• diary political and General News Events from Feb 2

investment. Chinese and African firms signed 16 trade and investment deals valued at $1,9bn.
Hu also pledged to extend $5bn in loans and credits to Africa over the next three years -- $3bn in loans and $2bn in preferential credits. It also pledged to establish up to five trade and economic co-operation zones on the continent. The South African government will be seeking to attract this Chinese investment to Coega.
The 16 contracts were signed between 12 Chinese firms and
11 African governments --
Egypt, Ethiopia, SA, Nigeria,
Kenya, Ghana, Zambia,
Uganda, the Seychelles, Lesotho
and Cape Verde.
The main sectors included infrastructure, telecoms and information-technology equipment, insurance, mineral-resource development, finance, and textiles manufacturing.
While the biggest deal signed at the forum in 2006 was for a $938m project awarded to China's state-owned Citic conglomerate to set up an aluminium plant in Egypt, others included:
A $300m highway renovation project in Nigeria;A contract of $30m to build a telephone line in Ghana;A $60m textile business in Sudan;A copper-mining project worth $200m in Zambia;Plans to build a $55m cement factory in Cape Verde; andA $230m ferrochrome mine and smelter project in SA.
The Chinese government announced its intention to liberalise trade with Africa -- increasing from 190 to 440 the number of African exports that qualify for zero-tariff market access. This will hopefully assist in promoting trade exports from Africa to the Chinese market.
As trade levels have increased exponentially in recent years, outward-bound investment from China to Africa is rapidly rising.
China claims to have invested $6,27bn in Africa, primarily by state-owned enterprises in the extractive, telecoms and construction sectors.
Africa accounts for between 15% and 20% of China's external direct investment. This figure is set to rise in the short to medium term.
China has announced its commitment to $8,3bn for infrastructure development in Nigeria, $3bn for port, rail and a mining investment in Gabon, $600m for a hydroelectric dam in Ghana, and has just established a $5bn fund for further investment in Africa.
China's investment focus will remain on energy-endowed economies, primarily in Nigeria, Angola, Sudan and Algeria.
As 2006 and China's Year on Africa ends, there is little doubt that the resonance of the 2006 forum will continue. The targets are ambitious but reflect China's commercial intent toward Africa.
The continent is rapidly becoming China's commercial sphere of influence. The challenge is for African economies to develop their institutions and formulate strategies of engagement vis-a‚-vis China and its state-owned enterprise investors.
In late 2009, the next forum summit will be held in Cairo, Egypt. High economic growth in double-digit figures looks set to continue in the Chinese economy.
China has become the most active investor in Africa and this level of engagement does not look set to taper off. Almost surprisingly for Africans, China's level of confidence in the continent's economy will change the commercial landscape of Africa.
But African governments
and companies lack both a knowledge and understanding
of the drivers of this engagement and its eventual outcomes.
Document AFNWS00020061205e2c5000w4

Economy & Politics

Africa expands China trade --- Businesses adjust to rise in Asian goods as restrictions fall

By Craig Timberg The Washington Post

880 words

5 December 2006

The Wall Street Journal Europe

WSJE

12

English

(Copyright (c) 2006, Dow Jones & Company, Inc.)
KANO, Nigeria -- The pasta factory Umar Sani Marshall's family owns on the outskirts of this ancient city hadn't churned out a single piece of macaroni in more than a year. The other former titans among Kano's once-mighty manufacturers were doing no better, producing mostly cobwebs as the city's markets overflowed with low-cost imports from China.
So last month Mr. Marshall, 30 years old, tall and wiry with rectangular, silver-frame glasses and a goatee, decided to forsake his legacy as scion of one of Nigeria's leading industrial families. He strapped $5,000 to his waist and flew off to Asia in search of a new kind of fortune, built not on making goods but trading them.
By the time he returned 12 days later, Mr. Marshall had started a new business dealing cars and auto parts, as a middleman between Chinese suppliers and Nigerian consumers. Along the way, he said, he found the kinds of profits that long have eluded Kano's manufacturers, and he learned a few lessons about how to work with Chinese businesses instead of competing against them.
"When you go there with the intention of buying socks, you will come back with a jacket and hat" as well, Mr. Marshall said, smiling as he pretended to place a top hat on his head.
His shift to trading from manufacturing mirrors a broader one across Nigeria and much of Africa. A 30-year experiment in building local factory capacity has faltered with declining trade barriers and rising global competition, most powerfully from China. African business leaders increasingly are staking their fortunes on old-fashioned extractive industries, such as oil production needed to fuel Asian industry, while also attempting to profit from the flood of finished goods coming in return.
Although the model stirs memories of the kind of economic relationships once common between European powers and their vassal states here, Africans say the Chinese at least treat them as equals and invest in infrastructure projects key to the continent's future.
At a recent trade summit in Beijing, officials from 48 African nations met with Chinese leaders, who promised to double aid to Africa while offering $5 billion in new loans. Already Chinese firms have built dams, roads, railways, port upgrades, mining facilities and telecommunication systems in Africa.
A Chinese company at the summit announced an $8.3 billion project to build a railway connecting Kano to the port city of Lagos. It will be paid for out of Nigeria's oil revenue, which is burgeoning in part because of rising Chinese demand. Overall, Africa's trade with China rose from $10.6 billon in 2000 to almost $40 billion last year. Projections are that it could reach $100 billion by 2010.
Signs of China's growing prominence on the continent are easy to spot in Kano, a bustling, thousand-year-old city of 3.5 million people that long was a regular stopover for trade flowing through the Sahara, whose sandy southern edge is nearby. Now the city's gaze has shifted to East Asia, with Chinese restaurants spreading across the city, Chinese goods filling shops and a Chinese-owned shoe factory employing more than 2,000 workers, more than any other private employer in northern Nigeria.
A decade ago, the Marshall family's shortcake factory had a similar number of workers and a powerful market position throughout northern Nigeria and into neighboring Cameroon, Niger and beyond. It is now closed, along with the family's pasta factory, victims not so much of competition as of government policies that made it difficult to import durum semolina, a key ingredient, Mr. Marshall said.
Business leaders here say the decline of Kano's manufacturers resulted from an influx of Chinese products as trade restrictions fell. Chinese companies had more modern machinery, more reliable sources of electricity and easier access to capital, said Saidu Dattijo Adhama, owner of a textile factory whose payroll has dropped to 24 workers from 335. The raw cotton produced by Chinese farmers, meanwhile, was stronger and yielded more fabric per pound.
Fifteen years ago, 500 factories hummed with work in Kano. Fewer than 100 remain operational, most at far less than full capacity, according to the city's Chamber of Commerce. Tens of thousands of jobs have been lost. Meanwhile, Kano's Kwari textile market, the biggest in West Africa, has swelled with stall after stall of Chinese fabrics and clothing.
Liti Kulkul, former chairman of the textile traders association here, estimated that a decade ago, 80% of the fabric sold at Kwari was made in Nigeria, compared with 5% now. Asian products, mostly from China, account for the rest. "We have taken this path of neocolonialism," Mr. Kulkul said. "They have virtually crippled all aspects of our economy."
Others see China not as the ruin of Kano business but as a transformative force pushing the city back to its roots in trading. Chinese business "revived the economy," said Ahmed Rabiu, deputy president of the Chamber of Commerce. "Trading improved. Manufacturing went down. That's it."
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Document WSJE000020061205e2c500006

