China in Africa: companies as enablers and beneficiaries? An empirical evaluation of state-business relations in the Forum on China-Africa Cooperation

Abstract

China’s strong economic presence in Africa has resulted in an increased interdisciplinary debate. Our contribution is the incorporation of a business perspective by uncovering the prominence and role of business in China’s diplomatic Africa engagement. Our theoretical contribution by applying the state-business relations (SBR) literature is to examine whether established frameworks can be expanded by an international dimension through intergovernmental initiatives like the Forum on China-Africa Cooperation (FOCAC). The paper conducts a document analysis of all declarations and Action Plans of all FOCAC conferences in the period 2000–2021, combining both a content and a thematic analysis based on an explorative and iterative coding process. Our data suggests that the prominence of businesses has increased while the scope of their activities and the number of focus sectors (especially infrastructure) has risen particularly since 2012. Companies are considered as enablers for political and economic goals in the state-driven FOCAC. We find that SBR frameworks are applicable to international contexts and propose an expanded SBR approach integrating transnational intermediary institutions like the intergovernmental FOCAC and transnational business platforms which facilitate positive state-business relations across countries and a conducive business environment.

Introduction

When considering China’s involvement in Africa, the conferences of the Forum on China-Africa Cooperation (FOCAC), which are attended by numerous leaders from Africa and China, may immediately come to mind. The FOCAC Action Plans (AP) regularly result in multi-billion-dollar commitments to African countries from the Chinese government. An illustrative example is the latest FOCAC meeting that took place on 29 and 30 November 2021 in Dakar, Senegal. It was attended by delegations from 53 (of 54) African countries and ran under the theme “Deepen China-Africa Partnership and Promote Sustainable Development to Build a China-Africa Community with a Shared Future in the New Era.” ¹ As in previous conferences, the delegations endorsed an official communiqué as well as an AP for the time period 2022–2024, outlining focus areas of cooperation as well as specific economic targets and funding commitments. ² As a result, it is widely believed that the Chinese engagement in Africa is primarily driven by the state and consistent with China’s overarching geo-economic initiatives. ³

Against the backdrop of the latest FOCAC conference, we as business scholars aim to investigate the role of companies in China’s intergovernmental engagement with Africa. The conferences indicate a significant nexus between the states—that is China and the African countries—and business. To this end, we seek to examine the current trajectory of Sino-African relations and the role of and implications for companies in general. Previous studies made important contributions to reveal various aspects of economic and business relations between China and Africa. While numerous papers have analyzed the Sino-African trade and investment relationship, ⁴ only few studies examined the role of the private sector in the context of China’s Africa engagement ⁵ with many topics yet to be investigated. ⁶

Our paper contributes to the understanding of the role of business, business activities, and focus sectors which hint at potentials for business in the FOCAC initiative. As FOCAC is an intergovernmental initiative, we also contribute to the research on state-business relations by integrating a transnational component. While we conduct an interdisciplinary analysis of 15 policy documents of all FOCAC conferences spanning the period 2000–2021, we acknowledge that official documents are far from being objective. We will therefore reflect on their credibility in our methodology section. In reference to companies, we do not refer to any specific group but rather include all active companies, irrespective of size, sector, or nationality. This is because of the political and high-level nature of the analyzed documents that precludes the differentiation by type of firm as much as the identification of specific business opportunities. Our aim is to investigate the relevance and role of businesses as well as their topical context within China’s main diplomatic initiative in Africa. We enhance the theoretical landscape of the state-business relationship literature ⁷ by integrating a transnational dimension into Taylor’s ⁸ framework. This framework serves as a robust foundation for our analysis, offering a comprehensive perspective on state-business relations in developing economies. By introducing the FOCAC as a transnational institutional intermediary, we obtain a holistic understanding of the international dimension of state-business relations. While we leverage Taylor’s SBR framework to underpin our analysis and extend it to the FOCAC context, our findings contribute to the broader theoretical discourse on SBR, transcending the confines of this specific framework.

The paper is structured as follows: In the next section, we contextualize our investigation by unveiling the current state of economic relations between China and Africa in the setting of FOCAC. We present the primary economic outcomes of the conferences along with economic data on the relationship. In the following section, we conduct a literature review of state-business relations and engage with the interdisciplinary discourse surrounding China’s engagement in Africa to develop our research questions. Section four describes our methodology based on a qualitative research approach, followed by the analysis and discussion of the research results that expand Taylor’s framework and put forward three propositions. Finally, our conclusion provides avenues for future research in this field.

FOCAC and the current state of economic relations between China and Africa

The context of our research is the Forum on China-Africa Cooperation which is the overarching and most important institutional platform for Sino-African relations. FOCAC was established in 2000 to coordinate and strengthen the relationship between China and African countries, thus, creating the first multilateral dialog platform between China and any group of the Global South countries. The conferences are held every three years, with venues alternating between China and Africa. The FOCAC covers a broad spectrum of topical fields of cooperation, ranging from economic to political issues, security policy as well as intensifying people-to-people relations. ⁹ In this paper, we focus on the economic goals that essentially consist of advancing the economic growth of both China and African countries.

Over time, China’s economic commitments have gradually increased and extended in scope, particularly between 2000 and 2015. The main outcomes of economic engagement (Table 1) are the provision of loans and investments, debt cancelation, and zero-tariff treatment for imported commodities from African Least Developed Countries (LDCs). As a core economic pillar, investment of Chinese companies is meant to enhance their footprint in Africa as well as to improve the infrastructure, thus, stimulating economic growth. At both the 2018 and 2021 FOCAC meetings, the investment value of Chinese companies was targeted to reach U.S. dollar (USD) 10 billion (bn) over three years. In addition, various credit lines were provided to finance large investment projects and boost the growth of African Small and Medium-sized Enterprises (SMEs), while the goal was to expand Chinese imports of products originating in Africa.

Table 1. Main economic outcomes of Forum on China-Africa Cooperation Conferences 2000–2021

Sources: FOCAC, 2000, 2003, 2006b, 2009, 2012, 2015b, 2018b, 2021b.

