China in Africa: developing a continent

cina africa 

19.giugno.2013 (Moment Media Ethics) – Over the past ten years, investment in Africa’s second largest economy in the world have come to $ 2.9 billion, starting from $ 75 million, and with these China’s influence can be seen everywhere. The report of Zhang Yuwei from New York to China Daily USA.

When Asoka Ranaweera participated in a project for the construction of a glass factory in Ethiopia with the support of the China Africa Development Fund in 2009, thought that it was a “first-class investment” given the importance of the amount of that time.

It was the first glass factory in Ethiopia – worth $ 15 million – and built by Chinese investors through the CADF, a private-equity fund. The fund, created in 2007, had planned to spend about $ 300 million on various projects in the continent in 2008.

Located on the outskirts of the capital Addis Ababa, the industry – built by the Chinese construction CGC Overseas Construction Group Co Ltd – had to produce up to 60,000 tons of sheets of glass per year, of which 30% are for local use and the remaining intended for export to the countries of East Africa.

“At that time the investment was considered one of the most important,” said Ranaweera, founder and CEO of Grid2Grid, a consulting firm in Washington that has been involved from the CADF to assist in locating bankable projects in Africa.

All this happened four years ago. Now the footprint of China is big and it’s getting even bigger. Chinese investments have reached $ 2.9 billion last year from $ 75 million in 2003, with an average annual growth of 50 percent, according to the Chinese National Commission for Development and Reform.

China’s investment and its influence can be seen everywhere in Africa, which attracts criticism from some Western pundits who often liken Chinese investment to “colonialism”. However, many believe that China will bring hope to Africa.

The Zambian economist Dambisa Moyo is one of them. The Moyo told her bluntly on international aid to Africa. In his best-selling book Dead Aid: Why Aid Is Not Working and How There Is a Better Way for Africa (2009) explains how international aid can hinder the growth of Africa. Recently the same author explained how the investments of the second largest economy in the world are transforming Africa.

“I’m not saying that China should receive the red carpet, blanche when it comes to Africa or anywhere in the world, and do what he wants,” the economist said recently in an interview with CNN. “We need investment, we need to create jobs and we need real businesses in those areas, but I think it is important to concentrate on what China can do for Africa, as well as on what Africa can do for China. I think this debate has not been objective as it should be. “

In the markets of Cairo, Luanda, and Johannesburg, any Chinese product – clothing, jewelry, and electronics – is popular among Africans thanks to affordable prices.

“With the growth of per capita income, the bulk of Chinese goods such as microwaves, refrigerators and washing machines – along with a set of other assets – have entered the African market,” says Ranaweera. “These goods much cheaper than American or European products, have become affordable to many growing middle classes in Africa.”

The best partner for now

Mthuli Ncube, Chief Economist and Vice-President of the African Development Bank [African Development Bank, BAS], said that China is the best partner that Africa can have it now. “However, Africa needs to stand up and develop a strategy that commits China, so that both areas can progress further,” he added.

Robert Rotberg, a visiting Fulbright scholar at the Canadian Centre for International Governance Innovation, said that although the Chinese investments in Africa have a positive impact, African countries need to “diversify to use the most of the cash flows of Chinese.”

“L ‘[Africa] needs to develop the manufacturing sector and others; China can offer a transfer of knowledge,” said Rotberg.

Ncube says that although China is increasing investment in Africa, the continent should develop a strategy for China and use China as an example in many areas. The chief economist said the African manufacturing sector should start to produce various parts for various final goods that are produced in China. Ncube reiterated that Africa should see China as a “ramp” that can be used to reposition its role in the global economy. “Africa is expected to become the world’s factory just as China has become in the last 15-20 years,” says Ncube.

Ranaweera argues that the current China’s investment in Africa accurately reflect the pattern of investment in the American and European continent, with the bulk of Chinese investment in mining and natural resources (oil and gas, mining, forestry). “

Criticism of China come from concerns about the competition of the Americans and Europeans, he says. “The Americans and the Europeans criticize China, but the business model is exactly the same; Africa provides the raw materials to America, Europe and China,” he says.

China overtook the U.S. in 2009, becoming the largest trading partner of Africa. The trade between China and Africa amounted to $ 10.5 billion in 2000, $ 40 billion in 2005 and $ 166 billion in 2011.

“China has risen in the last 35 years by poorly industrialized country to country with advanced industry. This experience can be invaluable for the African countries, “said Ranaweera. “These experiences can lead to increase the skills, knowledge and experience of African countries.”

