Colonization hasn’t occurred in Africa since the Europeans ravaged the continent in the late 19th century. Recently, China’s new wealth has them also looking to Africa for investment in their rich natural resources. So far, China has been investing in infrastructure in the new country of South Sudan, which is filled with untapped oil. The idea of Chinese creating new business in Africa is gradually spreading The Asia Times reports:
“Chinese businessmen fanning across Africa these days need a thick skin. They are all too often accused of being exploiters, harsh employers and the ultimate insult – neo-colonialists interested only in stripping the continent of its mineral wealth.
But is this fair?
To be sure, much of what brings Chinese investors to Africa is below the ground, rather than above it. This is far from the entire story, however. Increasingly, money is beginning to find its way into everything from construction to agriculture to heavy engineering.
This month, for instance, Chinese energy firm Sinopec teamed up with South African counterpart PetroSA to explore building a US$11 billion oil refinery on the country’s west coast. Refineries are notoriously unprofitable, with razor-thin margins. Since South Africa has no significant oil or proven gas reserves itself, the proposed plant would depend on imports, and would have to serve the local market to be viable.
The plant will therefore serve the South African market and not be used to process exports to China. This is only the latest of such investments that demonstrate a willingness by Chinese investors to put down roots and infrastructure in Africa. It also shows that China’s dragon safari is about more than just sourcing commodities for export.
In 2007, the Industrial and Commercial Bank of China (ICBC) paid $5.5 billion for a 20% stake in Standard Bank of South Africa, the continent’s largest lender. The deal caused much breast-beating in South Africa at the time, particularly as few in this part of the world had even heard of ICBC.
Today, though, the partnership has matured into one of the most successful banking alliances in Africa. Standard has more than 500 branches across 17 countries in the continent, most of which offer easily exchangeable yuan for local currencies. The availability of the Chinese currency greases payments for subcontractors and eases raising loans for businesses where Chinese corporations are involved.
And increasingly they are.
“Agriculture, as well as services such as banking, finance, and insurance, is part of the new sectors where China invests in the continent,” says Daoude Cisse, a research fellow at the Centre for Chinese Studies at Stellenbosch University in South Africa.
Direct investment from China to Africa reached $13 billion in 2011, Cisse says, and total trade for the year was $155 billion. “China has contributed to African economic growth, making some African countries the fastest growing economies in the world.”
China is eager to export not only manufactured goods, but ideas; plans to construct six or seven “African Shenzhens” – a reference to the village-to-megacity special economic zone in southern China – are being discussed with various countries up and down the continent. In Mozambique, one of Africa’s poorest countries, Chinese backers have funded a $26 million industrial park to establish a textile and clothing manufacturing center.”