Category: China-India-Africa

Financing the African economy: Supporting the Modernization of African Economies

By Clarisse Hida & Joël Ruet

As the Summit on the financing of the African economy will be held on May 18, 2021 in Paris, at the invitation of Emmanuel Macron and with the African heads of state and government, solutions must go well beyond refinancing of sovereign debt, to integrate the dynamics of an African financial system undergoing a great transformation, and must include the banking sector, both at the level of the private sector and of commercial banks.

Africa has been resilient since the economic crisis of 2008 with controlled debt until the covid pandemic, and, for many countries, debt has been raised in connection with a transformation, an extension of the tax base, with margins remaining in this in terms of debt sustainability. But above all the continent, and in particular sub-Saharan Africa, has demonstrated a real boom in its economies, served by the growth of pan-African banks, which now desreve better support internationally.

But today Africa remains underbancarised, and a “classic” treatment of African economies by the tools of the banking system possibly supported by a multilateral public tool for the correct assessment of risks, including the issues of “rating”, looks promising.

Key Take-aways :

► The issue of financing the African growth should be approached through:

– Maintaining development assistance in the context of COVID-19 which, in itself, does not constitute a specific risk for Africa.

– The revival of public and private foreign investments in Africa, by improving the perception of African opportunities, including a fairer rating of private and sovereign financial assets.

– And finally, through support the access to capital markets for commercial banks since it is clear that many banking regimes are sound and should not be underestimated.

► In each of the avenues proposed, the international community must play an integrating or intermediary role that goes beyond the framework of development aid.

► This triple approach would make it possible to tap new types of financers, who would be able to better understand the specificities and strategies of African countries, particularly, but not only, with regard to debt and its refinancing.

The Bridge Tank at the BOAO Forum for Asia 2021: a partnership anchored in a shared vision for the future

The Bridge Tank at the annual “Chinese Davos” meeting

After a year of pandemic which led to its suspension in 2020, the BOAO Forum renewed its annual conference from April 18 to 21, 2021 in a context fluctuating between resumption of international trade and temptation to withdraw. As such, the “Chinese Davos” plays a decisive role in the international calendar by advocating an open multilateral dialogue, at a time when the Covid19 has lastingly disrupt the international balance and created a series of new challenges while exacerbating those which pre-existed to it.

Since 2018, the chairman of the Bridge Tank Joël RUET has participated to the BOAO Forum, of which the think tank is a partner. As every year, he spoke at a high-level conference alongside international leaders from the political and business worlds, such as Dmytro KULEBA, Ukrainian Minister of Foreign Affairs, Jens ESKELUND, vice-president at the Chamber of European trade in China, or LIU Hualong, president of China Poly Group, but also the director general of the WTO, Ngozi OKONJO-IWEALA, or the South Korean Minister of the Environment.

He was one of the three French speakers, embodying the circle of think tanks, while Jean-Pierre RAFFARIN and Henry GISCARD D’ESTAING, respectively represented the political and economic world. This high-level platform of dialogue, eagerly awaited in the context of a return to international discussions, aspires to build a global consensus and promote common and sustainable development. This meeting was an opportunity to discuss the measures takenby the BRI countries to keep the economic and trade volume roughly stable and normal during the COVID-19 pandemic when the global economy plunged, and cross-border trade and investment slowed down. The role of China-Europe Railway Express in stabilizing the global supply chain was also discussed, as well as the role played by e-commerce in renewing and developing international economic cooperation. In the context of an implementation of the New Silk Roads, but also of an Investment Agreement between the EU and China which is debating, the future of Sino-European relations also occupied the space of discussion.

For Joël Ruet, chairman of the Bridge Tank, “the investment of today makes the business of tomorrow”

In his speech, Joël Ruet stressed the need to optimize Eurasian trade, embodied by the rise of the China-EU Railway Express, by emphasizing the role of upstream investment. As such, it calls for a rebalancing of trade, in favor of exports of European technologies and equipment to China. On this point, the Bridge Tank discussed at length the subject of the EU’s competitive advantages to be brought to bear in its trade with China.

He also addressed the energy issue : the Belt and Road Initiative (BRI) could play an important role in connecting the two hydrogen champions Asia and Europe. The Bridge Tank has also developed several avenues of cooperation in terms of research that it would be strategic to develop between the two regions.

Joël RUET added that the EU did not intend to tackle the climate issue as one subject among others, but as an issue that conditions and prevails over everyone’s interests, and compared this approach to the Blinken line: dealing separately with technological rivalries and coordination for the climate. Joël Ruet said it remains to be seen whether this separation is audible by the Chinese side.

