China in Africa

China’s Trade and Investments in Africa

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China and Ethiopia sign deals

China’s premier Li Keqiang and Ethiopia’s prime minister Hailemariam Desalegn at a treaty signing ceremony in Ethiopian capital, Addis Ababa

Chinese Premier Li Keqiang arrived in Ethiopia Sunday for the start of a four nation Africa tour (Nigeria, Angola and Kenya), his first visit to the continent since assuming his position a little over a year ago. Both nations signed 16 deals total which included legal accords covering diplomatic visa exemptions, cultural corporation and extradition, agreements on economic, trade and technical cooperation, loans and cooperation agreements for the construction of roads and industrial zones.

Chinese firms have invested heavily in Ethiopia in recent years with their worth swelling well over $1 billion in 2014, according to official figures.

Beijing is also a key partner in Ethiopia’s bid to expand infrastructure such as roads, railways and telecom services.

Huawei Technologies Co Ltd – the world’s second largest telecom equipment maker – and ZTE Corp are working to introduce a high-speed 4G broadband network in the Ethiopian capital Addis Ababa and a 3G service throughout the country.

Officials said both firms have now signed an $80 million deal to lay optical ground cables to form a nationwide network.

This is the second major high level visit to Ethiopia after last years visit by President Xi Jinping.

China increases investment and aid to Africa

Chinese Premier Li Keqiang

In continuation of Chinese investment, engagement and cooperation in Africa, Chinese Premier Li Keqiang unveiled extra aid for Africa totaling at least $12 billion on Monday, and offered to share advance technology with the continent to help with development of high-speed rail,  boost collaboration in industry, finance, poverty reduction, ecological protection, people-to-people exchanges, and peace and security.  Speaking in Addis Ababa, Ethiopia’s capital, Mr. Li also reaffirmed Beijing’s support for Africa’s infrastructure sector: “Infrastructure is the precondition to industrial development. China will actively participate in projects such as roads, railways, telecommunications and power in Africa”.

Li said that the new $12 billion credit line would be on top of the existing $20 billion already offered when former President Xi Jinping made loans of $20 billion to African nations from 2013-2015 when he visited in March 2013.

He also said China will discuss with the African Development Bank the prospect of establishing a joint fund to support infrastructure development.

China’s direct investment in Africa reached $25 billion at the end of last year. With Africa having four of the top 10 fastest growing economies in the world, expect more investment and commitment from not just Africa, but many other nations.

 

India’s growing presence in Africa

India has two reasons to take an interest in Africa – it’s deeply concerned about China’s forays into the continent’s strategic and economic space, and it’s also mindful that it requires the support of its 54 nations if it is to realize its ambitions to become a permanent member of the U.N. Security Council. India is a latecomer in Africa, but as a demonstration of its pro-active engagement with the continent, the government this week announced that its trade target with the continent has now been revised upwards to $90 billion by 2015, up from the previous target of $70 billion. The announcement came on March 17, when the India-Africa Business Council met in New Delhi for the first time. The second meeting of India-Africa trade ministers took place the same day. The growing ties between India and African nations has seen bilateral trade soar over the past decade, and India has established a number of pan-African institutions under the umbrella of the India-Africa Forum Summit for capacity building and human resource development across many areas, including the India-Africa Institute of Foreign Trade, the India-Africa Diamond Institute, the India-Africa Institute of Educational Planning and Administration and the India-Africa Civil Aviation Academy. Yet another institution, the India-Africa Business Council, was launched on March 17, with a brief to put in place a vibrant mechanism for enhancing economic and commercial relations between the two sides, especially in areas including agriculture, agro-processing, manufacturing, pharmaceuticals, railways, energy and petroleum and natural gas. As of now, India is in no position to take on China in Africa. But the Indians are clearly making a concerted pitch to win friends and influence people there.