In 2015, specific trade and investment goals were laid out. China and African countries aimed for USD 100 bn in Chinese foreign direct investment (FDI) stock in Africa and USD 400 bn in trade volume by 2020. ¹⁰ However, these goals were not realized. One reason was that the target setting took place during a time of high global commodity prices which drove Sino-African trade volume to USD 203 bn in 2015. As commodity prices fell, trade value contracted to USD 133 bn in 2016 before gradually recovering to USD 192 bn in 2019. ¹¹ The American Enterprise Institute, capturing both FDI and construction contracts greater than USD 100 m, estimated Chinese investment in Africa to have amounted to a stock of USD 288 bn between 2010 and 2019. Annual Chinese investment flows into Africa peaked in 2013 at USD 41 bn before continuously oscillating between USD 25 and 32 bn between 2014 and 2019. ¹²

Chinese investment in Africa largely focused on infrastructure, encompassing both FDI and construction contracts. Between 2010 and 2019, nearly two-thirds of Chinese investment in Africa were directed towards the energy (USD 97 bn) and transport (USD 86 bn) sectors. ¹³ All over the continent, Chinese companies are involved in building or modernizing power stations, transmission lines, railways, roads, or seaports. As a consequence, Chinese contractors held a 60% market share in Africa’s engineering, procurement, and construction (EPC) business in 2019. ¹⁴ More specifically, six of the ten biggest EPC companies operating in Africa are Chinese. ¹⁵ They offer complete investment packages for infrastructure projects in Africa making it attractive for African governments. The packages typically include feasibility study, design, funding, construction, certification, operation, and maintenance. ¹⁶ The large part of the funding for these projects offered by the Chinese EPCs is sourced from the various agreed funds in the FOCAC meetings.

Literature review

State-Business Relations (SBR) literature

Our research primarily aims to understand the role of business in the politically motivated and state-driven FOCAC conferences, recognizing their pivotal role in shaping Sino-African relations. Accordingly, we have opted to employ the state-business relations literature as the foundational theory underpinning our analysis. Over the last thirty years, an expanding body of research investigated the interaction between states and businesses in developing nations. ¹⁷ This body of seminal work on the “developmental state” has placed particular emphasis on the mechanisms through which states collaborate with and utilize business to advance their economic development strategies. ¹⁸ Certainly, the deep-rooted connections linking government and business have long been identified as essential pathways for information exchange regarding industry requirements and operational methods. ¹⁹ Ties between business and government play a crucial role in effectively coordinating industrial strategies and lending credibility to governmental actions. ²⁰ Well-defined institutional relations between state and the private sector are, thus, considered to be a key success factor for a country’s development. A purposeful and strategic institutionalized partnership between the private sector and the government is facilitated by the formation of national business lobbying groups or business associations on the private sector side, as they enable companies to communicate their concerns effectively to governmental entities. ²¹ Along the line of state-business relations with a prominent role of business associations, Sen & te Velde ²² discovered in their empirical study comprising a panel of 19 African countries for the period 1970-2004 that successful state-business relations are vital to driving superior economic growth when compared to countries with less robust connections. According to them, the establishment and maintenance of collaborative ties between the government and the private sector have the potential to serve as a driving force for bolstering economic growth in the region. In a further step, they concluded that institutionalizing these collaborative ties with actors, such as business associations, may help to streamline information among stakeholders and reduce policy uncertainty. Interestingly, Quereshi and te Velde’s ²³ findings suggest that particularly SMEs profit from joining business associations and, thus, may contribute to economic growth, whereas large corporations commonly find other ways to lobby with the government in pursuit of a favorable investment climate.

It was Taylor ²⁴ who raised critiques against this approach and the findings: Firstly, he identified their empirical methodology as problematic for using simplistic indicators to measure the ramifications of business associations in Africa. This approach, he contended, may result in misleading conclusions about their role in driving economic growth. He argued that for business associations to exert influence in state-business relations, they need to possess institutional strength, a characteristic he observed as lacking in the African context. Consequently, reducing the explanation of how SBR leads to growth through business associations is not sufficient. Secondly, he questioned the direct link between SBR and growth. In his opinion, there is an intermediary element, the business environment, that is conducive to growth. Hence, SBR is affecting growth not directly but by improving the business environment. As a consequence of his criticism, Taylor developed a model highlighting that SBR cannot be confined just to simple relationships between the state and business associations and therefore needs to be interpreted in a more comprehensive and nuanced way. He advocated changing the focus of SBR research from economic growth to the improvement of the business environment which will ultimately stimulate growth. He further argued that in light of low institutional strength of African business associations, various combinations of government actions, international donor pressure as well as key national and international companies are rather shaping positive state-business relations and favorable business environments. As a result, in his SBR framework, he identified three mechanisms (he called them typologies) that are conducive to a growth-promoting business environment. Only the first mechanism, which he called ‘capable states and strong associations’, considers a noteworthy role for business associations, in which domestic companies and multinational firms may be organized, to influence a beneficial business environment. For the second mechanism (‘self-styled developmental states’), the business environment is eased by a state-driven process, in which governmental entities, sometimes motivated by international donors and a developmentalist ideology, strive to enact policies that favor business interests. The third mechanism refers to ad hoc, informal relations between the state and key national and international firms. Further, policies can emerge through loosely connected interest groups rather than solely through formal collaborations between governments and business associations or business groups on specific topics. ²⁵

However, Taylor’s framework ²⁶ alongside other scholarly work on SBR, ²⁷ exhibits a notable limitation by predominantly focusing on the national socio-political environment and therefore limiting itself to the national level. ²⁸ In two of his typologies, specifically the self-styled developmental states and the informal, ad hoc approaches, Taylor acknowledges the significant influence of international donor pressure. He contends that the latter approach is critically reliant on the developments within the international political economy landscape. Apart from that, his analysis is mainly focusing on the dynamics between a single state and its domestic private sector including Multinational Corporations (MNCs) with a local presence operating in the respective state. Even though there are studies, which investigate SBR from an international perspective, they do so by mainly applying a cross-national comparative and not an intergovernmental approach. ²⁹ Thus, the analysis within the existing frameworks remains largely confined to the boundaries of individual states, thus, overlooking the broader international dimensions such as intergovernmental initiatives. This presents an opportunity for further extensive research on the interaction between private firms and public institutions in the international context. In order to contribute to this matter, we apply the SBR research to Sino-African relations in the context of FOCAC and, thus, add a transnational component to the body of research on SBR.

