have also been successively established according to the agreement. Based on the status of African economic integration， the AfCFTA Agreement has fully drawn on the rules of the World Trade Organization （WTO） and other regional trade deals， with several distinct features.

Signing of an e-commerce protocol

Almost all major regional trade agreements signed and coming into effect in recent years have contained e-commerce-related provisions. These include the Comprehensive and Progressive Agreement for Trans-Pacific Partnership （CPTPP）， the United States-Mexico-Canada Agreement （USMCA）， and the Regional Comprehensive Economic Partnership Agreement （RCEP）. However， only six African countries have adopted three regional trade agreements that incorporate e-commerce provisions. So far， no intra-African trade deal has touched upon e-commerce， which undoubtedly makes Africa lag behind in the global e-commerce arena.

For a long time， African countries have opposed the introduction of e-commerce rules in the WTO， on the ground that the definition of e-commerce is not yet clear-cut. In addition， most African countries perceive their micro-， small-， and medium-sized enterprises （MSMEs） as being underprepared for competition with global tech giants. As e-commerce negotiations may pave the way for in-depth liberalization， these states are worried about the potential adverse effects on their policy flexibility. However， with the outbreak of COVID-19， the importance of the digital economy and e-commerce has been increasingly recognized. More and more African countries have come to realize the urgency of reaching an e-commerce protocol under the AfCFTA framework. In February 2020， it was decided at the AU Assembly of Heads of State and Government that Phase III Negotiations focus on “an AfCFTA Protocol on E-Commerce immediately after conclusion of Phase II Negotiations” on intellectual property rights， and on investment and competition policy. So far， a standing committee for e-commerce negotiations has been set up and is broadly canvassing public opinion. In the above AU Assembly decision， member states are urged to “ensure that Africa is able to negotiate and implement an AfCFTA Protocol on e-commerce where Africa has full authority on all aspects of it such as data and products being traded under e-commerce， and to promote the emergence of African-owned e-commerce platforms at national， regional and continental levels.” Being the regional trade bloc with the largest membership and the highest concentration of developing countries， the AfCFTA is likely to exert profound influence on the WTO negotiations on e-commerce rules and the future global trade order if an e-commerce protocol can be reached in line with the latest developments and existing legal models on the African continent.

A gradual and incremental approach

Compared with other regional trade agreements， a prominent feature of the AfCFTA is its emphasis on the principles of “variable geometry” and “flexibility and special and differential treatment.” The AfCFTA Protocol on Trade in Goods recognizes the different development levels between member states， and the necessity of providing sufficient flexibility， special and differential treatment， and technical assistance to those state parties in need. The Protocol on Trade in Services， in its preamble， also acknowledges “the serious difficulty of the least developed， land-locked， island states and vulnerable economies in view of their special economic situation and their development， trade and financial needs.” It is stipulated in Article 7 of this protocol that state parties shall “take into account the challenges that may be encountered by State Parties and may grant flexibilities such as transitional periods … to accommodate special economic situations and development， trade and financial needs.”

These provisions on “flexibility and special and differential treatment” go beyond the usual distinctions， which have been based primarily on economic measurements， by incorporating factors such as level of industrialization， size of the agricultural sector， resource endowments， proximity to ports， and conflict status. This allows for “differentiated opportunities” and “targeted supports” for AfCFTA state parties. It is argued that the AfCFTA represents a shift from using special and differential treatment as a largely defensive trade approach to one that positions such treatment as an affirmative tool for achieving sustainable development， and that this new approach may finally replace the old trade paradigm of “haves and have nots” with a system in which trade rules can be designed to benefit all.

The incremental approach of the AfCFTA’s trade arrangements is also reflected in its adoption of the “variable geometry” principle， which allows state parties to make commitments and advance their trade agendas in a gradual and orderly manner in accordance with their priorities and capabilities. It is believed that the principle has accelerated the African integration process by enabling different countries to jointly advance regional integration projects at their own pace. The principle of “variable geometry，” together with that of “flexibility and special and differential treatment，” fully demonstrates the wisdom of African countries to gradually promote AfCFTA construction based on reality and the greatest consensus.

Bearing the special mission to facilitate full African integration

The AfCFTA is not merely a trade liberalization arrangement， but also a flagship project for promoting African integration and eventually achieving African unity. The AU’s Agenda 2063 had the aspiration to build “an integrated continent， politically united based on the ideals of Pan Africanism and the vision of Africa’s Renaissance.” To realize that goal， the AU has made the AfCFTA a major instrument to advance the Agenda 2063， in particular making it a lever and a platform to facilitate solidarity and development of the continent. Therefore， the AfCFTA bears the dual mission of enhancing African integration and stimulating African development. As Thomas Kwesi Quartey， Deputy Chairperson of the African Union Commission， pointed out， the strength of Africa is “rooted in the effective implementation of projects of continental dimension that contribute to its development and especially to the consolidation of its integration and unity.” Deemed as a “Pan African approach to trade，” the AfCFTA is used by the AU as a “United States of Africa” to help Africa play a greater role on the world stage.

