Long Term Strategy: Why China is Investing in Trade with Africa

The world’s two largest economies, China and the USA, are in a tussle for geoeconomic autonomy and global leadership, while China and the European Union endure persistent trade-related tensions. For China, a middle-income country with a fast-ageing population, this equates with a need to invest in alternative markets and sources of growth.

China has been Africa’s number one trade partner since 2009, owing primarily to its demand for African fuels and minerals. More recently, however, elevated electrification in China alongside a shift away from a growth model based on intensive infrastructure construction and voluminous low-cost exports provide the baseline for new growth drivers. Hence, nurturing accelerated China-Africa trade that fosters China’s and Africa’s next phase of development is a new priority, especially amid a tense global backdrop for China.

Moreover, African countries are growing impatient for development. Since COVID-19, not only have processes of rescheduling debt been burdensome, but secondary geoeconomic events have also displaced development attention and fiscal resources towards other issues, such as conflict in Ukraine. For China’s part, amid these tensions, it is doubling down in Africa, in terms of investment in trade-related infrastructure and industrial development. Recent related news in Tanzania alone include the July 2025 opening of the China-constructed East Africa Commercial and Logistics Centre in Dar es Salaam, and China’s commitment to constructing the Tanzania-Burundi rail-link that will connect landlocked Burundi to Tanzania’s trade-related infrastructure. Specifically, the line will run to the central Burundi town of Musongati, which is proximate to the world’s tenth largest nickel deposit as well as reserves of gold, platinum, palladium, copper and iron.

Back in 2010, visiting South Africa as Vice President, Xi Jinping promised Africa that China would optimise the level and structure of China-Africa trade. Trade tensions elsewhere appear to make this promise more of an imperative today. But what are China’s government and companies doing to foster such a new model of China-Africa trade growth?

The fourth biennial China-Africa Economic and Trade Expo (CAETE), held from June 12 to 15, 2025 in Changsha, capital of Hunan Province, China, offers a signal. This article explores the origins of this biennial China-Africa trade expo, and why it is based in Hunan Province. And ponders whether the trade policies of US President Donald Trump have implications for China-Africa relations.

China’s “Hunan” Africa-focused Trade Agenda began amid Trump’s First Trade War

In January 2018 the 45^th US President, Donald Trump, announced the imposition of generalised tariffs that disproportionately impacted China (Table 1). If anything, bilateral trade tensions between China and the USA have intensified since.

Table 1: International Trade Policy Points of Inflection, 2018-2019

Source: Johnston, Lauren A. (2025), ‘The “Hunan Model”: From “African Shenzhen” to China’s “Africa Shenzhen”, SSRN Working Paper.

 In parallel to and independent of those bilateral tensions is the steady evolution of Africa’s own intra-regional trade agenda. Discussions toward a continental free-trade agreement began with a decision adopted by the 18^th Ordinary Session of the African Union Assembly, held in January 2012. Adoption of the African Continental Free Trade Agreement (AfCFTA) was agreed in March 2018 - two months after the USA-China trade war began. AfCFTA aims to create a single continental market for goods and services, with free movement of businesspersons and investments, and hence pave the way toward establishment of a Continental Customs Union, and foster intra-African trade. In October 2018 China hosted a triennial Forum on China and Africa Cooperation (FOCAC), in Beijing – the sixth of its kind. In his plenary speech, Chinese President Xi Jinping promised some 50 present African heads of state that China would launch a China-Africa trade expo.

Moreover, immediately after that FOCAC, a gathering of African and Chinese officials took place in Changsha, capital of Hunan Province, and produced the “China-Africa Changsha Declaration on Upholding Solidarity and Cooperation of the Global South”. Commonly referred to as the “Changsha Declaration”, this reaffirms a commitment to building a China-Africa community with a shared future that is capable of addressing complex global challenges, from economic instability to geopolitical disruptions, with solidarity and equity.

China-Africa Economic and Trade Expo (CAETE)

Importantly, the Gaoqiao Grand Market itself is not a standalone trade area but sits within the much larger China (Hunan) Pilot Free Trade Zone. Moreover, the permanent CAETE hall is also the physical heart of the China-Africa Economic and Trade Deep Cooperation Zone, that focuses on overcoming bottlenecks that inhibit China-Africa trade and economic ties, including legal, digital, currency and language-related. Hence CAETE itself takes place within a bigger Chinese global trade agenda and within a bigger China-Africa trade facilitation agenda.