Sino-African political and business relations

China’s strong economic presence in Africa triggered an increased interdisciplinary academic interest with a focus on (development) economic topics offering extensive research gaps from a business perspective. ³⁰ The first main research area centers around the drivers and motivation of Chinese investments in African markets. ³¹ Other major fields of inquiry are Sino-African trade relationships ³² as well as Chinese aid provision to African countries and its impact. ³³ Another stream of research examines the debt contracts and modalities of Chinese lenders with African governments. ³⁴ In the context of African debt owed to Chinese lenders, another strand of the literature attempts to evaluate the Sino-African economic relations in terms of who the beneficiaries are and whether the relationship is a balanced one. The main narratives range from symbiotic win-win relations to allegations of China reproducing colonial exploitation structures and in particular entangling African countries in debt traps. Various authors have analyzed and partially demystified this debt trap narrative. ³⁵ This growing research body attests to the Chinese economic dominance in Africa and thereby to the relevance of the topic under investigation. However, there are authors who challenge the portrayal of Africa’s powerless position by emphasizing the growing influence of African leaders in shaping focus areas and conditions of Sino-African relations to spur their countries’ economic development. ³⁶

Business-related research in the Sino-African context is far more limited and has mainly focused on the role and interests of Chinese companies in Africa. Gunessee and Hu ³⁷ point out that compared to other developing regions, Chinese companies more frequently exhibit mergers and acquisitions (M&A) activities in Africa in order to secure access to the continent’s natural resources. Further, different papers have illuminated the employment effects and staffing practices of Chinese firms in Africa. ³⁸ A study revealed that, on the one hand, private Chinese investment is growing and has the potential to create jobs while, on the other hand, long-term benefits such as technology transfer and cooperation with local businesses remain on a low level. ³⁹ In this employment context, Wegenast et al. ⁴⁰ concluded that Chinese companies engaged in mineral extraction create fewer local jobs compared to non-Chinese mining firms. Other studies tried to disentangle the ownership of Chinese companies and examined private enterprise investment. ⁴¹

With regards to the African private sector, few papers insinuate that local firms might benefit from the Chinese engagement under certain conditions. ⁴² Gyamerah et al. ⁴³ show that the Belt and Road Initiative (BRI) could enhance the innovativeness of SMEs in East Africa as well as enable their internationalization as they may enter partnerships with Chinese firms. However, other studies show that the local private sector sometimes struggles to fulfill the standards and demand of Chinese-led infrastructure projects in Africa. ⁴⁴

Despite an increasing number of papers published in recent years, there remains a notable gap in research concerning the role and implications of business in the context of China’s engagement with Africa. Furthermore, there is a dearth of analysis regarding the extent to which businesses serve as facilitators for Chinese political objectives in this context. According to the current literature, companies are playing a significant role in invigorating Sino-African relations through investment, trade, and technology transfer. With our research, we contribute to the existing literature by providing empirical evidence and insights into the role of companies in China’s official engagement with Africa. To the best of our knowledge, this is the first comprehensive assessment of the relevance and role of companies in FOCAC. We therefore raise the following research questions (RQ):

RQ 1a: How prominently and in which topical context are companies featured in FOCAC over the time period 2000–2021?

RQ 1b: Are companies seen as enablers to achieve the economic targets of the state-driven FOCAC?

Based on the analysis of RQs 1a and 1b on the underlying dynamics of business in the FOCAC policy documents over a time period spanning more than two decades, we apply our results to the SBR framework outlined in section 3.1. This approach is vital as it broadens our knowledge of how business is linked and integrated into the intergovernmental FOCAC. We specifically aim to make a significant theoretical contribution to Taylor’s ⁴⁵ state-business relations framework by adding a transnational dimension. Particularly, we examine institutional intermediaries such as intergovernmental initiatives like FOCAC in order to shed light on the patterns characterizing the relationship between the state and business in transnational settings (here: Africa and China). Based on the literature and the resulting criticism and research gaps (see section 3.1), we raise the following research question:

RQ 2: How can SBR frameworks be expanded by an international dimension through institutionalized transnational platforms?

Methodology

Research design

We opted for the investigation of documents to analyze the importance of business in China’s diplomatic Africa initiative, as document analysis is considered to be highly appropriate for “intensive studies producing rich descriptions of a single phenomenon.” ⁴⁶ We mainly pursued an inductive approach, which is suitable for exploring complex issues and generating novel concepts, ⁴⁷ with the objective of obtaining an in-depth understanding of our research context. Thus, it is well-suited to generate robust mid-range theory, produce new insights, and formulate propositions ⁴⁸ —in our case on the business implications of Sino-African relations. However, to answer research question 2, we also followed a deductive approach to include some themes in our otherwise inductively-generated coding framework. As such, we understand our document analysis as an empirical starting point for further interdisciplinary research on Sino-African relations.

Document analysis is a qualitative approach to systematically investigate and review documents. “Like other analytical methods in qualitative research, document analysis requires that data be examined and interpreted in order to elicit meaning, gain understanding, and develop empirical knowledge.” ⁴⁹ While documents are central to the investigation, they can take various forms. ⁵⁰ In our study, we focus on policy documents, including communiqués and action plans, as a specific document type that represents qualitative data material. ⁵¹ These policy documents are typically released by institutions—in our case the FOCAC.

However, the document analysis research approach does not come without limitations. Regarding the credibility of documents, it is important to recognize the subjective and politicized perspective on Sino-African relations that the investigated official documents present. Despite appearing to be objective, these documents can be biased and often reflect a political agenda. Therefore, scholars stress the importance of critically evaluating policy documents and studying their contexts, textual content, and resulting consequences. ⁵² Acknowledging those limitations, we nevertheless focus on FOCAC documents as we regard them as essential indicators for identifying the role and relevance of companies and the key dynamics in Sino-African state-business relations. The declarations and Action Plans are the written outcomes of the FOCAC conferences that have taken place every three years since 2000. They are drafted by the Chinese government and negotiated and adopted between the participating African and the Chinese governments. The documents point to the multi-facetted collaboration between China and African countries in terms of e.g., economic and business matters, political cooperation, security policy, culture, and media. These policy documents enable us to track both continuities and shifts in priorities over a time period of more than 20 years. As to the context of our analysis, we focus on the FOCAC conferences as described in section 2.