Economy & Politics

Africa finds trade ties to China lucrative --- Businesses adjust to rise in Asian goods as restrictions fall

By Craig Timberg The Washington Post

1,278 words

5 December 2006

The Wall Street Journal Asia

AWSJ

11

English

(c) 2006 Dow Jones & Company, Inc. To see the edition in which this article appeared, click here http://awsj.com.hk/factiva-ns
Kano, Nigeria -- THE PASTA FACTORY that Umar Sani Marshall's family owns on the outskirts of this ancient city had not churned out so much as a single piece of macaroni in more than a year. The other former titans among Kano's once-mighty manufacturers were doing no better, producing mostly cobwebs as the city's markets overflowed with cheap imports from China.
So last month Mr. Marshall, 30 years old, tall and wiry with rectangular, silver-framed glasses and a goatee, decided to forsake his legacy as scion of one of Nigeria's leading industrial families. He strapped $5,000 to his waist and flew off to Asia in search of a new kind of fortune, built not on making goods but trading them.
By the time he returned 12 days later, Mr. Marshall had started a new business dealing cars and auto parts, as a middleman between Chinese suppliers and Nigerian consumers. Along the way, he said, he found the kinds of profits that long have eluded Kano's manufacturers, and he learned a few lessons about how to work with Chinese businesses instead of competing against them.
"When you go there with the intention of buying socks, you will come back with a jacket and hat" as well, Mr. Marshall said, smiling as he pretended to place a top hat on his head.
His shift, from manufacturing to trading, mirrors a broader one across Nigeria and much of Africa. A 30-year experiment in building local factory capacity has faltered with declining trade barriers and rising global competition, most powerfully from China. African business leaders increasingly are staking their fortunes on old-fashioned extractive industries, such as oil production needed to fuel Asian industry, while also attempting to profit from the flood of finished goods coming in return.
Although the model stirs memories of the kind of economic relationships once common between European powers and their vassal states here, Africans say the Chinese at least treat them as equals and invest in infrastructure projects key to the continent's future.
At a recent trade summit in Beijing, officials from 48 African nations met with Chinese leaders, who promised to double aid to Africa while offering $5 billion in new loans. Already Chinese firms have built dams, roads, railways, port upgrades, mining facilities and telecommunication systems in Africa.
A Chinese company at the summit announced an $8.3 billion project to build a railway connecting Kano to the port city of Lagos. It will be paid for out of Nigeria's oil revenue, which is burgeoning in part because of rising Chinese demand. Overall, Africa's trade with China rose from $10.6 billon in 2000 to almost $40 billion last year. Projections are that it could reach $100 billion by 2010.
Signs of China's growing prominence on the continent are easy to spot in Kano, a bustling, thousand-year-old city of 3.5 million people that long was a regular stopover for trade flowing through the Sahara, whose sandy southern edge is nearby. Now the city's gaze has shifted to East Asia, with Chinese restaurants spreading across the city, Chinese goods filling shops and a Chinese-owned shoe factory employing more than 2,000 workers, more than any other private employer in northern Nigeria.
A decade ago, the Marshall family's shortcake factory had a similar number of workers and a powerful market position throughout northern Nigeria and into neighboring Cameroon, Niger and beyond. It is now closed, along with the family's pasta factory, victims not so much of competition as of government policies that made it difficult to import durum semolina, a key ingredient, Mr. Marshall said.
Business leaders here say the decline of Kano's manufacturers resulted from an influx of Chinese products as trade restrictions fell. Chinese companies had more modern machinery, more reliable sources of electricity and easier access to capital, said Saidu Dattijo Adhama, owner of a textile factory whose payroll has dropped to 24 workers from 335. The raw cotton produced by Chinese farmers, meanwhile, was stronger and yielded more fabric per pound.
"Without a little protection, if the Chinese bring their finished cotton to Nigeria, you cannot compete with them," Mr. Adhama said. "The gap is so wide that if you just allow them to come in, you are killing Nigerian companies."
Fifteen years ago, 500 factories hummed with work in Kano, but fewer than 100 remain operational today, most at far less than full capacity, according to the city's Chamber of Commerce. Tens of thousands of jobs have been lost. Meanwhile, Kano's Kwari textile market, the biggest in West Africa, has swelled with stall after stall of Chinese fabrics and clothing.
Liti Kulkul, former chairman of the textile traders association here, estimated that a decade ago, 80% of the fabric sold at Kwari was made in Nigeria, compared with 5% now. Asian products, mostly from China, make up the rest.
"We have taken this path of neocolonialism," Mr. Kulkul said. "They have virtually crippled all aspects of our economy."
Yet others see China not as the ruin of Kano business but as a transformative force pushing the city back to its roots in trading. Beyond Mr. Kulkul's stall, which specialized in the colorful Nigerian prints long produced by local textile mills, the market buzzed with dealmaking.
Rows of shops overflowed with Asian-made air conditioners, televisions and DVD players. Beyond them, Kano's noisy, smoggy streets were jammed from curb to curb with Chinese-made motorcycle taxis that largely have replaced the aging stock of Italian-made Vespas, which cost three times more.
Chinese business "revived the economy," said Ahmed Rabiu, deputy president of the Chamber of Commerce. "Trading improved. Manufacturing went down. That's it."
Not everyone in Kano applauds the change. The motorcycle taxi drivers earn less than factory workers once did. And the growth in trade hasn't absorbed most of the workers laid off in the past decade. There are more beggars and other visible signs of poverty than ever before, residents say.
"We are very bitter that the factory closed down," said Ibrahim Garba, 50, who worked for the Marshall family's pasta factory for 25 years, earning enough to support his two wives, six children and six grandchildren.
Now, instead of going to the factory, where he operated a generator, he farms five dusty acres of corn, beans and millet, most of which he uses to feed his family, not to earn money. His income has plunged from about $50 to about $15 a month, Mr. Garba said.
But Mr. Marshall, with the education, capital and savvy to adjust to Kano's shifting business climate, isn't complaining.
He met with Chinese businessmen in Singapore and quickly spent the $5,000 he brought and $15,000 more he had kept in reserve in Nigeria. In return, he got four used Honda cars and 1 1/2 shipping containers full of car parts. Used automotive products here are known as "Belgium" for the traditional source of many of them, but now most Belgium comes from Asia.
Mr. Marshall calculates that he can sell the cars and auto parts for $34,000, a profit of 70% on his investment.
"I'm going back next month, inshallah!" Mr. Marshall said, using a common phrase in the Muslim world that means "God willing." "More opportunity is coming."
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Document AWSJ000020061204e2c50001k

