Thursday, April 24, 2008

China and Africa

an excerpt from the council of foreign relations site about China's quest for African oil:

Trade and economic activity. Sino-African trade grew by 700 percent during the 1990s, and the 2000 China-Africa Forum in Beijing set off a new era of trade cooperation and investment that is producing notable results. From 2002 to 2003, trade between China and Africa doubled to $18.5 billion, and then nearly doubled again in the first ten months of 2005, jumping 39 percent to $32.17 billion. Most of the growth was due to increased Chinese imports of oil from Sudan and other African nations. China's foreign direct investment in Africa represented $900 million of the continent's $15 billion total in 2004. China is now the continent's third most-important trading partner, behind the United States and France, and ahead of Britain.

Experts say Chinese companies see Africa as both an excellent market for their low-cost consumer goods, and a burgeoning economic opportunity as more countries privatize their industries and open their economies to foreign investment. Some textile manufacturers, for example, are reportedly investing in African factories as a way to get around U.S. and European quotas on Chinese textiles. "China is very pragmatic about this," Kang says. "It's cutting deals with governments all over the world."
How is China building its relationship with Africa?

With integrated packages of aid that lead to business opportunities and market share for Chinese companies. "One of the interesting things about doing business with China these days is that it's a full-on supplier," Economy says. "They will come in and provide everything that surrounds the development of the country." In Angola, which currently exports 25 percent of its oil production to China, Beijing has secured a major stake in future oil production with a $2 billion package of loans and aid that includes funds for Chinese companies to build railroads, schools, roads, hospitals, bridges, and offices; lay a fiber-optic network; and train Angolan telecommunications workers. Economy says China is following a very traditional path established by Europe, Japan, and the United States: offering poor countries comprehensive and exploitative trade deals combined with aid. For example, Japan after World War II paid $5 billion in war reparations to South Korea, Taiwan, and China in the form of export credits for Japanese goods and loans to be used for Japanese construction and other services, Kang says.

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