Data analysis

Conducting a rigorous document analysis entails the following steps: finding, selecting, making sense of, and synthesizing the data found in documents. ⁵³ For finding and selecting documents, we consider the final documents of the FOCAC as most meaningful for the direction of Sino-African relations as this is the only high-level institution exclusively convening heads of state and governments from China and African countries. Therefore, we limited the data material to the APs and declarations of all eight FOCAC ministerial meetings between 2000 and 2021. We identified and accessed all these documents on the websites of FOCAC or the Chinese Foreign Ministry. The finding and selection processes were strictly guided by the principles of authenticity, credibility, representativeness, and meaning. ⁵⁴ In terms of authenticity, we consider the documents to be reliable primary source that represent the outcomes of the intergovernmental conferences between China and African countries. As mentioned above, with regard to credibility, we acknowledge the subjective perspective found in the documents. We considered this limitation in our research design which aims at formulating propositions based on the indicative results we can derive from the official documents. As for representativeness, we include all existing documents of the ministerial conferences between 2000 and 2021 and, therefore, regard them as typical and complete data material for the FOCAC meetings. Finally, we argue that as high-level documents, they are of utmost importance to the direction of Sino-African relations, including goals, focus areas, and commitments of cooperation.

The analysis, the making sense, of the selected documents was characterized by an inductive and exploratory process of combining content and thematic analysis. We followed an approach suggested by Bowen ⁵⁵ aimed at skimming, reading, and interpreting the documents while coding them. Our iterative approach of cycling between coded data and existing theory enabled us to polish our code system and identify emerging thematic clusters. In the first stage, we applied an “open-coding” technique ⁵⁶ and labeled the relevant passages of the documents with codes related to our research questions. During this stage, we considered sections that contained references to companies in FOCAC. In addition, we identified meaningful and relevant text segments that contained signal words associated with business engagement, namely “business,” “compan*,” “enterpr*” and other private sector terms including “private sector,” “private-public partnership,” “PPP” and “private capital,” and extracted those passages. ⁵⁷ In this step, we realized that the FOCAC APs are more relevant to our study than the communiqués as the former are more specific and detailed on the Sino-African cooperation. After completing the open-coding phase, our aim was to elevate the level of analysis by integrating first-order concepts into second-order themes through axial coding. ⁵⁸ Applying the constant comparative method, we compared our data in various ways to develop themes. ⁵⁹ We validated our coding process, by undertaking a consensual coding approach. Referring to Butterfield et al., ⁶⁰ two researchers coded two out of 15 official documents independently resulting in an intercoder agreement rate of 92% and 74% in the two documents, which is above the minimal requirement of 70%. ⁶¹ Afterward, discrepancies were discussed to identify how and why interpretations diverged and in order to ultimately resolve disagreements. ⁶² Following the joint reflection, the lead author then coded the rest of the documents. All analytical steps of the content and thematic analysis were conducted with the software MAXQDA.

Based on our content and thematic analysis, we identified three main themes that relate to the role and relevance of business in Sino-African relations, namely the frequency of business terms, the nature of business activities, and the key sectors. First, we analyzed signal words for business engagement in order to uncover the relevance attributed to companies in the FOCAC documents from a longitudinal perspective. We focused not only on the quantitative amount of mentions over time but also analyzed the topical context in which those signal words were found in order to identify focus areas of transnational state-business relations in FOCAC. Secondly, following the process of Gioia et al., ⁶³ we aggregated these first-order concepts to second-order themes, which related to our research questions. In an iterative way, we subsumed eight codes in the theme relating to business activities: investment, production/processing, transportation/storage, technology transfer, sales, training, employment, and local sourcing. Third, we analyzed economic sectors that are being prioritized by the state-driven FOCAC. In some cases, a textual segment refers to different economic sectors. For example, in a text segment Chinese investment in both the logistics and manufacturing sector were encouraged to expand the industrialization of African companies. ⁶⁴ In line with our qualitative approach, such a textual segment was assigned to different codes. ⁶⁵ The codes created in an iterative manner referred to the following sectors: agriculture, banking/finance, healthcare, logistics/transportation, manufacturing, mining, and tourism. Infrastructure was sub-divided into energy, telecommunication, transport, water, and general infrastructure. We did not include the construction sector because we argue that Chinese construction activities are primarily infrastructure-related.

Results

Investigating the role of business in FOCAC documents, we quantitatively analyzed the use of all the business-related codes referring to the three themes we have identified: business terms, activities, and economic sectors. While analyzing the FOCAC documents, we observed that the declarations contained less relevant material as they were of low depth and specificity ⁶⁶ , while the APs emerged as a meaningful basis for our analysis. Therefore, our figures are henceforth based on the FOCAC APs only. In total, 806 codes were assigned to textual segments of which 37.0% referred to key sectors and industries, 34.7% to various business activities, and 28.3% to business terms. The FOCAC of 2021 alone accounts for 25.3% of all codes. A distinct increase in codes is noticed in the final three FOCAC APs starting from 2015. In these cases, the frequency of codes was 70% higher compared to all previous meetings combined. Interestingly, for each of the themes—business terms, business activities, and economic sectors—an increase in codes is evident. This may at first glance be interpreted as a growing relevance of business-related topics in the FOCAC discussions and therewith in Sino-African relations. However, one might object that over the years the length of the APs increased from 2,912 words in 2000 to 13,254 words in 2021 causing the rising number of codes. To control for the length of the Action Plans, we introduced a ratio “business-related codes/1,000 words” (orange line in Figure 1) that makes the number of specific business-related codes comparable over the period 2000–2021. Based on that, we find an overall tendency that business has played a continuously more prominent role since 2006 in relative and absolute terms. The peak in 2015 may be explained by high infrastructure investment activities in the context of the Belt and Road Initiative that was launched in 2012.

Figure 1. Absolute and relative number of business-related codes in FOCAC documents (2000–2021).

Source: The authors.