Strategy for National Economic Revolution
by Chuma Ifedi

1,280 words

4 December 2006

06:04 PM

All Africa

AFNWS

English

(c) 2006 AllAfrica, All Rights Reserved
Lagos, Dec 04, 2006 (Daily Champion/All Africa Global Media via COMTEX) --
Apart from the external debt relief from the Paris Club achieved at prohibitive costs, telecommunication explosion which is still exorbitant compared with other sister countries, anti-corruption crusade without positive examples at the leadership level and the railway reconstruction programme for which no time frame has been given, national economic development in the last seven years has not been impressive.
The economic reforms have been controversial, with some of them questionable and others patently counter-productive. Nigerians are still wondering what indeed the reforms have done to improve the quality of their lives.
Alhaji Atiku Abubakar, Vice President, at his election campaign on November 25, 2006 lamented that the economic reforms have made a few persons rich and the majority of the population extremely poor. The large number of workers retrenched in recent months have swollen the population of unemployed and the gangs of idle manpower roaming the streets. Some of them will likely migrate to the crime sector sooner than later. Besides, the reforms have transferred our strategic installation to questionable hands including unreliable expatriates and made us vulnerable in case of war. Rather than alleviating poverty, the reforms have indeed escalated penury especially in the rural areas. More citizens are eating from the dustbins.
The new government coming in May 2007 must chart a new course to save us from the prevailing abject penury and privation. The new leadership should show us by their own examples that patriotism and dedication are the prime foundations of national development. We look forward to a selfless leadership culture reminiscent of great people like Aminu Kano, Dr Michael Okpara, Julius Nyerere of Tanzania, Nelson Mandela, Mahatma Ghandi and Pandit Nehru as well as Kwame Nkrumah of Ghana. Selfless leadership will generate the fertile mobilization of the Nigerian people and boost trust for those in government. At present, the citizenry have practically no confidence in those at the helms of power who are seen generally as looters of our commonwealth. How can Nigerians repose confidence in leaders who regard governance as their vineyard to lace their pockets with public funds with which they build monumental farms, businesses and private universities?
The new government should evolve pragmatic annual budgets targeted at lifting the poor masses from their misery. It is an open secret that most of the annual budgets issued since May 1999 have not been implemented. There are no periodical reports on annual budgets. They are rituals performed every January and nothing is done to indicate how far the budgets are implemented. The presidency at the national level has been selective in deciding which aspects of the projects would be executed. This arbitrary method has bastardized the official budgets since the current democratic administration. Military regimes were more consistent in budget implementation.
The new government must accord electricity generation and distribution absolute priority in order to accelerate industrial development. Billions of naira purportedly invested in the power sector have not yielded visible improvement. In fact, there was more electricity supply in 1998 than today. Nothing has again been heard about the Mambilla Hydro-power plant after the formal approval of its commencement on October 19, 2005 by the federal executive council. Nigerians want accountability for the N182 billion spent on power infrastructure since 1999. The president of the World Bank recently warned that "Nigeria will not see an end to poverty when 90 per cent of businesses in the country rely on backyard generators".
One is astonished that Nigeria, the sixth largest producer of crude oil, imports refined petroleum. The factors behind this anomaly have been attributed to mismanagement, corruption and the proclivity of those on the corridors of power for self enrichment. What has happened to the scheme to start new refineries in Nigeria? Nigerians are waiting to know the outcome of the negotiations with the Chinese on the take over of the Port Harcourt and Kaduna refineries.
The new government arriving in May 2007 should be wary of the West's dictates to Nigerians the model of economic development they need. This is the fundamental failure of the current federal government. In the effort to get external debt relief, President Olusegun Obasanjo surrendered our rights for home-grown national development to the World Bank and the International Monetary Fund (IMF). Whoever thinks that the National Economic Empowerment and Development Strategy (NEEDS) is original must be naive. It is entirely a framework designed by the World Bank and its agencies. Ironically, while Nigerians are suffocating from the crippling results of the ongoing reforms, the World Bank is full of praise for the presidency. Nigerians wear the shoes and know where they pinch.
The new government must concentrate development on the rural areas where majority of Nigerians live and where poverty is more widespread. Chief Obafemi Awolowo once suggested that rural areas should be accorded prime attention for about 10 years as a cardinal measure of alleviating poverty and boosting the rural populace. Nigerian countryside is decaying, causing unprecedented migration to the urban centres. We should resuscitate the "Better life programme for rural women" as a veritable modality for rural transformation.
The new government should give greater attention to domestic investors contrary to the illusive ongoing crusade for foreign direct investors. Charity must start from home. Foreign investors cannot embrace Nigeria because of our deplorable infrastructure, personal insecurity and rising political instability. Domestic investors are willing to make sacrifices and endure inconveniences to accelerate national development. Towards this objective, affordable loans should be provided and industrial parks and centres established to motivate local entrepreneurs. It is sad that interest rate in Nigeria is one of the highest in the world.
The new government should review the national food policy in order to reinforce agricultural production. We must revisit the mass mobilisation for food production and accelerated food production programme promoted by the last national rolling plan. All available facilities and manpower should be deployed to farming. Large scale farms should be encouraged as in Kwara State. Too much emphasis on cassava is myopic. The construction of cost-effective water storage structures and irrigation infrastructure, establishment of breeding stock multiplication farms and greater attention to the provision of fish inputs to boost fishery will expedite agricultural development. So also, more agricultural credit and insurance, promoting on-farm storage and further development of the National Centre for Agricultural Mechanisation. Food security deserves all the attention it can get. A soldier marches on his stomach. The review of the Land Use Act is overdue.
The Nigerian army should be production-oriented in peace time to maximize the Gross Domestic Product as in China and Israel. We need a peoples army devoted to project reconstruction instead of an idle army in barracks and sometimes joining armed robbery gangs for lack of meaningful occupation. The achievements of the army in civil assignments in China and Israel have become proverbial. Nigeria should take the cue.
The new government should mobilize women for productive endeavour. Suitable incentives like the former People's Bank should be established to enable women engage in petty trading and miscellaneous skilled work. Nigeria must not allow anachronistic traditions and religions to relegate women to the background. The vogue in the Northern states by which women lay idle at home is retrogressive in a similar vein,bodies should be motivated to establish economic ventures and training institutions. They should mobilize members to acquire technical skills and professional vocations.
The new government should stop the creation of new universities. Rather than producing half-baked graduates, more vocational institutions should be established to train efficient technicians and artisans.
Document AFNWS00020061205e2c400008

