China expands influence in Africa

China expands influence in Africa
26 December 2005

China expands influence in Africa

China’s growing demand for energy sources and profitable construction deals is leading the world’s most populous country increasingly to swoop into Africa, where it has found abundant raw materials, governments desperate for outside investments, and relatively little competition from American firms. The Chinese, sensing Africa’s tremendous potential upside, are making strategic economic inroads into a continent that, outside of oil investments, has long been written off by most Western companies as too risky because of poor governance or threat of conflict. US companies, in particular, have been caught flat-footed by the Chinese financial strikes, according to American and other experts on Africa’s economic potential.

In the last several years, China has either struck oil deals or built on existing ones in Angola, Algeria, Chad, Sudan, Equatorial Guinea, Gabon, and Nigeria. More than half of Sudan’s oil exports go to China, accounting for roughly five per cent of its imports.

But trade is not limited to just oil. Chinese stakes have also risen dramatically in infrastructure projects and the mining of precious minerals, including diamonds, gold, and platinum. Trade between Africa and China was at $18.5 billion in 2003, an increase of 50 per cent over the previous year. Some analysts believe that could double by the end of next year.

The seriousness of the Chinese purpose can be especially seen in Angola, where a US$2 billion line of credit from China’s export bank has led to railroad repair, road building, office construction, a fiber-optic network stretching for more than 100 miles, and a stake in oil exploration in shallow waters off the coast.

It is also evident in the number of semi-private companies that have won dozens of contracts here. "Profit is what we want," said Liu "Johnny" Jian Wei, 39, spokesman for Civil Construction, a Chinese-owned firm that has worked on construction projects for five years in Angola. "We can make a profit because we have an advantage over other foreign companies we work holidays, Saturdays, Sundays, most evenings, and we cost a lot less."

In Angola, the United States remains the country’s biggest trading partner largely because of oil contracts, but China is a solid second with bilateral trade totaling $4.9 billion in 2004, a 113 per cent increase from 2003. Overall, roughly a quarter of China’s oil imports come from Africa; the United States imports about 15 per cent of its oil from Africa now, but that could grow to 25 per cent as well in a decade, according to the US National Intelligence Council.

In Angola, though, the Chinese export bank did attach some conditions to its $2 billion credit line to Angola, including that Chinese companies receive 70 per cent of the contracts.

Angolan officials haven’t complained. Finance Minister Jose Pedro de Morais said in an interview last month that his country had earmarked the first $1 billion of the Chinese line of credit in only 19 months, "and I’m sending a team to Beijing to negotiate the terms of the second billion."

"Through the Chinese, we found a way to rebuild our infrastructure quickly," de Morais said. "And you know what? The success of these projects has helped normalize our credit relations with other banks. They are ready to expand their lines of credit with us because they can increasingly see a country that has infrastructure that works."

In Angola, Chinese workers are constructing office buildings; housing developments of up to 5000 units; a new international airport; several sections of railway that fell apart during the country’s quarter-century civil war, which ended in 2002; hundreds of miles of roads; hospitals; and schools.

"It’s amazing what the Chinese can do," said Issac F Maria dos Anjos, a member of parliament and the ruling party’s election committee. He said Angolan-made cement in 50 kilogram bags costs $10 per 50kg bag, while China’s imported cement costs much less. And the Chinese companies’ cost per square meter of construction is a fourth of that of European companies, he said. "Why would you stop these guys from coming?" dos Anjos said, laughing. "It absolutely will help the ruling party. We have to build hospitals. We have to build bridges. And we will do a lot of it in just one year" before elections.

But not everyone here welcomes the Chinese. Rumours run rampant. Two widely circulated rumors around the capital were that several hundred thousand Chinese workers were now working around the country, and that many of them were prisoners. Angolan officials and foreign diplomats said the rumours were false; an official at the Chinese Embassy in Luanda declined to comment. Still, many Angolans are upset that Chinese workers are getting many of the jobs. "The majority of Angolans don’t have work, and we see the Chinese everywhere doing jobs that we should have," said Joao Manuel Osvaldo Pinto, a popular broadcaster at Radio Inglesia, Angola’s leading private radio station.

At a housing development about 30 miles south of the capital, in Panguila, Civil Construction has built more than 3000 small houses in about a year and will build another 2000 in the coming year. The three-room houses cost $3000 each; the occupants are those moved by the government out of shanty towns in the capital.

"It’s a hard place for us to live," Liu said later. "We miss our families back home. But it’s good business here. It would be even better, but it’s difficult for the Chinese to get work visas. If the Angolans really opened the doors to Chinese, you would see many, many more of us."

Published under Cement News