Potential Gains from the AfCFTA

As the general economic law goes， a larger market scale and lower tariffs will stimulate or increase gains from trade. For a long time， the fragmentation of the African market has retarded an economy of scale and undermined the economic potential of the entire continent. The AfCFTA construction is expected to boost Africa’s capacity for independent development and enhance the resilience of its industrial and supply chains， thus improving its disadvantageous position in the global economic and trade landscape.

Stimulating endogenous impetus for African economic growth

First， intra-African trade will expand thanks to the AfCFTA. As a flagship project of Agenda 2063， the AfCFTA aims to significantly accelerate the growth of intra-Africa trade and use trade more effectively as an engine of growth and sustainable development. The inadequacy of internal trade has long strained Africa’s independent and sustainable development. According to the report on economic development in Africa published by the United Nations Conference on Trade and Development （UNCTAD）， the share of intra-African trade in total trade in goods of the continent hovered at around 15.2 percent in the period 2015–2017， while comparative figures for Europe， Asia and America were 67.1， 61.1 and 47.4 percent respectively. With a level of internal trade far lower than other regions of the world， the development of manufacturing industries in Africa has been limited， and the African economy is also highly susceptible to shocks from global markets. Now， with the launch of the AfCFTA， intra-African trade is expected to take a larger share. The free trade area will lead to the creation of a single continental market with a population of over 1.3 billion and a combined annual output of US$2.2 trillion. The transition phase to the Continental Free Trade Area alone could generate welfare gains of $16.1 billion and boost intra-African trade by 33 percent. Once implemented， the AfCFTA Agreement is estimated to lift an additional 30 million people from extreme poverty and 68 million people from moderate poverty， and real income gains from full implementation of the agreement could increase by 7 percent， or nearly $450 billion. This would greatly help cultivate a large consumer group in Africa and stimulate further expansion of intra-African trade.

Second， with the AfCFTA in place， the capacity of supply of final products from African nations will be enhanced. For a long time， the abnormal trading structure featuring the export of raw materials and import of manufactured products has led to homogeneity in industrial and trading patterns among African countries， and undermined their economic complementarity. The vision of “made in Africa” has always been difficult to firmly take root. With the advance of the AfCFTA， the reduction and elimination of tariffs and the gradual removal of non-tariff barriers will significantly lower the costs for enterprises， and facilitate cross-border trade and investment within Africa. At the same time， the AfCFTA is expected to attract more foreign direct investment in the production of industrial and manufactured products. The process will promote intra-continental trade in intermediate products and capital goods， and allow African companies to gain from the value added in the shift from raw materials production to finished goods production. According to World Bank estimates， the volume of total exports would increase by almost 29 percent by 2035 relative to the baseline， and intra-continental exports would increase by over 81 percent， while exports to non-African countries would rise by 19 percent. In particular， manufacturing exports would gain the most， 62 percent overall， with intra-African trade increasing by 110 percent and exports to the rest of the world rising by 46 percent.

Third， under the AfCFTA scenario， Africa will be empowered to engage in the international division of labor. Building a free trade area is conducive to driving economic growth， increasing production efficiency， enhancing product specialization， promoting healthy competition， and facilitating technology transfer. Therefore， the AfCFTA creates a favorable environment for the development and expansion of African enterprises， especially those small and medium-sized ones. In the AfCFTA， the creation of new and larger markets， matched by possibilities to produce on a larger scale behind preferential walls and engage in learning by exporting， can raise the odds of survival and expansion for SMEs. As the AfCFTA significantly reduces the costs of participation in the international division of labor， local enterprises that are able to survive in the African market can enter global value chains based on their own competitiveness， making it possible for Africa to upgrade its standing in international industrial chains.

Closing the gap in industrial and supply chains

Currently， the industrial and supply chains of Africa are highly fragile. Due to its strong reliance on external markets in the international division of labor， the performance of the African economy is often dependent on that of others. So far， the “cake” of Africa’s external trade is predominantly divided among Europe （primarily the European Union）， East Asia （particularly China） and the United States. For geographical and historical reasons， Europe has been a key stepping stone for Africa to integrate into global industrial chains. In 2015， of the total $498.59 billion of African value added in third countries’ exports， about 62.8 percent， or approximately $313 million， is embedded in EU exports， which makes the EU the most critical hub of supply chains from the African perspective. Africa’s dependence on European industrial chains is not only reflected in its direct exports to Europe， but also demonstrated in third countries’ exports to Europe. The macro-economic impact of the novel coronavirus pandemic has suppressed European countries’ demand for African products. Likewise， the mounting pressure of the economic downturn has led to declining European imports from other countries and regions， whose exports to Europe are usually made possible by intermediate products supplied by African manufacturers. As a result， less demand from Europe will also affect these countries and regions’ imports from Africa.