A Section

From Competitors to Trading Partners; Africans Adjust As Business Ties With China Grow

Craig Timberg

Washington Post Foreign Service

1,252 words

3 December 2006

The Washington Post

WP

FINAL

A23

English

Copyright 2006, The Washington Post Co. All Rights Reserved
The pasta factory that Umar Sani Marshall's family owns on the outskirts of this ancient city had not churned out so much as a single piece of macaroni in more than a year. The other former titans among Kano's once-mighty manufacturers were doing no better, producing mostly cobwebs as the city's markets overflowed with cheap imports from China.
So last month Marshall, 30, tall and wiry with rectangular, silver-framed glasses and a goatee, decided to forsake his legacy as scion of one of Nigeria's leading industrial families. He strapped $5,000 to his waist and flew off to Asia in search of a new kind of fortune, built not on making goods but trading them.
By the time he returned 12 days later, Marshall had started a new business dealing cars and auto parts, as a middleman between Chinese suppliers and Nigerian consumers. Along the way, he said, he found the kinds of profits that long have eluded Kano's manufacturers, and he learned a few lessons about how to work with Chinese businesses instead of competing against them.
"When you go there with the intention of buying socks, you will come back with a jacket and hat" as well, Marshall said, smiling as he pretended to place a top hat on his head.
His shift, from manufacturing to trading, mirrors a broader one across Nigeria and much of Africa. A 30-year experiment in building local factory capacity has faltered with declining trade barriers and rising global competition, most powerfully from China. African business leaders increasingly are staking their fortunes on old-fashioned extractive industries, such as oil production needed to fuel Asian industry, while also attempting to profit from the flood of finished goods coming in return.
Although the model stirs memories of the kind of economic relationships once common between European powers and their vassal states here, Africans say the Chinese at least treat them as equals and invest in infrastructure projects key to the continent's future.
At a recent trade summit in Beijing, officials from 48 African nations met with Chinese leaders, who promised to double aid to Africa while offering $5 billion in new loans. Already Chinese firms have built dams, roads, railways, port upgrades, mining facilities and telecommunication systems in Africa.
A Chinese company at the summit announced an $8.3 billion project to build a railway connecting Kano to the port city of Lagos. It will be paid for out of Nigeria's oil revenue, which is burgeoning in part because of rising Chinese demand. Overall, Africa's trade with China rose from $10.6 billon in 2000 to almost $40 billion last year. Projections are that it could reach $100 billion by 2010.
Signs of China's growing prominence on the continent are easy to spot in Kano, a bustling, thousand-year-old city of 3.5 million people that long was a regular stopover for trade flowing through the Sahara, whose sandy southern edge is nearby. Now the city's gaze has shifted to the Far East, with Chinese restaurants spreading across the city, Chinese goods filling shops and a Chinese-owned shoe factory employing more than 2,000 workers, more than any other private employer in northern Nigeria.
A decade ago, the Marshall family's shortcake factory had a similar number of workers and a powerful market position throughout northern Nigeria and into neighboring Cameroon, Niger and beyond. It is now closed, along with the family's pasta factory, victims not so much of competition as of government policies that made it difficult to import durum semolina, a key ingredient, Marshall said.
Business leaders here say the decline of Kano's manufacturers resulted from an influx of Chinese products as trade restrictions fell. Chinese companies had more modern machinery, more reliable sources of electricity and easier access to capital, said Saidu Dattijo Adhama, owner of a textile factory whose payroll has dropped from 335 workers to 24. The raw cotton produced by Chinese farmers, meanwhile, was stronger and yielded more fabric per pound.
"Without a little protection, if the Chinese bring their finished cotton to Nigeria, you cannot compete with them," Adhama said. "The gap is so wide that if you just allow them to come in, you are killing Nigerian companies."
Fifteen years ago, 500 factories hummed with work in Kano, but fewer than 100 remain operational today, most at far less than full capacity, according to the city's Chamber of Commerce. Tens of thousands of jobs have been lost. Meanwhile, Kano's Kwari textile market, the biggest in West Africa, has swelled with stall after stall of Chinese fabrics and clothing.
Liti Kulkul, former chairman of the textile traders association here, estimated that a decade ago, 80 percent of the fabric sold at Kwari was made in Nigeria, compared with 5 percent now. Asian products, mostly from China, make up the rest.
"We have taken this path of neocolonialism," Kulkul said. "They have virtually crippled all aspects of our economy."
Yet others see China not as the ruin of Kano business but as a transformative force pushing the city back to its roots in trading. Beyond Kulkul's stall, which specialized in the colorful Nigerian prints long produced by local textile mills, the market buzzed with dealmaking.
Rows of shops overflowed with Asian-made air conditioners, televisions and DVD players. Beyond them, Kano's noisy, smoggy streets were jammed from curb to curb with Chinese-made motorcycle taxis that largely have replaced the aging stock of Italian-made Vespas, which cost three times more.
Chinese business "revived the economy," said Ahmed Rabiu, deputy president of the Chamber of Commerce. "Trading improved. Manufacturing went down. That's it."
Not everyone in Kano applauds the change. The motorcycle taxi drivers earn less than factory workers once did. And the growth in trade has not absorbed most of the workers laid off in the past decade. There are more beggars and other visible signs of poverty than ever before, residents say.
"We are very bitter that the factory closed down," said Ibrahim Garba, 50, who worked for the Marshall family's pasta factory for 25 years, earning enough to support his two wives, six children and six grandchildren.
Now, instead of going to the factory, where he operated a generator, he farms five dusty acres of corn, beans and millet, most of which he uses to feed his family, not to earn money. His income has plunged from about $50 to about $15 a month, Garba said.
But Marshall, with the education, capital and savvy to adjust to Kano's shifting business climate, is not complaining.
He met with Chinese businessmen in Singapore and quickly spent the $5,000 he brought and $15,000 more he had kept in reserve in Nigeria. In return, he got four used Honda cars and 11/2 shipping containers full of car parts. Used automotive products here are known as "Belgium" for the traditional source of many of them, but now most Belgium comes from Asia.
Marshall calculates that he can sell the cars and auto parts for $34,000, a profit of 70 percent on his investment.
"I'm going back next month, inshallah!" Marshall said, using a common phrase in the Muslim world that means "God willing." "More opportunity is coming."
WP20061203NIGERIA3
Document WP00000020061203e2c30004j

