Morocco led the way in North Africa earlier this month when it became the first in the region to sign on to an implementation plan for China's massive infrastructure programme, the Belt and Road Initiative.
Four other North African countries - Egypt, Libya, Tunisia and Algeria - have signed belt and road memorandums of understanding but Morocco is the first to go that one step further to detail the projects it and China will deliver.
Moroccan Foreign Affairs Minister Nasser Bourita said the initiative would "open up new prospects for trade and investment, and bring additional opportunities consistent with the kingdom's New Development Model".
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But where once that agreement would have been a near-guarantee for funding, it will now not necessarily translate into greater amounts of Chinese financing, particularly for major infrastructure, observers say.
Morocco is among more than 50 African countries that have either signed belt and road implementation plans or MoUs with China, with newcomers last year including Guinea-Bissau, Eritrea, Sao Tome and Principe and the Central African Republic.
In the past, joining the belt and road came with high prospects of funding, often for huge infrastructure projects, from Chinese policy banks Exim Bank of China and China Development Bank. But now those banks are now demanding feasibility studies amid debt distress in the continent.
Benjamin Barton, an assistant professor at the University of Nottingham's Malaysia campus, said that with the slowdown in the Chinese economy and a generally more inward-looking and conservative approach from Beijing, "the heady days of ill-considered projects and wild spending have been - temporarily - put to rest".
Barton said funding would become more austere and driven by financial, environmental, social and political factors - rather than "just agreeing to projects for the sake of racking up project numbers".
He said that for China the focus of the belt and road was less about expanding the roll-out to increase the scope to fund new projects and more about enlarging "membership" to increase the initiative's legitimacy.
Barton said that since the belt and road was designed mainly to sway countries in the Global South, the more African states that signed MoUs to join, the better.
"China will continue to strive to get countries in the Global South to sign up to the [belt and road] in a bid to eventually have all countries in the Global South part of it," he said.
Lauren Johnston, a visiting senior lecturer at the University of Adelaide and founder of New South Economics, agreed that Chinese investment was changing.
She said that in the recent past, big Chinese investments were involved in large infrastructure projects, especially in the energy sector.
"[But] now the focus is on realising some of that value such as getting the exports moving, and getting employment going up, and moving some of the value chains," Johnston said.
She said investment flows, including financing, moved in "waves and lumps" and did not have to rise continuously "to express continuous commitment from China".
She also said the belt and road was only a decade old and just a title for outbound investment, trade, regional and cross-regional integration.
"That most African countries are signed up just says they are not against China. It doesn't itself signify anything else at all or even that. It's symbolic. But giving that face may help in fostering bilateral ties," Johnston said.
"What matters is the jobs being created, the new export opportunities, the students getting trained on scholarship, the new areas that have electricity at home and the lives saved at hospitals."
Mark Bohlund, a senior credit research analyst at REDD Intelligence, said the belt and road had been "exaggerated as a driver of Chinese lending in Africa" and membership did not necessarily trigger new or more financing from China.
"Overall Chinese lending to Africa [peaked] in 2013, the year the [belt and road] was unveiled," Bohlund said.
He said Beijing signalled at November's Forum on China-Africa Cooperation (FOCAC) in Dakar that it would continue to shift its official financial engagements with Africa towards trade financing and supporting Chinese equity-based investment rather than the large lending for infrastructure projects.
He said the new additions to the initiative could be seen as a political development.
"For Beijing, the main incentive is to tie [belt and road] countries closer politically and increase its support in forums such as the UN General Assembly," Bohlund said.
Kanyi Lui, an international finance lawyer at law firm Pinsent Masons in Beijing, also saw a shift away from just infrastructure projects.
Lui, who has advised on more than 100 cross-border lending transactions involving Chinese lenders in power, resources and infrastructure projects, said Chinese lending in Africa would likely refocus to facilitating exports from the continent and providing liquidity to local banks.
"Unlike financing large construction projects, these trade financings tend to involve much longer relationships and should enhance connectivity and exchange between the host country and China," he said.
"We expect to see smaller but higher quality investments from China into Africa, particularly in relation to productive assets and activities which can benefit from the big infrastructure projects commissioned previously, and also boost the local economy by promoting exports."
During the Dakar meeting, Chinese President Xi Jinping promised US$10 billion in trade finance to support African exports and another US$10 billion in credit lines for financial institutions. But Xi did not say how much would go into bilateral project finance in Africa.
However, Lui said this did not mean China would exit infrastructure in Africa. "This is an area where China has a unique strength and a large pipeline of projects was built up over the last decade."
However, he said commercial banks working with multilateral lenders would probably take on an even more active role in the financing of these projects in the future.
This article originally appeared in the South China Morning Post (SCMP), the most authoritative voice reporting on China and Asia for more than a century. For more SCMP stories, please explore the SCMP app or visit the SCMP's Facebook and Twitter pages. Copyright © 2022 South China Morning Post Publishers Ltd. All rights reserved.
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