A more detailed break-down of the themes and codes is presented in Table 2. The quantitative presentation of our results will be supplemented by a qualitative contextualization and interpretation of a) the relevance of business, b) key sectors and industries as well as c) business activities. The findings from the analysis of the three themes will serve as the foundation for the discussion regarding the role of business in FOCAC and the connection to SBR approaches.

Table 2. Analysis of all business-related codes in Forum on China-Africa Cooperation Action Plans 2000–2021

Sources: The authors based on FOCAC, 2000, 2003, 2006b, 2009, 2012, 2015b, 2018b, 2021b.

Relevance of business terms

Business apparently plays an important role in the FOCAC meetings. In absolute terms, the number of references to business terms (e.g., enterprise and company) has continuously grown after FOCAC 2006. When controlling for document length, the ratio peaked with the first AP which was officially named “Programme for China-Africa Cooperation in Economic and Social Development” in 2000. The subsequent FOCAC APs of 2003 and 2006 then contained fewer business terms. However, after 2006 mentions of these terms rapidly rose in absolute numbers and relative to the APs’ length. In 2021, business terms were mentioned 61 times which is thrice as often as in 2000. The more frequent use of business terms stresses the importance of companies for bi- and plurilateral economic and business relations. It also shows that state actors acknowledge the important role of businesses in the intergovernmental initiative.

Contextualizing the more frequent use of the business terms, some key patterns can be identified. They are particularly found in the context of plans to establish business networks and partnerships between Chinese and African companies facilitated by the formation of supporting institutions. The China-Africa Joint Business Council between the state and business actors of China and African countries organizes business meetings among companies and associations and provides training on doing business while focusing on each other’s market specificities. ⁶⁷ Furthermore, various business conferences dedicated to consolidate cooperation between businesses from China and African countries, trying to intensify overall Sino-African economic and trade linkages took place as side-events to the ministerial conferences. ⁶⁸ A prominent example is the China-Africa Business Forum which was established in 2003. It usually takes place on the sidelines of the FOCAC conferences and is attended by representatives from Chinese and African enterprises, business associations, and research centers. This forum provides opportunities for informal meetings between government officials and business representatives. ⁶⁹ Another example is found in the 2006 AP when the establishment of the China-Africa Joint Chamber of Commerce and Industry was commended. Its mission is to facilitate communication and foster beneficial cooperation between businesses from China and Africa. ⁷⁰ Thus, the FOCAC makes provision to establish formal and more informal transnational business association-like platforms including Chinese and African businesses.

The above-mentioned formal and less formal transnational state-business institutions aim to pave the way for an effective dialog and consultation mechanism between Chinese and African enterprises. ⁷¹ As a result, they could facilitate cooperation between private sector actors, culminating in joint ventures or other joint business endeavors: “The Ministers pledge to encourage mutual investment by their enterprises, the exchange of experience in business management, the setting up of joint ventures or sole ownership enterprises, including small or medium ones and the establishment of joint business.” ⁷² This shows that businesses are considered to be a building block for Sino-African relations. In addition, the strengthening of cooperation among SMEs is envisaged to promote industrial development as well as to intensify production and export capacity in Africa. ⁷³

Another context of the use of business terms is with regard to the creation of a favorable business climate for African and Chinese companies. ⁷⁴ On the African side, this includes the improvement of the legal framework and basic infrastructure (see role of the infrastructure sector in section 5.2.) as well as the provision of services to attract investment from Chinese enterprises. ⁷⁵ All countries are encouraged to safeguard the lawful rights and interests of investors. In addition, facilitation measures such as approval procedures for investment, customs clearance, border entry, and exit for investors should be promoted. China and African countries further aim to negotiate and implement agreements on facilitation and protection of investments and avoidance of double taxation. ⁷⁶ National and regional arbitration organs should solve contractual frictions and conflicts between Chinese and African enterprises. ⁷⁷

Key sectors and industries

In all eight FOCAC APs, 298 codes were assigned to textual segments that refer to sectors and industries which ultimately indicate fields of business potential. In 2000, seven sectors were mentioned quite un-specifically and located in only eight textual segments. This figure increased to reach 79 mentions across twelve sectors/industries in the Dakar AP of 2021. Overall, 78% of sector and industry-related codes are found starting with FOCAC 2012. In summary, three findings on the focus sectors over the FOCAC life cycle are made: First, infrastructure and agriculture account for more than 60% of all mentions across all APs. Secondly, the scope of sectors covered in the FOCAC APs increased over time. Thirdly, the intensity of mentions of nearly all sectors increased, especially after the FOCAC in 2012.

Infrastructure is from the beginning in the year 2000 continuously prioritized as the key sector of Sino-African economic relations: “We agree to continue to place infrastructure development on top of [the] China-Africa cooperation agenda.” ⁷⁸ As Table 3 illustrates, the mentions of the infrastructure sector amounted to nearly 42% of all sector/industry-specific codes since the announcement of the BRI in 2013 indicating the strong link between the FOCAC and the BRI initiatives. Analyzing the infrastructure sector further, dynamics in the sub-sectors of energy, telecom, transport, water, and non-specified infrastructure become apparent.

Table 3. Infrastructure sub-sector share in total sector mentions (2000–2021)

Source: The authors.

The analysis in Table 3 indicates a shift in focus within the infrastructure sector towards especially energy followed by telecommunication and, to a lesser extent, transport. The halving of the share of “non-specific infrastructure” after 2012 is an indication of a more specific agenda in the infrastructure sector, thus indicating business potential for companies. The exposed role of this sector clearly reflects the perception of underdeveloped infrastructure as a key obstacle to economic development in African countries and exhibiting a negative impact on the business environment. ⁷⁹ China is ready to use its advanced technology, expertise in engineering, contracting, and finance power as well as technical and management skills to mitigate that challenge. ⁸⁰ The modernization of infrastructure should enhance regional integration and provide transport corridors to land-locked African countries. ⁸¹ The improvement of transport and energy infrastructure is conducted in close partnership between China and the African Union via the Presidential Infrastructure Championing Initiative. ⁸² While this initiative is of more general significance, the APs mention specific plans such as the formulation of a China-Africa Railway Cooperation Plan (2016–2020) that spurs the construction of railway networks across African countries. ⁸³

Apart from infrastructure, agriculture (19.8%) as well as logistics and transportation (8.1%) are the most frequently mentioned sectors. First, from the outset, agriculture is an essential sector of Sino-African relations as it is key to ensure African food security by e.g., increasing agricultural productivity. ⁸⁴ The important role is exemplified by the foundation of the China-Africa Research Centre for the Development of Green Agriculture, which brings together and fosters the cooperation between African and Chinese agribusinesses. ⁸⁵ Second, with regard to logistics, a “[h]uge potential in transportation development” ⁸⁶ was frequently highlighted in FOCAC APs. Therefore, aviation and shipping companies were encouraged to create more air and shipping connections between China and Africa and to build logistic centers in African markets ⁸⁷ in order to facilitate business between China and African countries. However, as many international companies have large production sites in China to serve global markets, amongst them African markets, they are likely to benefit from these efforts as well.