He also reflected on the place of Africa in the Belt and Road Initiative, suggesting that Africa wants and must find its place there. According to him, investments on the African continent, still too limited to infrastructure, would benefit from further enhancing contact between individuals by focusing on human capital and skills training.

Ukrainian Foreign Minister in favor of an ambitious European cooperation on hydrogen

The Ukrainian Foreign Ministry raised the many challenges brought to light by the pandemic. He argues that international trade will play a key role in the global economic recovery, provided cooperation is boosted. To achieve this, and like Ukraine, which is posed as a strategic logistics hub, the regions of the world must enhance their connectivity in order to foster multilateral interactions.

He advocates enhanced European cooperation in the sector of alternative energies such as hydrogen. He therefore calls for coordinated efforts to invest in hydrogen technologies, ensuring that Ukraine intends to play its role as a strategic partner. The Bridge Tank shares with interest the Minister’s enthusiasm for innovative cooperation around hydrogen, as evidenced by these numerous works on the subject.

For Jens Eskelund, Managing Director of Maersk and Vice-President at the European Chamber of Commerce in China, “the business world allows constructive international dialogue beyond politics”

Jens Eskelund spoke about the pre-Investment Agreement between the EU and China, whose ratification has been suspended due to political disputes. For him, this is the dangerous symptom of a phenomenon of politicization of world trade: the political circle meets the business world. However, this situation is untenable in the long term: both parties must be aware of the need to maintain an open dialogue. For him, trade remains the area where constructive and frank links can be maintained regardless of political differences. The business world therefore has a role to play in maintaining contact where diplomatic relations face an impasse.

According to him, and the Bridge Tank totally agrees with him, international cooperation is indeed crucial to meet future challenges such as the climate challenge: on this subject, the EU and China cannot afford to develop technologies in parallel without converging.

LIU Hualong and the importance of working towards a state of trust to rebuild international relations

In a context of tension in diplomatic exchanges, the CEO of Poly Group insisted on a return to a state of trust, a necessary prerequisite for any trade or international investment. According to him, sharing experience and building trust are essential to rebuilding a sustainable post-covid world and stabilizing the global supply chain.

Joël Ruet bounced back from this intervention, emphasizing that constructive relations must be rooted in a state of mutual understanding, fueled by international networks and cultural projects. In fact, for a rapprochement on investment to be made by companies, it is essential to get to know each other, through multicultural initiatives.

The Bridge Tank at the BOAO Forum : to go further

If the Bridge Tank has been a faithful partner of the BOAO Forum since 2018, it is because it works to offer a vision of the world converging with the vision shared at BOAO, in favor of openness and cooperation. The interviews suggested below, given by Joël Ruet to Chinese media, allow us to deepen the meaning of this shared vision.

During an interview with CGTN TV, Joël Ruet proposed avenues for reflection on environmental cooperation between China, the European Union and the United States. He also mentioned the need to strengthen coordination between the G20 and the BRI and addressed the issue of governance of these new Silk Roads to these journalists.

Joël Ruet was quoted by CCTV13, a Chinese national news channel, about the role of BOAO in the economic integration of Asia, but also of the world on a global scale.
 
In an interview with Xinhua news on the occasion of the opening of the Forum, the president of the Bridge Tank presented his point of view on the trade of tomorrow, necessarily based on proactive and ambitious investments, a reform of the WTO, and the greening of the New Silk Roads. Quoted in an article of Xinhua news on the place of China in sustainable development on a global scale, Joël Ruet argued that the BRI has a big role to play in the energy transition, in particular in the field of hydrogen.
 
To find all the media resources of the Bridge Tank about this 2021 Edition of the BOAO Forum : (insert link of the short post).
 

EU-China Comprehensive Agreement on Investment: Stakes for a constructive balance of power

By Philippe Coste, Pierre-Noël Giraud, Stéphane Gompertz, Henri de Grossouvre, Fatima Hadj, Brice Lalonde, François Loos, François Quentin, Joël Ruet, Raphaël Schoentgen, Alex Wang, avec Clarisse Comte et Claire Thomas.

After seven years of negotiations, the European Union and China reached an investment agreement on December 30, 2020. While Beijing sees in it the promotion of a “high degree of openness”, the EU aspires through this treaty to establish the long sought after “equality of market conditions”.

To carry out this project, a balance between the strategic interests of each side and common objectives on which to agree remains to be found… just as it remains to find avenues for concrete action.

