Welcome to Green Rising – Are you getting ready for many more (green) Chinese products reaching the continent?

Manufacturing nations in Europe may negotiate down Trump's tariffs and ease US trade, perhaps following rounds of verbal jousting. 

But China seems destined to end up with a massive Trump-shape wall limiting access to American markets for the long-term. 

The White House has become increasingly serious about "decoupling" from China.

At the same time, China has built – and is still building – massive (green) industrial capacity. 

A collision course is set. Far fewer Chinese products, including electric cars, batteries and solar panels, will go to America. But go somewhere they will. Warehouses are bursting. Might they go to Africa? Quite likely.

Analysis starts with the image above. Chongqing Changan Automobile, one of China’s top motor vehicle manufacturers, will begin selling cars (pictured) in Africa this year, so they announced a few days ago. That’s petrol and electric cars.

They join other Chinese EV brands such as BYD, Chery, SAIC, Geely and Great Wall Motors. All push to dominate emerging markets with low-cost vehicles, now that trade doors elsewhere are closing.

For decades, the world’s largest car factory was Volkswagen’s complex in Wolfsburg, Germany. But BYD, the Chinese electric carmaker, is currently building two factories in China, each capable of producing twice as many cars as Wolfsburg.

Part of this is by design. Chinese companies have built capacity for new energy products that is roughly double the current demand. 

The Financial Times writes: "China is far ahead in the race for supremacy in green technology." The International Energy Agency expects a striking 60% of all renewable energy capacity installed worldwide until 2030 will come from China. 

Last year, Chinese renewable technology exports eclipsed fossil fuels – once the darling of Beijing’s overseas development – for the first time. 

A staggering $1.9 trillion in extra industrial lending is fuelling a continued flood of exports that could be spread even wider across the world by the Trump tariffs.

That America is choosing to desert the market is icing on the cake for China. 

• USAID will officially close in July and with it maybe 10% of global climate finance

• The US Africa Command may be dismantled by the Pentagon

• African trade privileges are withdrawn, and the EU can’t replace all that’s lost

What should African governments do? 

Embrace the upside. Take even greater advantage of China’s investment and technologies. Its interest is real. 

Africa will be the easiest place for China to export to. Unlike almost everywhere else, the continent has little domestic manufacturing (with some exceptions). It won’t mind “dumping”. The EU, by contrast, is already nervous about China overwhelming its manufacturing sectors with exports. German carmakers want tariff shields of their own. 

Chinese EV prices in Africa are already tumbling, pulling level with petrol cars for the first time. And industrial investments are following. 

Foreign direct investment (FDI) in Africa rose 85% last year to $94 billion. This despite an 8% global decline in FDI and a significant reduction in international project financing worldwide. Expect more in this direction.

The Economist writes: “As America puts up walls, China will have a chance to reset trade relations around the world by offering to invest in manufacturing in partner countries rather than flooding them with exports.”

You might look at this map and say that most of China’s manufacturing investing has been outside Africa. And you’d be right. But the extraordinary thing is that China has actually been making manufacturing investments all across the continent. 

Behind this is a concept called “Industrial diplomacy”. China is building a network of global supply chains and production satellites that excludes America, devolving assembly and inputs to export markets, including Africa. 

Japan did something similar in the late 20th century, turning other Asian nations into an industrial backyard. Toyota builds lots of vehicles in Thailand. Now China is taking the model global. 

The downside for Africa? First, it could undermine nascent domestic manufacturers. Some in electric mobility are developing their own products. Can they compete with Chinese satellites… or will they become one? 

Second – national security. When grids, transport, healthcare, waste management, etc run on Chinese technology, Beijing attains great leverage. Countermeasures are needed:

• Insist on some technology transfers

• Diversify supply chains as much as possible

• Insist on robust tech inspections to keep out spyware

• Favour local control over plants using Chinese products

• Ensure “smart” components can be isolated or removed

But the overall goal for the continent is sustainable development. African nations will want to continue their friendships with western partners. But competition is ratcheting up.

Number of the week 

… is the estimated number of people relying on Lake Victoria, Africa's largest tropical lake, for their livelihoods. The Kenya, Uganda, and Tanzania lake is threatened due to a proliferation of harmful algal blooms (HABs) that turned its waters a deep green hue.

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