China’s BRI Stalls in Africa, Beijing Unveils New Strategy That Challenges US Dominance

Beijing: China’s ambitious Belt and Road Initiative (BRI), once the backbone of its global expansion strategy, appears to be losing momentum in Africa. After years of massive investments across the continent, Beijing is now recalibrating its approach—signaling what experts describe as a “new game” by the Dragon that could pose a long-term challenge to US financial dominance.

Fresh data released by Boston University’s Global Development Policy Center reveals a sharp decline in Chinese lending to African countries. In 2024, China’s loans to Africa fell to $2.1 billion, nearly half of the previous year’s level. This marks the first annual decline in Chinese lending to Africa since the COVID-19 pandemic, highlighting a significant shift in Beijing’s strategy.

The figure is a fraction of China’s peak lending in 2016, when it extended $28.8 billion in loans to African nations. The data indicates that China is decisively moving away from the era of large, debt-heavy infrastructure projects and instead focusing on smaller, commercially viable investments.

From Mega Projects to Selective Financing
Between 2012 and 2018, Chinese lending to Africa consistently exceeded $10 billion annually, largely funding railways, highways, ports, and power plants. Most of these loans were denominated in US dollars. However, this model has come under strain in recent years.

Economic shocks from the pandemic, rising global interest rates, and mounting debt vulnerabilities exposed the weaknesses of China’s earlier approach. Countries such as Ethiopia, Zambia, and Ghana slipped into debt distress, forcing Beijing to absorb losses on several loans. These setbacks have prompted a strategic rethink within China’s leadership.

As a result, Beijing is stepping back from large, dollar-denominated infrastructure financing and pivoting toward smaller-scale funding, often structured as foreign direct investment (FDI) through African financial institutions.

China’s Yuan Push Against the Dollar
What has drawn particular attention from analysts is China’s growing use of its own currency, the yuan, in African financing. This shift is widely seen as part of Beijing’s broader effort to counter the dominance of the US dollar and internationalize the yuan.

In 2024, all Chinese loans extended to Kenya were denominated in yuan. In October, China converted $3.5 billion worth of existing loans into yuan-based debt. Ethiopia is reportedly considering a similar move.

This currency strategy underscores China’s intent to reduce reliance on the dollar while strengthening its financial influence across emerging markets.

A Strategic Reset, Not a Retreat
While the sharp fall in lending has raised questions about whether China is pulling back from Africa, experts argue this is not a withdrawal but a strategic reset. Beijing is now prioritizing risk reduction, limiting defaults, and aligning overseas financing more closely with market-based returns.

China’s Africa policy, analysts say, is no longer about sheer scale. The era of massive Chinese loans flooding the continent may be coming to an end, replaced by more selective, sustainable, and strategically targeted engagement.

This recalibrated approach could reshape economic competition in Africa—and emerge as a long-term challenge to American financial influence on the continent.