Find the analysis note in French :2021-03-Issue-Brief-UE-CHINETélécharger

• This treaty provides for the intensification of economic and trade relations between the EU and China. It guarantees EU investors greater access to China and also helps to create more balanced conditions of competition.

• Areas of collaboration are proposed here, in various fileds : political (place of China in international organizations, global governance), legal (international standards, ESG), industrial (mobility, decarbonisation, role of SMEs), economic, environmental, scientific , technological (energy transition, carbon capture, hydrogen, nuclear, new energies), financial (coordinated introduction of carbon prices) and cultural.

• For the EU, it is above all a matter of asserting its strategic interests in a coordinated manner with the member countries during the ratification process.

The long-term issues of technological sovereignty, of competition between blocs, all possible causes of “stop and go” in bilateral relations must be seriously dealt with.

Despite the identified obstacles, maintaining an open but precise dialogue between the EU and China is essential. The European Union must continue its transformation and ensure respect for its increase in diplomatic power both within the EU and in its relationship with China: beyond state-to-state relations, it is up to the EU in as a community to negotiate the terms of a new bilateral relationship with China. It is in this way that it will confirm its status as a “balancing power”.

The Organization for the Development of the Senegal River Basin (OMVS) will be a candidate for the Nobel Peace Prize

On 12th March 2021, in Kayes, Mali, our Board Member Hamed Semega, announced the Senegal River basin organization (OMVS) will run for the Peace Nobel Prize. OMVS, an international organization under Guinea, Mali, Mauritania, Senegal, today celebrates its 49th anniversary. Heading towards 50, and ahead of the upcoming Word Water Forum, the 4 states realize the OMVS has been a factor of peace, stability and development in the region. Just as IPCC got the Prize on climate change mitigation, we wish the OMVS will get the prize for huge climate adaptation efforts it does on top of peace.

Senegal: The political crisis shaking the country

3 of our Founding Board Members from Senegal were mobilized in the international and national media during the restlessness the country experienced; Aissata Tall-Sall (on Francde 24) Minister of Foreign Affairs, Elhaj Kasse (on TFM) Special Adviser to the President and Mamadou Lamine Diallo ( on TFM), member of the National Assembly and one of the leaders of the democratic opposition.

Elhaj Kasse, Special Advisor to the President on TFM (Télé Futurs Medias) for a special program: how to get out of the crisis?
Mamadou Lamine Diallo, member of the National Assembly interviewed on TFM (Télé Futurs Médias)

Signing of the investment agreement between the EU and China

Ambassador Sylvie Bermann and our chairman Joel Ruet exchanged notes on Chinese TV on the EU-China investment agreement; noting that it not only concludes 7 years of negotiations but also of seeing on both sides the emergence of a different vision of the world. While many issues remain to be finetuned, ambassador Bermann recalled the agreement answers queries made by the EU and follow a European approach on the economy

Minister Edmond Alphandéry exchanges with Bridge Tank experts about carbon pricing

Edmond Alphandéry, former French Minister of the Economy and Chairman of the Task Force on Carbon Pricing, gave a long explanation of his vision of the place and importance of carbon pricing in the ecological transition, and highlighted the decisiveness of this measure in order to achieve the objective of carbon neutrality, within the framework of the Paris agreement.

Carbon pricing: an essential tool for the ecological transition

Minister Alphandery began by reminding us of the scale of the challenge posed by global warming and the complexity of the issues at stake : given that we emit 40 billion tons of CO2 each year, he explained that if we reasonably assume that the price of a ton of CO2 should be set at around 100€ (according to the main evaluations), then a carbon pricing system would cost €4,000 billion each year, which amounts to Germany’s Gross National Product (GNP).

In this context, the former minister sees carbon pricing as central to the fight against global warming. His explanation is simple: when carbon has a price, all economic agents (households, companies, the State) are encouraged to reduce their emissions, or even to stop them or to find alternatives, in order to reduce their expenses.
The speaker specified that there are two solutions currently applicable and applied in order to put a price on carbon. The first is a carbon tax, which is simple and effective, but politically difficult to implement and whose adjustment is complex. The second is the introduction of a carbon market, where emission permits are issued according to the total volume of emissions desired. Permits are bought by market participants in proportion of what they emit, and their price is defined by supply and demand.
According to the chairman of the Task Force on Carbon Pricing, the tautological advantage of the carbon market is that it is a market, and that it therefore encourages innovation and the adoption of virtuous behaviour by agents in order to resell their permits (see the example of Tesla in the United States). However, it has the disadvantage of being characterised by a high volatility of carbon pricing.
It is this last reason that prompted the former minister to chair the Task Force on Carbon Pricing in order to promote among decision-makers a targeting of the price of carbon rather than volumes, as is currently the case. On the European carbon market, for example, he said that this would give stability to a carbon price that had collapsed during the subprime crisis, and also increase visibility.