Figure 1: Building Blocks of China-Africa Economic and Trade Deep Cooperation Zone

Every second year around June, the Changsha International Convention and Exhibition Centre plays host to a much bigger CAETE-linked trade expo event. Tthe larger biennial gathering is given a theme and nominates a few African focus countries and Chinese focus provinces to promote that year. The theme of the 2025 CAETE was “China and Africa: Together Toward Modernization”, bringing an emphasis on firms with trade and investment capacity in related sectors such as clean energy, rural development technologies, industrial value chains, and the digital economy. China’s Foreign Minister Wang Yi gave an opening speech, while other dignitaries to attend included Ugandan Prime Minister Robinah Nabbanja, Liberia’s Vice-President Jeremiah Koung, and Kenya’s Foreign Minister Musalia Mudavadi. According to Chinese state media the expo attracted nearly 4,700 Chinese and African enterprises and over 30,000 participants, with projects agreed totalling over US$11 billion.

Projects agreed within the headline $US11bn include a tentative investment of around half a billion USD in the construction of a used car and auto parts warehouse in Nigeria, and a building materials processing plant in Egypt. In addition, Yadea electric scooters, which specialises in two-wheelers customised for local roads, agreed the rollout of EV charging and battery-swap infrastructure in Ethiopia and Morocco.

In the shadow of China-USA agricultural trade tensions, agricultural development was also an important feature at CAETE 2025. For example, the Sino-Angola Agricultural Equipment & Finance Cooperation was agreed, with Sinomach Hainan Development Company inking a set of agreements with Angola around agricultural machinery, finance and services. Overall, China is investing $350mn in Angolan agriculture to diversify China’s soybean and corn trade away from the USA, while fostering both economic diversification beyond fuel exports, and rural income growth in Angola. Similarly, a Nigeria-China Agricultural Science & Technology Park was agreed, aimed at elevating Nigeria’s agricultural output and fostering trade diversification. As were agreements signed by the Niger State (Nigeria) Agro-Industrial Processing Zone with China’s Overseas Engineering Group (COVEC), alongside plans to expand cultivation of maize, soybean, rice and wheat crops.

Within China two CAETE-linked events have also been held – outside of Hunan. The first was in Beijing, in February 2024, with the aim of promoting both CAETE and the larger China-Africa Economic and Trade Deep Cooperation Zone. This was primarily a familiarisation event held for African embassy-related envoys. The second event, the CAETE (Hubei) Special Promotion Conference was held in the city of Wuhan, capital of Hubei province (neighbouring Hunan), and took place in October 2024. The event aimed both to facilitate direct and deeper Hubei-Africa ties, and greater engagement of Hubei enterprises in CAETE 2025.

Building direct ties with African nations

A deeper evolution of ties between CAETE and interests in Africa is taking place in Hunan and in Africa. For example, at least two countries have an investment facilitation or commercial chamber office in Changsha. In October 2023 the Kenya National Chamber of Commerce and Industry announced that it has put into operation its representative office in Changsha. Among the stated aims is to facilitate trade and investment ties and to raise the profile and visibility of Kenyan goods in China. Thereafter, the Tanzania Investment Centre was launched in December 2024. The stated goal of the centre is to grasp $3bn of the $10bn in Chinese investments promised by Xi at FOCAC.

Alongside that rising presence of Africans in Hunan, CAETE has begun spreading its wings to Africa. In May 2024 the first-ever CAETE-flagged event was held on the continent, in Kenya, jointly hosted by the CAETE secretariat and Kenya’s Ministry of Investment, Trade and Industry. The event was not just targeting China-Kenya ties, but bigger sub-regional trade. Reported signings include a sunflower processing plant in Tanzania, a warehouse in Djibouti, and fish exports from Kenya to China. Logistics, food and agriproducts, machinery equipment, as well as biomedicine, were the focus of exhibitions.