Business activities

In the eight FOCAC APs in the period 2000–2021, 280 textual segments were assigned to business activities. The main activities mentioned in all of the meetings, as Table 4 illustrates, are investment with 66 codes (23.6%), followed by production and processing (18.2%), and technology transfer (16.1%). The mentioning of business activities gained momentum with the FOCAC in 2012 and increased significantly until the most recent conference in 2021. This rise reflects and is in line with the important role of companies (compare Figure 1).

Table 4. Relative relevance of business activities by type (as % in business activities) 2000–2021

Source: The authors.

Investment is still the most frequently mentioned business activity which is linked to specific sectors, in particular infrastructure, manufacturing including industrial parks, banking, and agriculture. ⁸⁸ The realization of large investment projects entails some business potential for the private sector by, for instance, providing materials such as steel, cement, and aluminum. With regard to agriculture, Chinese investment supports the strengthening of the African agri-food value chain: “China will support market-based investment in Africa’s agricultural industry, support African countries in enhancing their capacity for independent agricultural development, and invest in grain and cash crop production projects in such forms as greenfield investment, equity participation, mergers and acquisitions, and leasing, in order to extend the scope of Chinese agricultural investment in Africa from planting to warehousing, logistics, processing, and international trade.” ⁸⁹ Thus, in agriculture the FOCAC addresses the entire value chain from crop farming to food processing, implying a higher level of localization of value added.

In addition, investment in the manufacturing industries according to FOCAC documents is set to shift China’s labor-intensive industries to Africa and at the same time create local employment and stimulate technology transfer and local sourcing. ⁹⁰ However, its relative relevance has slightly dropped since 2012 while at the same time production and processing has gained in relative importance in the FOCAC APs as of 2012. Production and processing result in more steps of the value chain being localized in African markets: “The Chinese government will continue to encourage and support capable and reputable Chinese companies to invest in Africa, and guide Chinese companies to establish processing and manufacturing bases in Africa, help raise the added value of African export.” ⁹¹ The focus on expanding the production capacities in African countries was already envisaged in the Programme for China-Africa Cooperation in Economic and Social Development of 2000, including the promotion of local industries and the diversification of African exports. ⁹² It cuts across the focus sectors discussed above: In the mining sector, more beneficiation should be conducted in Africa ⁹³ with the goal of raising African companies’ capabilities in processing energy and primary resources in order to increase the local value added. ⁹⁴ Furthermore, agricultural modernization includes the processing of agricultural goods and high-tech food production as well as organic farming. ⁹⁵ The localization is also pursued in the healthcare sector where the production of medicines in Africa is envisaged in various of the later APs. ⁹⁶ This recent focus on local production and processing across various sectors and industries indicates business potential for companies with a presence in Africa.

Another business activity frequently mentioned (overall 45 times) is the transfer of technology and knowledge. Technology transfer enhances the productivity and competitiveness of African enterprises. This effect can be linked to most of the mentioned key industries, for instance, the rising importance of high-tech infrastructure, logistics/transportation, manufacturing, mining sectors, and agro-processing (compare Table 2) which all require upgrades in technology to enhance productivity. One example in agriculture is the foundation and later expansion of ten demonstration centers of agricultural technology. ⁹⁷ Similar efforts to deploy Chinese technology are observed in the infrastructure construction, especially in the transportation, the telecommunications, and the power generation fields, in order to spur the development of African countries: “The Chinese Government will give continued encouragement and support to Chinese companies in participating in Africa’s infrastructure development while focusing on technical and managerial cooperation with African countries to help improve their capacity for self-development.” ⁹⁸ Particularly in the transport sector, Chinese companies are set to showcase their advanced technology: “China will tap its advantages in railway technology to support Africa’s efforts in developing and modernizing its railway networks in order to facilitate cost-effective and efficient traffic and trade flows in the continent.” ⁹⁹

Discussion

The empirical analysis revealed the distinct and rising role of business in the intergovernmental FOCAC initiative. This transnational state-driven process of FOCAC has immediate implications for state-business relations. Our empirical results will be discussed along our research questions in light of the SBR literature.

With regard to the first research question on a) how prominently and in which topical context companies are featured in FOCAC over the time period 2000–2021 and b) whether companies are seen as enablers to achieve the economic targets of the state-driven FOCAC, our findings reveal a growing and multifaceted involvement of businesses in Sino-African relations, particularly evident since FOCAC 2012. The scope and frequency of business-related codes—business terms, activities, and economic sectors—continuously broadened. Companies feature prominently in the FOCAC meetings and are considered enablers for fulfilling diplomatic and economic goals for three reasons. First, the increasing mentions of business terms and the broadening of scope (focus sectors and business activities) clearly indicate that the governments see an important and diverse role to be played by companies in order to achieve economic growth targets. Second, we revealed that infrastructure was and remains the main focus sector in the FOCAC documents. Being a pivotal part of a favorable business climate, this focus of the documents and the role allocated to companies in building it demonstrates the enabler role. In addition, we argue that the spike of business-related codes post-2012 is connected to the BRI initiative starting in 2013 which has not only reinforced infrastructure investment but also resulted in specified infrastructure mentions with a focus on the sub-sectors energy, telecommunications, and transport. This implies that business potentials for companies lie along the value chains of the different infrastructure sub-sectors, which may include planning services, construction, equipment and material supply, and quality control services. While we find in our longitudinal analysis that infrastructure is the preeminent sector in the FOCAC, pertinent research has shown that actual infrastructure lending has stagnated and even collapsed in recent years. ¹⁰⁰ Third, we concur that business activities lead to productivity and growth on the firm level across the board. Based on core business activities (investment, production, and processing as well as technology transfer), we conclude an increasing push towards localization by Chinese companies, thus, in consequence offering potential demand to African and non-African suppliers onsite. This is in line with the results of studies on the BRI in which scholars found that African firms can benefit from Chinese engagement by taking advantage of technology transfer and seize the opportunity to internationalize their operations. ¹⁰¹ Based on our analysis, we develop the following propositions:

1. (1) Companies play a significant and multi-facetted role and business potentials exist, notably in the focus sectors infrastructure and agriculture.