The AfCFTA is an inevitable path for Africa to improve the resilience of its industrial and supply chains. On the one hand， with the growth of manufacturing industries of its own， more raw materials from Africa will be used for the production of manufactured products within the continent， thus easing Africa`s reliance on international markets. Besides， the more raw materials consumed by products made in Africa， the fewer left available for global supply， which will help Africa get rid of its disadvantageous position as a resource exporter. On the other hand， the construction of a unified African market will facilitate more foreign investment in African industrial supply and R&D chains， and expand the development space of local upstream and downstream industries， which helps create a vertical labor division system and makes it possible for Africa to control its own industrial and value chains.

The COVID-19 pandemic serves as an important accelerator for the localization of African industrial and supply chains. It forces African countries to review the critical issue of industrial chain sustainability， and reevaluate reliance on external suppliers. By turning to local suppliers which are much closer， intra-African value chains will be greatly boosted. As the Ghanaian president Nana Akufo-Addo stated， the COVID-19 pandemic has heightened the importance of the success of the AfCFTA， and the destruction of global supply chains has reinforced the necessity for closer integration among African countries. The United Nations has also pointed out in its report that Africa should accelerate the realization of its Pharmaceutical Manufacturing Plan to mitigate its dependence on imported pharmaceuticals and address the lack of access to high-quality affordable medical products. It is noted that the AfCFTA could be an opportunity to promote trade in pharmaceuticals and contribute to strengthening African healthcare systems for the long term.

Forging a common African voice in global trade negotiations

Highlighting the importance of African countries speaking in one voice， the African Union has called on member states to “speak with one voice on all issues related to trade negotiations with third parties” to avoid “fatally compromis[ing] the African trade integration process and undermin[ing] the vision and scope of the Abuja Treaty.” It is also explicitly stipulated in the AfCFTA Agreement that “in the event of any conflict and inconsistency between this Agreement and any regional agreement， this Agreement shall prevail to the extent of the specific inconsistency， except as otherwise provided in this Agreement.”

The AfCFTA’s special focus on a common voice is rooted in Africa’s long history of being divided. “Divide and rule” is the tactic often adopted by the US and European great powers when negotiating economic cooperation arrangements with African countries， which has eroded Africa’s overall interests. Take the negotiation on an EU-Africa economic partnership agreement （EPA） for example. Instead of considering Africa as a collective group， the EU has chosen to negotiate with sub-regional organizations such as the Economic Community of West African States （ECOWAS） and the Southern African Development Community （SADC）. The approach， which has been widely criticized by African countries， is believed to have led to a “race to the bottom” among the sub-regional organizations. More importantly， it has sown discord within African countries and hindered their integration process. With the implementation of the AfCFTA， Africa is now able to participate in international economic negotiations with one position and one voice， which will undoubtedly enhance the continent’s discourse in global economic governance. As Albert Muchanga， Commissioner for Trade for the AU， pointed out， the adoption of the AfCFTA will give Africa a unified voice on the global stage， and it is going to give leverage to the continent across the world. Under the WTO framework， Africa can now be represented by the AfCFTA and engage in negotiations as a single trade bloc， thus ensuring its say in the most important multilateral trade organization of the world.

Challenges Facing the AfCFTA

Despite the above-mentioned potential benefits， there remain multiple challenges ahead for the AfCFTA which still remain to show themselves. Within the African continent， difficulties are inevitable when it comes to coordinating the various states and sub-regional organizations and， on this basis， arranging for a unified trade and investment framework. More fundamentally， there is a lack of endogenous dynamics for the sustainable growth of intra-African trade.

Limited manufacturing capacity within the region

The benefits that the AfCFTA can bring to the African continent may be limited due to insufficient local manufacturing capacity. Despite the free trade area’s potential to promote intra-African manufacturing industries， turning that potential into reality requires the African Union， the sub-regional economic communities， and individual African states to create favorable conditions for the development of the local manufacturing sector， for example by introducing new policies to help empower local enterprises and cultivate industrial clusters. Only by so doing can the utility of preferential trade arrangements be maximized. In this sense， trade policy is not a substitute for industrial policy. Unless AfCFTA member states are able to produce manufactured goods that are both of high quality and reasonable price， regional countries are most likely to put aside the preferential trade arrangements and conduct trade with extra-regional third parties. This is especially the case given the prevalent preferential arrangements Africa has with the United States and Europe. Therefore， the reduction of tariffs and removal of non-tariff barriers is only the first step to increasing internal trade.