Against the threat of climate change, China must adopt and extend carbon pricing

Edmond Alphandéry then spoke about the role of China, whose place he considered to be unavoidable regarding these issues. The country’s emissions are indeed higher than those of the United States and Europe combined. In this respect, he pointed out that the Chinese government is aware of the importance of the issues at stake and has already promoted a number of ecological transition measures. For instance, he stated that there is already a carbon pricing system in China, even if the price remains largely insufficient for now and is limited to the energy sector.
The former minister also stated that, in his view, there is a real Chinese will to carry out reforms. He particularly welcomed the initiatives and discussions that are taking place between various European and Chinese personalities, discussions in which he himself took part, in order to defend a convergence of the carbon prices of the two powers.
For Edmond Alphandéry, if such a reform was promoted, it would be no less than a revolution in the fight against global warming.

In conclusion, the panelist made a proposal to the Chinese authorities regarding their major strategic programme that is the BRI. As the government increases energy investments, especially aimed at thermal power plants, Edmond Alphandéry would consider it relevant and effective to introduce an internal carbon price in the companies and industries financed by Chinese funds. This would simulate a carbon price and thus encourage decarbonisation, while sending a strong message to the international community by underlining the importance that China attaches to reducing greenhouse gas emissions.
Edmond Alphandéry said he would be ready to support such an initiative immediately.

Alphandery was one of the main speakers at the Bridge Tank forum on EU-China cooperation post-Covid-19.
He participated in a panel moderated by Philippe Coste, former French ambassador, on greening investment in the European Union (EU) and China, and on the challenges of the Belt & Road Initiative (BRI). The forum took place at the Palais Brongniart in Paris on 15 October 2020. Other speakers in this session were Pierre-Noël Giraud, Professor of Economics at the Ecole des Mines de Paris, Djellil Bouzidi, member of the Haute Autorité de la Statistique and of the Bridge Tank’s Board, and Song Luzheng from Fudan University.

Exchange on the role of culture in international relations between Irina Bokova, former Director-General of UNESCO and the experts of the Bridge Tank

The first woman elected as Director-General of UNESCO, Minister of Foreign Affairs in Bulgaria in 1996, and former Bulgarian ambassador to France, Irina BOKOVA is a passionate politician, who shares the values ​​of openness and dialogue with the Bridge Tank. During her career, she became involved in international efforts in favor of equality between women and men, education for all and access to culture. Among her many fields of action, scientific cooperation for sustainable development is particularly close to her heart. She has also pleaded for Bulgaria’s membership of the EU and NATO, and continues to campaign for European integration by promoting the values ​​of diversity and human rights.

Irina Bokova, Board member of the Bridge Tank and co-organizer of the EU-China post-covid Cooperation Forum

From the opening session, the former Director-General of UNESCO recalled that Sino-European cooperation should take into account a human and cultural aspect, like said in the Sustainable Development Goals of the 2030 Agenda, which will allow a constructive link in the economic, political, security and environmental fields.

She gave a more “UN” dimension to the debates, to reflect on multilateralism, globalism and the climate, in which China and the EU are key actors. Dialogue between these two powers is therefore essential to build a more inclusive, sustainable and multilateral post-covid world and reform the multilateral system, as she said in the Forum on January 21. Irina Bokova insisted on the growing role of China in this project : she recalled President Xi Jinping’s carbon neutrality commitments by 2060, the central place of China in the recovery of global activity, as well as Beijing’s role in integrating culture and science into the United Nations 2030 Agenda.

What post-covid human exchanges?

Irina Bokova federated the debates around the question of human exchanges, be they cultural, educational or scientific in the development of a vision of the future. This essential theme must be part of the wider debate on geopolitical issues and ecological transitions. The former Minister of Foreign Affairs affirmed that there is a convergence in the thoughts on this aspect of cooperation between the EU and China, which are two great cultural powers. It is therefore an essential aspect of the current debate on the refocusing of Sino-European relations, all the more crucial as China has invested heavily in the areas of culture and identity in recent years.

Indeed, Xi Jinping has revived a major UNESCO project, the Silk Road, by giving real importance to heritage, cultural and identity issues. The new Silk Roads, beyond trade flows, must play a role in building intercultural bridges. In addition, China now ranks first on the UNESCO World Heritage List. This sector is an integral part of its economy, showing the world that culture and its industries can play a significant role in the growth and trade of a country.

