China aims to rewrite perceptions on Africa investment push-envoy
Wed Jul 18, 2012 10:19am GMT
* Chinese envoy to Africa says focus on partnership for growth
* African nations can follow Chinese model on development-envoy
By Michael Martina
BEIJING, July 18 (Reuters) - Beijing is eager to rewrite negative
perceptions of its growing ties with Africa at a summit this week, citing
expanding private investment and a push to shift low-end manufacturing to
the continent long seen as a commodities and energy cache for China.
Chinese state-owned firms in Africa face criticism for using imported labour
to build government-financed projects like roads and hospitals, while
pumping out resources and leaving little for local economies, an image
Beijing wants to change at the Forum on China-Africa Cooperation beginning
on Thursday.
"As China's economy transitions, shifting labour intensive industry to
regions outside of China offers production opportunities," Zhong Jianhua,
China's special envoy to Africa, told Reuters this week.
"African countries should seize this opportunity," he added. "They can step
into a track that China has taken in the past to develop their own
industry."
Chinese President Hu Jintao will speak at the summit's opening day and is
expected to announce a new set of loans for the continent. At the last
meeting held three years ago, China pledged $10 billion.
FRONTIER MARKETS
China's economic trade with Africa reached $166.3 billion in 2011, according
to Chinese statistics. In the past decade, African exports to China rose to
$93.2 billion from $5.6 billion.
Industrial and Commercial Bank of China, for example, the world's most
valuable lender, has invested more than $7 billion in various projects
across the continent.
The China Non-Ferrous Metals Mining Corporation however became the maligned
face of Chinese investment during a bitter election campaign last year in
Zambia, where it owns several lucrative copper deposits.
Along with the state-run firms, a growing number of smaller private Chinese
businesses are looking to frontier markets like Africa to sell consumer
goods and join in on promising growth prospects.
"A lot of African growth is no longer just commodity growth. It is growth in
telecoms, services, and consumer products," said Diana Layfield, Standard
Chartered Bank's CEO for Africa.
An official with Africa's multilateral lender however said concern remains
that countries will just shovel resources out and not look to diversify.
"They (African nations) are thinking about the immediate resources that
could get them billions" of dollars, said Anthony Nyong, manager of the
compliance and safeguard division at the African Development Bank. "We need
to gradually work at building the capacities of African countries to see how
they can negotiate good deals and know what is important for them."
China has also found it difficult to navigate tricky political and conflict
problems in Africa, particularly as the main oil investor in both Sudan and
South Sudan.
MAJOR HURDLES
China still faces a struggle to encourage companies to invest and shift
production to Africa even if labour costs are lower. Smaller firms in
particular are overwhelmed by the world's second largest continent with more
than 50 U.N. member states that have diverse languages, cultures and income
levels.
"The idea that it will happen quickly, except in selected circumstances, is
probably far-fetched," said Layfield, with Standard Chartered, adding that
one factor accelerating some trade now is a sharp drop in container
transport costs following the 2008 financial crisis.
Jeremy Stevens, a Beijing-based China economist at Standard Bank, said even
if Chinese firms move to Africa they face competition from other low-cost
producers such as India, Bangladesh, Vietnam, Mexico and Turkey -- and
inland China.
"It is more costly to make something in Africa because of bottlenecks in
infrastructure, human capital and access to finance, which have been
exacerbated by poor governance and mismanagement," he said. (Additional
reporting by Ben Blanchard; Editing by Ed Lane)
C Thomson Reuters 2012 All rights reserved
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Received on Wed Jul 18 2012 - 17:30:31 EDT