Features

Conference success in Rome and Beijing

1,051 words

1 December 2006

Trade Finance

TRAFIN

English

Copyright 2006 Euromoney Institutional Investor PLC
Trade and Export Finance in China – Beijing
Both foreign and domestic banks, in addition to traders, exporters, law firms, government agencies and insurers, came together to continue the success of Trade Finance and Euromoney Seminars' Asian events at the 2nd Annual Trade and Export Finance in China Conference at the Crowne Plaza Beijing on 29-30 November. Over 160 attended the two day event.
The conference, sponsored by Standard Chartered Bank, was opened by chairman Willem Klaassens, managing director, head, commodity corporates, Greater China and Japan and began with a panel discussion on the positioning of foreign banks in Chinese trade and export finance. Featuring bankers from across the spectrum of trade banking, the panel was moderated by Godwin Chang, regional head of export finance Asia at Société Générale. Despite falling pricing, foreign banks continue to have great expectations, and all are confident of their ability to differentiate themselves from their competitors. Asif Raza, head of trade, Asia-Pacific at JPMorgan, also highlighted the importance of cooperating and collaborating with domestic Chinese banks to the advantage of all parties with the intention of working out how best to leverage each institution's individual advantages. Also present on the panel were Audrey Yu, regional head of export finance, Asia, at Citigroup; Frank Wu, regional head of commodity corporates, China, at Standard Chartered; Julia Wu, global transaction banking head, China, at Deutsche Bank; and Maaike Steinebach, regional head, Asia, global commodities group at Fortis Bank in Shanghai.
Following on from the first panel discussion, Zaiping Yang, deputy director general, China Banking Regulatory Commission, spoke on the potential for banks to build up a successful factoring business in China (Trade Finance, November 2006) to achieve deal levels akin to the rest of the world.
The second panel of the day discussed how domestic banks can position themselves to finance trade flows in the new 'international' China. Representatives of Shenzhen Development Bank, Bank of China and China Construction Bank spoke on how each of their institutions was utilizing their network and knowledge to work with the rest of the world. They are equally as confident of the China market as their foreign counterparts.
The afternoon session of day one featured presentations on working with ECAs from GE and Alcatel Asia Pacific, a look at the role of China's ECAs the country's economic development including input from China Exim, George Liu, head of export finance at Industrial and Commercial Bank of China (ICBC), and Sumanta Panigrahi, director of export and agency finance at Citigroup. The day was rounded off with a presentation on satisfying China's insatiable demand for energy by Standard Chartered, and a well attended cocktail reception sponsored by Citigroup.
Day two was chaired by Standard Chartered's Ong Tee Chong, head of structured trade finance, South Asia, and began with a speech from Jiang Tao, general manager of the banking department at ICBC, on their previous export finance work and the outlook for the future. Lihong Xao from the State Administration for Foreign Exchange (SAFE) presented on the ways in which SAFE is working to make trade easier within China from a technological, physical and regulatory point of view and what can be done about the trade imbalance.
Further sessions included the use of trade credit and investment insurance, insights into the flows of trade between China and North and South America, and a look at the obstacles and opportunities in the burgeoning field of Chinese metals and mining, including the importance of supply chain finance and metals price risk management.
Standard Chartered acted as lead sponsor, Citigroup as cocktail sponsor, ICBC as a panel sponsor, and PCH China Solutions, a specialist in supply chain management and sourcing solutions from China for the electronics industry, exhibited in the networking area.
Global Export Finance Conference – Rome
There were a total of 300 people attending the Trade Finance magazine and Euromoney Seminars JV Global Export Finance Conference in Rome on 8-10 November. This includes the people attending the Italian Trade & Export Briefing day on 8 November.
The event was chaired by bankers from the lead sponsors – BBVA and Citigroup. David Albagli, deputy general manager of BBVA Italy chaired day one, and Valentino Gallo, managing director, export and agency finance, Americas, Citigroup, chaired day two. Gianluca Bravin, managing director, head of business development at Sace, chaired the Italian briefing day.
Key presentations took place in the main forum, and day one was later split into two streams covering various specialized industry sessions. Panel sessions included: Assessing the modern ECA; The future of export finance; The CIS, Russia and Central Asia; Telecoms; Central Europe; Shipping; Export finance in Africa; Latin America. Individual presentations included: Local cost finance; Market demand for metals; Export finance and infrastructure; Energy sector in the Gulf; Exploring South-South trade; Sovereign risk debate; Basel 2; Foreign direct investment; Multilateral agencies in Africa; Project finance in emerging markets; and Environmental risk.
The event was sponsored by BBVA and Citigroup – acting as co-lead sponsors. BNP Paribas was the 'icebreaker' cocktail sponsor. ABN Amro was the lunch sponsor. Sace was the cocktail sponsor. Other sponsors included Calyon, Norton Rose, Société Générale, Sovereign and Zurich.
A total of 40 countries were represented at the event, and from every continent. The event attracted delegates and speakers from most of the OECD countries, and also from a range of emerging/emerged markets – including Brazil, India, China, Russia, South Africa, Pakistan, Egypt, Tunisia, Kenya, Nigeria, Mexico, Turkey and Ukraine, to name a few.
Of the delegates, some 65 were corporates – producers, manufacturers, or borrowers of some description; 115 were commercial bankers; 43 were from export credit agencies; 22 were from private insurance companies; 18 were from development banks/MFIs/ministries of finance/regulatory bodies; 19 were from law firms; and the rest from advisery companies, mezzanine finance companies, and other firms. n
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Document TRAFIN0020061227e2c10000y
The Hungry dragon and the dark continent: as China's economy grows, so too does its need for energy and resources. In order to fill those needs, the country is quietly signing agreements with many poor African nations--in the process fundamentally altering the patterns of global trade and realigning political allegiances.(SPECIAL REPORT: Geographical dossier)
Furnis, Charlie

