China marches on in Africa despite downturn

China: Chinese businessmen are taking a long-term view and pursuing strategic expansion in Africa even though China’s multiplying investments on the continent have lost some lustre in the global downturn.

Beijing and Chinese companies have pledged tens of billions of dollars to Africa in loans and investments mostly to secure raw materials for the world’s fastest-growing large economy.

That long-term interest remains intact, despite a worldwide economic slump that has hit China’s exports to the rich world and a sharp decline in Africa’s mineral shipments to China.

China-Africa trade has surged by an average 30 percent a year this decade, soaring to nearly $107 billion in 2008.

“China is in Africa for the long term, and strategically,” said David Shinn, a former U.S. ambassador to Ethiopia and Burkina Faso who teaches at George Washington University’s Elliott School of International Affairs.

“They will not veer from this, in my view,” he said.

Far from retreating, many Chinese businessmen are hunting for bargains.

Chinese and Indian firms have expressed interest in taking over Zambia’s top cobalt producer Luanshya Copper Mines since it halted operations in December, Zambian state media reported.

South Africa’s Standard Bank, itself 20 percent owned by the Industrial and Commercial Bank of China (ICBC), said last month it was advising Chinese mining clients on buying opportunities in Africa and elsewhere.

“They are looking at 2009 and saying ‘This is a time we see as a very big buying opportunity. We’ve got the backing from government, we’ve got the financial means’,” Thys Terblanche, the bank’s head of mining and metals investment banking, told Reuters.

Beyond mining, Chinese state companies are pushing ahead with strategic energy sector investments and infrastructure; private outfits are continuing to expand in technology areas.

“Some developed Western countries hit by the financial crisis are reducing their investment in Africa. Objectively, this is a powerful opportunity for Chinese businesses to expand their investment and market share in Africa,” Cui Yongqian, a former Chinese ambassador to the Republic of Congo and Central African Republic, told a China-Africa trade forum this month. Trade with Angola, China’s biggest source of African crude oil, reached $25.3 billion in 2007 and Beijing has offered Luanda $5 billion in oil-backed loans.

Shenzhen-based Huawei Technologies, China’s biggest telecoms equipment maker, is pushing south from its established stamping ground in North Africa.

“I see no reason why they would want to decrease their investments in the telecommunications sector, because that’s profitable for them,” said George Washington University’s Shinn.

“It will vary according to sector and country ... It’s very dangerous to generalise about the China-Africa relationship,” he said. “They will certainly make tactical retreats where the economy requires it.”

Wednesday, Reuters