The strong demand of the African continent cannot be met by locally made products in a short time. The manufacturing sector in Africa， long troubled by its weak development， has been playing an insignificant role in the world economy. According to a report by the accounting and consulting firm PwC， the share of value-added produced by African manufacturing industries was as low as 1.6 percent of the world’s total in 2019. The chronic and severe problem of disjunction between African production and consumption can hardly be reversed in a short time. Due to the poor basis of the local industrial sector， only a small proportion of Africa’s main supplies to global markets， including primary commodities such as petroleum and minerals， are consumed locally. In recent years， the emerging middle class in Africa has stimulated the consumption of automobiles and auto parts， computers and electronic products， apparel and fashion accessories， and smartphones. However， because of the underdeveloped local manufacturing capacity， African consumers can only meet their demands largely by importing. While the implementation of the AfCFTA and the construction of a unified African market is expected to catalyze a wide array of locally based enterprises， trade facilitation within the free trade area is a slow process， and it takes time to attract international investment， improve industrial layout， and build up production capacity of scale. In other words， instead of yielding immediate benefits， the AfCFTA’s vitality is only more evident with the passage of time.

Low level of trade facilitation

High transaction costs constitute a major reason for the sluggish expansion of intra-African trade. Once the AfCFTA Agreement slashes the level of tariffs， institutional and technical barriers will become the main obstacles to the rapid growth of African inter-state trade. According to the World Bank， it takes about three and a half weeks for a container of car parts to be cleared by Congolese customs. In addition， while East African countries like Tanzania and Uganda have established a one-stop border post to slash time for cargo movement between them， new delays in the form of divergent standards for goods have quickly emerged， underscoring the changing nature of non-tariff barriers. Moreover， as an UNCTAD report shows， while the average applied rate of tariff protection in Africa is 8.7 percent， other obstacles have been found to increase the cost of African trade by an estimated 283 percent. The International Monetary Fund （IMF） also pointed out that bringing Africa’s quality of logistics to the global average level （an improvement of about 19 percent） would lower the cost of cross-border movement of goods and increase intra-regional trade by over 12 percent.

While the AfCFTA Agreement and relevant implementation mechanisms have drawn a clear roadmap for advancing African trade facilitation， there is still a long way to go before the situation can fundamentally improve. To expedite the processes of importation， exportation and transit， and to expedite the movement， clearance and release of goods including goods in transit across borders within state parties， an annex on trade facilitation has been incorporated into the AfCFTA Agreement. Besides， the five operational instruments governing the AfCFTA， namely the rules of origin， the online negotiating forum， the monitoring and elimination of non-tariff barriers， a digital payments system and the African Trade Observatory， are all dedicated to reducing intra-regional trade costs. Admittedly， these provisions and implementation mechanisms have charted the course of， and created the conditions for， Africa’s trade facilitation， but substantial obstacles to cooperation in this regard remain due to the poor infrastructure within regional countries， the inconsistent technical standards and regulatory systems， as well as cultural and linguistic differences between states， and the uncertainty of rules brought about by the coexistence and overlapping of multiple integration organizations. Within sub-Saharan Africa， only a handful of countries such as Kenya， Ghana and Rwanda have made major breakthroughs in trade facilitation in recent years， while the progress of other states is far from ideal. Moreover， trade facilitation requires substantive policy reforms at the state level， which poses a test of difficult political choices to national leaders amid the rampant pandemic.

Severe shortage of infrastructure

Infrastructure development on the African continent remains at a low level. Only 38 percent of the African population has access to electricity， the penetration rate for internet is less than 10 percent while only a quarter of Africa’s road network is paved. Studies have shown that poor road， rail and port facilities add 30 to 40 percent to the costs of goods traded among African countries. Since 2010， even those African countries with better economic performance， such as Ghana and Ethiopia， have frequently experienced severe power shortages， leading to dire consequences like factory shutdowns and withdrawal of foreign investment. Inadequate transport connection is also part of the reason for the slow progress of sub-regional economic communities in Africa. In the ECOWAS for example， decades after the common market agreements were signed， market access is still limited due to poor transportation.

For the AfCFTA to be successful， infrastructure and industrialization remain key pillars. To improve the infrastructure deficit， the AU and the African Development Bank launched the Program for Infrastructure Development in Africa （PIDA） in 2012. By integrating cross-border and cross-regional infrastructure development plans of all kinds in Africa from 2012 to 2040， the program serves as an infrastructure guide for African countries and regional organizations. Covering four major areas of energy， transport， information and communications technology （ICT）， and trans-boundary water resources， PIDA aims to develop a web of 37，200 kilometers of highways， 30，200 km of railways and 16，500 km of interconnected power lines by 2040， and plans to add an extra 1.3 billion tons of capacity at the ports.