4,292 words

1 December 2006

Geographical Magazine

GEOM

53

ISSN: 0016-741X; Volume 78; Issue 12

English

Copyright 2006 Gale Group Inc. All rights reserved.
Jacob Lukaka is optimistic about the future. When he graduates from the University of Nairobi later this year, the 23-year-old Kenyan student will start work for a travel company. Ordinarily, quite a few of his fellow countrymen would have been qualified to do this job; however, in this case, Lukaka is one of only a handful who have the requisite abilities. The tour operator in question caters for Chinese tourists, and he is one of the few Mandarin-speaking Kenyans.
Lukaka knows what a great opportunity he has now. "China is growing very quickly," he says. "It's now a driving force in the world, both economically and politically." And he's keen to use this to his advantage. "I hope I have the chance to get a masters degree in China, majoring in international relations."
Lukaka is one of the first 18 graduates of the university's Confucius Institute for Chinese Studies, which was set up late last year by the governments of China and Kenya to promote cultural exchange between the two countries. With similar departments opening in Zimbabwe and South Africa, the institute is the manifestation of the growing spirit of cooperation between China and Africa.
Indeed, since Beijing hailed a new era of South-South cooperation in 2000, the Chinese have been making their presence felt in Africa. Trade has grown by 400 per cent in four years. In boardrooms all over the continent, Chinese executives are striking billion-pound deals for precious raw materials, while in markets and trade centres, Chinese businessmen are selling everything from clothes, shoes and handbags to mattresses, wardrobes and three-piece suites.
At the same time, construction firms are changing the face of the continent, building everything from roads, bridges and railways to shopping malls, casinos and golf courses. And in schools and hospitals, Chinese professionals are working alongside their African counterparts in an effort to share knowledge and experience.
While African leaders have been rolling out the red carpet for their new friends from the East, the media has reported warnings that the flood of cheap Chinese imports is destroying local industries and that Beijing's courting of rogue regimes is perpetuating corruption and human rights abuses. However, there is another side to the story, the impact of which looks set to affect us all.
The fact is that China's economic expansion into Africa is triggering fundamental changes in the patterns of global trade, turning on its head accepted wisdom concerning international development and realigning political allegiances. And few people seem to have noticed. The implications can't be underestimated--not only upon trade, aid and diplomacy among developing nations, but on the economics, politics and security of the world as a whole.
Getting resourceful
In January, Beijing announced that 2006 was to be China's Year of Africa. And so it proved to be. After publishing its official African Policy, the Chinese government visited 19 African countries in the first six months of the year, signing more than 100 bilateral agreements covering politics, economics, trade, infrastructure, culture, education and science and technology. In August, it resumed diplomatic relations with Chad after a nine-year hiatus sparked when the latter switched its allegiance to Taiwan. And, as Geographical went to press, representatives of 47 African nations were gathering in Beijing for the third ministerial conference of the Forum on China-Africa Cooperation (FOCAC).
These diplomatic moves reflect the rapid growth of economic ties between China and Africa. Since the first FOCAC conference in 2000, the combined value of imports and exports has risen from US$10.4billion (5.6billion [pounds sterling]) in 2001 to almost US$40billion in 2005. China is now Africa's third largest trading partner behind the USA and France, and analysts predict that levels of trade will double to US$80billion in the next two years.
The raw materials needed to fuel China's rapid industrialisation account for a large proportion of Sino-African trade: copper from Zambia, cobalt from the Democratic Republic of Congo (DRC), manganese from Gabon, iron ore from South Africa and diamonds from Sierra Leone, as well as timber from Equatorial Guinea, Congo-Brazzaville and Cameroon, and cotton from Burkina Faso, Benin and Mali. China is now the world's second largest consumer of oil, and in 2004, sourced 30 per cent of its oil imports from sub-Saharan Africa, from Angola, Sudan, Equatorial Guinea, Gabon, Nigeria and Congo-Brazzaville in particular.
Not content with the commodities themselves, state-owned or state-backed Chinese companies have been busy buying up the deposits. In Zambia's copper belt, for example, they have invested US$170million into the mining sector, and in Zimbabwe, they dominate operations of the world's second largest platinum reserves, estimated to be worth more than US$500billion. The China National Offshore Oil Company signed Beiiing's biggest oil deal in January this year, paying US$2.3billion for a 45 per cent stake in a Nigerian oilfield in the Niger Delta.
While the West looks on with a touch of jealously and more than a hint of suspicion, African governments are welcoming the Chinese with open arms. During a meeting on Africa-China cooperation at the last World Economic Forum in Switzerland, Mozambique president Armando Guebuza said China's interest in Africa was "very welcome" and that cooperation had resulted in "dividends for both parties". And in anticipation of the third FOCAC summit in Beijing, Ghana's president, John Kuffuor, said that China-Africa relationship had reached an "all-time-high level of cooperation", adding that "African leaders are going to China to negotiate for more cooperation".
In 2004, there were more than 650 Chinese state companies working in Africa. Today, there are more than 800. Many are based around construction, building the Supreme Court in Namibia, the State Building in Uganda, a shopping centre in Nigeria and a presidential palace in DRC, and rehabilitating roads, railways and bridges in countries such as Angola and Mozambique. But there are also investments in telecommunications systems, agriculture and manufacturing. And the China Great Wall Industry Corporation, the state-owned space-hardware manufacturer, has even won a contract to build Nigeria's first satellite.
The Chinese are rewriting the rules of investment risk in Africa, says Martyn Davies, director of the Beijing-funded Centre for Chinese Studies at Stellenbosch University in South Africa. "They have a confidence in the continent that no-one else has," he says. "And that has to be a good thing. I wish Western companies would engage with the same vigour."
China's African Policy sets out a framework for what it calls "a new type of strategic partnership with Africa", featuring "political equality and mutual trust, economic win-win cooperation and cultural exchange". As well as improving bilateral relations, the aim is to promote democracy in international relations, says He Wenping, director of the West Asia and African Studies Section of the Chinese Academy of Social Sciences in Beijing. "Both China and Africa are opposed to unilateralism and the use of force," she says. "China believes that through developing South-South cooperation, we can improve North-South dialogue and establish multilateralism in the world. We also want to strengthen the UN and other multilateral organisations and encourage them to pay more attention to development and anti-poverty concerns."
In the spirit of South-South cooperation, Beijing has written off US$10.5billion worth of debt from 31 countries since 2000 and created tax exemptions for 190 imports from 25 countries. Its African Human Resources Development Fund has trained more than 10,000 African professionals, and last year, its universities offered more than 15,000 scholarships to students from 52 African countries. At the same time, it has provided in-country technical assistance by sending more than 600 teachers and 15,000 doctors to work alongside their African counterparts.
Using a trick it learnt from the West, China is using its aid and investment to support its own interests. In Mozambique, for example, it has donated and loaned funds to the government for construction projects, including new parliament buildings and a conference centre. Part of the deal is that Chinese companies should be contracted to carry out the work.
