‘China, don’t milk Africa’

Addressing delegates to the China-Africa Co-operation Summit in Beijing last week, Mbeki urged the Chinese government to pursue investment with a “sustainable development” thrust, which would mutually benefit all parties involved.

He urged the Chinese government to take note of Africa’s mammoth development challenges that included reducing poverty and improving the state of most of the continent’s economies.

China signed trade agreements and construction deals worth US$1.9 billion with 11 African countries last week, as the country sought to boost its investment in the continent and expand its already burgeoning economy.

The deals included a US$230 million investment by state owned Chinese company Sinosteel in a ferrochrome mine and smelter project with South African company Samancor, which is intended to increase ferrochrome production in the southern African nation.

They also included a commitment by China’s Citic to build a US$938 million aluminium smelter in Egypt.

But despite being well intentioned developments at last week’s summit have veiled concerns in several African countries regarding China’s growing influence, which many believe has been at the expense of local companies.

Although Chinese firms and business operators have brought in much needed foreign investment into Africa, it is the way in which they have crowded out local businesses that have a number of African states worried.

In several countries including Zimbabwe, South Africa and Kenya Chinese companies and small business operators have been accused of “dumping” cheaply manufactured and poor quality products onto local markets.

The People’s Republic of China denies the charges.

The result has been a slump in sales of locally produced goods.

In his speech last Sunday, Mbeki hinted at the unfair business practices that indigenous business organisations have decried, urging China to “strive for a fair and equitable global trading system that is characterised by transparency, good corporate governance, predictability and poverty alleviation and eradication”.

“May we use this forum as a stepping stone towards transforming our continental relationship with China, based on a shared vision… of our developmental challenges and the advancement of the Nepad (New Partnership for Africa’s Development) objectives,” Mbeki said.

As part of the development stance, China has pledged to play a bigger role in Africa’s development.

Chinese President Hu Jintao said the country planned to double aid to Africa in the next three years, by removing tariffs on some of its exports and expanding credit lines in order to “strengthen economic and political ties”.

China’s Foreign Affairs minister, Li Zhaoxing, said the country was eager to participate in the process towards Africa’s development.

“We want to open new avenues for investments for mutual benefits. We want to contribute to the economic development of African countries,” Li said.

According to Mbeki China’s investment in Africa has already reaped benefits in the human resource development, debt relief, and investment. He said for its part, the continent would assist China’s growth through the supply of raw materials and other products.

China’s moves to invest in Africa have largely been inspired by the country’s extensive economic growth. The country is the world’s fastest growing economy, having grown by an estimated 9 percent in 2005.

As it seeks to meet the demands of its growth, the Chinese government has sought to increase supplies of raw materials such as oil, iron ore and other mineral resources.

Due to its burgeoning industry, the country has targeted Africa’s oil and steel producing countries, with contracts for oil in Nigeria, Angloa and Libya, while demand for iron ore and aluminium has been met through contracts in Egypt and South Africa.

World Bank statistics show that China is the world’s biggest manufacturer of steel and aluminium, and is currently the largest importer of iron ore.

November 2006
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