The constraint of poor infrastructure on the AfCFTA is a long-term problem. On the one hand， infrastructure building on the continent faces a severe shortage of funds. Even though Africa has become more proactive in infrastructure development by tapping the potential of the private sector， the move is still a drop in the bucket. According to calculations by the African Development Bank， the annual funding gap for Africa’s infrastructure construction is as high as $68 to 108 billion. Given that the COVID-19 pandemic has exacerbated the debt burden of many African countries， those states that have hit the debt ceiling are unable to provide sovereignty guarantee for the financing of major infrastructure building， which will inevitably delay the progress of some projects and affect the efficiency and costs of intra-regional trade and transport. On the other hand， as a program closely related to the AfCFTA construction， PIDA covers a wide range of areas and is up against the challenge of overall planning and coordination. It not only involves continent-level coordination between the AU Commission and the New Partnership for Africa’s Development （NEPAD） Planning and Coordination Agency （now transformed into the AU Development Agency）， but also has to deal with coordination among the eight African sub-regional economic communities and among different geographical areas within individual countries. All this requires strong and effective leadership and enforcement. Unfortunately， the absence of leadership is one important reason for the repeated failure of past infrastructure projects in Africa， and the situation has not fundamentally improved. The mid-term review of the first phase of PIDA undertaken in 2019 showed that only 35 percent of its 143 projects were under construction or already operational.

Dilemma of collective action

Just as the locomotive determines how fast a train can travel， the support for the AfCFTA from regional major countries such as South Africa， Nigeria and Egypt directly concerns the fate of the free trade area. However， these countries’ attitudes towards the AfCFTA and their preparations for implementation are rather worrying. According to the AfCFTA Year Zero Report by AfroChampions， a private sector partner of the AU， the overall average commitment level of the continent to the AfCFTA is at 44.48 percent， and its overall implementation readiness level is at 49.15 percent. None of the above-mentioned three regional major powers is among the top ten countries according to overall performance or in terms of commitment. In particular， Nigeria’s commitment level to the AfCFTA， at 20.9 percent， is among the lowest among all African states. The commitment level reflects countries’ true willingness to advance the AfCFTA process. While the least developed countries are eager to make best of the markets and opportunities brought by the AfCFTA， the major powers seem to indicate more concerns. So far， South Africa， Egypt and Nigeria have all yet to formally release their respective national strategies for implementing the AfCFTA.

In Nigeria， the differentiated domestic interests have cast a shadow on the government’s implementation of the AfCFTA Agreement. Nigerian consumers and traders， and certain Nigerian industries， including its financial and telecommunications services industries， potentially stand to benefit from the AfCFTA， and are therefore broadly supportive of the country’s participation in the AfCFTA. Nigerian manufacturing industries， on the other hand， having long benefited from the significant protection afforded by Nigeria’s highly restrictive trade regime， are skeptical about the free trade pact and opposed to the signing and ratification of the AfCFTA Agreement. The manufacturing sector initially lobbied against the AfCFTA and has urged the Nigerian government to ensure that Nigeria’s large domestic market doesn’t become a “dumping ground” for foreign products， thereby harming local manufacturing firms. Despite the eventual signing and ratification of the AfCFTA Agreement， powerful vested interests in trade protectionism in the country raise doubts about the Nigerian government’s commitment to actually implementing the Agreement and fulfilling its promises.

New Opportunities and Challenges for China-Africa Cooperation

The launch of the AfCFTA will have profound influence on China-Africa cooperation. With the construction of an integrated African market， the prospects will be brighter in those areas where cooperation between the two sides has been underway， while fresh opportunities will emerge where cooperation can only be possible with a large and unified market in place. For example， China-Africa infrastructure cooperation projects will be standing on a more solid footing in terms of economic sustainability because of the expansion of the African market. Besides， as internal barriers are gradually removed， far-reaching changes will take place in China-Africa cooperation on industrial parks， particularly with regard to the regional and national distribution of industrial parks and the scale and industrial types of the enterprises in them. At the sectoral level， the building of a large and unified African market will usher in more cooperation opportunities in the digital economy， financial services and infrastructure development.

First， the AfCFTA is expected to bring new possibilities to China-Africa cooperation in the digital economy. Africa is in urgent need of the digital economy to empower its AfCFTA construction. On the one hand， the digital economy is indispensable for AfCFTA trade facilitation. Improving digital connectivity is of vital importance to promoting intra-African trade， especially now that internet-based communication， cross-border flow of data and electronic payment have become the new normal of trade. In the Digital Transformation Strategy for Africa （2020-2030）， the AU aims to “build a secured Digital Single Market in Africa by 2030 where free movement of persons， services and capital is ensured and individuals and businesses can seamlessly access and engage in online activities in line with Africa’s Continental Free Trade Area.” On the other hand， advancing the vision of “made in Africa” cannot do without the digital economy. By empowering the African manufacturing sector， digital technologies are not only able to seamlessly connect production and consumption and achieve the dynamic equilibrium between supply and demand， but are also capable of linking upstream and downstream of the supply chain， as well as different parts of the industrial chain and various nodes of the service chain， thus enhancing supply chain efficiency.