Chinese President Hu Jintao visits new African Union headquarters financed and built by China

Chinese President Hu Jintao

The new African Union headquarters was inaugurated by China’s President after being built and financed by China.

Chinese President Hu Jintao is expected to visit Addis Ababa this month to inaugurate a new African Union headquarters financed by China and built largely with Chinese labor.  The project was launched when Moammar Gadhafi was maneuvering to move Africa’s diplomatic capital to Libya.Official African Union and Ethiopian sources confirm that President Hu will be in Addis Ababa January 28 to open what is being called “China’s gift to Africa.”  The inauguration ceremony will be held the day before African heads of state hold their January meeting at AU headquarters for the first time. According to custom, African heads of state meet every January in Addis Ababa. But the summit previously has been held at the city’s United Nations conference center because the AU headquarters building was too small. Construction of new facility began in June 2009, when Addis Ababa’s position as Africa’s diplomatic capital was in doubt.  The city has been home to the continental body since its founding, largely due to the influence of the late Emperor Haile Selassie, who was one of the driving forces behind creation of the Organization of African Unity in 1963.But in 2009, the late Libyan leader Moammar Gadhafi was the AU chairman, and he made no secret of his desire to build a grand new headquarters in his hometown of Sirte.  That plan was thwarted, however, when China agreed to pay for a $200 million facility in Addis Ababa. It was built by the China State Construction Engineering Corporation, largely with Chinese labor. Ethiopian Prime Minister Meles Zenawi toured the new facility last week and hailed the close cooperation with China.  He revealed that he had lobbied Chinese officials to build the new headquarters, donated land adjacent to the old AU campus, and exempted taxes on all imported construction materials. His remarks were reported by Chinese and Ethiopian state media, which were invited to cover the event. AU Projects Director Fantahun Hailemikael says the new facility will vastly improve the African Union’s institutional capacity. “Almost 48 years after foundation of the OAU (Organization of African Unity), the African Union is now able to have such a big facility that can fulfill its requirement in terms of office and in terms of conference,” he said. “The Chinese government generously has given this facility as a gift to Africa and the African Union.”The complex features a 2,500 seat amphitheater and a helicopter landing pad so visiting dignitaries can be flown in from the airport, eliminating the need for motorcades that tie up traffic. The office tower will become home to 700 of the 1,300 African Union staff members.  The other 600 will remain in the old section.The new facility symbolizes China’s growing involvement in Africa, and individually with most of the 54 AU member states.In 2010, China moved ahead of the United States as Africa’s largest trading partner.  The Chinese State Council, or Cabinet, reported trade with African nations reached $114 billion in 2010, as compared to $10 billion in 2000.Industry experts say 70 percent of the continent’s oil exports go to China.

This is a continuation of China’s soft power projection Africa.

Here’s video report about the grand opening:

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China recognizes Libyan National Transitional Council

China has recognized the Libyan National Transitional Council, following the such countries as Germany, Turkey, France, U.K, U.S., Russia and institutions like the United Nations.