Beijing has now gone a step further, using aid and investment to help it win contracts for the commodities it so badly needs. In 2004, for example, China's national export bank, Eximbank, loaned Angola US$2billion to rebuild its infrastructure. The agreement dictated that not only should Chinese companies be contracted to do 70 per cent of the reconstruction work, but that Angola should supply China with 10,000 barrels of oil a day. So fruitful was this deal that China has since loaned Angola a further US$4billion for reconstruction work, invested US$3billion to build an oil refinery and is now licensed to export 456,000 barrels of oil a day.
In some cases, Chinese companies are even taking on loss-making projects just to secure the deals. With such a strategy, the Chinese are beating their rivals hands down. "The private Western companies just can't compete with Chinese state-owned enterprises. They don't have the resources to build a road or power station," says Davies.
Unsurprisingly, African governments seem to be enjoying dealing with China. Last year, PetroChina signed an oil deal with Nigeria worth 30,000 barrels a day for five years in return for China funding two new power stations. Speaking to Fortune, Nigeria's oil business development manager said his government had more influence in their negotiations with Chinese companies than they did with their Western counterparts. "They are desperate for our resources," he said.
However, not everyone has been so impressed by China's modus operandi.
A welcome boost
When China's NFC Mining Africa paid US$20million for an 85 per cent stake in a Zambian copper mine in 1998, residents of the nearby towns were overjoyed. It had been 11 years since the closure of Chambishi mine had caused widespread unemployment. Renewed production would provide a welcome boost to the local economy.
NFC promised to build a US$7million explosives factory on the premises and donate US$600,000 to equip and refurbish a local hospital. Eight years on, however, Chinese-Zambian relations at the mine have soured. In April last year, a huge blast in the explosives factory killed 46 workers. And in July this year, Chinese management shot six miners during violent protests over pay and conditions.
In Lusaka, where the Chinese population has swollen to 30,000 in the past decade, the situation isn't much better. Businessmen selling cheap imports from their homeland have been accused of destroying local industries. "Wherever you go--the market, the town centre--the Chinese are there and they are putting Zambians out of business," Joe Mamba, a 27-year-old cobbler told the Telegraph earlier this year. "I make shoes with genuine leather. The Chinese make bad shoes very much cheaper, so people go to them and I have no business."
Anti-Chinese resentment boiled over in October following the results of Zambia's presidential elections. Riots broke out and Chinese shops were looted after it became clear that an opposition candidate who had accused Beijing of "exploitation" had lost.
Chinese imports have also replaced domestically produced clothing and furniture in Ghana and South Africa and have been blamed for the loss of 350,000 jobs in Nigeria. And in Ethiopia, research has shown that 28 per cent of shoemakers studied have been forced into bankruptcy and 32 per cent to downsize and make redundancies.
To make matters worse, competition from Chinese manufacturers in third-country markets has also hit African industries. Following the liberalisation of the international textiles trade in 2005, the value of the clothing and textiles from five African countries fell by 17 per cent, causing widespread job losses--3,000 in Kenya, 12,000 in South Africa and 15,000 in Lesotho. In Swaziland, redundancies in the sector ran to 56 per cent.
One of the main principles of China's foreign policy is that it won't interfere in the internal affairs of another country. So when Eximbank lends a government money, or a Chinese company signs a contract to buy oil or build roads, there are no conditions about good governance or environmental damage.
To their African partners, this comes as a breath of fresh air. But human rights and anticorruption activists are worried. "The Chinese are supporting some African governments that have very poor records on transparency, good governance and human rights," says Sarah Wykes, senior campaigner with Global Witness, a British NGO working to expose the links between natural-resource extraction and human-rights violations.
Nowhere is this more clearly illustrated than in Angola--China's largest supplier of oil. Donors had refused to lend the Angolan government the funds it needed for reconstruction without commitments to move forward on issues of human rights, good governance and fiscal transparency, explains Wykes. "Then, in 2004, there's suddenly this US$2billion export credit deal with the Chinese. And the Angolan government no longer needs any concessional loans from the IMF or the World Bank."
Similarly, many believe that China's investment in Zimbabwe has allowed Robert Mugabe to continue to bring the country to its knees. And that its dealings with Sudan caused it to block a UN Security Council resolution in 2004 calling for sanctions in response to the atrocities in Darfur, Sudan.
China's record of arms sales is further proof that its government has little concern other than its own economic gain, say campaigners. Not only has it recently conducted deals with Sudan, Zimbabwe, Burundi and Equatorial Guinea, it sold an estimated US$1billion worth of arms to both Eritrea and Ethiopia before and during the 1998-2000 war between the two countries.
Most coverage of China's influence in Africa has trodden this line--that Africa is poverty stricken, corrupt and incapable of managing its own affairs properly, and China is greedy and untrustworthy, so the result can only be disaster. And when institutions as ideologically divided as Amnesty International and the Bush administration share this conclusion, it's difficult to disagree. There is an opinion, however, that our Western/Northern perspective is preventing us from grasping the exact nature of the situation (see What's really going on here?).
There are, however, more wide-ranging implications than the direct impact of China's trade, aid and investment in Africa that, ultimately, will affect us all.
Rewriting the rulebook
The countries that benefit most from China's attentions are the commodities exporters. They're not simply enjoying the growth in sales to Beijing and all that is associated with it, but have also seen the value of trade increase because China's huge demand for raw materials has forced up commodities prices on the international market.
This is the same, albeit opposite, effect experienced by the textiles industries in Lesotho, Swaziland and Kenya. Indeed, economists now believe that the rapid growth of China's economy and its impact upon third-country markets is reversing one of the fundamental laws of economics. And, in doing so, it is forcing many countries to reassess their development strategies.
"One of the conventional wisdoms of development strategy has been that because commodity prices have fallen in comparison to the prices of manufactured goods, countries should target their industrial sectors for expansion. However, China's accession to global market threatens this logic," says Raphael Kaplinsky, professor of international development at the Open University and co-author of a UK Department for International Development report on China's impact on Africa. China's competitiveness has caused the price of manufactured goods to fall, Kaplinsky explains, and its demand for certain commodities has caused their value to increase. "Now, economists believe that African countries should focus more on commodities and move out of manufactured goods."
It's difficult to overestimate the significance of this trend, he continues. "In terms of development policy and development studies, this is a major issue. In the space of five years, China has turned on its head one of the unwritten economic rules that have governed development for decades."
However, China's influence in Africa now extends far beyond simple economics. All over the continent--indeed, all over the developing world--governments are looking east for policy advice as well as new trade and investment opportunities.
