Chinese Business Interests Grow in SADC
Catherine Sasman
28 March 2011
GROWING Chinese interests in southern Africa are experienced through increased exports to and imports from China, a report suggested.
It stated that China has also assumed a key role as a source of debt relief through concessional loans and "near conditionality-free" financing to governments, export credits, infrastructure assistance and foreign direct investments (FDI).
Chinese FFI flows are also in the textile sector, into agri-processing, financing, power generation, road construction, tourism, and telecommunications.
But, said Dr Bwalya Ngandu, a consultant from Zambia, African exports to China are mostly limited to a small groups of countries and products such as oil and other primary commodities.
Chinese exports to Africa are dominated by manufactures, especially final consumer goods like textiles, furniture, and other household goods.
Ngandu said direct investments are increasingly geared towards mining research and exploitation, some establishment and management of industrial plants, and a booming in infrastructure development in some African countries.
China, he said, now tops FDI inflow into the SADC region, while aid is on the rise, which is predominantly in favour of Chinese businesses and interests.
This, he added, is significant in fragile and post-conflict states like the Democratic Republic of Congo and Angola.
The China-Africa summit in 2006 promised US$3 billion in preferential loans, U$2 billion in export loans, US$5 billion in support for Chinese investments in Africa.
The summit has similarly agreed on principles of cooperation and promised a 'win-win' approach, political equality, mutual respect and confidence, and sincerity, or no conditionality', which resonates well with African states.
China's unprecedented economic boom has repositioned it in the global economy, elevating it as the second largest economy in the world with analysts predicting that it can overtake the economy of the USA within the next 10 years.
A big complaint against "jobless" Chinese investment into Africa, limited technology transfer, and a "crowding out" of large and small local businesses.
Ngandu said complaints against China's role in Africa is that it comes with cheap products, a threat to local industry to both infant and established ones, and a threat to local jobs.
Moreover, he said, Chinese firms "comes" with its own labour force with little or no recruitment of local labour power.
Furthermore, he suggested, there remains an issue of transparency in Chinese contract and business practices in Africa, especially on natural resources.
Ngandu said China's intervention in Africa is a wake up call for traditional development partners.
He suggested that African states need some regulatory or legislative protection.