The digitalization of cultural exchanges

Irina Bokova dwelled on the place and dangers of digital in the promotion of culture. With its ability to create bridges between societies, it has enormous potential, to such an extent that the United Nations will soon adopt measures that makes access to digital a human right. However, she warned of the worrying risks associated with technology : it tends to standardize and erase diversity and threatens to fragment societies by creating isolation and alienation in communities.

On the condition therefore of being part of an ethical approach at the service of humanity, technologies remain a space of extraordinary creativity and an unparalleled connection platform, making it possible to link museums to the digital world by arousing curiosity about cultural projects. The former director of UNESCO concluded that a nation never awakens without curiosity for its culture, something that China understood well when it completed in seven years the construction of 5 000 museums, and for the culture of the others, pillar of all cooperation and bulwark against intolerance.

 

Irina Bokova is a Bridge Tank’s Board Member, which regularly shares her thoughts and expertise. She notably co-organized and opened the post-Covid EU-China Cooperation Forum alongside Joël Ruet, President of the Bridge Tank and Sylvie Bermann, French Ambassador to China.

On October 15, 2020, this “hybrid” Forum brought together four former ministers, five former ambassadors and around thirty experts at the Palais Brongiart in Paris, as well as around a hundred registrants on three continents, to share nourished, informed and precise on economic, industrial, social and cultural questions on the EU-China relationship.

Exchange with Minister Brune Poirson on EU’s Economic package, energy and ecological transitions in China and Europe

Brune Poirson, a Vice-President of the United Nations Environment Assembly and former Secretary of State to the French Minister of Ecological Transition and Solidarity of Emmanuel Macron, came to bring her expertise in a conversation with the Bridge Tank.

She highlighted the importance of dynamics such as the 2015 Paris Agreement, the Chinese government’s commitment to become carbon neutral by 2060, as well as the European Commission’s Green Deal and the Belt and Road Initiative. She argued that these initiatives would help develop global governance that include more trade with and between developing countries.

China: a natural ally for Europe for climate

She supported the importance of engaging with China and said that she “never misses an opportunity to engage in dialogue and mutual understanding with China.” She stressed the importance of  respecting the Paris Agreement. She also referred to the withdrawal of the United States from the Paris Agreement, a delicate situation for France and Europe, which had to adapt and find other allies. China met the requirements of the emergency and “proved to be a natural ally on these issues. “Brune Poirson drew attention to the “very strong symbolic act” of China’s commitment, which does not have the same way of building and implementing public policies as the EU.

Moreover, these strong trends were accentuated during the COVID-19 pandemic and highlighted US protectionism. This has allowed Europe to accelerate its vision, on environment being a tool of power and might for the European Union. In particular with the Green Deal, which was then transformed into a recovery plan. The Green Deal responds to a vision of the world including trade with other areas, clear territorial missions existing on both sides, and it responds to a common vision of the EU and China. The European Commission’s Green Deal is financed by the recovery plans (with the support of the EIB), while China uses the Belt & Road Initiative, financed by government-to-government loans, export banks (China Development Bank), or multilateral banks (AIIB).

The European Heads of State will have to respond to these ambition tests at the next European Council and will then have to prove their commitment by raising the CO2 reduction targets. The People’s Republic of China, organizer of the COP15-Biodiversity, will have to show its capacity to engage third parties in international cooperation (in particular ASEAN on forestry issues).

A strategic panorama that hides massive and common challenges of energy transition

Also present at the Forum were the following personalities: Ding Yifan, researcher at the Institute of Global Development of the Development Research Centre of the State Council of the People’s Republic of China, and Thomas Melonio, Executive Director of Innovation, Research and Knowledge at the French Development Agency. They spoke in the session “Restart, energy and ecological transitions in China and Europe”, moderated by Raphaël Schoentgen, former CTO and member of the executive committee of ENGIE and former president of Hydrogen Europe.

In addition to Brune Poirson’s remarks, Ding Yifan argued that decarbonisation of Chinese energy production was a key element in reducing greenhouse gas emissions, but that it also required the transformation of the economy in several Chinese regions. Significant Chinese investment is being made to encourage the transition to hydrogen, and this is an area where cooperation between the EU and China could be beneficial to both sides. Thomas Melonio argued that it was crucial that Africa be included in the new cooperation agreements, especially as the Chinese and European development banks have the same objectives regarding Africa.

Brune Poirson, Ding Yigan and Thomas Melonio spoke at the Forum on China-Europe Relations and the Impact of the COVID-19 Pandemic. This forum took place at the Palais Brongniart on 15 October 2020.

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