2. (2) The private sector is seen as an enabler for mutual political and economic goals in China’s diplomatic Africa engagement.

On a more conceptual level, and related to our research question 2, our data provide insights that allow us to contribute to the literature by expanding Taylor’s SBR framework ¹⁰² by an international dimension. Our data analysis confirms that the state-driven FOCAC and the role of business therein is compatible with our reference SBR framework by Taylor, once we add the transnational dimension into the model. Our investigation adds empirical evidence to the main elements of Taylor’s SBR framework. While he developed the three mechanisms (typologies) crucial for a conducive business environment and functioning state-business relations primarily in the national environment, we apply them to the intergovernmental FOCAC context. First, we revealed an enabler role for business from participating countries and an important role for business associations and other state-business institutions aimed at supporting companies in doing business in African countries or China. Such a role is taken by the China-African Joint Chamber of Commerce and Industry that was founded in the FOCAC process and can now bundle the interests of Chinese and African companies to facilitate state-business relations to improve the business environment. Second, FOCAC is a state-initiated and -driven platform where various decisions and planned actions are set to improve the business environment in African countries by strengthening the legal framework and by providing basic infrastructure as can be seen from the discussed focus on the infrastructure sector. Third, we found some evidence for informal and ad hoc meetings of business representatives and government officials at various side events of the FOCAC conferences including the China-Africa Business Forum and the China-Africa Joint Business Council. All three mechanisms of Taylor’s SBR approach are applicable to the FOCAC context. The novel aspect is that FOCAC as an intergovernmental initiative aims at improving business conditions in a transnational setting and facilitating transnational state-business relations.

Our findings serve as a crucial foundation for deeper reflections on Taylor’s analysis of the business environment in African countries. Taylor posited that state-business relations improve the business environment, potentially leading to economic growth. Building on our results, which notably indicate improvements in the business environment in terms of transport and energy infrastructure, expanded corporate ties and technology transfer, further research is necessary to empirically examine how FOCAC or, more generally, Chinese economic activities such as trade and investment are shaping the business environment in African countries. Concerning Taylor’s assessment of SBR positively influencing business conditions, our approach yields limited insights especially with regard to the causal relationship and overall impact, due to the type of data (policy documents) and the chosen qualitative methodology. Therefore, the actual impact the specific FOCAC measures exercise on the business conditions cannot be validated and should be interpreted as indicative. In addition, certain business conditions, such as those related to governance, may remain unaccounted for, given that the influence of Chinese engagement via FOCAC is, at best, indirect. So, if considering World Bank statistics for Sub-Saharan Africa over the time period 2004–2019, the dynamic development of business conditions in Africa becomes apparent with improvements in some areas such as the time to start a business or to register property while stagnation is found in areas such as the time to enforce contracts. ¹⁰³ However, these selected developments of the business environment in African countries cannot conclusively identify an impact of Chinese engagement, let alone of FOCAC. While some scholars have attempted to isolate the specific impact of Chinese engagement, their findings have provided only limited insights so far. For instance, a study examining Chinese investment in Eastern African countries revealed that Chinese FDI does not significantly stimulate the involvement of local industries, ¹⁰⁴ contradicting the envisioned expansion of production and processing in African countries, as outlined in the FOCAC documents. Conversely, another study discovered that Chinese FDI had a positive effect on technological progress in 24 African countries, ¹⁰⁵ aligning with our findings of the aspired knowledge and technology transfer. In conclusion, further research employing a quantitative methodology is necessary to empirically uncover a causal and tangible relationship between FOCAC and the business environment in African countries.

Expanding on Taylor’s framework based on our findings, a significant distinction from national SBR frameworks emerges within FOCAC as an intergovernmental platform: unlike the original framework, which primarily concentrates on one state and its associated companies or business associations within a single country, FOCAC involves multiple states and companies spanning across nations (here, 53 African countries plus China). Hence, a transnational context of SBR increases the number and type of stakeholders. This is in line with the evolving SBR literature on diversified business groups. ¹⁰⁶ In the context of the state-driven FOCAC, we revealed that numerous states collaborate and form a “state association”-like institution with the aim to create a platform to agree on policies and measures regarding the African countries and China. One key aspect of FOCAC is to improve the business environment for companies from both China and Africa and to engage with companies or business groups from all countries. To this end, they established transnational business institutions—supported by the FOCAC conferences—which are in line with the role of business associations in the SBR literature, here aiming to cluster companies across countries. In contrast to SBR frameworks in the national context, business associations are within the intergovernmental FOCAC a rather singular phenomenon. Therefore, we conclude that in addition to the currently considered protagonists such as single state, MNCs and domestic firms, international donors and business associations, further actors need to be integrated in order to analyze the SBR in a transnational setting. Our findings cumulate in the extension of Taylor’s SBR framework by integrating transnational institutional intermediaries like the FOCAC (related to states) and transnational business platforms (related to companies and business associations). Figure 2 shows the national-focused Taylor SBR framework with the extension of the transnational dimension by drawing on our analysis of the FOCAC (gray shaded area). The aim here is to show the interlinkages between the increased number of stakeholders. However, we do not make statements on the strength of the linkages.

Figure 2. The expanded Taylor framework in the international FOCAC context.

Source: The authors.