At the end of March, the new President of China Xi Jinping began his first visit abroad after the conclusion of the election less than two weeks before. The trip took the form of a 6-day African tour in Tanzania, Republic of Congo and South Africa where he participated in the 5th summit of the leaders of the BRICS in Durban. His trip has shown how much importance China attaches to extend ties with the continent in the coming years.

Xi was the first Chinese head of state to visit the Republic of Congo ever since the two countries established diplomatic relations in 1964. The reciprocal trade between China and the Republic of Congo came to $ 5 billion in 2012 from $ 290 million in 2002.

In a speech in Dar es Salaam, the economic capital of Tanzania sea, Xi set the tone for future Sino-African relations, providing reassurance that China’s growth and the increase of its international status will not change their bilateral relations, and stating that “the importance of Sino-African relations will not decrease, but it will grow.”

China faces new challenges and new problems in Sino-African relations, said the Chinese leader talking to the public. “China has [worked] and will continue to work together with African countries to take practical measures in order to solve problems appropriately in trade and economic cooperation so that African countries reap further benefits from this cooperation.”

Xi has confirmed the continuation of Chinese investments announcing a plan to train 30,000 Africans over the next three years, including 18,000 scholarships.

Xi also said that China will strengthen mutually beneficial cooperation with African countries in agriculture, manufacturing and other industries, helping these countries to convert the benefits from the resources into advantages for development.

The announcement of Xi for a “never-ending support for Africa” ​​at the BRICS summit is not surprising given the history of Sino-African relations, says Jon Taylor, a professor of political science at the University of St. Thomas in Houston, Texas.

“To be fair, China differs from the U.S. and Europe because it provides more infrastructure and investment in exchange for development, with an eye to business relationships. With these economic relations so strong, it should not surprise you that the development model of China is seen by African leaders as viable as much as the western model of development, “says Taylor, a keen observer of China.

A key economic player

Douglas Zeng, a senior economist who focuses on global markets and the economies of China and Africa to the World Bank, says that while China is rapidly emerging as a key economic player in Africa, and its overseas activities are scrutinized by the international media, research institutions, and donor agencies, “but a lot of data on Chinese financing for development are based on untested hypotheses, on individual case studies and sources of incomplete data.”

In 2006, China announced that it will create 50 special economic zones in Africa. So far, China has created eight of which are in sub-Saharan Africa.

“These areas can help to initiate the manufacturing sectors in Africa,” says Zeng.

“Some of these areas have made progress in the construction of infrastructure and attract investments,” note Zeng, adding that also face some challenges including improving the management capacity on the part of the developers of the area and the difficulty in coordination with the government counterparts in host countries.

They were more than 1,600 development projects funded by China for a value of $ 75 billion in 50 African countries from 2000 to 2011, according to data from the Center for Global Development, a think tank nonprofit in Washington that focuses on international development, and AidData, which collects information on individual aid projects funded by foreign governments and aid agencies. The projects on health, on education and on the storage are those that have received funding from China’s most conspicuous.

“Sectoral distribution of Chinese aid to Africa contradicts the model of traditional donors, which channeled the most important part of their funding – approximately 50% – in the social and humanitarian aspects. In this sense, Chinese aid is complementary to the assistance of Western donors, “said Zeng.

More recently, the Chinese HNA Group, the private airline and the fourth largest air carrier by fleet size in China, has signed a partnership with the World Food Program of the United Nations to help provide rations to take home to promote ‘girls’ education as part of its program of school meals in Ghana.

Last year, HNA Group has extended its Brightness Action – a ten-year charitable program initiated by the company along with the Tongren Hospital in Beijing in 2004 to deal with cases of avoidable blindness – the African continent. The program has helped to recover sight to more than 1400 people in Zimbabwe, Malawi and Mozambique.

HNA Group also has business projects in Africa. Last year, he signed a cooperation agreement with the Ghanaian Africa World Airlines to launch a joint venture co-financed by the fund China Africa Development Fund among others. It ‘was the first aeronautical investment made by a Chinese company in Africa.

The commitment of HNA in Africa reflects a new wave of Chinese investments that carry a corporate social responsibility [CSR] on the continent, and that could give a glimpse of the direction taken by the Chinese investment.

“China’s investment in Africa are mainly from companies owned by the state. In the future, an area to keep an eye on will be the Chinese private companies and individuals who make investments in Africa, “said Ranaweera.

“The next big wave will come when the medium and large private enterprises move their capital from China in collaboration with Africans to make money,” he says. “An example of this might be in the future a large Chinese construction company that binds to an African partners to build commercial and residential properties in an African city by the rapid growth.”


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