China has both the willingness and the capability to strengthen cooperation with Africa in building a digital AfCFTA. In the Forum on China-Africa Cooperation Beijing Action Plan （2019-2021）， the two sides commit to “share good practice in each other’s ICT development， seize the opportunity presented by the digital economy， and encourage companies to carry out cooperation in ICT infrastructure， the internet and the digital economy.” Upon the conclusion of his visit to five African countries at the beginning of 2021， Chinese State Councilor and Foreign Minister Wang Yi also indicated that China would help Africa seize the opportunities brought by the information revolution and cooperate with the continent in building a Digital Africa. At the China-Africa Internet Development and Cooperation Forum held in August， Assistant Foreign Minister Deng Li introduced China’s proposals for the China-Africa Partnership Plan on Digital Innovation. Apart from the common aspiration， China’s globally advanced digital productivity is the major driver of China-Africa digital economy cooperation. With a thriving digital economy represented by various new business formats， China is able to provide essential support for the integrated development of digital technologies and the real economy. China’s strong digital productivity can well meet Africa’s burgeoning demand for digital development.

New opportunities for China-Africa cooperation abound in the areas of “digital economy plus manufacturing，” electronic payment， e-commerce， information technology application， single window construction， and digital single market. Take “digital economy plus manufacturing” for example. The deep integration of the digital economy and technologies with “made in Africa” manufacturing is expected to become the priority area and breakthrough point for China-Africa digital economy cooperation. In this regard， the two sides can step up cooperation in relevant governance， infrastructure development， financial services supply， technological application and upgrading， and business model innovation， thus helping Africa better reap the dividends of the digital economy.

Second， the AfCFTA construction is likely to give fresh momentum to China-Africa infrastructure cooperation. For a long time， despite the importance the AU and regional countries attached to cross-border and cross-regional infrastructure building， progress has been slow due to a shortage of funds and the failure to coordinate. In the future unified African market， there will be greater demand for cross-border and cross-regional infrastructure networks. As the construction of the free trade area requires the removal of institutional barriers for large-scale free movement of persons and goods within the continent， cross-border and cross-regional infrastructure is expected to witness improvement， which will further enhance intra-African trade and attract more investment， integrate the value chains of regional and global trade， and facilitate Africa’s participation in global trade and supply networks. In the AU’s Agenda 2063， an integrated high-speed train network， implementation of the Grand Inga Dam project in the Democratic Republic of the Congo， establishment of a single African air transport market， and the pan-African e-network are all identified as flagship projects. Besides， cross-border and cross-regional projects have played a crucial part in the second phase of the PIDA Priority Action Plan （PIDA PAP2） for the period 2020-2030， which was adopted at the AU Assembly of Heads of State and Government in February 2021. Moreover， the Trans-African Highway Network （TAH）， a network of all-weather roads of high quality with a total length of 57，300 km and made up of 10 sections， will be an integral part of PIDA PAP3 for the long-term period of 2030-2040.

With China’s powerful infrastructure building capability， China-Africa infrastructure cooperation will be developing on a solid foundation. As the largest contractor and funder in African infrastructure construction， China enjoys both financial and technological advantages in the African market. With a share of more than 40 percent， Chinese enterprises can translate the strong market position into a cost advantage. Apart from that， the technical performance and reliability of the facilities and equipment used in Chinese infrastructure construction， especially in railways， are also in the world’s leading or advanced tier. Because of the sound quality， low costs and efficient delivery of their projects， Chinese enterprises possess an undisputed comparative advantage in African infrastructure development， and that is why most African countries are willing to seek cooperation with China in infrastructure investment. Over the two decades since the launch of the Forum on China-Africa Cooperation， China has built for Africa over 6，000 kilometers of railways and the same mileage of roads， nearly 20 ports and over 80 large-scale power plants. Despite the pandemic， the value of China’s newly signed contracts for African projects rose by 21.4 percent year-on-year to $67.9 billion. This growth， counterposed to the global downtrend in overseas investment， implies the tremendous potential in China-Africa infrastructure cooperation. Moreover， while Africa is in urgent need of large-scale cross-border transport facilities， currently the infrastructure cooperation between China and Africa is mostly conducted within individual countries， with limited involvement in the building of major regional transport networks. As the AfCFTA is launched， Chinese enterprises are given the opportunity to comprehensively engage in the planning， investment， construction and operation of cross-border and cross-regional transport networks in Africa.

China and African countries are also able to step up cooperation in establishing a single African air transport market and large-scale integrated power systems. In the AfCFTA Protocol on Trade in Services， the AU member states recognize “the potentially significant contribution of air transport services and， in particular， the Single African Air Transport Market in boosting intra-African trade and fast tracking the AfCFTA.” Given that local airline businesses suffered heavily amid the pandemic， China can consider expanding investment cooperation with African local airlines and advance the single African air transport market by participating in the building of airports and other supporting facilities. In the area of energy infrastructure， to address the severe shortage of large-scale integrated power systems on the continent， the United States and other Western powers have focused on developing mini-grids and household grids， which are disconnected from a larger centralized power grid， in their aid to Africa. But the off-grid small generation installations cannot fundamentally satisfy the growing power demand in African production and modern societies. As the AfCFTA construction advances and African industrialization accelerates， the demand for large integrated power systems is expected to be greater at national， sub-regional and continental levels， which makes it possible for Chinese firms to participate in the construction of cross-border and cross-regional power transmission and distribution systems， or the development of large hydropower projects.

