Monday, March 2, 2009

China-Africa trade, investment ties to deepen

Diallo, Tiemoko (Reuters, Bamako) 2009-02-13 

Chinese President Hu Jintao arrived in Mail yesterday as his first stop in a four-nation tour of Africa aimed at deepening trade and investment links with the world’s poorest continent despite the current economic slowdown.

China-Africa trade has increased 10-fold since 2000, soaring 45 percent to nearly US$107 billion in 2008 alone. Investments in and imports from Africa are dominated by minerals and oil – Angola is China’s single largest crude supplier.

Hu is visiting four countries which are not currently among Beijing’s big sources of oils or minerals. After Mali, he will be travelling to neighbouring Senegal, mainland Africa’s westernmost country; Tanzania on the east coast; and the Indian Ocean island of Mauritius.

“These are not classically resource-rich countries so this is a message to Africa that (China) will engage with all sorts of countries in Africa”, said Patrick Smith, editor of Africa Confidential and publisher of Africa-Asia Confidential.

“The other message is that, amid a crisis, when many Western economies are talking about cutting aid budgets, China is travelling the world talking about trade and investment.”

The Chinese delegation will sign accords with all four countries, although few details have been released.

Although companies from the Asian giant are expanding in technology sectors such as mobile telephony as well as food and agricultural businesses, Mail and Tanzania are Africa’s third and fourth largest gold miners while Senegal has a budding gold and iron ore sector.

Chinese company Sinopec is looking for oil in northern Mail, and the state-owned China National Petroleum Company has signed a US$5 billion deal to produce oil in neighbouring Niger.

The global economic slowdown, combined with sharp falls in world prices for oil and other metals, has weakened the short-term prospects for some of those investments. Hu’s visit is thus widely viewed as a sign of confidence to sooth fears that China may turn its back on its allies in Africa.

“I would read this as an effort to assure Africans of China’s continuing and sustained interest in Africa despite the global economic crisis”, says Christopher Alden of the London School of Economics, who co-edited a 2008 book entitled ‘China Returns to Africa’.

The current visit also contrasts with the newly introspective attitude in some of Africa’s traditional partners who have been forced to pump money into their own economies amidst the slowdown, potentially at the expense of both foreign investment and development aid.

Chinese officials insist that the global crisis must be prevented from cutting aid to Africa, and have repeatedly stated that it will not dampen Chinese interest in investing in Africa.

“Beijing takes advantage of French weaknesses in Africa” headlined an opinion article on Hu’s visit in right-leaning French daily paper Le Figaro this week, noting the country’s growing influence in the former French colonies in Africa.