Considering a transnational context changes the number of stakeholders that are participating in the relations: there are two or more states that need to “coordinate” and there are companies from different nations, some of which are organized in national business associations which could include any organized business group. There are two key elements of a transnational SBR approach of which one is the foundation of transnational business platforms that offer a way for companies (and business associations) from different countries to organize. The other element is the intermediary state-driven platform (here: FOCAC) where the countries discuss and organize mutual policies and goals that may be relevant to a conducive business environment. Based on the interaction between these two groups, “classical” SBR can occur in the transnational context. Hence, FOCAC influences the business environment via the state-driven mechanism, while international companies of one country may informally and in an ad hoc way interact with the foreign state. With regard to the latter, an example of informal and ad hoc relations in Sino-African transnational SBR is Kenya’s Standard Gauge Railway. The Kenyan government exempted the Chinese engineering, procurement and construction (EPC) firm, China Road and Bridge Corporation, from taxes on all of the imported equipment and materials. ¹⁰⁷ Therefore, our framework is not limited to a simple one-way street where governments dictate policies but rather is characterized by various mechanisms with bi-directional interaction between the private sector or business associations and government officials. In sum, our analysis shows that the SBR framework can be extended to integrate the international dimension beyond (1) comparative analyzes of country-specific state-business relations as conducted by previous research ¹⁰⁸ as well as (2) the discussion of international donors and key international firms within the national context. ¹⁰⁹ We particularly argue that transnational institutional intermediaries can foster state-business relations in an international context and, thus, support the development of (here: African) countries. Based on our results and their discussion, we raise the following proposition:

1. (3) SBR approaches can be expanded to include transnational constellations. The key for them to work are transnational institutional intermediaries like the FOCAC.

While our analysis primarily focused on expanding Taylor’s (2012) framework, our findings contribute significantly to the theoretical discussion on state-business-relations. Firstly, we introduced a transnational dimension to SBR frameworks, which have previously focused on the national context. ¹¹⁰ This addition is paramount in a globalized world where multiple states and companies from various nations, often being organized in business associations, need to coordinate. We introduce a novel analytical framework placing transnational institutional intermediaries at its core, applicable across numerous multi-country settings in Africa and beyond. This is of great significance as it contributes to the interdisciplinary debate on the renewed geopolitical initiatives on Africa with some authors indicating a new scramble for Africa. ¹¹¹ Beyond China, numerous countries such as Japan, the EU, US, India, South Korea, Russia, and Turkey have also established summits in order to shape political and economic relations with African countries as well as to facilitate business-to-business collaborations. Similarly, transnational institutional intermediaries, initiated by China or other countries, can be found in other emerging market contexts such as Eastern Europe or Latin America. ¹¹² A pivotal aspect of these transnational institutional intermediaries, which leads to the second point of how we are advancing the discussion on SBR, is their dynamic nature as summits rather than static organizations. State-business relations are not only shaped by business associations or (international) organizations but also by specific events such as summits and conferences with varying levels of formalization. We argue that such transnational platforms are vital for beneficial state-business relations as they bring together stakeholders from governments, businesses, and business associations. In addition, such events frequently endorse a final communiqué which serves as a reference document and can be utilized by all actors to work on the improvement of the business environments in the involved countries.

Conclusion and future research

Our results add to the academic understanding of the implications of Chinese economic and business engagement in Africa for companies in the FOCAC context. In the course of our analysis, we propose an expanded SBR theoretical approach by adding the international dimension. We revealed a high and increasing relevance of businesses in the transnational FOCAC context where we identified core business activities, especially in investment, production and processing, and technology transfer. The focus sectors, particularly infrastructure, are key to improve the countries’ business climate and at the same time offer potential for companies. The enabling role of business in achieving the goals of the state-driven FOCAC was shown. We find that transnational platforms like FOCAC are a key driver for beneficial state-business relations across countries.

However, there are some limitations to our approach, which simultaneously provide avenues for future research: First, Taylor’s assessment of the low institutional strength of African business associations and, hence, their low role in SBR was made some ten years ago. It might be interesting to assess the current situation of African business associations in order to evaluate the effectiveness of this mechanism in terms of creating an improved business environment. On the same note, the institutional strength of our newly proposed, transnational intermediary platforms should also be investigated empirically. Second, we put forward a systemic structure of a transnational SBR framework but we were not able to assess the magnitude of the interlinkages between various stakeholders in our paper’s approach. Therefore, we see scope for future empirical investigations to evaluate the strength of the linkages. Third, our evidence is indicative and not conclusive with regard to business potential. We could not determine specific potentials within individual sectors or business activities due to the general and political nature of the FOCAC APs that were the basis of our analysis. Further research is necessary to specify business potentials and to uncover business opportunities along the value chain as it was also suggested by Kamoche et al. ¹¹³ Fourth, we found indicative evidence that SBR promotes the improvement of the business environment. However, a conclusive analysis, particularly of the causal relationship between FOCAC or more broadly Chinese economic activities in Africa and the business environment in African countries needs to be empirically evaluated by future research. Fifth, it was not possible to distinguish whether business potentials for companies primarily relate to Chinese, local African, or international enterprises. Also, no distinction was and could be made between state-controlled and private Chinese companies. Future studies should differentiate between these different nationalities and ownership structures of firms in order to clarify which type of enterprises can seize the business potentials in African markets evolving from the FOCAC and related BRI. Related to differentiating the type of companies, further research is needed to examine suitable business approaches of international non-Chinese and African companies on how to seize business opportunities. A promising methodological approach would be to investigate specific cases as some authors have already shown. ¹¹⁴ Sixth, our data suggest that the state-business interactions are not exclusively uni-directional from FOCAC/state to businesses. In alignment with Taylor, ¹¹⁵ private sector firms also possess various channels to influence decision-makers, such as a more formal channel (business associations) or informal channels (private contact to decision-makers). Therefore, future research can uncover how firms influence the FOCAC negotiations via their home government or FOCAC-linked institutions such as the China-Africa Joint Chamber of Commerce and Industry to create business potential. Seventh, the assumption of our model that there is a monolithic ‘One China’ bloc in Africa can be critically questioned. Other studies show the complexity of Chinese state-business relations with feedback mechanisms from Chinese companies operating in Africa to the Chinese government, from Chinese workers deployed to African countries to their parent company in China ¹¹⁶ or even competing interests between state actors at national and provincial level ¹¹⁷ or between State-Owned Enterprises. ¹¹⁸ Therefore, we see great scope for future research to examine how the complexity of Chinese state-business relations affects the efficiency and institutional strength of FOCAC.