Third， the AfCFTA construction is likely to break new ground in China-Africa financial services cooperation. Africa’s desire to develop its financial services industry has become stronger now that the free trade area has been launched， as building a unified African market requires quality infrastructure， smooth circulation and convenient business environment， all of which cannot be done without tremendous financial input. As indicated by the IMF and other international economic organizations， the financial services sector should take a lead role in providing the major tools necessary to implement robust trade agreements. However， the current financial market on the African continent， characterized by a low level of capitalization， a shortage of liquidity， a scarcity of financial tools and a lack of long-term products， is seriously lagging behind others in the world. Given this， Africa is in urgent need of improving its financial services industry and expanding its financing channels. So far， China-Africa financial cooperation is still conducted at a low level， with China’s provision of policy-oriented or development finance as the main approach. Since financial services is among the priority sectors for opening-up in the AfCFTA， African countries are actively developing and reforming their respective financial industries. This will bring opportunities to expand and deepen China-Africa financial services cooperation.

As an important component of China-Africa pragmatic cooperation， financial services cooperation between the two sides has a solid foundation. It is both part of the ten cooperation plans adopted at the FOCAC Johannesburg summit and the eight major initiatives adopted at the subsequent Beijing summit. As more and more Chinese enterprises have entered the African market in recent years， Chinese-funded banks and other Chinese financial institutions are also expanding all-round and mutually beneficial cooperation with their African counterparts. Now， the products and services of Chinese financial institutions have covered almost all African countries. On the one hand， China-Africa financial cooperation has lent tremendous support to their production capacity cooperation， and propelled Africa’s economic growth and industrialization. On the other hand， more Chinese companies are able to take root on the continent thanks to the financial cooperation， which enhances the global competitiveness of Chinese enterprises. In the AfCFTA context， African countries’ increasing desire for improved business environment and enhanced industrial competitiveness creates broad space for deepening China-Africa financial services cooperation.

The AfCFTA construction is expected to inject fresh impetus into China-Africa financial cooperation. First， the two sides can consider joint efforts in building the African financial institutions， namely the African Central Bank （ACB）， the African Monetary Fund （AMF） and the African Investment Bank （AIB）， whose creation is mandated by the Constitutive Act of the AU. Given the critical role of logistics and cross-border payment in a free trade area， the Pan-African Payments and Settlement System （PAPSS） has been launched. With PAPSS， about $5 billion in money transfer charges would be saved each year for the continent， formalizing a significant proportion of the estimated $50 billion of informal intra-African trade. A feasible option for China would be to invest in PAPSS infrastructure， support PAPSS standards setting， and help train relevant technical professionals， thus assisting Africa in building its own financial institutions. Second， the construction of a unified African market will create new possibilities for China-Africa cooperation in the capital market. China can support African countries and those financial institutions with higher credit ratings to issue renminbi bonds in China， while allowing qualified Chinese financial institutions to issue renminbi and foreign currency bonds in Africa. The funding that Chinese enterprises obtain from bond issuance in Africa should be encouraged to invest in AfCFTA-related infrastructure development. Last， the AfCFTA construction also provides an opportunity to expand cooperation between Chinese and African financial institutions. China should improve the layout of its financial network on the continent， encourage its financial bodies to set up more local branches， and consider establishing joint venture banks with the African side， among other measures to broaden the scope of their investment and financing ties.

While expecting the new opportunities that the AfCFTA brings to China-Africa cooperation， it should be noted that challenges are also on the rise and becoming even greater.

First， China’s cooperation with individual African countries or sub-regional organizations will be under more pressure. On the one hand， with the AfCFTA launched， China’s free trade arrangements with African countries or sub-regional organizations will be scrutinized through the lens of African economic integration， which increases the potential pressure it faces. Now that the AfCFTA Agreement has been implemented， research shows that most African countries are inclined to negotiate free trade agreements with China on the AU platform. A united Africa may raise its bid， and the diversity and complexity of national demands may seriously protract the process of collective negotiations. China’s free trade negotiations with individual African countries or sub-regional organizations are expected to be more difficult. Take the US-Kenya free trade negotiation as a reference. A major reason for its sluggish progress is that the AU and the East African Community （EAC） do not support free trade negotiations between their individual members and extra-regional states， for fear that Africa’s overall interests would be undermined. EAC trade officials， in their strong criticism of and opposition to the Kenya-US negotiation， even accused Kenya of violating the EAC Customs Union Protocol. On the other hand， the shift of Chinese direct investment on the continent to an export-platform pattern may arouse dissatisfaction from some African states， especially when these countries are flooded by products made by Chinese-invested plants located in another country. In fact， the above-mentioned hesitation of Nigeria in signing the AfCFTA Agreement has something to do with the concern that its market would be overwhelmed by commodities made by extra-regional investments in Ethiopia or other countries with favorable infrastructure conditions.