During the 1990s, international development was based around a theory that became known as the Washington Consensus. Originally devised by the World Bank and the IMF as a means of tackling Latin America's debt crisis, it was adopted as a model for all development programmes and subsequently applied globally.
The results ranged between poor and disastrous. Critics cite the Argentinean economic crisis of 1999-2002 as proof that its policies were flawed. According to Joshua Cooper Ramo, a former foreign editor of Time magazine who now lectures at Tsinghua University in Beijing, it was "a banker's list of dream conditions for development" and "had little to do with directly improving peoples' lives". His criticism echoes the widely held belief that the Washington Consensus was designed primarily to open up the markets of underdeveloped countries to the multinational companies of North America and Europe.
Ramo believes that China's success in economic growth and poverty reduction acts as an example to the rest of the world of an alternative path to development. Beijing's model, he says, "offers a vision for how technological globalisation changes things [in a way] that is far more nuanced and frankly useful than much of what is sent out from Washington or Geneva".
Based upon more than 100 interviews with key decision makers in China, Ramo has defined a new Beijing Consensus, a model driven by a desire for equitable, peaceful, high-quality growth that favours stability, self determination and, above all, flexibility.
Founded upon innovation-led growth, explains Ramo, the Beijing Consensus has turned established development doctrine on its head by favouring 'bleeding-edge', rather than 'trailing-edge', technology. "It suggests that creating high-growth economic hubs is more important than building sequentially from fundamentals," he writes in a paper published by the UK-based Foreign Policy Institute. "It is better, in this world view, to wire some of the country with fibre-optics instead of patiently waiting to wire everything with copper first."
Ramo goes on to explain that Beijing is now trying to make sustainability and equality primary considerations, rather than luxuries. The dynamism of China's market in the past 25 years has caused the country all manner of problems--pollution, social instability, corruption, mistrust of the government and unemployment, he writes. "Without a change to a more sustainable growth model, China's economy is likely to splutter out, choked off by a shortage of resources and hampered by corruption and pollution."
According to Davies, African leaders are now interested in learning from China's experience. "There is a growing frustration with the Western approach to development," he says. "Fifty years of aid hasn't worked, and the G8 is failing to deliver. China, on the other hand, has experienced nine per cent growth a year for more than two decades and raised 400 million people out of poverty--that's about half the population of Africa. It's easy to see what the attraction is."
Power shifts
Such is the support for Beijing in some parts of Africa today, that it not only enjoys an advantage over its Western competitors, in some cases it's replacing them. After Beijing handed President Jose Eduardo dos Santos' Angolan government a US$2billion loan in 2004, he refused to allow French oil company Total to renew its licence on a large block, offering it instead to the Chinese Petroleum and Chemical Cooperation.
This shift of power in Africa shouldn't be underestimated, says Kaplinsky. The implications extend beyond trade and economics. "With the growth in resistance to Western globalisation," he says, "we now have a series of failed states in East Africa where there is the possibility of al-Qaeda training camps and so on. Now that China has become Sudan's biggest ally, the USA and European governments will be able to exert little influence upon the government without their support. We've seen this already happening with UN sanctions and Darfur."
The interesting question now is how the West will respond to China's growing influence in Africa. The hope is that it will be forced to pay more attention to development issues. However, there is evidence to suggest that the USA is so desperate to retain the upper hand in the region that it's lowering its foreign policy standards in an attempt to beat China at its own game. According to a report published by financial analyst Global Insight, between 2002 and 2004, the US administration increased its annual oil imports from Equatorial Guinea--a country whose human rights record is ranked alongside North Korea and Myanmar--by 120 per cent in order to keep up with the Chinese.
According to historian Niall Ferguson, the growth of ties between China and Africa is indicative of a global shift of power from West to East. "There's no question that that's what we're seeing," he says. "It's a long process that you can trace right back to the early 1900s, when Japan became the first Asian power to discover the joys of modernity. But bearing in mind that China was the world's largest economy in 1700, we are really seeing a global rebalancing."
Where African nations will position themselves in this great global shake-up remains to be seen. "There's no doubt that China is offering African nations a great opportunity to take control of their own destinies," says Davies. "The onus is now on these governments to invest the revenues into their economies to stimulate the growth they so badly need."
What's really going on here?
While human rights groups and anti-corruption campaigners condemn China's policy of unconditional trade, African governments continue to deal enthusiastically with the Chinese. So are they all trying to pocket the proceeds at the expense of their people? Or are we missing something?
Perhaps we simply don't understand what is actually going on. "It cannot be good that African governments persist with human rights abuse, or perpetuate their rule against the desires of their peoples, but poverty remains Africa's greatest problem, and liberal concerns have not helped Africa's poor," wrote Lindsey Hilsum, Channel 4's international news editor, last year. "The Chinese come to Africa as equals, with no colonial hangover, no complex relationship of resentment ... If African governments could respond in a way which spreads the new wealth--a large if, of course--then China might provide an opportunity for Africa which Europe and America have failed to deliver."
According to He Wenping of the Chinese Academy of Social Sciences in Beijing, the Chinese approach to development aims to build a solid economic foundation before tackling anything else. "Of course the ideal is to have good governance, human rights and so on, and to achieve economic growth at the same time," she says. "But in practice this may not be possible. If people don't have food to eat and clothes to wear, how can you establish good governance and transparency?"
Chinese aid to Zimbabwe: help or hindrance?
The Zimbabweans have a name for shoddy goods--zhing-zhongs--and, recently, President Robert Mugabe found out why his people use this term to describe the Chinese goods that have flooded the country.
In December 2004, China's First Automobile Works signed a deal to supply the Zimbabwe United Passenger Company (Zupco) with 400 eighty-seat buses. The first consignment of 50 buses, worth US$2million, arrived the following April. However, none of the buses is still working, and Zupco has cancelled the remainder of the order.
It doesn't end there. In 2005, Air Zimbabwe bought two MA60 turbo-prop passenger jets from the Xi'an Aircraft Industry Group Company for US$78million, and received a third as a donation. Within a year, all three were grounded: one never managed to take off in the first place, another had to make an emergency landing at Victoria Falls and the third caught fire during take off in Harare.
RELATED ARTICLE: China's growing trade with Africa.
Since the end of the last millennium, the value of trade between China and Africa has shown a staggering rise (far left). While commodities such as cotton have featured in this growth (above), oil has made up the lion's share (below), with Angola becoming the top supplier of crude oil to China (below left). China's move into Africa has focussed on a relatively small number of countries, several of which are now heavily reliant on the Chinese market--in Sudan, for example, more than two thirds of exports go to China (see map)
[GRAPHICS OMITTED]

Percentage of total

Exports going to China