China has officially recognised the National Transitional Council as Libya’s ruling authority, the foreign ministry in Beijing has announced. It is the last permanent member of the United Nations security council to do so. China’s relations with the NTC were strained last week when it emerged Chinese arms firms had talked to Muammar Gaddafi’s representatives about weapons sales. The statement, released late on Monday – a public holiday in China – added that Beijing respected the choice of the Libyan people. Spokesman Ma Zhaoxu said China hoped all signed treaties and deals would remain in force and be “implemented seriously”. It cited an unnamed NTC representative as saying: “Libya welcomes China to engage in the country’s reconstruction and jointly push forward the steady and sustained development of bilateral ties”. China had already held talks with the NTC and said it valued its “important role”, but had held off full recognition. “They have taken their time in recognising the rebels,” said Steve Tsang, professor of contemporary Chinese studies at Nottingham University. “I would have thought they really should have done this much earlier. I suspect the timing was simply determined by the practical issues of negotiations with the National Transitional Council and that now they have something they think will be satisfactory from their perspective.” But he added China’s behaviour would affect how it was seen by the rest of the world. “You will have quite a lot of people concluding China is much more interested in protecting its own national interests than performing its duties as a leading power in the international scene. As [one of the] P5 [permanent members of the UN national security council] there are certain expectations and moral responsibilities … The way the post-Gaddafi situation has been handled, [people] have not been giving China a particularly high mark,” he said. Chris Zambelis, a researcher at US consultancy Helios Global who focuses on the Middle East, added: “They saw the writing on the wall … Some countries are still holding out, but one by one they are lining up [behind the NTC].” He said while China’s energy interests in Libya were not as great as those elsewhere, it wanted to protect them. An official with a rebel oil firm suggested last month it might freeze out countries that had not supported it. There was embarrassment when it emerged that Chinese state-owned arms firms met Gaddafi’s representatives in July – despite a UN weapons embargo. Beijing’s foreign ministry said the government did not know of the meetings and that no contracts had been signed or weapons delivered. But Zambelis added: “Whatever rebel government emerges, China already has a place in the country business-wise. It wouldn’t make sense to start shutting it out … We will still see China in Libya.” China surprised some by supporting the UN arms embargo and abstaining on the vote on Nato airstrikes – though it later condemned the bombing. Its investments in Libya are thought to be worth about $20bn (£13bn).

China has been reluctant to recognize the NTC since it would go against its “non-interference” policy.  The changing regional dynamics and winds of change have made China grudgingly change its stance. Like Russia, China had business interests in Libya that it wanted to protect, hence its timidness in supporting the Libyan uprising against Qaddafi.

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Kenya looking to attract Chinese investors

Kenya looking to attract Chinese investors.

Kenya plans to attract more companies from China to set up shop locally to help bridge the balance of trade gap that is in favour of Beijing. Increased investment in infrastructure would be complemented by investors from China, said a Kenya Investment Council director, Mr Derrick M’Mbijjewe. “We want to take stock of Chinese investments in the country. China is ready to fund companies that want to set up base in Kenya,” he said. Mr M’Mbijjewe spoke at a workshop on China’s impact investment at Norfolk Hotel. Bilateral trade between Kenya and China increased from $1.5 billion in 2009 to $1.8 billion in 2010, which is heavily skewed in favour of China. He said the country should use its strategic position to attract investors from the Far Eastern country. With the most developed capital market in the region and trained personnel, Kenya was suited to attract more companies, he said. Have local partner The model preferred by most companies from China is to have a local partner to mitigate “political risks” though some local outfits are unable to raise the required capital. There is therefore a need to encourage more direct foreign investments. Companies investing in Africa from China are partly or entirely owned by the government. Capital Markets Authority chief executive Stella Kilonzo said ways to attract venture capitalists to mobilise resources would be explored between regulators in the two countries. Over concerns of China undertaking nearly all the infrastructure projects, experts said, it was about providing the most competitive technical and cost elements during the tendering. Mr M’Mbijjewe said companies from China mostly provided better prices for implementation of projects compared to those from the West. “Chinese are investing cautiously in Africa knowing they will benefit into the future. Even when there is a problem in Kenya, they do not slow down their projects. They are more flexible to risk than the West,” he said. In 2006, Kenya and China signed six agreements on economic and technical cooperation that included concessional loans and air services that allowed national carrier, Kenya Airways, landing rights in the country. China has also set up a fund to encourage companies to import black tea, coffee, rose seeds and sisal.

While not much can be done to decrease or slow down trade that is in China’s favor (supply and demand economics), Kenya needs to look at reducing barriers for multinationals whether that is taxation and or tariffs. With China, maybe Kenya needs to use some Chinese methods and demand that Chinese firms train and hire local workers just as the China does to any foreign company wanting to enter the Chinese market.

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