In November 2024 an additional CAETE event was hosted in Africa, in this case in Abuja, capital of Nigeria. The “China-Africa Economic and Trade Expo (for) Entering Africa (Nigeria)” centred upon Hunanese firms entering Nigeria’s (and Africa’s) agricultural and industrial sectors. With Nigeria being Africa’s largest investment market and the continent’s largest contracting market for China, this first West Africa-based CAETE event was jointly organised by the China International Contractors Association alongside the CAETE Secretariat, as had been the case in Nairobi. Moreover, it also coincided with two match-making events. First, the China Engineering Technology Exhibition which had a focus on infrastructure, new energy, engineering machinery, building materials, agricultural machinery and equipment, and medicine and health. Second, the China-Africa Business & Healthcare Matchmaking Conference (Nigeria).

Nigeria, is also home to the Africa hub of the “Hunan-Guangdong-Africa Railway-Sea Intermodal (Nigeria) Logistics Centre”, which was unveiled in parallel to CAETE’s Nigeria event in late 2024. The centre is situated in the Lagos Free Trade Zone and was opened after the new 2.5mn TEUs capacity Deep Seaport container terminal was handed over for operational management in 2023. The Logistics Centre not only connects to Hunan’s Intermodal Railway-Sea trade route but furthermore operates an integrated and digitized trade logistics system, and includes commodity storage, handling and transportation. Five such centres are planned in Africa, with a second already being set up in Egypt.

Beyond these CAETE-flagged links, one important link between Hunan’s China-Africa zone and its CAETE sub-element is the Hunan-Niger Deep Economic and Trade Cooperation Joint-Functional Zone. This is the first zone-level interconnection to Hunan, and is located in Niamey, Niger. Its goals include elevating Niger’s export-related foreign exchange earnings, import substitution, and building an investment ecosystem for Chinese enterprises in Niger.

Why Hunan Province and What Next?

China has not announced why Hunan Province was selected for this intensive and important national flagship role in advancing China-Africa ties at a time of rising trade tensions between China and some of its largest and most important trade partners. It has been argued, however, that the reasons are well-considered and highly strategic. These include Hunan’s historic and modern competitiveness in industries such as agriculture, agri-technologies, construction and heavy machinery industries and minerals processing. Also, in terms of the political economy of development, Hunan has played a central role in China’s success in eliminating hunger and absolute poverty – goals that the agenda seeks to help all African nations achieve over coming decades, and which link to the aims of the Changsha Declaration too.

China-Africa trade is at all-time highs, reaching some US$296 billion in 2024 and increasing a further 15,4% in the first eight months of 2025 according to Chinese data, having recovered from both COVID-19 and flatter commodity prices over the last decade. On the other hand, flatter commodity prices also mean that since 2015 the continent has traded in deficit with China – a deficit that appears to be rising. South Africa, Angola, Nigeria, the Democratic Republic of Congo (DRC) and Egypt are China’s leading partners on the continent, with DRC also enjoying a rare trade surplus with China. There may, however, be an overall risk that as export markets like the USA and Europe become less accessible to China’s manufactured goods, so that Africa becomes a targeted destination. Utilising this for African development and ensuring that this does not sabotage but serves Africa’s own development, may be a challenge of this far more fractured global trade era.

Meanwhile, Hunan Province is playing an increasingly important role in shaping trade, and has also recently signed a provincial level trade promotion agreement with South Africa’s Gauteng Province, a province that accounts for around 7% of Africa’s GDP, and which is at the heart of the mining and banking sectors on the continent. With China’s imports remaining heavily structured toward acquiring raw commodities from Africa and selling back industrial goods. The goal of the Hunan Model, including the Changsha Declaration, is to transform that imbalance so that Africa can industrialise over coming decades. Trump’s trade agenda may have added momentum to these aspirations.

What comes next is not clear, other than a probable intensification of Chinese initiatives. Supporting such a prediction are demographic shifts, with Africa being home to the largest share of the world’s youth – tomorrow’s consumer pipeline. Moreover, African nations themselves are evolving their own intra-African trade facilitation agenda through AfCFTA, for which China appears to be preparing itself – both in support and also to tap into potential growth. The ongoing norm shifts in trade policy and the unpredictability of Donald Trump’s second presidency are likely to accelerate and intensify related efforts, as will efforts by the European Union to protect its market for advanced manufactured goods from Chinese competition. As lower-cost African equivalents are emerging, China, through its agenda from Changsha, Hunan Province, seeks to gain a decisive foothold in their early phase of maturing.