Second， economic frictions between China and Africa are likely to increase. On the one hand， there will be potential competition existing between “made in China” and “made in Africa.” The development of the African manufacturing sector is bound to result in greater pressure for Chinese products in the African market. While in the short term it is difficult for locally-made products to outperform Chinese manufactured goods， in the long term the former will gain more advantages because of tariff reduction in the free trade area and the cheap labor force in Africa， which may lead to a rise of trade frictions between the two sides. On the other hand， China’s trade surplus with Africa may further expand with the AfCFTA launch. African countries， dissatisfied with China’s long-time trade surplus position， have been urging China to expand import of their agricultural products. According to World Bank predictions， the AfCFTA may widen Africa’s trade deficit to China. Compared with the baseline scenario， the increment of Africa’s imports from China would be 2.1 times the growth of its exports to China by 2035， thus making the trade deficit even larger. Reasons for the expanded trade deficit include the imperfections in China-Africa trade cooperation and promotion mechanisms， especially in the agricultural sector， the immaturity of trade promotion platforms， and a lack of China’s supporting measures for imports from Africa. Unless these problems are properly addressed， Africa’s increasing trade deficit to China may result in more frictions between the two sides.

Third， China-Africa economic and trade cooperation will be subject to greater international scrutiny. On the one hand， there will be more competitors influencing the trajectory of China’s trade and economic relations with Africa. As the AfCFTA construction motivates global major powers to invest more on the continent， local Chinese enterprises will have to engage in fiercer competition， particularly in the areas of infrastructure investment and project contracting. At the Group of Seven （G7） summit held in the United Kingdom in June 2021， the leaders launched the Build Back Better World （B3W） Partnership， to “help narrow the $40 trillion plus infrastructure need in the developing world.” Claimed to be a fairer alternative to China’s Belt and Road Initiative， the B3W Partnership will lead to more competition in the foreseeable future between China and the Western powers in their respective trade and economic relations with Africa. On the other hand， the Western stigmatization of， and intervention in， China’s Africa policy will be more frequent. In recent years， the US and other Western powers have been keenly aware of the ongoing friendly and cooperative relations between China and Africa， considering China’s rising influence on the continent as a challenge to their established interests. They have been falsely accusing China of creating “debt traps” in African countries and promoting so-called “neo-colonialism.” As the AfCFTA elevates the strategic and economic value of the African market， more attention has been given by external powers to developing trade and economic ties with regional countries. In the context of China-US competition， China-Africa cooperation will inevitably be faced with various kinds of intervention and obstruction. In his latest trade agenda， the Biden administration seeks to “collaborate with allies to address global market distortions created by industrial overcapacity，” with key sectors ranging from steel and aluminum to fiber optics， solar， and other sectors where the Chinese government has been a key contributor. Since production capacity cooperation plays a major role in China-Africa relations， economic and trade ties between the two sides stand to face more challenges if the United States draws together the Western bloc to attack China’s policies and moves in the region. Moreover， in the AfCFTA context， issues such as the quality of Chinese exports to Africa and the disordered competition between Chinese enterprises may be grossly exaggerated or even played up， causing international public opinions unfavorable to China and undermining the positive atmosphere of China-Africa cooperation.

Conclusion

With Africa’s firm commitment to integration and a strong determination to change its marginalized position， we have reason to expect a promising future and significant returns from the AfCFTA. Blessed with its large consumption market， its tremendous demographic dividend and the increasingly stable economic and political situation， Africa is a qualified major force in the future world economic landscape.

In the face of new opportunities and challenges brought by the AfCFTA construction， the Chinese and African sides need to meet each other halfway and push their cooperation to a higher level. They can consider setting up a leading group for China-Africa FTA negotiation within the FOCAC framework， and start to conduct early studies on possible challenges， and advancing paths and revenue distribution programs under the FTA. This will create positive conditions for their in-depth cooperation. Additionally， pragmatic dialogues are all the more necessary for the transformation and upgrading of China-Africa economic and trade cooperation. The two sides can build strategic consensus on the key areas of their production capacity cooperation in the AfCFTA context， and jointly find a solution to the issue of their trade imbalance.

For China， the China International Import Expo and the China-Africa Economic and Trade Expo are both platforms it can use to expand the access of African products to the Chinese market. With the AfCFTA launched， China should now devote more efforts to analyze the feasibility of expanding its cooperative projects in Africa from the angle of AfCFTA construction， as a move of advance planning. To promote China-Africa mutually beneficial cooperation on a more solid footing， China should attach more importance to demands from the African side， respect its autonomy， and take care of its needs in the process of cooperation. China can also get involved in the AfCFTA development by seeking third-party market cooperation with extra-regional powers， to achieve benefit sharing and pooling of risks.